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November 30, 2014

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Mustsign topost

why choose between incompetence and malice when the two often go together?

gastro george

Is there any doubt that it's Osborne's policy to shrink the state? The economics and politics just follows from that. Whatever the problem, the answer is always more austerity (for the poor).

Ralph Musgrave

Given the incompetence at the OECD, IMF and by Rogoff and Reinhart when it comes to working out the optimum size of the debt and deficit, it wouldn’t be a big surprise if Osborne was clueless as well. I.e. we’re ruled by idiots. For some details on the OECD, IMF etc see:

http://krugman.blogs.nytimes.com/2014/11/26/keynes-is-slowly-winning/?module=BlogPost-

http://bilbo.economicoutlook.net/blog/?p=24922

http://www.economonitor.com/lrwray/2013/04/20/why-reinhart-and-rogoff-results-are-crap/

Donald

It's, surely, just about what's easier to sell.

It's easier to persuade people that we need to shrink the state "because the deficit" than it is to persuade them that we should "because growth".

There are at least three reasons for this.

1. It's just a more intuitive and easily understandable argument.People can see why if you're spending more than you earn you need to spend less. It's less clear why a small state means more growth.

2. Saying we must - ie we have no choice
- makes it easier for people to accept hardship for themselves and others.

3. By saying we must, they look less ideologically driven and can appeal to a broader base.

Two and three are particularly true for a government from Eton. Which also explains why actually persuading people that they want a small state because it's good (rather than necessary) more difficult.

Ben

For me shrinking the state by a tiny bit is background noise. Let's turn up the amp to 11 on land prices.

Another Chris

Cock-up theory wins for me.

The Conservatives primary backers and social circle are people who hate paying taxes - no matter how small those taxes are or how little they themselves pay. You can't sustain any form of modern government without high taxes. But all bar the richest of Conservatives also want or need the benefits of the modern state, a well funded NHS, good pensions, defence and police forces etc.

The cognitive dissonance between these two positions is squared by blaming everything and everyone you can read about in the Mail.

They want to keep their houses but the state to pay for their nursing care. They'll be the first to howl when the consequences of underfunded nursing homes make the headlines.

Their policies follow their hearts.

nick j

surely it's just straightforward class war? driving the already poor plus a few other unfortunates (the sick, elderly, unemployed...) into destitution pour encourager les autres.

Ben

nick j - if it's class war why do they get so much of the vote?

http://i.dailymail.co.uk/i/pix/2014/03/03/article-0-1C01531200000578-187_634x393.jpg

The tories and UKIP (tories lite) have the biggest share of the 65+ vote.

It's age based and it's about maintaining the unfair land price situation.

From Arse To Elbow

Given that underlying public expenditure as a % of GDP has not fundamentally changed (and the deficit has not shrunk), and is projected to still be around 40% going forward, the question should really be: what is Osborne doing if he isn't shrinking the state?

Much of his plan looks like the legacy of Thatcherism - privatising health and education and eviscerating local government - however it also appears to be more calculating in its protection of pensioners. If there is a conspiracy here, it may be the result of Osborne interpreting David Willets' The Pinch as a manifesto.

Blissex

«but there isn't the ideological clamour for a smaller state. In fact, in one respect there's the opposite. One aspect of Theresa May's plans for a surveillance state is that they create an atmosphere conducive to big government;»

Oh please, my usual comment: reducing the size-of-state argument by conservatives is a complete red herring, it is just a euphemism for reducing redistribution, because conservatives think that the state mostly redistributes from wealthy people like themselves to poorer people (instead it mostly redistributes from younger men to older women).

When the state does things other than redistributing downwards or between sexes, and spending benefits the interests of property owners and other incumbents and taxes hit mostly the working poor and the poor, conservatives are all for a big state: more military spending, more foreign wars, more security and police spending, more prisons, more control of "morality", more dozens or hundreds of billions of handouts as welfare for traders and executives in finance.

It is amazing that even sensibly skeptical people accept the framing of the "less downwards redistribution" argument as "smaller size of the state" one.

Blissex

«if it's class war why do they get so much of the vote? .... The tories and UKIP (tories lite) have the biggest share of the 65+ vote.
It's age based and it's about maintaining the unfair land price situation.»

