Three things the EU needs to fix, and one that it doesn’t

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At a recent event organised by the Spectator, Matthew Goodwin, an academic who has made his name with studies of the far right, suggested that the European Union was falling apart, and that in time Brexit, for its trauma, will be seen as the right move for Britain. Supporters of the EU are so mired in the crises of the moment, from Brexit to the Italian budget to refugees to governmental corruption in east Europe, that they are not asking deeper questions abut the Union. In the spirit of moving the debate along, I want to talk about three fundamental problems that need to be fixed, and one that doesn't.

The one that doesn't is a lack of democracy. This is a nearly universal complaint, but it is a proxy. It is an old rule about complaints: often what people say isn't the real issue. In the EU's case the real issue is that people feel that they don't have enough say in key things that affect their lives, such as who can move into their neighbourhoods. The answer to that isn't making EU institutions more transparent and accountable, and still less directly electing officials. In practice these will tend to centralise power and create yet more aggravation from those who get outvoted. There is as yet no European polity, and little solidarity between Europe's extremes. These are necessary prerequisites for democratic structures. The European parliament is a democratic failure for this reason: the only useful purpose its elections serve is as a vehicle for protest votes - but that is because the voters don't care about the consequences. Decisions in the Union are made through a consensus or near consensus of democratically elected heads of state - which is as good as it is ever going to get. Instead we need to look at the issues that are causing the deepest friction, in particular the free movement of people, or the greatest institutional stress, such as corrupt and populist governments, or both, like the Euro.

Let's start with the free movement of people. This is so difficult is because free movement is in fact very popular. People like the idea that they can up sticks and move anywhere in the continent where the opportunities are better or the climate is nicer. This is, above all, what inflames passions amongst Britain's Remainers. And it is why Europe's politicians created the Schengen passport free zone. But for those people who find themselves surrounded by newcomers, it feels that they have lost control over an important aspect of their lives. And the biggest stress of all comes from people who originally come from outside the continent to live here, though we shouldn't forget the stresses created by Poles and Lithuanians in Lincolnshire, or British "expats" in Spain. There is an undoubted racist undertone to this, but liberals need to understand that behind this is the feeling that rural and small town residents have of lost control. Democratisation, in this case, means more local control on who is entitled to residency, work and benefits. Of course this would mean that those choosing to keep foreigners out should lose the benefits of having foreigners come in - but people need to make that calculation for themselves, rather than have it imposed on them from on high.

The next problem for the Union is the way that corrupt elites can take control of governments with weaker national institutions, and bend them towards favouring insiders. Often this is done under the guise of populism, as in Hungary and Poland; sometimes it is a bit more obvious, as in Bulgaria and Romania. The elites running these countries are able to take the benefits of EU membership while ignoring its institutional norms, such as free speech and the rule of law. The more skilled practitioners, like Hungary's Victor Orban, are then able to portray the EU's complaints as an outrageous attack on their own democracy. Here what is needed is a bit of rebalancing of EU institutions to give the majority more leverage. Time is on the EU centre's side: few things are more unpopular than corruption and sooner or later voters will endorse the rules-based EU institutions. But the majority need to be able to exert more subtle pressure on the backsliders than currently. The EU budget is an obvious place to start.

And so we come to the Euro. As with freedom of movement the problem is that the Euro both very popular, and has a capacity to create extraordinary friction. The Euro is popular because it is, for most people (Germany and the Netherlands excluded), a better store of value that any local currency would be, as well as a more flexible unit of exchange - two of the key functions of a currency. Meanwhile governments like the reduced cost of borrowing that the Euro brings. Germany and the Netherlands, meanwhile, derive much of their wealth from trade and doubtless appreciate that a floating currency would tip the terms of trade against them. And yet a single currency brings many problems with it, especially when combined with the fiscal rules that prevent countries from properly managing their business cycles. This can create unnecessary hardship, as well as dangerous frictions between the currencies haves and have-nots. The new Italian government is about to challenge the system to breaking point. It wants to loosen the fiscal rules to stimulate its economy, for which there may be a perfectly decent case, while at the same time rolling back reforms that would make the Italian economy more efficient. Interestingly, it is not finding this as easy as it thought, since its manoeuvres have raised its cost of borrowing without the EU institutions lifting a finger. But doubtless they will succeed in engineering a damaging confrontation. Most people think that they way forward is to create stronger institutions at the centre of the zone so that resources can be moved around within it more freely. The Germans object, though, and so there is impasse.

The solutions to each of these three issues are not clear. But what I think is clear is that they will require a new EU treaty of some sort. At the extreme it may mean closing down the existing union and creating a new one - or at least for the core countries to threaten this. That will require the crisis to deepen. They also mean that some of the fundamental rights and freedoms on which the Union has been built will have to be rethought. The sooner that people start that rethinking, the better.

But before we despair we must remember the things the Union does well. First is that it makes continental commerce easier, especially since the Single Market was instituted in 1992. Second, it is more effective than any national institution in taking on global multinational businesses, whose anti competitive practices are an increasing global problem. Third, they help its smaller members to stand up to bullying by countries inside and outside the union. Ask yourself why Vladimir Putin and Donald Trump dislike it so much? And fourth, it does regulation pretty well. A recent example of this is the General Data Protection Regulations (GDPR). This is a welcome push-back by the European public against the abuse of data by commercial and other interests. It is very unlikely that individual governments would have done as good a job. Their local political agendas are too full to make room; crucial elements would have been watered down by local vested interests. Even in Brexit Britain you hear very little protest against what is a very irksome set of requirements; people feel that something needed to be done. There are many other examples. And, of course, it makes sense if each country's regulations are compatible with each others. It is not that EU institutions are immune to special interests, but that it is better placed to handle them than national governments.

And there is such a thing as a shared European identity, based on a shared history. This may get stronger. Europeans used to see the rest of the world reflected in its own image - a result of its period of empire in the 18th and 19th Centuries. As other continents emerge from that shadow, Europe looks a smaller place - but it becomes more obvious what unites it. It stands against the free-wheeling capitalism of America, the totalitarianism of China, the theocracy of Iran and Saudi Arabia, and the cynical kleptocracy of Russia. It does so based on centuries of learning things the hard way. As the EU struggles with its raison d'etre something more cohesive should emerge. That is my hope.

 

 

Liberals still don’t get the Trump phenomenon. He is not in danger

To judge from the headlines in the liberal press, or liberal commentators on the BBC, you would think Donald Trump's presidency in the US was on its last legs. This follows the conviction yesterday of two of his (formerly) close advisers, and his being implicated by one of them in an illegal pay-off. But these commentators have failed to understand how the Trump phenomenon has rewritten the rules of US politics. Provided he maintains his health, Mr Trump will surely last until the end of his term in 2020. And if his liberal opponents continue to underestimate him, he could well win a second term.

