Thursday, July 14, 2016

Know-nothing Arrogance or Machiavellian machinations?

As Theresa May forms her new government, she has certainly sprung a few surprises. The appointments of Boris Johnson as Foreign Secretary, David Davis as the Secretary of State for Exiting the EU and Liam Fox as International Trade Minister have placed a large part of the future interaction between the UK and the EU in the hands of the Brexit campaigners. Some regard this as a subtle plan to ensure that the Leave campaign takes responsibility for what they have wrought. To be honest I think the jury is still out. The utter chaos of the last few days has been largely down to a proven lack of responsibility amongst the leaders of the Leave campaign. Mrs. May is given points for Machiavellianism in forcing the Leavers back into the Conservative tent, however what she has also done is that the Conservatives must now take responsibility for the future process of EU-UK relations. The Tories are now irrevocably the party of Brexit.

The problem with the "Brexit mean Brexit" discourse is that no one has yet determined precisely what Brexit does actually mean. Even now there is a clear difference between the ideas of an associate membership, an EFTA solution, and EEA solution or a complete exit from all EU-led structures. It is by no means clear what version carries with it the support of the Conservative Party. Increasingly there seems to be some traction that the "Brexit means Brexit" narrative actually means complete withdrawal. If so, then Mrs. May's "safe pair of hands" risks being the instrument of strangulation of the economic well being of our country and its political survival as a single unit.

While 51% were not clear about what version of Brexit they wanted, 48% - led by the young and the better educated- did not want to lose any of the features of the European Union. A complete exit is a very clear minority position. The appointment of Mr. Davis- who apparently does not understand that Germany and France will not do any trade agreements separate from the rest of the EU, because that is the whole point of the EU- is nearly as controversial as the appointment of Mr. Johnson, and potentially even riskier.

Mrs. May has squared the circles of her party, at the cost of irritating all the UK's international partners. The fact is that the ignorant who have wrapped themselves in self righteous tosh about British democracy fail to recognize the idealism that also lies at the heart of the European project. That cynical and lying journalists may have persuaded the old and the poor that the EU is all about bureaucracy does not remove the fact that the rest of Europe regards the Union as a noble project designed to support European prosperity as a whole. Lecturing those who believe in the European ideal in the way that many right-wing Conservatives have often tended to in the past will isolate Britain still further, and the divorce could become very bitter indeed.

As the new government takes its first baby-steps, Mrs. May must know that, despite the current implosion at the heart of Labour, it is the Conservatives who stand to be tarred with the contempt of history if a suitable and moderate path is not established soon. 

Even Machiavelli ended up in exile.    

  

Monday, July 04, 2016

Open Politics

The rumble of the Brexit earthquake continues.

As both Labour and Tory politicians jockey for leadership in their prospective parties, it is becoming all too clear that a new political system is now struggling to be born. The traditional left-right split has for some time been overlaid with a different matrix. Partly one might call this a socially liberal vs socially conservative spectrum. David Cameron, by campaigning on issues such as gay marriage, laid claim to a socially liberal stance, and such issues were not always split on conventional party lines. More to the point there are now far wider signifiers- it case become a matter of an entire political culture. 

In short the Brexit has revealed a totally different political spectrum: those who support globalization and the open society and those who oppose it. Broadly speaking, the metropolitan, young, educated remain voters are supporters, while the rural, older and less educated leave voters are not. This cultural split seems set to create still further upheaval.

The political system, as currently constituted, does not reflect this fundamental split. Jeremy Corbyn's reactionary Socialist dogma barely even recognizes the growing power of the open society, and to be honest, Theresa May is not exactly in touch with the open minded concerns of youth either.

Thus there is now an obvious opportunity to recast British politics in a more modern and responsive form. Though the Brexit crisis is only just beginning, the result may lead to some fundamental changes in the future. As Corbyn continue his stubborn resistance, it seems more and more likely that a Labour split might form the core of a new grouping- though not necessarily a particularly cohesive one.

The tedious managerialism that has been the bill of fare in the UK since the fall of Margaret Thatcher and the Berlin Wall has led nowhere.

The new politics will not rest on questions of administration but of philosophy. Those who believe in the open politics and the open society will still need to carry the unconvinced, but in the end the closed society can not deliver the prosperity that the open can. 

