United Kingdom 2015 Election

History was written in the recent UK General Elections. There were many historic shocks and yet again the opinion polls were wrong. The Conservatives and Labour were neck and neck in polling however managed to gain a majority. Labour meanwhile have been routed, not only in Scotland but have failed to make any significant gains in England and Wales. The Greens and UKIP despite all the hype only got a seat each. The SNP shocked everyone, gaining near complete control over Scotland and removing the Westminster parties from power. The Liberal Democrats were torn to bits and it remains to be seen if they can once more be a credible third party in UK politics once more, possibly not in this generation. UK politics has become fragmented - SNP in Scotland, England has gone blue once more with the South becoming a sea of blue.

Despite no one predicting a Tory majority I did mention the possibility a couple of weeks back in a recent blog post. Once the exit polls came out it did not surprise me, in fact I still thought they underestimated the Tory vote and decided to blog to twitter to state that the Tories would not only get the numbers claimed would get more and get their majority despite all the coverage still talking of deals. Once the results starting coming in, other commentators started comparing it all to the 1992 election, something I said in my original blog post. What did surprise me was the extent of the SNP vote in Scotland. I knew they would do well - possible 20-30 seat gain, but 50? The swings broke historical voting records, something I just didn't see coming. I thought people like Jim Murphy, Douglas Alexander and so on would retain seats but it appears people just wanted SNP regardless of old ties (I think also the "No" vote to independance would have been split between the various other parties, while the "Yes" vote was concentrated in the SNP).

Of course this was a fascinating election whichever tribe you support. Here are my thoughts.

Conservatives

Strengthened their English vote. Cameron has successfully positioned the party in Center territory and was able to pick up a number of Liberal Democrat seats. People have felt the recovery and it showed as the Tories not only defended their seats but actually increased their majority.

Labour

A bit of irony. For years under New Labour they had moved too far to the right and Scottish people showed their distaste by voting in spades for SNP who have a socialist stance. However Labour actually moved too far left for English voters therefore Labour never made any real inroads in middle England. They were talking of price controls (on rents), "mansion" taxes, more tax on upper earners and scapegoating banks. Obviously the south of England completely rejected these anti-aspiration policies and went Blue.

Liberal Democrats

Annihilated. I don't know where they go from here. Labour swept up any progressive votes they had, the Tories taking the moderate center ground voters. They are traditionally a progressive centrist party but went into coalition with a Tory Government. Its core voters therefore administered punishment. There was also SNP fear in England so many also voted Tory.

SNP

A clear message; Scotland want more powers. This will be interesting and I will discuss below.

UKIP/Greens

Despite all the hype, only got a single seat each. They will both say we need Proportional representation. I've covered why thats a bad idea (I also mention in that post I thought Labour would come to power in this election - however this was before Ed became leader and I thought it would his brother David that would replace Brown at the time, who is more center, and I'm sure would have got more Tory and Lib Dem seats than his brother - already people are saying he should come back to British politics. If Labour want to win the next election, they need to move back to the center ground and elect a leader like David Miliband).

What will happen with the SNP? A lot of people are prematuratly stating that UK parties are dead in Scotland. They could be correct however if I was David Cameron I would offer fiscal autonomy to Scotland. This would be easy to pass as it doesn't affect other UK nations and is what the SNP want but also still preserves the union. He should call their bluff for a number of reasons.

• I don't think they want it. They are a party who have heavy spending commitments due to their socialist agenda but due to the current low price of oil would have no money to fund such spending. Many high tax payers reside in England, thus they would struggle to generate money that way. 
• If they did they would bankrupt Scotland. They would run out of money and it would be clear to the Scottish person that they are inept. There would be no "Westminster" to blame as fiscal autonomy gives that control to Scotland

If this happened I believe many seats would once again move back to Labour/LibDem/Conservative hands and the Scottish may once more wish to not have autonomy over their finances or try to elect the above to manage the budget in a better manner. This move, if Cameron would be brave enough to do it, would preserve the union and discredit the SNP. It would also potentially push Scottish mentality towards a more center right wing stance.