The first point to make is that Mr Trump is utterly shameless. He is not the least bit embarrassed by anything that he has done. Call this narcissism if you like, but he will fight on. The second point is that his base of support both remains solid, and maintains a grip on the Republican party.

To his base, Mr Trump is the man who has delivered. Evangelicals have their conservative judges. Business leaders have their tax cuts and roll-back of tiresome regulations. Conservatives everywhere are enjoying are enjoying the rout of liberal values: it feels like fresh air. And the bad behaviour? That is utterly unsurprising; they knew the sort of man they were taking on. So long as he is doing the job of battering ram, they will forgive everything. Corruption is something that happens to liberals, in their eyes, and not to politicians on their own side. Indeed in they seem to think that corruption is less about illegal payoffs and more about the process of political compromise with people who are not like them.

So neither Mr Trump nor his base will be shaken by recent events. Legally the President looks secure too. There is debate as to whether it is possible to indict a sitting president with a crime - but if that came to be tested the Supreme Court has shown no appetite to challenge Republicans on anything important. It is unlikely that the special prosecutor, Robert Mueller, will even try. Everybody else in Trumpland is either dispensable or Mr Trump can use his powers of pardon. There is pretty much nothing Mr Trump would not do rather than admit defeat.

Which leaves the danger of impeachment, which is essentially a political process. It is looking likely that the Democrats will take control of the House of Representatives in the mid-term elections in November. That would allow impeachment to proceed. If there were grounds to do so against Bill Clinton in the 1990s, there will be more than enough against Mr Trump. But success depends on the votes of two-thirds of the Senate. Which means that half or more Republican Senators will have to turn against him. Given Mr Trump's hold on the party grassroots, and his ability to undermine the credibility of any given opponent by a constant process of smearing, he looks secure. He will paint the impeachment as a politically tainted process, and not without a degree of justice. This is politics, and Mr Trump has proved to be America's most effective politician.

The problem for liberals is that they persist in judging Mr Trump and his supporters by their own standards. Mr Trump's behaviour would kill a liberal politician's career. But Mr Trump does not need liberal votes. Instead he is playing an altogether different game: the politics of emotion, victimhood and identity. It is something liberals really don't get.

But Donald Trump is politically vulnerable. His base is as loyal as ever, but it is a minority. He is making little attempt to win over anybody else: indeed he enjoys antagonising large sections of the US nation. This is one reason why it looks as if he will do badly in the mid-term elections. Another is that there are some cracks in his record for some of the people who had supported him.

To his supporters Mr Trump is a breath of fresh air because, unlike politicians before him, he is delivering on his election promises. That is true in the sense that he is doing things that mainstream politicians have not dared to do: notably the ratcheting up of the trade war, which has widespread public support. There are broken promises aplenty, of course, but these are either on secondary issues, or easy enough to pass off blame onto others. But I think there are two sources of trouble. One is healthcare reform. This is fiercely complicated, and the Trump administration is unable to do anything complicated. His attempts to push through a reform last year collapsed. That itself is not a problem: there are plenty of people to blame it on. And if he had succeeded it might actually be worse for him. The problem is that for many working class Americans, getting decent and affordable health care insurance is becoming impossible. A Republican reform of healthcare would not have helped. But the slow decay of the Obamacare system is making things worse. That is enough to create doubts for a lot of Trump voters, who increasingly realise that the Republicans are not on their side.

A second problem comes with the trade war. The process itself may be popular, but as it progresses it will create more victims. Already many farmers are worried. It may be enough to help the Democrats hold on to Midwestern Senate seats that would otherwise have been near impossible to hold.

This may be enough for the Democrats to overcome gerrymandered boundaries and win the House of Representatives, and even the Senate (tricky because the previous contests were six years ago on a Democratic high water mark). But the path to the presidency in 2020 is much trickier. Once Mr Trump is able to concentrate his political skills on undermining a single opponent, all bets are off. A lot of people blame his victory in 2016 on the Democrats choosing a weak candidate in Hillary Clinton. But in many ways Mrs Clinton was a strong candidate. Mr Trump would have successfully undermined any Democrat opponent, just as he did with his Republican opponents in the primaries.

And there is a trap for Democrats. It is tempting to follow the Republicans into the politics of victimhood and identity. There are plenty of people who feel victimised by the Trump regime. But that takes them away from many of Mr Trump's less committed and more sceptical supporters. He may be able to rally them again. The Democrats need to show that they are standing up for these voters too, on healthcare and jobs in particular.

I continue to hope there will be a moment of revelation to Trump supporters, akin to what Hurricane Katrina did for George Bush Jnr. But the man has survived so many knocks, that I doubt this will happen. After that I just hope that the Democrats can choose a candidate with high ethical standards that can convince all working class Americans that she or he is on their side and Donald Trump isn't.

Italian populists will find it easier to complain than to govern

Well one of my 2018 New Year predictions is bearing fruit. I predicted that the big issue in 2018 for the EU would be Italy, and its push back on how the Euro is run. Just how this will play out is very hard to judge, but it is now centre stage. Most of the coverage centres on threats by Italy's Five Star Movement (M5S) and the Northern League to take Italy out of the Euro. But the politics of that is much trickier than many give credit for.

It is, of course, too easy for liberals like me to sneer as the disparate group of politicians we refer to as "populists". The popular frustration they play on is real enough, and liberals are very reluctant to engage with it. We seek for ways round it and dismiss it. But for all the weakness of established political movements, populism does represent a threat to European (and American) society. What populists aim to do is stoke up a sense of grievance and victimhood to secure power for themselves, which they then proceed to use to for the purposes of self-enrichment and cronyism. Nobody should be surprised that a movement built on resentment at elitism and cronyism should, in practice, be much worse than the system it is replacing. Donald Trump made hay from Hillary Clinton's minor lapses in data security, and talked of "draining the swamp" in Washington. And yet the new governing elite plays fast and loose with security and thinks nothing of placing its own friends and relatives in positions of influence. Its supporters don't seem to mind.

The populist system in Europe is most advanced in Hungary, where under Victor Orban's Fidesz a crony state is becoming deeply entrenched. It is worth noting that when Fidesz first emerged from the post-Communist gloom it seemed fresh, modern and innovative. It has been corrupted by power. But Hungary does have some advantages. First it can claim subsidies from the European Union because of its relative lack of development. Second it has its own currency, so it is not beholden to the system of Euro governance. But note a key element of the system: it requires EU subsidies to keep going, and anti-EU resentment is one of its key themes. Staying within the system while complaining about it ever more loudly is Fidesz's central political strategy.

The Italian populists are embarking on a similar strategy. I am perhaps being a little harsh on M5S. Its hatred of the old establishment cronyism is genuine and it does seem to want to move to something better. It refused to deal with Silvio Berlusconi, one of the pioneers of populist cronyism, for example - though its more cynical Northern League allies had long been associated with him. And yet Italy's economic predicament makes something like the classic populist trajectory almost inevitable.

