We don't believe the Resolution Foundation in the slightest
The Resolution Foundation tells us that the wealth gap has soared in the course of the pandemic and therefore something must be done about it. One of the things they recommend is exactly why we don’t believe a single word of the analysis:
The distribution of debt and savings changes provides extra justification for keeping the pandemic support of an additional £20 per week to UC
Changing universal credit quite obviously changes the wealth distribution. £20 a week is £1,000 or so a year, capitalise that (using the method Saez and Zucman use in their iconic paper) and that’s a change in wealth of about £20,000 per recipient. More if we use current interest rates to discount future income.
The way the Resolution Foundation - and to be fair to them this is true of the entire field measuring the wealth distribution - measures wealth the wealth distribution isn’t changed in the slightest by this. Which is a basic problem with the measurement of the wealth distribution of course.
We do not include any of the things which government does which reduces wealth inequality in our estimation of wealth inequality. This also means that anything government does to reduce wealth inequality doesn’t change wealth inequality as it is measured.
We move vast sums from richer to poorer each year. Total social spending is some 20% of GDP - a fifth of everything in the economy. Capitalise that again, using the approved method, that’s about £8 trillion in wealth moved around out of total household wealth of about £15 trillion. Absolutely none of this, at all, is included in the usual estimations of the wealth distribution.
We don’t believe the usual stories about the wealth distribution. Simply - and accurately too - on the grounds that it takes no account whatsoever of what is already done to reduce wealth inequality. Once someone comes back with estimates that include the effects of the welfare state then we’re willing to start discussing whether more should be done - or perhaps, less.
Essay: Why are Remainers still so cheesed off?
Remainers, however much they got right about Brexit, lost the argument. Now, five years on from the referendum, what matters most is what they got wrong — and why.
Most Remainers do not see it this way. Even so, they will have begrudgingly noticed that six months after Brexit, the supermarket shelves are full, the lights are on and trucks flow freely down the M20. The UK retains the top destination in Europe for investment, the City of London continues to dominate European financial services, sterling is on the up and the FTSE is nudging all-time highs. They will certainly know that the UK stole a march on our neighbours in rolling out Covid vaccinations, panicking Brussels; and that this has something to do with paddling our own canoe.
To summarise the argument of this essay, the Remain cause made much of its high-mindedness over the last five years of the Brexit saga. It is now obvious that the Remainer sense of superiority distracted from their low dishonest campaign, which has left the country divided and its supporters bereft.
What Remainers got right
Remainers called the negotiations accurately. They were not as simple as the Leave camp claimed; the EU’s negotiating team stuck to a legalistic process; it was unrealistic to expect EU member states to defect from their collective position; and there is a trade-off between regulatory sovereignty and market access. They were also on the money about the complications of Ireland, trade deals with the US and other major partners, plus the empty promises made to the fishing industry.
They also got elements of the outcome right: businesses are suffering from the loss of freedom of movement; there are likely to be problems in the supply of unskilled labour; trade with the EU has suffered at least frictional disruption; expats are facing everyday difficulties; Brexit delivered a shock to international institutions; and leaving will not end our dealings with the bloc.
Some of these arguments were better than others, but even the best failed to change minds. They were undermined by Remainers’ inability to mount compelling arguments for their cause; weakened by their association with the overwrought “Project Fear”; overshadowed by the self-defeating attack on the referendum’s legitimacy; or wasted as supporting the “soft Brexit”, which challenged the sovereignty prized by Leave voters.
Remainers’ central problem
These days, former leaders of the Remain camp reminisce that they dared not make a political case for the EU, as any attempt to do so repelled focus-groups. They could never overcome the obstacle that any political proposition for the EU rests on a picture of the world which most Brits just don’t buy into.1
Europhiles like to talk up the part played by the EU in promoting Europe’s postwar peace. There is something to this, notably the reconciliation between France and Germany, but Britons incline to place more emphasis on the part of NATO in holding the line against the Soviet Union, with some also remembering that France detached itself from the alliance for forty years.
The prospect of an “ever closer union” puts voters off throughout the continent. This applies all the more to that majority of the UK electorate which is relieved to have avoided the Euro and Schengen, worries about the standards of EU accounting and democracy and would run a mile from the prospect of a standing EU army. Remainers also press the view that the EU is such a central part of the postwar “rules-based order” that Britain’s departure weakens the entire set-up. This doesn’t wash with most British voters, who see the risk as far-fetched. So much for the politics, but even economics was less help to Remainers than they might have hoped, with trade sovereignty (discussed further below) presenting the evidence that while we were in the EU, its trading regime penalised the UK.
For lack of positive arguments, the Remain campaign changed the subject. Its principal moves were to promote “Project Fear”, warnings about universal disruption, conspicuous for their hyperbole; and to challenge the legitimacy of the referendum. They ignored, obfuscated or traduced sovereignty, Leavers’ central concern. Remainers also raised various further points, some largely ill-conceived, eg, reputation, relations with the US, trade agreements and other minor matters; and some with a measure of substance, eg, fishing and Ireland. None, however, justified the catastrophic construction placed upon them by Europhiles.
“Project Fear” — disruption, long-term economic adversity
During the referendum campaign, it was often asserted by commentators that while the Leave cause had the best of the political argument, Remainers had the best of the economics. This was half true. We have already seen that the dirty little secret of the Remain campaign was that its leaders knew almost immediately that they could not mount a persuasive positive political argument. Worse still, trade sovereignty below presents the evidence that the economic argument on which Remainers relied was so easy to answer that they had no choice but to double down with the exaggerations of “Project Fear”. Initially, Remainers promoted it to get out the vote for the 2016 referendum. Thereafter, it survived to push along a second referendum; failing that, to press for a “soft Brexit”, with a view to minimising alterations to the status quo; and to provide the powder and shot for parliamentary ambushes. Leavers argued that the gain was worth the pain — Johnson’s “Nike tick”. Nonetheless, the psychology textbooks tell us that the fear of loss outweighs the prospect of gains, so Project Fear’s warnings should have found an audience. Instead, they were discredited by their hyperbolic precision, eg, Osborne’s forecast of a cost of £4,300 for each household; and Remainers’ coincident attacks on legitimacy and sovereignty. All of these seemed to confirm the truth of the Leave camp’s earlier mockery of “experts”.
