Competent government? Read and weep

As if a downpour on the long holiday weekend (and Coronation Day) were not enough to dampen the spirits, I just read Ian Dunt’s How Westminster Works … and Why It Doesn’t. It’s an excellent book, forensic in its analysis of the operations of the UK’s central government – and that is exactly why it’s so deeply depressing and angry-making. The chapters cover both the political processes – selection of MPs, role of special advisers, the imbalance of power between the Executive and Parliament, lobby journalism – and the official aspects – an amateur-by-design civil service that’s becoming ever-less capable, increasing tensions between ministers and officials, the dire impact of the Treasury. The book is even handed, pointing out that many of the trends that make for ineffective government today started in the 1990s or before, and were accelerated significantly by New Labour, before being turbo-charged by the succession of Conservative governments that have followed.

My takeaways are:

  • It would actually be a bad idea to reform the House of Lords as it’s the only part that semi-functions
  • None of the actors in UK national politics have any incentive to change anything – for instance, proportional representation would be excellent but neither Tories nor Labour want it
  • I already thought more devolution to sub-national levels is desirable, and now think it’s the only hope of introducing any competence into UK government (although many people in Whitehall and Westminster have the cheek to talk about a lack of capacity at local level).

If you really want to get angry about the pervasive incompetence of the government, just read the chapter on Afghanistan. Shameful.

The book ought to go on every reading list for UK politics and government courses, and be read by all interested citizens. Buy it and despair. It complements Paul Johnson‘s excellent and equally angry-making Follow The Money, and my colleague Dennis Grube‘s more equable but still damning Why Governments Get It Wrong and How They Can Get It Right. Perhaps the most depressing thing in the UK is that when Donald Trump started destroying the US government’s efficacy (documented in Michael Lewis’s The Fifth Risk) he intended to do so. Our politicians and officials are destructive by accident. Destroying democracy through incompetence is somehow even more dispriting than doing so through malevolence.

What makes this even more depressing is that the need for effective government is increasing – collective action challenges like climate change, new security concerns, technological transformations all point to an increased need for a strategic economic policy framework. This isn’t going to happen if all the politicians’ and officials’ focus is on strategising for the next minuscule political advantage on social media.

The book does end with some suggestions for reform, but I found this chapter a bit half hearted. It isn’t that they wouldn’t be good ideas, just that it’s hard to see any incentive or ability to implement them. At least today (6 May 2023) we showed the UK can still put on a grand ceremony, even in a downpour.51LR0fJXYAL._AC_UY436_QL65_

 

Re-building Manchester

Manchester Unspun: Pop, Property and Power in the Original Modern City by Andy Spinoza is a fascinating  history of the extent to which my home city has changed since I left to go to university in 1978. It is a combination of personal memoir and political history, the latter seen through the lens of popular music – the famous Haçienda, Factory, Madchester phenomenon etc. The book describes the enormous changes in the built environment of the city centre, with property development a key vector of regeneration, led for much of the period covered by the due of Sir Howard Bernstein as chief executive and Sir Richard Leese as council leader. As it notes, this was often a controversial approach in its specifics, and for all the improvements in the centre remains contested.

The book was particularly interesting for me as I had a bit part in the first, George Osborne, devolution deal as the co-ordinator of the 2009 Manchester Independent Economic Review. Spinoza is dismissive of this effort but he seems to under-appreciate its role in getting the Treasury on board with the devolution journey. Anyway, I worked with the two Sirs and many others to put the MIER together, and I greatly admired them for their dogged and long-term determination to revive Manchester – a project 40 years in the making since the depths of deindustrialisation. The MIER in any case provided a baseline against which the city could judge its future progress. This hasn’t been overwhelming – as we noted in the follow up Prosperity Review in 2019/2020. Manchester still punches below its weight in terms of productivity, still has problems of housing and homelessness, still has great inequalities between and within its constituent authorities, still needs to improve its skill base, and so on.

