SOPA wipeout. How Wikipedia lost its innocence.

It's only when Wikipedia isn't there you realise how incredibly influential it has become. Just try a few random searches. Yesterday I Googled “Scottish independence referendum” and top of the results list was the Wikipedia entry. Then I searched “global warming”, which also served up Wikipedia's page as number one. Even searching something relatively obscure, like “pensions crisis”, Wikipedia emerged top of the results table. Almost every non-news search I made came up Wiki – except interestingly, Celtic Football Club, where the club's own site is top. But even here Wikipedia was third.

This website is well on the way to becoming the number one source of information for the entire world. Wikipedia is a valuable resource, and is greatly increasing the accessibility of human knowledge. However, I'm beginning to wonder if it isn't gaining a virtual monopoly on online wisdom. Which is more than a little worrying. There was a time a few years ago when Wikipedia was the butt of stand ups and satirists because of the unreliability of some of its biographical entries, which were often full of lurid inaccuracies. These are all in the “Wikipedia inaccuracies” page on , er, Wikipedia. But no one is laughing now. Every school and university student in the industrialised world goes first to Wikipedia when they're looking for information for an essay. Not for nothing did the Wikipedia boss, Jimmy Wales, say on the eve of yesterday's blackout: “get your homework done early kids”.

Any journalist who says he or she doesn't use Wikipedia at some time or other is lying. You can't help using it because it is always there, sitting in poll position, on every internet search. Of course, I would never use it as a source on anything remotely controversial such climate change, or immigration, or the banking crisis. But as a means of checking routine facts – like the Conservative majority in the 1951 general election – Wikipedia has become remarkably and convenient and reliable. This is because, with its forty thousand editors monitoring millions of corrections by users, it is almost impossible for a simple factual inaccuracy to remain uncorrected for very long. It's entries are often sketchy and tendentious, but everyone turns to them, and they mostly get the basics right.

But just consider what immense power this places in the hands Jimmy Wales, the internet entrepreneur who set it up only ten years ago . Wikipedia's act of self-censorship yesterday was in protest at what many in the wired community believe is an attempt by big corporations in America to kill the internet by forcing it to obey draconian copyright laws. The Stop Online Piracy Act (SOPA) and its sister legislation, the Protection of Intellectual Property Act (PIPA), currently before the US Congress, have been backed by media moguls like Rupert Murdoch of NewsCorp. But in taking itself down yesterday in protest, Wikipedia was engaged in its own form of powerplay. Clearly on this one issue, Wikipedia is taking sides, and is denying access to information in an attempt to strong arm a democratically elected legislature.

Now, I don't hold any brief for SOPA or PIPA, which make it illegal for any website to distribute, knowingly, material that is in breach of copyright.    It is targeting those file sharing sites that our kids use all the time to share music and videos. Critics like Jimmy Wales claim that just by inadvertently linking to a pirate site, a website might be prosecuted under SOPA. This will drive many out of business, and curb freedom of speech. No one likes censorship, and everyone loves free stuff – but I can understand the purpose behind the legislation, which is to halt the losses that are incurred by publishers, authors, musicians, film-makers when their work is illegally distributed through internet pirate sites. The music industry and the newspaper industry have been brought to their knees by the internet. Bands can no longer expect to earn much from sales of their recorded music because it is offered online for nothing. Surely this is wrong. Creative people need to eat, like everyone else, and these sites are stealing their lunch.

To internet businesspeople this sounds like special pleading from old-tech industries who have failed to move with the times. There is a 'democracy of knowledge' on the web, we are told, and that it is evil to attempt to control this or to make money out of it. Everything should be free and accessible to all, in the digital republic. But how can film studios continue to invest hundreds of millions on making films if they are given away for nothing? How can newspapers survive if they have no revenue?

Moreover web organisations aren't exactly averse to making a lot of money out of other peoples' work. Essentially what happens is that the revenue that may once have gone into the box office or the record store now goes to the mega websites through their targeted ads. Google and YouTube make billions of dollars through advertising around content that they haven't made. At the other end of the food chain, TVShack, the site set up by a British student, Richard O'Dwyer, who is being extradited to the US to face trial for piracy, was earning £15,000 a month from advertising. Heavy handed justice perhaps -but this is surely theft.

Of course it would be worrying if websites were closed down because they inadvertently link to pirated content, though defenders of the legislation insist that intent has to be proved first. President Obama, under pressure from Silicon Valley, has called in SOPA until it can be reviewed for any unintended threat to freedom of speech. But I can't see why copyright law should not apply on the internet just as everywhere else. The truth is that websites are just like any other publishing business and the sooner the law recognises this the better.    The world wide web is not the wild west - it cannot remain unregulated. And I am really rather worried that Mr Wales has chosen to use his own muscle in trying to challenge laws which are, whatever you think of them, the product of a democratic process. Maybe it's time to say that Wikipedia has got too big for its own good. Mr Wales's website may be on the side of the angels, but after yesterday's blackout  it has lost its innocence.

The Union's last thousand days.

At times of constitutional turmoil, like last week, I'm often approached by researchers and producers from the London media looking for someone to explain the will-they-won't-they, devo-max independence-well-maybe referendum. They invariably use the word ”wily” when they're talking about Alex Salmond, as if the First Minister was a petty demagogue in some post-colonial banana republic. Isn't he 'playing games with the constitution', 'deviously delaying the referendum', 'picking a fight with Westminster'? Well, last week his wiliness was to play with a straight bat.

David Cameron believes he 'got a result' in that he finally “smoked out” Salmond on the referendum date last week. But there was really never any secret about the timing of the referendum, since it had been made clear in the Scottish election that the ballot would be held in the second half of the parliament. And for all the talk of imposing an early referendum, that's exactly what is going to happen. Similarly, as civic Scotland luminaries like Canon Kenyan Wright have argued, it really isn't up to Cameron or Salmond to decide if there are three options or two, but the Scottish people. The SNP's preference has always been to have a single question, yes-or-no ballot on independence, and for all the fuss and fluster, that hasn't changed either.

If an early referendum had been imposed on Scotland, it would anyway have been disastrous for David Cameron, since the SNP would have boycotted it. Rather like the Northern Ireland referendum in 1973, or the Keep the Clause referendum in 2000, it would have had zero credibility as a result. So, why did the Prime Minister propose it at all? Worse – why raise the prospect of an early referendum on Sunday, and then appear to back down within 48 hours? He must have realised that by intervening in this way he risked raising Scottish hackles at a Tory 'toff' trying to 'fix' Scotland's future.

Margaret Thatcher: my part in her downfall.

It was the 1987 general election campaign. I'd recently been made the BBC's Scottish political correspondent and I was furious that Prime Minister Margaret Thatcher had refused to give me an interview. So, when she arrived for a “whistle stop” press conference at Glasgow Airport, I was determined to get something out of her.

After her scripted remarks, I started hurling questions at her without waiting to be called. “Whatever happened to Tory promises on a better devolution, Mrs Thatcher?...What have you to the hundreds of thousands of Scots thrown out of work?...Do you not accept that your poll tax is destroying the TorIes as a political force in Scotland? ”. She answered my early questions, but at this she halted and said in those inimitable tones: “That's quite enough from you, young man. Now, does anyone else here want to ask the poll tax question?”. There was silence from rest of the hack pack who were clearly enjoying seeing the press conference turned into a car crash. Grudgingly she continued, and though my editor had to cut the bits and pieces together afterwards, we got an interview of sorts.

