UK election update and how populism has broken British politics

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Its long been true that a politicians promise lasts as long as a snow ball in hell and is about as reliable as the Scottish national football team. But this latest election in the UK really does take the biscuit. All the parties, but the Tories in particular, are proposing policies that are unworkable and divorced from reality. And as they also contradict everything the respective leaderships have done over the last few years, it is extremely unlikely they would actually keep these promises (if you think the Tories are going to invest money in the NHS, or you think Corbyn’s going to allow a 2nd referendum, I’ve got some magic beans I can sell you).

Inevitably this is the impact of populism on UK politics. Because the problem with populism and such tabloid friendly policies is that they violate what I would call the iron law of politics – all policies have to conform with the realities of the real world if they are too be successful. You can’t break the laws of physics, nor can you ignore reality. If a policy is not properly costed or it would have massive repercussions for a large number of people, or it is just plain unworkable, it ain’t going to happen. Any government who tries to implement such a policy can expect it to fail (as backbenchers rebel or you get sued and tied up in court or civil servants kill it off). Or worse they suffer a massive backlash against it after its implemented (which is basically what’s going to happen to the Tories and Corbyn after brexit happens).

Late us take a few examples. For starters the Tories brexit policy, where by they want a “clean breakbrexit and to restrict immigration. That would put in jeopardy many UK businesses and a large number of jobs. The likely response from businesses is that they’ll try and circumvent this legislation (e.g. find a way to exploit the NI loophole to move goods in and out of the EU/UK) or they just hire a bunch of lawyers to fill out all the paperwork for them. Its the same way the corporations have been circumventing Trump’s tariffs (they send Soya beans to Brazil, or electronic goods from China to Taiwan, take it out of one box, put in another one and then send it off tariff free).

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Of course, while big corporations can afford to insulate themselves and limit the damage of brexit, smaller businesses or individuals (who can’t afford to hire a lawyer to fill out the 86 pages of forms needed to claim residency) are going to be exposed to the very worst of its full effects. But there some elements of brexit big business can’t avoid. Any sort of queue at the borders for example immediately imposes a cost to them. Even if its only for a few hours, that basically means a truck driver cannot get his delivery into/out of the UK without going over his hours (so he’ll need to stop and rest or you’ll need two drivers, essentially doubling your costs).

Which is why the likely response is going to be for corporations to start suing the government, knowing full well the government doesn’t want to get into a messy legal scrap, which could involve sensitive documents being subpoenaed and ministers being called to testify in court (raising the risk that they perjure themselves while under oath). Pretty much every time the Tories have been faced with this threat so far over brexit they’ve either settled out of court or lost the case.

So corporations know that they can safely sue the government and either wriggle some sort of concession out of them or win compensation (noting that neither compels them to stay in the UK long term). Of course, as this means the EU (or the US, China and India) knows that they will have the UK over a barrel in trade talks, they will make few concessions because they don’t have too (as the UK will be compelled to do that for them).

That said, labour’s manifesto also repeatedly breaks this iron law of politics. Lets take for example their plan to abolish private schools. I mean I’d be curious as to what drugs they were doing when they dreamt up this one up. How’s that going to pan out in the real world? Well the previously private school will become a state funded school (which receives a donation of a few million a year from several anonymous offshore funds to top up its budget). The rich will just buy up all the property in its catchment area (then put the kids and a Nanny in those houses), so the only people who get to go to those schools will be rich kids. The only difference is that now, thanks to labour, taxpapers will be helping to subsidise the education of Ress-Mogg’s kids. Does that really strike anybody as a good idea?

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And what about nationalising the water, power and rail companies. I mean yes the services they provide are terrible and overpriced, privatisation has been a failure, but that doesn’t mean you get to fill in the blanks with whatever fantasy most appeals to you. The devil is in the detail, and without such details re-nationalisation either won’t happen or it won’t change anything.

Assuming they can get such a bill through parliament, the first hurdle is that they will get sued by the shareholders of these companies. At the very least this ties labour up in court for several years, meaning that by the time the policy can be implemented the Tories might be back in (and just drop the case or reverse everything). The only way they can get around this problem is by paying out massive amounts of compensation. Money they simply won’t have.