Yet it has changed so much for the better since I left as all the mills were closing down but the rivers remained polluted and the buildings blackened. More than half the students graduating there now stay in the city region. Andy Burnham’s mayor-ship has helped create a stronger political identity. It continues to be a cultural dynamo (Mike Emmerich, a Manchester eminence grise, has written compellingly about the role of culture in cities). I really enjoyed reading Manchester Unspun for the history told through music – largely new to me. One for all Mancunians and all keen to see the UK’s cities other than London regain their mojo.

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Planning disasters big and small

When teaching cost benefit analysis, I ask my students if they think the Sydney Opera House should not have been built. It’s both an Australian icon and an extreme example of the kind of major project disasters that Bent Flyvbjerg has made his name analysing: massively over budget, massively delayed, destroyed the reputation of its architect, and isn’t well suited to its purpose. When I did the tour, the guide claimed that, due to the narrow footrpint, for ballet there were matresses placed in the wings for the dancers to cannon into as they leapt off stage, and people to catch them so they didn’t bounce back on stage.

In general, the problem with big (and small) infrastructure schemes is that they so often seem to be over-budget and delayed, and yet we need infrasttructure. And as Flyberg’s new book, How Big Things Get Done (written with Dan Gardner), points out, the same is true in everyday life of projects like home extensions and refurbishments. The book has a few examples of successful major projects – like Frank Gehry’s Guggenheim in Bilbao, or the new Terminal 5 at Heathrow Airport. What distinguishes these from the far more numerous disasters?

The advice is easy to write down: be clear about what you want to achieve with the project; plan with as much care and detail as you can; forecast costs on the basis of what similar projects have actually cost on average; make sure you have an experienced project team that can deliver quickly when they get the green light. For big projects – although not your new kitchen – make the activity as modular as possible, for example by manufacturing components offsite. Technology and the use of digital twins and offsite manufacture should help a lot on infrastructure projects – this seems to have been key to Gehry’s consistent success.

This all sounds like common sense, but is obviously harder to achieve in practice. I thought the element missing from this book was the political economy of why it is so hard to do projects well. Peter Hall’s (1980) Great Planning Disasters is still a must read on this front. Having said that, I very much enjoyed How Big Things Get Done. Recommended, and particularly if you’re planning home improvements.

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Who owns Kent?

Brett Christophers has become the leading expert on the role the financial sector has played in shaping the UK economy – for better or worse, usually the latter. I first came across his 2013 Banking Across Boundaries, where he was the first person to point out the pernicious effect of the ‘FISIM’ (financial intermediation services indirectly measured) construct in flattering the contribution of finance to the economy – a point later taken up by others. Subsequent books have looked at UK land ownership (The New Enclosure) and rentiership (Rentier Capitalism).

His new book, Our Lives In Their Portfolios: Why asset managers own the world, lives up to the high expectations established by the earlier ones. The subject is the scale and scope of the ownership of physical infrastructure – mainly in the UK but with examples from the US and Australia too – by large and generally little-known asset managers. Take Kent for example: water and wastewater infrastructure is controlled by Macquarie and Morrison, while the gas network is owned by Global Infrastucture Partners and Brookfield. Blackstone, Harrison Street and Safanad own much housing. EQT Partners owns the charging stations for electric vehicles. And so on.

In short, a group of global asset management companies act for investors such as pension funds and companies, creating funds that invest in real assets and buy in services to operate them. However, while the investors have long term horizons and look for steady returns (such as rents or fee income), and the infrastructure itself is long-lived, the funds set up by the asset managers coming in between are short term – a few years at most. Ownership of the assets by different managers churns frequently, and the managers have every incentive to cut maintenance costs and raise charges or rents. As all the operational aspects are contracted out to service companies, the asset managers are neither energy or water companies, nor investors in such companies: they are pure rentiers. The risks are borne entirely by others – and particularly the people experiencing crumbling homes or essential services.

