The dust starts to settle from Salzburg: the tension over Brexit mounts

After the spectacular breakdown between Britain and the remaining EU countries at the summit in Salzburg last week, what is the state of Brexit? The chatter in the media, mainstream or otherwise, is either hopelessly partisan, or hopelessly superficial (the BBC is taking mediocrity in political analysis to new heights). Before taking the plunge on this I wanted some of the dust to settle, and also to see what the more reliable commentators had to say.

For me, these commentators write for the Financial Times. Easily the best on Brexit is legal correspondent David Allen Green. His take on the summit is that the British Prime Minister Theresa May badly misjudged the mood on the EU side, leading to the breakdown. But he still expects the all-important exit deal to be done allowing the transitional deal to come into play on 30 March 2019, while the details of the longer term relationship are hammered out in time for the transitional period's end on 31 December 2020. For an alternative view I went to Wolfgang Munchau. I don't particularly like him as he is prone to getting a bit worked up, but at least he is free of that awful British superficiality of understanding when it comes to the EU. He suggests that it is the EU side that has misjudged things: they think that a no-deal situation would be so painful for Britain that it will buckle before it is too late - underestimating the political difficulties for Mrs May, even if that is what she really thinks. So he thinks that the no-deal situation on 29 March 2019 is all too likely.

Before trying to make sense of this, it is worth highlighting a couple of other things that are emerging from the wreckage. The first is the idea that Brexit can be halted and made to go away. So far talk of this has been confined to ardent Remainers on the margins of British politics. But for the first time at Salzburg some European leaders spoke publicly about the possibility. Idle talk, perhaps - it is nowhere near the official EU position. But perhaps it explains why some EU leaders are unsympathetic to Mrs May's compromise idea. Meanwhile British commentators are in two camps. One side says that there is growing momentum for a further referendum with reversing Brexit as an option. The other says that not only would this be a logistical nightmare, but there isn't the political will to do it where it matters: in the House of Commons. Labour's fudged conference motion to be debated today gives succour to both lines of argument.

Another thing worth mentioning is rising talk of the "Canada option" in British political circles. This refers to the comprehensive trade deal the EU has struck with Canada, which some think is a model that the UK should follow. The idea is not that this would be in place for 30 March 2019, but that it could be negotiated in time for 2021, when the transition period ends. This has the advantage of being completely consistent with the EU negotiating position, and being acceptable to the troublemakers in Britain's Conservative Party (and the hard Brexiteers in Labour too). It has one overwhelming snag, beyond requiring the dismantling of many manufacturing supply chains and the clogging of ports, which hard Brexiteers have never much worried about. It is inconsistent with the stated aim of an open border between Northern Ireland and the Irish Republic. Which means, under the current EU offer, a sort of customs border between Northern Ireland and the rest of the UK. Most Britons couldn't care less about this - but it is an existential issue for the Democratic Unionist Party (DUP), on which Mrs May's government depends, as well as old-fashioned Conservatives, of which there may be a few left.

So it keeps coming back to Ireland. Here I think there are a couple of issues that don't get talked about enough. The first is that Brexit, especially a hard one, could lead to moves to unify Ireland. This possibility was left in the Good Friday Agreement, but only if most Northern Irish people agreed. Within the EU there was little prospect of that, even as the relative proportion of Catholics is rising (it is said that the UK's more generous welfare state is at the heart of this). But at least one poll showed that this changes in the event of Brexit. Idle speculation? Perhaps: the DUP don't seem to be overly worried about it. But serious political miscalculations happen. A messy Brexit might be resolved by Irish unity - do the DUP really want to risk this?

The other issue is the impact that a hard Brexit, and worse still a no-deal, would have on the Irish Republic: it could be catastrophic, as so much of its trade is either with Britain or through it. Mr Munchau admits that the impact of a no-deal would affect Britain more than its EU partners, but says that the latter's pain theshold is lower. So he advises the British government to hold firm. I'm not so sure about this as a generality (to judge from the way Russian sanctions have been applied, in spite how much they hurt some EU members), but Ireland is surely a weak link. And since Ireland is at the heart of the most awkward negotiating issue, this matters a lot, and gives strength to Mr Munchau's analysis.

And then into this brew we must add the state of British politics. If the EU does bend, and Mrs May is able to put something like her current proposals (referred to as "Chequers" after the place where it was forged with her cabinet) to parliament. Will she have a majority and what happens if she doesn't? The current suggestion is that there will be a sizeable Tory rebellion amongst Brexit hardliners, and Labour will vote it down, which makes Mrs May position look hopeless. But what then? Labour hopes for a General Election: but Mrs May is unlikely to concede it with her party in such disarray. She may then try to resolve the impasse with some form of referendum. If she is cunning, this will simply be between her deal and a no-deal, with no option to remain. Labour is badly split on the latter. Whether there is a Commons majority for an option to remain is questionable.

But the possibility may be enough to make hard Brexiteers, both Tory and Labour, think twice. The cleverer amongst them have already realised that Mrs May's compromise is a sensible staging post to where the want to go. Once the country gets past 29 March, the Remain coalition will start to wilt as there would be no easy way back in. And there is enough ambiguity in the SNP position for them to be persuaded to sit on their hands. A majority for the compromise position may yet be conjured up. If Mrs May was a more skilful politician I would say that with more confidence.

So my prediction is this: Mrs May will stand firm and the EU will start to bend, though it may take until December. Some kind of deal will be negotiated, which still leaves many issues about 2021 unresolved, but which will be enough to get to avoid the cliff edge on 29 March 2019. She will then succeed in getting this through parliament. Ultimately Britain will get a camouflaged Turkey-style deal, with a customs union of sorts in goods and no freedom of movement. So much the same as I was predicting before.

What could change it? If EU governments start to club together to offer the UK a way out of Brexit, that could just change the political dynamics in Britain. Or if a political miscalculation leads to a new General Election, and hence a two month stasis in the negotiating process, then that do raises the odds of a no-deal, whoever wins. So the tension mounts.

Lib Dem economic policy takes a step leftwards

Last Monday the Liberal Democrats passed a policy paper on economic reforms, Good Jobs, Better Businesses, Stronger Communities. This covers economic policy outside fiscal and tax reform, and fits in with the party leadership's wish to address the challenges of what is often called the fourth industrial revolution. Does it measure up to the challenge?

