Will Boris Johnson survive?

I do not usually use this blog to indulge in short-term political speculation. I have access to no special inside sources – I simply make use of the information pumped out by sections of the mainstream media, being mainly the BBC and the Financial Times, supplemented by newsletters from The Guardian, The Times and the New Statesman. But I can’t resist it in the case of Boris Johnson’s future tenure as UK Prime Minister. There are some wider themes.

By last Friday Mr Johnson had hit a new low, as yet more revelations about parties in Downing Street emerged. Significantly these came through the Daily Telegraph, a paper that has been very supportive of Mr Johnson, with the angle that disrespect was being shown to the Queen, as these events occurred on the night before the funeral of the Duke of Edinburgh. Conservative MPs were reported to be going to their constituencies over the weekend to “take soundings”. This process is often referred to, but it don’t actually know what it means. Clearly comments coming through to MPs through email and social media are highly unrepresentative. But what can you do over a weekend? We are meant to conjure up pictures of MPs going out to high streets and knocking on doors to talk to ordinary voters. But if they do this, the coverage is likely to be small and equally unrepresentative. And it doesn’t sound the sort of thing Tory MPs do on cold days in January. Instead, presumably what happens is that the MPs have a chat to a few usual suspects: party officers and donors, in their Conservative Association – people that they need to keep onside in the shenanigans of local internal party politics. This morning a BBC correspondent was suggesting that the feedback was not as terrible as the emails last week. But it is hard to say how reliable this feedback is. Mr Johnson has not acted out of character after all, and he has a huge stock of capital to deplete.

Meanwhile Mr Johnson has been working on a recovery strategy. The first step is to buy time by asking people to wait for an investigation by civil servant Sue Gray to be completed. Then there has been spin that these are trivial events compared to the great affairs of state that Mr Johnson has supposedly got right, and that anyway he has made a fulsome apology. This apology was made last Wednesday before Prime Minister’s Questions in parliament. This in fact covered only one of the events, and hid behind the lame idea that he thought it was a “work event” that was within the rules at the time. Mr Johnson did look abject on that occasion, but few think that this had anything to do with being genuinely sorry. Alas this dissembling on the apology is typical of how politicians operate, and it is a foretaste of how Ms Gary’s report is going to be spun. It will be presented as answering a question that was actually outside its terms of reference – whether the events were illegal.

The next part of the strategy is to have a clear-out of the staff at 10 Downing Street, whose culture appears to be so out of tune with the public zeitgeist. This supports Mr Johnson’s narrative (to insiders) that he has been badly let down by his staff. This is well-trodden territory for incompetent leaders, and personnel changes almost never work.

But the most curious part of Mr Johnson’s survival initiative has been a series of policy ideas presented to Tory backbenchers as “red meat”. These include putting the Royal Navy in charge of stopping the flow of migrants in small boats coming across the Channel, and ending the BBC licence fee. These invite the question of why, if they are such good ideas, they hadn’t been progressed already. Worse, they look like an invitation to a political quagmire. In the case of migrants, it is hardly clear how this is actually going to solve the problem – instead it looks like more over-promising. Priti Patel, The Home Secretary, has already seen her reputation amongst Conservative activists nosedive for being unable to deliver on fierce rhetoric. And as for the BBC – this could very easily be presented as a vindictive attack an all its works, from Strictly Come Dancing to the Green Planet, from excessively doctrinaire Tories who resent the BBC’s political coverage. The public may have cooled a bit on the BBC, but it is still a much-loved institution amongst the middle of the road voters that the Conservatives need to hold onto.

So this strategy might be called an alligator strategy, after the famous James Bond scene where he escapes from a trap by using the backs of alligators as stepping stones to cross a pool. Tory MPs who are frightened of taking such a drastic step as unseating the PM must be given a possible path to safety. The point is to weather the crisis, not to create a winning strategy for the next two years. And since I think that these MPs are genuinely frightened of making awkward choices, and yearn for the feel-good days of Mr Johnson’s past, I think it could well work.