I was quite out of order, of course, and I rather cringe at the thought of it. As I was leaving she looked directly at me with that deadly smile and a shake of the head which said: “Ok – but don't think you're so clever.” I only interviewed her properly once after that and it was an uncomfortable affair. Almost as uncomfortable as seeing her again, ten feet high, on the cinema screen meticulously recreated by Meryl Streep in The Iron Lady. It was like being back a that press conference.

2011. Why I think independence is inevitable.

  Spare a thought for Iain Gray this festive season He was by no means a bad politician – as his party discovered when they looked to replace him.  But the abiding image of the 2011 Scottish parliamentary election campaign has to be Labour's Scottish leader seeking refuge in a “Subway” sandwich bar after being pursued by anti-cuts protesters. Mr Gray said he was no 'feartie', and reminded reporters that he had “walked the Killing fields of Cambodia” before entering politics. But the 'meatball marinara incident' helped seal his fate in the subsequent ballot, as Labour suffered its worst election defeat in at least 80 years.

The May 2011 Holyrood election was one of those landmark moments when a nation discovers, almost by accident, that it has altered the course of history, even if it isn't quite sure in what direction. Labour didn't just lose 22 seats – the SNP finally stormed the gates of its West of Scotland heartland, taking Glasgow Cathcart, Kelvin, Shettleston, even Anniesland, seat of the late Donald Dewar himself. The SNP swept Edinburgh too, leaving only one Labour constituency member in the capital city, the 'neonationalist' Malcolm Chisholm, and no Liberal Democrats or Tories. The Scottish Liberal Democrats also lost all their constituency seats in the Highland and Islands and in North East Scotland. After the bloodbath, the SNP was left with 69 out of 129 seats in Holyrood – a landslide that has turned the debating chamber into a supporter's club. But Alex Salmond, could legitimately claim that the SNP was now the first political party in modern history to represent the entire Scottish mainland. All three opposition leaders resigned, and the clock started ticking for the independence referendum which was now unstoppable.

2011 was also a critical year for me professionally and personally. Over thirty years of writing about Scottish politics, I'd always argued that home rule within the UK was the only plausible constitutional destination for Scotland. I envisaged a form of federalism, where Scotland would have extensive tax raising powers within a broad union with England and Wales. Of course, I accepted the right of the Scottish people to leave the UK – but I just thought it would never happen. Independence seemed too dramatic, too disruptive, too revolutionary for this small-c conservative country which, contrary to its popular image, avoids confrontation whenever possible. Now I am not so sure.

Scots did not vote for directly for independence, of course, in May but this massive vote of confidence in the Scottish National Party, and in particular its leader, Alex Salmond, was not made lightly. The Scottish voters did what commentators like me said was impossible, delivering an absolute SNP majority in a proportional election. It had the look of a watershed. And the political landscape did not just change because of the Scottish election.

The second bombshell to hit Scottish politics detonated not in Holyrood but in Brussels, in December, when David Cameron vetoed the European Union treaty on the new “fiscal compact” to resolved the euro debt crisis. Cameron has made what looks like a fundamental and irreversible change in Britain's relationship with Europe, delighting his eurosceptic backbenchers, but fatally undermining the unionist cause at home. The charge against the SNP has always been that they are “separatists”, who seek to divide nation from nation, and risk leaving Scotland alone and isolated from the mainstream of Europe. Now it appears as if David Cameron is the separatist and that Britain is now isolating itself from the other 26 members of the European Union.

The euro debt crisis has altered the dynamics of the Scottish Question in much the same way as Britain's membership of Europe altered it in the '70s. If the United Kingdom is on its way to the outer fringes of Europe, then what is left of the argument that only by remaining in the UK can Scotland be assured of representation at the “top table of Europe”? Both the former Liberal Democrat leader, Paddy Ashdown, and the Labour First Minister of Wales, Carwyn Jones, have said that Cameron's veto has “strengthened the the hands” of the Nationalists, and they should know. As regional unionists, they see the danger that this new separatist Conservative-led administration poses to the moral integrity of the United Kingdom. How it turns the arguments about Scottish and Welsh independence on their head. After the Cameron veto, does anyone seriously believe that the 26 countries of the greater EU, who have finally shown England the door, would deny membership to an independent Scotland?

The United Kingdom used to be a humane project for the common good, based on universal principles, and embodied in great social institutions like the National Health Service. Not any more. The NHS is being privatised in England. Britain today looks more like a devil-take-the-hindmost union, driven by eurosceptic English Conservatives, and dedicated to protecting the financial interests of the City of London. Scots who retain a commitment to those old values have been left adrift and confused. For it wasn't just the Tories who debased the coinage of union: it was a Scottish Chancellor, Gordon Brown, a Labour son-of-the-manse, who gave birth to the monster that is the City of London through his policy of 'light touch regulation”.

Scotland remembers the charge that they were greedy for seeking to benefit directly from oil revenues in the 70s and 80s. “It's Scotland's Oil” was a political own goal for the SNP precisely because the slogan seemed selfish and narrow-minded. Politics is always about morality rather than material interest, and Scots didn't want to appear grasping. But where did the oil wealth go? To pay for the great industrial recessions of the 1980s that destroyed Scottish manufacturing, and to help make London the investment banking centre of the world. It's difficult for Scots to still feel they have a stake in this Banker's Britain.

But that doesn't necessarily mean they intend to vote for independence in the referendum pencilled in for the middle of 2014.. It remains the case that support for independence rarely rises above a third in opinion polls – though in an amusing poll for the Scottish Social Attitudes Survey in November 65% said they would support independence if they were £500 better off as a result. The vast majority of Scottish respondents continue to say that they want a parliament with more powers within the UK - 68% in the Times/Mori poll in December. Scots have difficulty saying they want to “break up Britain” even as they vote in huge numbers for a party dedicated to precisely that.

But the sheer scale of Labour's defeat, and the absence of any coherent response from the unionist parties, has created a momentum for further constitutional change which will be very difficult to halt. Already, the Scotland Bill, which comes back to parliament in the New Year, is looking like an irrelevance. This is the bill which implements most of the recommendations of the 2009 cross party Calman Commission on devolution, which proposed extensive new tax-raising powers for Holyrood including a 50/50 division of income tax revenue. The tax proposals had been severely criticised in 2011 by nationalist economists as unfair, inherently deflationary and probably unworkable. But now Labour and the Scottish Liberal Democrats seem to be ditching Calman also.

The Shadow Foreign Secretary, Douglas Alexander, made a dramatic intervention in the autumn of 2011, telling Labour that they had been “gubbed”  and that they had to show “an open minded approach as to how the architecture of devolution can be improved”. The Liberal Democrats too have set up a commission under the former leader Sir Menzies Campbell, to look at a new, improved form of devolution as a way of getting back into contention. The Scotland Bill will require the consent of both parliaments if it is to become law in the New Year. Alex Salmond has called for the bill to include powers for Holyrood over broadcasting, the Crown Estates, excise duties and corporation tax. The Scottish Secretary, Michael Moore is making clear that he isn't having any of it, and says that if Alex Salmond wants the increased borrowing powers contained in the Bill, he is going to have to lose the rest of his wish list. The way things are looking right now, both parliaments may decide that it is best to lay the bill to rest rather than to amend it to death.

