The libertarian slavery paradox

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The Political compass as libertarians see it

I happened to be watching the remake of the TV series Roots recently (based on the Alex Haley novel) and it did occur to me how it creates a bit of a troubling problem for libertarians. They like to see themselves as the ultimate liberals at the opposite end of the political compass to nazi’s and authoritarians. However I would argue that logic would dictate that any libertarian society would inevitably eventually become a slave owning society.

Think about it, in a libertarian society if someone owes you money or compensation for something, how do you get them to pay? Let’s suppose someone did a shoddy job tiling your roof, or he ran over your 6 year old kid and she’s now paralysed for life and needs expensive treatment, or someone simply defaults on their loans to a bank without paying (which is bad news for savers, recall there will be no federal insurance on banks under libertarianism, if enough borrowers default the bank goes under). Without a government, in a libertarian society with lax law enforcement and little to no regulations means that courts will be toothless. And without some sort of authority to enforce the law people, in particular the wealthy with their vast fortunes and private armies, can simply ignore the law. And those at the very bottom, can simply shrug their shoulders and say, well I’m broke, I’ve got nothing to pay with, I own no property, so your screwed, now if you’ll excuse me I’m going to go get drunk, then drive to the park and fire my gun at squirrels near where your children play.

And the thing is that this wouldn’t only be allowed in a libertarian society, it would be considered a perfectly moral act. Libertarians often claim to follow the philosophy of Objectivism, which basically amounts to saying that its okay to be a selfish jerk and that being a kind and caring person who gives the slightest thought for others is morally wrong. In such a society, it would be considered okay to default on debts and basically screw everyone else over. This will be normal. But if everyone did that, society would quickly fall apart. Banks won’t lend money to anybody, even those with good credit. Doctors would refuse treatment without payment up front (and patients with any sense would refuse to pay until the treatment was completed). Without some sort of a system (let’s call it “a government”) to make sure people honour their obligations, the whole economy would unravel.

Now libertarians would say, oh but we’ll just have this code of honour whereby if anyone does something bad we’ll give them a terrible review on Facebook or something. Ya, and is that actually going to help? Donald Trump went bankrupt four times, you’d think after the 2nd time people would have learnt the lesson not to lend him money. You’d think nobody, least of all libertarians would have voted for him, but here we are. There are a host of well known scams around, many of them simply modern takes on old con tricks, yet thousands still fall for them every day.

They have this TV programme on UK TV called “Rogue Traders” where they set up a sting operation and catch various con-artists, dodgy used car salesmen, telemarketing fraudsters, cowboy builders and rogue tradesmen and then essentially name and shame them. Thing is, very few end up out of business. Some of them keep appearing in multiple episodes, sometimes under a new name or sometimes openly trading under the same name (one even put “as seen on rogue traders” on the side of his van!). Generally what’s stopped these people becoming season regulars is that the authorities eventually caught up with them and put them out of business.

But in a libertarian society there’s no authority and no social safety net. So how do you enforce any sort of law or civil suit? My guess is that what will happen is when the repo men arrive to cart away someone’s stuff, if they don’t find enough stuff to pay the debt, they’ll take away the debtor and his family and force them to work off the debt. This is pretty much how slavery worked in a number of society’s throughout history and how the practice of bonded labour works to this day.

Now libertarians will no doubt say, no we’ll outlaw slavery. But its going to be impossible to enforce that when the rich and the powerful have their own private goon squad. And unfortunately even in this day and age there’s several parts of the world where bonded labour is still practised, despite laws outlawing the practice. And it tends to occur in places where the government’s authority is weak or corrupt. For example in Somalia and Libya, countries with little in the way of government and lots of guns (as close to a libertarian society as you’ll find!) there are active slave markets.

And there’s the second problem for libertarians, democracy would collapse pretty quickly in a libertarian society. Taking objectivism to its logical conclusion, the easiest way to win an election is to bribe election officials and intimidate voters. e.g. the wealthy landowner threatens mass evictions, the billionaire says his goons will go on the rampage if they don’t win the election. This is how African dictators can win elections with margins of +90%. And even if the wealthy lose the election, they can simply ignore anything the government does that they don’t like, as they are essentially untouchable in a libertarian society.

In a society whereby the wealthy can grow their fortunes unchecked and utilise the power it gives them without any checks or balances, then it becomes essentially impossible to have a democratic and free society. Take for example Rockfeller or the other billionaire’s of the “robber baron” era. With no government to break up his monopoly (and an Objectivist philosophy that basically said it would be morally wrong for him to give anything away to charity) his fortune would have grown even larger, his descendants would now not only control 90% of the US oil supply, but probably 90% of the US energy supply as well as many public utilities (e.g. internet access, water, hospitals, police, fire services, etc.). At this point, they become the defacto ruling royal family of the US, emperors in all but name, with the role of US president essentially becoming “ass kisser in chief” (you can just see the debate with Hilary and Trump demonstrating their butt kissing techniques).

Now libertarians will say, oh that would never happen, we’d just boycott the business of those we don’t like (in which case you need to go look up the meaning of the word “monopoly” cos that’s sort of the problem, you can’t boycott a monopoly!). Or they’ll argue that sooner or later another billionaire will build up an even vaster fortune and take over. Oh great, so because one rich asshole is better at screwing us over than some other rich asshole, he gets to be emperor instead. Ya, that sound way better than our current system of government!

The sad fact is that libertarianism only works if you ignore the last thousand years of history. A libertarian society would quickly become a feudal society, where the rich will grow vast fortunes unchecked and abuse their power without limit. Where the poor, if they are unable to pay the vastly overinflated prices the rich with their monopolies charge, will be at risk of being sold into slavery. Where speaking out will be impossible, as the press and internet are controlled by the rich. And those who do a Robin hood and fight back will be derided as socialists and terrorists.

In truth, if there’s anything that libertarianism is at the oppose end of the political spectrum to it is democracy and free markets.

Gibraltar and article 50

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Brexit threatens to make a monkey out of the UK

The EU’s response to article 50 was fairly conciliatory and to be honest about as good as the UK could expect. If the EU wanted to be nasty, they could have taken the opportunity to pull funding from all EU farm subsidies, university research and development aid to the UK for all projects that would end post-brexit. Then slap all UK students in EU universities with a massive bill for their fees and ex-pats with fees for healthcare costs. They could have given MEP’s the day off, stopped Farage’s salary packed him off on the Eurostar home, handed out bottles of Champagne and declared a new EU wide holiday “so long suckers day”. But they didn’t.

