Brexit and the waning days of the United Kingdom

[Sheilbh]

Also a very interesting blog-post which I more or less totally agree with.

I also think this is relevant not just to Tories but to the US/Republicans and to the whole culture war/"woke capitalism" debate. The reason Republicans especially are getting so up in arms against companies posting their support for BLM or waving rainbow flags is that the conservative view no longer has enough market power so it needs to move to political power. Once upon a time consumer power - which will dictate a lot of behaviour by companies - was on the side of what we'd now see as more conservative values. That's shifted because most companies are always marketing at young people, especially the educated young because they will probably have relatively high disposable incomes and are what brands want to be associated with. So companies are pandering to their views and what's left for conservative is the exercise of political power where they can still win enough power (obviously in markets that are targeting older people there's less of this - I've yet to see Viking River Cruises' pride message for example).

Obviously companies posting their rainbow flags and support of BLM does not indicate their political values any more than they did cancelling gigs or sponsorship with the Dixie Chicks or profound concern about Janet Jackson's nipples. It indicates where those companies think their market is.

Many links in the blog:
https://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2021/05/markets-the-right.html

Markets & the right

Samuel Gregg reminds us of an important fact about rightist thinking – that the right has always been ambivalent about markets.

This is as true in the UK as in the US. We saw this, for example, in the 19th century when the Tories split up over the abolition of the corn laws and when Thomas Carlyle damned economics as the "dismal science" for wanting to abolish slavery. We saw it too in Roger Scruton's mixed feelings about Thatcher:

She leaned too readily on market economics, and ignored the deeper roots of conservatism in the theory and practice of civil society.

And we see it today in the Tories imposing trade barriers not just between the UK and EU but even within the UK. Perhaps the most spectacular example of this is John Redwood's seamless move from ardent Thatcherite to supporter of autarky.

All this poses the question, though: why is it now that the right is moving away from free market thinking rather than twenty or thirty years ago?

The answer, I suspect, lies in part in the one thing that conservative thinking has always been consistent about – its concern to protect private sector hierarchies. As Corey Robin says:

The priority of conservative political argument has been the maintenance of private regimes of power.

And here's the thing. Free markets sometimes help maintain these regimes but sometimes threaten them. In the 80s and 90s, markets helped to entrench capitalist power, because deindustrialization and globalization helped to weaken the power of organized labour. (This isn't to say that the decline of unions was purely due to market forces: the coppers at Orgreave were agents of the state.) In these circumstances, the right discovers a love of markets.

At other times, though, markets disrupt hierarchies. The free trade espoused by Smith and Ricardo was bad for landlords: Smith was, in his day, a heterodox economist.

What we're seeing today is a reversion to those times. Markets now are a danger to the existing order, in three different senses.

First, some employers are befuddled by the unusual sight of localized labour shortages. Obviously, Econ101 says the answer to this is to raise wages – which some are loath to do. The notion that market forces might actually work to workers' advantage rather than capitalists' is an unfamiliar and disturbing one.

Secondly, in a free market employers can hire whom they want – which means immigration. A market society is a cosmopolitan society. Rightists who feel awkward about hearing foreign languages don't want that*.

And thirdly British capitalism is now to a large extent a rentier economy, as Brett Christophers has shown. A genuinely free market, however, would undermine this. Freer copyright laws would curb intellectual property rents; ending banks' implicit subsidy and encouraging competition would cut financiers' rents (pdf); more competitive government tendering could reduce what Christophers calls contract and infrastructure rents; and shifting taxes from income to land value would end landlords' power to expropriate for themselves the positive externality of improvements to local areas. In ways such as these, introducing more market forces would undermine actually-existing capitalism.

It's no accident, therefore, that the right should now be falling out of love with free markets – because these are no longer a way of preserving the existing order. You cannot tell intellectual history purely through the lens of ideas. Material interests matter, and it is these that are turning the right away from markets.