Which surely leaves Mr Johnson in a similar position to John Major in 1992, when his credibility collapsed with the ERM crisis. He limped on for over four years before succumbing to the worst electoral defeat in the party’s history. Mr Major is the exact opposite personality to Mr Johnson, but that will not stop them from suffering the same fate.

If Mr Johnson survives, it will be a vindication for the Labour leader Sir Keir Starmer, whose strategy has always been to differentiate himself from the Conservatives mainly on competence. After two years when this approach seemed to be taking Labour backwards, it is at last paying dividends. It is unlikely to work if Mr Johnson is replaced by Rishi Sunak, Liz Truss or, especially, Jeremy Hunt. But a wounded Mr Johnson is the perfect target.

Boris Johnson’s political achievements are astonishing. His fall will be as spectacular as his rise. My guess is that this will occur at the next General Election – but it could be much sooner if Conservative MPs have any sense.

The Tories must choose between lower taxes or the NHS

Discontent in the British Conservative party goes beyond frustration with the erratic leadership style of Boris Johnson, and his low poll ratings. Many feel that the government is failing to deliver on a distinctly Tory vision of how to run the country – one that is business-friendly with light regulation and low taxes. Shadow leadership contenders, the Chancellor Rishi Sunak, and Foreign Secretary Liz Truss are both trying to capitalise on this discontent. But there is no way out, which is why Mr Johnson may yet limp on until the next election.

Item One in this discontent is the government’s covid strategy. Many Tories feel that it is too heavy-handed and too beholden to cautious experts. Leave the public to make up its on mind on precautions and take the consequences, they suggest. Their thinking is plainly muddled, and out of touch with most voters, but at least as the virus morphs into something a bit less deadly, so policy can move on in their direction.

Item Two is Brexit. In Tory eyes this was meant to be a great liberation from bureaucracy, which would allow “buccaneering” British business to achieve its full potential. And yes, one prominent Tory did use that word, referring to licensed pirates on the high seas back in the 17th and 18th centuries, at whose modern equivalent the Russians’ advantage is surely unassailable. In fact businesses have been mired in even more form-filling, associated with imports and exports to the European Union, which surrounds the country, and is thus its readiest partner for both. Some remember that it was much simpler back in the 1960s before Britain entered the Common Market – failing to understand how the world has moved on. Meanwhile rolling back regulations has been happening at a snails’ pace, as the regulations were more than a bureaucratic whim, and aimed to achieve a public good – which has to be achieved in an alternative way. Downing Street has resorted to pointing to crowns printed on beer glasses and the changed colour of passports as among the main achievements of Brexit. And that is before the insoluble problem of Ireland is brought into the picture, ever capable of exploding with dire consequences. In fact most Brexit voters, including the former Labour-voting ones that Mr Johnson so successfully courted in the 2019 election, never much cared for deregulation as a reason for Brexit. They wanted to see more restrictive immigration policies – which the Tories have indeed delivered. But that has brought more bureaucracy, and snarl-ups due to labour shortages. Tory MPs’ business friends are not particularly happy, even as Tory voters are now a lot less worried about the issue.

And Item Three is taxes. They are going up, both corporate taxes and national insurance, levied on people in work and their employers. This is nominally to pay for grasping the nettle on the emerging social care crisis, but in fact the money will disappear into the National Health Service, which has been completely disrupted by the covid crisis, and now has massive backlogs for routine care. The Tory discontents say that above all they should be a party of lower taxes (especially on businesses and the rich, sotto voce) – and that this is a betrayal. Mr Sunak hints that if it was left to him, he would be cutting taxes soon. Most people outside the Conservative Party wonder if he can possibly be serious. With little room for manoeuvre on the budget deficit and national debt (and if you don’t think such things are relevant, high inflation suggests fiscal excess) the only way this vision can be delivered is by cutting government spending.