Mostly agreed, but some details missing... I have tried to explain my understanding of that several times, I'll try again:

* The "conservatives" are about the boosting of the benefits of *incumbency* rather than specific classes. It used to be the benefits of feudal or anyhow large landowning incumbents and some professionals, currently it is about business and finance incumbents and owners of urban land.

* Conservatives in anglo-american culture countries, particularly in the USA, UK, Australia, have created a coalition of the 1%+the 50-60% below them, with the vision of a "plantation" economy, an alliance of high income/wealth and above average income/wealth voters to make below average income/wealth voters pay most taxes/fees and above average voters get most advantages. The rallying cries are "cheap hired help is hard to find today" and "property prices are not high enough to reward the aspirations of conservative voters".

* The "plantation" economy vision is based on an old study that shows that incumbents in the property of houses and shares (and cars) vote for conservatives parties almost regardless of income and social class, because they think themselves to be landladies of the suburban mini-manor.

* So yes it is largely about boosting the profits of land speculation of the older middle classes, but also about letting those profits be cashed-in tax free with remortgages, and maintain a high level of benefits to middle aged and older women voters.

* Because it is also heavily sex based politics: women tend to be more conservative than men, especially when welfare for men is involved, and since women live rather longer than men, and own property and shares far more commonly (in part because of divorces and widowhood), middle aged and older women are in general far more commonly incumbent rentiers than men, and also outnumber them at voting time (no upper age limit, more assiduous voters), and they tend to be swing voters rather than "tribal" voters like men. IIRC men pay for around 2/3 of the cost of the welfare state and women get around 2/3 of the benefits, for various cultural and structural reasons. The "triple lock" on pensions is of course targeted mostly at women voters.

* It is also heavily regional based, not just sex based politics: since the North vote Labour regardless, they don't matter either to Labour or the Conservatives, and anyhow most of their properties are not worth bothering much about and they tend to be too poor to have significant shares.

The conclusion is that the prized swing voters in marginal seats in the South East tend to be middle aged and retired women with property and remortgages ("old aunts") and what they want is:

* higher property prices,
* lower taxes on property,
* lower remortgage interest rates,
* lower wages for workers, especially young men,
* lower benefits for men, especially from the North.
* higher benefits and protections for women, especially older ones, especially in the South East.

The Conservatives have delivered quite a bit of that, and New Labour did too before them.

If you score the Conservative policies of the past few years they are almost always benefiting Souther voters, especially older property owning women, and hitting men, especially Northern, working class and younger ones.

For example the UK government (it has been a bipartisan policy) negotiated hard to include Bulgaria and Romania in the EU, and to encourage cheap Bulgarian and Romanian workers to immigrate to work in the UK.

As ChrisD always says, the evidence is that this results in a net boosts to the UK "economy" (weasel word!), for example via a larger working population; thus boosting property and share prices, and driving down below-average wages.

The benefits in lower labor prices and higher property prices (and higher NI and other taxes paid by young immigrants who won't be costing the state much for many decades) accrue mostly to the 1%+50-60% and in particular Southern property owning older landladies, and the lower wages and higher unemployment hit mostly Northern males especially if younger, but since the hit to the latter is smaller than the benefits to the former the "economy" gets boosted.

Blissex

«Much of his plan looks like the legacy of Thatcherism - privatising health and education and eviscerating local government - however it also appears to be more calculating in its protection of pensioners. If there is a conspiracy here,»

No conspiracy at all... I The Spectator reports publicly and authoritatively:

http://www.spectator.co.uk/columnists/politics/8886331/the-party-modernisers-are-thatchers-true-heirs/
«This makes it imperative that, in government, the Tories move the centre to the right. Thatcher grasped that, while Karl Marx’s political economy is wrong, there is something to be taken from his understanding of how politics works. Council house sales created a new class of property owners, privatisation a new private-sector workforce, and economic and regulatory reform empowered the entrepreneur.»
«His Chancellor and chief political strategist, George Osborne, is constantly looking for new ways to create Tory voters.»

By far the most effective way to socially engineer voters into tory (with a lower case "t") voters has been Right-To-Buy, plus hang-and-flog policies targeted at older women.