Sometimes it is hard not to agree with fellow Lib Dem blogger David Boyle that liberals don't take economic policy seriously enough. There was little excitement about this motion, or another two which tackled taxation. I only attended two of the three debates myself and spoke in neither. But the party leader Vince Cable takes economics seriously (he was a professional economist after all), and the party does find itself well-provided with official policy, even if most of its members might struggle to know what it is. The party should be doing more to promote internal debate.

The Good Jobs motion, and the paper behind it, demonstrate one of the problems. They are very densely packed with ideas and policies. So much so that they are hard to read and harder to condense into something clear and ringing. There seem to be two problems here. First the scope was probably too large. You could easily produce a worthwhile motion on workplace rights, for example, rather than tucking it away in this much bigger motion. And then there is the desire to establish consensus. This boils down to including something for everybody: I'll let your hobbyhorse through if you'll do the same for mine. How much this dynamic came from the policy working group itself, and how much from outsiders I don't know. It must be admitted that there are some advantages to this approach. The Labour manifesto last year seems to have been produced by a similar process, and it collected together enough hobbyhorses to make it a good tool for roping in disparate groups of special interests. I remember one online commenter disparaging the Lib Dem manifesto because, unlike Labour's, it had no policy on puppy farms. It was an electoral success, notwithstanding major holes in, for example, university finance. Secondly, if your party actually does get into government, it helps to have a bank of small-ish policy ideas ready. This gives ministers something to do, and helps them set their own agenda, rather than being swept along by their departments and issues of the moment. So the policy paper should do valuable work, even if it failed to the party at large on fire.

My main beef is that it pays homage to the idea that the country has a serious productivity problem, and that this is something politicians should worry about. But this is such a consensus view that I guess they had little choice. I don't particularly object to the polices that this gives rise to. Indeed many of its ideas would no doubt dent measured productivity in the short term (more regulation, tougher environmental focus, and so on), so it is probably politically wise to have some policies specifically focused on raising productivity. Labour does something similar.

So what, for me, are the key issues? The first is that too much money in the economy is being either retained by businesses, or distributed to shareholders, or paid to senior employees. Quite apart from the corrosive effect this has on people's sense of fairness, too much of this money is idle, causing a phenomenon called secular stagnation. One of the symptoms is low interest rates and too much private debt. This tendency started in the 1980s and  technological changes aren't making it any easier. In order to address this, broadly two sorts of reform are suggested. First there is attacking monopoly capitalism. This is David Boyle's big theme: he wants to rescue the old liberal concept of free trade as a liberator, after it has been hijacked by neoliberals to mean staying out big business's way. The second is to redress the balance of power between workers and bosses. I think this latter is probably more important - I am less convinced than David that modern monopoly capitalism is quite as harmful as it was in old economy days of oil, phones and steel - though I do think he is onto something over excessive protections for intellectual property. The Lib Dem paper embraces both approaches, though not intellectual property, which requires a policy paper all to itself. It opens the door to supporting unions. Having heard a very sensible presentation by a representative of the union Prospect at the party conference, I am changing my mind about the role of trade unions. One of my formative political beliefs (from the 1970s) was that unions were a baleful influence on the economy. But empowering unions sounds much more likely to redress the palpable power imbalabce than more shared ownership of businesses, a typical Lib Dem suggestion (though not advocated as radically as the left are starting to).

The second issue is that the economy needs to be pushed towards environmental sustainability. Not only does this mean unlocking renewable energy and leaving coal and oil buried in the ground, but it also means producing and consuming less stuff. The sustainable economy will be based on services, not manufacturing. This needs a change of mindset, and the policy paper does give it a big shove in the right direction.

A third issue is getting a more even geographical spread of economic success. It is a pity that economists are not giving this more thought. Certain economic processes seem to benefit from accelerating returns - returns that rise with concentration. The idea of accelerating returns sounds good, but it isn't, because it leads to success being concentrated, and increases inequality (unlike the alternative concept of diminishing returns, the more conventional assumption in economic modelling). This seems to be because of network effects among personal relationships, that work better in geographical proximity. This is not particularly well understood, but needs to be. I am convinced that government structure is part of the story. More devolved political power helps - but exactly how and why is less clear. The policy paper duly pushes for this, both in government and in the purchasing of public agencies. That is helpful. But whether more devolved government will help Boston, Margate or Merthyr Tydfil enough is doubtless open to scepticism. The centralised political culture runs deep in Britain.

And a fourth issue is human fulfilment. We have reached the point in our economic evolution when economists need to consider this explicitly, rather than simply trying to give people more money to spend. This fits in with worker empowerment, but there needs to be more. The paper's advocacy of lifelong education and individual learning accounts is helpful here. But I want to see the greater availability of counselling for people between jobs, or unsatisfied with their jobs, as a part of this. Simply giving people spending power is not enough, and can be dehumanising - one of the reasons that I am suspicious of universal basic income, a very fashionable idea on the left that the Lib Dems are sensibly steering clear of.

So, overall, this policy paper fits well enough with the economic agenda that I support. But standing back it leads me to a striking thought. There is a growing overlap between current liberal thinking and new socialist thinking (which isn't just a throwback to the 1970s as its opponents claim), and a step away from the neoliberal thinking that still dominates the centre-right. Perhaps there will be enough common ground for a future coalition, once Labour sees beyond its internal struggles and overcomes its more extreme tribalism. Alas that day is some way off. But a coalition with Conservatives once the Brexit hoo ha has settled looks even less wise than it was in 2010.

 

Vince Cable sets a bold course for the Liberal Democrats

In one episode of the masterly political comedy Yes Minister, the knowing civil servant advised his naive minster on the art of public presentation. It depends on how radical you are. The more radical that you want to be, the more sober the presentation needed to be, to reassure the wary. A contentless speech, on the other hand, needed to as glitzy as possible. On that basis the British Liberal Democrats' leader Vince Cable's speech yesterday to his party must have been radical indeed. Its presentation was as dull as ditch water, fluffing its one joke (something about erotic spasms). Its content was another matter.

Most commentators, inside and outside the party, have been unable to see past the superficial. They complained that it was dull, and lacked radical new ideas. They assumed that his appeal to reasonable, moderate voters, put off by the extremism of other parties, meant that his ideas were would be wishy-washy, and duly saw that both in what he said, and in the series of policy resolutions passed by the conference. But I have been listening to leader's speeches for nearly 30 years. I'm tired of the presentational tricks, the crowd-pleasing jokes, the radical-sounding policy ideas that lead nowhere, and the personal stories injected by professional speechwriters to establish "authenticity". What I actually heard was a series of direct answers to the hard political questions that the party faces; he never lost my attention. My first thought, as we got up to applaud it, was that it was the best leaders' speech I had ever heard.

