The Royal Family is a factory of human misery

How I hate the British fascination with royalty. I will not watch That Interview. But the Royal family is a critical link in my country’s constitution and we can’t ignore it entirely, much as we might want to. Both sides in this spat are making the case for the family’s release from its constitutional role; the grubby business of elections and politics can’t be worse than this.

For somebody that affects uninterest in the royals, I have a guilty secret. I immensely enjoyed the Netflix series The Crown. I only started to watch last autumn, but I have now seen all four series. Before the last series I was interested to read the criticism of it in the press, from royal experts. This is a class of people who make my flesh creep, as they try to exploit the social cachet of knowing the royals. Mostly this criticism was pretty weak – a lot of trivial things (but none that made as annoyed as the use of a Crusader III tank in Suez in 1956; this vehicle was obsolete in 1943). More serious were the conflations and exaggerations in the drama, and events that never happened. These often annoy me too (machine-guns at the Curragh, etc) , and I’m very wary of the defence that the dramas are following a higher historical truth. But to my surprise, I found that I felt that the makers of the series had a point in this case. There was another category of criticism, the knowing “they wouldn’t do that” about some or other misbehaviour, such as the mistreatment of the Thatchers when they visited Balmoral. And yet the drama made it clear that this arose from a gulf of misunderstanding, not intention, and it is all too credible.

The strength of The Crown is that it has a clear and consistent theme, and that theme is clearly true. The institution of the monarchy overpowers the individuals in the Royal Family, and crushes all those who attempt to assert their individuality. Although the drama starts with the last days of George VI, its real beginning is the Abdication Crisis of 1936, when Edward VIII had tried to rebel against the system. This casts a heavy shadow over the first two of the series. The drama shows how the Queen herself came to terms with not being in control, and how pretty much everybody else in the family was crushed and became very unhappy. It focuses on Prince Philip, Princess Margaret, Prince Charles and Princess Diana. But we know that the unhappiness doesn’t end there. Funnily enough the series doesn’t make a big deal out of the tabloid press, the big focus of Prince Harry’s anger – but they point to the contradictions of the institution itself.

The fourth series of the Crown ends in the early 1990s. But we all know that the same drama has been continuing at the same pace in the quarter-century since. And That Interview is only the latest twist. What to make of it? The most explosive claim, about remarks over the colour of Harry and Meghan’s baby is quite hard to take seriously without more context. Was is overt racism, or was somebody being a twit? We may never know – but sensitivities differ across the Atlantic. The broader claim is more serious though: that much of the British public struggled to accept an interracial marriage, which was stoked by the British press. This was part of the toxic atmosphere that the couple felt they had to escape; Prince Harry feels that the Royal Family machine ran for cover rather than fight their corner. The Crown suggests that this was always so, but that this is out of necessity. Another serious charge was that Meghan was not offered help, or help that she felt she could use, when she complained of suicidal thoughts. This echoes, consciously perhaps, of the Palace’s neglect of Princess Diana. In that case the usual secret sources suggested that The Crown was being unfair and one-sided, and that Diana was pretty difficult to deal with. That defence reveals an incomprehension of the problem; the television portrayal was all too convincing. In Meghan’s case the story is likely to be more complicated – but establishing the truth feels like an intrusion.

But the big picture is clear; it is another variation on a theme that has been played out many times. A younger member of the Royal Family feels they can freshen things up. The ‘Firm” feels that this is intolerable and will undermine the monarchy, and crushes the troublemaker. The interesting thing is that The Firm could well be right: the moderniser may do much more harm than good, given the ambiguous nature of the institution, being an upholder of democratic values while being deeply undemocratic itself.

Is it worth it? The British Monarchy does a reasonable job of being the ceremonial head of state. It has its weaknesses. In 2019 the Queen could do nothing to stop several months of Boris Johnson controlling the considerable executive powers of the state with no parliamentary or democratic mandate – a constitutional and democratic outrage. It was the Supreme Court, not the Monarch, that stopped the most outrageous element of this: the attempt to prorogue parliament.

But this constitutional arrangement comes at a huge human cost to the family at the centre of it. By and large they don’t choose to be members. If we had an elected head of state, they at least would have chosen it as a career. The Monarchy has turned the Royal Family into a factory of human misery. There are better ways. Alas reform is unlikely to be a political priority. The misery of one family is not worth the time and trouble.

Rishi Sunak shows a sure touch with 2021 Budget

Yesterday Rishi Sunak, the British Chancellor of the Exchequer (though that job title belongs to no other country so far as I know), showed why is considered to be the country’s top performing minister after Boris Johnson, the Prime Minister. It was Budget Day; he got most things right, while putting off a lot of decisions for another day.

The central issue for the government is, of course, dealing with the pandemic. His decision was to continue with a whole raft of fiscal support measures, such as the furlough scheme, until the end of September. This is well after the vaccine programme is supposed to have brought society back to normal, sort of. This shows that Mr Sunak has learned from his mistakes. Last year he was too eager to hurry things back to normal and withdraw fiscal support. Like his boss, he seems to have effortlessly risen above the mistakes of 2020.

But how is this to be paid for? Government finance does not work like household finance, and especially not for a medium-sized developed country with its own currency, like the UK. Mr Sunak has simply added the costs to the national debt without any serious plans to repay it. After dealing with short-term support for the stricken economy, Mr Sunak’s next priority is to show how he will stabilise government finances in the new, shrunken, normal by reducing the budget deficit. He did this by freezing tax allowances and raising the rate of corporation tax (from 2023). The former will allow the government to benefit disproportionately from incomes increasing through inflation. This allows the Conservatives to stick to their pledge not to raise personal tax rates, nowithstanding the hurricane that has hit the economy.

A lot is missing from this plan. Public spending plans have not been changed once the emergency subsides, though it isn’t hard to see many ways in which the stress on public services will rise; some are painting this as strategic choice for a return to austerity, but surely it is too early to say for sure. The long-promised solution to social care funding did not materialise. The temporary increase in Universal Credit, which many want to make permanent, has been prolonged only until 30 September. There were various gimmicks under the heading of “growth strategy”, i.e. measures to encourage business investment, but nothing major. Tax advisers will indeed get an economic boost, especially from his 130% capital allowance scheme for “productive” investment. So the Budget was not the long-term strategic rethink many had been hoping for. The big question is whether the government has such a rethink in mind at all, or whether it is saving it for later. Saving it for later would be perfectly sensible in the current fast-changing environment. A lot of criticism is focused on these missing items, however. Another line of attack, notably from the Liberal Democrats, points to gaps in the emergency support, especially for smaller businesses. This is valid, but it is a bit late for a government rethink.