I shall return to this debate, but the political sea change may throw up some big surprises in the coming months and years. Though Theresa May offers the comfort of a pause for breath today, by 2020 the pressure for real change may have out played her caution. 

The Brexit campaign leaders- Farage, Gove, Johnson- have demonstrated both a cowardice and a dishonesty that will rightly blacken their name for the foreseeable future, Brexit may be their victory, but it is already a Pyrrhic one, and as their hollow promises are revealed for the lies they were, there will be little forgiveness for any of them.

The vindication of the Liberal Democrats has been far swifter than they hoped, albeit that it has come with such a price for the UK. However, the party can now lay claim to being in the vanguard of political change. The game's afoot.   

Monday, June 27, 2016

As the political vacuum in the UK continues, the markets are filling the gap

The UK fiasco has continued unabated. Neither the Conservatives nor the Labour party have any effective leader. It is quite clear that the victorious Leave camp is totally divided as to what should happen next, and there is no clear plan as to what level of engagement or disengagement the UK will have with the European Union.

The market collapse that is taking place is the responsibility of the utterly irresponsible leaders of the Leave campaign. So, it could well be that having wielded the knife against David Cameron, Boris Johnson may yet go the way of a previous Tory challenger: Michael Heseltine. Perhaps Theresa May as leader could provide some reassurance, but in the face of economic meltdown, the calls for an early general election -which under the circumstances is clearly necessary- may create an untenable situation for any party. The fractious and divided body politic of the UK is on the brink of collapse. The cowardly, but sullen and determined Jeremy Corbyn is facing the total breakdown of his leadership, but there are few amongst the Labour leading lights who can inspire in the face of the national catastrophe that we now have to face.

Into this chaos the markets are injecting their own commentary. Despite the brief reemergence of the Prime Minister and his Chancellor, the market collapse is now assuming a very dangerous shape. Some are suggesting that the cable (USD/GBP) rate is now headed to parity, which implies a fall of one third from Thursday night's close. The implications are startling. The UK will fall from the fifth largest nominal economy to eighth, just above Italy. The recession that this implies is into double figures. It implies the implosion of the UK property market, it implies cuts in the government budget of the order of 10-15% across the board- a level of austerity that could seriously test the social order of the country. All of the gains made since the early 1990s will have gone over the course of a few weeks. UK bank stocks are now in deep decline- over a third of the value of the UK banking sector has gone in two trading days. The rout is expanding into construction, property and any business that relies on imports, which in the UK is pretty much all of them. The Brexit shock could push inflation very sharply higher. The scale of the meltdown is mind boggling and since there is still no clear plan emerging in London, there is no bottom on the market.

Nor have other European markets been immune- there remains considerable uncertainty as to how the impact of the UK exit can be contained. Wisely, Mrs. Merkel has shown a cool head, suggesting that there was no immediate hurry and that it would be counter-productive to seek to punish the UK for this disaster. She is, of course, right: the punishment being meted onto the UK already is severe enough. However within a few days London must set out a timetable for what is going to happen next- and there is no such timetable. It is not even clear if any new Prime Minister would be able to enact an article 50 notice without a new general election. Paradoxically this chaos may stabilize the European Union itself, as other nationalist movements see what could happen to them, if they push things too far. 

Yet even if the UK general election chose a solidly remain government and the referendum was indeed rescinded, the damage and humiliation being visited on the UK will not go away. Even though Scottish separation in the immediate future would be an economic neutron bomb if it was done too soon, there are hot headed calls for an immediate rerun of the independence vote: and the only leadership in the UK at the moment is coming from those who want to destroy it. 

Personally I think that a lot of people now want to the Conservatives destroyed- they and their UKIP cronies are responsible for this catastrophe. Yet the pathetic response from Labour reminds us that politics as usual is not an option. Any election, however necessary, could throw up a Parliament that can not form a government of any kind.

The fact is that we may still not have reached any understanding of where the bottom of this crisis is going to be, and for as long as that remains the case, the markets will be in turmoil. 

Sunday, June 26, 2016

Leadership vacuum

In the three days since the UK's referendum it has become clear that the Leave campaign were not merely lying about the impact of the EU, they literally had no idea about what would happen if they won.