Nonetheless, these fears represented the overwhelming official and professional consensus. Just one or two maverick economists — for example, Tim Congdon and Patrick Minford — pointed out that they failed to recognise second-order effects, with clunky economic models taken too seriously. It is true that the former Governor of the Bank of England, Mervyn King, stated that he expected Brexit to have the same effect on growth as joining the EU in the first place, that is none at all; but he was up against strenuous warnings to the contrary from his successor, Mark Carney.
Covid has complicated the immediate outcome and its measurement but so far, Project Fear turns out to be without foundation. Osborne’s threatened “punishment budget” was self-defeating. Indeed, it never made sense: how could it be delivered, given that he was bound to resign on losing? Queues at Dover and empty larders have never happened; there has been no loss of jobs. European traders reported disruption early in the year, but recent figures are returning to pre-Brexit levels. The UK continues to hold the largest stock of inward investment in Europe and the City jobs on as ever.2 Meanwhile, long-term concerns have been softened by the post-Brexit vaccine success.
Delegitimising the referendum
Although Remainers made much of their claim on the moral high ground, they betrayed this and damaged themselves by withholding losers’ consent for over four years. This was opportunism: they were seeking to lay the ground for popular and political support for the “people’s vote” campaign for a second referendum; or, failing that, to press for a “soft Brexit”, as befitting a poll with a small majority, or failing to specify an outcome. The reduction in May’s majority after the 2017 election reinvigorated Remain MPs, who represented the result as throwing the referendum into question. This was also unprincipled, as candidates from both major parties had campaigned on manifestoes promising to honour the referendum result.
Even so, Europhiles continued to protest about constitutionality, destination, demographics, manipulation, racism, lies, and executive overreach. None of this changed minds and voters became irritated at hearing that they’d given the wrong answer. The Leave camp saw they were on to a winner and joined in with gusto, arguing as to “advisory” — legally correct but politically tone-deaf in the face of the huge turnout, Cameron’s promise to honour the result and his resignation; “super-majority” — also tone-deaf plus constitutionally irrelevant; “destination” — disingenuous as only a “hard Brexit” made for regulatory, border and trade sovereignty; “older, less-educated voters”, etc — anti-democratic, distasteful and incoherent; “racist,” etc — challenged by poll and crime data; “manipulated” — no convincing evidence, with the Guardian taking its conspiracy-theorist, Carole Cadwalladr, off the story after she lost a libel case to Arron Banks, the founder of Leave EU; “lies” — voters know that campaigning politicians are not on oath; and “overreach” — at odds with the UK’s political culture.
Bad feeling was amplified by parliamentary chaos, including dissident ministers and officials given to leaks, together with guerrilla lawsuits, some persuading the judges but none stopping the train. The increase in temperature led the public to lose patience and to question Remainers’ other messages. The “people’s vote” campaign imploded.
Regulatory sovereignty
Sovereignty was central to Leave voters and the final negotiation, but Remainers never got it. Some could see it only through the lens of immigration, leading to accusations of prejudice. Others relished the thought of binding the UK with the Lilliputian threads of European Court rulings, with a view to undermining Brexit altogether. Remain campaigners minimised the issue, stigmatised it as racist and obfuscated it with “shared sovereignty”, which no-one understood, let alone took seriously.
Leavers were initially divided over their own construction of sovereignty and deliberately failed to specify an outcome during the referendum campaign. The preparations for, and early stages of, negotiations established that only a “hard Brexit” delivered freedom from intervention by the European Court and freedom to strike trade deals. As this emerged, Leavers ignored Remainers’ insults and stuck to their guns. Towards the end of negotiations, “sovereignty” was reframed as “regulatory divergence”, at which point the complications of Ireland entered the limelight. Within a few months, the post-Brexit headlines were “vaccine, nimble, speedboat”, confirming sovereignty’s substance and auguring well for the future.
Border sovereignty — freedom of movement, immigration
Remain campaigners sought to discredit border sovereignty as racist, or as making EU immigrants ill at ease in their new home, or as placing British expats at risk, or as destroying the ideal enabling Britons to “live, love and work in Europe”. They talked up negotiating difficulties, though this was tricky in the face of the strenuous efforts on all sides to minimise human friction.
They also argued that restricting the flow of EU immigrants would lead to labour shortages. There is something in this, though the taint of prejudice prevented discussion of the implications of Commonwealth or other third-world immigrants replacing low-skilled arrivals from the EU. Leavers spoke of the opportunity to substitute better-capitalised or more highly-skilled locals, though it was never clear how this would apply directly to (eg) care homes or hospitality. Long-term expatriates face teething troubles, which the authorities are trying to sort out. “Live, love and work in Europe” turns out too ethereal to interest the general public. Our immigration policy is a work in progress.
At first the Covid epidemic seemed to soften the topic, with one million EU migrants said to have returned home. Attitudes may harden, however, with the number of EU citizens presenting themselves for settlement as much as 66% above estimates, with six million European applications for settlement at the end of June 2021, compared to 3.6m estimated residents in 2016. This suggests that the number at the time of the referendum was close to twice official figures, calls into question the bases upon which the original debate was conducted and gives many millions of reasons to reject the smear that Brexit has made EU immigrants to the UK ill at ease.
Trade sovereignty
Early on, both sides struggled with the ins and outs of the endgame. Remainers warmed to what came to be known as soft Brexit as closest to the status quo — always articulated as minimising disruption; but at the outset Leavers declined to offer a clear destination, offering models including Norway, Switzerland and even Turkey. It took some time for the underlying issue to be definitively flushed out as membership of the Customs Union and of the Single Market. All then ignored the elephant in the room, the UK’s pre-Brexit trading within the EU. By their silence, Remainers conceded the lack of a positive argument. The Customs Union was transparently more useful for European than British exporters of goods. In part, this is because the post-WW2 decline in duties has put emphasis on non-tariff measures, where the EU is a notable offender. Similar considerations apply to the Single Market, in principle more important for the UK as the world’s number two exporter of services, but with years of data showing that it hasn’t done much good for anyone, including this country.3
Unable to make headway on the specifics of trade sovereignty, Remainers instead dwelt upon the sheer proximity and size of the European market, as the “gravity model” of trade beloved by economics geeks, but irrelevant given the EU‘s dysfunctional regime; or on dangers to the City, the taxman’s darling but otherwise too unpopular to attract sympathy; or on the economic implications of the loss of freedom of movement, accurate enough but doomed to fall on deaf ears given Leavers’ appetite for sovereignty. Leavers were happy to aim off such technicalities, as they had so much the best of it on legitimacy and sovereignty. The latter also emerged as the basis for resolving hard vs soft: if the UK was determined to negotiate independently on goods, it had to leave the Customs Union; if similarly inclined on services, it had to leave the Single Market
The Remain camp also ventilated other issues during the campaign and afterwards.