At the heart of this is rising spending on the NHS. Since the party regained power (in coalition) in 2010, the government has attempted to cap NHS spending so that it just about kept pace with inflation. But as the baby boomers age, and skew the ratio of older people, demand has been rising at a higher rate. The financial pressure has caused system resilience to be reduced, and this is one of the causes of the now alarming backlogs. Tory hopes that NHS costs are containable are based on two fallacies and a misconception. Fallacy One is that demand can be met through making the service more efficient. Any user of the service can point to inefficiencies in this massive, bureaucratic behemoth of an organisation. But that comes with the necessary scale and complexity of what the healthcare sector is trying to do – international comparisons show that Britain’s health services are amongst the world’s most efficient. But these same comparisons also show that in many areas Britain’s health services less effective. We are, to quote The Times columnist Matthew Parris, “getting a second-rate service for the cost of third-rate one.” This is not what the public wants, and further cost restraint is liable to mean the service becoming third-rate all round.

Fallacy Two is that faster economic growth can allow spending to keep up with demand. Alas the headwinds against growth in a modern, developed economy are many, and I have written about these many times. That demographic problem that is stoking up demand is not least among them. Besides there is plenty of evidence to suggest that the wealthier people become the more demand there is for health services. Which leads me to the misconception: which is that excess demand for the NHS arises because it is free. That suggests that there should be ways of persuading the public to make do. But the problem is that the effective NHS monopoly on health care limits supply. Other systems are much better at mobilising private money – and where they do, demand is higher, not lower. A large and growing healthcare sector is one of the features of any modern, developed economy, however it is financed. Resisting it will breed discontent.

That points to an answer. If Britain could move healthcare to a public insurance model, such as the Netherlands or Australia have, the public would both get a guarantee that their basic needs will be met, and the mobilisation of private money to pay for a world-class service. I have been to Australia quite a bit over the years – and one thing I hear very little of is discontent with its health system. And Aussies know how to be discontented. But such a shift, as surely almost all Tories know, is an impossibility. For all its faults, the public has become attached to the system. And trying to mix more private money into it would be seen as a betrayal of its ethos. Doing this as a open public policy is clearly suicidal. But doing so by stealth, by restraining the public service while allowing the private sector to grow, is problematic too – although exactly this has happened to dentistry and optometry already. If wealthier people are paying big taxes for a service they don’t use, it will create discontent, and reducing their taxes will starve the public service, making it even worse. Neglect of the NHS under the Conservative governments of 1979 to 1997 was one of the reasons that support for the party collapsed in the 1990s. And one of the reasons that Mr Johnson did so well in 2019 was by promising to invest a lot of public money in the NHS, amongst other public services.

But people can pay more tax. Taxation in Britain is not especially high by European standards. If the system is well-designed the harms can be limited. Tories will have to embrace this, unless they want to challenge the public shibboleth of the NHS. Instinctively many Conservative MPs understand this, and they may realise that Mr Johnson represents the best way of postponing this awkward choice, and they may well let him muddle on.

What Conservatives should be doing is developing a new vision for the 21st Century that embraces higher taxes and a well-funded NHS at the heart of a flourishing health economy, based on world-leading health research and development. This is perfectly credible, unlike world leadership in buccaneering.

When will we see peak China?

Don’t bet against China. This has been sage advice ever since that country’s careful embrace of capitalism after the death of Mao Zedong in 1976. Failure has been predicted several times, but its growth has been rapid, both in economic and political power. Similar advice pertains to the US economy, at least for better-off Americans, even as its politics disappoints. But nothing is forever, and there will come a point when China’s growth runs out of steam.