If this sounds conspiratorial, it shouldn't. Think of politics as being a little like natural selection. Policies and ideas arise if not as random mutations then at least sometimes wholly or partly independently of material interests. But the environment then selects which ones survive or thrive – and a key part of the environment is class interests. The Tories good fortune has been to find a way which reconciles voters' longstanding hostility to free markets with both their own interests, their love of order and inequality and electoral success.

My story here is not just about the right, however. There's a message for technocrats. They tend to see markets as a mere engineering problem: sometimes they work well and sometimes they need fixing. Maybe this would be true in an ideal society. But we don't live in such a society. Instead, we have a class-divided one in which capitalists and rentiers have the whip hand – and that hand determines when and how markets get to work.

And there are points here for the left. The powerful sections of the right are no longer free marketeers. Pretending that they are is a tactical error, which fails to see that one of the Tories' great strengths is its ability to change. Also, if markets can be a threat to actually-existing capitalism, perhaps many leftists should rethink their instinctive antipathy to them.

* No. Immigration does not reduce natives' wages (except very slightly for a minority).

[The Larch]

More Home Office disfunction, this time telling long-naturalized British citizens that they risked losing rights.

Home Office letter wrongly tells British citizens to apply for settled status
Long-term citizens alarmed at letter saying they risk losing rights to work and healthcare unless they apply for post-Brexit status

A number of long-term British citizens have expressed alarm at receiving letters from the Home Office telling them they risk losing the right to work, benefits and free healthcare unless they apply for UK immigration status in the next six weeks.

Campaigners said they were concerned that the "scattergun" mailshot, which was sent out to thousands of people instructing them to apply for EU settled status before the end of June, revealed weaknesses in the Home Office's databases, and a lack of bureaucratic clarity about who has the right to live in the UK.

The letter, which was wrongly sent to numerous people who have lived in the UK for over 40 years, states: "The United Kingdom has left the European Union, so to carry on living in the UK after 30 June 2021, you and your family members need to have a UK immigration status," the letter states.

Among those who received the letter were several people with dual citizenship, including retired nurse Marianne Howard, 82, originally from Germany, who has been a British citizen for over 50 years; retired structural engineer Geoge Smid, who was born in what was then Czechoslovakia and became a British citizen in 1987; Isabella Moore, originally from Poland, who has had citizenship for over 40 years and spent 33 years working as an NHS doctor; academic Jan Culik, who holds a Czech passport and naturalised in the UK 36 years ago; and architect Eva Apollo-Crawshaw, originally from Poland, who has been a British citizen for 40 years.

Several expressed their unease about the insensitivity of the letter's wording, which highlighted that urgent action was required if the recipient and their family were to continue to be eligible for benefits, free healthcare and the right to work in the UK. Some, but not all, versions of the letter include a paragraph on the second page, telling recipients to ignore the notification if they already have citizenship. Anyone confused by the letter was invited to call a helpline, and several of those who tried to do so over the weekend and on Monday were directed to an answerphone message which stated: "We are experiencing a high demand for our services and currently have no more space in our call queue."

Some recipients said they were disturbed to discover that they remain classified as foreigners on internal Home Office databases, despite having been British for decades.

Helen Howard-Betts said her mother, Marianne Howard, who married a British citizen in 1965 and who has two British children and four British grandchildren, "went into a complete panic" when she received the letter. "It seems like an algorithm has done this. She has heart disease and her blood pressure went through the roof. I can't understand why they don't cross-check the databases to see if someone already has permission to stay," she said. "Why create unnecessary stress by sending a letter like that to people to whom it doesn't apply?"

Maike Bohn, co-founder of the3million, a grassroots organisation supporting EU citizens in the UK, said: "It is concerning that the Home Office sends frightening letters urging people to apply to the EU settlement scheme to remain eligible for benefits, and are not able to exclude those who have naturalised to become British decades ago or who already hold pre- or settled status."

One woman, who asked for her name not to be printed, said she had received two similar letters in the space of a week, informing her that she needed to apply for settled status, despite the fact that she had applied for it and been granted it last year, having lived in the UK for 14 years. "They should have a better system and not scare people like this. It is irritating because after Brexit we feel like second-class citizens anyway," she said.