Influence in world, reputation
The Remain camp sought to undermine Brexit by talking up the institutions of the EU and other European bodies (eg, the Human Rights Court), on a view that that British defection would undermine the post-WW2 settlement in Europe, if not the entire “rules-based order”. This was overwrought but understandable, given the coincident chaos of the Trump administration. Remainers also talked up the British courts, which from time to time seemed an avenue to frustrate Brexit altogether. Throughout, they demonised Johnson as irresponsible, with EU figures adding fuel to the flames.4 In the late stages of the negotiations, Remainers made much of the UK on the back foot over prorogation and official hints of walking away from the Northern Ireland Protocol. Concerns about international standing were goosed up by a drip-feed of interviews with retired ambassadors and unattributable leaks from a Foreign Office devoid of direction under May.
Such complaints were ill-founded. May dismissed Trump’s proposal of a claim against the EU and no-one took up Dominic Cummings’ plan to disconcert Brussels by declining to serve Article 50 notice. Instead, the UK has been scrupulous about treaty procedures and timetables. This goes so far as to include the Northern Ireland Protocol, despite what Macron describes as its incohérences, which have led both sides into unmannerly post-agreement jostling. At time of writing, Johnson is holding his own, while remaining a controversial figure. The Foreign Office is pulling out the stops to make the new dispensation work, working up the recent Cornwall G7 and forthcoming COP26; and testing appetites for a D10 group of democracies and a welcome from the CPTPP (Pacific trade pact). If anything, reputational damage is going the other way, what with the EU’s discomfiture over its vaccine roll-out, failures of pragmatism in Ireland, fishing kerfuffles, and the collapse of its deal with Switzerland.
Ireland
Barnier’s memoirs make no secret of his determination to protect the EU’s borders: none of the three alternative frontiers for Ireland works well. The topic came to the fore relatively late in negotiations. Hat-tip to John Major, in other respects so relentless a Remainer as to make it hard to pick out this prescience from his other jeremiads.
Remain campaigners were ostensibly trying to defend the peace process and the Good Friday Agreement. Some, however, were happy to use the issue to undermine Brexit altogether — the backstop threatened to keep the UK under EU regulation indefinitely — though so far, I’ve seen no evidence that they were in cahoots with Brussels. Even so, they made no bones of talking up the issue, dwelling on Nationalist sensitivities. They also sought to bring in the US, as a natural sympathiser to the Republic and Nationalist sentiment, as well as a sponsor of the Good Friday Agreement.
The reaction was fury from the Democratic Unionist Party, at the time supporting May’s government; and from the European Research Group, the Brexit ginger-group of Tory MPs. The parliamentary arithmetic plus the Attorney General’s formal opinion kyboshed the backstop and obliged May to resign. In the best case, as things now stand, all parties are stuck with the final arrangement, the Northern Ireland Protocol, which miscalculated the province’s politics by overlooking the Unionists. In the worst case, we’ve all been thrown into uncertainty because the EU entertained the backstop as a gambit to undermine Brexit and the Commons sniffed it out. Either way, the fragile balance in Ulster has been unsettled by disobliging EU officials. A border in the Irish Sea may be better than the intolerable backstop, but it’s hard to see the current set-up lasting for long.
Relations with the US
During the campaign, the UK Government used Obama’s popularity and authority to push for a “Remain” vote. Afterwards, Remain campaigners invoked Trump’s disrepute to tarnish Farage as his buddy and Johnson as (in Trump’s unhelpful words) “Britain Trump”, so as to discredit Brexit as similarly populist. At worst, Europhiles sought to use US influence to inflame the complications of Ireland, lobbying Nancy Pelosi and others, with a view to derailing Brexit altogether.
Obama’s “back of the queue” remarks — intended as a favour to Cameron — turned out self-defeating with UK voters. Trump’s chaos and disrepute prevented any advance on trade during his term. After initial jitters, Biden has reset relations, confirming the UK as a much-trumpeted (but naturally, junior) partner, with trade not yet on the agenda. Ireland is a continuing bugbear: if America's purpose in revealing its démarche on the subject was to mollify domestic sentiment, or placate the EU ahead of the Cornwall G7, or even to clear the air, the leak also recalls Obama’s clumsiness and runs the risk of similar blow-back.
It is true that the US fostered the EU and would have preferred Britain to stay. Nonetheless, the US takes its allies as it finds them: since WW2, it’s weathered greater storms, for example France, Greece, Israel, Korea, Portugal, Saudi Arabia and Turkey; and eighty years of strategic intimacy count for much.
Fishing
Europhiles used fishing as a parable of the futility of an independent trade stance, in that the ambitions of the UK’s fishing fleet were unrealistic. They talked up the insignificance of the sector, its disproportionate emotional weight on both sides of the Channel and the impossibility of obtaining sovereignty over our waters while our fleet needed access to European markets for its own catch. The public was uninterested, while Leave campaigners kept as quiet as possible, knowing that Remainers had the best of the argument; and that the UK’s fishing fleet is perennially bloody-minded, fragmented and undercapitalised. So far, we have seen bad-tempered stand-offs with French fisherman and disruptive treatment of British imports by EU officials. These teething troubles have been amplified by French electoral politics. The only way out is for HMG to underwrite investment in (and negotiate access for) intercontinental delivery chains, sufficient to leave our fleet relatively invulnerable to the EU market, when both sides revisit the deal in the mid-2020s.
Trade agreements
Remainers argued that the UK could never replicate the EU’s network of trade pacts. They talked up the number of such deals and the difficulty of achieving them. The reaction was indifference by the public and the odd unread monograph from the Leave camp. It was hard not to smile when, during Brexit negotiations, the EU completed agreements with Canada and Japan, formerly stuck for years. A few days after Brexit, the UK rolled over sixty-odd agreements with the marginal economies with which Brussels had struck pre-Brexit deals. Serious-ish deals are now done or close with Australia, India & Japan. Concerns were based on a flawed understanding — sometimes wilful — of the EU’s disappointing performance.