The backlash has been enormous- I think the level of "buyers remorse" is now so severe that if the referendum was now re-run, that Remain would utterly crush the Leavers.

The problem is that even if the referendum could be re-run, the damage is already done. The differential vote, with Scotland strongly supporting the EU, and England voting to leave has restarted the divisive and difficult argument over Scottish independence. The economic damage is already in the billions, and the next week will see further carnage in the markets.

From the point of view of the EU, there is a clear temptation to push the UK out and try to reconfigure the Union without the uncertainty. In my view this would be a disaster, not just for the UK, but the EU itself. I have never been impressed by the leadership of Mr. Juncker, but I had hoped better of Donald Tusk, the President of the European Council.

The problem now is the total leadership vacuum in the UK. The political system is going to be shaken to the core, and it is entirely possible that the Conservatives and Labour could both face existential challenges. London is in no position to trigger article 50, and will not be able to do so for some time.

Previous referendums in the EU, in France, Ireland, the Netherlands and Denmark have been rerun, and there is now significant pressure inside the UK, that this happens in Britain too. This is something that the EU leadership should welcome and tacitly support.

If they do not, and Brexit actually happens then, as George Soros forecasts today, we could be looking at the total breakdown of the EU. 

The leadership vacuum in London must be met with understanding in Brussels, otherwise the crisis in the markets in the coming week could finally destroy not just the UK, but the EU too.  

Saturday, June 25, 2016

The Damage Done: The UK faces the Sunset


As I feared, the polls weren't wrong, but the bookies were. On a very narrow margin, the referendum in the United Kingdom has voted to leave the European Union.

In the face of a great shock, there is a tendency to exaggerate the scale of the crisis. There is after all an awful lot of ruin in a nation. Unfortunately the UK has been pressing its luck for sometime now. I could write screeds about the narrow education system, the growing lack of social mobility and the economic imbalances, but that must wait for another time. The point is that the people of England and Wales have voted to Leave, but the people of Northern Ireland and Scotland have voted to Remain. 

As I predicted in May, the vote to Leave has triggered a thunderclap of a crisis. The Prime Minister has indeed resigned, Sterling did indeed fall through the floor, the FTSE went into meltdown and next week the UK will lose its AAA credit rating. Investment projects are being suspended, Millions of workers are facing an uncertain future and in the face of the divisive and ugly anti-immigrant theme in the campaign, many are making plans that no longer include staying in Britain long term. The crash is already causing damage that will lead to a permanent fall in the economic performance of the UK for many years into the future- the damage is already done.  

Yet, as we parse the result, it is not only that Scotland and Northern Ireland that have voted differently from the majority. The astonishing thing is the massive difference between older people, the less educated, the less well off and the rural populations, which largely voted Leave, and the young, the well educated, the better off and the urban populations, which largely voted Remain. A sociologist might suggest the vote was a rebellion by those with no stake in globalization, against those with a heavy stake in globalization. Personally, I am not convinced. The fact is that before the vote, only 30% of those who supported Leave believed that they would win. Even after the polls closed, Nigel Farage was forecasting a narrow Remain victory. Thus the shock of the actual result was pretty universal. It is clear that if people had believed that the situation was so close, that many people might have voted differently. "Buyers Remorse" amongst Leave voters has already been significant.

The question now, is is that "Buyers Remorse", and the growing understanding that "Project Fear" was nothing of the kind, but an accurate forecast of the impact of a Leave vote sufficient to change the country's political direction? There are examples of Referendum votes against the EU- in France, Denmark and the Netherlands- which have been either fudged or reversed. Can the UK change its mind, and would the EU accommodate this?

The early signs are mixed.

The decision of David Cameron to resign was accompanied by a further decision: not to activate article 50 of the Lisbon treaty until a new government can be formed. This will give a brief breathing space on the UK side. However, Martin Schulz, the German Socialist President of the European Parliament, believes that article 50 should be activated now. Meanwhile the German Chancellor, Angela Merkel, is silent- suggesting that it is up to the exiting party to declare its intentions first. The likely new Prime Minister, Boris Johnson, is now suggesting that the UK intends to seek associate membership- like Norway or Switzerland. However, the European Commission suggests that even to negotiate the framework agreement would be far beyond the two year negotiation window that Article 50 requires. The problem is that article 50 is simply too inflexible and too short a window for the necessary agreements to be made. Despite Mr. Schulz's insistence, pushing the UK out in too quick a timetable will lead to chaos, and not just in the UK.