Isabella Moore, a consultant pathologist who highlighted the problem in a letter to the Guardian said: "I've had British citizenship for the past 40 years. I don't understand why I'm being singled out as a foreigner and told I'm getting benefits from the Department for Work and Pensions. I paid national insurance contributions for 33 years." George Smid said he was worried that the letter mentioned his family's eligibility: "I felt complete disbelief. My daughters were born here and are in their 30s."

Green party peer and former party leader Natalie Bennett said: "That these letters are being sent shows a very serious failure of government systems. Massive stress is being caused to UK citizens, many of them elderly, who are falling foul of the hostile environment. This is dreadfully reminiscent of the Windrush scandal, and demonstrates a 'couldn't care less' attitude in government."

The Home Office has been contacted for comment.

[The Brain]

Are these post-Conquest arrivals? Psh!

[Sheilbh]

Another new leader in Northern Ireland

Doug Beattie (unrelated - but I think he's the first party leader to have been awarded the Military Cross since Eden) was the only candidate for leadership of the Ulster Unionist Party. He is a liberal unionist who has spoken about hoping to reach out to all regardless of religion, sexuality or ethnicity. Especially as the DUP pivots to a young earth creationist, whether the UUP will be able to pick up votes by supporting a union with actually-existing relatively liberal Great Britain rather than some weird, imagined, fundamentalist Protestant take on what the union is and should be.

Of course as ever my main view on Northern Ireland is everything would be a lot better if people would just vote for the SDLP and the UUP - the parties that actually negotiated peace - rather than rewarding parties (Sinn Fein, the DUP) for taking the most intransigent stance

Obviously I know it's not that simple. But still

[Sheilbh]

Fairly impartial take on the impact on the City from former chair of the FSA/Deputy Governor of the BofE etc - not least because it's roughly what I would have expected

A Brexit Post-Mortem for the City
May 18, 2021
Howard Davies
Almost five years after the Brexit referendum, and five months after Britain's exit from the European Union, the future of London as a global financial center seems secure. But although the City will remain Europe's largest financial marketplace, its Golden Age as Europe's financial capital is over.

LONDON – Nearly five years after the Brexit referendum, and in the five months since Brexit itself, the debate about the future of the City, the financial center of London, has remained a dialogue of the deaf. Those who voted in June 2016 to leave the European Union believe, whatever the evidence to the contrary, that the impact will be minimal, and that the warnings of job losses and business relocation are exaggerated. Remain voters are programmed to think the opposite and, whatever the evidence to the contrary, forecast gloom and doom. What can we learn from what has actually happened?

We have to acknowledge, first, that COVID-19 has confused the picture mightily over the last 18 months. People have not found it easy to change location, even if they wanted to. More important, there are some temporary regulatory arrangements that blunt the impact of the United Kingdom's departure from the single financial market. There is a Temporary Permissions Regime in London for some EU-based firms, and the European Commission has allowed euro-denominated instruments to be cleared in London until 2022, to avoid the disruption a sudden change on December 31, 2020, might have brought. So what we are seeing today may not reflect Brexit's full longer-term impact.

Nonetheless, changes that have occurred so far permit us to start assessing the future of the City and the financial operations based there. One move that generated headlines was the abrupt shift of trading in European equities from London to Amsterdam at the start of the year. An average of €9.2 billion ($11.2 billion) in shares was traded daily on the Amsterdam exchange in January, four times the volume in December 2020, while London's daily average dropped sharply, to €8.6 billion. The switch can be traced to regulation: the European Commission has not granted "equivalence" to UK trading venues, and is in no rush to do so.

That was a crucial early goal by the Remain team in this match, you might think. But the Leave team hit back quickly. Very few job moves resulted from this switch, they say: most of the traders remain in London. And they point out that London continues to lead Europe as a center for raising new capital. In the first quarter of this year, €8.3 billion was raised through London IPOs, compared to €5.4 billion in Frankfurt, €5.6 billion in Amsterdam, and just €0.1 billion in Paris.

