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Did the UK's Triple Dip "escape" signal a "healing" economy?

By John Charles Dyer, UK Correspondent 

25 April 2013.  It’s official. The Office for National Statistics (ONS) estimates the UK avoided the dreaded Triple Dip Recession -- at least for the first quarter of 2013. Based on 44% of the “required output determination” ONS estimates the UK grew 0.3% the first Quarter of 2013 over the last Quarter of 2012 and .4% over the first Quarter of 2012. The usual suspects celebrated the news as vindication of the Chancellor’s Plan A. But a cross section of economists and independent think tanks remain skeptical.  

The skeptics include me.  In this piece I will suggest a perspective I think more consistent with observable reality.  The theme is, absolute numbers grow, but their value diminishes.   

Consider Exchange Rate 

I regularly convert US dollars into UK pounds. I’ve become very aware of the impact of fluctuating rates on the value of the converted currency.  

In a prior FOI request I asked ONS how they account for these fluctuating rates in their estimates. ONS informed me they don’t, but they do adjust for inflation.  I've asked ONS to confirm that is the case with the last figures.   

From the perspective of one who makes and spends his or her money in the UK the impact of exchange may appear less important than inflation or subsumed in its calculation.  But when one must consider what it will cost in outside currency (an asset) to buy pounds (a commodity), it's an important consideration and an indicator of the strength of the UK economy.  Moreover, in the end, I as a consumer must still buy at inflating prices -- and pay taxes -- with pounds of fluctuating value.   

So I regularly ask, what will it cost in US dollars to buy £4,000 for the month’s living expenses. I also regularly ask the trends and whether the timing’s best to take care of a US obligation rather than convert dollars into pounds to spend in the UK. That is in its small way just what transnational investors and businesses do when they make investment decisions.  

Based on this experience I decided to look at the ONS headline figures through the prism of the exchange rates. I asked, what did it cost in US dollars to buy £4,000 per month in each of the quarters ONS compared.  

The detailed work sheet can be found here Download Exchange Rate Worksheet . 

Briefly, it cost me $650 more to buy £12,000 pounds during the last Quarter of 2012 than it did during the first Quarter 2013 and $241 more during the first Quarter of 2012 than the first Quarter of 2013.  Restated another way, the £12,000 for first Quarter 2013 was of lesser dollar value than either of the comparison Quarters. The drop in value was 3.4% and 1.3% respectively.  While the absolute numbers grew .3% and .4% respectively their value relative to the dollar shrank.  

Does that put the .3% and .4% GDP growth figures into a different perspective?  

Employment 

Where else have we seen an increase in absolute numbers but a contraction in their value? Employment.  Between 2008 and 2012 the net number of persons estimated employed at least one hour per week for pay increased 402,000, but the percentage of working age adults actually working for pay shrank from 59.6% in 2008 to 58.7% at the end of 2012.   Moreover the majority of new employment was part time, for which the average wage was £155 per week.  

Can the Foreign Service Reform Itself? If so how and where to begin?

By Patricia H. Kushlis

I have been documenting serious problems with the State Department’s approach to its most precious resource, its human capital since January 23, 2008. These problems, in reality, began well before 2008. This post “Can the Foreign Service Reform Itself?” has been added to the ever lengthening – now nearly book-length – list entitled “The Troubled State of State” affixed to WhirledView’s top left sidebar.

There have been various institutional arrangements established to mitigate the human resources problems at the State Department. Too many of these arrangements are in desperate need of change. One is the pressing need for an Inspector General as Secretary Kerry has recently and rightly stated. Another is the fundamental reform of an institution called the Foreign Service Grievance Board where too often Foreign Service personnel disputes are sent for resolution.

The following recommendations on reform of this board are by an experienced Foreign Service Officer currently caught up in State’s human resources labyrinth. The officer outlines weaknesses of this board and suggests ways they can be mitigated.