But whether the bill stands of falls, the home rule story has already moved on to the next chapter. Figures from across the political spectrum – from the Conservative-leaning Reform Scotland think tank, through the Blairite former minister, Lord Foulkes, to nationalist “fellow travellers” like the former First Minister, Henry McLeish, are calling now for virtually all tax raising powers to be handed over to Holyrood. The SNP call this, “full fiscal freedom”; Lord Foulkes calls it “fiscal responsibility”; others call it “devolution max” or “independence lite”. Whatever, it implies a fundamental change in relations with England that it might eventually look very like independence. After all, the SNP says that, after independence, it would keep the pound and look to cooperate with England on foreign policy and non-nuclear defence.

Indeed, critics of the SNP question how Alex Salmond can still call it “independence” when the Bank of England is setting interest rates and Brussels is regulating the Scottish budgets. This is the modern nationalist paradox: they appear support not one but two monetary unions - UK and EU - at the same time. Salmond has tried to resolve the contradiction by invoking a new, though largely undefined, “Social Union” between Scotland and England, as if in some way trying to retrieve the best bits of the old UK and a referendum on the euro. But the SNP seems finally to have accepted that true independence is an anachronism – that the world has changed, and that in future Scotland is destined to remain in perpetual negotiation with other supra-national authorities.

Perhaps this is why Mr Salmond seems content to sacrifice formal independence in a multi choice referendum. For if the SNP leader continues to offer not just independence, but also “devolution max” on the referendum ballot paper, he must surely realise that independence would lose. Scots would vote for devolution max, the policy now backed by Lord Foulkes and many Conservatives.  The calculation on Mr Salmond's part must be that this measure of “fiscal freedom” would be so close to formal independence that, in the modern multinational world, there would be no practical difference. Salmond could win even if he loses. But by the same token, in winning fiscal autonomy he might kill forever the 'auld sang' of full independence.

Whatever, in 2011 independence ceased to be a hypothetical and became an immediate and practical possibility, widely discussed and debated. I now think it is almost inevitable that Scotland will leave the United Kingdom as we understand it now – though it will almost certainly find itself back in some kind of confederal relationship with England. The two partners in the ancient Union are now on very different political trajectories. It would be well for everyone in Scotland - and the UK – to start preparing for the transition now. It is in no one's interest for the United Kingdom to disintegrate chaotically.

A financial nativity tale

Herald.

A telling conversation with ghost of Christmas present

Iain MacWhirter

Columnist

Christmas Eve at St Andrew's Square, in the centre of Edinburgh's financial district.

Wet snow falls on the scattering of tents housing the Occupy protesters. Jake Rice sweeps the slush out of the mess tent ... and onto the £300 hand-made shoes of Andrew Duncan, an investment banker.

AD: Jesus Christ!

JC: Oh, sorry. Didn't see you.

AD: Aye, well. You can now. And I'm bloody soaked.

JC: Um, but who ... what d'you want.

AD: Well, I was going to give you these bottles, but I'm tempted to drink them myself now.

JC: Why? You look like one of the people who've stolen 1% of the wealth. You're not from the tabloids again are you?

AD: No, and I've stolen a damn sight less of the wealth this year, I can tell you. Bonuses have been trashed by the crash.

(Sound of child crying.)

AD: Christ! you got kids here? In this?

JC: Only during the day.

AD: Yes I forgot, you lot all go home at night don't you – back to your warm middle-class beds.

JC: Actually we don't. I've been here for two months. Before that I was at St Paul's.

AD: Hear they've given up.

JC: No they haven't. They've agreed to move on rather than be forcibly removed in the New Year. We aren't going anywhere.

AD: OK, sorry. Look, I've been watching you here every day since you pitched up. Never believed you'd last. Which is why I'm bringing this crate. Just thought you deserved a bit of a winter warmer.

JC: That's kind of you, but I'm not sure we should really be taking donations from the people who've been wrecking the financial system, destroying public services and throwing people out of their homes.

AD: Ha, ha, ha! What school did you go to?

JC: That isn't the point. It's not where you come from that matters; it's what you do.

AD: Aye, well. I went to one of the worst schools in Edinburgh. We used to throw stones at people like you in your poncy blazers.

JC: Now it's my turn to tell you where to go ... If you don't understand why that doesn't matter then you can't possibly understand why we're here.

AD: Actually, I understand a lot better than you might think. Look, I'm sorry, I didn't come here for an argument or to jeer at you. As I say, in a curious way I respect what you are doing here. I'm glad someone's doing it.

JC: Why don't you join us then?

AD: Nah, I'm just not into that. I'm not a demo kind of person, never have been. Can't take it seriously.

JC: What do you actually do?

AD: I work in financial derivatives – currency mainly, and a bit of securitisation – but that's all frozen up at the moment.

JC: So you're a speculator then.

AD: Not really. I try to predict what various currencies will be worth, then we short on exchange traded funds valued in euros. At any rate, that was what we did.

JC: What possible value can there be to society in speculating on currencies? Don't you realise how people like you have driven commodity prices so high that people in Africa are having to sell their bodies to eat?

AD: Look, I never made the system. Really, it's just a job. Actually, I'm one of the people who agree about a Tobin tax, you know a tax on currency transactions – like George Soros says.

JC: A Robin Hood tax? You?

AD: I hate that phrase, but yeah. Why not? You have stamp duty on houses. Currency is just a market, it's just like selling anything – clothes or food. You make a profit on the sale. If you didn't have markets you'd not have this tent.

JC: Actually, this came from Blacks which has just gone bust thanks to people like you.

AD: I'm not to blame for high-street shops being hit by the internet. That's you lot with your MacBook Pros. You don't realise how you are changing everything with those things.

JC: OK. But if you look at the crisis as a whole, it's got a lot to do with greed, lax regulation, inequality, tax avoidance ...

AD: Well, actually. I agree with a lot of what you say. It's been appalling. Those financial scandals: endowment mortgages, payment protection insurance, private pensions, precipice bonds ... It's an utter disgrace. Trouble is ordinary people just don't understand the financial system. The politicians don't either. Next year, this Government is going to introduce a new semi-compulsory pensions system for the low paid which has been designed entirely to protect the profits of the pension providers. Bet you'd never heard of the National Employment Saving Trust?

JC: I don't have a pension.

AD: Course not. People like you don't work at all.

JC: The people are kept in ignorance by a compliant media, by the lies of the banks, and by corrupt politicians.

AD: Tell me about it. I couldn't agree more. People are completely defenceless. They should be taught about finance at school. They don't know how much they're being robbed because they're blind.

JC: But you make a living out of it. How can you stand there and say that?

AD: Actually, we're not so smart either. Look around this square at these grand bank buildings. There's absolutely nothing behind them. Empty shells. The money has all gone. They've killed themselves by their own greed.

JC: What about the trillion in public money that the Government gave you people to pay for your mistakes?

AD: Got me there, friend. Madness. Rewarding failure. Government handed a trillion to us, no strings. So what were we going to do? Go bust? That would have meant an economic depression.

JC: We're in an economic depression, or hadn't you noticed?

AD: (Turns to go) Actually I had kind of ... I've just been made redundant. Happy Christmas.

The last throw of the dice? ECB gives bankers a happy Christmas..