But instead the plan seems to be to sort out the exit from the EU first then talk about a trade deal. This is as good as the UK is going to get. As one MEP pointed out, brexit is in of its self painful enough (self inflicted) punishment, the EU doesn’t have to be nasty. As for the Theresa May’s plan to essentially play chicken and brinkmanship with the EU, this is the equivalent of her driving towards the EU in a mini cooper, while the EU is in a truck driving towards her. And given that the EU has to balance out the consensus of 27 member states, its a truck that’s on cruise control. The EU won’t blink first. The eurozone crisis should have made that fairly obvious.

Of course the bit that got the tabloids worked up was how the EU appears to be backing Spain over Gibraltar. This is hardly surprising. Put yourself in the EU’s shoes. Suppose your a boss of a company, two employees are in dispute with one another over something. One is one of those nightmare employees who is always causing problems, who fortunately has already given his notice. The other is not your most dedicated employee, but he’s certainly loyal and generally pulls his weight. Who are you going to back up?

Personally, while I understand why Gibraltar’s citizens want to be part of the UK, I can’t understand why the UK wants with Gibraltar (I’m told by ex-pats its a grotty little tourist trap), nor what Spain wants with it either. Personally, I’d try and sell it to Morocco or some gullible Saudi sheik. However, Gibraltar’s post-brexit status does hammer home the sorts of issues the UK will face post-brexit. If the UK wants to maintain air links with Gibraltar, that will require EU agreement. So everything will have to take a week long sea voyage there or go through Spain (or possibly even Morocco). If the UK imposes strict border controls on the EU, then the EU will reciprocate, Gibraltar citizens will need a visa just to go into Spain to go shopping and visa versa. Trade and tourism will collapse. Leaving the EU common market and suddenly all the food and resources the colony needs gets slapped with tariffs ranging from 10-30%. In short, unless the rest of the UK is willing to pay a lot of money to subsidise Gibraltar, it will become non-viable pretty quicly. The locals will all leave and the UK will own a ghost town.

Naturally fighting talk about going to war to protect Gibraltar is just plain silly and shows how far divorced from reality the brexiters have strayed. Are they seriously proposing to attack a NATO ally because the Spanish make Gibraltar pay an extra 20% more for olive oil and they make the locals fill out the same sort of visa application form the British make Spanish fill out upon arrival at Heathrow?

But the thing is this will apply to the whole of the UK as well, Gibraltar is merely a microcosm of the problem. Any immigration controls or restrictions on free movement of people or goods, will be reciprocated by the EU. Smugglers, both those on the Irish border and the channel ports will be having a field day. An interesting article for example about the lengths smugglers of tea would go to in days gone by to outwith the tax man.

Furthermore, given that Spain has now indicated that it won’t block Scotland joining the EU, this suggests a secret horse trade has gone on. The EU has given Spain some leeway over Gibraltar, in return for which they will not object to Scotland joining the EU in the event of a yes vote. I warned before that if Tories plan to rely on “the Spanish option” to block Scottish independence, that’s not going to work….of course if Gibraltar really wants to put the cat among the pigeons, the thing to do would be to vote to join Scotland (they’d get to join the EU again and piss off the Spanish!).

But certainly if you heard a popping noise this Friday that was the sound of the brexiters bubble bursting. It should be obvious now that they are not in the driving seat. The UK’s options are to take the best deal the EU offers them, or screw the country over by exiting without a deal. Which isn’t much of a choice.

EU collapse fantasies

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Press brexiters on the fact that they’ll get a worse deal outside the EU than inside it, they’ll go into denial, why would the EU cut itself off from its main trading partners…..well largely because you dickheads voted for brexit! Case in point, UK airlines have now been warned they’ll need to move their base and refinance such that they are majority EU owned and based, if they want access to EU airspace. David Davis himself more or less conceded this week, that yes, the UK will be worse off. At this point, forced to accept that yes, it is all but inevitable that the UK is going to get a pretty raw deal, they’ll mumble something about how the EU will probably collapse anyway. This fantasy of the EU crumbling, just because the UK leaves, tells us a lot about brexiters.

Firstly I would have to agree that the EU as an institution has never been more vulnerable. I’d rate the chances of it falling apart at about 25%. Now if you’re a eurocrat, that’s a pretty scary thought, a 1 in 4 chance of the EU breaking up. That’s a big red warning light that should be going off in Brussels. Certainly the need for reform of the EU post-brexit is urgent. Unfortunately for the brexiters, this reform will likely involve making it more democratically accountable (e.g. an elected EU president), more centralisation of certain powers (including possibly NATO) and to balance that all out, more regional autonomy with perhaps a multi-speed Europe. In short, everything brexiters don’t want to happen.

But that still leaves a 75% chance that the EU will survive this crisis. Part of the problem the brexiters don’t understand is that getting another country to leave the EU, aside from Greece and Italy (who many in the EU want to leave!), isn’t going to be easy. Much was made by the Daily Mail of the “success” of the Dutch and French fascist parties recently, with them leading opinion polls. Unfortunately, leading an opinion poll in most cases means getting just 25-30% of the vote.

While in Britain the Tories won a majority with the support of only 37% of the vote, things are a little fairer in Holland and most EU states with proportional representation. You want a majority, then you need 50% of the votes (which the Tories haven’t gotten in decades), about half of what the Dutch fascists are currently getting. The chances of Le Pen winning a run off, even if the other candidate was a potted plant, is somewhere between slim and zero.

And even if they could win an election and put an exit from the EU on the ballot, its not quite as straight forward as it was in the UK. The UK is also leaving the EU on the basis of support from only 37% of the electorate (the 70% turn out times the 52% support in the referendum), closer to 27% if we factor in the many millions of EU citizens and UK citizens living abroad who were denied the right to vote in the referendum. In most of the rest of the EU, the idea that 37-27% of the electorate (most of them old geriatrics who’ll be dead before brexit goes through) is not democracy, its perversion of democracy. Generally election rules in these countries would require something as radical as leaving the EU to gain +50% support (i.e. a majority of the electorate, not a plurality of those who showed up on the day). Its doubtful you could get that in the UK, so even less so in the rest of the EU.

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Hence the brexiters are likely to be disappointed to learn that the EU will likely survive. And in fact, that’s just as well because its better for the UK that there is an EU. If there’s a worse case scenario than a hard brexit from the EU, its a hard brexit and then the EU breaking up shortly thereafter. That means the UK has to go and negotiate deals with each of the 27 member countries, and they’ll all have a host of competing agendas. We might get a trade deal with Germany for auto parts, by conceding on allowing free movement of German citizens into the UK, only for the French to slap a 25% tariff on all car parts travelling through their ports unless we rebrand Cheddar Cheese la merde anglais.

Indeed, this is precisely the problem with brexit, it involves the UK delegating important decisions to Brussels (or Washington and Bejing), fooling itself that its taking control, but leaving it up to the EU to be the responsible grown up and pass all the regulations and laws that will ultimately govern UK trade. So by conjuring up such EU breakup fantasies, what the brexiters betray is that they have no plan, no big idea.