The leaves two bigger questions: is it sensible to put off dealing with the expanded national debt? And is it sensible to raise the rate of Corporation Tax? My answer to both is “yes”. The limits to government finance are very tricky to assess. On the one extreme we have countries like Argentina, constantly overdoing it and stuck in a world of inflation and debt crisis; on the other we have Japan, whose mountainous public debt and frlarge budget deficits are simply shrugged off. A large national debt needs to be refinanced over time, as the bonds that finance it mature. For now this is cheap and there are plenty of buyers. But that can change; interest rates can rise; investors can be scared off. There’s no sign of this at the moment, but this debt will be with us for a long time. Can’t the Bank of England take on the debt that the markets can’t digest anyway? Yes, but this is a bad idea if inflation is in the system, especially wage inflation. But some wage inflation is good – it is the process by which living standards increase, especially in poorer households. Another problem is if the country requires a lot of foreign currency (the position Argentina got itself into); this is a risk if the country has a large current account deficit. But there are no warning lights flashing on either inflation or currency needs. If that changes the government might need to raise taxes further – but not yet.

And as for Corporation Tax, the government’s reversal of strategy is spectacular. Starting with the Coalition with the Lib Dems in 2010, the rate has been steadily reduced to 19%; the plan now is to bring it up to 25%. This rise is widely portrayed as an attack on business. But that isn’t the right way to look at it. As a tax on profits, rather than on sales, employment or property occupation, it is a very efficient tax. The incentives to run a business efficiently remain unchanged by the rate. It is better regarded as a tax on capital. It is certainly one of the things that companies look at when deciding where to locate a business internationally – but it is still quite competitive at 25%, and basing attractiveness to business investment on tax rates is an invitation to footloose capital, not secure growth. Capital is already cheap, and the story of this century has been the rise of rewards on capital compared to labour. This looks like a good place a tax hike. There are problems with the tax, especially in its treatment of foreign trade and borrowing, but the rate is surely not too high.

Politically, though, this Budget is part of a general revival of the Conservatives’ fortunes. Mr Johnson and Mr Sunak are often painted as rivals, and doubtless they are, but so far this year they are working well together, promoting a narrative of a sure-footed, cautious but fiscally generous recovery from the pandemic. Labour, who had opposed the rise in Corporation Tax, are floundering.

The pendulum swings rapidly in politics, but Rishi Sunak is showing a sure touch. Later this year, as his bluff is called on public spending, it will be interesting to see what he and the rest of the government do.

Rethinking economics – what we should learn from the pandemic but probably won’t

I recently published some thoughts on the economics of the pandemic. This wasn’t one of my more coherent offerings, but somehow I needed to break the ice. I wrote about the short-term question of government stimulus. I made a throwaway remark about the pandemic throwing up deeper issues as well. I want to open the box on these, because I think the pandemic has shown the poverty of conventional economics. So here are some early observations

The narcissism of small differences

Economic commentary used to be about small changes to the economic aggregate statistics, such as GDP or productivity. That didn’t prepare us for the earthquake that came. There are some big things happening in the world, and the risk of a pandemic is only one: there is climate change, nuclear proliferation, bottlenecks in global production processes (microchips, rare earth minerals, etc), but we tend to overlook these in a quest for small gains here and there. It seems like an avoidance strategy for not confronting the bigger questions of our time. Above all we need to break away from our obsession with monthly or quarterly or even annual GDP growth. Alas even during the crisis commentators are trying to compare quarterly GDP figures between countries, at a time when they are surely unreliable, where differences in statistical methods between countries are not well understood, and when timing differences between countries on the evolution of the epidemic matter a lot.

Production is no longer central to economic performance

We depend on food, clothing and many manufactured goods, but these represent a diminishing proportion of the economy. Or, to put it another way, these activities only occupy a minority of workers. Manufacturing, by and large, has had a good crisis. Clearly it has been bad for some things, but it has been good for others (computers and PPE for example). Our roads and ports have stayed busy with goods being moved to and fro. But this has still left economic devastation. And yet economic commentators still tend to talk of manufacturing as being central. They fret about barriers to trade, the effect of bottlenecks on inflation, and stagnant productivity. And yet developed world economies have moved on from these things.

An economy where services matter more than anything for the supply of jobs, and health and care services in particular, needs a different mindset from one based on factories and products moving around on lorries.

Most of the economy is non-essential

As we locked down, we drew a distinction between essential and non-essential supplies and services. The former turned out to take up a surprising small share of economic activity, and it wasn’t hard to keep the show on the road. And much of what we deemed essential has a dubious claim to that status (garden centres? – of course that doesn’t mean that there aren’t very good reasons for keeping them open). That is good news because it shows that there is more resilience in modern society than we thought. But it should make us reflect on whether we have our priorities right for the non-essential parts of our lives. Their action should be about providing wellbeing both to those using and supplying them. How well do they actually do this?

It also turned out that essential workers included a lot of people of rather lowly status in our society. Hospital cleaners; care home workers; supermarket shelf-stackers – all of whom tend to be paid as little as possible. The habit of calling these and other workers “low-skilled” has rightly been challenged. It is a stark reminder that a modern developed economy often rewards the ephemeral while taking the essential for granted.

We have found the magic money tree

The government has been called upon to open the floodgates of public finance, with a “what it takes” approach. The budget deficit has duly expanded into unthinkable territory. The sky hasn’t fallen in. Inflation and interest rates remain low. In fact there are no signs of financial stress at all, unless you count rather bubbly markets in financial assets. Doubtless that is partly because of the extraordinary economics of lockdown, when so much private spending and investment has been suppressed, leaving room to finance government spending. But we have much more flexibility on government finance than many thought we did, especially when we control our own currency.

If this looks too good to be true, it probably is. But we don’t really know what the vulnerabilities are. How do we know when we are overdoing it? For my liking economists are too focused on inflation. The consequence of overdoing things could as easily be some form of financial crisis that makes people poorer.