The Liberal Democrats meanwhile were decimated. I'm sure Labour will once more move more towards the center-right a Blairite position once more and the tories are already there which is where the majority of English voters are politically. The party surely will gain some of their seats back over time; I think a number of freak factors contributed to the collapse; rise of SNP, Coalition and other tactical voting.

Labour didn't completely abandon New Labour politics. Ed Miliband was in fact the first Labour leader to actually say he wanted to cut spending but he did move the party ever so slightly left and thus did not gain the middle England vote. Socialism is dead in England (well I'm sure the North East would disagree). Margret Thatcher once said her greatest achievement was "New Labour" (although it was the British electorate that created it). British people took a profound shift the right during her time, nearly killing off the old Labour party. Under Neil Kinnock, then under Blair, Labour continually moved towards the center then to the center-right position in order to eventually defeat 18 years of Tory rule. Blairs first term kept to Tory spending plans and they were the first Labour Government during 1997-2001 to actually run a budget surplus. Labour had also abandoned any notion of tax rises - Blair was ruthless in this agenda removing any of his politicians who suggested such a policy. Thatcher meant that both main parties actually now encompassed Tory values, so it didn't really matter who got in power (hence one reason for recent voter apathy during Tony Blairs rule and the rise of the SNP in traditional Socialist areas such as Scotland).

This is also how I came to my conclusions of a Tory majority and that the polls would be wrong just like the 1992 election, Labour had moved once more to the left and all the "Shy Tory" voters would appear once more (in fact, whenever Labour did this in the post war period they always got a lower eventual vote than the polls suggested). They will no doubt under their next leader move back into the center-right ground. But heres a problem how would they re-gain Scotland if they were to do this? Put simply they can't; its either England or Scotland. I think their best chance is to support any devolved power to the SNP and just watch the party self implode.

England meanwhile is now firmly in the right-center of the political spectrum; Socialism is virtually dead. People believe in aspiration, business, profits, capitalism and so on. New Labour success was built on these principles the center-right ground which David Cameron now occupies. People have felt the recovery, indeed I see it with my own eyes as my own salary has kept increasing during the Coalition Government. Most of all people voted for why I thought the Tories would get a majority - stability. They saw too much of a risk with Ed Miliband, either with the economy or deals with the SNP so opted for the conservatives. Do not underestimate this victory. Not since Thatcher in 1983 has an existing PM increased their number of seats; and to actually increase the proportion of votes we have to go further back.

What are the main conclusions that can be drawn from the election? With all the drama and historic records that were set the actual outcome is quite boring. Its the same PM who wants to keep the status quo and is actually a reflection of the English people. Above all else they wanted stability and I actually applause such an outcome. Its a triumph of the first past the post as all other outcomes would have been fraught with battles from the off - no one would have a majority and there would have been deals that would have never worked for the long term. That doesn't mean David Camerons new Government is solid; far from it. With such a slim majority all those rebel backbenches may think it's time to raise their concerns knowing full well the actual majority has been reduced compared to the coalition. History has once more repeated itself just like in 1992 as I predicted a couple of weeks back.

Tory Election Boom

"The panic appears to be over. Now is the time to get worried."

William Keegan, Author and Journalist

It's been over three years now since the formation of the UK Coalition Government between the Conservatives and Liberal Democrats. Austerity was supposed to be on the agenda but the reality differs, there is still budget deficits, increased spending and lots more debt. Private debt still remains at historic high levels. As all politicians always do, with an election due in less than two years its time to engineer a boom based on a policy of reckless monetary and fiscal policy. Public debts are over 1 trillion pounds, yet mainstream politics has a consensus towards further spending.