The central issue for Italy is the Euro. Both M5S and the League make this a central complaint. They complain that the Euro's budget rules are too tight and prevent sensible fiscal policies from being implemented that might help lift Italy's dismal economic growth rate. Plenty of economists from across the world agree with them. How much substance there is to these complaints is a complex topic for another time (my answer: yes some, but nearly as much as many make out). The real question for populists is just how serious about this do they want to be. Do they want to make genuine, credible threats to leave the Euro? The answer is surely not.

It is, in fact, institutionally and practically very hard to leave the Euro once you are in it. For all its extreme problems, Greece never seriously contemplated it. But there is a political problem too, which, for example, cost Marine Le Pen in France dear when she seemed to be on the threshold of power. That problem revolves around two things: interest rates and savings. One of the main reasons Italy joined the Euro was to reduce interest rates, especially on government debt. It should be remembered that, contrary to the populist narrative, Italy was not bullied and cajoled into joining the Euro by the Germans. The Germans never wanted them in, but Italy made it in thanks to both some fairly hefty austerity economics and diplomatic skill. This proved very successful. If Italy left the Euro, the country would surely have to raise interest rates on its debts and government finance, including a looser fiscal policy, would in fact be much harder. That is exactly why Italy joined the Euro and the basic dynamics haven't changed. And this would not be some future prospect (like the dire predictions made about the British economy after Brexit), but would be immediately apparent should the prospect of Italy leaving the Euro look real. The rise in Italian government bond prices after the populist victory at the polls shows this.

The economics may not be quite as simple as I have made it sound. The Italian economy, for all its weakness, is roughly in balance on trade, which makes looser fiscal policy and monetary policy much easier - but that was true before. The real problem is that successive Italian governments have been unwilling to take on the economic reforms that might make the economy more productive, and a looser fiscal policy more sustainable. It is a popular misconception on the left that "Keynesian" loose fiscal policy can drive growth and pay for itself. That is only true of there is spare productive capacity, such as in a recession, or if productivity reforms form part of the government programme. In fact the left usually see "Keynesian" policy as an alternative to "neoliberal" reforms rather than a complement to them. I have written often that neoliberal reforms are played out - but that is not true of Italy, which used the gains made from joining the Euro to put off the evil day. The populist movement draws much of its strength from resistance to such reforms when they were belatedly embarked on by the Socialist government of Matteo Renzi - so embarking on a reform programme looks out of the question.

Still, politically, the interest rate problem is not the most serious. That is that leaving the euro would be seen as a threat to many Italians to the value of their savings. Economists talk about currency as a means to an end - a sort lubricant to help achieve real economic gains through higher levels of investment and consumption. Money means nothing in itself. But most people outside the elites have a different view. To them money is a sacred promise made by the government to the people that they can save now to spend later. Politicians forget that at their peril. If Italian savers start to think that threats to leave the Euro are serious, they will see a threat to their savings and support will drain away from M5S and the League faster than most people think is possible.

And so the populists need to maintain that balance: whinging about victimisation within the Euro straitjacket, while making no serious attempt to leave the system. This sort of have-your-cake-and-eat-it politics is, as it were, bread and butter to populist politicians. But it will surely be harder inside the Euro than out.

This is doubtless behind the Italian President Sergio Matterella's rejection of the coalition's proposed finance minister. What looked like a clumsy denial of democracy could in the longer term be part of a challenge to the populist parties to put up or shut up about the Euro. That could pay dividends if only the established political parties to put up a credible alternative government.

The method in Donald Trump’s madness

It is two months since my last post. This may be the longest period of silence since I started this blog in 2011. This is mainly because I have been consumed with the process of getting 39 local election candidates nominated for council elections here in Wandsworth, and all the attendent duties of being agent and local party Treasurer, officer and volunteer. Along with other duties as school governor and party officer at regional and, now, even Federal Party level. Plus the occasional bit of time off and some family care issues.

Meanwhile the newsletter section of the blog was subject to over 1,000 fake subscriptions consisting of Russian web addresses. This was only stopped by implementing Captcha, which was somewhat trickier (and more costly) than I expected. In any case, the oncoming election, and my senior role in one borough, has constrained my ability to comment as freely as I like this blog to be. And it isn't over. The election itself happens in a week's time. After that I have to prepare and submit 39 expense returns. All I will say on these elections for now is that I have been involved in local elections in Wandsworth for 32 years, and in that time they have proved a graveyard of predictions. I will comment when it is all over.

Meanwhile there has been plenty else going on. In Britain we have had a kerfuffle in Labour over antisemitism. And there has been the so-called "Windrush Scandal" in which the Home Office has hounded legal immigrants with incomplete paperwork. I want to comment on both in due course. And politics in America continues its sinister course, with the Trump administration subverting institutions of the Republican Party, the US Federal state, and the world's trading and diplomatic architecture.

Which draws me to today's topic. Looking back over the last two years it is striking how liberals and established politicians have consistently underestimated Donald Trump. It has been easy to dismiss him as stupid and immature. And yet he has proved wily and dogged and he has always ended up on top. His critics need to understand him better if they are to devise an effective counter.

The first thing to say about Mr Trump is that his intelligence is of a different type from that we are used to in our leaders. It is very right-brained. We have traditionally adored and respected the left-brained virtues of logic, computation, complicated language and rules. But the right brain handles values, emotions, context and seeing thing as a whole. A healthy mind keeps the two in constant dialogue. We see Mr Trump's left-brain deficiencies as fatal flaws; and yet neglect of right-brained virtues by liberal intellectuals is just as serious a deficiency.

Now let's be more specific. Mr Trump's world consists of competing individuals and groups who win, or lose or strike bargains with each other. It's a world divided between adversaries and trusted insiders. To the former you must be merciless; to the latter you must show and expect unquestioning loyalty. In this way of looking at the world, the liberal system of collaboration and shifting coalitions with its infinite shades of grey is simply weakness. There is an acute sense of victimhood: that honest Americans have been made monkeys of by outsiders who have outmanoeuvred the country's establishment.

Another aspect of the Trump view is that rules are a means to an end, and should not be elevated to an end in themselves, as liberal intellectuals do when they set the rule of law on a pedestal. Liberals say that the rule of law protects the weak; but does it really? The Trump alternative is for people to be part of a group with strong mutual loyalty and leadership that focuses on results.

The problem for liberals is that the Trump view is very widely shared, especially amongst less-educated people, but, clearly, not just them. Liberals tend to worship institutions that favour educated people through an unseeing meritocracy. They then try to compensate for this by offering handouts to the less fortunate, which creates a patron-supplicant relationship that undermines human dignity. Many on the left, who rail against "austerity", just don't understand why so many poorer people hate state benefits.