Hayek was right

We are supposed to be living in an information age, but governments, and everybody else, are blundering around for the lack of information. Governments can’t devise efficient schemes to help businesses in lockdown, even though they can afford them, because they have no good way of knowing which businesses need help, and how much. The result is that many are getting generous help they don’t actually need (including a lot of fraudsters), while many more that need help aren’t getting it. This information gap brings to mind the neoliberal ikon Friedrich Hayek’s argument in “the Road to Serfdom”. The most effective way of transmitting information in a complex society is the use of free markets. Government attempts to close the information gap result in oppression and corruption. The truth of that is evident in China, which has done most to gather and act on information about its citizens.

To them that hath shall be given

But the injustice of leaving matters to free markets is also very apparent. At first I was a bit sceptical by reports that poorer people were being hit hardest by the pandemic. People always say that, regardless of the facts. But it is very clear that people in poorer communities with less stable jobs have suffered more than anybody else. The big problem with free markets is that so many people lack the wherewithal to take part properly. This helps make the case for ideas like Universal Basic Income. The US scheme of giving handouts to everybody has been very helpful to the poorest, though it has also led to excessive gambling on financial markets by retail investors.

Free choice doesn’t work well in a pandemic

Libertarians have been very exercised by what they see as excessive government restrictions to individual choice. They feel the people should be left to make their own choices about the risks they want to run. Such critics have been made to look very foolish more than once. People may be able to make choices about personal risk, but they are ill equipped to assess the effect of their behaviour on others. The idea that the vulnerable should hide while leaving everybody else to take their chances doesn’t fit the complexity of society, where vulnerable people depend on others, or are forced to go out to earn a living. Instead of confronting these realities many libertarians instead tried to deny the facts, suggesting that covid-19 was similar to flu. This is another sign that unfettered free markets don’t provide efficient outcomes in many circumstances.

So where does the leave us?

What strikes me first and foremost from this is that we have become slaves to chasing marginal benefits while the planet is in crisis. As societies we could do a lot more to change the way we do things to address the dangers we face, without damaging health and wellbeing beyond some short-term disruption. “It will damage the economy,” is not an adequate reason for not acting. And the notion that economic growth is a prerequisite to positive change is false, in developed countries at least.

Government action is clearly part of the solution, but most successful action will come through individual initiative, with the action of free markets playing a central role, alongside a strong civic society that is able to challenge and complement government action. And it means that economists must move on from a focus to one focused on broader wellbeing.

Will we do this as life starts to return to normal? I wish I could be optimistic.

The same, only different – from Tony Blair to Keir Starmer

“The same, only different.” This is the advertising slogans I remember most clearly from the later 20th century (the 1970s most likely). I can’t remember what it was for, and a Google search doesn’t help. It was not one of the era’s more successful slogans, evidently. The advertiser was trying to say that its product had been improved, but without saying that it had been rubbish beforehand, or to put off loyal customers. I have often used it in connection with the Labour Party led by Tony Blair in the mid 1990s. As Sir Keir Starmer attempts a relaunch with a big speech today, it seems appropriate again, as indeed I was saying last week.

The same as what? In my original analysis of Mr Blair, I meant that the Conservatives. The party was making a pitch to “Middle England” voters who had been voting Conservative, and needed to reassure them that his party stood for a was a triumph of style over substance. Labour’s policies, notably on taxation and spending, were almost the same as the Tories. The key differences could be confined to four points that could be put on a small pledge card, alongside a fifth that said there would be no increase to income tax. Tories worried about putting “clear blue water” between them and Labour, but when they tried, Labour either immediately adopted the policy themselves, or let the Conservatives dig deeper into a hole with an unpopular policy. It was an extraordinarily disciplined effort, resulting in the most spectacular election victory of modern times, but which left the party with a weak mandate to actually do anything radical.

On reflection the slogan also applies to Mr Blair’s message to party activists. His policy stance displayed a marked turn to the right, in favour of the neoliberal orthodoxy. But Mr Blair maintained that the party retained its ultimate objective of getting a better deal for the working classes; it was just the tactics that were changing. He wrote the slogan “For the many, not the few” into the party constitution.

Mr Blair’s highly managed approach to politics invited distrust, but in both these messages he was as good as his word. In his first term he implemented austerity policies just as severe as the Conservatives were proposing, and was careful about raising taxes. In 2001, when the public had got used to Labour being in charge, he won another big election victory, but took a distinctly more socialist approach. Over the next two terms, Labour ramped up public spending and invested in public services. Anybody who did not think this approach was of the left only has to compare it with what followed. The problem was that he, and Gordon Brown his Chancellor and successor, and just as much an architect of this strategy, chose to avoid raising taxes on income and spending, and instead focused on the bubbly capital markets. When the crash came a massive hole was left in public finances. Mr Brown’s progressive cuts of the basic rate of income tax to 20% were a massive misjudgement.

What of Sir Keir? It seems to that he is trying a similar trick. His speech today was long on vague talk of transformation and a “fork in the road”, but his policies sound distinctly close Boris Johnson’s Conservatives, which are a distinct turn to the left for that party. He made working with business a central theme, and stressed sensible management of the nation’s finances. But the comparison with Messrs Blair and Brown does him no favours. These two offered the public clear messages of what they were about, especially Mr Blair. Even before he was leader, he offered us “Tough on crime, tough on the causes of crime”. As the election approached it was “Education, education, education”. On the radio this morning the Shadow Chancellor Annaliese Dodds was offered the chance sum sum up what Labour now stood for in a sentence. She waffled; I really can’t remember what she said.

But it is early days and this is not the mid 1990s. The Tories then were led by the uncharismatic John Major. Often the public go for opposites – so the best way to oppose the charismatic Mr Johnson might be something much more competent and mundane. It worked for John Major in 1992 after all, contrasting with his predecessor, Margaret Thatcher, as well as the Labour leader Neil Kinnock.

Still, clarity of message can’t hurt. The real test of that is that it must upset people, especially on the left. Only then will the public understand that Labour has moved on from the crazy years of Jeremy Corbyn, and that the party will deliver what Mr Johnson say he wants to do, but is too chaotic to succeed. The same, only different.

The economics of the pandemic: don’t panic

One of my favourite subjects in ten years of blogging has been economics. But for the last year I have hesitated. There has been a lot to write about, but somehow I did not have the confidence to say anything. A couple of weeks ago I got as far as writing an article, but it just meandered. But this week I have been bombarded with different opinions on the impact of the pandemic and what to do next, so I feel I must try to make some sense of it.