Other issues
Remain campaigners also flagged up data protection, where the UK now has the option to free itself of gold-plated GDPR regulations; defence and foreign policy, from which the MOD was delighted to drop out and where France Germany and Italy are now soliciting bilateral links; the Erasmus scheme for overseas study, although second-eleven European universities never attracted our best and brightest, with twice as many EU students coming here; medical co-operation, where defection has made for Britain’s headline Brexit success; and police and judicial cooperation, which so far is operating satisfactorily at working level. Once again, Remain concerns rested upon a flawed reading of the record.
Tone of voice
In addition to imperfect arguments, the Remain camp suffered from an off-putting manner. Political campaigners have learned to rely upon emotion to win over and retain support. It is no disgrace that leaders of the Remain campaign found it expedient to do so, but their three big emotional themes were inauspicious. First, they made much of their own expertise and authority, together with the support of international economic bodies and local industrial interests. This turned out to be self-defeating, as voters bridled at being asked to take instructions from spokesmen whom the Leave campaign was able to reframe as elitist, remote or self-interested. Second, Remainers dwelt upon the disproportion between Britain and the EU, arguing that the big battalions were bound to have the best of it. If anything this undermined Project Fear, as most voters declined to flinch from, let alone support, the neighbourhood bully. Finally, Remainers claimed to occupy the moral high ground. As already touched on in Delegitimising the referendum and Reputation — influence in the world, they promptly undermined themselves by acting as though this gave them permission to attack Leave voters as ill-informed, racist or otherwise to be disregarded; and to attack the UK government as disreputable, when its tactics brushed up against legal or other norms. Any merits in this last were undermined, as linked to episodic attacks on the UK’s negotiators for proposing “unicorns”, a term popularised by Brussels as rubbishing Britain’s position. Although I have noted the lack of evidence of deliberate co-ordination, nonetheless Europhiles hurt themselves by appearing to delight in undermining the home team. All in all, Remainers’ tone of voice failed to change voters’ minds but here too, we face its aftermath.
Conclusion
Post-Brexit Britain has passed its first test, but there are plenty more to come. Meanwhile, Brexit has been mainland Britain’s most protracted disharmony since the sixteen years of turmoil between the rejection of Castle’s In place of Strife and the defeat of Scargill’s miners. It was prolonged by lack of certainty and May’s unsuccessful leadership; and intensified by the chagrin of defenestrated incumbents and the lefty self-righteousness consistently attested by poll data.5 Good people lost their sense of proportion, but let’s not exaggerate: Home Counties dinner-parties may have been tricky, but at least there was no violence. Compare the coincident gilets jaunes over the Channel, or the violence throughout the West in the 1970s. If we look for a lesson, it would be that Remainers don’t realise that their devastation and anxiety arise because the leaders of their campaign shaved the dice for lack of persuasive arguments. Unfortunately, some still do so.6
This goes some way to explain why Brussels officials and Leave campaigners railed so fiercely against Johnson’s mischievous journalism, which they argue poisoned the British public against the EU with fibs. This is a bit stiff from cultures delighting in Rabelais, de Bergerac, Le Canard Enchaîné and Charlie Hebdo (France); Böll, Brecht, Grass and Simplicimus (Germany); not to say Swift, Hogarth, Dickens, Private Eye, Viz and Rod Liddle (here).
It is some sort of corrective that a poll taken in late April 2021 showed that most French voters have a favourable opinion of Johnson, going so far as to prefer him to Macron. Source: Institut français d'opinion publique. https://www.ifop.com/publication/le-regard-des-francais-sur-boris-johnson. Extracted 4 June 2021
This is despite the failure to implement the commitment that both parties should “by March 2021, agree a Memorandum of Understanding establishing the framework for [financial services] cooperation. The Parties will discuss, inter alia, how to move forward on both sides with equivalence determinations…” (Annex 3 to the Co-operation and Trade Agreement between the EU and the UK). Instead, we have seen bad-tempered exchanges on fishing, Ireland and vaccinations. The City is now preparing to go its own way, independent of EU regulation.
While the UK was a member of the EU, its regime of non-tariff measures (NTMs) put our exporters of goods at a consistent disadvantage. For many years, the OECD has measured these as trade restrictiveness indices (TRIs), with the UK showing by far the lowest NTMs. The EU nudges the Americans but is mercantilist by the standards of Australia, Canada and ourselves.
The OECD also measures TRIs within the EEA (the EU plus Iceland and Norway). The 2019 figures show that the EU has higher internal NTMs than the UK in 20 out of the 22 sectors measured. The worst offender is Austria with barriers 2.5x UK levels; Italy is 2.3x, Germany 2x and France 1.6x. Ireland is closest to the UK at 1.08x, no surprise as Dublin generally follows London. Such differentials have always been present, telling us that the reality of the Customs Union put the UK at a systemic disadvantage: everyone else could sell goods to us more easily than we to them.
The Single Market did equally little for UK service exporters. In August 2020, the EU published its own analysis of internal TRIs for business services (accounting, architecture, computer, engineering and legal). This shows that internal and external barriers for competition are identical in 104 of 115 measures, meaning that by this standard too the Single Market was close to useless for the UK. Sources: OECD. https://stats.oecd.org/Index.aspx?DataSetCode=STRI; and https://qdd.oecd.org/subject.aspx?Subject=STRI_INTRAEEA; and European Union: https://publications.jrc.ec.europa.eu/repository/handle/JRC121443. Extracted 21 January 2021. Author’s analysis.
Parenthetically, no-one knows how much co-ordination there was between Brussels and Remain campaigners in this country. In the heat of the moment, some Leavers claimed there was a seamless web between the two. If there was, no-one is talking and so far, there’s no smoking gun. Maybe this is another conspiracy theory.
The poll question is that used for over sixty years to flush out racial prejudice: “How would you feel if your child married a…?” For US data see YouGov America; https://today.yougov.com/topics/politics/articles-reports/2020/09/17/republicans-democrats-marriage-poll; 17 September 2020. For UK data, including Brexit affiliation, see YouGov: https://yougov.co.uk/topics/relationships/articles-reports/2019/08/27/labour-voters-more-wary-about-politics-childs-spou; 27 August 2019.