A further problem for liberals is that Mr Trump's methods will produce enough results to justify the faith his supporters are putting in him. The tax reforms in 2017 were a huge coup, whatever we my think of them objectively. The pressure he is putting on China, North Korea and Iran may well yield some short-term results. His approval ratings may not be good in comparison to other presidents a year into office, but they are not particularly bad in absolute terms; they may not suffer the sort of middle-term decay that those predecessors were subject to. And he knows how to rally the sceptical floating voters when he needs them, not least by casting doubt on his opponents.

So what could stop him? The pundits predict that the Republicans could lose their control of the House of Representatives in November, though the Senate looks more secure. That would limit his ability to pass legislation. And yet it will also give Mr Trump a scapegoat on which to blame his failures. Nobody knows how to milk victimhood like Mr Trump. It may even give him a chance to reshape the Republican Party into his instrument in time for the next round of elections in 2020.

A further problem for Mr Trump is a declining base. This base is core to the Trump phenomenon: it is the loyalty group that is central to his identity. It is white, working class and ageing. It will be impossible for Mr Trump to form such a strong bond with other voter groups, and these are growing faster than his base. But in the medium term Mr Trump can keep this threat at bay by suppressing it, through promoting scepticism and apathy, plus changing electoral rules through things such as voter ID. In the longer term Mr Trump bumps into term limits and old age. But he can do a lot of damage before then.

I think there are two more important threats to Mr Trump, because these concern his base. The first is trade policy. Mr Trump's narrative on trade is very appealing, but if he follows through by starting trade wars it will threaten the working class jobs of exporters. In the Trump narrative, of course, many more workers will benefit. But in the short term these benefits will be much harder to see. Midwestern farmers, who have been strong supporters, are already starting to wonder. Still, Mr Trump loves brinkmanship, and he may well feel he can strike bargains and claim victories before any serious damage is done.

The second problem is health insurance. One of the driving themes of Mr Trump's presidency is to dismantle anything his predecessor, Barack Obama, put in place. Mr Obama's crowning achievement was his health insurance system, and Mr Trump is desperate to dismantle it. And yet Obamacare tackles a genuine working-class problem of basic healthcare becoming unaffordable. Abolishing it would cause anger and hardship. Replacing it is the sort of massively complex enterprise that the Trump White House is incapable of. And, unlike tax reform, there is nothing like a Republican consensus on what any replacement regime should look like. Mr Trump will try to blame the Democrats as Obamacare gradually breaks down through neglect - but for once this line of attack will be hard to sustain.

So Mr Trump's revolution may fail. But liberals, and not just in the US, would do well to ponder how to broaden their appeal so that they are not so vulnerable to right-brained populists like Mr Trump.

2018: Trouble is brewing between Germany and Italy and between China and the US

Prediction is a mug's game; you are more likely to miss something important than demonstrate insight. And yet it is the only good way to put your insights to the test. Science may be mostly about gathering and reviewing evidence, but the true test of its worth is prediction. And so, in line with tradition for this time of year, I feel I must have a go.

When I started to think about it, my feelings about 2018 were anticlimactic. The British political deadlock will continue: there will be no election and no change of PM. The Brexit negotiations will somehow manage to put off the more difficult problems yet again, probably through a transition deal that will look very like staying in the Single Market. The investigation into the Trump's campaign's connections to Russia may snare members of his team but not the man himself; he will stay in office. The Democrats may take the House of Representatives, but they won't manage to retake the Senate. And so on. Things will limp on much as they are now.

But none of that is very brave. It just guessable, keep-your-head-down fare that does not put my understanding of the world under any real stress. And yet proposing something more exciting is a matter of luck, especially if I am confining my predictions to a twelve month period. I need to look at things another way. Where do I see trouble brewing, even if the chances of something breaking in 2018 is less than 50%?

Let's start with the world financial system. There is something unstable about it, even if it does not look as dangerous as it did in 2007 - it is more like the tech bubble of 2001. Asset prices look too high, largely because there is more saving than than the system is able or willing to convert into productive investment. This applies to the West, where too many assets are piling up in the hands of businesses and rich individuals, while many forms of investment are commercially unattractive to most people. And it applies to China, where there is something not right about the volume of money invested, especially through state owned businesses; a lot of useless assets don't seem to have been written off.  But what will be the proximate cause of a financial crisis? A Chinese banking breakdown? Inflation breaking out in the US? A panic in the property markets? And when will the crisis strike? Personally I feel that government bonds are a better bet than other asset classes in the medium term, though that would not be the case if inflation got going. But that is more of a threat in America than it is in Europe or Japan.

And there is something not right with the capitalist system. Technology has changed the way it works, and our political systems have not caught up - rather like the mid 19th Century world in which Marx wrote Das Kapital. Most conventional economists really haven't grasped this or it implications. The answer will be political change, but what? Without answers, political pressures will build up, and not just in the developed world. It is fashionable to suggest that liberal democracy is in danger, but the situation in the autocracies of China, Russia and Turkey, to name but three, don't actually look any less tractable. But where will the political system crack? Governments have become better at repression. And there is no convincing alternative to sell. Yet.

What of Britain? The Conservatives look to be in deep disarray, but they have a lot of strengths - especially the widespread fear of the alternative, and the substantial funding that could unlock. We need to remember how close Theresa May came to a triumph, with the coherent ideology of Nick Timothy behind her - she might have destroyed Labour's working class base. Their introversion did for them in the end. Can a new leadership revive their fortunes? I see similar strengths and weaknesses in Labour. Are they peddling new or old wine in their old bottles? I suspect more new than their critics give them credit for, which will make them a much stronger proposition. But there is an introversion too. The leadership is not sharing its thinking about what to do with this country; it just wants disparate people to project their hopes onto their vague pronouncements, so that they can gain power; only then might they share their real thinking with us. Meanwhile, the tensions within British society - the stagnation of the left-behind places, the squeezed funding for public services and benefits - will serve to increase frustration. Something spectacular could break the deadlock. But what and when?

And Europe? This looks like another deadlock. The populist xenophobes may have stalled a bit in 2017, but they are alive and well. It is striking that Poland's ruling party remains very much in control, in spite of the fact that many Poles do not share their paranoia - their economic policies, which involve widespread cash handouts, are popular, and may not be as disastrous for the economy as many critics suggest. Economics is at the heart of politics - and politics is at the heart of economics. But the biggest threat to European stability comes from Italy, where elections are to be held in 2018. We might well get a strong pushback from that country against the way the Eurozone is run, at a time when German politics is being pushed in the direction of more conservatism on the Euro, and not putting Germany's savings surplus to constructive work across the zone. That conflict could cause the system to break. But maybe the French can intermediate to give the Italians what they want while making the Germans feel they have won?

In America I see a strange mix of euphoria and anger. The tax reforms passed before Christmas were a big win for the Republicans, and it will give them real momentum. While the Administration, and the tax reforms, are generally unpopular, relentless propaganda from the many rich winners may baffle floating voters for a bit. That could be good for the Republicans in the congressional elections. It is a tall order for the Democrats to take either house, especially the Senate, where Republicans have plenty of opportunity to win back seats lost at Barack Obama's high point. But the Administration's malign neglect of the healthcare system could bite back.