And also by pandering to such EU breakup fantasies they show that they simply do not care. They don’t care that people are losing their jobs (e.g. Heriot Watt just announced 100 jobs to go and put the blame squarely on brexit), they don’t care that young people are now migrating in droves (the talk among my students seems to be where to immigrate to after graduation, given the lack of graduate places), or British citizens with an EU spouse are being forced to leave the country. They don’t care that people have lost money due to the collapse in the pound, with prices now gradually creeping up with inflation rates going up.

Granted they probably will start to care when they realise they can’t afford retirement anymore and that many of the retirement perks the government showers on the grey vote are starting to be withdrawn. Case in point, many councils can no no longer afford to pay for elderly care homes anymore and there are chronic staffing shortages, so services are starting to be withdrawn. And with the son or grandson the old brexiters were relying on to look after them in old age having now immigrated, they’ll find there’s nobody left in the country to look after them. And I can’t say I’ll have much sympathy.

And given that polls do show that people will not accept a hard brexit or any deal that leaves the country worse off, its very likely that either parliament might come under pressure to reject the deal Theresa May gets (and remain in the EU). Or in a decade or two (once all the old racists have died off), its possible that another referendum will be held and the UK will rejoin the EU.

In short, this brexiters EU collapse fantasy is essentially an admission that they know they’ve screwed themselves and the country over for ideological reasons, just so they message their fragile egos. Is the equivalent of some fool who burnt his house down for the insurance money, but the company refused to pay, so now they want everyone else to burn their houses down too just so they can feel a little less foolish.

Why post-brexit immigration policy is doomed to failure

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We’ve had two reports come out over the last week regarding the post-brexit impact on immigration. One warns that already skill shortages are creeping in and that these will inevitably impact on the economy. Another report predicts that the brexit bigots are in for a nasty surprise, as its likely that brexit won’t produce any meaningful cuts in UK immigration. It will make little difference overall and simply mean trading EU migrants who come in for shorter periods (which we want, as it means they pay taxes and leave before they become a burden on the state in later life). While in return we’ll be getting more older UK citizens moving back home, or longer term migrants from beyond the EU (both of whom are generally looking to settle permanently).

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Surely both of these reports can’t be correct? Well yes they can be. Its just that both of them are feeling different parts of the brexit elephant at different times in the future. Inevitably the drop in the pound (which makes British wages less attractive), brexit uncertainty and the sharp rise in xenophobia all means that the number of Europeans coming in will take a knock. And, as noted, we are already seeing some of these effects. This will lead to labour shortages in many key areas. And a drop in people in work will eventually mean a drop in tax revenue.

Why can’t unemployed brits take up these posts? Well because in many cases they lack the skills and training required, or they live in the parts of the country where there aren’t labour shortages. At the same time, the low value of the pound makes wages in the rest of Europe suddenly seem rather attractive. So some of those with the skills we need, both British and EU citizens, might be tempted to move to Europe to take advantage of their now higher salaries.

On the other hand, as I’ve pointed out in a prior post, the representation of EU citizens in migration figures is often misunderstood by the brexiters. While yes, group together all of the EU countries their numbers look high, but we’re ignoring the fact that on a country by country basis far more come in from India or China than any EU country. And UK citizens and their families make up a very large chunk of net migration figures.

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Also net migration figures represent just what they say – net migration, i.e. the turn over, those coming in minus those leaving. This is an important distinction because it means the numbers of people we are dealing with is a lot higher than many realise. You’ve got many UK citizens who travel back and forth for work related reasons, as well as seasonal workers who come into the UK to meet key skills shortages. The idea that all of these people are going to have to go through some sort of intensive screening and form filling is going to create a logistical nightmare.

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We’ve had a taster of sorts of the chaos this will cause already. Some EU citizens have been thinking ahead and applying for UK residency. Note we’re talking about people married to British citizens, who’ve been here for 24 years. They get asked to fill out some Byzantine 85 page form, pay a few hundred quid in costs, surrender their passport for several months and then have their application rejected for no obvious reasons and get a letter back advising them to prepare to leave the UK.

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The UK is lagging well behind taking in its far share of refugee’s.

Unfortunately, this is exactly the sort of crap that migrants from beyond the EU have had to deal with for years. It highlights something we’ve long had to cope with in the HEI sector – that the UKBA is one of the most incompetent and badly run government departments on the planet. They are a law onto themselves who are able to hide their ineptitude and stupidity behind a cloak of scary Daily Mail headlines. Regularly they’d impose all sorts of Monty python-esque like rules or dictates on us (or employers), rules they’ll often then re-interpret in a completely different way to what the law actually says….then ignore any information we send them. e.g. the one time we did have to report one of my students to the UKBA (she dropped out of the course), I was more than a little surprised to bump into her on the bus a few months later (and she got off at the same stop as the halls of residence, so I’m guessing she was still living in her term time address). Yes they had her name and address and several months later, they still hadn’t done anything!

If any other government department behaved like the UKBA they’d be spending half their budget just defending themselves from lawsuits and paying out compensation to those whose civil rights they’d violated, or the time of employers and universities they’ve wasted.

Now imagine what’s going to happen when a few million EU citizens in the UK all have to apply at once for residency. Throw in another 6 million for those of us of Irish descent (if for some reason our reciprocal rights are lost) and we’ve got a massive backlog (I believe they currently handle only about 100,000 a year!). The end result is something akin to the Clark County gaming commission. There will be a ten year backlog and as a result anyone who you would genuinely want to kick out (e.g. a Muslim jihadi, Romanian Gypsy criminal horse meat butcher….I’m trying to imagine the worse case scenario for a Daily Mail reader), it will take several years for his application to get to the front of the pile and thus for anyone to realise he shouldn’t be in the country. And when his number is about to come up, all he has to do is change his circumstances (e.g. change his name by deed poll, marry, divorce, have a kid, etc.) and his application gets moved to the bottom of the pile.

At this point UK immigration law becomes pointless, as one could live and die without it ever applying to you. This is why Australia, UKIP’s poster child, doesn’t apply the same rules for New Zealand citizens as it applies to those from Europe. Similarly Canada and America apply a much more relaxed immigration policy to each other than they do to those from further afield. Its simply not logistically possible to have everyone coming in from your nearest neighbours fill out an 85 page form and then pay some civil servant to read it. In short, the proposed immigration controls are just unworkable.