A wonderful example appears in the Guardian, datelined 27 June 2021, where Will Hutton, lifetime critic of free markets and former Principal of Herford College, Oxford, mixes anecdote, bile and cherry-picked statistics under the headline The case for Brexit was built on lies. Five years later, deceit is routine in our politics. Motes and beams come to mind. Source: https://www.theguardian.com/commentisfree/2021/jun/27/case-for-brexit-built-on-lies-five-years-later-deceit-is-routine-in-our-politics. Extracted 28 June 2021.
The billionaire boys and their toys
On July 11th Richard Branson flew to the edge of space, just shy of 53 miles up, just short of the internationally recognized Kármán Line (62 miles) that marks the point where outer space begins. On July 20th Jeff Bezos hopes to reach space itself in his New Shepherd capsule.
A handful of rich people are driving technology forward at a faster pace than it might otherwise develop. They are the billionaire boys, who use money made elsewhere to aim at the cutting edge of innovation. They push technological advance at a faster pace than it would achieve if left to straightforward commercial development.
They are all well-known for the products and processes they introduced to make their first fortunes. They enriched us all with search engines, home delivery and electric cars. Many of them became rich through software or internet development, but are now applying their wealth to areas that excite them in fields such as space travel and transport.
Paul Allen, who co-founded Microsoft with Bill Gates, put up $25m of his own money to fund Burt Rutan's company, Scaled Composites, and to help it win the X-Prize of $10m for achieving the first private manned spaceflight above the Kármán Line with SpaceShipOne in 2004. Its successor is SpaceShipTwo, the vehicle behind Virgin Galactic. Allen's original backing was not done for a return, but to speed up access to space by private citizens. As a sideline Allen, whose own fortune was estimated at £20bn, also funded the Allen Institute for Brain Science, and the Allen Institute for Artificial Intelligence. He put $30m into the Allen telescope array to aid the Search for Extra-Terrestrial Intelligence (SETI). He died in 2018, having left a big mark on technology.
Elon Musk made his first millions with Zip2, an internet city guide, receiving $22m when Compaq bought it. He co-founded PayPal and received $165m when it was snapped up by eBay. Like Allen, he has helped to fund private enterprise spaceflight, founding SpaceX with $100m. SpaceX developed the Falcon rocket that launches its Dragon capsules to the International Space Station (ISS), and lowers costs by being re-usable.
Musk also founded Tesla Motors to advance electric car technology. He fundamentally redesigned the car, and pioneered battery innovations that solved the limited range problems that held back the spread of electric vehicles.
One of Tesla's backers is Larry Page, who co-founded Google with Sergey Brin and is reckoned to be worth $112.5bn. He has also backed alternative energy sources, is reported to have donated $20m to the Voice Health Research Institute after developing vocal cord issues of his own.
His Google partner, Sergey Brin, is worth over $105.5bn, but draws an annual salary of just $1, as Page and Musk do, as Steve Jobs did. He backed the genetic research company, 23andme, founded by his then wife, Anne Wojcicki, and has also put money into alternative energy, including wind-powered electricity from kites, and funded the initial development of lab-grown meat. He invested $4.5m in Space Adventures, and has booked a flight to the International Space Station.
These billionaires are all very boyish in temperament, bubbling with enthusiasm over new gadgets and ventures. These boys play with very expensive toys, however, and their enthusiasm is bringing closer the day when their toys become available to the rest of us at more affordable prices.
A major player in this billionaire's game is Jeff Bezos, who founded Amazon and is reputedly worth $213bn. His toy is the New Shepard vehicle of his aerospace company, Blue Origin. The rocket lands vertically under power, just like the science fiction rockets of 1950s comics. A manned capsule will take astronauts into orbit, while the Blue Origin returns to Earth to be readied for another flight.
Bill Gates is the odd man out, preferring to fund the Bill and Melinda Gates charitable foundation rather than to advance technology that excites his enthusiasm, but even here his wealth might well conquer malaria.
The common theme is of billionaires using their wealth to bring forward the technology they dreamed about as boys, and never quite grew out of. It’s not entirely new. Britain's Industrial Revolution featured several gentlemen who used the wealth of landed estates to fund the development of inventions they thought would be useful. Some did it with an eye to future profits, but others did it to improve humankind.
What is remarkable about today's billionaire boys is the scale of the wealth they commit to pushing forward their dreams. They have money to spare, and can take risks no shareholders of boards of directors would contemplate. They push technology forward because they want to see the toys - the private space-planes, the high performance electric cars, and the driverless vehicles that will one day whisk commuters to and from work more rapidly than high speed trains can.
The billionaire boys want to see tomorrow, and are putting resources into making it come sooner. And the rate of technological progress is accelerating because of their activities.
Democracy and liberty are not synonyms
Rod Liddle points out that there are a number of authoritarians in our society:
They yearn for authoritarianism and, however they might profess their love of humanity, they distrust and despise people who are not themselves. They are, I think, anti-democrats. They live in a world that is not to their liking largely because it is too free. Lockdown is, for them, a kind of nirvana and it should continue for ever.
A certain exaggeration there for effect possibly but there certainly are those out there who are natural authoritarians. But this is not to be anti-democratic, it’s to be anti-liberty, anti-civil rights perhaps.
An important distinction that must be made.
Democracy is valuable, no doubt about it. But it’s not the ultimate value, not at all. It can - indeed often has and will always be at risk of becoming - a tyranny of the majority. Which is why we have systems of limiting said democracy.
We have Human Rights Acts, Bills of Rights, the ECHR and on and on precisely to limit what democracy may do to us. Yes they’re, in that first line, what government may not do to us but that’s just democracy - in a democratic system of course - at one remove.
Authoritarians are not anti-democratic, they’re anti-civil libertarian. It’s the risks of authoritarians managing to get elected which means we have those systems to protect us from democracy just as we also have systems to promote it.
As with so much else there’s an optimal amount of that democracy. Enough that we determine who rules us, assuredly, but not so much that the majority overrides that liberty.
A certain brutality here, yet also a certain truth
Mr. Lutnik will no doubt be demonised as a very bad man, even a brutal one:
Junior bankers who complain about being burned out by long hours in the office should stop moaning and think about changing career, according to an American banking boss.