And what would they be buying? The train operating companies or the UK utility firms are often just the front face that handles billing for your utilities or sells you a train ticket. The actual trains are mostly owned by a separate layer of firms, as will be some of the power stations and large parts of the gas and electricity grid. So you’d have to buy out these firms as well (which is easier said than done as they tend to own quite valuable assets). The UK track network is already owned by a state owned quango (so they are already in a defacto state of national ownership).

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The cost of labour’s re-nationalisation plans according to the centre for policy studies See their website for further info

The trouble is having spent tens of billions (or possibly hundreds of billions) getting control over these assets, labour will have no money left to actually make any improvements. The reason why the UK has a railway network the Italians would be ashamed off is a long standing lack of investment into what is essentially a collection of Victorian era infrastructure (with a similar situation as regards water and power networks).

And while it has gotten a lot worse under privatisation (as they have a captive market and no real incentive to invest), its not like British rail was vastly better (they put some money in yes, but clearly not enough). I mean consider that steam engines were running on British railways up until 1968. So at the same time the Japanese are introducing their bullet trains, and France was working on the TGV, the British were being hauled around by Thomas the tank engine.

Unless the government is prepared to pour many tens of billions of pounds (per year) into the railways to correct these historical mistakes (with tens of billions more going the way of the energy & water), there’s little to be gained from re-nationalisation. They could subsidise ticket prices yes, or similarly subsidise electricity and water costs, as some other countries with state owned utilities do. But who is going to pay for that? And what’s to stop the Tories simply cancelling such subsidy’s when they get back into power?

Too which the usual reply for Corbyn supporters is tax the rich. However, as I pointed out before, while there are many good reasons why the rich should pay more in taxes (as they do so in many other countries). But we need to be realistic about how much money such taxes will actually raise. Labour themselves estimate such measures would only raise about £80 billion (which might be a little optimistic). But this is nowhere near enough.

The reality is that if they want to undertake such spending plans, they’d have to push up taxes for everybody. Now there’s no reason why higher taxes are a bad idea. There are many countries with thriving economies where citizens pay a lot more in tax (with the wealthy pay a disproportionately higher rate) and they get better public services (I have relatives in Germany and I know people who live in Scandinavia, this is their everyday reality and they prefer that to the British or American model).

And no the rich won’t leave the UK “within minutes” of Corbyn becoming PM. That’s just grade A BS. The only rich who will leave are those who are doing something illegal (you know like the hedge fund managers bribing Boris) or the ones who are bad at maths. For the reality is that the cost of living in a tax haven is often much higher. For example, Switzerland’s cost of living is twice that of Germany (so any German billionaire who lives across the border is imposing a defacto 50% flat tax on himself and having to pay taxes to the Swiss on top of that!).

But that said, there’s a limit to what the rich and corporations will tolerate (just look at Argentina or Venezuela). And a general increase in taxation isn’t what’s in labour’s manifesto promises. And as Marcon discovered when he tried to sneak a tax increase through in France, you are likely to face a serious backlash when the public catch you at it. But before any Tories start sniggering, brexit is also likely to be very expensive. As expensive as Corbyn’s nationalisation policy, if not much more expensive. They too will face the dilemma of either pushing up taxes or implementing another round of deep austerity, neither of which is going to go down terribly well with the general public.

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What about borrowing? Well if you are bank would you lend money to either of these clowns? Probably yes (banks are kind of run by arrogant upper class types), but as its a riskier bet, only at the right price. Which means pushing up interest rates. Which means everybody on a mortgage or who is renting sees their bills going up, which again is likely to provoke an angry backlash. And this also means the financial markets will have Corbyn or Johnson over a barrel. If they don’t dance to the bankers tune, they risk losing access to credit (which they can’t afford to lose).

Finally, we need to acknowledge that the UK is part of a globalised world and not isolated from international events. Another tabloid friendly labour policy is to nationalise BT and give everyone free broadband access. I’m going to assume they’re not familiar with the train wreck which happened when Australia tried this, the so called blunder down under.