Clearly what these stories show is that there’s an urgent need to reign in and reform the UKBA. Keep in mind that this incompetence and mistreatment of EU citizens has already been noted by the EU and they will inevitably reciprocate post-brexit. So failing to reign the UKBA in will mean it takes 6 hours for UK citizens to clear customs post-brexit. Frankly whichever moron came up with this ridiculous 85 page form (so complicated that even the UKBA can’t seem to figure it out!), should be sacked on the spot. Ultimately for the sake of speed and efficiency, the UK’s immigration rules will require simplification. And even in the best case scenario, more border guards will still have to be hired to prevent any backlogs developing in the system. And that’s going to cost a few billion. Yet another of those many “hidden extra” costs (along with a few billion for the farmers, eight billion for university research, another eight for the car industry, etc.) that the brexiters forgot to mention on the side of those buses.

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The UK border post brexit?

So the Tory policy on immigration is clearly unworkable, it would be difficult to come up with anything worse. But what is Corbyn’s response? Well he’s come up with some half baked plan to divert immigrants away from certain parts of the country that already have large numbers of migrants. To call this a massive misreading of the situation is an understatement. Migrants generally congregate in the parts of the country where there are labour shortages and thus jobs available. These areas tend to see very little support for either UKIP or brexit. By contrast areas with high unemployment and low rates of migration tend to be where the support for brexit was at its strongest.

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There is an inverse correlation between leave voters and the number of migrants in their local area

It is in these areas with relatively low immigration rates where you’ll find UKIP bigots sitting on their arse whinging about migrants taking their jobs, when in truth there are jobs available, if they’d just get up off their arse and move somewhere where there is work (or perhaps retrain and gain the skills to get a job). And unlike the UKIP’ers, migrants have no interest on sitting around living on benefitsAnd how is Corbyn going to make them move where he wants them too? Is he going to have is own version of the stasi follow immigrants around?

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EU citizens are a tiny portion of benefits claimants…..

Corbyn’s is basically proposing to pour fuel on the UKIP fire. It represents such a colossal misreading of the problem, that it clearly shows that he is even more out of touch on this issue than the Tories. And that takes some doing.

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…..and far more Pakistani’s claim benefits anyway….so how is leaving the EU supposed to help?

Either way, all of this means that any hope of the brexiters for a points system and serious cuts to immigration is unlikely. But unfortunately, that’s not going to stop them trying. Hence why we’ll probably see them try to impose some Daily Mail friendly border controls. Of course once the UKBA ends up buried under a sea of paper work, many millions of the types they want to keep out, sneak in through the cracks, while a lack of skilled labour leads to factories closing, chronic NHS staffing shortages, crops rotting in the fields, etc. Finally at this point, there will be panic and they’ll have to roll back these restrictions.

In short, the UK will have voted for the worst of both worlds, loss of all of the benefits of being in the EU with none of the border controls that were supposedly the justification for brexit in the first place.

Delayed reaction

One of the problems with Brexit and Trump, is that while both are expected to cause serious economic damage, often to the very people who voted for such policies, but it might be sometime before the full impact of this is realised, as the primary risk is the long term damage.

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Indeed we are already seeing the effects. For example, recent rationing of vegetables in the UK. The supermarkets blame unseasonal weather in Spain. However, relatives I have in Spain, Ireland and Germany and they report that while yes supplies are down and the price of certain vegetables is up, there’s no rationing. The obvious explanation is that the drop in supplies in Spain has pushed up the prices. But with the UK pound having dropped in value by 20% the UK supermarkets are being outbid by their competitors from the rest of Europe who can pay the Spainsh growers in euros.

Similarly brexit has been disruptive to businesses, 58% of firms say so. There’s been many job losses since brexit, the banks are already quietly moving out of London. But employers, aware of how politically sensitive any such claim would be, are going out of their way to avoid saying so, often blaming other factors instead. e.g. we’ve seen a few redundancies in the uni. The official reason is that the research units they worked for didn’t bring in enough money….what they don’t mention is that the main source of research money was from the EU! The UK government has promised to pick up the tab for research, but we’ve certainly not seen any of that money, so now people are losing their jobs.

In another example, we have the recent revelation regarding NHS overcrowding. Well in part this is due to the fact that the NHS has been chronically underfunded since the Tories took office. But brexit has made it increasingly hard for it to recruit. They, like universities (we’ve been unable to fill a number of vacancies since brexit), will find it difficult to recruit staff from abroad to plug staffing shortages, as foreign staff will be fearful of the impact of brexit. The reduced value of the pound makes UK salaries look less attractive (and the rise in racist incidents and xenophobia doesn’t help either!). So the end result, waiting times go up and granny’s reward for voting leave is she’ll be waiting longer for that heart operation.

Politicians are experts at taking credit for something that happens through no action that they have taken (often despite their policy rather than because of it). At the same time, they are also very quick to try and avoid blame for something that is very much their fault. But the problem is that a lot of the time the effects of their term in office don’t show up until after they’ve left office.

Case in point, the Great Recession. The Republicans have tried to blame everyone other than themselves for this, Bill Clinton, Obama, Hilary, working class people, the tooth fairy, etc. The reality is that the two people who have to take the bulk of the blame for the financial crisis are Ronald Reagan and Margaret Thatcher. Their policy of deregulation, neo-liberal turbo capitalism and the rat race “greed is good” attitude it brought with it, set up a massive bubble in the world financial system. A bubble that finally popped in 2007.

And the warning signs were there right from the start. There were numerous scandals, with companies going bust, billions lost and the government forced to step in, cheque book in hand to rescue reckless gamblers. LTCM (Long Term Capital Management), the Junk bonds scandal of the 80’s, Stratton Oakmont (of Wolf of Wall street fame), the Guinness trading fraud, the failure of Barings bank or BCCI, the American savings and loan crisis, ENRON etc.

Indeed, its worth noting that a number of these scandals and failures listed above occurred within the term limit of both Thatcher and Reagan, or their immediate successors. So nobody can plead ignorance and say they didn’t realise the dangers. And it was in this era that the concept of “too big to fail” was established. The lesson many on Wall street took away from these early scandals was that no matter how badly they screwed up, the government would bail them out. Profits had been privatised and risk had been socialised.

This is not to say all other presidents in between escape blame. G. W. Bush was clearly asleep at the wheel in the lead up to the crisis. There was a massive property bubble building and a huge rise in credit. A number of experts were warning that this wasn’t sustainable. He and his advisers should have realised the danger and taken away the punch bowl before the party started to get rowdy.

Bill Clinton often gets blamed for the crisis because he repealed the depression era Glass-Steagall act. However, we have to put this decision in the context that the banks were simply by-passing the act (via overseas subsidaires), in part thanks to legislation passed under Reagan and trading in derivatives had been left unregulated by the Reagan Adm. (which was ultimately the trigger for the financial crisis) Clinton’s options were to do nothing, or get rid of the act and then try to replace it with something that actually worked. So in and effort to get a GOP controlled congress to play ball with him and regulate derivatives, he signed a repeal as a concession (one that had been put on his desk by Republicans, i.e. they initiated the repeal, then pressured Clinton into signing it, not the other way around as its often presented). Of course Republicans being the backstabbing two faced gits that they are, they simply took the repeal and didn’t put in place any new regulations.