Howard Lutnick, who runs Cantor Fitzgerald, said bankers should go into the job knowing it will involve late nights and weekend work.
His view is a stark contrast to his American rivals that have given junior staff extra time off, higher pay or gifts such as Peloton bikes or Apple Watches this year amid fears of a revolt.
"Young bankers who decide they’re working too hard - choose another living is my view," Mr Lutnick told Bloomberg TV. "These are hard jobs."
With reference to the difference between American and British practices, the British already work fewer hours, even in this sector.
But as Adam Smith said - and as has been shown to be true subsequently - compensating differentials are a real thing:
The five following are the principal circumstances which, so far as I have been able to observe, make up for a small pecuniary gain in some employments, and counter-balance a great one in others: first, the agreeableness or disagreeableness of the employments themselves; secondly, the easiness and cheapness, or the difficulty and expence of learning them; thirdly, the constancy or inconstancy of employment in them; fourthly, the small or great trust which must be reposed in those who exercise them; and fiftly, the probability or improbability of success in them.
First, The wages of labour vary with the ease or hardship, the cleanliness or dirtiness, the honourableness or dishonourableness of the employment.
There is also the allied concept of efficiency wages - bankers get paid lots in order to make dipping into the cash flow an expensive thing to do if it risks losing the high income from the employment itself.
But there it is, right there. One reason bankers get high pay is because of the hardship, those long hours. Those who find it not a sufficient compensating differential should find another way of making a living.
Mr. Lutnik is right.
The whole of the advantages and disadvantages of the different employments of labour and stock must, in the same neighbourhood, be either perfectly equal or continually tending to equality. If in the same neighbourhood, there was any employment evidently either
more or less advantageous than the rest, so many people would crowd into it in the one case, and so many would desert it in the other, that its advantages would soon return to the level of other employments. This at least would be the case in a society where things were left to follow their natural course, where there was perfect liberty, and where every man was perfectly free both to chuse what occupation he thought proper, and to change it as often as he thought proper. Every man’s interest would prompt him to seek the advantageous, and to shun the disadvantageous employment.
In terms of employment in finance we are in something as close as anyone ever has been to such a completely free market. The pay reflects the hours. Sure, that might not be a trade off that all are happy with but so what? There are, as we all know, alternative employments out there with different trade offs.
We do wonder where Polly Toynbee gets her information from
Polly Toynbee tells us that:
In the last decade, the NHS budget per capita fell in a rapidly ageing population.
That doesn’t, particularly, seem to be true.
In this edition of the UK Health Accounts, healthcare expenditure consistent with the definitions of the System of Health Accounts 2011 (SHA 2011) has been estimated back to 1997 for the first time (Figure 1). Health spending between 1997 and 2018, in nominal terms, trebled, with the average annual rate of growth being 5.8%.
Controlling for inflation, healthcare expenditure more than doubled over the same period, experiencing an average annual rate of growth of 3.8%. Breaking this down into healthcare spending before and after the impact of the 2008 economic downturn, healthcare spending grew by an average rate of 5.3% per year between 1997 and 2009, slowing to an average of 1.9% between 2009 and 2018.
Estimated healthcare spending per person, in real terms, almost doubled between 1997 and 2018, rising from £1,672 per person in 1997 to £3,227 in 2018, as healthcare expenditure growth greatly exceeded population growth.
Agreed, that doesn’t include the last couple of years but we think we’d have heard about it if “the cuts” had reversed that previous 8 years of growth to give us that decade Polly claims.
There’s also a political problem here:
Voters might ignore the fiendishly complex history of NHS restructuring, but they will grasp one simple, sinister point: the government is seizing control of the everyday running of the NHS, in what the Health Service Journal calls “an audacious power grab”.
This is a corollary to Hayek’s point in The Road To Serfdom. His main one being that if government provides health care then we, the population, will be managed to benefit the health care system. Like, you know, cowering in place in order to save the NHS.
The corollary here is that Polly does insist that government be that healthcare provider. Both in financing and in providing the workforce and facilities, the treatments. And yet she seems to think that government isn’t then going to try to control what is done with that £200 billion a year and more.
That’s really not the way politics works now, is it?
We even have a logical problem here:
The then NHS CEO, David Nicholson, himself called that upheaval so colossal “it can be seen from space” as it broke the NHS into fragments, putting every service out to tender to anyone, public or private, enforced by competition law. Every part of the NHS had to bid and compete against others for any service: co-operation was illegally anti-competitive.
This is to grossly misunderstand how markets work.
Yes, there is competition, yes, competition is beneficial. But the competition isn’t between the different layers or links in the chain of provision. That always remains as cooperation. It’s between the different people - organisations - that can be any specific link in that chain.
The supermarket and I are cooperating when I buy a banana. More than that, so is everyone in the supply chain. The folks who make the refrigerated ships that carry the fruit (actually, an herb) across the ocean, the sailors upon said ship, the guy who dug the hole to put the clone of the Cavendish into it 10 years before, the people who make the fungicides, the supply chain is a masterpiece of coordination and cooperation.
Competition is between the varied alternative folks who could provide any one or more of these goods and services in that supply chain.
The cooperation makes a market work, the competition is how I get to buy the banana at 99 pence per kg.
Markets, that is, are a method of organising cooperation. Competition is just the decision about who to cooperate with. And why would we be against that?
Factual errors, illogic and an ignorance of politics. Well, it is a Polly column, isn’t it?
The view from the bubble
There is an old proverb that tells us, “Never criticize a man until you have walked a mile in his shoes.” The corollary is that you are therefore a safe mile away when you voice your criticism, and you have his shoes.
The humour notwithstanding, it can spread understanding if people try to see how the world looks from someone else’s point of view.
Analysts sometimes speak of the “Westminster bubble,” named after the Westminster centre of government and administration. It includes Parliamentarians, political staffers, those employed by NGOs, civil servants, broadcasters and academics. It is alleged that they share a common standpoint, and rarely encounter the views of those outside their mindset. They live, it is said, in an echo chamber in which they think the views they hold in common with those of their milieu are the only possible views that reasonable people can hold.
In truth, they represent a class that extends beyond Westminster. Many of them will have attended good schools and gained university degrees. They tend to work in jobs that don’t actually produce goods and services other than communication, education and government. They socialize with like-minded friends. Their parallels can be seen in other big cities as opposed to ordinary towns, sharing similar lives and holding similar views.