Perhaps more significant for the world as a whole is the thought that China and the USA are on a collision course. Donald Trump is itching to start a trade war with China, to reverse what he sees as America being ripped off. China's ambitions are increasingly global. At the moment the two have come to an uneasy accommodation, with North Korea a joint focus of attention. But this looks unsustainable; China will not stop North Korea from developing nuclear weapons, as only a military intervention of some kind will achieve that, and China surely does not have the appetite for that. But a trade war between China and the USA would be an attack on one of the central economic and political pillars of the early 21st Century world. It would be extremely destabilising economically and politically. China still needs exports to the US to sustain its economy; the US still requires to be bankrolled by Chinese money. This is surely the most likely source of a financial crisis.

And then there is the risk of war. North Korea is determined to develop a genuine nuclear threat to America, and this is a huge provocation. It's not a happy situation when we seem to be relying on military men to provide the restraint on the President.

So to summarise: the two critical developments to watch are a clash between Germany and Italy over the economic management of the Eurozone, and a clash between the US and China over trade. Either or both could precipitate a global financial crisis resulting in a substantial reduction in asset values and the banking woes that would follow from that. I am cautiously optimistic that the problems of the first of these will be contained; I am not at all optimistic on the second.

Donald Trump’s security policy represents the revenge of the right-brainers

I am currently working my way through Iain McGilchrist's The Master and his Emissary. The theme of this book is the battle between the right and left parts of our brain. Mr McGilchrist thinks that in western civilisation left-brain thinking has become predominant, to the detriment of humanity. And yet, looking at the current state of politics, and Donald Trump's recent announcement of United States security policy in particular, I am thinking that this a case of being careful what you wish for.

I am somewhat short of halfway through this book. It is an engaging read, but not a fast one. I may not doing him justice in the comments that follow - and when I finish, I will review it properly here. The big idea is this: the human brain, in common with all vertebrates, is split between two hemispheres. The right covers awareness of the world around us; the left focuses on completing tasks. Much of our conscious life amounts to a conversation between these two hemispheres. Mr McGilchrist sees the two hemispheres as rivals competing for domination in our own selves, and in the societies we create. He feels that the right side should dominate, as it is this side that puts things into perspective. But he sees everywhere the dominance of left-brain thinking, and that this is very destructive of what is of real value.

He has a point. The two-hemisphere system is an evolutionary success. That is because management is the marriage of two incompatible skills - those that require general awareness, and those that require detailed attention. The need for this duality is not well understood. The book produces some remarkable quotes from early research into the hemispheres, describing the right hemisphere as weak and nearly useless, which reveals much about prevailing thought. My professional life has been in business management. Almost all the advice and literature on this is a variation on left-brained thinking - the need for focus on key priorities, "SMART" objectives, and general discipline. There is some awareness that success depends on other things: values, creativity and managing risk. And yet there is little realisation that these skills require a different type of approach. Trying to reduce them to the terms of SMART objectives and the like will destroy them. This was dramatically illustrated by the banking industry in the great financial crash ten years ago. Risk management was treated as a technical task, and confined to strait-jacket of mathematical models, with results that were absolutely disastrous. To this day I don't think this is properly understood by many managers and commentators. There has also been a similar misconception in artificial intelligence, which started off by thinking that left-brain thinking was all that the brain did, and all that needed to be done. Whether AI designers have got the implications of the duality fully on board I don't know - but they have been making headway.

And yet. In common with most (all?) intellectuals who try to grapple with their emotional and intuitive side, including me, there is something very left-brained about Mr McGilchrist's presentation. He reasons too much, and he does not question enough. As a result I think he's missed something big. For all his distinctly partisan advocacy of the right-brain, he is firm that we need both sides of the brain. He is clear about what an excess of left-brain thinking means, but he has not thought enough about what happens with an excess of right brain-thinking. He equates it with a loss of effectiveness, but not much more. But left-brain thought is needed to bond societies together. Without it bad things start to happen.

This should be apparent from the dominant role the left brain plays in language. It should also be apparent from other disciplines where left-brain thinking predominates of necessity: science and the law. Both of these are about finding common ground and agreeing on things. Science is not so much about trying to find the truth about the world around us, but about developing a common body of understanding. That is what an obsession with objective evidence is about. It is trying to find something diverse people can agree on.

The right brain, on the other hand, is very much about subjective, personal experience. It helps form strong bonds between people who are already strongly linked, by place or experience, but generally does the opposite when those links are weak. Indeed nothing bonds, and defines self, like conflict.

Western liberalism is undoubtedly very left-brained, which means it is often bone dry. Think of Barack Obama, once he has stepped beyond his dreamy rhetoric; or the British campaign to Remain in the EU. Liberals are charged with a lack of emotional appeal. But that is almost its central point. Liberals want to bring diverse people together to live in harmony - and that means emphasising the dry and the dull: reason, rules and common ground.

Which brings me to Donald Trump. He stands for a reaction against dry liberalism, and the triumph of right-brain thinking. He is only interested in evidence and logic inasmuch as it supports his prejudices. Everything else is dismissed as "fake". He relishes conflict with those that are different or who disagree. And this helps him form strong emotional bonds with his own tribe.

Mr Trump's National Security Policy, announced yesterday, shows us some of what this means. Gone is the common enterprise to make the world a better place. China is not a partner with whom America can forge such a better world, but a rival who seeks to diminish America 's share of world resources. Free trade is not way that makes everybody better off, but a potential threat - a way that other countries can rob naive American policymakers. Of course, all of these ideas contain more than a germ of truth. Perhaps it is just another half-full or half-empty proposition. Indeed the BBC describes the policy as "pragmatic". But right-brained thinking promotes conflict and conflict is sure to make the world a poorer place. For everybody.

The dialogue between the right and left parts of our brains is full of paradox. Left-brained thinking is very self-centred, but it is essential for harmonious living with our neighbours. The right brain sees the world as a whole, but it is one that is dominated by a single viewpoint. It is the tension that these paradoxes produce that makes the duality of our brains so powerful. Which leaves us with a final irony. The left-brained liberals are discovering their right-brained selves. Mr Trump and his ilk are producing a highly emotional reaction. And that reaction will in due course defeat him, allowing a more patient, constructive path to be resumed. The brain only works effectively as a partnership between its two conflicting sides. That should be the moral for our world.

Brexit: Britain will end up in the Customs Union

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This blog has been wrong about a lot of things. Especially the Labour Party. But one area where my record has been very strong, in spite of standing outside the conventional wisdom, is Brexit. This is encouraging me to be recklessly brave in making my next prediction: Britain will stay in the EU Customs Union, even if it will take another two years or more before that becomes apparent.