Yet, as the practical negotiations are considered, it is now clear that the vote will indeed lead to an existential crisis for the UK. The reaction in Scotland has been the collapse of support for the common state. Nicola Sturgeon, in the disorganized and emotional way of the SNP has, immediately announced plans for a second referendum. Personally, I think it is a little premature, but the clear direction of travel for Scotland is clear now. Unless the UK stays in the EU, Scotland will leave the UK.

That, I suspect will trigger another thunderclap in the rUK. All the institutions that have been taken for granted, from the Monarchy downwards, will be challenged. I see the end of the UK leading to a much weaker, smaller, but perhaps eventually more open society in England and Wales. A country that is less Pomp and Circumstance and more the Levellers, and eventually, of course, the rUK will return to its European ideals- just too twenty years too late, and too diminished, as usual.

As for Scotland, the swing of the establishment behind Independence will hopefully result in a significant change in the ideology of the emerging Scottish State. The hurried chaos of immediate separation- snatched quickly, less it be reversed- needs to give way to a more confident, but longer timetable. In order to gain support amongst the other 27 member states of the EU, Scotland will need to be a genuine force for European federalism. This implies membership of the Euro, not the untenable idea that Sterling can be retained. This implies full opt-ins to the European acquis, with the possible exception of Schengen, where a three way rUK, Ireland, Scotland passport zone may need to be retained, Although that can only happen if rUK becomes an EEA or Schengen member, otherwise, there will indeed be borders at Berwick, and we must accept the damage that might cause. Scotland will need to spend a great deal on defence and to keep the nuclear bases open, especially to the Americans. Russia remains a serious threat, and Scotland, with a strong martial tradition, should commit to help the defence of the EU as much as possible. The halfway house of the Common Monarchy should, in my view, give way to a ceremonial Presidency, with the powers of the Crown devolving to the Parliament or President, as appropriate. Yet, again, the details of the future will have to await further events. 

The people have spoken, but Messrs. Johnson, Gove and Farage, the nominal victors, are most likely to be the gravediggers of the UK.

Unless there is a popular uprising which derails the result and significantly changes the political scene, which I can not altogether rule out, the end of the auld sang of the UK is in sight. I regret it. In a fit of pique, the voters have unleashed forces that will bring about the precise opposite to what they may have intended. Unless they recant, through protest or through early elections that bring about an explicitly pro-European government, committed to staying in the EU, the first pebbles of the landslide to come are already rolling.

Wednesday, June 22, 2016

The evil that men do


The referendum in the UK has hardly been a spectacle of informed and intelligent debate.

We have seen absurd statements made by politicians who must clearly know that they are lying. The cost of EU membership is easily provable with the most cursory online research and yet the the Leave campaign have run with a number that is provably not true- £350 million a day is at least twice and probably three times more than any actual number, and anyway assumes that the UK receives no benefit from membership, which we do, even if Leave can hardly deny, although they try. Leave has predicted that the entire population of Turkey- all 70 odd million of them- would come to the UK as soon as Turkey joined the EU- an immediate prospect, according to them. The facts are simple: Turkey is unlikely to join the EU for years, probably decades, and possibly never, and even if they did, it is patently absurd to expect all the Turks to move from the sun kissed beaches of the Mediterranean to the millionaires playground of Scunthorpe. It is fear tactics pure and simple. Time after time the Leave campaign has been not merely economical with the truth, but excessive with the lie direct.

Now the Leave campaign, scenting that they may have been rumbled, is resorting to a whinging victimhood that is truly emetic. At a time when the opinion polls show the race to be neck and neck, they resort to the tactics of throwing mud: accusing the Remain campaign of the disgraceful tactics that they themselves are guilty of. The idea that anyone would wish to make a political spectacle of the brutal murder of Jo Cox is utterly repellent. Yet that is what the Leave campaign suggests the Remain in campaign is orchestrating. I would encourage a close reading of the headlines in the Daily Express, Daily Mail and the Sun in recent months. I would suggest that Nigel Farage's Immigration poster - cropped white faces and all- is not a dog whistle, it is as someone said recently, a siren:
   

So Farage, so unsurprising. But when Farage was predicting violence on the streets if immigration was not "controlled" he was doing a bit more than predicting: he was inciting. If, like the right wing press, you continue to put out the idea that immigration is creating a breaking point, you can hardly be surprised when a mentally ill person with extreme views may indeed break: and the result is oh so predictable, but not perhaps quite in the way that Mr. Farage intended. So lies about immigration, lies about the EU budget, what can we trust about the Leave campaign?