To draw an analogy if was Thatcher and Reagan who designed and commissioned the warehouse made of matchwood with no fire exits and crammed full of oil soaked rags built right next to an orphanage. Newly appointed fire safety officer Bill Clinton should have done something about it. But as it was already built and afraid of catching flak from the powerful builders lobby and their Mafia allies, he caved into pressure and just signed off on it without inspecting the building. It was however ultimately nightwatchman Bush, who was asleep on duty in the warehouse when it went up in smoke. And it was likely his habit of smoking indoors and his failure to extinguish his cigarette that caused the fire to start in the first place.

In short, yes it would be unfair to blame Reagan and Thatcher alone for the financial crisis, G. W. Bush, Gordon Brown, Blair, Clinton and anyone who with a credit card who spend money they didn’t have prior to the crash, we all need to take some of the blame. But clearly it was these two who set the world on the road to ruin. But the problem is that the bomb didn’t go off within their terms, hence they didn’t get the blame. Indeed there are (as noted) some Trump voters who blame Obama for the crisis, even thought he wasn’t in office until well after the crisis had started.

So one has to worry that history is about to repeat itself. Trump and Brexit will both have lasting long term impacts on the global economy. Potentially, we might well look back in a few decades time and point the finger at this moment as the point where Western capitalism and democracy failed. But it will take a while for such damage to appear. Indeed, given that Trump’s plan seems to be to cut taxes and increase public spending, we could well see a temporary jump in the economy, even thought he’ll just be starting another unsustainable bubble.

The US has a major problem with its national debt. As I discussed in a prior post, if something isn’t done about it, sooner or later the US government will go bankrupt. And Trump is talking about borrowing anything from $10 trillion to $20 trillion. This could potentially double the debt and push it to levels equivalent to nations like Greece or Italy. At the same time, his racist, xenophobic and anti-science policies will stifle investment. The next generation of investors and entrepreneur’s will bypass America and go elsewhere. Already in fields such as renewables or biotechnology America is falling behind its rivals. Tariffs and protectionism, will just make things worse in the long term.

In short, Trump policy will make it very difficult for the US government to raise tax revenue to pay off its debts. And with the baby boomers retiring the US needs to start raising income just to pay the pensions of those retiring. At some point, it could be a few years time or twenty, the US government won’t be able to raise the cash to pay its obligations, never mind service its debts and it will default. Of course the likelihood is the markets will see this coming and stop to lending any money to the US government, leading to a sovereign default.

Now Trump supporters will say, so what that’s only bad news for China and those pricks on wall street, isn’t it? Well two thirds of America’s debt is internal, that is to say held within the US. And American pension funds are the main holder of US treasury bonds. If the US were to default as Trump has implied, he’d be bankrupting every pensioner and saver in America. Print more money? That will destroy the value of the dollar, which is bad news for billionaires like him or anyone on a fixed income (such as pensioners). In short, there is no way that Trump or any of his successors (whether Democrat or Republican) can dig their way out of this hole without screwing over pensioners and baby boomers, or in other words the very people who put him in office. Trump’s economic policy is essentially the same as Argentina’s prior to the crash in 2001.

In Britain Theresa May has committed the UK to an economic policy that is also unsustainable. Brexit is going to be expensive, perhaps a cost of up to £66 billion just to leave and maybe as much as £25 billion per year to fund all those subsidies she’s promised to those who will lose out (car makers, universities, farmers, etc) as well as the loss of trade. Put quite simply that’s unsustainable. There was something of a stopped clock to Osborne and Cameron’s obsession with deficit reduction. In that they were doing it because they couldn’t bring themselves to spend public money on the poor and the needy (who’d just blow it all on stuff like pasties and rent). But that’s not to say that the UK hasn’t got a big problem here, one that will get worse with time as more and more baby boomers retire.

Digging the UK out of this hole becomes difficult post-brexit. Making it harder for young Polish workers to come in and take over paying the taxes that pay for the pensions of retiring British workers isn’t helping matters. Quite apart from making it harder for companies to recruit (i.e. longer waiting times in hospitals, you won’t be able to get a plumber, train and bus strikes and delays become more common, etc.). Letting the value of the pound slide leads to high inflation, which means pensioners take a hammering and workers start demanding higher wages (anyone paid in sterling reading this has essentially taken a 20% pay cut this year thanks to the falls in the value of sterling).

Cutting public spending? Well the two biggest line items in the budget are the NHS and the welfare bill. And pensions and working tax credits are the main source of welfare spending, not unemployment benefit (tiny by comparison). In short, there is no way the UK can dig itself out of this hole that doesn’t screw over the very pensioners who vote Tory and voted overwhelmingly for brexit. My advice to any pensioner is don’t retire....ever!

In fact here’s a prediction, my guess is that what will finally push the US over the edge will be its greatest ally the UK. You can just see the scenario. The UK, at some difficult to predict future date, goes broke as a result of brexit and defaults on its debts. American banks post huge losses. Worried the US might be next and needing cash in hand to prevent a run on their reserves, they all dump their holdings of US treasury bonds. The US government finds it impossible to obtain credit and defaults as well.

What about the IMF? Well do you think China or the EU is going to be terribly helpful after Trump and Brexit? They’ll rescue themselves and their own banks but that’s it. Keep in mind that some bankers may actually be able to profit handsomely from the crisis, the same way they profited during black Wednesday.

So the real danger with Trump and brexit is the long term lasting impact they will have, not the short term. Its important to realise this and when things do hit the fan, remember how we got here. And also as we go along, remember that while many may be reluctant to admit it (particularly those who voted for these clowns in the first place!), but both are already having an impact on the real economy and on people’s lives.

The case against article 50 and the hard brexit that will follow

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So MP’s are finally voting on article 50. Tory eurosceptic labour leader Jeremy Corbyn is calling on his MP’s to back the bill. After all we had a referendum and a majority backed leave. However I would argue, no, both labour and Tory rebels should not back article 50 and here’s why.

Well no firstly they didn’t get a majority. As I’ve pointed out before multiply the turnout of the referendum (70%) by the 52% and you come up with 37%. Now excuse my elementary maths, but isn’t 37% less than 50%? By definition a majority requires +50%. In most European countries a decision on something as important as this this requires a majority decision, not a simple plurality. And this ignores the millions who were excluded from the ballot (EU citizens, UK citizens leaving abroad).