As the author rightly points out, “we owe it to ourselves and our country to ensure that, as we promote workers’ rights and respect for the rule of law around the world, our internal governance reflects our values.” Clearly, I think the State Department falls far short. This thoughtful analysis and its recommendations need a considered and careful read:

Fixing the Foreign Service Grievance Process: Seven Simple Reforms

The Foreign Service grievance process, as currently constituted, is crippled by illogical, unnecessarily complex procedures and structural conflicts of interest.

This must change. We owe it to the Foreign Service community to put in place a user-friendly process that resolves disputes quickly, equitably and with dignity. We owe it to the American taxpayer to stop the current system’s massive waste of human and financial resources. And we owe it to ourselves and our country to ensure that, as we promote workers’ rights and respect for the rule of law around the world, our internal governance reflects our values.

Outlined below are seven areas in which the process is out of step with contemporary norms, along with common-sense reform proposals aimed at increasing both fairness and efficiency. It is my hope that these ideas can start a broader conversation aimed at establishing a grievance process that is fairer, more transparent and more efficient.

1. Mediation: resolve cases whenever possible without a formal grievance

In the private and intergovernmental sectors, and elsewhere in the Federal Government, it is common practice to try to resolve disputes quickly and amicably through the intervention of trained external mediators. This strengthens workplace morale by facilitating rapid, mutually acceptable solutions. It also saves money by averting time-consuming administrative proceedings and litigation. State offers no such option.

While the FSGB “encourages the parties to consider and engage in voluntary efforts to settle the case” and offers the services of one of its members to serve as a mediator “[a]t the joint request of the parties,” this offer comes too late in the process to make a difference: after the aggrieved employee has filed a formal grievance with the Department, received an adverse response, and filed an appeal with the Board. If mediation is to work, it needs to be seen as a first, rather than a last resort.

The Department and AFSA should agree on a roster of qualified external mediators, and offer their services to employees upon request as an alternative or precursor to the grievance process. Any costs involved would be more than offset by savings realized through a decreased grievance workload.

2. Objectivity: remove responsibility for initial adjudication of grievances from the Bureau for Human Resources

The Department’s Grievance Staff, which adjudicates employee grievances, sits within the Bureau for Human Resources, which exercises direct responsibility over the vast majority of “grievable” actions and decisions. This constitutes a direct conflict of interest: grievance attorneys who “review” impugned HR decisions report to the same Director General under whose authority those decisions were taken in the first place.

This discourages accountability, and encourages costly and time consuming defenses of even obviously erroneous decisions. Responsibility for the initial adjudication of grievances should be transferred to the Office of the Legal Advisor, or to a special office established under the direct authority of the Secretary.

3. Segregation: Separate responsibility for adjudicating grievances from responsibility for defending the Department’s position

A further conflict of interest is the dual (or even triple) role played by the HR Grievance Staff. The same official who oversees the initial investigation and adjudication of a grievance then turns around and represents the Department when that same case comes before the FSGB. The need to build a case with a view to an eventual defense before the Board represents an insurmountable conflict of interest, which prevents the Grievance Staff from serving as a truly objective finder of fact in the initial adjudication of the grievance. The investigation/adjudication and advocacy functions should be clearly segregated, and assigned to different offices. Ex parte communications between those offices should be strictly prohibited.

4. Perspective: Reconstitute the Foreign Service Grievance Board to eliminate the perception of bias and ensure a broader interpretation of “the Department’s interest.”

 The members of the FSGB, while appointed by the Secretary, are recruited by the Bureau for Human Resources, and the Board includes many retired Foreign Service Officers with extensive experience in the HR Bureau. While the Board’s members, individually, may adhere to the highest standards of personal integrity, this practice as a whole, like the placement of the Grievance Staff in HR, perpetuates at least the perception of bias in favor of Department management. Ideally, grievance panels should be composed of distinguished jurists and/or labor relations experts with no direct links to State HR (in most other systems, HR experts are available to the board in an advisory capacity, but do not sit as voting members). Each panel should include an AFSA representative, specifically charged with ensuring that the rights of the grievant are respected throughout the process.