So what are these hard questions? The first was what actually do we say if the party succeeds in its quest to secure a referendum on the Brexit proposal, with an option to stay in the EU. This is something that most advocates of a referendum say little about. Vince recognises that most people that support Brexit have a real grievance, having been left out of whatever economic advance the country has made over the last generation. That needed to be addressed through public investment, and for public resources to reflect population increases more readily. He also recognised that the party needed to push for reform of the European Union itself. This is something most Remainers are silent about.

But this only poses deeper questions about what is wrong with Britain, that go far beyond Brexit. Vince took this on too. Part of his answer was a familiar liberal one: better education services, with a lifelong remit; he mentioned further education colleges in particular as a neglected sector that needed attention. He also supported Education spokesperson Layla Moran's ideas for changes to schools. These are a little too crowd-pleasing for me (replacing Ofsted and reducing primary testing) but are generally going in the right direction. But he also had ideas, indeed firm policies, on the economy, often a Lib Dem weakness. He recognised the biggest problem: that too much money is being hoarded by the well-off. He wants to tackle this by taxing it harder. This is quite brave, since there is likely to be collateral damage amongst a swathe of older people (like me) who have made money from owning homes, and who (unlike me) want to pass on much of this wealth to their children (I don't have any). This is surely part of the answer, but also I think it means being braver on government debt. But he hinted at this too - by loosening government rules on borrowing to invest, locally and nationally. My criticism in my previous post that the Lib Dems are weak on economic policy is being addressed.

He also wants to start thinking about how the impact of increased automation will affect our lives, and how public policy needs to change to reflect it. This will doubtless lead to a focus on empowering workers, as well as re-focusing regulation of digital platforms. Deputy Leader, and likely successor to Vince, Jo Swinson also talked about this.

But, of course, developing a policy platform that is relevant and radical is only part of the problem. The are small signs that the party's fortunes are improving at the expense of Britain's big parties, but far short of what is needed to turn the party into a major political force. The party isn't speaking to the vast majority of the public, and media gives it little attention, almost none of it sympathetic. Amongst those who have some awareness of the party, it is considered to be well-meaning but ineffectual. It is unfashionable to support the party, and many people who might be supporters resort to sneering at it. There needs some kind of seismic shift, both in gathering supporters and, critically, money. Vince has launched a series of ideas for party reform in an attempt to do just that. I did not attend any of the consultations on these reforms, but I understand that attendees were giving them a sympathetic hearing, but were worried about some aspects, notably that the free supporters' scheme might be subject to entryism. Many of the older hands are very sceptical, though. They way in which the leadership is trying to push the reforms through has ruffled quite a few feathers.

But the party doesn't belong to these old hands, who include long time members like me, and more recent ones who joined in the 2000s, who consider themselves to be radical liberals. The party's membership has exploded since 2015. The recent publicity of Vince's reforms have drawn in thousands more. Nearly every other speaker claimed that it was their first time speaking at conference. By and large these were persuaded by the leadership line. A strong move by the old lags to derail a motion on immigration, recommending substantial reforms to Britain's current system, but falling far short of making the country truly open, was easily defeated. The complainers were passionate, angry and numerous, but oddly unspecific. Against this most people were persuaded that the policy was a step in the right direction.

But the opportunity is palpable. The Conservatives are skewered by Brexit, as well tied to an outdated economic orthodoxy. Labour is riven by internecine struggles that are relegating many of its ablest people to the sidelines. Too many of its supporters indulge in tribal abuse as an alternative to building broad support for a radical policy programme. Its leader is failing to convince much of the public. A bit like the Lib Dems, he is seen as well-intentioned but ineffectual.

And meanwhile Brexit is hurtling towards us. Personally I still think that the Prime Minister Theresa May will succeed in getting a compromise deal with the EU through, allowing an exit from the union in March next year. The Lib Dems owe it to their supporters to try their damnedest to stop her. But its leader is looking at what the party has to do beyond that. That encourages me.

What can we learn from 1977? The need for fresh economic thinking

Economic thought follows a 40 year cycle. It starts with a period of doubt, as the conventional wisdom appears inadequate; this lasts ten to twenty years. A new way of looking at the economy then emerges and this leads to a period of confidence and optimism, lasting twenty to thirty years. And then optimism collapses into another period of doubt as the orthodoxies fail. Currently we are in a period of doubt, which started ten years ago. That was also the case 40 years ago. A chance discovery has just brought this home to me.

Last weekend I was staying at my father's house, and picked up his copy of E.F. Schumacher's Small is Beautiful. That book, published in 1973, was one of the products of the previous period of doubt, and is a topic for a future post. But out of the book dropped a cutting from the Financial Times, dated 24 February 1977 by Samuel Brittan, one of that newspaper's most distinguished writers. It was a bit of a shock, because what it says is so similar to what people like Adair Turner, and me in this blog, are saying now. (Apologies: the scan isn't that great as the text is very small, and it defeated my OCR software, so it may not be that easy to read).

The article is a review of a book Social Limits to Growth by Professor Fred Hirsch, which is largely unknown these days (unlike Schumacher's), but not quite forgotten. Hirsch developed the idea of "positional goods", whose value does not arise from their consumption, but what they say about your social position. He noted that as societies get richer, the more important positional goods become. But ramping up production of these goods is self-defeating, as they then simply lose their value. He suggested that this poses a limit to how far economic growth can go. He also discussed the contradictions of market capitalism, and in particular that it depends on self-interest (some would say greed), but needs this to be constrained to avoid corruption and rigging the system.