The conservatives have recently announced the "We'll help you buy a house" scheme to try and inflate the recently lagging housing market, creating the voter "feel good" factor. Monetary tightening is mentioned, as it has since the crash of '08, but words do not match the actions of our monetary overlords who continue with loose money and low interest rates. BoE recently appointed Governor Mark Carney is all for abandoning inflation targets, instead shifting the focus towards Growth, a move mirroring the priorities of the Federal Reserve. Janet Yellen has been given the the nod by another big spender Obama. Stuck within the confines of academia and Government agencies she makes a good choice to a leader who has not attempted to tackle the deficit and whose legacy will be a disaster for his successor.

The Eurozone still has too much debt, the plasters continue to hold but like any temporary measure are making the problems worse. America continues to raise the US debt ceiling as though it has validity. If they keep raising it at will then how can it be called a ceiling. Cuts from all corners of the Globe are hypothetical.

Fundamentals, as always, are key. A panic can reside but the fundamentals always come back into the picture. Golds bull market is not over, its just on its next leg, like it has been over the past decade plus with various ups and downs just like any Bull market. Governments can't defy economic reality of spending money they don't have - bond markets, currencies, commodities - will all catch up with their reckless spending. Running budget surpluses is hard work for Governments only when a party feels they require to obtain economic credibility from the electorate does a political institution follow such a path. With all parties in the UK promoting spend-onomics there will be no immediate return to that concept.

I never believed this current Government would sort the mess and they are doing what I thought they would, dodging the real issues, tinkering on the fringes with little progress to show for it. Expect more short term polices. Tackling long term issues are no good for politicians precious votes. Ironically the short term Tory boom will please Keynesian's who will proclaim our troubles are over. In reality the problems continue to compound. 

The Euro, Past, Present and Future

“Our role as central banks is to guarantee price stability in the Eurozone. I’m convinced that the future of the euro is fundamentally linked to the support of the population, and that this support depends on the confidence Europeans have in the stability of their money.”  

“The mandate is deeply rooted and stems from the lessons learned during the seventies and eighties," he said. "It’s when a central bank ensures price stability that it contributes the most to durable growth.”  

“Governments must take on their responsibilities and not subcontract them out to monetary policy.” 

Jens Weidmann, Bundesbank President (article)

The persistent Euro crisis has garnered much media attention in the aftermath of the credit crunch. With benefit of hindsight many have concluded that the Euro was always doomed to fail from the start, with both sides of the political spectrum fervently believing they were correct all along. In Britain, right wing thinkers always believed that 'Brussels' never had a solution and should stay out of Individual Nations affairs. The left initially thought the Euro to be a good thing, seeing old currencies as symbols of Imperialism, but would later object to the Austerity imposed on member States. The left during the seventies were opposed to the common market, while the right were in favour. When the European Exchange Rate Mechanism was in use it was the right who were generally in favour. After the pound was ejected the left could claim it was a disaster made by the Tories; after the event had occurred.

You can see the confusion and schizophrenic nature from both ends of the political spectrum. History has shown both camps to support one form of monetary union, but then to oppose another. There has never been a thorough discussion on the Euro in mainstream politics with either end of the spectrum unable to rationally determine what the real issues are. 

Claims have been made that "You can't have monetary union without political union" or "A Nation and its Government should always have control of its own money supply", to "You need the power to devalue in order to regain competitiveness". All are stabs in the dark, as these were never raised as issues back when the currency was created. Only when catastrophic events have transpired do these so called shortcomings come forth. Like all events in history, it is never a simple yes or no, and requires a rational look of what caused the current situation to arise.

During Bretton Woods I, when the US was on it's quasi Gold Standard, they pegged the dollar to gold allowing only foreign central banks to redeem their dollars for gold. With increased deficits by Kennedy and then by Lyndon Johnson this spending had to be paid by someone, therefore the government does what it usually does, it printed money to pay the difference. When the Bretton Woods agreement was created the Keynesian's proclaimed that redeemability of the dollar for gold would cause no issues as institutions would never need to claim. Unfortunately for them they didn't count on Jacques Ruff advisor to former French president Charles De Gaulle. 'They run deficits without tears', thus Ruff advised De Gaulle to call the Americans bluff and trade in the paper promises for something that the American Administration couldn't create out of thin air. Others followed suit.