5. Expeditiousness: Shorten procedural timelines, and institute a fast-track procedure for time-urgent cases

US Gun Control, a non British British issue

By John Charles Dyer, UK Correspondent 

18 Apr 2012. Last night the gun lobby defeated even the least intrusive of the measures US President Obama sought to enact into law in the wake of a tsunami of gun violence. I regret that nothing could get past the gun lobby but I am not surprised.  

Here in the UK the British of all political persuasions watch with slack jawed horror and utter disbelief.  I have been hard pressed to explain it.  

To control or not to control 

I myself did not favour gun control per se. I favoured reasonable time, place, manner of storage and discharge of ammunition.  

But it is clear now that even my different approach would itself be a non starter. Even were the gun lobby to entertain any control legislation from any President they clearly aren’t going to do so from President Obama. It’s personal. 

I did not favour gun control per se because 1) I knew it had no chance and 2) I, unlike many who support gun control, am uncomfortable with the argument the second amendment was only ever intended to provide for a militia for the common defence in a time before a strong national military.  It is an appeal for a liberal cause to a conservative principle of interpretation with which I have heartburn. 

The principle of interpretation is important 

It may be historically true that the framers were only thinking of their circumstances at the time, but for a good 150 years the Constitution has been interpreted by the preponderance of distinguished jurists in light of the mores of their time not the framer’s time. The law is said to be “living” not static. In the past 50 or so years a competing principle of interpretation arose as conservatives sought to limit “social engineering” and “activist” judges who allegedly “make” the law instead of interpreting it.  Proponents of original intent argue the Constitution should be interpreted in line with what the framers were thinking at the time in the absence of more recent amendment.  

I am a living law kind of guy. But I am also a stare decisis kind of guy. I  think you can’t have your judicial interpretation cake and eat it too. If I apply original intent to the second amendment to limit its weight to providing a militia for the common defence I feel compelled to apply it to “cruel and unusual punishment.” Visa versa, if I apply living law to “cruel and unusual” punishment I think I must do so with the second amendment. Whatever the historical original intent the second amendment has come to protect private ownership of guns.  

On Dealing with the Hermit Kingdom

By Patricia H Kushlis

Does North Korea’s leadership belong in the madhouse or Alcatraz as so many of our right wing politicians, militarists and some journalists seem to suggest?  Or are they behaving as sanely – at least from their perspective - as their accusers?  Is there something important going on in Pyongyang that is overlooked here that should be considered?

I attended an excellent two-day Santa Fe World Affairs Forum symposium on US-East Asian relations at St. John’s College in Santa Fe, New Mexico early last week:  The North Korean nuclear threat, China’s capabilities and future intentions, reasons for Myanmar’s immense political changes and the overall ramifications of the changing face of Asia for US interests were at the top of the agenda.

Several years ago, then President George W Bush labeled North Korea – as well as Iran – as the Axis of Evil. This reversed Bill Clinton’s softer line that may or may not have been making progress towards some kind of normalization of relations with the Hermit Kingdom.  If such a sea change were to happen, our military presence in North Asia could and should be reduced substantially. This in itself is likely a flashing yellow light for those in the defense industry who profit from a continued state of high military readiness in the region not just those in Pyongyang but also our own in Washington.

No one, however, has ever satisfactorily explained to me the reasons for Pyongyang’s peculiar actions or what might induce its secretive leaders to change course.  In essence, the Hermit Kingdom has been brushed off as the proverbial enigma wrapped in a mystery - without further thought or examination.

Political Science 101

But put away the swords and the blinders for the moment and go back to the basics:  The first axiom of politics is a leader’s (or collective leadership’s) determination to remain in power.  That’s lesson one, political science 101.   In Pyongyang, the transfer of power is dynastic.  The country may call itself socialist, workers or communist but in reality it is governed through an age old form of familial leadership based on an historic Asian dynastic model.  Moreover, over the years, the North Korean dynasty has been propped up by the country’s military with China’s acquiesce and sometimes more.