  Turns out that Francois Baroin, the French Finance Minister, wasn't far wrong last week.   The most hated man in the City of London said that Britain was in just as bad financial shape as eurozone countries like France, and that the rating agencies should be downgrading British debt.  We have higher inflation, lower growth and larger debts than France which is currently on the downgrade 'list of shame'.   Now Moodies has put the UK on credit death watch too. 

Douglas Alexander, Scottish nationalist?

    It's extremely uncomfortable, especially at mealtimes.  All week my mouth has been dropping open inconveniently, bouncing off my chest, getting in my food, stifling coherent speech.   The reason:  the Shadow Foreign Secretary,  Douglas Alexander's,  jaw dropping intervention in the independence debate.  In a speech in Glasgow the one time protege of Gordon Brown (they're not so close these days) appeared to dump the Scotland bill in the dustbin of history and promised "an open-minded approach as to how the architecture of devolution can be improved".

   The clear implication is that Labour at least are no longer viewing the Calman Commisson report, and the Scotland Bill it inspired, as the last word on Scottish home rule.  Or rather, Labour is no longer prepared to go into the Scottish referendum allowing Alex Salmond to have an each way bet on the result, by supporting devolution max and independence.   Alexander is unspecific about exactly how far he is prepared to go down the road towards "devolution max" but there is no doubt that Labour is now resolved not to go die in the last ditch defending the status quo, while the SNP adopt the mantle of devolution.  I talked with him in the BBC studios on Saturday, and his irritation at the way the SNP have claimed credit for home rule, and made the Scottish parliament their own, even though they boycotted the Scottish Constitutional Convention, is very clear.
If there is a better devolution available, Labour will sponsor it.

  This is an astonishing moment.  The ground is moving under our feet.  If Labour is now contemplating fiscal independence, and though Alexander has not said this, I believe that is what he means, then we are on the verge of a constitutional revolution.   Let me explain:  the Calman Commission was, in a sense, unionism's last throw of the dice.  Professor Calman made what I argued at the time was a compelling argument for the Scottish parliament to have tax raising powers.  A grown up parliament must take on the responsibility of raising the money it spends, he said.  It must be accountable for its actions, transparent, fair, efficient.  However, the Calman solution, a fifty fifty split of income tax, was never very coherent and had all the hallmarks of a Whitehall fudge.  Even its supporters have difficulty explaining how it would work, or be an improvement on the present arrangements of a bloc grant from Westminster.

    The only way forward from Calman is a form of fiscal autonomy where the Scottish parliament raises the vast majority of the money it spends.  This has the advantage of moral clarity, and fiscal transparency.  There is no jiggery pokery with revised Barnett Formulas,  no deflationary fiscal devices.   There will be tax sharing, as there is in all federal arrangements, but the fundamental principle that parliament should be accountable is upheld.  Scots would no longer, under fiscal autonomy, be able to blame Westminster for "fiddling the figures".   The responsibility falls on the Scottish parliament to balance its books, pay its way, tax as well as spend.  Make the hard choices. And they are hard.  Fiscal autonomy is no easy ride for the SNP because it's main propaganda message - 'it's all London's fault' - is whipped from under them.


  No wonder Douglas Alexander/s namesake, Danny - the Treasury (?) is sounding increasingly desperate.  The unionist coalition built around the Scotland Bill has fallen apart. But this is only a recognition of reality.  Calman was a victim of the May election, when the SNP won an absolute majority in the Scottish Parliamentary elections.  Alex Salmond can do exactly what he wants in Holyrood, and he has made clear he is not going to vote through the Scotland Bill in its present form.  Since the passage of the bill requires the consent of the Scottish parliament this has killed the bill because the SNP will simply it.  What is Westminster going to do?  Impose a radical new tax regime which has been rejected by the Scottish Parliament?  Hardly.

   Douglas Alexander is a gifted political strategist and he saw the meaning of May long before his Scottish party had woken up from their post election hangovers.  It changed everything. Not just the balance of power in Holyrood, but the whole trajectory of Scottish, and British politics.  His sister, Wendy Alexander, may have set up Calman but that was in a different age.  Labour now faced the danger of being left out of the new order - forced to go down with a bill that has been moved by the hated Liberal-Tory coalition.   Labour had no option but to change course, as he tried to tell them in October when he reminded them that they had been "gubbed".  If Labour go into the independence referendum chained to a Tory bill they will be gubbed for good.

Salmond's first own goal. Sectarianism

  From The Herald.    Like most people concerned about freedom of speech, I've been watching the progress of the Offensive Behaviour at Football and Threatening Communications Bill, with mounting alarm. Outlawing the singing of songs at football matches seemed such a ridiculous proposition that initially I thought the Scottish government weren't serious. That Alex Salmond just wanted “send a message”, and that the loopier parts of this unnecessary legislation would be dropped. And if not, MSPs would realise that such a law as unworkable as it is objectionable. Surely, reason would prevail. It hasn't.

Yesterday, MSPs in Holyrood passed a law that could make the singing of the national anthem punishable by a five year prison sentence if it is associated with “offensive or threatening behaviour” in any context that involves football. No one knows exactly what “offensive and threatening behaviour” is, and anyway, because of the Catch 22 drafting, the very singing of “sectarian” songs is itself deemed offensive. There is no list of proscribed songs because to compile one would invite ridicule - “Give Ireland Back to the Irish” - Paul McCartney? This dumb law could also make the carrying of flags, colours or religious symbols illegal at football matches, in the trains going to football matches or in pubs or any public place where football is being shown. It could make singing The Sash illegal in a pub, but not in the street outside it. This is utter madness.

Who are the separatists now? Take Britain out of Europe and you can take Scotland out of the UK

David Cameron's decision to take the UK out of Europe will take Scotland out of the UK.  The Prime Minister's use of the veto against the EU treaty on budgetary reform looks like the game-changer that the SNP leader Alex Salmond has been waiting for.   Attachment to the Union in Scotland is likely to evaporate as Scots realise that they have become an appendage to an essentially isolationist England with a sceptic media saturated with an ugly chauvinism. The hostility shown towards European nations is like a bad version of the hostility that old school Scottish nationalists used to show towards England. Only they grew out of it. 


  David Cameron's narrow nationalism, putting the interests of the City of London above those of resolving the EU budget crisis, has fatally undermined the moral case for sticking with Britain.  If the UK is now a Banker's Union, dedicated to protecting the privileges a delinquent financial elite, what price internationalism, democracy, social welfare or any of the values that were supposed to define the common British project?


The SNP has suffered greatly in the past from accusations that it is a "separatist" party, seeking selfishly to divide the UK, and pit nation against nation.  But who are the separatists now?
  


  The argument for sticking with Britain was always that this gave Scotland representation at the highest levels of decision-making in Europe.  This is clearly no longer the case.  The UK is marginalised in Europe, whatever the Prime Minister may say - a "union" of one against 26.  This isolation is the culmination of decades of revanchist anti-Europeanism,  which has coincided with the decline in popular attachment to the symbols of Britishness on both sides of the border. 


   As England turns in on itself, lapsing into a financial parochialism, Scotland turns out - seeking to rediscover in Europe the communitarian values that it believed underpinned the UK.  The SNP used to be criticised for demanding "Scotland's Oil", for seeking to grasp the nation's natural resources for itself.  Well, Scotland gave the oil away, and now finds that it was used, not for the common good, but to build an evil empire of greed.  It surely won't get fooled again. 

£500 for independence?

