Category Archives: Tories

Brexit shock therapy

Child Labour Photo Contest 2012_Third Prize
Child Labour Photo Contest 2012_Third Prize.
Ever since the Brexit referendum, I've kept thinking that the hard Brexit plans surely must be due to a lack of understanding of the consequences, that the Tories would eventually opt for a much softer outcome (such as the Norwegian solution) or at least apply for a decade-long transitional deal to give them time to negotiate new trade deals and all that.

I simply couldn't see any benefit in causing utter devastation to so many people and businesses across the UK, so I kept believing the people opting for a hard Brexit must be ignorant or deluded.

Then two things happened. Firstly, the leaked memo showed that people in government do seem to realise what they doing and what the consequences will be. Secondly, I started reading Naomi Klein's “The Shock Doctrine”.

Parts of this book are now a bit dated (it's from 2007, so from before the crash), but the bits where she explains why it's only possible to implement radical neoliberal reforms after some sort of societal crisis are just as relevant today:

It was in 1982 that Milton Friedman wrote the highly influential passage that best summarizes the shock doctrine: "Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable." [...]

What [Friedman] understood was that in normal circumstances, economic decisions are made based on the push and pull of competing interests – workers want jobs and raises, owners want low taxes and relaxed regulation, and politicians have to strike a balance between these competing forces. However, if an economic crisis hits and is severe enough – a currency meltdown, a market crash, a major recession – it blows everything else out of the water, and leaders are liberated to do whatever is necessary (or said to be necessary) in the name of responding to a national emergency. Crises are, in a way, democracy-free zones [...]. [p.140]

If this is true – which I fear it is – a hard and chaotic Brexit will be a huge opportunity for the Tories to completely abolish the welfare state. They'll be able to get rid of the NHS, free education, unemployment benefits and whatever else they don't like. They'll be able to do this while looking immensely sad, saying that it's all the EU's fault for denying them the package they wanted (but quietly always knew wouldn't be acceptable to the other EU member states). They'll blame everybody else for the economic collapse, but use it to create a neoliberal wonderland where only the strong survive. Eventually people will realise what has happened, but by then it'll be too late to reverse.

In Ian Dunt's new book (“Brexit: What The Hell Happens Now?”), the conclusion is similar:

Britain is about to experience a toxic mix of weak law and strong lobbying. It is tantamount to switching a country off and on again. Except that it will not revert to its original state. It will revert, in all likelihood, to a low-tax, low-regulation laissez faire economy, more akin to that of Singapore or Hong Kong than the countries on the Continent. [p.161]

More than three years ago, I warned that many people in England wanted to go down that Singapore-style route:

In their book Going South: Why Britain will have a Third World Economy by 2014, Larry Elliott and Dan Atkinson claim the UK needs to make a fundamental choice: Should it move in the direction of a Scandinavian welfare state (similar to the Common Weal ideas currently being discussed in Scotland), or should it become a low-tax state based on free trade (called "Freeport Ho!" and "Freeport Britain" in their book)?

They don't really discuss Scottish independence in their book, and they seem to think that the UK must make the choice as a whole.

However, it appears to me that Scotland and London have already chosen. Scotland wants to go down the Common Weal path (and what we're really discussing in the independence referendum campaign is whether we can convince the rUK to go down that road with us, or whether we should do so alone), and Greater London has practically decided to become a global free port (which is why so many people in the South-East want to leave the EU, dismantle the NHS, and all that).

What I didn't foresee back then was that the Tories would be able to use the chaos created by their hard Brexit to implement this vision, which is so utterly different from the vision of an egalitarian society based of solidarity and fairness that the vast majority of people in Scotland share.

If we can't stop the Tories from administering their neoliberal shock therapy, we need to get out before it's too late. We're about to witness something that'll make Thatcher look like a cuddly socialist in comparison.

Borders, ID cards and databases

Passport, please
Passport, please.
Different countries use different means to ensure everybody and their dog don't just turn up and use their services (such as hospitals, schools or pensions).

Some countries – such as the UK – prefer to control the border but then have very few checks on the inside.