I once had a Burmese cat named Cleo who spent the first two weeks of our assignment to Athens with her nose pointed into a back corner of a shelf in our bedroom closet.  I suppose she must have come out when no one was looking because she clearly used the litter box and ate her favorite food.  She ultimately resurfaced but only after we moved to a garden apartment which allowed her to explore the garden at will sitting for hours soaking up the Greek sun.

Fear of the unknown had much to do with Cleo’s behavior in that temporary apartment just as it’s plausible that fear of being dethroned (or possibly worse – think Ceaceşcu in December 1989) has been a likely motivating factor for North Korea’s seemingly irrational behavior since the country was established in the wake of the Korean War.  This flashed through my brain when one of the experts at the conference in describing the unique characteristics of the North Korean propaganda barrage pointed out that the country’s threats always concluded with the phrase: “if the Americans attack.”  But the speaker added that these four final words are not reported in the media or government statements we see in the West. 

The Householder’s Purse, a Legend of the Fall

By John Charles Dyer, UK Correspondent 

10 April 2013.   As all the world already knows, former Prime Minister Margaret Thatcher is dead.  Today, the Speaker recalled the House of Commons to special session to pay tribute to the late Prime Minister.  

It was in-of-itself a befittingly and ironically controversial decision. Each MP is now able to claim £3,750 in expenses they would not have been able to claim had the House of Commons only waited until Monday. The funeral isn’t until the 17th. Reputedly the Speaker balked at the idea.

Memories of a Legend  

As reflected in news coverage, the parties reportedly celebrating her death and the discussion in the Commons today, memories of the late Prime Minister’s career are as vivid and divisive today as Mrs. Thatcher was during her tenure as Prime Minister. Critics think Cameron seeks to milk Mother Margaret for all she's worth but if that's the idea it is a risky strategy.  Mother Margaret's fans don't always see Cameron as her heir, enemies do. Resurfacing the cult of Margaret Thatcher may well benefit UKIP and Labour far more than Cameron.

Margaret Thatcher the person will be missed by those who loved her.  But, some who claim to miss her now shunned her for years. As one friend, Lord Tebbit said today in the House of Lords that he regretted leaving his friend to her friends. She was swept from office not by the electorate but by her colleagues.  

Another Tory politician this week claimed Thatcher “had to break a few eggs” in reference to the shutting down or privatization of whole industries at a severe cost to those the industries employed. Presumably, this was “necessary” in order to make omelets for her friends. For me, I count relatives among the eggs she cracked for their omelet. But I don't want to be a hypocrite. I've broken eggs too.

Prime Minister Cameron says Prime Minister Margaret Thatcher saved the nation and made it "great" again.  One wonders about his definitions of save and great, but the verdict on the late Prime Minister now belongs to history and historians not politicians. Her legacy may well be written by China.  

Her least debatable impact may be as the person who most framed political and economic debate ever since. Perhaps the mark of her impact is, no opposition leader since has managed to escape that framework.  It is that framework that concerns me now.  

The Householder’s Handbag 

Margaret Thatcher famously "handbagged" Europe. She also handbags us today. George Osborne and David Cameron remain constrained by one PR gimmick in particular we owe to the late Prime Minister-- the Householder’s Purse analogy. “Any householder knows,” so the analogy goes, “you can’t spend money when there’s no money in the purse.”  It was the government’s mantra as it first sought to sell austerity to the public.

Social Security, a growing problem

By John Charles Dyer, UK Correspondent 

5 April 2013. Politics often seems to come in two phrases. The first is, “Me, I want.” The second is, “Mine, you can’t have.”  They are the alligators in all the swamps the dedicated hope to drain. They infest every public policy issue. They handicap every effort to face facts and effectively respond. Social Security is one such public policy issue where fundamental facts present difficult questions for every side in the debate. 