Right now there is unmistakable hubris in China’s political class, which frequently touts the superiority of its political system over that of the West – with its response to the covid pandemic being the latest piece of evidence. And yet as 2022 progresses, that will look less convincing. The point here is not that the pandemic started in China and that the initial outbreak was fumbled. That could have happened anywhere, though it is interesting to note that in China the problem arose with weakness and denial at a junior official level, whereas elsewhere the weakness is more likely to be further up the chain. China’s policy is to stamp out the disease before it can get going through very strict lockdowns, and sealing the border. It shows a very impressive degree of political control and resolution from the centre, which other large polities have failed to match. But what next? The first problem is that China’s own vaccines are less effective than those developed in the West, and are not up to the job of being a first line of defence – but the leadership regards the use of vaccines developed elsewhere as a sign of failure. The next problem is that the virus is evolving so that it is becoming more infectious, and thus harder to contain – though less deadly. This means that as the West moves beyond the need for lockdowns and learns to live with the virus, China is faced with an awkward choice. Does it try to keep up its zero-covid strategy, with all the costs that that this brings? Or does it let the virus run its course in China, softened by vaccines and a less dangerous strain? That might make it look as if China’s leadership had made some wrong choices earlier on – even if that is unfair, given that death rates in China are likely to stay very low. We have a demonstration of the strengths and weaknesses of the different political systems. The open, chaotic system of democracy in the West, which includes some important countries in East Asia, is both better at technological development, and more adaptable and resilient when it comes to shaping public policy. Policy failure may be more likely in the West, but its consequences are not as serious – indeed it can be more readily used as a learning experience.

Behind this is the timeless conflict between centralised political control and localised decision-making. The genius of capitalism is that uses markets to facilitate efficient local choices, right down to the individual; markets have proved vastly more effective at processing information than any other system that humanity has devised. The attempts by socialist states to do without markets, and the free capital that is required to make them work properly, notably by the Soviet Union and Maoist China, proved a dismal failure. While these systems did have some notable achievements, they made little progress with the eradication of poverty. The Soviet Union’s attempt to reform and embrace some aspects of capitalist systems ended in complete collapse. China noted this failure and made sure that its own embrace of capitalism was more controlled. The Communist Party developed a hybrid system of central party control alongside highly competitive capitalist markets that has been astonishingly successful. It has been the world’s most striking political and economic success of the last fifty years, and has done more to move the world out of poverty than any other single thing. With economic success has come a stronger political standing, backed by military power, which the country has been increasingly ready to assert.

Now, as a good liberal I need to make an important point here. China’s rise has been good for the human race. A country of over a billion people deserves a high status in the world’s political system. American conservatives are inclined to see China’s rise as a political failure – but that is quite the wrong way to look at it. This is not just because it has benefited so many Chinese people, who can now adopt middle-class lifestyles – but China’s rise has contributed to a much more efficient world economy, whose benefits have been well beyond its borders, and not least in the USA and other countries in the West.

But there is a problem, both for China and the rest of the world. China’s hybrid system of authoritarian capitalism is not sustainable in the long run. China is far from the only country that has followed this path. In the first half of the 20th Century there were Germany and Japan. In both of these rapid economic success led to political tensions that in turn led to militarism and vastly destructive war. In the second half of the century several East Asian countries have followed the authoritarian capitalist path, which too has led to political tension. There seems to be a choice between allowing democracy to take hold, or moving deeper into totalitarianism. South Korea and Taiwan have decisively taken the democratic path. Indonesia, Malaysia and Thailand are struggling with this choice, though not yet on the totalitarian road. Vietnam has so far successfully avoided the crunch, but it is bound to come there. Singapore resists full democracy, while avoiding outright totalitarianism, and is further down the development path than others – but it is just a city-state.

Under its current leader, Xi Jinping, China has opted for decisively for totalitarianism, and is taking Hong Kong with it. What do I mean by totalitarianism? It is a political system where a highly centralised elite, usually with a clear single leader, attempts to control all aspects of life. This includes non-political values and the editing, and rewriting, of history. The concept of objective truth is discarded so that pretty much any statement is valued purely on its political implications. The reach of public policy often takes in the private foibles of the senior leader – in China the government wants to stamp out effeminacy among men, for example. The Chinese Communist elite has decided that any admission that the Party is, or ever has been, mistaken is a political challenge that must be crushed. Hence its difficulties in confronting covid. A change of policy might in fact be a sensible response to new facts about the virus – but, especially given the hubris displayed so far, it also makes it look as if the earlier policy was a mistake. The argument that when the facts change so does the policy is not a comfortable one for authoritarians: when the facts change, so might your legitimacy.