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Brexit was only supported by 37% of the UK electorate and under 27% of the UK population

The idea that the UK can make such a momentous decision (which statisticians say was something of a fluke) on the basis of a decision made by just 37%, the vast majority of whom are old foggies who’ll be dead in a few years time (meaning technically the 52% “majority” will have slipped away not long after brexit is implemented), is a complete distortion of who democracy is supposed to work. Especially when we remember how the brexit camp only won thanks to criminally irresponsible” campaigning.

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Its possible that the relative age difference between leave and remain voters means already they’ve lost the majority…if they ever had it in the first place!

And furthermore democracy is not majority rule. Its majority rule with minority rights. Given the tightness of the result, it would seem sensible to go for a Norway model arrangement. However, the Tories being the ideological zealots that they are pushing for a hard brexit. One that will see the UK becoming the 51st state of Trumpland.

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Indeed, perhaps more worryingly, we now have the PM throwing herself at the feet of Trump, offering him a state visit just days after he took office (normal protocol is to wait until a president is well into his term) and refusing to join criticism of his openly racist ban on Muslims (including many British with dual nationality). This does not bode well for future negotiations with the US on trade. Keep in mind there’s all sorts of concession the US will be looking for. The ability to buy parts of the NHS, the relaxing of UK safety or environmental standards and changes to UK food standards.

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You may wonder, if you’ve ever been to the US, why so many Americans have bizarre diets, they’ll avoid dairy or grains, but happily tuck into a pork chop. They’re vegan, but also like to go hunting. They eat all sorts of crap but insist on only soya milk in their coffee. Well the reason for this is the dire state of US food safety compared to those in Europe. This is a country where cattle can be pumped full of growth hormones (which end up in the meat or milk), chicken chlorinated and GM foods are often sold unlabelled. This is what’s going to be on your plate post-brexit.

Oh, what’s that you say, why I’ll just buy British. Ya, and already the UK farming lobby is looking to switch to these US production methods. Which aside from the food safety issues are terrible for the environment and for rural employment, given how the US food corporations and large farmers have squeezed out many small farmers. So UK farmers, especially small farms will struggle post-brexit. Oh and btw, the US food lobby are one of the main employers of foreign labour in the US. So not what you want brought over to rural England. In short, if you thought dealing with the EU was bad, dealing with Trump is a lot worse. And that is what MP’s will be voting for.

And worse, from a labour MP’s perspective, the Tories have hinted at how they want to get rid of the welfare state, gut employee protections and try and turn the country into some sort of tax haven for the super rich. Now firstly its unlikely they’d succeed, Ireland has a much lower rate of corporation tax (and personal income taxes), the Benelux and East Europeans offer even lower rates for certain kinds of business (and all throw in free EU membership as a freebie). The baby boomer pension time bomb and the very generous retirement the UK has given to its pensioners (free NHS treatment, bus pass, winter heating, TV license, weekly state pension, etc.) means the numbers simply don’t add up without reneging on pensions. But its probable they’ll at least try. One has to seriously question the sanity of any supposed left winger who votes to endorse this in a few days time.

Furthermore, as I’ve pointed out before any labour MP needs to think strategically. Basically if you are a labour MP, the people in your district who voted leave were overwhelmingly Tory or UKIP supporters. Polls have shown that the vast majority of labour members and supporters voted remain. Now backing brexit is not going to convince any of these conservatives types to back you next election…..but it might cause many of those who voted remain to vote against labour. I for one will not be voting labour next election if they back article 50, even if they oust Corbyn before the next election. And it will probably be a long time before I think of doing so again. As far as I see it if labour back brexit, they will be guilty of betraying every principle their party has stood by. And given that backing brexit has turn Corbyn into a Tory groupie, I’d be better off voting lib dem, the SNP or the Greens as they are providing much more effective opposition to the Tories than labour.

And I am far from alone, polls show many now vote one way or another depending on how they voted in the referendum. If labour backs brexit they are committing political suicide. The results of recent by-elections should have hammered that point home.

And from a UK point of view, a hard brexit means tension in Northern Ireland and Scotland. While its still far from clear Sturgeon can get a majority any time soon (although I won’t rule it out, her chances are better than last time), I’d argue such a historic betrayal by England all but guarantees that over a long enough time line (once the older generation who voted leave and no to independence last time have died off), that Scotland and NI will leave the UK at some point in the next few decades. Voting for article 50, MP’s need to consider you may be voting to break up the UK. Future historians might judge you very unkindly, noting that our current ones ain’t exactly thrilled either.

All in all we have to conclude the entire brexit process is flawed and it was flawed from the begining. Cameron, confident of victory and more worried about the short term internal politics of his own party, did not ensure the correct political checks and balances were put in place before calling the referendum. He should have insisted on a majority decision and held the referendum in the autumn when turnout from students would have been higher. He did not set out, nor did the leave camp, what kind of brexit we’d be getting. And I find it very difficult to believe that many of those who voted leave what the UK to “take control”….and then surrender sovereignty and control over our food supply and Health care to Trump and his cronies. The entire process is flawed, its going to be a mess, so I’d say go back to the begining and start again. Why should the country suffer just because Cameron was a moron?

Blogging catchup

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There are dark clouds on the horizon…..

My travels down south

One of things you need to get used to in Argentina is the crippling bureaucracy, forms stamped in triplicate, checked, queried sent back and then recycled as fire-lighters. They say you have to be patient to be Argentinian. The brits could have stopped any invasion of the Falklands just by getting them to queue and fill out the appropriate paper work (trouble is the argie’s are so used to standing in large queues so they’d out queue the British!).

They do try to cut down the red tape at border control by streaming people into different groups, one for locals, another for those from neighbouring South American countries, another for everyone else and one for Americans (they implement the same harsh checks the Americans implement on Argentinians, so any American going to South America, bring a big book, expect a long wait and to be finger printed, photographed, body cavity searched and asked if your a terrorist/rapist/nazi or here to steal our jobs). Naturally one has to dread what will happen post-brexit if the UK tries to restrict immigration from its neighbours. The queues will be horrendous. As it was it took an hour to work my way through a half empty Buenos Aires airport and about four hours to go through the border into Chile.

Another little incident, on the taxi ride in London, the taxi driver saw a crash in the opposite carriageway. He dialled 999….and got put on hold…..for ten minutes before he had to give up and focus on driving (he was on a hands free btw). He was getting the same fobbing off from the cops as I’d been getting from BA. Imagine you’ve got an axe murderer breaking down your door and you’re on the line to the cops and getting put on hold like that. Britain truly is going to the dogs.