Is it Social Security or is it Welfare 

It is “Black April” in the UK.  The Coalition implements several “reforms.”  Some argue these reforms dismantle social security rather than reform it, penalizing the poorest and most vulnerable for the reckless gambling of the richest and most protected.  Others argue the reforms improve the system, making it fairer.  They call the system “welfare” not “social security.”  They describe the system as a safety net not social insurance and its benefits as "dole." They say the dole entraps. It undercuts the self confident, self reliance essential to earn one's way in the world.   

But the language of unbridled hate undergirds many proponents' arguments. Many, especially the Chancellor, divide the UK into “aspirational strivers” -- the good guys --- and “work shy shirkers” -- the bad guys -- who hide “with the blinds drawn” while the good guys go to work to not only “earn their way in the world” but also support the shirker.   It should not be that one can do better on benefits than in work, an argument made by comparing the extreme end of benefits in London to the lowest wage earners throughout the country. The Coalition argues they still provide for the "deserving" poor but in so arguing create yet another divisive distinction separating countrymen.  

While they say they provide for the most vulnerable, what they actually do is cut both the eligibility and the support the eligible receive. They give little. They more than take that away with a multitude of cuts.  They argue they make work pay, but they have done nothing to increase individual wages, benefits or hours of employment. They only made benefits hurt more severely than the lowest paid work.   

In rhetoric and design it is a naked appeal to “Mine, you can’t have.”  

I am on the other side of this argument. I am committed to social security as an expression of the social responsibility fundamental to a functioning society.   But I, like others who hold my view, struggle with the question, how are you going to pay for it.  

Living in Challenging Times: the US and East Asia

 

LIVING IN CHALLENGING TIMES: THE UNITED STATES & EAST ASIA
a two-day symposium

April 8-9, 2013
St. John’s College, Santa Fe, New Mexico

sponsored by

SANTA FE WORLD AFFAIRS FORUM
Co-sponsors: U.N.M. Center for Science, Technology & Policy
Albuquerque Committee on Foreign Relations, American Foreign Service Association & St. John’s College

DAY ONE:  2-6 pm: Registration; “East Asia and the Pacific:  Issues and Challenges,” Ambassador Will Itoh, Director, Washington International Programs, University of North Carolina at Chapel Hill; and Senior Advisor, McLarty Associates ; “North Asia and the Korea Conundrum,” Dr. Chris Nelson, Vice President of Samuels International, Washington, D.C.; Cocktail reception for speakers and Symposium participants.

DAY TWO: 9:15 am -4:00 pm: Registration; “China as a Rising Power Seeking its Rightful Place,” Dr. Suisheng Zhao, Director of the Center for U.S.-China Cooperation, Josef Korbel School of International Studies, University of Denver; “The Chinese Military Machine,” Dennis Blasko, author “The Chinese Army Today: Tradition and Transformation” (Routledge 2012) and former US military attaché Beijing; talk on “Is the Myanmar Exuberance Irrational -- and whatever happened to Vietnam?,” Ms. Frances Zwenig, President, U.S.-ASEAN Business Council Institute, Inc.; wind-up panel.  Full buffet luncheon for speakers and Symposium participants.

All sessions will be followed by generous discussion periods.

PARTNER ORGANIZATIONS:  Friendship Force, Albuquerque Council on International Visitors, Public Diplomacy Alumni Association, University of New Mexico’s International Studies Institute, University of New Mexico’s National Security Studies Program, Public Diplomacy Council, Women’s Voices, American Association of University Women – Santa Fe Branch, & Fulbright Association of New Mexico.  

FEES & REGISTRATION: Both days: $70 members; $85 non-members; $30 students; 4/8 only: $40; 4/9 only: $50.  To reserve a place please e-mail [email protected].  Symposium fees may be paid with your credit card using our Paypal account. You may access Paypal directly by clicking on this link or you may send your check to The Santa Fe World Affairs Forum, PO Box 31965, Santa Fe. NM, 87594, with your name and contact information, if you are not a member.  Checks should be made out to The Santa Fe World Affairs Forum.  Please note on your check that payment is for the April 2013 symposium.  Your payment guarantees you a place, but it is non-refundable after Wednesday, April 4, if you are unable to attend.