We come to a basic problem with authoritarian systems. They rely heavily on an elite of no more than a few hundred people, personally known to each other. Beyond this it is impossible to trust people completely. And the further they follow the totalitarian path, the greater this reliance becomes. There is simply a limit to the amount of information that such a small elite can process. The public health authorities in Wuhan, where the covid outbreak started, were not able to take clear, independent decisions, but felt that their duty was to suppress information about anything that looked bad. China has worked hard to make its elite work efficiently, including by leveraging it with technology. The country is placing heavy hopes on the use of Artificial Intelligence (AI). Singapore’s ruling elite is doing much the same thing with some success – but it is one thing to manage a city state, and another a country of one billion people. For China’s ruling elite the problems are mounting. Here are a few of them.

The first problem is demographics. Thanks both to Mao’s one-child policy, and to the normal dynamics of economic development, the ratio of working-age people to older people is in the process of rapid decline. The overall population of the country is starting to fall. For all the country’s economic advances, a Western-style system of welfare has not been developed. This will require a radical reshaping of the Chinese economy with high economic productivity increasingly focused on domestic needs – and, surely, a greater dependence on imports.

Then there is financial management. China’s system of finance is many-layered and complex. The Western socialist idea of a centralised system of state finance with a large national debt has not been followed – doubtless because the economy too large and complex for that to work. Vast amounts of money have been invested, notably in property development, financed by a complex system of finance, involving public and private agencies. Restrictions on banks have led to complex work-arounds. There is a huge dependency on high property values, which reaches well into local government finance, where funds depend more on property development gains than taxes. The whole system bears a strong resemblance to the financial system in the West before the Great Financial Crisis of 2007-09. Western commentators are quite sanguine about this, assuming that the vast political power available to China’s central government will allow them to manage any fall-out better than Western governments did. Only up to a point.

Even in the area of global politics China faces a problem. Much as they crow at the retreat of the West in such places as Afghanistan, they have little ability to fill the vacuum. The West’s retreat is followed by collapse, vacuum and, in many places, war, and not by a beneficent China restoring order. China has nothing to match the West’s proclamation of liberal values and a rules-based order. It simply denigrates them, while boasting about its own political system, which is pretty much impossible for any other country to replicate, except Vietnam, perhaps. It is notably un-ideological in its international dealings. That is very attractive to regimes who tire of being lectured by Westerners – but it has a dark side. China has no compunction about bullying if it does not like what any country is doing – Canada, Australia, South Korea and, currently, Lithuania are all victims. Suddenly a rules-based order and a bit of lecturing start to look more attractive. China’s weak international position was especially conspicuous at the recent COP-26 climate conference. The country showed almost no leadership, in spite of the fact that most countries are becoming much more concerned about climate change. Those countries get a more constructive response from the West. And China is the world’s biggest producer of carbon emissions, so it should have something important so say.

These problems are clear. Another important issue is more ambiguous. Will the increasing control of the Communist elite mean the loss technical innovation? At the moment the Party is bearing down on privately-controlled businesses, which have been the source of much of this. But totalitarian regimes can be good at innovation, especially in highly focused areas, such as military technology. China has set some major priority areas, which will doubtless receive generous funding. All the same, innovation and creativity flourish more in a less directed environment. Much of China’s investment is sure to disappoint. AI, in particular, is a much much trickier thing than those with directive minds allow. Driverless cars have been around the corner for many years now, for example.