Before the vote last year, I was always worried that the Leavers would win. I felt that my most persuasive argument for Remain was not that Britain would be better off in the long run outside the Union (though I did think that), but that the process of extraction would dominate British politics for so long that progress on any other of the county's pressing issues would be halted. And thus it has proved. Poverty is growing, and Alan Milburn, the government's (Labour) adviser blames it on the Brexit effect. The government may riposte that "absolute" poverty is still on the way down, but that claim looks very doubtful; "relative" poverty is clearly getting worse, after decades of progress. Poverty is a subject I will return to - I am working my way through a very challenging study from the Webb Foundation, which will require a degree of reflection. But Brexit is throwing up urgent problems in almost every area of government policy. And where it doesn't, there is the indirect issue of distraction.

After the vote my first comment was that a long transitional period would be essential. A further prediction was that Northern Ireland would be the "surprise" issue that could derail the whole process, and it was the most important thing to get sorted out. This is now nearly consensus. , but at the time people were obsessing about whether Brexit would be soft or hard. The answer was in fact clear: soft in the short term, and then we'll see once we've all understood it a bit better.

More recently there seemed to be an impasse between the British position that we should proceed to trade talks with the EU now, and the EU position that the "divorce" questions be settled first. I suggested that the British would win out in the end. And so it is proving. It suits the British commentariat to say that it is the British that are caving in, but in fact it is the EU side that has moved substantively; they are having to settle for some reassuring words. The mystery was why it took Britain so long get there; the answer to that was maybe that a bit of theatre suited both sides. There is a snag, though; just when it all looked settled, the Northern Irish Democratic Unionists (the DUP) torpedoed it. That was my Irish caveat - and, I should add, I understand Irish politics, north and south, even less than the Labour Party. Still, this looks more like a glitch than a full stop - a result from the Prime Minister Theresa May's debilitating introversion that had left the DUP out rather than talking them to death - which is now what she will have to do. All that is required for the moment is a dose of fudge. The DUP may well create some real trouble later on, but now does not look the right moment.

I had drafted a blog a month ago saying that I thought the talks were on track to succeed in moving to the next step, just when everybody was saying it looked hopeless. I didn't post it because it was ended in a whimper. So what? Where was it all going? I now think I have the answer.

The firstly, I think Brexit will happen. Many Lib Dem friends hold on to the hope that the seeming chaos of the negotiating process, and the absence of any clear vision of the long term, means that the whole thing will collapse. But the negotiating machinery in Britain and the rest of the EU is in place, and officialdom has got used to the idea. It will happen, it may just not make as much difference, in the short run, as people thought. The way politicians deal with hard problems (I nearly wrote "modern politicians" but this is surely as old as the hills) is to string things out. The expression is "to kick the can down the road". You decide as little as possible for now, so that reality has more time to sink in, and hardened positions can soften. The consequences of this approach are not well understood by the commentariat. They talk as though you negotiate treaties as if you were buying or selling a house, which is the biggest thing that most of these people have had to negotiate for themselves. We are for ever hearing about this or that strengthening a negotiating position, and in particular how threatening to walk out makes you stronger. But it is nothing like selling a house. It is infinitely more complex; you have to live with, and do more deals with, your counterparty afterwards; and you can't simply choose to sell your house to somebody else. You have to keep the engine running, to switch the metaphor.

So complete collapse is unlikely, and Brexit nearly inevitable. Reversal would cause more problems (in the short term at least) than it would solve. Besides, the political conditions for it do not exist. There has been no seismic shift in British opinion, even if polling shows Remainers edging ahead. The Conservatives desperately want to hang on to power to keep Labour out, and keeping to the legal form of Brexit is essential to keep the party together. Labour would like to create trouble for the Conservatives, but do not want to be put on the spot. The desertion of Brexit supporting working class voters from Labour could torpedo their hopes of winning the next election. And power, for the Labour leadership, is much more important than Brexit.

But time is short. The priority now is to get that transitional deal up and running. Though the idea is to make as little difference as possible to current arrangements, beyond a few bits of carefully chosen and powerful symbolism, it will be hard enough. There will be no time to sort out the ultimate destination. Hard Brexiteers will continue to babble away about complete independence; the more pragmatic people will keep arguing for this or that aspect of the status quo. The truth is that the British governing class, and still less the public, have not understood the options properly, and not decided between them. And that is not surprising, given how big and complex it all is. We have to kick the can down the road. (Alas I had hoped to resist clichés in this blog, but I need to finish this piece).

So the process will drag on. Perhaps even the British people will be allowed a say in the process. Another referendum looks very unlikely - and probably not desirable. Trying to reduce everything down to "yes" or "no" has proved very unsatisfactory. But a general election during the transition process is another matter. An election is not due until 2022, which would be three years into the process, by which time many decisions will have been taken. But once the current government has delivered formal Brexit in 2019, it may find it hard to hang on. Brexiteers seem desperate to avoid any popular participation in the decision-making process, however - a role reversal from before the referendum. But the government's minority status, and its lacklustre leadership, will make it hard to hang on.

But where will we end up? A divided nation will at some point be desperate for a compromise, and one that makes the Irish border more workable. It is in fact quite clear what that compromise is: membership of the Customs Union. If it is good enough for a prickly and independent Turkey, why can't it be good enough for a prickly and independent United Kingdom? The government has ruled it out. But the whole process has been one of options being ruled out and then being ruled back in again. Brexiteers have a vision of Britain being a free-trading beacon, showing the rest of the world how it is done - and that would mean standing outside the Customs Union. But the British public are not interested in that vision; and, besides, the rest of the world has moved on. The massive expansion of world trade is coming to an end (except maybe within Asia and between Asia and Africa).

It may take a general election before before the British ruling elite reconciles itself to staying in the EU Customs Union. But I think that day will come.

Time for another pause for reflection

Arthur Conway Young "Sacrificed to the fallacy that war can end war"

Earlier this year I said I would scale back my twice-weekly postings in order to give me time for reflection. I was profoundly disturbed by the world around me. I used the word "depressed", and though this sparked worries by friends about my mental health, this was, and remains, a good word to describe my feelings. I am being numbed into a sense of apathy. After that pause a surprise General Election was called. I was swept up in the excitement of it all, and indeed the British political landscape changed profoundly. But as the British situation regresses to stalemate, the excitement has gone. I don't feel that my thinking is adequate for the situation the world is in. I need time to reflect, and, if need be, to change course. So I will scale back my postings again.

That process has already started, as I haven't posted for about two weeks. Last week I went on a centenary battlefield tour of the Western Front, from the Somme valley near Albert, and north to Ypres and Arras. That was an experience enough to cause a pause for reflection in itself. It was an example of how political misjudgements can lead to devastating results for millions of individuals. It is hard for us to say what it was all for, even if we accept that many of the changes that the war ushered in were good. These changes were a profound understanding of the futility of war and the brotherhood of man, across class, nation and sex (alas it took another war before entrenched attitudes on race started to change). But, as the remarkable epitaph on the tombstone in my picture, taken in the Commonwealth cemetery at Tyne Cot near Ypres, says, this war did not end war. And indeed, what I find so depressing about now is that in so many ways the lessons humanity learned a century ago are being cast aside.