From the Herald.   It sounds cheap at the price. 65% of Scots would opt for independence if they were £500 better off as a result, according to the latest poll from the Social Attitudes Survey. With all that cash the SNP has been accumulating recently through legacies and donations, Alex Salmond must be tempted just to send out a brown envelope with every referendum ballot paper. Perhaps they could redirect redirect some of that £60bn in fantasy funding for infrastructure projects announced this week. Scotland could be taking its seat in the United Nations before the decade is out.

There has been much scorn heaped upon Scots for appearing to put a price on their continued membership of the UK. Almost as much as has been heaped upon the Scottish Infrastructure Secretary, Alex Neil's, Mega Plan for road and rail projects, including a high speed rail link, with a sprinkling of housing and hospitals. Most of the projects won't come to fruition until the 2020s and beyond, and rely on optimistic funding from NPD, PPP, PFI or whatever form of private finance initiative happens to be in favour at the time. The Mega Plan also depends on the Scottish parliament getting the borrowing powers contained in the Scotland Bill, to which the SNP government is vehemently opposed. The consensus amongst the Mcchattering classes is that it has the ambition of Roosevelt's New Deal, but little prospect of becoming a real deal.

But at least the SNP are trying to do something. Industry bodies, including the Scottish CBI which is no friend of nationalism, have been praising the scheme for trying to inject confidence into a flatlining economy. Some foreign pension funds are reported to be interested in financing projects which, like rail, have guaranteed revenue streams. Most of the scornful newspaper comment concedes that someone somewhere really needs to be talking about growth and the SNP government is at least suggesting there may be life after the recession. Certainly Neil's plan puts the UK government's £5bn infrastructure plan announced in the Autumn Statement in the shade.

In a country like Scotland, where half the economy is the state, no one will invest if the government isn't taking a lead. For every £100 million invested, 1400 jobs should emerge in the wider economy. It's just a pity that so many of the projects are unimaginative road improvements, picked from the briefing sheets supplied by transport lobbyists: Forth Road Bridge, M8 link, A9 duelling, Aberdeen bypass, etc. I thought that the SNP was supposed to be in the green investment business, developing renewable energy.

But there is a broader political objective here. The SNP is playing a game of fantasy independence – giving voters some idea of how life might be in future if Scotland were to to it alone. Everything the SNP does right now, from Alex Salmond lecturing the Chinese on Adam Smith, to getting civil servants to research a “Scandinavian” prospectus for independence, is all about preparing the ground for the referendum, which looks like coming in the middle of 2014. The task is to eliminate the negatives – make independence sound like a bracing hill walk rather than a leap in the dark. The SNP is trying to think us into leaving the UK.

And that much-derided poll from the Social Attitudes Survey is, they believe, an indication that Scots are thinking the unthinkable.. A £500 a year bung may seem a crass, materialistic reason for seeking national freedom, but read differently it suggests that most Scots would now opt for independence if they thought it could be made to work economically. . Certainly, there appears to be precious little romantic or emotional attachment to the United Kingdom, kith and kin, the flag or any of the other symbols of Britishness.

Perhaps this a consequence of the very materialistic way that unionists have posed the argument. Opponents of independence invariably resort to versions of the “divorce is a costly business” argument. - the £4 billion deficit, the loss of the Barnett Formula.   Scotland hurled out of the EU and left destitute like a single parent on a bleak housing estate. It is the cost of the divorce that is always emphasised, not the emotional bonds that led to the original marriage.  In fact, the Union – Parcel o' Rogues aside – was a moral project as well as an economic one. 

   Even during the days of the British Empire, when Scottish soldiers shot the natives, Scots graduates ran the colonial administration, and Scottish bankers took all the money, there was a sense of mission: that this was somehow bringing civilisation to the world. After the fall of the British Empire there was a new moral union. It was based on working class solidarity, trades unions, the war against fascism, the 1946 Labour government and the National Health Service. Scots were fully signed up to the social democratic project, to the welfare state, and largely remain so today, even though the industrial working class is no longer a political force, and the welfare state is under challenge as never before.

Scots are thinking hard cash because they no longer recognise any coherent moral message from an increasingly eurosceptic United Kingdom, dominated by the City of London, and run by a government largely composed of ex-public schoolboys. Why should Scots keep faith with a union based on plutocracy, where personal enrichment is the only mission around? The SNP believe Scots are ready for a new political narrative in which Scotland figures as a rugged equalitarian Nordic nation, with a history of self-reliance and self-help, that doesn't need state handouts and can do very well on its own.

And talking of prospectuses, the nationalists think they can offer a pretty convincing IPO for the referendum: highly educated and versatile work force; £350bn in North Sea Oil; a quarter of Europe's wind and wave energy; thriving tourist industry, five world class universities and an awful lot of water.     It would be pretty poor management that could make a mess of those numbers. If I were a Japanese pension fund, I might consider investing in it.

    So, unionists should take little comfort from that risible price drop poll.  Scots are increasingly taking independence seriously, and are costing the future. A leap in the dark might be better than being left in the lurch.

Black November: it's enough to drive you to drink.

     November was when the banking crisis of 2008 finally hit home. The governments of Europe have bankrupted themselves by taking on the debts of the banks.  The latest move by Angela Merkel and Nicolas Sarkozy is the final nail in the coffin of the eurzone economies.  It saddens be greatly to say that, but I can't see any way out for them now. 

   What was decided in Paris was that, in future, private investors will not incur any losses in future defaults by eurozone countries.  In Greece, the banks and investment houses who had bought up Greek debt were forced to take a "haircut" of some 30-40%. This freaked bond investors and made them wary of taking on sovereign debt of any Mediterranean states - which is why Italy's borrowing costs leapt above the crucial 7%.   Markozy decided that the only way to calm the markets was to give them a promise that future losses will be taken onto the state.

   All very well, but the sovereign states of Europe are already effectively bankrupt, not because of public debt, but because of the 23trillion that has been lent by eurozone banks. This is the real wild card.  By any reasonable standards, the eurozone countries are already insolvent.  And there is no one left to come along and pay their debts for them.  This is why the rating agency, Standard and Poor's (what a wonderful, Dickensian name that is) has put them all, even Germany, on notice of credit down grade.  This will make it even harder for them to borrow money, and will increase debt. 

   But all those gloating over the misfortunes of the eurozone should remember that Britain is deep in the debt pit as well, and it is only because we have been debauching the currency and igniting inflation by Quantitative Easing that we have been left alone for the time being.  There is a reckoning here too. 

Everyone should have a decent pension.

   That's what the strikers' placards said, and they are right.  Everyone should have a decent pension.  The trouble is that the vast majority of workers in Britain don't have one, and don't have the remotest hope of having one.

   The basic state pension in Britain is worth only 17% of earnings the lowest in Europe, £102 pw for a single person, or just over £5,000 a year.  The average in Europe is 57% of average earnings, around £14,000.   Even in the Netherlands, the second lowest, pensions are worth twice what they are here.  Hardly luxury, but at least it is just about possible to live on it.   The UK pension simply isn't enough to live on.

   People here are expected to save for their retirement.  But the iniquitous means testing that is applied to the pension credit actually discourages people from saving. Which is why so many don't.   The average private sector pension is only worth around £20 a week, and yet this can disqualify a pensioner from receiving the pension credit which bumps the state pension from a £102 to £137 for a singe person.  And to add insult to injury, this is classed as taxable income - unlike tax credits or interest on an ISA.    Britain has the most complicated pensions system in the world, and many people who are eligible for the pension credit don't manage to complete the pages and pages of form filling.