The rest as they say was history. Bretton Woods I was abandoned, in which we moved to the current global monetary system we still have now. The erratic fluctuations of the currency markets during the seventies accompanied with widespread financial turmoil prompted many European nations to look for solutions to stabilise trade, thus the chaos became one of the prime reasons for the single monetary currency created two decades later. (Taken from a previous post)

After the post war era Western Europe progressively moved towards economic integration. Many reasons exist, to combat American dominance, to unify against Eastern Europe, to enable greater trade - it was always a strength in numbers philosophy. 

Prior to the Euro, Europe had the ERM which attempted to tie the various currencies on the continent to the German D-mark; which at the time was one of the hardest currencies in Europe. It was doomed from the start as fixing currency exchange rates is a foolhardy scheme. It was price fixing and like any attempt to fix market prices it fell apart in the end. The principle however was to maintain low inflation among member nations and to stop political pressure to devalue in a race to the bottom. The right wing in Britain joined the ERM under Majors Government, despite the Majority Conservative Euroscepticism we see now. 

When the Euro was created nations who had an association with soft currencies clamoured to obtain membership. Its easy for complaints to be made towards the Euro now when austerity is imposed, but when the single currency was introduced it was seen as an economic boon by such countries.  Nations such as Spain, Greece and Ireland benefited greatly from the introduction of the Euro. Inflation fell, interest rates stabilised, capital investment spending increased. The whole point of the Euro is to ensure inflation is kept low by borrowing inflation credibility from the old Bundesbank who had a long history of doing just that. Interest rates fell across Europe in part due to this factor. Bond markets could therefore ask for a lower rate of interest on Greek or Italian bonds as Monetary Policy had been handed over to the more competent Germans. Historically Mediterranean countries would erode the value of their bonds with expansive monetary policy, but when these powers were absolved to the ECB, markets lowered prices for such Government debts.

A similar mechanism happened here the United Kingdom, whereby monetary automonoy was taken out of political hands. In 1997 the new Labour Government gave interest rate decisions to the Bank of England, a supposed neutral organisation. The idea was to take such decisions away from politicians who had in the past set interest rates to create inflation, and/or economic booms during election times. Both sides of Parliament, agreed that this was a good policy. The rest of Europe did something similar to the above, it handed monetary policy over to the Bundesbank. Another example of the contradictive nature of mainstream thinking.

The principle in keeping inflation low is a good thing. This spurs capital investment and production so that citizens can obtain better living standards. The more stable a moneys purchasing power is, the better off its people will be. The faster a currency devalues over time, the poorer its economy and people will be.

Many of the countries however still worked under the spend now, act later mentality. Government and consumer debts kept rising along with off the record liabilities. The European Welfare state was supported by this illusion, along with heavy Government corruption, rigid regulation or absurd employment traditions. The Credit Crunch was just the spark to highlight all these underlying issues to the market that has since demanded the bankrupt countries get their house in order. Markets have been trying to do this by asking for higher rates of interest on bonds; increased risk means the return an investor requires should be higher. This is the markets price mechanism trying to force bankruptcy/spending reform upon the political system. Without this dynamic the old political system tricks people to believe that an easy fix is within sight, allowing Government spending to get out of control. The problem is whenever these prices have been raised, a bailout fund is announced in an attempt to bring these prices back down. Initially the markets predictably put money on the new policy but not for long as markets know the underlying issues are only compounding.

The quotes taken from the Bundesbank President are exactly the reason the Germans have such a strong reputation in financial markets for running a sound currency during the Post War Period. It also highlights cultural differences between the Germans and the Mediterranean countries, who historically had Governments that pursued high inflation for their political failings. The periphery countries want all the benefits that accompany the common currency, low inflation, low interest rates, real terms capital investment, while at the same time oppose the fiscal constraints that help foster such benefits.