Other countries – such as many other EU countries – prefer to have an ID card of some sort that documents that the holder is entitled to access services.

And finally some countries – mainly Scandinavian ones, I believe – have a central database that keeps track of who can do what.

Of course most countries use a combination of these factors – for instance, when you use the Scottish NHS, they ask you for some personal details so that they can find your CHI number, which is the Scandinavian approach.

The UK approach is really nice once you're on the inside, because you don't need to carry any ID and in general don't need to prove who you are all the time. The problem with it is that it depends on controlling the border, which just isn't very easy these days. After all, any person who arrives legally – as a tourist, student or business person – can become an illegal immigrant simply by overstaying their visa. It also makes it almost impossible to have different immigration policies in different parts of the country (such as making it easier to move to Scotland than to England).

The other two approaches work much better in the modern world because being in the country doesn't entitle you to anything per se. If you don't have an ID card or a database identification number, you won't be able to access non-emergency health care, sign your kids up for school, or do any of the many other tasks you do as a resident.

Schengen, the EU's passport-free zone, to some extent depends on members using ID cards or databases so that gaining access to a country doesn't entitle people to anything. And one might argue that this is also the basis for the EU's free movement of people. For instance, Denmark knows exactly how many EU citizens have moved there and when, because they have to register for a database identification number as soon as they move there, so there isn't the same feeling that the government isn't in control of immigration.

It was thus quite interesting how the Leave campaign was so obsessed with controlling the borders. Unless they want to make it illegal to be a tourist, people will arrive, and some won't leave again, even though they were supposed to. And of course maintaining the open border with EU member Ireland will make it impossible to keep out EU citizens (because they can at all times travel legally to Ireland).

The lack of ID cards or a database is also what is making life so difficult for EU citizens in the UK post-Brexit. It's difficult to prove how long we've been here, and whether we actually ever ticked the boxes for being a legal resident. In many other countries, it would be an administrative piece of cake to find everybody who had been here legally for more than five years and send them a permanent residence permit, without any need for 80-page forms.

Much as I love the lack of ID cards and database identification numbers in Scotland and the rUK, I'm starting to think that what the Leave voters really wanted was a national ID card and/or a universal database, because that's the only thing that would make it harder to be an illegal immigrant here.

Of course Theresa May's solution works, too – namely to make the UK so unattractive and despised abroad, with a basket-case economy, that nobody in their right mind wants to move here. If she succeeds, immigrations numbers will fall below zero without any need for border controls, ID cards or databases. What a victory!

I wish I had a time machine

Großmutter und Großvater
Großmutter und Großvater.
I'm half Danish, half German. I grew up in Denmark (before flitting to Scotland when I was 30), but of course I still identify as German, too.

My German grandparents were born in 1899 and 1900, so of course they remembered both World Wars equally well, and they obviously had vivid memories of raising their kids between and during the wars (they had thirteen weans, born between 1927 and 1944, and ten survived till adulthood).

They weren't Nazis. They voted against Hitler at every opportunity, but given the number of kids they had, there was a limit to what they could do. Nevertheless, I believe they always felt guilty not to have done more.

While they were still alive, their memories of the interwar period seemed somewhat irrelevant to me, like it was ancient history without relevance to the modern world.

And yet, today I'm sitting here wishing for a time machine so that I could speak to them. The Tories' hideous conference is making me want to discuss Hitler's ascent to power with somebody who lived through those years. How certain have you got to be that what you're seeing is beyond the pale before you act? What should you be looking out for? What would they have done differently with hindsight?

My great-grandparents lost their entire fortune during the German hyperinflation. My great-grandfather was a lad-o-pairts who had moved to Stuttgart as a teenager, got an apprenticeship as a baker and ended up owning one of Stuttgart's largest and most central bakeries with lots of employees, but he and and my great-grandmother lost everything during the 1920s, and they had to move in with my grandparents. My dad remembers them as grumpy and disillusioned.

Given the way the pound is falling like a stone, I wouldn't mind using my time machine to have a wee chat with them too about what to do when you live in an economic basket-case country.

Sadly, however, there are no time machines, and we have to use history books and our gut feelings to navigate these troubled waters. I guess that's why history keeps repeating itself.