By contrast I lost my wallet. Within twenty minutes, as a result of a call to an non-emergency line (by someone else rather than me) there were two Argentinian cops outside. Granted there wasn’t a lot they could do and let’s face it a tourist losing his wallet is hardly a police priority, but its in stark contrast to what you’d expect in the UK. The fact is UK policing, like so many things in the UK (public transport, hospitals, roads, public housing) is kind of crap and no way near up the standards of those in other countries. We have public services many developing nations would be ashamed of.

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Of course Argentina is at the back end of a major economic crisis. Frankly all those brexiters whinging about how bad they’ve had it the last few years come across as a bunch of spoiled brats compared to what the Argentinians have been through since 2007. Are they voting for brexit from their South American neighbours? Are they blaming migrants from Chile for all their woes? No of course not. Yes the previous government Argentine did labour on about the Falklands (predictably), but the current regime’s gone quiet about that. In short it does tend to suggest Brits lack backbone.

Trump train wreck draws nearer

Trump hasn’t even been inaugurated and he’s already in a crisis. Normally a president gets a honeymoon period from Congress and the press. Even that’s run its course for Trump already. And some of those leading the assault are his fellow Republicans. It doesn’t bode well, particularly given his disastrous press conference. Then there’s him appointing his family members to senior positions and not putting his money in a blind trust fund.

All in all it leads me to the conclusion that Trump will probably be impeached at some point. For the moment the GOP will hang onto him, as they need him. But sooner or later, after a few scandals, after his supporters realise they’ve been had and start jumping on the anti-Trump band wagon, there will be moves to oust him.

Recall how all through the election he went through cycles of being denounced and disowned by his own party. That sort of cycle continues, things will come to a head eventually. And there’s several obvious flash points already, his differing views on healthcare reform, his sucking up to Russia, his dubious appointees, the very real possibility of corruption scandals and conflicts of interest, sex scandals, confrontations with China, etc. And keep in mind it doesn’t require a majority of Republicans, only enough to join with the democrats and swing an impeachment vote.

Tories let their brexit fantasies slip

A brain fart from the chancellor let slip the Tories post-brexit fantasies. He suggested that the UK could “punish” the EU for imposing tariffs on it by lowering its corporation tax. Let’s think about that for one minute. As noted in a prior post, the UK will probably have to in some way subsidise its manufacturing sector post-brexit. The governments overall costs will be up (by tens of billions), tax revenue will be down (no young Poles to pay for the NHS), so cutting taxes is not a long term strategy without some major cuts to public spending.

That means no subsidies to farmers, manufacturing, fishermen or the regions. It means big cuts in NHS spending and cuts to the welfare budget. Keep in mind that working tax credits and pensions are the main source of welfare spending (over 50% of total spending), unemployment benefits are less than 10% of the welfare budget. So any significant cuts to welfare would impact on pensions and working tax credits.

In short one has to ask how popular the idea of a massive tax break to corporations would be while manufacturers get hammered, millions lose their jobs. While those lucky enough to keep their jobs lose their pensions, benefits, tax credits and see big cuts to public services. It doesn’t quite tie in with the Tory mantra of looking after working families. So it is something of an empty threat.

Of course they can only make it thanks to their ally Corbyn. He’s rendered labour so unelectable that the Tories could conceivably get away with such a thing. It also betrays the reality that brexit will be negotiated to benefit only those in the UK who live within the M25. The rest of the country will get screwed.

True GDP

Speaking of London, its commonly stated how the UK is so much better off under the Tories. Actually, that’s not true, it depends on where you live. As the graph below shows, if you live in London or the South East then yes, the GDP in your region has gone up by rather a lot. However, in the rest of the country its a different story. Scotland and the South West has seen a decline and then a recovery (no thanks to the Tories), while the rest of the country has never really recovered from the crash. Northern Ireland has flatlined.

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So when you hear stories about how well the economy is doing, ask for a minute yes and for who?

Corbyn rebranded

Corbyn promised to rebrand himself as a populist firebrand prior to Christmas. To copy the tactics of Trump and co. to push labour to victory. So how is that working out? Predictably, not so well. Indeed, my suspicion is that this was a plot by some Blairite’s in his cabal to push the Corbyn train wreck over the edge.

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For starters what Trump calls “post-truth” the rest of us call “lying. Corbyn goes around promising the sun the moon and the stars and he’s going to be accused of the very thing he berates the likes of Tony Blair for. Recall that what got Tony Blair such a bad name with those on the left, was those lies over Iraq. While Trump and Farage might be able to stir up the laden racist living in some easily deluded fools, I’m doubting Corbyn can use the same tactic with those on the left. They like there “facts” too much.

And we’re ignoring the fact that the media are unlikely to give him a free ride. While they failed to take Trump and the brexiters to task for their numerous lies (perhaps because they were so numerous it was hard to keep up). But they are certainly not going to let Corbyn away with that. He says anything that sounds like a change in policy his flip flopping, he back tracks he’s dithering, he promises anything that’s probably undeliverable they’ll line up experts around the block to denounce him.

Is this fair? No, but its the reality that every left wing leader has had to deal with for some time. Brown, Miliband, Sturgeon have had to put up with the same. If you can’t take the heat, stay out of the kitchen.

And given that there’s two by elections coming up, at least one of which he’s likely to lose, it doesn’t bode well for Corbyn. Losing a byelection to a sitting and unpopular Tory government in a safe labour seat would be unprecedented and just plain bad. Losing one to UKIP would be disastrous and fatal. My guess is that if labour loses these next two byelections, we’ll probably see another leadership challenge shortly there after.

Perhaps more worrying for labour is the reasons for these byelections. Two MP’s simply up and quit. It suggests that many within the labour party are simply admitting defeat. They know Corbyn’s leading the party off a cliff but that they won’t be able to unseat him until its too late. They know he’s essentially allied himself with the Tories on brexit. Any political ambitions they have are about to be dashed. And come the next election a lot of them are about to find themselves unemployed. So yes, some are out looking for work already and if an opportunity comes along (such as to become director of the V&A), they are going to take it. So labour will probably face a dripping away of MP’s as they flee the sinking ship.

Cycle status

Chris Grayling, the transport secretary has shown himself to have some UKIP like views towards cyclists. Firstly he knocks one off his bike getting out of his ministerial car. Secondly he say’s they aren’t proper road users. I’m reminded of the the late (insane and drug fuelled) major of Toronto Rob Ford, who banned cyclists from the cities streets….then left wondering why there were so many new cars on the road.

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Any car driver who dislikes cyclists, just imagine he’s in a car instead. Do you want those tail backs to be even longer? More delays more misery. Cyclists are doing you a public service. And if you want to rant about them not paying road tax, well neither do you, there’s no such thing as road tax, roads are paid for mostly out of general taxation. And as for vehicle tax, cops, the queen and tractors (to name a few) don’t pay that either. Try screaming abuse at them and see what it gets you (about 6 months I’m guessing).