Well, we can judge them by their friends. The fact is that the "leadership" of the motley crew of Leave: Boris Johnson, Michael Gove, Nigel Farage, George Galloway are hardly the mainstream. What is mainstream is the backing of the most right wing newspapers: The Daily Telegraph, owned by the non-dom Barclay brothers from their Sark off-shore haven. The Daily Mail, owned by the non-dom Lord Rothermere through a network of off shore trusts. The Daily Express- a "newspaper" so wedded to the truth that it refuses to accept any newspaper regulation- is owned by the porn baron Richard Desmond, again through a series of non transparent ownership vehicles and finally The Sun, a foreign owned newspaper that has been implicated in a series of scandals. 

This referendum may be the last hurrah for this cankerous right wing rag-tag. For years they have twisted the truth, insulted those who seek a more just country and undermined their political enemies through blackmail and threats. The fact is that Leave has become the voice and puppet of the the right wing political-media complex. I do not underestimate their power. Despite everything, the fact that 40% of the press supports Leave, with only the Guardian, the FT and the Economist wholly supporting Remain, is a big advantage. In the past there would have been little doubt that such a united front in support of a political cause would have carried the day. Yet perhaps for the first time, it may not happen this time. News is now gathered from a wide variety of sources, and the bias of the right wing is more obvious and more strident than it has been in the past, although also it is of course more easy to challenge. Fact checkers have stood ready to demolish any argument with a stout leavening of facts: something that the Mail journalists in particular have trouble with. This is why Leave have faced such an uphill challenge: their argument is not supported by very many facts, only be primitive emotions, which are the stock-in-trade of the Tabloids.

The battle seems to have been fought by the marionettes of Leave to defend their media masters, but this could be the last time. I for one have viewed the antics of the right wing press with, at first, disbelief and now with contempt. The British press has showed itself to be at their very worst. As today I read screeds of Leave propaganda in the Daily Mail, I have lost all patience. The shrill poison of their ignorance, coupled with the arrogant certainty of their invective has left a young mother murdered, but as the obvious accusation emerges, these hypocrites scream that the just anger of those who have seen what has happened is "playing politics".

It is a stain on our democracy that these people retain so much power that they could yet persuade the British people to embark on the economic train wreck that Leave would cause. It is an outrage that the deep pain that people feel at the senseless murder of an MP is dismissed as a mere pose. It is criminal that these vermin continue to have the power to twist and subvert with unabashed lies.

Whatever the result, the time has come for the stables to be cleaned: this cancer must be destroyed. 

Saturday, June 18, 2016

Politicizing things

Some are saying that it is important not to politicize the brutal murder of Jo Cox.

Her Murderer declares his name to be "Death to Traitors, Freedom for Britain", but it is so important not to politicize things.
Nigel Farage not merely predicts violence, but practically incites it, but it is so important not to politicize things.
The Leave campaign calls anyone who suggests they are wrong self interested liars, no matter how neutral or respected they may be, but it is so important not to politicize things.
The Leavers suggests that the entire population of Turkey is coming to the UK- an absurd lie- but it is so important not politicize things.
The Leavers suggest that the UK pays in a sum everyday that is a massive multiple of any real number and suggests that there are no gains from membership, but it is so important not to politicize things.
The Leavers say that the massive economic damage they would cause is a price worth paying, perhaps easier to say when you are a millionaire like Farage, but it is so important not to politicize things.
Significant parts of the British Press supporting Leave becomes mere propaganda for the foreign and off-shore companies that own them, but it is so important not to politicize things.
The atmosphere of lies and hate stirred up by an irresponsible Leave campaign supported by a near criminal media leaves a young wife and mother dead, but it is so, so important not to politicize things.