Look at Myanmar, where the hundreds of thousands of Rohingyas are being ethnically cleansed, with many thousands murdered while others are forced into inadequate refugees camps. This has caused barely a ripple in world affairs. The recent coup in Zimbabwe, which changes little, is causing more fuss. Chinese, Indian and Russian politicians, who these days constitute great powers in the emerging world order, couldn't care less. The Americans are doing a bit more, but it is not in the new "America First" philosophy to care that much; and, to be fair, their power in the neighbourhood is greatly diminished. Europeans worry a bit more, but they are so far away that closer concerns crowd them out. This is the new normal: people's lives just don't matter compared to narrowly defined national interests.

Meanwhile, closer to home in Europe, grand liberal gestures, like Germany's acceptance of Syrian refugees simply generate a fierce backlash. Polish and Hungarian leaders stoke up Islamophobia; our own politicians mutter about how foolish and "unrealistic" the German policy was. Meanwhile, in Britain we are distracted by the colossal act of self-harm that is Brexit, while the retreat of government services and benefits reeks profound social damage, which most people prefer to ignore. People respond to disturbing changes in the world around them by narrowing their horizons and saying it is all somebody else's problem.

Still, there is hope. When I visit my local, 90% minority primary school, I don't see the picture of hopeless and profound division that the conservatives say is inevitable. I see people working across ethnic and social barriers towards a common purpose: living together and promoting the values of tolerance and inclusion. I see the challenges of restricted resources being met imagination and resolve. There is a better way if only we had the courage to take it.

I am an optimist. But right now I need to work out how to channel that optimism more effectively. I plead the need for a little more space to do that.

The British are bowing out. Now the EU is a battle between the French and German visions.

The European Union dominates British politics at the moment - but in a rather superficial way. It is focused on the short-term implications of the country's relationship with it, and not on the institution itself. And that is true especially of continuing Remainers. They concentrate so much on stopping or diluting Brexit that they avoid tackling questions about what the Union is, and what it is turning into. More thoughtful Leavers will no doubt suggest that the focus on Brexit is a displacement activity from more uncomfortable questions about the EU. So it is worth taking a step back from the kerfuffle about Brexit to think about the Union itself.

I think it is helpful to view the debate over the EU as a conflict of three visions. I will characterise (or caricature) these as the British, the German and the French visions. The British vision is of the union as a free trade area; its fundamental purpose is economic, and to bring to its members the manifold benefits of free trade. The British are divided on whether this necessarily includes the free movement people, or, rather, labour (as opposed to temporary visitors, which most people are happy with). Many older people (and probably a majority) think emphatically that it doesn't, and that goods are fundamentally separate from labour. Younger voters tend to say that it does - seeing free movement as a way to expand their personal horizons. Some are muddled - wanting all the benefits of retiring to Spain and using its health service for free, while stopping people from moving into Britain. But all sides treat this as a fundamentally economic question. and think of it individualistically - how does it benefit me?

The Germans feel that the fundamental point of the EU is to create transnational order. This affects trade, so that manufactures and services are based on common rules, and that countries don't get an unfair trading advantage through lax labour or environmental laws. But it goes deeper; they see nothing wrong with rules that secure fundamental political principles, such as human rights and the democratic order. Britons tend to resent this as an unnecessary intrusion, feeling secure in their own country's institutions - different histories do much to explain the different attitudes. Britons have learnt to trust domestic institutions; Germans (right up to 1990 in the East) have learnt that trust can be abused. The Germans' outlook is more collective than the Britons' - but they share Britons' distaste for political meddling from EU institutions.

But the French, on the other hand, emphasise the political union. To them it is a joint political project, in which their country must take a leading role. They tend to see the EU as a counter to the giants that stalk the world stage, and in particular to the US - but also to Russia and China. Internally they advocate a greater use of political mechanisms to resolve the problems and conflicts within the Union itself. This is the most collectivist view. If Europe as a whole advances, the logic goes, then we all do as individuals. The British tend to view it the other way round.

It is tempting to suggest that these three visions are all right, and that some form of reconciliation or compromise must be found. But I find it more helpful to see the three visions as varying stages of understanding of what the European project implies. A free trade area cannot reach its potential without transnational rules, including some form of transnational arbitration. And you cannot have such a transnational system of rules in the long run without common political processes to manage them. The North American Free Trade Area (NAFTA) was often held up as an example of what "just" a free trade area might look like - but it first lost momentum and is now in imminent danger of collapse, as it has been unable to handle the  political tensions it has created. The French understand the implications of the EU the best, the British the least - which, of course, is the main reason why Britain is leaving. Most of the British public do not want to accept the political implications of the EU; many of those that voted Remain were in denial, and voted that way to maintain their own short-term economic prospects. The whole Remain campaign last year was based on little more - one reason that the more thoughtful Leavers feel that it is they that hold the high ground.

With Britain on the way out, the driving tension will now between the German and French visions. The British view was shared by other members, especially the Scandinavians (as a matter of principle) and the eastern members (as a matter of political convenience). Brexit not only removes the British view's biggest advocate, but also it points to the ultimate destination of countries that follow it.

The Franco-German tension could ultimately destroy the union. The Germans are easily the union's most powerful member; but the French are ultimately right - the Germans are simply postponing an inevitable reckoning. This tension is most easily seen in the management of the Eurozone. The EU's treatment of Greece, for example, was brutal and surely misguided - even if I find most of the pleadings by Greek politicians such as Yanis Varoufakis to be self-serving and evasive. To the Germans, the Greeks simply broke the rules. They lied about their economy to get it into the Euro, and then milked the Union for all they could get with no attempt to make their economy more productive or less corrupt. The crisis was a reckoning, and it must be played out according to the rules. That Greek voters approved of gobbling up their neighbours' resources as an easier alternative to fixing deeper problems at home did not make what they were doing democratic. But this view is also self-serving and evasive. German banks contributed mightily to the Greek bubble, and German businesses where happy to sell things to people who could not afford them. There must be a principle of caveat emptor. Instead the German taxpayer bailed out their banks, and their government is trying to blame the Greeks. It is a political mess that requires a political solution, and that means some of the rules must be changed. It is clear, for example, that much of the Greek government debt must be forgiven. The country also needs financial aid to help its economy to grow on a financially sustainable path. But that implies accountability from the Greek government.

And yet the French view, which is now being vigorously pursued by its new president, Emmanuel Macron, leaves hard questions at its core. It requires stronger and deeper transnational institutions, whether at the EU or Eurozone level. But are the democratic institutions up to the job? And is there democratic consent for them? And how deep must these central institutions go? The type of problem posed by Greece persists: member states trying to take the rest of the union for a ride - to take the money, but without any any serious attempt to develop an open and efficient economy, buttressed by democratic institutions, based on the rule of law applied without corruption. Challenges aren't just being presented by such countries as Hungary and Poland, but by countries closer to the heart of the picture, like Italy. And France. And even Germany with its destabilising surplus savings. Mr Macron's strategy is to boost France's credibility by reforming its economic institutions. But what will make other countries follow this path?