The simple problem with the Euro, or any money controlled in a monopolistic manner, is its openness to abuse. Money should be provided, like all goods and services, by a free market, competition, consumer sovereignty and choice. Thats the real issue behind the Euro and the solution not just to its ills but all problems that will arise with Government controlled money. 

We are witnessing the end of the Euro as many analysts/pundits/commentators are proclaiming, who state it should never have been created (usually these were the same people who were saying the UK should have joined, or were selling their Dollars and buying Euros a few years back). It is impossible for any commentator to predict what Governments will do, however I believe the Euro has the potential to prosper from recent events, only if the Germans maintain a hard line. This will entail Government defaults, bank collapses, members leaving, but if they decouple the currency away from political pursuits it will be a sound currency relative to others.

The real crisis will be if the Germans do not uphold a hard line. Many are distracted at the crisis occurring in Europe but are unaware of the crisis building up in nations who are overstretched, but still have monetary autonomy. Countries like Japan, the UK and the US are the ones who will have real problems. Their spending is also out of control, but the politicians are just using monetary tools to mask their problems. Interest rates for Government bonds are low in such countries because the market knows they will just monetise their debts if there are no buyers. Its certainly not because they are any more creditworthy. However this postpones any reforms that need to occur, with the situation getting worse. Look at Japan. Its debts are astronomical and will no doubt have great problems during the decade.

The Euro, if it is managed correctly, will be a strong contender to challenge the Dollars world reserve currency status. If this occurs, contrary to popular opinion, I believe the UK will eventually join as we continue to mismanage pound sterling. 

As mentioned in previous posts, I believe the 21st Century will be a great Century for liberty, individual freedom and human innovation. Statism, Monarchies, dictators have all had their time in the West. Such nations will increase individual freedoms as the states role diminishes over time. It will be an evolutionary process, not revolutionary. I also believe that the Euro may be a step towards the abolition of Government control over money. Its a pseudo gold standard that has the potential to stop endless devaluations for political means. As the state shrinks, people will realise the state is not required to help run our lives with money also falling under a similar observation, we don't need our Government to issue money. The Euro may well be run by Government officials, but its not tied to a single nation or a unified political system. Therefore the Euro, to some extent, decouples political affairs from monetary policy. We are a long way from free market money, but the Euro could be the start of a long path towards such a goal.

Recession

First it was Club Med that experienced a relapse of sluggish economic growth with Spain and Greece slipping back into negative growth. The reasons outlined by the 'experts' who caused the original depression were, "The currency wasn't flexible", "There was no devaluation", "Governments couldn't deploy monetary measures", all because such powers had been centralised to the ECB.

Then the UK recently slipped back into recession. Yet it has consistantly devalued, it has consistantly printed more money relative to other Western nations and it's Government has deployed uber loose monetary policies to try and "solve" the growth issue. However the UK has still come a cropper too. 

UK pay in real terms has fallen more then anywhere, inflation is higher relative to other countries, the country is still running a large budget defecit (just as  Keynsians claim this is whats needed), it has printed hundreds of billions, nationalised industry, had historically low interest rates that are very negative when taking into account the current inflation rate and the currency has been  devalued considerably. All of the above are always touted by Keynsians as the solution however it has done the UK no good what so ever. None of this suprises me, nor should it suprise the reader of this blog.

A lot of claims have been made that the UK has fallen back into recession due to the austerity measures. However all of the above does not indicate austerity but reckless government spending, as bad as under the previous Labour government. Cameron and the Conservatives are performing exactly as I thought they would, no spine and all sound-bites. Indeed it is worth repeating:

The Tories may be historically comfortable in this setting but how many grass root Lib Dem supporters are going to swallow the medicine? Defection of many to Labour is inevitable. And remember - "things were going 'well' under Brown". This could cast the Tories in the wilderness for a decade if they practice what they preach. There's only so long you came blame the previous government for the mess. Give it a year and people won't be seeing Labour mess but will instead switch their view to Tory mess. Just like Thatcher. People forgot the Labour mess in the 70's, they just remember the early eighties.