Most recently there were a couple of articles in the FT. There was an interview with economist Dani Rodrick, in which he urged that the left should make up for its attachment to neoliberalism in the 1990s and 2000s and meet the challenge of right-wing populism with a sort of left-wing populism. The focus of this should be the creation of decent jobs (the populism bit being the blaming of everything on plutocrats and bankers). He has certainly hit on something important, but to me left-wing populism brings to mind the late Hugo Chavez, and the creation of useless jobs given to political cronies, the running down of productive industries and bankrupting the economy on welfare programmes used to shore up politically compliant communities. This is where the policies of Labour’s former leader Jeremy Corbyn would have led in my view (he is a fan of Chavez after all). On the same day the neoliberals fought back with a piece by Ruchir Sharma, a banker, who claims that emerging market economies have responded to the crisis by pressing forward with supply-side policies, rather than splurging on stimulus. These are IMF-style programmes without the IMF – he points to China and India, amongst others. With developed economies resisting such reforms, he says these emerging economies will be better placed to overcome the shock. This is an interesting take on what is happening, but the conclusion is facile. Developed economies are at the productivity frontier, and they are not in need of many neoliberal reforms (with some exceptions such as Italy) – I agree with Mr Rodrick here, even if his picture of left-wing populism sends shivers down my spine.

And then we have some writing about President Joe Biden’s proposed massive stimulus for the US economy (£1.9trn is the headline). Left-wing commentator Robert Reich launched into enthusiastic support on Facebook. The Economist thinks it goes too far, and should be better targeted, echoing criticism from former adviser to President Clinton, Larry Summers. They fear that it will trigger inflation, and then rising interest rates, and a financial crisis. Meanwhile, also in FT, Gillian Tett has written about the remarkable stance of Chairman of the Federal Reserve Jay Powell, whom she thinks is being far to aggressive on the length of time he suggests interest rates should stay low. Meanwhile there is a lot of fretting about signs of overheated financial markets, with the popularity of crypto “currencies” like Bitcoin eliciting much angst.

There is quite a lot of agreement that governments are right to spend to support the economy, but a big concern on how far this should go. Critics of stimulus worry about setting off inflation. But conservatives have cried wolf on inflation many times in the last few years, and yet it remains stubbornly low. Most commentary on inflation misses the mark.

What is inflation? It is a devaluation of the currency, so that the same nominal units income or savings buy less, but that a fixed nominal amount of debt becomes easier to pay off. The focus of commentary tends to be almost entirely on the first, measured by overall movement in consumer prices. But if wages do not rise to match prices, then debts are not depreciated. It isn’t really inflation, in my books, but a structural adjustment. The three main reasons for this can be worsening terms of trade (i.e. imports becoming more expensive, usually because the exchange rate is depreciating), a decline in productivity, or a shift of bargaining power from labour to capital. None of these require the same policy response as inflation proper (i.e. higher taxes or reduced public spending, or higher interest rates). And in the 21st Century consumer prices and wages have rarely moved in line with each other in developed economies. Before the financial crisis of 2007-2009, wages trended ahead, largely because of improving terms of trade from cheap imports, mainly from China. After the crisis wages have usually failed to keep pace with prices, as the terms of trade moved against developed countries (Chinese products stopped getting cheaper), unmasking a steady process of the balance of advantage moving from labour to capital. All this is very different from the later 20th century, when most of the current theories of economic management were developed. Then wages and consumer prices usually moved in lockstep. The breaking of the link between prices and wages is one of the critical things to understand about the modern economy.

So what happens when demand runs ahead of supply? Inflation remains stuck because rising prices choke off demand, because wages for most people do not keep up. The typical response is for imports to rise. At least that is what I suspect from the limited times where this has happened in the 21st Century (I believe Britain in the mid noughties was a case in point). But a feature of modern developed economies, especially since 2007, has been a chronic lack of demand, while conservative government fiscal policies were the accepted wisdom.

So what will happen if President Biden’s stimulus gets going, with the Fed minded to keep interest rates low? I don’t think it will lead to more than a slight increase in inflation, largely because of the disconnect between prices and pay, but also because of the nature of the recovery. The Economist refers to some supply bottlenecks, such as in microchips, but these relate to distortions in demand arising from lockdowns. Assuming that the US comes out of lockdown, then the main rise in demand will be for services, rather than such manufactured goods, where there seems to be quite a deep pool of unemployed or underemployed labour. And doubtless imports will rise too, and the US dollar will strengthen relative to other currencies. Also much of the excess demand will be funnelled into asset markets, so the current distinctly bubbly markets could well continue. If there is trouble it will come from some kind of breakdown in financial markets. But they do not seem to be as vulnerable as they were in 2007. All this rather supports Mr Reich’s optimistic outlook. As the stimulus plays out things become a lot less predicable, but that is a couple of years away and not necessarily unmanageable.

What should the British government do? It has run up an astonishing budget deficit in its largely successful attempt to keep the show on the road in the crisis – unemployment is remarkably low I the circumstances. According the Economist the deficit is nearly 20% of GDP, the largest of any of the economies it follows. But the same statistical table shows something rather interesting: that the current account deficit to has fallen to 1.3%, and is unremarkable by international standards. Not long ago it was one of the highest. This, together with very low interest rates, suggests that there is no financial crisis, and therefore no need to panic, as the country did in 2010, when the budget deficit was 11%, though the current account deficit was a bit higher at 2 to 2.5%. The government’s main problem is its own rhetoric about government finances.

How quickly could things turn nasty in the UK? We are much more vulnerable to a financial crisis than the US, because we lack financial clout. But again we look much less vulnerable than in 2007. A big question is what happens if the current account goes sharply negative again. That is not necessarily unsustainable (it can be financed by selling property to foreigners). But if world interest rates should start to rise then problems might spiral. But my guess is that the country is safe for a couple of years at least.

There are some much deeper economic questions emerging from the covid crisis, which point to a major change in direction for economic management. These should occupy us more than short term government finances.

In defence of vaccine nationalism

Not all are equal when it comes to vaccination against Covid-19. Israel speeds ahead, followed by Britain and the USA, with other European countries bumbling along in their wake. Developing countries, or most of them, are a long way behind. This has provoked some harrumphing. “None of us are safe until we are all safe”, it is said. According to this idea the vaccine should be distributed in a world programme based on individual vulnerabilities. This gets general murmurs of approval from liberal types, or at any rate those are not in government. No wonder conservatives think liberals are soft in the head.