   Let the public sector workers keep their pensions - but only if the rest of the working classes are given similar security.  The danger is that the majority of workers, who are not employed by the state, and who cannot afford any pensions, will refuse to continue to pay, through their taxes, for the relatively generous pensions of public sector workers.  There has to be some kind of equity here.

High pay equals low growth.

 The High Pay Commission has told us what we already knew: that the very rich have turned the economy into a personal wealth-generating machine.  Earnings for CEOs have risen thousandfold over the least thirty years as average earnings have only tripled. 


  There is no conceivable economic justification for their extravagant wealth, which has arisen largely through regulatory indolence and public ignorance.  Remuneration committees composed of highly paid executives naturally acquire an exaggerated sense of their own worth.  The idea that those dull boardroom suits, with their bad breath and stale management speak, are 'masters of the universe' is laughable. 


  The capitulation of successive governments to  neoliberal fantasies about how the productive economy actually works has allowed a climate of kleptocracy to command Britain's boardrooms. If even Labour politicians are "relaxed about people getting filthy rich so long as they pay their taxes" (Peter Mandelson, 01) then it is hardly surprising that the wealthy have filled their boots. 


  The trouble is that moral condemnation of this kind of elite behaviour doesn't work.  They don't have any morality beyond brute self-enrichment.  What is needed is a critique of the economic implications of allowing he top 1% to acquire 40% of the wealth.  In a British context it is about looking at the way this concentration of wealth undermines the productive economy.  


   The kleptocrats don't spend their money in productive ways, they use it for speculation in property, commodities and other assets.  This leads to stock market instability,  spikes in the prices of property, oil and food,  and to the creation of sophisticated financial products designed to increase yield, like hedge funds, special purpose vehicles, private equity.   Poor people spend their money on food, clothes and other consumer goods all of which generate economic activity and employment.  


   Grotesque inequality of wealth is not just an abomination, it is an economic depressant in the truest sense.  It creates stagnant pools of wealth, sucking the vibrancy out of the economy and depressing growth.  Roosevelt had the right idea when he slapped initially a 70% tax and then, ultimately, a 90% tax on incomes above $200,000.  If you look at the history of taxation rates in the UK and US over the last eighty years, it is no accident that the most productive years of the capitalist economy were in the 1950s and 1960s when tax rates were double what they are today.  


   That's the trouble with capitalism today.  They don't know what side their bread is buttered. 

UK Government launches sub-prime mortgage scheme

   How will using taxpayer's money to subsidise inflated house prices make home ownership more affordable?  The UK housing minister, Grant Shapps has announced a "get Britain building" programme (inspired I fear by similar moves in Scotland)  in which the state will lend most of the deposit on first time home buyers' mortgages.  They say this is to help first time buyers, whose average age,  according to the BBC, is now 43 years.  It won't - this is just a sop to the construction industry which is tanking again because of the euro-debt crisis. The money will go straight to the builders of the over-priced doll's houses that are too small for family life.

    There's a very good reason why building societies and banks are asking for deposits:  because house prices are falling.   Houses are still far too expensive in Britain, compared with continental Europe or America, and subsidising the sale of them will only keep prices unaffordable a bit longer.  What first time buyers need are houses that they can afford, not yet more debt.  Those lured into this scheme are likely to find, in future years, that they have taken on negative equity.   Anyone who seriously believes that house prices are going to rise during a double dip recession needs to be saved from themselves.  


 The government  also intends to increase the discount on the sale of council houses  so that people will be able to pick them up for half of what they are worth.  This is an unwarranted extension of the policy that has virtually destroyed social housing in Britain.  Selling council houses for a fifty percent discount to the market rate is immoral and should be illegal.  It is the taxpayer who paid for the construction of these houses and it is unforgivable to hand the capital gain to private home owners, many of whom will sell to buy-to-let landlords.  These houses will then be let at rents that can't be afforded by most working people, let alone the unemployed or low paid.  The inflated private rents will be paid by the government, the taxpayer, through housing benefit.  This amounts to a systematic asset stripping of public assets.  


   But the worst thing about both these policies is that it is all about trying to solve a debt crisis by yet more debt.  You would have thought after the last three torrid years that we had learned something about the dynamics of the debt economy, but apparently not.  All we need now is for the newly privatised Northern Rock (or rather the profitable bit, since the £50bn in dud NR mortgages has been retained on the state's books) to start offering 95% mortgages and the cycle will be complete.   If the government wants to help young people it should be taxing the profits and bonuses of UK banks who owe their existence to the tax-payer.   It should restore the cheapest and most effective means of building affordable homes, which is council housing.  And it should tax the speculators who sit on building land and make unjustifiable profits out of the housing shortage.  Ultimately, the UK housing crisis cannot be addressed without some form of site value taxation.  

Sovereign debt crisis? The answer's in Frozen Planet.

  Think of the european nations as a herd of bison pursued by a pack of wolves. For long periods nothing seems to happen. Until, one of the bison gets separated from the herd and the wolves descend in a lightning coordinated assault. However, if the herd regroups and charges, the wolves have no chance and will back off again.

I'm grateful to Frozen Planet for this imagery, which isn't exactly how financial markets work, but is helpful in explaining the political dimension of the sovereign debt crisis. The point is that the nations always have strength in numbers. The markets, which have been picking eurozone nations off one by one, can only do so as long as governments don't unite against them. Politics trumps economics

The trouble is that the euro bison, instead of charging the wolves, are wandering around the tundra, nibbling the grass, butting heads and generally failing to get their act together. This is because there's a failure of leadership: there is no dominant bison to call the others into line and charge the markets. Well, actually there is dominant bison – Germany – but for understandable historical reasons, Germany is reluctant to tell the rest of the herd what to do. A German dominated superstate is a very frightening prospect for countries, like France, who spent half of the 20^th Century fighting them.

If the eurozone had a central authority, a proper central bank, or an institution like the Federal Reserve in America, the markets would be losers and would have to seek kills elsewhere – the cost of borrowing in Italy would be the same as in Germany because the Italian bonds would be european bonds, backed by the combined might of greatest economic force on the planet – the European Union. What is happening now is that the markets are testing highly indebted countries like Greece and Italy and the rest of the herd is leaving them dangerously exposed.

The Clarity Act is as clear as mud.

  There is an air of quiet desperation in Whitehall as civil servants and UK government ministers try to out-manouevre Alex Salmond over the referendum.  They feel he's been getting away with murder, insisting on holding it at the time of his choosing and with an unspecified number of questions. 

    Westminster has finally realised that including "devo max" on the ballot paper as well as independence would leave Salmond with a win win  - since he would happily settle for fiscal autonomy for Holyrood if independence is rejected, as opinion polls suggest it would be.  Hence the threat to take it out of Scottish hands altogether and stage a pre-emptive independence referendum organised by the UK Electoral Commission.  After all, as constitutionalists like Oxford Professor Vernon Bogdanor keep telling us, Holyrood doesn't have the legal authority to run a binding referendum because the constitution is reserved to Westminster.  Why should England dance to the Nationalist tune?  It is a complaint uttered by UK commentators and academics around bodies like the Constitution Unit at UCL, who really think it's time to jolly well stand up to these separatists, and beat them at their own game

   The Labour minister, Margaret Curran, has wisely tried to head off this pre-emptive referendum which would of course play directly into the hands  of the SNP.  What better than for London to be dictating the constitutional destiny of Scotland? The SNP is hoping against hope that Westminster will make their day. The problem with the metropolitan political and academic elite - who only read the ultra-unionist headlines in The Scotsman - is that they have very little understanding of political dynamics north of the border, or how much attitudes have changed here over the last five years.  The SNP has an absolute majority in Holyrood, and any attempt to impose a referendum would be blocked.  There would have to be a consent motion passed by the Scottish Parliament for any legislation initiating a Westminster-led referendum.    