For example apart from Help-to-Buy, the Right-to-Buy discount has been increased enormously, something that has gotten less attention that it deserved:

http://www.telegraph.co.uk/news/politics/9181928/Council-tenants-to-get-up-to-75000-to-buy-their-own-homes-David-Cameron-to-say.html
«The average Right to Buy discount, as a percentage of the market value of the property, fell from 50 per cent in 1998-99 to 24 per cent in 2008-09. In London, the figure fell from 53 per cent to 10 per cent.
The discount will more than quadruple the discount cap in London and treble it in most parts of the country. The discount will be available from today (3 April) to two million council tenants and another 500,000 housing association tenants.»

http://www.independent.co.uk/news/uk/politics/social-housing-in-crisis-as-too-many-homes-are-sold-under-right-to-buy-9684172.html
«Social Housing can now be sold at a discount of 70 per cent of its value, with a capped saving of £77,000 across England and £102,700 in London boroughs.»
«in London, where some councils have found they are so short of homes they are having to rent back the properties they recently sold.»

A fraud case makes it clear how huge are the profits from Westminster-Council style "social engineering":

http://www.birminghammail.co.uk/news/midlands-news/birmingham-right-buy-fraudster-who-7764383
«A woman who claimed a whopping 70 per cent discount to buy her council house - whilst living in a second home that she owned - has escaped jail after admitting fraud.
Sonia Hunter became the first person in the Midlands to be convicted of a ‘Right to Buy’ scam after claiming a massive £46,600 discount on a home that she had no right to buy.
Hunter claimed the discount to buy her Newtown council house and went on to pay just £19,800 for it last year.
But the 57-year-old, who had been a council tenant in the Attenborough Close house for 34 years, was actually living at another home she owned in Erdington’s Court Lane.
The fraudster had bought the second house in 1996 and was renting out the council house.»

Blissex

«No conspiracy at all... I The Spectator reports publicly and authoritatively:»

And ConservativeHome.com also publicly and authoritatively:

http://www.conservativehome.com/thetorydiary/2014/03/how-thatcher-sold-council-houses-and-created-a-new-generation-of-property-owners.html
«By the time of the 1983 election, half a million families were living in houses they had bought from the local council. Tory canvassers could tell at a glance from the new doors and windows on these properties where their supporters lived.»
«It fell to Tony Blair to try to educate his party in the folly of denying people’s natural desire to better themselves.»

Here «better themselves» is a euphemism like "aspirational", for "cash-in massive tax free capital gains at taxpayers' expense".
Mostly in the South East of course.

It continues:

«There were even prophetic council house sales by local Tories in the drive to create voters with a Conservative political mentality. As a Tory councillor in Leeds defiantly told Labour opponents in 1926, ‘it is a good thing for people to buy their own houses. They turn Tory directly. We shall go on making Tories and you will be wiped out.’»

The whole piece is very interesting, especially the historical bits (Right-To-Buy was pushed forward by Heath and Heseltine against Thatcher's objections...)

Some other highlight:

«Here we see one of the causes of the present acute shortage of housing, leading to intolerably high prices in London and the South-East: intolerable, that is, to anyone who does not already possess a house, and is not very rich.
This state of affairs appeals to people who already own houses, for their property has increased in value by almost unbelievable amounts.»

More precisely «appeals to people who already own houses» should be "appeals to people, mostly middle aged and older ladies, who own family houses in the South East bought 20-40 years ago".

Also the conclusion to the piece is quite bizarre and inconsistent for a Tory...

magistra

One sex-related data point to note on Blissex's theories: Women are substantially more opposed to immigration than men, according to polls: http://may2015.com/featured/how-does-concern-about-immigration-differ-by-age-class-party-and-gender/. I don't know how much of this is due to age effects: that the over 60s, who are most opposed to immigration anyhow are disproportinately female, because men die earlier. But policies that appeal to older women voters definitely don't include allowing large-scale immigration by Eastern Europeans.

Christiaan Hofman

It's a deliberate cock up, because he really doesn't care about it, and he doesn't care because it does exactly what he wants: shrinking the state, and giving him a cover up for doing that.

George Carty

Blissex,

Why should the most right-wing segment of the UK electorate (pensioner or female-divorcee Southern homeowners) be the key to winning General Elections in the UK?

Normally, I'd expect the "swing voters" in any country to be in the (local) centre, between the left-wing loyal voters and the right-wing loyal voters...