Sir Samuel Brittan, as he now is, was one of my favourite economics writers: I read his columns religiously (alongside the American writer Paul Krugman), a process that helped me develop an interest in economics which eventually led to me giving up work and taking a degree in Economics at UCL in 2005. He might loosely be describes as a neoliberal, but above all he was rigorous in his thinking and not at all doctrinaire. He starts the article by posing the question about why economic growth and productivity had slowed, and reflecting on Maynard Keynes's essay Economic Possibilities of our Grandchildren (1931 - belonging to the previous period of doubt and introspection that Keynes did so much to resolve). What is economic growth for? Keynes predicted that at some point it would become pointless. Sir Samuel accepts Hirsch's analysis, and goes on to wonder about whether the market economy was really the paradigm that many idealists made it out to be. He concludes:

The main case for the market system is as a method of cooperation, which minimises coercion (e.g. conscription versus the price mechanism). But no one after reading Professor Hirsch can imagine that it promises a short cut to our economic nirvana or that it can manage without an economically literate public philosophy, which - 200 years after Adam Smith - we have still to evolve.

So what was happening in 1977 to provoke so much doubt? I remember it well: I was at university (studying physics and geology) and very politically engaged. In Britain it was the period of the Labour government of Jim Callaghan. Inflation was persistent; unemployment was high. The economy was dominated by large  industries, many of them nationalised, where union power prevailed. They were generally very badly run, especially the nationalised ones, partly because of union interference. Callaghan's tactic for controlling inflation was to do national pay deals with unions, who were grudging at best, and there was much industrial unrest. He, and his Chancellor Denis Healey, concluded that unemployment could not be tackled through expanding demand, as the conventional wisdom prescribed, referred to as "Keynesianism" as if Maynard Keynes could ever be pinned down to an -ism. Instead they adopted deflationary (i.e. austerity) policies to tackle inflation first. It was a turning point in British economic policy which is often ascribed to the Conservative Margaret Thatcher, who became Prime Minister in 1979.

But in the 1980s the economy picked up, with, apart from the odd wobble, continuous growth up to 2007, featuring steady productivity growth. So that poses an obvious question. Was the pessimism about the limits to growth in 1977 unjustified? And is my current pessimism, if it is correctly called that, justified now?

What was behind that quarter century of growth? In Britain, reform of the nationalised industries, most of which were privatised, was clearly part of it. But the deeper causes were the advance of technology, and the development of globalisation, which meant the increasing use of cheap inputs from Asia. These advances gave people access to advanced technologies that have undoubtedly improved lives. I remember desperately searching for phone boxes to make calls in the 1970s; nowadays almost everybody has a mobile phone, a product that was science fiction in 1977, but made cheap and accessible by technology and globalisation. But the growth was skewed. Whole industries, such as coal mines, were closed down or gutted. Those years are not remembered fondly in many areas of northern England or Wales, which were devastated (in common with many equivalent areas elsewhere in Europe and in North America). Most of the benefits of growth went to better educated middle class people, the yuppy generation, of which I was one.  And a lot, much more than in the previous half-century, went to a tiny elite of super-rich. Inequality rose dramatically up to 1997 in Britain; it has stabilised there since, but continued to advance elsewhere in the world, notably the USA. Progress for working class people was much more mixed. Globalisation, and the backwash of decolonisation, also led to a freer movement of people within and between continents, which built resentment amongst those who stayed with their historic communities. So when the good years came to an end with the crash of 2008, there were all the ingredients for a populist backlash. Moreover, when examining the pattern of growth, much of it depended on Hirsch's positional goods, or services which do not directly support increased human wellbeing (investment bankers, mortgage advisers, lawyers, accountants, cyber criminals and security specialists, and so on).

And there is something else: the technology that underlay the growth may have been secure and lasting, but its other foundations were not: the post-Keynesian economic consensus, and the availability of cheap Asian imports. In order to keep the economic engine rolling governments allowed the build up ever larger quantities of private debt. A liberalised financial system, regulated by floating exchange rates, that eased the flow of capital between countries, helped this process along. But this is unsustainable in the long run. At some point policymakers have to confront the macreconomic problem behind it: which is that we are trying to expand the supply of goods and services faster than demand. Without artificial, government-provoked stimulation, the economy sinks. This is what is meant by secular stagnation. Meanwhile, as the Asian economies catch up with the west, the availability of cheap imports, so important to growth in that period, is fast diminishing, and is not being replaced by the development of other regions of the world.

What people failed to see in 1977 was how much of an impact that technological change would have on people's lives, and how this would continue to improve human wellbeing. That potential for further improvement remains. But what the doubters were right about is that the conventional way that economists link human wellbeing to economic growth was breaking down in the developed world. It is now in complete ruin. But most policymakers are still in denial.

Is Vince Cable’s plan for the Lib Dems a gamble too far?

Last Friday the leader of the British Liberal Democrats, Vince Cable, launched his plan for remaking his party into a broader liberal movement. Having been away, my reaction to this event has been slow. But before we launch into the party conference next weekend, here are my first thoughts.

Vince's main idea is to create a supporters' scheme which costs nothing to join. To give people extra incentive to sign up to this (and be bombarded with requests for help and donations, etc.) he suggests that these registered supporters have a vote to help choose party leaders - and a suggestion that non-MPs may be allowed to stand for the leadership. He also wants to make it easier for new members to become candidates for parliament - currently they must have a full year of membership. Vince said that the party needed to open itself up to become a movement for political moderation.

First reactions in my Facebook feed were very negative. If there's one thing that annoys the more vocal people in this community it is referring to Lib Dems as "moderates", or worse, aiming at the political centre. The party has being going through difficult times after its support collapsed in 2010 when it joined the Conservatives in coalition government. What has kept those of us who remain going, and motivated those who have joined since, is passion for its liberal and internationalist values, not moderation, and not being Mr In-Between. But political leaders know that they must do more than merely represent their supporters; they must broaden their movement's appeal to people who do not currently support it actively. There are many people out there who are appalled by the idealistic extremism that is infecting both Labour and the Conservatives. Doubtless the use of the word "moderate" was based on at least some market research, though the party cannot afford much.

Apart from suspicion of the word "moderate", members are wary of involving large numbers of newcomers with little experience or stake in the party. The Labour Party were the first down this route, when they opened up their leadership contest in 2015 to the public for just a £3 fee. In one sense this was enormously successful: hundreds of thousands were drawn in, and many became full-fledged members. The party how has about 600,000 members when the next three in size (the Conservatives, the Scottish Nationalists and the Lib Dems) have not much more than 100,000 each. But this influx of members helped a manifestly unsuitable candidate (Jeremy Corbyn) become elected to the leadership, and has been exploited to drive the party to left. I need to be careful here. Mr Corbyn has been badly underestimated by mainstream politicians and media, and the lurch to the left has involved some welcome fresh thinking. It may not turn out as bad as many outsiders, including me, are predicting. But what is unquestionable is that the process has been very uncomfortable for many of the people who had devoted their lives to the party before the influx changed things. And that's what many Lib Dems fear will happen to their party if these changes actually succeed in drawing lots of new new people in. It's all very well saying that these new supporters should share the party's current values, but how do you ensure that this is the case?