There are deeper philosophical and ethical questions behind this, but it would be useful to start with two facts which don’t seem to get mentioned in this context. The first is that vaccine manufacture is well behind the ambitious targets set earlier in the year. The headlines may be dominated by the massive scale of orders placed by the British government and others, but delivery is another matter. According to Tim Harford in the Financial Times some 800 million doses were promised in 2020. but only 20-30 million were actually delivered. There are no surplus stocks sitting around in national inventories while the needy are unvaccinated. The second fact is that death rates in the developed world, and Britain and the USA in particular, are very high. Britain’s is the highest in the world, we are told. In the developing world death rates are much lower. Some of this may be down to weaknesses in data gathering and government denial, of course. But mostly it is because their populations are much younger, on average, and so less vulnerable. And Britain and the USA both have an obesity problem. So if you are going to start with a worldwide vaccination programme, why wouldn’t you begin with the USA and Britain anyway? Is there really a worldwide injustice here?

Looking a bit deeper there is then the question of practicality. Collective efforts are often inefficient. In Europe the EU’s joint procurement is well behind that of newly separate Britain’s. A centrally organised world programme doesn’t bear thinking about. It’s bit like the lockdown sceptics’ idea that we should protect the vulnerable and let everybody else live their lives unrestricted (or restricted only by their own fear). At fist sight you might think it looks a good idea, but it doesn’t survive any closer inspection at all.

It’s worth a thought as to why this might be. One problem is accountability. The more complicated a project, and the more people involved, the more the need for accountability slows things down. And at the world level accountability has always been a problem. There is also the question of information. The further away you are from the sharp end, the poorer the quality and the less effective decisions tend to be. Committees and collaboration have their place; they even have heir place in worldwide vaccination programmes. But not in leading the emergency effort to get as many people vaccinated as fast as possible. here allowing national governments to act independently is going to get more shots into arms more quickly.

This leads to an important philosophical and ethical issue that liberals would do well to think about more deeply. How often do we hear pleas that needs of African peasants (we often focus on the rural poor and overlook ballooning urban poverty for some reason) should be just as much concern to us as the problems of our immediate neighbours? The fact that we neglect poor people in faraway places is regarded as a moral failure. And yet when rich people, or people in rich countries, try to help poor people far away, it so often ends badly. Aid ends up helping the wrong people, or distorting market and governance structures to their detriment, or simply comes over an example of patronising post-colonialism, reinforcing ethnic stereotypes. The exercise often seems to be guilt-tripping with little wider practical utility, beyond raising the status of certain NGO types. Of course the first premise of the liberal argument is sound enough: that all people on earth are morally equal. This is not a given, but there are all manner of reasons, moral, spiritual and pragmatic, why we should believe this. But this needs to be complemented by some form of proximity principle. It is quite right to be more concerned about those closer to us than those further away. It isn’t a moral failure. We can imagine a sort of hierarchy of family and close friends, neighbours, fellow countryman and so on. Such a hierarchy invites a whole series of problems, though. Western liberals, me included, agree that race or ethnic identity should play no part in it, of course, but this isn’t universally accepted (look at what is happening in China or India). Should Britons be more concerned about Latvians than Moroccans because of some form of European or Christian identity? And a lot of aid made by rich countries to faraway places is beneficial to humankind; I give to several charities and support the UK’s generous aid budget. It’s a bit of a nightmare, which is doubtless why many liberals try to short-circuit the discussion by denying any kind of proximity principle. But that doesn’t work either.

I am no moral philosopher,so I am not going to attempt an answer to these tricky questions. I rely on intuition. To me there is nothing wrong with countries focusing on vaccinating their own citizens as a top priority, even if richer countries end up getting ahead of the queue (which won’t be entirely the case anyway; India, for example, is the world’s leader in the manufacture of vaccines and is as nationalist in its priorities as anybody). That does not mean it is right to sabotage other countries’ efforts, or to hoard unused vaccine stocks. And once the urgencies of your own country have been dealt with, it is right to devote national resources to aiding other countries where the need is greater. I often disagree with the current British government’s moral priorities, but I think they have this one roughly right.

A federal UK: a solution that is worse than the problem

In a world where people choose facts to suit their prejudices, and dismiss challenge as the work of a sinister enemy, it is still important to seek out views that make you uncomfortable. This is how I felt when I read this article in The Times by Matthew Parris. I like Mr Parris, but I often disagree with him; I think his views on lockdowns and the virus border on irresponsible. But this article, on creating a federal UK constitution to head off the threat of Scottish independence did what reading newspaper columns should.. It made me very uncomfortable because it challenged a long-held position of mine that the UK should move to federal system of government, with regional states. It made especially uncomfortable because he is right.

The idea is that the threat of Scottish independence needs a radical constitutional answer, and that such a proposal would allow unionists to grab back the initiative. And a Federal UK is thought to be that radical answer. It would allow further powers to be devolved while ending the muddle where Scottish MPs vote on English questions. It would all be so much tidier. There is nothing inherently un-British about a federal system. The US constitution has firm Anglo-Saxon underpinnings; the ex-colonial states states of Australia and Canada were set up with federal constitutions, in systems which are otherwise modelled on the UK. And a polity with 3-10 million people is often very efficient, if other European countries are anything to go by, with strong political cohesion (usually – let’s not talk about Belgium).

The problem is England. There are two ways it can be incorporated into a federal UK. First is to set up a separate English parliament. But this would so dominate the whole federal entity that it would be at permanent loggerheads with the UK parliament. I don’t think there are any good examples out there in the world where such a lopsided federation has worked. Russia has gone down this route, both in in Soviet days and afterwards, and it hasn’t been a triumph of empowerment and democracy. I have advocated this, with a new English or UK capital in Birmingham, but even then I wasn’t convinced. Mr Parris rightly dismisses it. The second route is to turn English regions into states. This is elegant in theory, but it is a top-down solution that would be imposed on a sceptical public.

This is a hard truth for people like me to bear. I am inspired by European states, such as Germany, Switzerland and Austria, which operate a regional federal system. These are amongst the best-run states in Europe. Compare that to the over centralised Britain and France. France, of course, has tried to impose regional government, as has Spain (an interesting parallel because the motivation is similar: to head off separatism). Mr Parris dismisses the Spanish solution as comprising made-up states with little political purpose. I don’t know whether he is fair on that, but it certainly hasn’t solved the Catalonian question. The problem in England is that there is little or no regional culture or identity for regional government to lock into. Like one of the more singing criticisms of the European Union: there is no demos. This is unlike the situation of the USA, Australia and Canada, which were agglomerations of separate colonies, often physically far apart.