Most would think of themselves as internationalists, regarding patriotism as insular and outmoded. Overwhelmingly they supported the EU and voted Remain. They despised Trump and regard the Tory party with a lofty disdain. They are on the Left politically, and regard business and profits with disdain. Most of their salaries are funded directly or indirectly from taxpayer funds, so they are above what they might see as the sordid process of actually making money.
Many of them acquiesce in anti-capitalist ventures that crop us periodically, from Occupy Wall Street to Extinction Rebellion. Many think the most important issues facing humanity are equality, diversity, decolonization of the culture and such environmental causes as don’t actually limit their own lifestyle. They adopt the changes in terminology demanded by woke culture. One can only guess at their reasons for looking down on the ordinary people outside of their world. Perhaps they think their education makes them superior in other respects?
And yet there is a world beyond the bubble, a world in which ordinary people are doing their best to lead decent lives, to get by as best they can, and to do their best for their children. They are no less honourable for being outside the bubble or for working in lower status jobs, and their views are no less entitled to expression than those of the bubble people.
They are mostly patriotic, taking a low-key pride in their country and its achievements, and not denigrating its past. This does not make them xenophobic, as bubble people seem to think. They tend to be tolerant, not racist, and not opposed to those who choose different lifestyles. They are as concerned about the environment and the world their children will inherit as their bubble counterparts are, albeit in a less strident way.
If they have a complaint about modern Britain, it might be that those at the centre of its government and its culture have overlooked and ignored them and discounted their legitimate views and concerns. The response of many of them was to vote Brexit and to vote Tory, as a protest against being told how to behave and what to think by those who believe their superior status, as they see it, entitles them to do this.
The bubble is not Britain, and those who move within its confines might learn something if they looked beyond it.
Taking George Monbiot's advice to heart
George tells us that:
The lesson, to my mind, is obvious: if we fail to hold organisations to account for their mistakes and obfuscations, they’ll keep repeating them. Climate crimes have perpetrators. They also have facilitators.
This seems entirely reasonable to us. From the same edition of The Guardian we get this:
More than 8 billion people could be at risk of malaria and dengue fever by 2080 if greenhouse gas emissions continue to rise unabated, a new study says.
Malaria and dengue fever will spread to reach billions of people, according to new projections.
Researchers predict that up to 4.7 billion more people could be threatened by the world’s two most prominent mosquito-borne diseases, compared with 1970-99 figures.
The figures are based on projections of a population growth of about 4.5 billion over the same period, and a temperature rise of about 3.7C by 2100.
This comes from a paper in a part of The Lancet network:
…across four RCPs (arranged from the most conservative to business-as-usual: RCP2·6, RCP4·5, RCP6·0, and RCP8·5)
Now that’s a mistake, or obfuscation, that needs to be held to account. As one of us has pointed out in significant detail that RCP 8.5 is not business as usual. It never was anything other than an unlikely edge case just to show extremes. The actions that have already been taken concerning climate change make it - without extreme and significant retrogression - unachievable as even a possible case now.
What might happen if we all party with coal like it’s 1899 is a possibly interesting rumination. But to call that a likely, even possible - let alone business as usual - future is somewhere between that mistake or obfuscation that we must hold people to account for.
Well George, what say you?
Green capitalism
Although many environmentalists say that socialism must be introduced to solve environmental problems, the environmental record of socialist counties has been very poor indeed. Other environmentalists blame capitalism for degrading the environment and call for it to be replaced without specifying what is to replace it.
Green capitalists, on the other hand, say that where capitalism has degraded the environment it is because natural resources such as the atmosphere and the oceans have not been costed. It is the tragedy of the commons that people are motivated to overuse resources that add value but cost nothing. They further say that if externalities are properly costed, people will have an incentive to use them efficiently and sparingly. They support the notion of internalizing these externalities, with many of them calling for carbon taxes and carbon trading so that the pollution costs enter the prices of products, leading people to turn to less polluting alternatives. Green capitalists argue that firms that use fewer resources such as energy, raw materials or water, find this is good for profits as well as the planet.
They further point out that if society through its governments sets targets, capitalist entrepreneurs will come up with cost effective ways of achieving them. But it’s not just governments that are doing this. Surveys report that consumers show more brand loyalty and willingness to pay higher prices for products perceived to be sustainable. This is especially true among Millennials and Generation Z, who currently make up 48% of the global marketplace and have not yet hit their peak spending levels. Firms that want to capture a chunk of that market have a financial interest in producing sustainably.
Entrepreneurs in search of profits are already making renewable energy sources more efficient, and are bringing its costs down. Renewables are technologies, not fuels, and technologies develop and improve, whereas fossil fuels remain as constants. And given the ability to produce more and more electricity from renewables, the development and spread of electric vehicles is offering a green revolution in transport. People need not travel less, but just to travel clean.
Environmentalists assume that if animal husbandry is bad for the environment, people must learn to eat less meat, but the green capitalist’s answer is to produce meat from non-animal sources such as cultured (lab-grown) meats. Capitalists are also applying GM and CRISPR technologies to enable more food to be produced on less land, leaving land free for reforestation, and thereby increasing the world’s tree cover.
The capitalist’s answer to the overfishing of the world’s seas is to insert the discipline of markets into what has been a common resource. Iceland and New Zealand now assign tradable quotas to fishing boats so that they have a commercial interest in sustaining stocks. If a boat hauls in more than its quota of designated fish, they buy quotas from other boats instead of dumping the catch, EU-style, to avoid fines.
When supermarkets, seeking profits, buy cheaper tomatoes from warmer countries rather than pay for expensive ones that need energy inputs to grow them, this has been castigated as “food miles,” but the reality is that they are effectively importing renewable sunshine from abroad rather than requiring energy resources to be expended at home.
The effect of all of this capitalist and entrepreneurial activity is to make a convincing case that protecting the environment does not require the overthrow of capitalism and markets, as many environmentalists demand. Instead it requires the application of them.