An Alien Visitor

Blissex - Brutal as usual, but I can't help feeling that you over focus on one issue.

The biggest indicator that the state has really shrunk will be very very low tax rates for the mass of people. And if you are waiting for that you are an idiot.

Blissex

«the most right-wing segment of the UK electorate (pensioner or female-divorcee Southern homeowners)»

I think that "right-wing" is not quite right, those voters are rather socialist and left-wing when it comes to their own civil rights and their own incomes, just like the traders and executives in the City and in business. They want a big-state for me, but a small-state for thee. They are ferociously right-wing when it comes to the civil rights and incomes of "scroungers" and "nasties", Northerners and men.

Also because a large chunk of South East property owning middle aged and older landladies are baby boomers who grew very liberated during the 60-70s and a lot of them got rid of their husbands one or more times. They are both Thatcherite and "socially/sexually liberal", so not a mixed situation.

Relevantly Cameron owes a large part of his being leader of the Conservatives to his targeting that constituency. For example, why ever did he work so hard for the rights of queers, despite the reluctance of his party? They are a small minority of voters. I guess that it was a dog whistle to liberated, socially progressive but economically and politically conservative baby boomer landladies.

«Normally, I'd expect the "swing voters" in any country to be in the (local) centre, between the left-wing loyal voters and the right-wing loyal voters...»

Not quite here, in part because as quoted above «This makes it imperative that, in government, the Tories move the centre to the right» and that mission was accomplished by Thatcher and Blair.

But in part because "left" and "right" are not merely ideological positions, they are also heavily ethnical/regional and sex based, especially in countries like the UK, the USA and Australia where parties are strongly segmented by ethnicity and sex.
A bit (actually a lot) like Rangers and Celtic...

Also in part because I have come to think that "right" and "left" don't exactly overlap with "sell-side" (speculators) and "buy-side" (producers).

Looking at maps of politics and culture and other statistics, in the UK:

* The North, of whatever income and social class, don't vote Conservative. A little mentioned fact is that Conservative policy did not just pauperize the Northern working class that was already in trouble, but also smashed the Northern middle and professional classes, and they are not going to forget that. The North know that the Conservatives see them as tribal enemies.

* The South upper and professional classes (the top 10-30% by income) just won't vote progressive (they will vote New Labour, which is little "t" one-nation tory, as long as they deliver property capital gains).

* The genius of Thatcher (or perhaps her advisors) was to figure out that the Southern middle income classes were willing to swing for the right price, and then to bribe them with enormous discounts on the sale of state property and the promise of squeezing the "living-in-luxury" poor until the pips squeak with ever higher property prices and rents and the immigration of cheaper workers from very poor countries. The genius of Blair was to do the same, but less viciously.

Put another way, swing voters vote their "book", they don't much care about "left" and "right"; other voters vote "tribally", vote their "traditional identities", especially men.

Blissex

«but I can't help feeling that you over focus on one issue.»

But as even the true-blue ConservativeHome.com article above argues at length property speculation (fueled by government-sponsored private debt) is the single biggest, defining, central issue of the past 30 years of UK (and Australian etc.) politics and economy.

And it is because the amounts of money involved are GIGANTIC... My usual "money shot" quote:

http://www.bbc.co.uk/news/business-19288208
«In 2001, the average price of a house was £121,769 and the average salary was £16,557, according to the National Housing Federation. A decade on, the typical price of a property is 94% higher at £236,518, while average wages are up 29% to £21,330»

That's an average between the North and the South, and it does not really apply to the North.

But even it taking it as it is, that means £12,000 a year for a decade of tax-free effort-free income for a working class family in the South earning around £16,000 after tax.

£12,000 a year of tax-free effort-free windfall is GIGANTIC, especially if it recurs every year for 10 years as per the above numbers; and actually it has been going on for 20-30 years. And for the millions of people with a house in London it has been even bigger than in the rest of the South.

Do people really realize what an extra £12,000 a year of (purely redistributive rentier) windfall going on for decades can mean on top of an earned after tax income of £16,000? For millions if not a dozen million families?

Do readers here realize what that means to "aspirational" Southern voters and what they are prepared to vote for to keep it coming?