  So that is a non starter.  The next trick is to introduce a Clarity Act such as the one passed by the Canadian Government in 2000, though never recognised by the province of Quebec which inspired it.  This was the product of an examination of the legality of secession by the Canadian Supreme Court, and was seen by many Quebecers as an attempt to stifle their independence movement.   The Clarity Act states that subordinate regions or principalities have no legal right to secede. However, if a referendum is passed in which the question is clear, and there was a substantial though undefined majority, then the other states in the union have a duty to respond to the demand for autonomy.   It is a masterpiece of legal sophistry, open to almost any interpretion, from sending in the tanks to endorsing independence on the basis of a majority of one.  The latter is how Quebec separatists see it. 

   The Clarity Act, a reaction to the knife-edge 1995 Quebec referendum has never tested, so no one really knows what it means in practice.  It is the work of constitutional lawyers and, like economists, if you put twelve of them in a room you will get twelve different interpretations. But any attempt to use constitutional law to foil the Nationalists will backfire as assuredly as holding a pre-emptive referendum. The SNP holds most of the cards. Unionists would be far better advised to sit on their hands, and wait to see what Alex Salmond comes up with in 2014 – though I suspect that we'll be hearing about the question or questions long before that.

Of course Scotland would be admitted to the EU. Look at Latvia, Estonia etc etc.

  I've been in this game too long.   I remember being taken by the Tories nearly twenty years ago to Brussels to hear Baroness Ellis  warn that Scotland would not be allowed to join the EU.  Don't even think about it!  France and Spain would block an independent Scotland to discourage their own separatist movements. England wouldn't accept Scotland as a legitimate nation.  There would be years of wrangling over budgets.  England would dump financial liabilities onto Scotland to reduce its contribution to the EU budget etc etc..

 Scotland would end up broke and isolated, a ragged and homeless fragment lost in the North Sea.   It was tedious rubbish then, and it is rubbish now. Yet, barely a week goes by without some report or other announcing that wee Scotland would be frozen out of Europe and told to go and sit on the naughty step. 

    I've just been looking at the latest report to hit the front pages.  It came from the House of Commons Library and it is a background briefing note, not an authoritative assessment of the Scotland's legal status within the EU. It carries its own health warning  "[This briefing note]  should not be relied upon as legal or professional advice or as a substitute for it.  A suitably qualified professional should be consulted."   It goes on to rehearse all the arguments that have been made about Scotland's relationship to the EU that have been made over the years. Pros and cons - naturally, the Scotsman chose the con and headlined this as "£8bn Bill To Join The Eurozone". This presupposes that Scotland would automatically join the euro, which of course is not going to happen, at least in the short term.  Just like Sweden, Scotland would have the right to decide whether and when to join the euro. The report goes on to question whether membership would be automatic and finds differing views among constitutional authorities. 

   Lawyers make their money from creating legal complexity, so you will always find that there are differing legal opinions about secession.  But the political reality is that it is inconceivable that the EU would try to block an independent Scotland from entry. The EU is founded on the principle of national self-determination, so the idea that Scotland would not be recognised as a nation in Europe is ludicrous.  Scotland is already a part of the EU through its participation in the United Kingdom, and as a nation in its own right, Scotland would automatically qualify for membership of the EU.   It would take concerted action by the other member states to prove, either that Scotland is financially insolvent, or that it is not a democracy, or that it is in in violation of the European convention on human rights.   That is not going to happen. 

  Sure, there may be bureaucratic obstacles to formal entry - calculations of Scotland's contribution, relationship to the eurozone, Shenghen - all of which are the subject of opt outs by the UK.  But many of these problems would also face the RUK (Residual United Kingdom) in exactly the same way.  How much should England and Wales pay exempt of Scotland?  What weight should English votes continue to carry in the Council etc etc..  

  But the central question: Scotland's ability to remain in the EU, answers itself.   in 2004, the EU admitted a raft of small European countries many of which had been part of the Soviet empire.  The idea that the EU would reject Scotland because it used to be part of the UK is laughable. Iceland is being given a free entry ticket to the EU as I write.  Scotland is a wealthy country, unlike Greece or the small former Eastern block countries like Latvia and Estonia or minnows like Malta.  Scotland has around £400 billion in oil reserves, a quarter of Europe's wind and wave energy, five of the top universities in the planet.  

I despair at unionists who make these arguments because they are only destroying their own case.  If this is the standard of debate we can expect in the run up to the independence referendum then - roll on independence!

Hollywood and the arms trade.

"The Shadow World - Inside the Global Arms Trade" by Andrew Feinstein Hamish Hamilton £25

     There's a memorable sequence at the start of the 2005 Hollywood blockbustrer, “Lord of War” which shows a bullet's eye view of a bullet's life cycle, from a manufacturing plant through various intermediaries till it ends up in the head of an African civilian via the chamber of a Kalashnikov. The message is clear: arms don't come from nowhere. From factory to gun, there is a path that is easy to trace for anyone with the will so to do. The fact is, as Andrew Feinstein explains in this remarkable and couragous book, that governments are so heavily involved in the deeply corrupt world of arms dealing, that they turn a blind eye to the human cost and the damage they do to their own economic and moral integrity.

The “Lord of War”, played by Nicolas Cage, was based on the life Russian arms dealer, Viktor Bout aka “the merchant of death”, who made his name busting arms embargoes in African states in the 1990s. He helped arm the Liberian dictator Charles Taylor's murderous NPFL, and the psychopathic Sierra Leonian bandit Foday Sankoh's RUF, which used child soldiers doped with crack cocaine to kill tens of thousands of civilians. The activities of the RUF featured in another Hollywood film, “Blood Diamond”, starring Leo diCaprio, in 2006 which connected up the dots between the illegal diamond trade and international gun running.

Despite their lurid celebrity these master of war are rarely prosecuted. Viktor Bout was finally arrested after a sting operation in Thailand in 2008 when he offered to sell weapons to US DEA agents posing as members of the Colombian marxist group, FARC. He had been under the protection of Russian oligarchs, who were furious when their man was arrested in Thailand and put pressure on the Thai authorities not to allow his extradition. It took two years and the personal intervention of Barack Obama to get him to America, where he was finally convicted last week.

It may be that Bout's capture was only made possibly by Hollywood. Had it not been for the publicity generated by these films, it's unlikely that the President himself would have been involved. In “Lord of War”, it was suggested that Bout's immunity arose from his being a US intelligence “asset”. There is evidence that he and his associates were indeed involved in George W Bush's “War on Terror”, and provided information about terrorist organisations like al Qaeda which Bout had supplied. Indeed, Feinstein clams that an attempt by the Belgian authorities to arrest Bout in Athens in 2002 was foiled when US intelligence sources tipped him off.