This is the end result of nearly a thousand years of English history. Ever since the Norman invasion of 1066 the national government (which quickly moved to London) has sought to undermine any serious regional political strength. The English failed to extend their rule into Scotland, and their rule in Ireland was never entirely secure. Wales came into the realm in medieval times, but its culture never quite integrated with England’s. But in England itself, this political integration was a success. This history is unlike that of Germany and Austria, where for hundreds of years the much-derided Holy Roman Empire held sway, allowing a multiplicity of local identities to coexist.

Things can change, of course. The most successful era of local government and initiative was not all that long ago, in the Victorian era. This left some wonderful civic architecture in Britain’s great cities. That followed local economic success, which depended on local natural resources (especially coal) and surplus rural labour. In the 21st Century successive governments have tried to build on this by developing “city regions” based on these old industrial centres, and led by “mayors”. These often uncover fierce local rivalries, and can’t be said to be fully rooted.

Still the city regions were better than the Whitehall-devised regions used for EU regional policy, which had almost no popular traction, except in London itself, perhaps. The city regions, and building on existing local authority structures, remain the most hopeful avenue for developing a more devolved political structure in England. It is a long, hard road. Almost everybody seems to favour more localised decision-making in theory, but in practice they undermine it at every turn, dismissing it as a “postcode lottery”. Fighting the covid-19 epidemic was a major opportunity to develop locally coordinated structures, but the government didn’t have the patience, and has not paid any discernible political price.

What is not going to work, though, is a hastily put together federal structure for UK government based on English regions, or England as a whole, for that matter. It would quickly fall into disrepute and be widely regarded s a shambles and waste of public money, at best.

Where does this lead? Well perhaps Scottish independence is not such a bad idea after all. A separation would be yet more painful and chaotic than the UK’s separation from the EU. But that other region of good governance and civic success in Europe, Scandinavia, is based one a community of independent nations not dissimilar in size to Scotland. Separation would make me very sad, but let us not try to head it off with constitutional reforms that are just going to make things worse in the longer run.

Sir Keir Starmer must take tough decisions on personnel and policy

Recently I wrote that Boris Johnson is in a strong position politically, notwithstanding all his ms-steps on Covid-19. This was based on British success on the vaccine, and that, for most people, Brexit is not proving to be a disaster. This now seems to be accepted political wisdom. I didn’t talk about another reason he is in a strong position: the disarray of the opposition parties in his English heartlands.

This weekend’s papers are full of despair over Labour’s new leader, Sir Keir Starmer; his honeymoon is well and truly over. It is even worse for the Lib Dem leader, Sir Ed Davey, who never had a honeymoon. Journalists want to see opposition led by charismatic leaders, and neither fit the bill. But I have a huge respect for both men: the main problem with each of them is the weakness their parties.

Ever since the 2010 General Election, Labour have been chasing a chimera: the “progressive majority”. This is the idea that most voters do not want to see a Conservative government. At first the idea was used to push cooperation between Labour and the Lib Dems. But under Ed Miliband, who took over in 2010, the idea was that Labour should harness this majority on its own, by crushing the Lib Dems and Greens; there was no need to chase marginal Conservative voters and so compromise “progressive” values. This strategy was carried forward by his successor, Jeremy Corbyn. They both managed to crush the Lib Dems and Greens, but this turned out to help the Conservatives more than their own party.

Sir Keir now accepts that he has to hone his party’s appeal to conservative voters. But after a decade of the party polishing its “progressive” credentials, it is far from clear that he is taking his party with him, or that he knows how to build the trust of these voters. His early strategy was to show that he is more competent and a stronger leader than the Prime Minister, Boris Johnson. He may have succeeded, but it clearly isn’t enough. The commonplace complaints are that he lacks vision, and that his team is weak. Of these criticisms, the second is probably the most important for now. None of his front-bench colleagues has made much impression, either because they aren’t really up to it, or because Sir Keir isn’t giving them enough scope. The Conservatives have their weakest front bench for some time, but even they are doing better than Labour. They have Rishi Sunak, Michael Gove and even the Health Secretary Matt Hancock is showing some grit. Priti Patel, the Home Secretary, seems to be completely useless to professional types like me, but it would be dangerous to underestimate her appeal to conservative voters.

Sir Keir needs to take some decisive action on his team. But he also needs to set out some kind of a story on policy. Many are urging him to adopt reform to the British constitution (with an eye on the Scots), but this looks like a dead letter to me. The English grumble about this, but have no real appetite for change. Whatever he does has to be both conservative and painful. The pain – by which I mean upsetting a lot of his activists – is necessary, otherwise the public will not believe that anything has changed. The model for this is the way Tony Blair engineered a fight over Clause 4 to the Labour constitution in the 1990s. Accepting Brexit is not enough. A tough stand on immigration and jobs for working class Britons looks like one promising angle. He will probably have to shadow Tory policy on tax and spend too even if they privately think it’s nonsense. Complaints about “austerity” will have to be struct from the Labour lexicon.

What of the Lib Dems? Going into coalition with the Conservatives in 2010 exposed fatal weakness in the party’s core support, and both the other parties took advantage (roughly speaking, Labour took the votes and the Tories took the parliamentary seats). They then went all out to stop Brexit, which brought about a revival, but failure leaves them bereft. Many of their former supporters see no compelling reason to support the party rather than Sir Keir’s Labour. Alas the party will have to learn patience. They will only advance on the national scene if the other parties give them the space. If Labour follows my advice and takes a sharp turn to the right, something like the gap that the Lib Dems exploited in the 2000s will open up. Until they do, the party has to concentrate on local government to secure its political base.

There is an obvious further point to make. If both parties are weak, then it makes sense for them to work together. A formal pact is almost certainly a bad idea, but some kind of informal carve-up of seats (as per the 1997 general election) may have something going for it. If Labour adopt a more conservative policy stance, and the Lib Dems present themselves as a more progressive junior partner, they may just be able to get the best of both worlds. The Greens might be brought in to try and scoop up hard left votes.