What gives weight to this is the thought that the party might be able to draw in defectors from other parties, including MPs and big-hitters. Unhelpfully, former Labour Prime Minister Tony Blair piped up on Friday too, expressing his fears over the turn that politics in Britain has taken. People won't be slow to make the connection that "moderates" and "centre ground" include people like him. And to many of us, it is people like him who got the country into this mess in the first place, by pushing a series of ideas (often referred to as "neoliberalism") that have created a whole class of left-behind people that are stoking up the anger.

But the party's position is quite desperate, if it wants to live up to its ambitions to make it to the political big time (i.e. achieve power), rather than being an ideological fringe, like the Green Party. It is stuck at between 5-10% in national opinion polls (though at the upper end of the range at the moment) and has too few MPs (at 12) to have serious political clout. Andrew Rawnsley sums this up very well. And yet, as Mr Rawnsley also points out, the opportunity is palpable. The ideological fringes in both the major parties are making the running. And there are examples of successful mass movements led from the centre (he points to Barack Obama, Emmanuel Macron and Justin Trudeau in Canada, whose party has been advising Mr Cable). If the Lib Dems can't do this all by themselves, it is hard to see it working without them. The party has nearly as many members as the Conservatives, and the organisational nous and cooperative culture that a brand new party would lack (one reason that the party has seen off Britain's most successful new party of recent times: Ukip).

There are moments in life when you have to be courageous, and take big risks in order to get what you want. This is one such moment for the Lib Dems. All the risks pointed out by the plan's critics have a basis in fact - but they can all be managed. The plan is not nearly enough by itself, but the point is to capitalise on opportunities as they arise. As such I am giving my support to it, though I have reservations about some of the plan. The secret weapon of liberalism is that it can be ideological and moderate at the same time, because it celebrates inclusion. Inclusion is what political moderation is all about.

To me, though, there remains a hole at the heart of this exercise, which will also afflict any new parties created out of fragments of Labour and the Conservatives. We know what they stand against, but what's the plan? How do they propose to help the left-behind, and start to heal the rifts that are all too apparent in our not-so United Kingdom? At the heart of this has to be a new approach to economics. At the moment Labour understands this better than the Lib Dems, but they are ruining their good ideas by proposing to over-centralise power and supporting the deep conservatism of trade unions. But at least they realise that the cosy consensus that dominates the centre of British political establishment has to be challenged. And that is radical rather than moderate. Once liberals start to champion an agenda for radical economic reform, everything is possible.

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.

Have economists learnt nothing from the crash? Three fallacies that persist

It is approaching ten years since the collapse of Lehman Brothers. To most people this is when the great financial crash started, since it is from this point that the most serious repercussions started to take place. Personally I date it from the collapse of interbank markets more than a year before, but never mind. What was so shocking about the crash was that so few trained economists foresaw it. Or, lest anybody mistake that for mere criticism of forecasting skills, how so many economists aided and abetted the forces that destabilised the financial system, or at any rate, did nothing to head the crisis off. Ten years on and I am starting to wonder whether we are unlearning the lessons of the crash, and relearning the complacency that let it happen.

What shook me was an article in the Financial Times by long-standing correspondent Martin Sandhu - the devasting cost of central banks' caution. His suggestion is that central banks were too cautious in the aftermath of the crash, and as a result the recovery has been stunted. What struck me about this article is how heavily it is based on the economic conventional wisdom that helped cause the crash in the first place. It is as if economists like Mr Sandhu had learnt nothing at all. In particular it is based on three persistent fallacies that should by now be well and truly exposed.

Fallacy 1: the pre-crash trend growth rate was real and sustainable

Economics is a numerical discipline, and economists are more than usually susceptible to the delusion that numerical measures are more real than the complex world they describe. One case in point is something called the "trend growth rate". This is an average rate of growth taken over a long period of time. By its nature it does not vary much from year to year, but before 2008 it had been remarkably consistent in developed economies, at about 2% per annum. After the crash it fell, and a new, much lower trend has established itself. Mr Sandhu's contention is that the pre-crash trend was ordained by the laws of physics, and that the decline must represent a policy failure - which he lays at the door of central banks. The gap between where the economy is now, and where it would have been had the pre-crash trend persisted, is now very big - and it is the "devastating cost" of the article's title. This is a persistent idea, which I have heard from Mr Sandhu's FT colleague Martin Wolf too, though I suspect that he is starting to wake up to the truth. You also hear it from some left wing commentators who lay the blame at the door of "austerity" rather than central banks.

The persistence of the trend before 2008 is all the evidence that many macroeconomists need that it must represent some natural law: the steady advance of technological change on productivity. They did not think it was their job to ask more penetrating questions. But the cracks were showing well before 2008, and had economists spotted this, they would have seen that instead of the world continuing on its steady course, the risk of an economic crash was building up. The crash blew away froth that had been accumulating in the years before.

There are several aspects to this, and I will try to be brief. First is that the sort of productivity growth that economists fondly believed is happening everywhere, was always confined to fairly narrow sectors of the economy, and those sectors are themselves narrowing. In particular it applied to agriculture and manufacturing: industries where you produce stuff and ship it. And yet the importance of these industries to developed economies is steadily diminishing, in a phenomenon called the Baumol Effect that is taught in Economics undergraduate courses, and which should have been no surprise. The true drivers of a modern economy are in services such as healthcare, where technological advance does not tend to advance productivity in the sort of way that is captured by economic statistics.

Second, in the ten years up to 2008 much of the rate of growth depended on globalisation, and in particular the use of cheap labour in the developing world, notably China. This was strikingly evidenced in the fact that the prices of many manufactured goods actually fell in the period. This was not a case of advancing productivity: it was the exploitation of another basic economic idea whose implications few modern economists actually seem to understand: that of comparative advantage. The problem is that where this arises because the developing world is catching up with the developed world these gains are temporary and actually go into reverse eventually. That was what was starting to happen before 2008 as Chinese wage costs relative to American and European ones started to close. It was not sustainable.