The Remain team advances again: Equities are not the only, or even the most important, instrument. The UK share of euro-denominated interest-rate swaps fell from 40% to 10% from July 2020 to January 2021, while the EU share rose from 10% to 25%. New York was the beneficiary of some of the business lost to London, as many forecasted. And they point to the move of banking assets worth perhaps €1 trillion out of the UK, mainly to Frankfurt.

But both sides acknowledge that from an economic point of view, the city in which trades are booked is less significant than the city in which traders pay their taxes. Soon after the Brexit vote, consultants Oliver Wyman estimated that 75,000 jobs would quickly be relocated to other EU centers. Others produced even higher estimates. Have those pessimistic forecasts been borne out?

The Leave team can claim another goal. A detailed survey from consultancy New Financial last month identified 7,400 positions that had been moved from London to a eurozone financial center – just 10% of the estimates in 2016. The biggest beneficiaries have been Dublin, Paris, Luxembourg, Frankfurt, and Amsterdam, in that order.

But the study can be interpreted in another way. Two years ago, the same authors identified 269 firms that had relocated some activity. Now they find that 440 have done so, and they regard that as an underestimate of the number that will eventually do so. They expect the relocated jobs number to rise further.

Moreover, there are signs that the property market may be reacting. Over the last two years, property prices have risen 20% in Paris, almost 40% in Amsterdam, but just 6% in London. But it will not be one-way traffic. Just as firms based in the UK no longer have unfettered access to the EU's markets, so most EU-located firms will need authorization to conduct business with London-based clients. So perhaps 300-500, mainly smaller, European firms will need to set up in London. The net result will be an outflow of jobs from London, but not on anything like the scale widely expected in 2016.

That is because firms have found ways to work around the regulatory obstacles. They have also found that moving staff is costly and difficult. London retains many attractions: schools, cultural life, and many long-established expatriate social networks. It will take time for any putative rival in the EU to develop a plausible matching offer.

It seems likely, therefore, that London will remain Europe's largest financial marketplace, by a considerable distance. It will remain plugged into a global network: transactions with European clients are perhaps a quarter of its business. But it will no longer be the continent's de facto financial center.

For the EU, London will shift from being its principal onshore financial center, to an important offshore center. Other cities will pick up business, though the signs are that a multipolar system will develop, with no single winner. There will still be a profitable role for London, but the Golden Age of the City as Europe's financial capital will recede, as Golden Ages tend to do.

I also suspect that his view (from the City) of a recent Golden Age has been widely felt by the rest of the country - or, even, the rest of London - which may be part of why we are where we are.

[Josquius]

A huge number of leave voters subscribe to a crabs in a bucket outlook, especially with regards to the city.
Job losses there are not only of minimal concern to them but even something to be cheered.

The big thing that had me screaming at the sheer idiocy of quitlings with this kind of view was the belief it was just kharma and it'd be the middle classes to suffer now whilst manufacturing jobs would come flooding back.

They're getting none of what they asked for. Many of the jobs are remaining, individual wealthy people will remain so, meanwhile many of the taxes these banks would have been paying will be moved elsewhere.
British manufacturing needless to say is fucked. You can't perform those jobs from the UK whilst technically charging for them in Amsterdam as you can paper work.

[Sheilbh]

Job losses there are not only of minimal concern to them but even something to be cheered.

Yes. But the estimates of 75,000 (Wyman) to 100,000 (PwC) job losses in the City which were pushed by the Treasury during the campaign being wildly wrong does play into the ongoing dismissal of "Project Fear" - and I suspect mean that in the event of a new indy ref that a re-run of 2014 won't work.

The big thing that had me screaming at the sheer idiocy of quitlings with this kind of view was the belief it was just kharma and it'd be the middle classes to suffer now whilst manufacturing jobs would come flooding back.

They're getting none of what they asked for. Many of the jobs are remaining, individual wealthy people will remain so, meanwhile many of the taxes these banks would have been paying will be moved elsewhere.
British manufacturing needless to say is fucked. You can't perform those jobs from the UK whilst technically charging for them in Amsterdam as you can paper work.