It seems the recent local elections have also reflected this mood (I realise some of the votes will be on local issues, but more commonly its used if people support current policies). Labour regained a number of councils and increased its share of the vote. Cameron is the latest scapegoat, the problem being unlike Thatcher he's not fixing anything and has to contend with stronger opposition with his Government having no ruling majority like Thatcher had. He's reliant on money printing, negative interest rates and a huge Government deficit. There's nothing austere about his politics. Ed Milliband keeps moving towards the center ground, refusing to trip up on left wing questions, such as questions on Union strikes, and maintains a consistent view with Ed Balls re-iterating the need for growth, ie more money printing and fiscal deficits. 

Public opinion in the UK is changing towards running deficits to support growth, a dangerous combination. Individual freedom, free markets and liberty create growth. When a Government tries to create growth it does the complete opposite over the long term. Running deficits, spending money on public works, creating inefficient and wasteful entities, removing entrepreneurship - all this does is stifle societies economic fabric. Socialism will always collapse for that reason. If I was a politician I could campaign for growth. I could promise that I would create employment, create public works projects, hand out subsidies, tax the rich. It's incredibly easy to do but this will never create the prosperity we all desire. 

Unfortunately the UK is slipping into this mindset where Government needs to increase spending once more. So far we have only endured mild stagflation but it will intensify going forward as people once more seem to be seeking for state intervention. Growth is peddled as a solution, but sustainable growth can only ever come from the free market, not Government Spending.

Its not only the UK that has lurched towards the left and away from 'Austerity'. The recent French elections have opted for a Socialist leader, Hollande, who like all Socialists has promised the earth but like any politician has no means to deliver. France already spends beyond its means yet has opted to spend, well, more. Policies will be watered down as market reality hits. 


Greece continues to be rudderless with the elections bringing no clear decision. Extreme parties such as the far left and right have gained at the expense of the  usual popular moderate parties.


I detailed the problems with PR in a previous post and Greece is a classic example of the problems caused. As a student of history it reminds me of many European Countries during the 1930's, similar to Germany, when Hitler rose to power. When crisis hits, people seek radical alternatives. The Greek people went for the extreme right and left, just like what happened in Germany 80 years ago. No one could form a Government, so Coalitions were formed, in Germany's case the moderate right aligned with Hitler's Fascist party believing they could moderate his views and was seen as the only option against the communists to uphold the status quo and form some sort of Government. Well what a mistake that turned out to be.


Times have changed, so I think the Greeks will see sense on the second election (although I may be wrong), but PR gives extremes platforms to perform on. Under first past the post systems that we have in the UK, it means people stick with moderate conventional politicians as extremes struggle to field candidates in all seats. People therefore vote for a party that will likely get the local seat. With PR, there is no such check and people can vote for extremes knowing full well there is not a number of seats to win, its a percentage of votes which gain seats, this in turn makes extremes more appealing. Extremes always offer people simple solutions. Problem is that whether its the far right or left, they always endorse catastrophic policies resulting in a complete erosion in individual liberties. Both ends of the spectrum believe its my way or the highway, and persecute anyone who gets in their way.


Greece now has the problem of no effective Government. Just like 1930's Germany, the moderates have to seek help from extreme parties in order to try and form a Government. The anti-austerity parties seem like they will get their way.


Recession. More Government Chaos and no real solutions. Some things never change.

Hung Parliaments

The British people have spoken electing a hung parliament. Negotiations began. Speculation was rife. Media groups with 24 hour coverage. It was 36 years since the UK had the last hung parliament the same time we last entered a period of stagflation. This time a coalition government was the outcome, a marriage between the Conservatives and Liberals. Labours bubble has burst with the 'no more Tory boom and bust' happening on their watch, ending the Utopian mirage the general public believed the party had delivered them. Despite the election defeat the party is still in good condition for the next leader with a sizeable number of seats and share of the vote. I said that if we got a Conservative Government the UK was in trouble (and not under the conventional wisdom), well we got two of the parties so my bets are for a Labour Landslide victory at the next election. David Milliband has put his hat in the ring for the leadership contest, another possible Blair but I get the sense he has more political beliefs than the later PM. Speaking of Prime Ministers, Gordon Brown had a dramatic exit on Tuesday evening. Despite having all the wrong polices I liked Brown. I think he genuinely believed in what he did, was obviously a highly intelligent person and had a strong work ethic who believes he is doing the right thing. There's not many like him in any more in Parliament that is a real politician not a PR Guru such as the other two leaders.