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While I’m sceptical that Musk’s starlink will ever work, the very fact its being proposed shows how quickly technology is changing in this field

And I also assume labour are unfamiliar with Elon Musk’s plans to launch a 12,000 satellite network to provide cheap high speed broadband world wide. Now okay, everything Musk needs to be taken with a pinch of salt, but it highlights the fact that how we access the internet today might not be the way we do it in ten year time (how many of you are reading this on a smart phone, a device that was in its infancy when I started this blog). So Corbyn would be spending tens of billions getting his hands on assets that could well be worthless within a decade or so. And while I’m also sceptical of Musk’s hyperloop proposal, its going to mean a big pulse of research in the direction of maglev’s, So it again highlights how transport technologies may change.

Now don’t get me wrong, I’m not saying that labour can’t implement its policies. The devil is in the detail. It requires one to be a bit more strategically clever and embrace your inner Tyrion Lannister. For example, rather than nationalising the UK railway’s (though holding the threat of it over their heads certainly won’t hurt) I’d instead lean on the rail companies to do their fe*king jobs. Refuse to allow any further fare increases (and either try to lower fares or let inflation do that job for you), fine the rail companies heavily any time a train is late (so heavily its just not in their interests to allow that to happen) and rigidly enforce the conditions of carriage (when you buy a rail ticket you and the rail company are entering into a contract whereby they are legally required to get you to your destination regardless of the costs to them).

Then at the same time offer them a carrot in the form of government money to improve the infrastructure (and again some of that is state owned anyway so that should be straight forward enough) and create a more efficient service, so long as they sign up to certain changes and support these improvements. The rail companies options will be to either sign up to this package or sell up and get out straight away. And even this is a win for the government as it means defacto nationalisation happens, but as the rail companies are doing so voluntarily, there’s no delay in court and you’d likely be able to buy them out at a fraction of the cost.

And equally, if I was a brexiter, far from leaving the EU asap, I’d stay in and draw the process out for as long as possible. As this is exactly what the EU wants to avoid. If they refuse any further extensions, revoke article 50 and threaten a 2nd referendum and a future re-issuing of it at a time that will be most inconvenient for the EU. That would put them over a barrel and force them to grant concessions they’d otherwise be unwilling to concede.

Finally, one has to acknowledge that some of the lefts policies do look a little elitist to anyone who doesn’t follow politics. Do people too poor to take the train really care if the government owns it rather than some random company. Those who do use the trains might see that as a good thing, but they are likely to be able to afford their own internet and would be turned off by the idea of the government owning it. The lib dems policy of revoking article 50 might make sense if you understand the dynamics of how a 2nd referendum would unfold, but it sounds a lot like they just want to ignore the referendum result.

By contrast the Tories have managed to keep their lies consistent. The trouble is, this is more than the usual election white lies. Its bordering on serious fraud. And I don’t think they appreciate the backlash they’ll face once the public realise they’ve been conned.

This is the problem with populism. It forces politicians to undertake blunt manoeuvres on a level his or her base can understand, even when they are strategically stupid things to do. It encourages leaders to lie to their own supporters, because nothing is more dangerous to populism than the truth. Consider that Boris’s brexit plan involved throwing the DUP under the bus and conceding everything the EU had originally asked May to agree too (which she hadn’t), even though he resigned because he argued May had conceded too much.

And in the US the consequences of Trump’s populist policy has been that corporations just kept the bits they liked (tax cuts for them, military and wall building contracts galore) and threw away everything else (e.g. bringing jobs back to America, LOL, for a laugh let’s make parts of the F-35 in China and Turkey). With a White House in chaos, a whole host of problems are building up, dictators have effectively been given free reign to do whatever they like, as have criminals. In fact we’ve seen an explosion in corruption and fraud, ranging from the $4 billion OneCoin ponzi scheme to an epidemic of Indian scammers targeting Americans and fleecing them (India’s Modi of course being another populist racist). So all of this is likely to be what’s coming to the UK post-election, particularly if the Tories win (disaster capitalism at its worst).

Regardless of who wins the election (save the lib dems, the spoil sport girly swots who’d cancel brexit), the policies of both party leaders will mean they’ll quickly find themselves bogged down by their own rhetoric. After which they will have little room to manoeuvre and will just have to do whatever they are told by the banks, the EU and the corporations. And that is what you are voting for.

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