What will happen next will be the usual European muddle and fudge. That muddle and fudge will either lead to disintegration, or to something that looks much more like a federal state. Or both - if more countries leave but a more integrated core remains.

And that poses a challenge to British Remainers, who either want to reverse Brexit, or to rejoin the union at some later stage. If Britons remain wedded to what I have called the British view, this will end badly. Britons must accept that they are signing up to a political project that reduces the sovereignty of the British state. Liberal Democrats, in particular, need to understand when there will be too much European centralisation, and when they would say no. After all their other rallying cry is the decentralisation of political power.

And me? Fundamentally I am a Frenchman on this. Proud though I am of my British and English identity, I also have a strong sense of European history and identity. I long to be part of a joint European political project. But not even I have thought through the full implications - and I am in what looks like a small minority. For that minority to grow, more persuasive arguments must be made.

 

The Lib Dems hope that Britain goes Dutch

After a couple of days sightseeing in York, one of England's most spectacular cities, I want to report back on the Liberal Democrats' conference held there over the weekend. It ended with the traditional rallying cry from the party leader Tim Farron. He spelled out a bold strategy for the party: to replace Labour as the principal opposition, and then to take on the Conservatives for government. Well that's not the first time I've heard such ideas from a Lib Dem leader's speech - and the only result has been that the party's wings melted like those of Icarus when it got too close to the heat of power. Could this time be different?

The Lib Dems are particularly taken by the result of the recent General Election in the Netherlands, and their hopes rest on similar trends being repeated in Britain. Now if your knowledge of the Dutch election was based reporting by the BBC News, and other mainstream news outlets, you might be a little surprised. The BBC pitched the contest as between the party of the Prime Minister, Mark Rutte, the VVD, and the populist-right PVV, a one-man vehicle for its leader Geert Wilders, and his extreme views against immigration, the EU and Islam. The BBC hunted out Dutch working class voters for its vox pops,  giving us the impression of a surge of support, in the manner of that that swept Donald Trump to power in the USA. The VVD meanwhile, though nominally a liberal party, seemed beholden to the PVV agenda, and anxious to sound tough on immigration, engineering a spat with the Turkish government to prove their point. When the VVD ended up with 33 seats, in the highly proportional Dutch electoral system, to the PVV's 20, the BBC proclaimed the VVD as the winner, and quickly moved on.

But there a 150 seats in the Netherlands parliament, so the VVD and the PVV covered barely a third between them. Elsewhere something much more interesting was happening, which puts the whole picture in a different perspective. There were in fact two main losers in the election: the VVD, which lost 8 seats, though remained the largest party, and, most spectacularly, the Labour Party (the PvdA), which was reduced from 38 seats to just 9. The PVV advanced by 5 seats, but there were bigger winners. D66, the liberal left party most similar in outlook to the British Lib Dems, advanced 7 seats to 19; the Christian Democrats (the CDA), a party not unlike Britain's Conservatives as they are being refashioned by Theresa May, also took 19 seats, gaining 6; and the biggest winner was the GreenLeft, which advanced 10 seats to 14.

What to make of this? Well it is fair to suggest that Mr Wilders and his PVV has set the political agenda. The CDA did well by coopting some of its ideas, and the VVD managed to hang on with similar tactics. But the two parties that where most vocal in promoting the opposite agenda, of voicing a sense of Dutch identity based on tolerance and being part of Europe, picked up 17 seats and have real momentum. The traditional Labour party was unable to hold together its coalition and collapsed.

And so the implications for British politics are clear. Mrs May's strategy for the Conservatives, with a lurch to right on identity and social issues, and to the left on economic ones, looks sound enough. The polls show it has a commanding lead, crushing the populist Ukip, and even doing respectably in Scotland. Labour, meanwhile, are floundering - unable to find a formula that holds together its coalition of traditional working class, new working class (including ethnic minority workers) and liberal public sector workers. Its problems are compounded by spectacularly weak leadership, and a sense of political entitlement amongst its membership that makes them focus inwardly, rather than develop an effective political presence in the country at large. And the success of D66 and the GreenLeft shows the possibilities for the Lib Dems, by wearing its liberal and pro-European heart on its sleeve. There should be an opportunity for Britain's Greens too, but they seem to have lost critical mass. Their move to being a party of the socialist left before the 2015 general election, including the adoption of Universal Income, was probably a major strategic error - and anyway the party seems allergic to clear leadership.

And so the Lib Dems at York went big for being pro-European, promoting a second referendum with a way back into the EU - and promoting the rights of EU citizens living in Britain. Political realists may dismiss this as being silly, but it lights fires. The populist surge, promoted by a hateful press, and supporting a hard Brexit, is generating a backlash, and the Lib Dems mean to exploit it.

But Mr Farron, and the party at large, are starting to look beyond that. That was evidenced by one fudge and one new idea. The fudge was on nuclear weapons. The party's liberal principles point to unilateral nuclear disarmament, eloquently argued for by many activists. But members at large sensed danger and adopted a fudged policy that will go nowhere. As David Grace, one of those advocating the unilateralist position, rightly pointed out - the party was not afraid of the Russians so much as of the Daily Mail. While intellectually persuaded of the unilateralist line, I personally lacked the courage to support it. It would put off too many floating voters.

The new idea was put forward by Tim Farron in his speech: an economic commission of independent experts to develop new ideas on economic policy. This follows a similar idea on health and social care. This is a step that the Labour leader Jeremy Corbyn started to take and then dropped - no doubt because he feared it would be a hostage to fortune. The time is ripe for new thinking on economic policy, and the Conservative government is heading for some deep trouble, with its over-commitment to austerity and low taxes, not to mention hard Brexit. Tim's commission cuts across the brief of an internal policy group (on the "21st Century Economy"), which I am planning to contribute to, but this looks like a sound move by him. The party can't carry a new economic policy by itself.

Tim's strategy is clear. Develop a core vote based on European identity and a liberal understanding of British values. And then pitch for floating voters, including those that voted for Brexit, based on economics and public services. Could it work? Labour could yet scupper it by dropping Mr Corbyn and going for the right replacement leader. Their German counterparts seem to be having some success with such a strategy. The most convincing alternative leaders are probably David Miliband or Ed Balls - but both are out parliament. Meanwhile the threat of complete collapse remains - the Dutch Labour Party is only the latest in a line of spectacular political failures by traditional socialist parties in Europe. The Lib Dems will still need a lot of luck - but this looks like their best chance.

I do not warm to Tim Farron personally. I am too cynical for his grand rhetoric, and bored of his jokes. But he is proving to be a very capable political strategist - much better than his predecessor. This will be interesting to watch.