While all the electioneering has taken place we've barely even noticed the carnage in the markets. The DOW crashing 9% at one point. Major stock indices all around the world looking shaky. Markets continue to worry about Greece, Spain, Portugal the UK. A bailout was announced but they can't kid the market who is playing the game but knows that the Government have set up the next disaster. Reports of relative safe 'havens' such as the US is like telling someone the boat they are in is safer than the next one because they've only sprung half as many leaks. Over the long term all boats are sinking just at different rates.

As the wheeling and dealing of the parties took place a hot topic was electoral reform, with the liberals trying to move towards proportional representation. In my view it will be a dark day if the UK was to loose the first past the post system, especially in these choppy waters the world finds itself in now. Its the political system that ensured Britain has historically maintained one of the most liberal and open societies in the world.

The end of the First World War sparked great political upheaval. The old empires - Habsburg, Ottoman, 2nd Reich - all collapsed and with it a scramble for the power vacuums they left behind. Democracy was imposed on many European nations, nations that were not acquainted with democracy. Not only did they get democracy but many got it in the form of proportional representation. The newly drawn boarders of the continent further exacerbated the issue of trying to dictate common policy. History views Fascism in rightly a dark context, however people in such countries didn't vote for the perverse beliefs such parties were associated with as the Second World War drew to an end, such extreme views had evolved during their time in power. Such extreme parties were formed from coalition governments that aligned themselves with traditional pillars of society.

Many European nations contained fragmented parliaments during the interwar period. Governments would come and go in months, for example the Reichstag in Germany had 16 parties all contradicting one another making laws almost impossible to pass. Many parliamentary members were radicals compounding the lack of common ground to be found giving huge variance towards policy. When the 'Crisis in Capitalism' struck in 1929, so did the crisis in democracy within many such European countries. The public began to believe that democracy was too ineffective to solve their problems thus seeking more radical alternatives. As extremes were given platforms in the context detailed above, nation after nation succumbed to the far right. All the above never occurred in Britain, the most mature democracy in the world. We had our share Fascism, but the first past the post never favoured Oswald Mosley.

Italian Fascism began like this, opportunities created by PR and the alliances they were able to obtain. Over time it gradually morphed into the political party it became infamous for. Hitler rose to power under exactly the same circumstances, again aligning himself with traditional pillars of society that could agree on some aspects of common policy but ignored other more radical views, believing these could be controlled. As Hitler and others increased their grip on power, they also abolished democracy and so began the dictatorships that they have become synonymous with.

Now I'm not saying that PR means we are going to elect a Fascist government, times have changed and I think the majority of Europe is a far more tolerant place. But PR gives rise to radical groups and fragmented weak governments. When the economies ticking over and everything seems fine this isn't so much of an issue, but when we have a persistent crisis then things can get messy.

I realise that our current first past the post system has produced a hung parliament, however the majority of seats are held by mainstream progressive parties. If we had PR then the Fascist BNP would have gained around 12 seats. Our current system ensures no such political base for them. UKIP would have around 18, the Greens 6. I understand what people say when parties get a greater share of the vote but don't get a proportional amount of seats, but first past the post generally ensures a moderate parliament. First past the post has its flaws but I would prefer it to other suggested alternatives out there.

With the new policy of fixed term parliaments I currently can't see the current Government lasting the five years. Splits are already emerging and when tough choices are to be made, finger pointing will begin, deals and U-turns will take place, garnishing further support for the opposition. Another Labour Government within five years? I think so and with it, further relative decline for the UK.