And third, much of the growth, especially in Britain, depended on industries whose economic benefits were actually doubtful, and where productivity measures are similarly flawed. Two sectors stand out. One is finance; not only are the actual benefits to human well-being from its output hard to understand, but much of the reported income turned out to be downright false. That is the main reason why the crash had such a drastic effect on GDP figures in 2009, as bank bailouts were needed to replace non-existent assets created by this fictitious income. That should be reasonably obvious, though I'm surprised by how few commentators pick this up. More subtle is the problem with a second sector reporting productivity growth: business services. This is things like lawyers, accountants, consultants and architects - particularly important in Britain. The problem here is that these do not provide services to end users but to other businesses. Which leads to the question, how can you say that these industries were becoming more productive when there is so little evidence of productivity gains in the industries they were advising?

Fallacy 2: consumer price inflation is the main evidence of unsustainable growth

In the 1970s developed economies overheated, and this led to an inflation price spiral, as consumer prices and pay rates chased each other. This wasn't supposed to happen under the Keynesian economic regime that most of the world used at the time, because unemployment was increasing too. This was a huge shock to the economics profession (a much greater shock apparently than the 2008 crash), which led to a brand new policy framework. This led to an obsession with consumer price inflation. If you keep this at some Goldilocks level, of between 1% and 3% per annum, then nothing too much could be going wrong, people thought. This was made the sole performance target for many central banks, as it meant that economies were neither overheating nor underperforming. Other things, like the level of bank lending, asset prices and balance of payments imbalances didn't really matter. This was central to the neo-Keynesian consensus.

If this was ever valid, it was rendered obsolete by the advance of globalisation in the 1990s and 2000s. Wages became detached from consumer prices. Capital flowed freely between the world's economies. Especially in Europe the movement of labour from one country to another became freer. There were many ways an economy could overheat without consumer price inflation becoming affected. Asset prices (real estate, shares or even bonds) could inflate into bubbles; dangerous levels of unreal assets could build up within the financial system; a destabilising level of migrants could cross borders. All of these things happened in Britain in the run up to 2008, and yet because inflation remained in the Goldilocks position people thought everything was fine, and that all these other things would just sort themselves out. Many still believe this; it is one of the few things that unites all factions of the Labour party, which was in power at the time. Likewise Mr Sandhu persists in suggesting that consumer price inflation was all that central bankers needed to worry about after the crash - and because it has shown no sign of taking off, there has been plenty of scope to pump things up.

Fallacy 3: monetary policy is an effective way of regulating demand

This was another part of the neo-Keynesian consensus. Prior to this the conventional wisdom that fiscal policy (taxes and public spending) was the best way to help a flagging economy or cool an overheating one. But after the failures of the 1970s it was felt that this got too tangled up in politics to be effective, and would lead to an excessively big state. Instead the job could be given to central banks, through changes to interest rates and other things like Quantitative Easing. These things were referred to as monetary policy, conjuring up the quaint image (not discouraged by economists) that it was about the printing of banknotes.

And yet this idea has not stood up to the test of time. Quite apart from the fallacy of using inflation as the main performance indicator, monetary policy affects many other things than consumer demand, and in fact has led to a build up of dangerous levels of private debt. The political pressures to keep interest rates low, especially if inflation is low, quickly become unbearable. And not just political pressures. Increasing interest rates can destabilise the banking system. Such increases may have provoked the pre-crisis in 2007 that in turn led to the main crisis. Monetary policy has no brakes.

Here the left wing critics of economic policy, who think that fiscal policy should do more of the work of regulating demand, are on stronger ground. But would politicians have the guts to tighten fiscal policy when needed? The vehemence of left wing criticism of austerity, and their denial that the pre 2008 economy was overheating, suggest that fiscal policy too lacks effective brakes.

Are we heading for a new crash?

There are some worrying signs, with the build up of private debt, and with reckless fiscal policy in the US. But we are not seeing the same reckless advance of "financial innovation" that proved so devastating ten years ago. Not in the developed world anyway: China looks a bit different, though the awareness of the central authorities there is a strong contrast to the denial of many western leaders before 2007.

But some trouble is surely ahead. Perhaps then economists will start to break out of their bunker and start viewing the world as it really is, instead being a construction of outmoded statistical aggregates.

Boris Johnson raises the spectre of Islamophobia

I was going to observe a dignified silence over British MP Boris Johnson's latest stunt. His aim was to gain attention and notoriety, and I didn't think he deserved any help from me. But with a week gone and the story still being run prominently by BBC Radio 4, my silence must be broken.

The stunt was Mr Johnson's regular column in the Daily Telegraph, published last Monday. I haven't read it, and I don't intend to. Nobody disputes three salient facts. First that its subject was the banning of face-covering garments in public places, recently enacted by other European countries, such as Denmark. Second that Mr Johnson said that such bans should not be enacted here, based on good liberal logic. And third Mr Johnson expressed his dislike of such garments as worn by some Muslim women (the niqab, the face covering with a slit for the yes, and the burqa, a total body covering) by making two derogatory comparisons. Unlike the BBC, who do so at every possible opportunity, I will not repeat these here.

Deliberately or not, this was a very clever piece of work. The first fact allows Mr Johnson to claim that the article is part of an ongoing and legitimate political debate, and the second that his views on the subject are liberal. But the third picks up on public hostility to women who wear the burqa or niqab. It was what attracted all the attention, drawing condemnation from Muslim members of the Conservative Party, and admiration from those with less liberal views, and those who think Muslims have no place in this country. The timing was impeccable. The BBC had just given wall-to-wall coverage to the Labour Party's troubles with antisemitism, so they could hardly downplay coverage of the story without being accused of bias. And, comfortably into August, there has not been much competing news; even the drought was abated by some welcome rain. Also Mr Johnson was on holiday, so he could evade interviews. As a politician that loves attention, things could hardly have gone better.

Could it damage him politically? That's hard to see. His liberal comments allow him to maintain injured innocence; the people who are condemning him were by and large hostile to him anyway. Brexit supporters have stuck with him. And large parts of the white British middle and working classes are hostile to Islam, and his derogatory comments resonated well. This is especially true of Conservative grassroots members, who most suspect are the main audience he had in mind. Mr Johnson surely wants to take over from Theresa May as party leader and Prime Minister. That ultimately depends on a vote by party members, should Mrs May step down or be forced out (not to be taken for granted). He is maintaining his already high standing with the grassroots. His main difficulty is his weak standing with MPs, who must pick the top two candidates for the membership vote. But his charisma far outshines potential rivals (except Jacob Rees-Mogg, whose standing among MPs must surely be even weaker) and he may yet be able to pick a path through that minefield.