So, as China confronts these problems, what is likely to happen? The biggest fear is that, like Germany and Japan a century ago, it channels its frustration into military aggression, and starts off a war that it cannot stop. There are some signs of this, but the world is a very different place. The world trading system, which has China at its heart, is liable to weaken as China tries to become more self-sufficient, both for political reasons, and to manage its changing domestic priorities. How this plays out in the wider world is hard to judge. It could be a boon for other developing world countries, who may take China’s place as exporters. It could hurt the American economy, which has benefited so much China’s boom – but then again, betting against such a dynamic and adaptable system is not wise.

My guess is that China will be enveloped by a slow-moving financial crisis. Communist power will succeed in slowing it down, but that will prolong rather than solve it. This will impact investment, development and growth across the country, and undermine the Party’s prestige. Eventually Mr Xi will be replaced, perhaps as his next term ends in five years’ time, and this would be cue for another change in direction. The world will become a very different place.

Boris Johnson’s Covid gamble

Understanding the latest wave of infections of Covid-19 in Britain is very hard. Data collection has been messed up by the holiday season, and anyway this wave, driven by the Omicron variant, is presenting in a different way to earlier ones, meaning the statistics don’t quite mean the same thing as before. Politically the most interesting thing, though, is the “don’t panic” attitude of the government’s policy in England, compared to what has been happening in Scotland and Wales. It is a gamble.

This gamblers based on a number of ideas. First is that the Omicron variant causes less serious harm than earlier ones, and that this is reinforced by more widespread vaccination, including third jabs, or “boosters”. The thought seems to be that scary infection rates won’t cause hospitals and other health services to be overwhelmed, and that the wave will burn out quickly and subside rapidly, reducing its impact on daily life. However this assessment seems to be as much driven by politics within the Conservative Party, as a sober assessment of what is known about the virus. For reasons that aren’t very clear to me, the Brexit awkward squad has decided that scepticism of the conventional, cautious approach to fighting the virus is the next Big Idea. Many business lobbies seem to have joined in, especially those in the hospitality and travel, after a frustrating two years, with recovery repeatedly postponed. The evidence and logic backing up these sceptics is weak at best – it is mainly a question of clutching at straws and finding out flaws in the logic of the advocates of caution. Funnily enough, though this scepticism is very prominent, even dominant, in the ruling party, it does not seem to be widely shared by the public, who usually find the government scientists more convincing. It is significant that the Scottish and Welsh governments (respectively led by the SNP and Labour) are taking a more cautious line.

So far it is very hard to tell who is right. Hospital admissions of people with Covid are going up, but not as fast as infections. Moreover it is not clear how many of these admissions are of people seriously ill with Covid, as opposed to being ill with something else, and also happening to be infected. A bigger source of stress seems to be staff being infected and having to stay away from work in isolation. Are things better in Scotland and Wales than in England? The statistics are very patchy; they do seem to be doing better, but that may be because Omicron hit them later (especially Wales). But if the government has got it wrong in England, it is too late to do anything about it. We could be in for two or three weeks of stories of overloaded hospitals and ambulances waiting outside unable to discharge their patients – and extra deaths, from Covid or not, as a result.

I find the sceptics generally unconvincing, and yet they aren’t wholly wrong. Stopping the virus is an impossibility – we have to have an end-game which involves us living with the virus, as we do with the common cold and flu. Vaccination is clearly part of that; other public health precautions may also have to become a permanent feature of life. We might need to adopt East Asian attitudes to the wearing of face masks. Ventilation standards need attention. Something else probably has a role too: waiting for the virus to evolve so that it comes less virulent, even as it becomes more infectious. Omicron seems to be a major step in that direction – which is why the government’s gamble may yet pay off.

And if it does, that will be a personal triumph for the Prime Minister, Boris Johnson, which will bolster his position within his party, if not the country at large. Another possibility is that things go badly, but turn out to be no better in Scotland and Wales, in spite of their extra precautions. That would prove the contention made by lobbyists that hospitality venues present minimal risk, and that restrictions are simply rounding up the usual suspects for appearances sake.

But most likely is that the evidence will be muddled, without proving either side right until many months later, when the debate has moved on. Such is life in the era of Covid. Happy New Year!