But if Sir Keir continues to dodge tough questions on personnel and policy, he will do enough to keep the Lib Dems and Greens on the floor, but will be quite unable to challenge the Conservatives for power. Mr Johnson has some big difficulties ahead, not least Scotland and Northern Ireland, but England looks his for now.

Learning to live with Brexit means looking to the future

Like a rather surprising number of Remainers, Brexit has been like a bereavement for me. Before the referendum in 2016 few people would admit to an emotional attachment to the European Union (indeed this was one of the reasons Leave won), but I was among them. I can date that attachment to attendance at a rally in Westminster Hall in 1975, when the keynote speaker was Ted Heath, my first political hero, when I was 17. Or perhaps it was before then, when I identified as “European” when living in Jamaica, in order to distinguish myself from the many Americans I was at school with (while doubtless trying to stay ay arms length from Britain’s colonial legacy). Whatever the origins, I have been following the classic five steps of bereavement since the referendum.

Compared to many Remainers I went through Denial and Anger pretty quickly, but then I got stuck for years on Negotiation. This partly revolved around pressing for a new referendum, and thinking about how that should be conducted – though as time went by I became more sceptical that this was the right way to go. But mainly I got drawn into discussion about the terms of withdrawal and the future relationship. This was a furious paddling to try and stave off the inevitable next stage: Depression, which duly struck with the December 2019 General Election result. I turned away from the whole subject and busied myself with other things. But I can now confidently say that I have reached Acceptance. Acceptance does not mean that the pain has stopped: there will be pangs every time I get stuck in a passport queue when ravelling in the EU, and with every young friend or relative that complains that their opportunities are blighted as they can only find work into Union with difficulty. But I can than talk or think about the EU without trying to roll back time.

The breakthrough moment came last summer, when the EU agreed a post-pandemic aid programme which involved the creation of shared debt. This was a massive breakthrough in the evolution of the union. The deal itself, as usual, will not live up to the hopes placed on it, but the union is now better placed to deal with the challenges facing it. I quickly realised that this deal would have been much harder to reach if Britain had been a member. We had become paranoid about taking on debt from other EU countries – the idea of EU solidarity had so little currency. Whether or not a small majority of Britons were now in favour of British membership at any time, the country was irretrievably divided and it became increasingly difficult for the country to be a constructive member. Both John Major and Tony Blair found this, after starting their premierships wishing for Britain “to be at the heart of Europe”; they failed and subsequent premiers did not even try. The EU is actually better off without us, even though our departure has weakened it in many ways. If Britain is to rejoin, it has to be wholeheartedly, with a referendum majority of much more than 52%, and with prospective membership of the Euro agreed and understood. That will not happen in my lifetime, or not without some catastrophe changing people’s outlook, which I do not wish on my fellow countrymen. I have got over it.

So how does an ardent Remainer like me cope with Britain’s new status? I think there are two key rules. The first is to look to the future, and not to refight the battles of the past. It is very tempting to say “told-you so” as one promise after another of Leave campaigners comes to naught. But it doesn’t help; we can’t turn the clock back. And anyway, we need to understand that Remain campaigners got things wrong too, if not quite so egregiously. The second key rule is to be more realistic and critical of the European Union itself. It is useless to try and sell it to the British public, and we must understand what opportunities Brexit presents, even when we are acutely aware of the costs. In fact if Britain does things better than the EU, it will provide healthy competition that might guide it to a better place.

In this spirit, one of the most important things to understand is that the Union, and especially the Single Market, is a neoliberal project. It is based on the promotion of free trade and competition, and it aims to limit government interference in commerce. It is ironic that many Conservative Brexiteers are ardent neoliberals, and think that Brexit opens up opportunities for Britain to pursue more neoliberal policies. I differ from most people on the political left in thinking that neoliberalism is not necessarily a bad thing. This week’s Economist has an article which suggests that Britain’s economic progress in the 1980s up to the Great Financial Crisis was more down to EU membership than the liberalisation pursued by Mrs Thatcher’s government. It makes the case by tracking total factor productivity of the three countries that joined the EU (or European Common Market as we then called it) in 1973, i.e. Britain, Denmark and Ireland, compared the original six members (France, Germany, Italy and the Benelux countries). This had been in steady decline until 1970, flattened in the 1970s and then rose steadily until the mid 2000s. Mrs Thatcher did not rule Denmark or Ireland, so but the county’s economic performance was no better. This is false dichotomy. A large part of the economic benefit of joining the union arose from the Single Market reforms, which were Mrs Thatcher’s gift to the EU, and probably her most enduring political achievement. The Single Market was not a conspiracy to inflict pointless bureaucracy on British industry – it was in fact the opposite: to free intra-union trade (and movement of people and capital) from unproductive bureaucracy. We are learning this the hard way. It is a neoliberal project par excellence.

The Economist suggests that outside the EU, Britain might again suffer from “British Disease”, as our markets become less competitive. But where I agree with the left is that neoliberalism has little to offer most developed world economies in 2021, and certainly not Britain’s. Our future economic wellbeing is much less dependent on free trade with other countries, and state intervention is going to be much more important. Free markets are still critical, but they are not enough. Furthermore, conventional economic measurements, such as gross income (i.e. such measures as GDP) and productivity, are an unreliable guide to wellbeing.

The Conservative plan to use Brexit to drive through neoliberal reforms is doomed. If they succeed in implementing them, which they will find hard, they will deliver disappointing results with Britain outside the Single Market. There will doubtless be opportunities in some industrial sectors, but for each these there will be other sectors ruined by Brexit. Last month the Economist painted a depressing picture for the outlook for the British chemical industry. Brexit may not be as dire for Britain’s short-term economy as many predicted (though the jury is still out on that one), but medium term the outlook for GDP and other conventional economic measures is poor. But I have just said that does not matter so much. Instead we should be focusing on national wellbeing, and here there are possibilities that may be improved by Brexit, or at least not harmed. To get this sort of thinking started I will suggest three.

The first is environmentally sustainable agriculture and fisheries. We need to look at these industries not from the old-fashioned point of view of extracting the maximum quantitive output from our land and sea, but to restore those natural resources to health. Marginal agricultural land should be rewarded; alternatives need to be found to the mass use of environmentally damaging pesticides and fertilisers. We need more marine conservation zones and a war on destructive industrial fisheries. We can do this much more easily outside the EU’s management structures.