The context is very depressing. Islamophobia is rife in Britain, as it is in most of Europe. Even respectable people can be heard saying that Islam is a repressive ideology, and alien to traditional British or European culture. Many people are open about this in a way that they are furtive about antisemitism - a bit like antisemitism in the 1930s. This is a remarkable turn of events. The British Empire included many Muslim subjects, who were recruited into the armed forces (especially in India) as they were considered to be good soldiers. These were then brought over to Europe to defend the homeland in both world wars. I remember my cousin, a senior colonial administrator in British Sudan, speaking warmly of Muslims.

It is not all that hard to see how the modern hostility came about, though. Militant Islamic terrorism, especially after the 9/11 attacks, is one reason. Muslims may regard these groups as nutters on the fringe of their society, but Islam is central to their identity, and they comprise a large part of what ordinary British people know about Muslims. And, over the last 50 years, there have been high levels of immigration from Muslim countries, especially Pakistan and Bangladesh. Many people feel threatened by immigration, which becomes a scapegoat for modern ills generally. Many of these Muslim groups are conservative and have made little attempt to integrate. People find women dressed in the niqab or burqa, though rare, especially provocative. I have to confess that I'm not comfortable with them either - it seems insulting somehow. The real problem with Mr Johnson's comments is that they will invite even more people to abuse these women in public. Indeed that seems to be exactly what has happened. Since the Brexit rebellion, hostility to all groups of immigrants has risen, and this has broken out into public abuse more often. It is why we all have to be careful in what we say.

Meanwhile most Muslims are good, law-abiding citizens, and harmonious integration proceeds apace. The fears of Islamophobes are fantasies. And yet it is these good citizens that will suffer the most. Mr Johnson well knows this (his family has Turkish roots after all), but he is happy to exploit anti-Muslim prejudice.

There are parallels with antisemitism. Just antisemitism disguises itself as perfectly legitimate criticism of Israel's treatment of Palestinians, so Islamophobia masquerades as criticism of extremist terrorists, or conservative social customs, such as the niqab. Legitimate topics for political debate get subtly subverted. Mr Johnson's subversion was particularly subtle - he just poked a bit of fun. Unfortunately this makes these legitimate topics harder to discuss.

So the anti-liberal backlash continues. I still believe that it will peak in Britain and other countries, and then turn. Partly this will be because the anti-liberals will be unable to deliver anything of actual value. But also I hope that liberals will buck up their ideas about how to help, and appeal to, left-behind people and places. Meanwhile we must call out prejudice when we see it.

 

Amid the noise about no-deal, a blind Brexit is being put in place

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The quality of political debate in Britain is hitting new lows. The politicians are  not interested in helping us understand what is going on, just in promoting some half-true story or other. 'Twas ever thus. What has changed is that challenge from journalists and commentators is weaker. Most media are promoting their own agendas. The BBC tries to be better, but it just presents one fiction, compares it to the alternative fiction being offered, and retires. Few are interested in talking about what is really happening.

The current talk about a "no deal" Brexit is a case in point. On the one hand, business groups are worrying that this will lead to an Armageddon on the day after exit, at the end of March next year. This is pounced on with glee by Remain supporters as a sort of "told-you-so". Government ministers simultaneously try to say that  it just won't happen, that it is the fault of EU intransigence, and that anyway no deal is better than a bad deal. Brexiteers, like the Conservative Ian Duncan Smith last weekend, just talk about something else completely. What are we to make of this all?

First of all, we have to be clear about what a no-deal Brexit actually is. We are not talking about the choice between the Single Market or WTO terms or something in between. This is what IDS, William Rees-Mogg and others change the subject to when pressed on the topic. What is meant by no-deal is, well, no deal. No trading protocols, no divorce bill, no transition period, no mutual recognition of citizens' rights, no common VAT infrastructure, no mutual recognition of standards. Just a vacuum in place of 40 years of accumulated law and regulation.

And that could be Armageddon. There would be queues at ports, empty shelves in shops, hospitals running out of medicines, layoffs in all kinds of businesses, holidays cancelled and even planes grounded at airports. Things would start to settle down in due course, but with Britain in the weakest possible bargaining position, it is very hard to see how most people aren't going to be made worse off. It is no wonder that Brexiteers don't want to talk about it. They are prone to suggesting that threatening a no-deal will improve Britain's bargaining position in the exit negotiation - a bit like threatening to walk away from a house purchase when you are making yourself homeless.

In fact, if the pro Brexit politicians were interested in intelligent engagement they could make two points. The first is that a no-deal is not in fact all that likely, because the deal is quite close to being done. The main sticking point is trying to find a form of words that will cover the EU's demands on the Irish border. The British government thinks that the current draft is politically suicidal, because it opens the possibility of Northern Ireland having some form of semi-detached status, with a strong boundary between it and the rest of the UK. Although most British people are quite chilled by that prospect, it would have devastating political consequences in the province. But a no-deal would almost as devastating for Ireland as it would be for Britain, so there is sure to be some flexibility on this. Indeed, there are already some signs of movement from the European Commission. The rest can be fudged, even if it does open up the prospect of another no-deal cliff edge when the transitional period comes to an end, on 31 December 2020. This is what the Scottish First Minister Nicola Sturgeon is calling a "blind Brexit": one where the longer term relationship is unresolved. This is exactly what the UK and EU negotiators are planning.

The second point to make is that we will know if there is likely to be a no-deal later this year - probably October. After that it becomes too late for the deal to tidied up and ratified by all the bodies required to do this, for such a complex treaty, in both Britain, the EU institutions and in other EU countries. That gives perhaps five months to prepare for that cliff edge. Temporary stop-gaps can be put together for the most urgent issues: citizens' rights, air traffic, and so on. I can't see that a lot of supply chains or border facilities will be sorted out by then - the infrastructure can take years to build - so there will still be chaos at the borders and some lay-offs. But we should avoid Armageddon.