Yeah I've always thought the areas that voted leave will be the worst hit. We're mainly seeing it in farming, fishing and food production.

Although I think covid will have a longer-term impact on British manufacturing - I think that while we all laughed at, I think Gove, talking about environmental concerns and 3d printers leading to on-shoring there is something to that, especially combined with a global pandemic that exposed the vulnerabilities of global supply chains.

So my understanding is a majority of NHS PPE is now being made in the UK from a very low base pre-covid, similarly joint funding of four different life science companies manufacturing four different types of vaccines is new and wouldn't have happened without covid. It may mean nothing or those may be the start of a rejuvenation of life sciences/healthcare manufacturing in the UK (as ever - the UK has generally done okay on the research and corporate management/HQ front but outsourced the manufacturing). And I think that is a model that needs to be adopted for the energy transition too.

There's no strategy yet (and see this piece: https://www.theguardian.com/politics/2021/may/18/uk-economy-could-resemble-italy-by-end-of-2020s-covid-brexit-climate) - and it requires a government to actually take the opportunity, but I think there is the potential that what we need to do to recover from covid and for energy transition to meet our net zero commitments actually far outweighs Brexit.

I'm not confident this government (or Labour) have a strategy on that to shape it in a positive way as opposed to just being buffetted by it. And obviously in actual terms of energy, we mean fuck all compared to China - but I think the impact of either climate or energy transition will far, far outweigh Brexit or recent economic shifts like deindustrialisation/Thatcherism. Those will be the definition of a little local difficulty in comparison. As I say I don't think our leadership class is up to the challenge of actually shaping that so I suspect it will be almost entirely reactive.

Edit: And obviously I think we're at the easy end of climate/energy politics and it will get far more difficult as costs and impacts are distributed unequally.

[Sheilbh]

I don't want to say it's over for Starmer - because Labour being Labour will give any leader the opportunity to lose at least one election before making a decision. But, from the Times:

Henry Zeffman
@hzeffman
EXCL: Keir Starmer is in talks with a production company about a fly on the wall documentary tracking his leadership

Some aides see it as a way of getting a broader section of the public to engage with him

Needless to say The Thick of It is trending. If nothing else, Starmer's starting to come across a little bit as despearte (like Nicola Murray), the sort of desperation that had Ed Miliband doing an interview with Russell Brand or the "hell yes, I think I'm tough enough" line or the Ed Stone. Which is a little concerning.

Edit: Meanwhile I see Dominic Cummings is posting again

As ever he's 99% insufferable - but possibly right in his criticism/analysis.

[Sheilbh]

So it turns out some Brits do self-describe as woke. But I'm still not convinced it's a terribly helpful term


And I wildly envy the 60% who've never heard of it or encountered the Discourse in general.

[Tamas]

Of course it's a terrible term. If you are woke as in awakened it means those who are not you are un-awakened ergo sleeping and ignorant. Which might be the truth but it won't help you winning people over unless you are a religion and threaten the unwoken with eternal damnation.

[garbon]

Of course it's a terrible term. If you are woke as in awakened it means those who are not you are un-awakened ergo sleeping and ignorant. Which might be the truth but it won't help you winning people over unless you are a religion and threaten the unwoken with eternal damnation.

[Admiral Yi]

Rolling eyes at obvious statements is very typical woke behavior.

What makes a term useful Shelf?

[garbon]

Rolling eyes at obvious statements is very typical woke behavior.

What makes a term useful Shelf?

Doesn't really seem worth my time to explain how silly Tamas is being but I'm also not going to leave such silliness without a remark.

[Admiral Yi]

Doesn't really seem worth my time to explain how silly Tamas is being but I'm also not going to leave such silliness without a remark.

Very efficient, very economical.

[Tamas]

Of course it's a terrible term. If you are woke as in awakened it means those who are not you are un-awakened ergo sleeping and ignorant. Which might be the truth but it won't help you winning people over unless you are a religion and threaten the unwoken with eternal damnation.

I am woke on the effect of the term 'woke'. You are the one who needs to catch up.