And that most or all of that was due to government policy to bribe voters in the South and accordingly virtually none of that happened in the North? E.g. recently:

http://www.telegraph.co.uk/finance/personalfinance/houseprices/10812771/House-price-heatmap-its-still-winter-in-the-regions.html

Also note that while the colossal amount of government-sponsored private debt that has fueled the GIGANTIC tax-free effort-free capital gains has only produced them in the South, but the citizens of the North also are liable for it. And the call for "austerity" to drive down that debt has resulted in large cuts to the North:

http://www.bbc.co.uk/news/uk-22112965

Again, that «one issue» involves GIGANTIC amounts of money. Compared to that almost nothing else matters.

As to GIGANTIC, that £12,000 is just the entry level, for "hoi polloi" among the Southern landladies.

Here instead is my other "money shot" quote on how that «one issue» has influenced the middle-upper classes:

http://www.dailymail.co.uk/money/mortgageshome/article-2105240/Stuck-rent-trap-How-middle-class-family-kept-remortgaging-home-pay-bills-longer-afford-repayments.html

«Certainly, we overstretched ourselves when we bought our lovely period home for £419,000 in 2002. But with mortgage companies practically throwing loans at us in a rising property market, we slept soundly at night, smug in the knowledge the house was making us money. [ ... ] The valuer had barely been in the house for five minutes yet we were able to borrow a further £80,000. [ ... ] We were lulled into a false sense of security about our wealth. Whenever we overspent we just remortgaged without comprehending the consequences of taking yet more equity out of the property. [ ... ] In our defence, we weren’t spending the money on expensive designer clothes, luxurious holidays or flash cars. Much of it was going on school fees and upkeep of the house.»

Those are GIGANTIC amounts of tax-free effort-free windfalls fueling a lifestyle full of "class consciousness". That's the Southern "middle-class" dream being realized and in this case popping. Another report on a similar case:

http://www.dailymail.co.uk/femail/article-2841450/Just-live-1m-house-doesn-t-mean-m-not-breadline-Ursula-knows-ll-little-sympathy-says-trying-match-parents-comfortable-lifestyle-left-penury.html

«While most of my contemporaries enjoyed all the perks of a middle-class upbringing in the Eighties - living in a spacious family house, private schooling and at least one foreign holiday a year - few of us can offer our children such luxuries.
Take private school. Both my husband and I were privately educated, but with four sons, we always knew we couldn't do the same for them.»
«When I look at their generation, I am green with envy. My in-laws still live in the detached, five-bedroom home in which my husband grew up. It is worth at least £1.2 million, but it set them back only £20,000.
By the time they were my age, they had paid off their mortgage and sent both their boys to private school. Fees have quadrupled since 1990, from an average of £2,985 per year to £12,700 in 2014 - a prohibitive cost for most of my friends.»

All this "poor lady in a mansion" needs is for her £1m house to boom in valuation to £1,5m: an extra £500,000 of tax-free effort-free equity capital gain would solve all her problems, at least for a few years. If some clever devil called Dave or George offered her that, what would she care about anything else?

That «one issue» seems to me the "pulling thread" to unravel much of the political and economic history of the UK since 1980.

And then there is the Scottish oil story...

Blissex

As obvious from the amount of quotes and (little) in between I produce, this blog involves some of my pet issues... So another long comment on:

«Women are substantially more opposed to immigration than men,»
«policies that appeal to older women voters definitely don't include allowing large-scale immigration by Eastern Europeans.»

I think that there is a big difference between the top 1%+50% ("makers" :->) and the bottomost 49% ("takers" :->).

Women voters in the 1%+50% seem to me conflicted, and want it both ways: they are delighted to pay lower wages to immigrants from much poorer countries for their hard work as carers, gardeners, plumbers, builders, cleaners, shop assistants, and to get higher rents for the properties they own from the same immigrants stuffed 2-4 to a room, but they also want those nasty-looking immigrants to stay away from them, to be deferential and keep their eyes down and to be invisible, like good servant wallahs, because they are afraid of or have spite for the "other" (the poor or working poor or immigrants from much poorer countries).

In the past same with the "savage paddies" who emigrated to England in past centuries. My usual link to what the South East thought of "savage paddies", which could be republished today with just the captions changed:

http://thesocietypages.org/socimages/2008/10/06/negative-stereotypes-of-the-irish/

In other words women voters in the top 1%+50% love immigration from much poorer countries when it makes it easier to find cheap hired help, but don't like sharing their suburbs or towns with them.