The Merchant of Brussels
We all know the plot of the Merchant of Venice. Antonio needs money in a hurry to finance his global trading ambitions and signs a contract under which Shylock can have a pound of his flesh of his choosing if he fails to repay the loan on the due date. Come the date, his ships are not back. He cannot repay the loan and the contractual text allowed Shylock to select Antonio’s heart. The sub-plot is that Shylock hates Antonio who went to the Venetian equivalents of Eton and Oxford and sees this as an opportunity to wreak vengeance. When Antonio’s friends offer to pay off the loan at many times its value, Shylock refuses. He insists that the contract was freely signed by Antonio and must be implemented to the exact letter.
Clearly it would be ridiculous to suggest that Shakespeare anticipated the Irish Protocol negotiations by 416 years, or that our Prime Minister resembles Antonio in any way, or that the EU are seeking to penalise the UK for leaving the club. Nevertheless, the parallels are there and it is interesting to recall how Shakespeare resolved the irresolvable.
The Irish Protocol was devised to avoid customs posts on the border between Northern Ireland and the Republic. It may be a small island but the border is longer than that between France and Germany and more difficult to police, although customs border posts worked perfectly well for 70 years from 1923. The idea that reinstating them would infringe the Belfast Agreement is a myth invented by Dublin; nothing in that Agreement envisages Brexit.
So, a Protocol which would allow free trade between the north and south of the island is clearly a good idea especially as the master trade agreement stipulates tariff free trade between the EU and UK. Free trade within the UK, i.e. between Britain and Northern Ireland, was so obvious that it hardly needed stating so the PM affirmed there would be no border in the Irish Sea. Unfortunately Shylock’s clerks could not grasp how Northern Ireland could be part of the EU customs union, observing all its rules and regulations, at the same time as being part of the UK customs union with rules and regulations which were expected to diverge from the EU’s. Tariffs are not the issue; non-tariff barriers are.
Furthermore, the drafting clerks had a tenuous grasp of UK geography. They seem to have confused the Isle of Man, which is not part of the UK, with Northern Ireland, which is. When the PM read the draft Protocol, if he read it at all, the absence of the obvious would not have worried him any more than it worried Antonio.
Given the total commitment of the Merchant of Brussels to the signed text of the Protocol, it is no surprise that suggestions of “flexibility” and “pragmatism” fall on deaf ears. Brussels views rather trivial extensions of detailed matters, such as sausages, as hugely magnanimous and the British negotiators take credit for any crumbs they can get. That approach will not solve the fundamental problem and it was not a route that Portia, an intelligent woman, chose to take. She played Shylock at his own game: he insisted on the letter of the contract, that, no more and no less. So be it: he could take a pound of flesh but not a drop of blood.
So where, in the 63 pages of the Protocol, is there the equivalent of the drop of blood? If that can be found and cause the Protocol to collapse, another could be drawn up to meet the requirements of both the EU and the UK. The negotiators spent weeks looking for that and probably missed it because it is so obvious. We can come to that later.
The drop of blood equivalent arises from the Protocol’s uncertainty about whether Northern Ireland is part of the United Kingdom, or merely involved in a shared customs union. This is a key point because the Protocol sees Northern Ireland as becoming part of the EU customs union but does not claim it is part of the EU.
Some Protocol clauses imply that Northern Ireland is indeed merely linked to, but not an integral part of, the United Kingdom. For example, one of the introductory clauses:
“RECALLING that Northern Ireland is part of the customs territory of the United Kingdom and will benefit from participation in the United Kingdom's independent trade policy,”
And Article 4 of the Protocol:
“Article 4: Customs territory of the United Kingdom:
Northern Ireland is part of the customs territory of the United Kingdom. Accordingly, nothing in this Protocol shall prevent the United Kingdom from including Northern Ireland in the territorial scope of any agreements it may conclude with third countries, provided that those agreements do not prejudice the application of this Protocol. In particular, nothing in this Protocol shall prevent the United Kingdom from concluding agreements with a third country that grant goods produced in Northern Ireland preferential access to that country’s market on the same terms as goods produced in other parts of the United Kingdom. Nothing in this Protocol shall prevent the United Kingdom from including Northern Ireland in the territorial scope of its Schedules of Concessions annexed to the General Agreement on Tariffs and Trade 1994.”
This confusion about Northern Ireland being fully part of the UK seems to be widespread amongst continental politicians. If one was to take a “pragmatic” view of implementing the Protocol then these matters would be swept away but if one takes the Shylock enforcing the literal approach, as the EU does, then the confusion undermines the very essence of the contract. The Protocol is a contract between two legal entities, the UK and the EU. If Northern Ireland is not an integral part of the UK, it is a separate country and not bound by the Protocol. Note that no Northern Ireland politicians were involved in the original Protocol negotiations, nor the renegotiations since. When I queried this with the Secretary of State for Northern Ireland on May 21st, he said it was nothing to do with them; it was purely a matter for London and Brussels.
Whether or not a judge would agree that this issue is enough to void the contract, is debatable. The case is certainly not strong and it may be regarded as academic because the need for a better Protocol is far more important. The relationship these days between Dublin and Belfast is pretty good and it is far more likely that they could not only find a solution but believe they own it. How much loyalty did London imagine Ulster politicians would give whatever Protocol London negotiated if the Ulster politicians were excluded?
At present the DUP focuses on the removal of the present Protocol when its replacement by a workable Protocol of some sort, one that meets the needs of the two parties in Ireland as well as the UK and the EU, is of far greater importance. Northern Ireland being in the two competing customs unions at the same time would be feasible if the UK regulations apply to goods supplied from Britain for consumption in Northern Ireland, whereas EU regulations apply to goods created in Northern Ireland for consumption in Northern Ireland or the EU. The contentious issue has been goods supplied from Britain to Northern Ireland intended for the Republic, or at risk of being consumed there. As it happens, the Republic makes plenty of its own sausages, similar to UK ones but of a different shape. There is minimal, if any, demand for UK sausages in the EU.
This problem could be solved by shipping all goods intended for the Republic, directly to the Republic, and labelling goods intended for Northern Ireland in a way that would make them unsaleable in the Republic, e.g. priced in sterling not euros or marked “For sale in Northern Ireland only”. It should be a matter for EU trading officers to deal with offenders within the EU, not a matter for UK officials.
No doubt Portia could make a better job of unravelling this matter than I have. What should be obvious to the negotiators, but seems not to be, is that the Protocol is fundamentally unfair and will cause serious trouble unless they stop tinkering and replace it with something sensible. By the way, Antonio’s ships did eventually return and he lived happily ever after.