Fact is indeed stranger than fiction. Which is good news for Hollywood, but bad news for the future world peace. If it takes a multi million dollar film before any of these monsters are arrested, then God help Africa. Mind you, there is enough in Feinstein's book for a dozen film pitches. Bizarre characters leap from the page - like Adnan Khashoggi,confidant of royalty, who claimed to be the wealthiest man in the world, and whose yacht, Nabila, was used in the bond film “Never Say Never Again”.. Then there is Dale Stoeffel, a US arms adventurer and ex special forces agent in Bruce Willis mould, who stood to make a killing out of the war in Iraq, but was himself killed in 2004 after he crossed members of the provisional Iraqi government. Yoshio Kodoma, aka “The Monster”, worked closely with US arms companies as they bribed and bought their way to the heart of the Japanese government.

But the grand-daddy of them all, and the source of most of the wealth of arms dealers like Adnan Khashoggi, was the al Yamamah arms deal, the biggest in the world, negotiated personally by Margaret Thatcher with the Saudi Royal family in 1985. It was an arms-for-oil deal worth £40bn, benefiting the UK defence conglomerate BAE systems, and according to Feinstein, Iron Lady's son, Mark Thatcher, who swept up the crumbs. Huge sums were paid in “commissions” to Saudi Princes and shady intermediaries. More than £6bn was paid out, and some of it, according to Feinstein, even flowed through the accounts of the Saudi fixer, Prince Bandar, into the pockets of two of the terrorists responsible for 9/11.

Feinstein's account of how the Serious Fraud Office was nobbled in its attempt to bring BAE to justice is deeply disturbing because of the insight it gives into the way that the entire British establishment has been subborned by decades-long complicity in the arms firm's questionable activities. Feinstein has seen BAE's modus operandi at close hand. He was an MP in the South African parliament after the collapse of apartheid, and he saw how the African National Congress was persuaded by BAE to spend £6 billions on weapons systems it didn't need while millions died of HIV/AIDS.

We knew the arms business was corrupt, but only a book as exhaustively researched as this one is able to reveal just how serious and extensive this corruption really is, and how democracy itself is threatened. “The tragic reality”, Feinstein says, “is that arms companies, large and small, and arms dealers and agents, get away with corruption and bribery on a massive scale, complicity in crimes against humanity and even murder. They operate in a shadow world, taking advantage of gaps in the international legal system and hiding behind the protective cover of powerful politicians and intelligence agencies.”

The Shadow World is a heroic book by an author who, in writing it, has placed himself in the firing line. We surely can't go on leaving this story to Hollywood. The global arms trade totalled $1.6 trillion in 2010, up 53% in ten years. As the world plunges into a double dip recession, with huge stockpiles of weapons, the script is being written for the ultimate disaster movie.   

Greek referendum? Bring it on.

   Referendums and markets don't mix. A referendum on Scottish independence is coming, and already the markets, or at least analysts from Citigroup, are saying it “will create huge uncertainty” and advising investors to shun Scotland. The trouble is, democracy is all about uncertainty. Democracy is inconvenient. But in times of constitutional uncertainty, it is absolutely paramount that the people clearly register their support or opposition to change.

In Greece, where democracy began, the markets are threatening to bring the house down because the Greek government is going to put the EU rescue package to a referendum. This is being cast as a breach of faith, a spanner in the works, an “abject failure of leadership” as one financial pundit put it yesterday. How dare this jumped up prime minister, Papandreou, ask the people for their point of view? What have they got to do with it?

Well the people have quite a lot to do with it. It is they who will be losing their jobs, suffering a decade of falling wages, higher taxes and the humiliating presence of an “occupying force” of Brussels civil servants telling their treasury ministers what to do, where to cut, etc.. It seems to me that this involves such a diminution of national sovereignty that it really should be endorsed by the people. After all, changes in the Treaties of the European Union require a referendum of the people – though governments in countries like Britain are peculiarly reluctant to hold them.

The markets are a mob – a capricious and unthinking herd, liable to emotional spasms and irrational passions. Think of the dot.com crash, the property bubble, irresponsible bank lending. The markets are not capable of rational thought; only people are. The mistake was not to tag a ballot onto the Brussels bail out last week, so that it could be clear that the people of Greece would be fully behind the deal. Or not.

Now, admittedly, the referendum proposal did rather come out of the blue. The Greek government is in turmoil, and we don't even know, at this stage, whether Papandreou will survive in office long enough actually to hold it.  But I have a simple view of these things, which is that the people do have a right to decide on their destiny, and moreover, that an austerity programme of the magnitude of the one facing the Greek people, really needs a democratic endorsement. Better a referendum than a protracted general election.

The choice before the Greek people is this: they either stick with the euro austerity plans, or they go for default. At present, there appears to be a considerable constituency for default – certainly on the streets and in the media. But as we all know, it is dangerous to simply take the political temperature from street demonstrations. No one really knows what the mass of ordinary Greeks really think. Opinion polls suggest that a majority of Greeks are unhappy about about the deal, around 60%, but we also know that around three out of four Greeks say they wish to stay in the EU. A referendum campaign is the way to reconcile these conflicting views.

The costs of default could be far greater than the cost of the Brussels austerity. Restoring the drachma, at a hugely devalued rate against the euro, would increase Greek debt by at least 60%. This is because the debt remains denominated in euros and will still have to be paid. The cost of Greek borrowing would also increase because Greece no longer has the powerful economies of the EU supporting its currency. Greek peoples' savings and pension funds will of course be destroyed, overnight, Greek banks will collapse and borrowing costs to small businesses will soar. Those public sector workers, so vocal on the streets, and so defiant against Brussels, would be in penury and out of work because the government would not be able to borrow the money to employ them.

On the other hand, a default along the lines of the Argentinian default of 2001, would make Greek exports competitive, because they would be a lot cheaper. Markets don't look back, and once the default is over, if the economy appears to be stabilising, it's possible that investors might start lending again in five years or so. Greece could also negotiate some kind of loose peg to the euro and remain within the EU free trade zone. Greek holidays would certainly become a lot cheaper, and that could help build an economic recover.

But do the Greek people really want to be impoverished servants of wealthy German tourists? Maybe they do. By the time the markets start lending again, the Greek economy will be a shadow of former itself. With few natural resources, and very little advanced manufacturing, it would be in the situation of some low wage north African and middle eastern countries. It's not at all certain that the fragile Greek democracy would survive – it is only thirty six years since Greece was run by a military junta, and the colonels are restive again. The great thing about membership of the EU is that it requires countries to respect democracy, civil rights and the rule of law.

So, Greece has a very grave decision to make, with momentous implications that will affect the country for decades. A majority for the Brussels deal would impress the markets and ensure that the Papandreou government had a firm mandate for austerity, to implement the Brussels plan. A majority for default would also clear the air.. Greece could tell the private investors that they can sing for their money – or take a 90% haircut. A vote for default might even make Europe come up with a better offer, it if looks like the euro would collapse as a result.

What I find offensive is the way commentators have reacted as if a referendum is somehow illegitimate, a damaging distraction. When countries like China, under a communist dictatorship, start telling democracies like Greece to “shelve its unhelpful referendum” I think we have to ask who exactly these ”markets” really are. Democracy is always the worse choice – except for all the others. Last night, European leaders grilled Mr Papandreou about his plans late into the night. I hope he stands his ground.