I think that if the UKIP or the Tories proposed to put all those Romanians and Bulgarians and Africans etc. in out-of-town, out-of-sight, slums with curfews (as it is done in some other countries with large hordes of metics doing the banausic work), those voters would be really pleased; as long as they could also invest in the slum houses with a huge discount for an instant tax-free profit and then charge high rent to those "parasitic" immigrants.

The skill of some politicians lies in pandering to property owning middle and higher income older women in the South East, by supporting their economic interests for more immigrants from much poorer countries to drive down or keep low below-average wages and push up property prices, while reassuring them about their safety and distance from the "other"s.

Thus Theresa May's constant stream of "security theatre" (mostly misandrist too) legislation implicitly or explicitly targeted at nasty-looking dusky/swarthy men (a strategy that has included Blair's ASBOs), or that is aimed at ensuring that the "victim" spouse always "wins" divorces, both of which delight the hang-and-flog middle aged and older women voters.

Interesting aside: the top 3 candidates for Conservative leader among Conservative members are Johnson with 60%, then May much further down, and then Gove (really!). Most Conservative members seem to be "old ladies in mansions" (more than 60% are over 65) who love naughty-but-nice Boris. He is "nice" as he bangs incessantly on the "higher house prices" and "more immigration from much poorer countries" themes, so to differentiate herself «May's plans for a surveillance state» pander to the same constituency in a different way.

Lower than average income/wealth working women and men, especially moving or considering moving from the North to the South (which enjoys enormous but slightly disguised government handouts unlike the North), of course don't like that immigration from much poorer countries makes it easier to find cheap hired help, because they be the cheap hired help, or to charge higher rents to tenants for worse housing, because they be tenants.

Blissex

«One sex-related data point to note on Blissex's theories»

They are not so much *my* theories as really short (ahem) summaries of "conventional wisdom" among political strategists and political scientists and sociologists and academics.

They are not much discussed publicly because some of the aspects not "politically correct" and sometimes attract hate for being "divisive" or "discriminatory". They are usually only discussed in technical papers using very euphemistic jargon.

Note that an important pollster thinks that *overall* political preferences are fairly balanced:

https://yougov.co.uk/news/2013/02/18/vive-la-similarite/

but under first-past-the-post what really matters is marginals.

Anyhow here is a really interesting summary of voting intentions, with a bit of detail as to by gender, age, class and region, but only since 2010:

https://www.ipsos-mori.com/_assets/political_monitor/voting_intention.html

Big differences...

Blissex

«The North know that the Conservatives see them as tribal enemies.»

Boris Johnson is a perceptive and shrewd person behind the mask, and this quote is apposite, and congrats to "The Economist" for reporting a question he ask during a Conservative conference last year:

http://www.economist.com/news/britain/21587279-prime-minister-lays-out-strong-electoral-hand-maybe-not-winning-one-daves-land

«When Boris Johnson, the slapstick Tory mayor of London, asked the audience if anyone was from Sunderland or Bolton, no one shouted back.»

Philip Walker

"The North, of whatever income and social class, don't vote Conservative."

You know not whereof you write. Let me introduce to you William Hague (Richmond) and Julian Sturdy (York Outer) and Rory Stewart (Penrith and The Border) and David Davis (Haltemprice and Howden) and... the list really does go on quite some way. Those are just the four I can name off the top of my head, but Wikipedia informs me that out of 54 Yorkshire and Humber seats, Labour holds 31 and the Tories, 19. Similar figures hold in the North-West. Northern rural areas return Tories, at times with fairly hefty majorities.

What you meant to write, I am sure, is that urban areas are practically Tory-free zones whether Northern (especially true here, apart from some leafy suburbs) or Southern (less true, but still a better generalisation than the opposite). The erroneous perception that the North doesn't return Tories arises because the North is far more metropolitan than the South.

TowerBridge

@Blissex -

Could you further elaborate on transfer of wealth to older women from younger men and redistribution actually performing this task rather than redistribution to all.

I have never heard this argument before and I wondered whether you can show me where you developed it from.

Thanks

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