Abandon ship!

Sunrise Orient wreck
Sunrise Orient wreck.
Do you remember when the Coalition government got into power in 2010 and introduced austerity because the UK's finances apparently were so dire that foreign investors would pull out their money if nothing was done? There was some truth in that, but of course the Tories only made things worse by taking money away from poor people (who would have spent it) and giving it to the rich (who didn't do much with it), so the deficit has continued to rise.

I'm mentioning this because the Chancellor of the Exchequer, Philip Hammond, has now abandoned Osborne's fiscal rules because Brexit is forcing him to do so. This means that the deficit is likely to rise dramatically soon, but without seeing the improvements that borrowing to invest could have led to without Brexit.

The pound is already falling like a stone, but once the financial markets fully realise that the UK is heading for a hard Brexit (and Theresa May was very clear about this on Sunday, as I've discussed before), and once they've factored it this ballooning deficit, it's likely to fall even faster.

I'm also very concerned that the Treasury seems to be contemplating to pay compensation to companies for losses caused by Brexit if they remain here. On the one hand they have to do so to prevent all exporting companies from leaving before March 2019, but on the other hand the money for doing so can only come from printing even more money, which isn't going to be good for the exchange rate.

Of course the pound will stabilise at some point, but it can fall a lot before that happens, and there won't be many well-paid jobs left at the end of it.

GDP of ArgentinaPerhaps things won't be that bad, but I'm starting to think the UK could go the way of Argentina, which over a hundred years fell from being on the same level as Germany or France, to a point where their GDP per capita is less than 30% of the USA's (see the adjacent graph).

Unless the majority of non-Brexiteers in the House of Commons get their act together and kick out this mad government before it's too late, Scotland has to get off this sinking ship fast or we'll get dragged down with it.

Beware of sleekit Tories muddying the waters

Beescraigs
Beescraigs by Alan Weir.
In the immediate aftermath of the Brexit referendum, most sensible people believed the Tories had a plan. Not necessarily a good one, but at least some sort of idea of what they wanted to achieve.

It then dawned on the rest of us that they had absolutely no plan whatsoever, that the Leave campaign had consisted of nothing more than infinite amounts of hot air and wishful thinking.

We then all expected the Tories to formulate a plan and tell us about it. This is clearly what the EU negotiators still are expecting – they've lined up their team and their negotiating position, and they're now waiting for the triggering of Article 50 and to hear what the UK wants to do. The Scottish Government also seems to be waiting to find out whether the Tory plan involves being part of the Internal Market and whether Scotland will have a formal rôle in the negotiations as promised.

However, what if they never clear things up? What if the various members of the UK government continue to contradict each other in public? What if they keep promising to listen to Scotland without ever doing so? What if it doesn't become clear till the night before Brexit takes place what it actually entails? It could actually be deliberate – if you have a weak hand in negotiations, clarity helps your opponents, so the Tories might think maximum obfuscation is the best way to get a good deal.

So I think we have to brace ourselves for the possibility that we might not know whether post-Brexit England and Wales will be part of the Internal Market till the Tory negotiators emerge in the wee hours of the morning from a smoke-filled room in Brussels in early 2019. Until that point, they might very feasibly keep saying they want to restrict immigration while having full access to the Internal Market.

The problem for Scotland is that if our plan is to use continued Internal Market membership as the way to get a majority to vote Yes in the next independence referendum, we effectively tie our hands because we can't then call the referendum until we know what the Tories are doing, and that could very well be too close to the actual Brexit date to allow us to hold a referendum in time to ensure that Scotland never leaves the EU.

I'm aware some independentistas would like us to wait till everything becomes clear and the consequences of Brexit are real and felt by everybody, but as I wrote yesterday, I feel that's like walking out onto thin ice with our partner when we could be standing on the shore.

We need to come up with a plan that works even if the Tories do their best to muddy the waters. Walking onto thin ice in the middle of the night when you can't see what you're doing is hardly better than doing it during the day!

Never attribute to malice that which is adequately explained by stupidity

EU referendum result: Prime Minister’s statement
EU referendum result: Prime Minister’s statement.