Despite the large impact this subterranean ownership structure therefore has on people’s lives – through lack of maintenance and repairs and rising costs – there is scant public information. One of the major contributions of the book is the evidently huge amount of work that has gone into stitching together what information is available: “Researching and writing about asset-manager society is sometimes much more like detective work than it should be.” There is a shout-out here to the FT’s Jonathan Ford, who has done some excellent reporting on various UK rentiership scandals. The book organises the material by considering the asset classes (housing, energy, farm land, transport), the geography (where are the investments mainly located – US, UK –  and where do the asset managers headquarter), and who are the major commercial players.

PFI projects clearly boosted the asset manager business no end, and there are continuing pressures for the government to bring more private long term investment into infrastructure, given that the state has seemingly abdicated from such investments in the country’s future. While I don’t have a problem with the idea of private money coming into infrastructure investment, there is a clear incentive issue: as Avner Offer’s excellent recent (2022) book Understanding the Private-Public Divide set out, private money will always require pay-back faster than a major piece of infrastructure can deliver, so there are challenges in structuring the investment and governance. And the lack of transparency and failures of governance over the maintenance and operation of infrastructure and housing, resulting from the financialized structure of the investment through asset managers, are shocking. I defy anyone to read this book without being at least a bit scandalized about the blatant disregard for the people using these essential services.

What to do about it? Not clear, but the first step is clearly the disinfectant of light. Our Lives in Their Portfolios is an essential start. The book is out in late April.

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Morality in the cloisters

I’ve thoroughly enjoyed reading Parfit: A philosopher and his mission to save morality by David Edmonds. I’ve always felt faintly guilty at never even having tried to read anything by Derek Parfit, given the reverent tone in which he’s mentioned by many philosophy folks. Much as I liked this book by Edmonds, a wonderfully clear and lovely writer (see eg Wittgenstein’s Poker), it helped confirm my decision not to try Parfit’s own tomes.

The main reason for my persistence with happy ignorance is that Parfit’s method was evidently the thought experiment, which is an approach that seems utterly unpersuasive to me – so what if something might be the case in a wildly unrealistic scenario, like someone whose arms reach the length of the Indian subcontinent? (As for the trolley problem, please give me strength.)

I’ll make do with what I’ve taken from this biography – Parfit’s claim that moral statements  (eg it is wrong to torture innocent children) can be objective (the denial of this implying that morality is only ever relative); his belief that the main ‘schools’ of moral philosophy can be reconciled; and his view of personal identity as continuous psychological experience. I do try, but philosophy is difficult. There’s one anecdote here about an example Parfit gives that has Peter Singer dramatically changing his mind – and I just don’t understand the example (someone indifferent to pain on future Tuesdays….), which seems absurd.

Not that this spoiled my enjoyment of the book. For its hero is an extraordinary character. He went from private prep school to Eton to Balliol to All Souls – a literally cloistered life – albeit doing a lot of teaching in US universities, and obsessively visiting Venice and St Petersburg to photograph them. Obsessive is a theme – for example one ends up deeply pitying the poor OUP publishing team that had to deal with Parfit’s manuscripts. And not only did Parfit lead such an inherently sheltered life, he became ever more reclusive, spending all his time working, fueled by pills and vodka. Somehow he managed a long relationship and eventually marriage to Janet Radcliffe Richards (who must be saintly, and whose 1980 book The Sceptical Feminist had a big influence on me).

There seems no doubt Parfit was a genius. He influenced many other philosophers profoundly, and the book traces his impact, for instance, on the Effective Altruism movement and the study of existential risk, as well as contributions to thinking about the future – climate change and population growth. Tyler Cowen describes Parfit as ‘the most important philosopher of his era’. Edmonds discusses whether or not Parfit was autistic, tilting towards ‘yes’ without reaching a firm conclusion.

A fascinating and important person. I do highly recommend the biography – and good wishes to those who bravely decide to tackle Parfit’s own Reasons and Persons and On What Matters (all 3 volumes).

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