The second, and more economically significant, area for development should be the health economy. The overall importance of health to the economy is growing, but it is not an industry that takes well to conventional economic measurements. Often less is more (healthier people require fewer medical interventions; more effective medical interventions often require more economic inputs a balance that is often seems to lead to reduced productivity). We need to develop better ways of managing public health, as well as more effective interventions. Britain has advantages here, especially those that arise from a single national health service, and the way it can draw medical data together. Covid-19 has shown the good and the bad of British health services. The country has led the world in developing vaccines and other medical interventions, but public health services have been chaotic, and central government interventions ineffective – though the country’s armed services have shown some rare organisational effectiveness. The country has palpable strengths, but the whole area needs to be rethought.

And the third area for focus is developing of opportunities for people with weak paper qualifications. This should be easier now that access to our labour markets from less developed corners of the EU (and the rest of the world) is being reduced. As a good liberal I support freedom of movement, especially within Europe, but the main benefits are for those with good qualifications. But keeping foreign labour out is far from sufficient for improving the prospects for people already here. This needs much more focus than it is getting – pushing more people in badly-paid and insecure jobs is not the answer, but it is where neoliberal policies will take us. One idea on the left that I would like to be given more time and thought is a government job guarantee. I think this has more promise for national wellbeing than the much more fashionable Universal Basic Income.

I need to make one further point. These ideas, and others which make wellbeing their focus rather than aggregate income, require a much higher level of government competence than we have ever seen in this country (except maybe in the days of Victorian metropolitan development). The British government is far too centralised to be effective (a criticism I would lay against the French one too, also shown up by the pandemic response), and it is made worse by excessive faith in management consultants and outsourcers. There are pockets of excellence in British public life (much of the education system, aspects of the NHS, and the operational side of the armed forces, though not its procurement side). But something big needs to change.

The current government is ill-equipped to take advantage of the opportunities that now present themselves. They should be challenged not for promoting Brexit, but for mismanaging it.

Trump is not a proper fascist; his coup might have succeeded if he was

Throughout his presidency, I have waited for the moment when Donald Trump overstepped the mark, causing him to alienate a large part of his support base. There were moments when I thought he had reached such a point, but I was proved wrong each time. But the events last week in Washington are surely that moment. His presidency is nearly over anyway, of course, but he is surely unlikely to come back from this.

Of course an astonishing number of Americans thought that the storming of Congress was justified, but the Republican coalition is still breaking up, and it is likely to reform without Mr Trump in control. You could tell Mr Trump was in trouble when he read out his statement disowning the protesters and conceding that he would hand over to the new administration. He normally doubles down; he does not do light-footed manoeuvre.

What happened? It was very clear from even before the election that Mr Trump would try to cling to power if he lost. His plan to do so amounted to a coup, but one that maintained some vestiges of legality. He thought he could mobilise Republican Congressmen and state administrators, and sympathetic judges to annul the state election results he didn’t like, and substitute more congenial ones. For the most part they did not cooperate (the Congressmen being a shameful exception), because Mr Trump could not provide them with any serious evidence to work with, and they had too much respect for the rule of law, or at any rate understood that the risks for them personally were far too high. His last chance was on Wednesday, when Congress was due to ratify the election results. He organised a march of his supporters on the Capitol. What was Mr Trump trying to do? Here it gets murky. His hope may have been to intimidate the law-makers into overturning the election results. He may simply have wanted a spectacular demonstration of the strength of feeling on his side to sustain the betrayal narrative, from which he could build his comeback. If you want to build a conspiracy theory you can easily find enough to work on. After he lost the election Mr Trump cleared out the senior appointees of the Defence department and put in complete loyalists. The Washington National Guard was under the control of the Defence department, but it had not been mobilised for trouble, as it had been for the Black Lives Matter protests.

But it looks as if there was no clear plan. Once the protesters got into the building they did not know what to do. This was the worst possible outcome for Mr Trump. The protesters engaged in vandalism and showed general disrespect for one of the United States’s most hallowed institutions without achieving anything more than a delay to proceedings. This was fine by those of Mr Trump’s base driven by a hate for those institutions and of revolutionary intent: the white supremacists, the QAnon conspiracy theorists and the wild fringe in general. But a large part of the Republican coalition prefers to see these people as a tiresome sideshow. For many conservative Americans, having somebody dressed in a bison outfit leading the way is not a good look. Funnily enough, if the protestors had been met by a robust police and National Guard presence, it would probably have worked much better for Mr Trump – they could blame failure on the “deep state”. The plan had not been thought through and it lapsed into farce, albeit a farce in which several people were killed.

That is very revealing. Many people claim that Donald Trump is a fascist. It is perfectly true that there are many common threads between Trumpism and fascism. The cult of personality, the demand for personal loyalty amongst officials, the disrespect for the rule of law and political convention. The tactics were fascistic too: the use of elections to gain a foothold, the cooption and then subordination of establishment conservatives, and the indulgence of mob violence from supporters. But there are big differences. Fascists concentrate power in a militarised state, subordinating all other civil and private organisations. They adore administrative competence (Mussolini wanted to make the trains run on time; Hitler built autobahns). They are also driven by a clear, if fantastical, vision of where they want to take their country. Donald Trump worked to dismantle the state, not build it up. He let private corporations run riot, including ones he did not like. He has very little regard for administrative competence. He was not a warmonger either – he tried to end foreign wars, not start them. His supporters were not organised into paramilitary formations that could drive through a violent coup. Some of his supporters were heavily armed, it is true, but there was something anarchistic about them; they viewed their weapons as an extension to their personal autonomy, rather than part of being a soldier for a cause. Once you take the narcissism away from Trumpism, there really is very little left.

Which is why the coup failed and Mr Trump has been humiliated. There were no storm troopers ready to enter the Capitol and neutralise opposing Congressmen. There were no leaders on the ground with a clear idea about what they needed to do.

Very soon Donald Trump will leave office. So much of his power, and self-esteem, derived from that office that it will be difficult for him to come back, especially after this fiasco. But his popular base is still there, angry at the turn of events and convinced that it is they who are the victims of a coup. The new administration faces many difficult choices. Joe Biden wants to be a figure of healing and reconciliation. But can he simply let the forces of darkness reorganise with impunity? Republican leaders face hard choices too. Their no-prisoners resistance to the Democrats has unleashed a tiger that is consuming them. Is it time to change tactics in order to capitalise on the fears that much of the American public has of left-wing radicalism?

And all the while the pandemic runs riot. What a moment to become President. But it will not do to underestimate Joe Biden.