I used to think that David Cameron was secretly trying to engineer a Leave vote. There were so many signs, e.g., (1) making demands from the EU that could never be met, (2) disenfranchising EU citizens and long-term British residents in Europe, (3) holding the referendum just after the Scottish, Welsh and Northern Irish elections (leading to a lot of election fatigue in these areas), and (4) also holding it during Euro 2016 (when national pride is always running high).

However, the way he didn't do any Brexit contingency planning and simply threw in the towel now makes it clear that he just was naïve and arrogant enough to think that he'd achieve a Remain vote no matter what.

I've even seen it mentioned that he bragged to Juncker that he was going to achieve a 70% win for Remain, which was clearly delusional.

Never attribute to malice that which is adequately explained by stupidity!

Trying to understand the Tories

Into the Abyss
Into the Abyss.
Westminster politics often makes me feel foreign -- the fact that it doesn't make any more sense now than it did when I arrived in Scotland 14 years ago just shows how completely divorced Scotland and England already are politically.

The Tories' referendum on leaving the EU is a prime example. In Scotland you simply don't encounter that deep antipathy towards the EU that clearly must be a common theme amongst natural conservatives in England, and as a result what's happening just now simply doesn't feel relevant to me. Unfortunately, Scotland voted No to independence, and as a result, this referendum is happening here too, and the outcome does matter to people in Scotland (not least to EU citizens like me).

I therefore have to get my head round this. The first question I've been asking myself is why Cameron decided to boldly split his own party like no man has split it before, and in particular, how he ended leading the Stay campaign.

Before the summer holiday, I had convinced myself that he was looking for an excuse to head the Leave campaign:

My guess is he’s already expecting his negotiations will fail (if for no other reason because he’s asking for things that any EU expert will tell him the other countries won’t give him), and he’ll then go out and say something along these lines: “I really wanted to remain in a reformed EU, but the other countries have turned their backs on us, so I will with a heavy heart have to recommend that this great nation leaves the EU.”

Why is Cameron doing this? My guess is it’s to save the Conservative party. If he came out in favour of leaving the EU already, some pro-business Tories would break out, and if he campaigned in favour of EU membership, a very large number of MPs would rebel. By pretending to negotiate in good faith, he keeps the pro-EU Tories happy, and by setting the negotiations up to fail, he ensures the Eurosceptics will eventually be happy.

I was mulling this over when my beloved wife pointed out that I might have been right but that this analysis was overtaken by events. In normal circumstances, a lot of EU countries would have been quietly relieved to see the UK leave, so they wouldn't have been willing to agree to many of his demands (and in fact Angela Merkel gave them a rather lukewarm reception when he first aired them).

However, these are not normal circumstances. The whole world is getting rather destabilised, and the EU is facing a lot of obstacles on many fronts simultaneously. The EU leaders therefore were afraid the whole edifice would come tumbling down if they gave Cameron the cold shoulder, so they were forced to agree to his proposals without major changes. As a result, he couldn't really claim to have been let down.

However, this leaves Cameron in a horrible position. As John Rentoul described it in The Independent:

If Cameron wins this referendum he will be hobbled by his party. Within moments of the result, the anti-EU Tory party will be looking towards the next referendum. At some point the EU treaties will have to be rewritten and it will be hard to resist demands for another referendum. Far from settling the European question, this referendum could ensure that Europe will dominate the Tory party’s choice of Cameron’s successor. [...]

If Cameron loses the referendum, forget all his hints about staying on. His time would be over. His party would not countenance Brexit negotiations being handled by a leader who wanted to stay in. One way or the other, this is the end of his premiership: we just don’t know how or exactly when.

I've said before that Cameron seems to be a clever tactician but a lousy strategist. I guess this might be yet another example of this, because surely he's ended up somewhere he never wanted to be.

I wouldn't mind the Tories half as much if they were just a fringe freak show (a bit like UKIP), but living in a country where these hapless wretched people have a parliamentary majority scares me witless.

The only glimmer of hope is that perhaps this referendum will lead to Scottish independence sooner rather than later.