And the rest is theatre. Remainers want to build up a sense of crisis so that people seriously start to rethink the whole foolish enterprise and call it off before it is too late. They know that once we get beyond exit day it will be much, much harder to get the UK back into the EU. The government thinks it is wise to keep its head down to preserve unity within the Conservative Party and to keep the Democratic Unionists of Northern Ireland on board. The Brexiteer politicians (the clever ones) have probably decided that this battle is done and are getting on with the next one: which is the shape of the world on 1 January 2021. Their main concern is that any deal done on Ireland does not lock out their preferred solution, which, for now, is some sort of Canada trade deal.

Admittedly this is quite delicate. A Canada deal looks incompatible with on open Irish border, which, with Republican terrorists still active and Loyalist groups ready to retaliate, could restart an escalation of violence. But the thing is to fudge it for now and hope that the passage of time will make the problem easier to solve. Under the transitional arrangements there would be an open border until 31 December 2020.

Theresa May's government has played a weak hand quite well. At the cost of making any progress on other burning political issues, including the ones that led to the referendum backlash, she's winning on executing Brexit. She is better off without Boris Johnson and David Davis, the two ministers who resigned in a huff. It would have been better to have negotiated a deal on citizens' rights separately, and put it to bed ages ago; that would make no-deal less scary. The EU side was dead set against this - but it would have been a bonus to their own citizens, so they might have given way. Mrs May made no serious effort (or any effort at all so far as I know) to do this.

So the good news is that Brexit Armageddon is very unlikely. The bad news is that the Brexit roadshow will keep on running after 29 March 2019. I read one article recently which looked forward to the day when we could move on from Brexit to sorting out Britain's many other problems. Alas that day is still years away.

Labour’s antisemitism row – what are the messages for the wider world?

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I haven't commented yet on the struggles of the British Labour Party with antisemitism. It is a battle between two tribes: Labour's left and the mainstream Jewish community, and it is very hard for outsiders like me to make much sense of it. And yet it is an important issue and there are implications for us all.

Of the two tribes my sympathies are much more with the Jewish community. Their case was nicely put by Guardian columnist Jonathan Freedland. The Holocaust remains historically recent, and it followed a creeping growth in antisemitism in European and American society that was widely tolerated, just as some Jews worry is happening now. Sensitivity is understandable.

The hard left, from which the Labour leadership is now drawn, does not seem to understand that sensitivity. They can't utter the word "antisemitism" without quickly adding "all forms of racism". I am reminded of Tony Blair and Jack Straw, who couldn't say "human rights" without tagging on the word "responsibilities". The corrosiveness of that practice is easy to see - it suggested that even basic rights are conditional. The whole idea of the post war notion of human rights is that they are unconditional, and therefore harder for the powerful to undermine. But what's wrong with the "and all forms of racism" tag when placed alongside "antisemitism"? One issue (to the ultra-sensitive) is that it suggests that those making the accusations of antisemitism may be themselves racist. It also suggests that there is nothing different or special about antisemitism to other forms of racism.

But that isn't true on at least two counts. The first is that most racism in the developed world is directed by the politically strong against groups that are physically and culturally distinct. But Jewish people are present in all levels of society, including what Labour call "the few", and many, if not most, Jews are highly assimilated into British society. Antisemitism thus depends on making distinctions that are even more arbitrary than other forms of racism, and the invention of conspiracy theories. Directing hatred against a group who are very much part of the mainstream is particularly insidious. It promotes the idea that institutions have been infiltrated and therefore cannot be trusted. And that encourages people to undermine those institutions, such as the rule of law, designed to protect the weak against the powerful. This may not make it worse than other forms of racism, but it makes it particularly difficult to fight.

The second difference is the state of Israel, a Jewish homeland that most mainstream Jews defend on some or other level. Much of the feeling on the hard left is based on a vehement hatred of that country. That has complex roots; it starts with anti-Americanism, and draws strength from pro-Palestine Arab and Muslim activists, who ally with the hard left, and who see no reason to hide their antisemitism. This has become part of the hard left counterculture, along with support for the socialist regimes in Venezuela and Cuba, and apologism for Russia.

It doesn't help is that defenders of the Israeli government often charge critics with antisemitism unfairly. There is much that it is fair to criticise the Israeli government for, especially now that the current regime is happy to push on the boundaries of racism itself. This is at the heart of the recent controversy in the Labour Party, when the party adopted an internationally recognised definition of antisemitism, but could not accept some of the examples given in the protocol in relation to criticism of Israel. As Mr Freedland says, though, the problem isn't in the precise detail of this, but in the lack of engagement with Jewish groups before they adopted the policy. Some kind of open discussion on how to criticise the Israeli government without tripping into antisemitism would have been wise. But openness is not something the hard left values.

What are the wider lessons? Firstly it shows a lack of political judgement on the part of the Labour leadership, and the party leader, Jeremy Corbyn, in particular. He likes to say that he is for dialogue with groups with unsavoury views (such as the IRA or Hamas) in the name of promoting peace. And yet he seems very selective in the sort of groups that he actually engages with, and it is very hard to see how the cause of peace is being helped. This does pose questions about his fitness to be Prime Minister.

The second wider issue is that the rest of us, who are neither Jews, nor of the hard left, need to redouble our guard against antisemitism. Jews are being made to feel uncomfortable in our midst. The hard left is only part of the problem; unfortunately many Muslims from Africa and the Middle East are importing antisemitism along with other racial stereotypes. They haven't understood the implications. People from other minority racial and cultural groups should aspire to what Jewish people have achieved. But if antisemitism persists they will never be safe, even after they have achieved recognition and assimilation. So we must engage with all of society to help stamp out the conspiracy theories and prejudices that lie behind antisemitism, and in this way help the battle against Islamophobia and other insidious forms of racism that on the rise again.

And how do we react to Israel? With a great deal of care. My worry is that the current government of Israel is playing a dangerous game. It is supporting populist regimes in places like Hungary, and promoting an Islamophobic agenda.  Still, there are plenty of worse things going on in the world. Consider the Syrian civil war and the actions of Iran and Russia. Look at China's oppression of the Uighur and other non-Han peoples in Xingjiang. And the attack on Rohingya people in Myanmar. And the threats against Israel from neighbours and elsewhere are real enough too. It isn't hard to why many Jewish people feel that criticising Israel often tips over into antisemitism, even if I think that too many of them are too uncritical.

The deeper message is this: antisemitism is like the gas that kills the canary in a coal mine. It is a warning of worse to come. But fight it on the basis of tolerance and inclusion (and not on the basis of Jewish exceptionalism), and we will be fighting the whole evil of racism.