Either way, making Chris Grayling transport secretary is like making Jimmy Savile minster for children.

Brentry

On my travels I read an interesting article in the Economist about Brentry, that is the UK entry into the wider European economy. After the Romans abandoned the UK it had become a continental backwater, invaded and fought over by one group after another. By 1066, the rest of Europe had bounced back from the dark ages, international trade was expanding, new ideas from the east (well actually old ones that had be rediscovered) were being implemented and tried out. Britain however, was still essentially caught up in the dark ages.

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While William the conqueror and his methods were certainly brutal, one has to acknowledge the economic benefits the Normans brought with them. The UK started to trade with the rest of Europe. The Normans brought security as well as new technology and new ideas. They went on a building boom, castles, city walls, restored Roman roads and then later built many of the country’s now famous cathedrals. A sort of medieval Keynesian economics was at play. By the king’s death, Britain was booming. One is reminded of this Monty python sketch.

Indeed the Economist suggests that the Brentry might even explain the North/South divide. Its often forgotten that there were two invasions of Britain in 1066, one by the Normans, but an earlier unsuccessful one by the Danes (well more specifically the Norwegian king), that was beaten off. Much of northern England had been under Danish influence for sometime, so many supported this invasion. Needless to say they weren’t in a mood to bend the knee to a bunch of cheese eating surrender victory monkey’s. So they resisted, the Normans put down the rebellions with their usual brutality, but this put the north a good century behind the rest of the UK in economic development and they’ve been playing catch up ever since.

War of the worlds hysteria

I also came across a release of Orson Welles infamous War of the World’s broadcast. It is often remembered for the supposed national panic in unleashed when it was mistaken for an actual news broadcast. Well in truth this is mostly a fake news myth invented by the media of the era (sound familiar?).

While yes a small number of very silly people did mistake it for actual news, but these were isolated incidents. Most were quickly informed it was just a radio play of a book that had been available for several decades. There’s no evidence of anyone jumping from roof tops or being treated in hospital for shock, or mass evacuations of New York suburbs. The newspapers blew the story way out of all proportion. Why? Because they, in particular those controlled by Randolph Hearst (the Rupert Murdoch of his day) saw radio as a threat to their business. So the exaggerated the level of panic. And let’s face it, it sold lots of papers.

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Indeed, some pointed to how strange it was some getting in a tizzy over aliens from Mars while ignoring the very real threat from Hearst’s buddy Mr Adolf across the pond in Europe.

Nissan deal and humble pie

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I’m increasingly of the view that the fabled Nissan deal struck by Theresa May and Nissan boss Carlos Ghosn is never going to work. There’s clear blue water between what Ghosn is telling his company he got the UK to agree too (i.e that they will compensate Nissan if the UK leaves the single market) and what the government is saying (no payments were promised). Let me illustrate the problem with a thought experiment.

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Let us suppose the UK leaves the single market. While the Tories seem to think they can “have their cake and eat it”, the reality is somewhat different. Any sort of restrictions on immigration and the UK is out of the single market. All the other nations in the EU would have to agree to the UK staying in (or joining later) and there is no way that’s going to happen, not if you’ve been listening to what’s being said in other EU countries. Yes Canada can get such a trade deal, but they are the other side of the Atlantic and aren’t being run by a bunch of racist nutters.

Leaving the EEA trade area would create a whole host of problems. For example we’d still be subject to EU food labelling (contrary to current government claims) as that’s actually controlled by the WTO (a bilateral agreement which lets the EU export food to non-EU countries). We’d need to hire a shit load of vets or go vegan (something to do with the slaughter practice of animals, there’s not enough non-EU vets to monitor this and yes those rules still apply if you want to export food abroad), we’d need to hire a small army of trade negotiators before we can even negotiate a deal with say China (and we have barely enough to negotiate a deal with the Vatican). Oh and btw the Chinese are prevented from dumping steel in the EU thanks to another bilateral agreement which won’t apply to the UK after brexit, raising the risk of an immediate trade war (unless the Tories want to see the recently rescued steel mills shut). The banks will also move some of their operations out of the country and sack tens of thousands of UK staff.

Certainly thought, the UK will forced to revert to WTO rules (if the UK can qualify as a member otherwise its chaos), which would slap tariffs of up to 30% onto all UK trade with the EU. UK cars will be hit by a tariff of 10%. A tariff of that scale on every car coming out of the Nissan plant would mean a government subsidy to the tune of several thousand per car and the plant produces about half a million of them per year. So that’s a billion or two a year to keep one car factory going.

Think about that, Theresa May is proposing to spend a few billion a year to keep 7,000 workers employed. That’s between £100,000-£200,000 per worker per year (depending on the breaks). And this could go on for many years (and it could take a decade to sort out any sort of deal….and there’s no guarantee of success at the other end). It would actually be cheaper for the government to simply buy the factory off Nissan, close it down and hand each worker, say half a million each on their way out the door, telling them to use it to sort their life out (pay off the mortgage, retrain, retire).

Even ignoring such absurdities, what about the other car makers? Do you think JLR, a direct competitor with Nissan in the SUV market is going to be happy with them getting a subsidy? No, they’ll sue the government and demand the same for themselves. Now if every UK car maker got the same deal, and really if one gets it they’ll all be entitled, that’s a subsidy from the government of say £3,000 per car (for some vehicles it will be higher, others it will be lower, this is about what you’d expect at 10% on the average cost of UK vehicles sold). The UK makes 2.5 million cars a year, so that’s a cost to the government of £7.5 billion per year!

Oh, and that assumes the EU doesn’t decide that this subsidy is unfair under WTO rules and doesn’t lodge a dispute with the WTO. That would see putative tariffs imposed by the WTO and the EU at a rate of up to 30%, so it could cost the government three times this amount in such a scenario.

And even this £7.5 billion figure is of course slightly less than the current cost of the UK’s EU membership. Add on the costs of propping up the UK’s R&D and universities post-brexit (up to £8 billion), the farmers (£3 billion), the fishermen, the regions (Cornwall and Wales, both in receipt of billions a year in EU structural funds), and we’re looking at a frighteningly high bill, probably tens of billions a year, certainly many times more than it cost to be in the EU.

And these are not one off payments, these are yearly costs. The one off costs of leaving the EU could be as high as €60 billion, if you listen to what the EU is now saying. And with falling tax revenue and a growing deficit problem, quite simply put, these are cheques Theresa May cannot afford to write. Because the banks who lend the government money (and in future they’ll be doing that from Dublin and Paris) will let those cheques bounce.

The UK cannot buy its way out of brexit. There will have to be some pain. And my guess is Nissan workers are going to be those how have to take some of it. Which begs the question, what class of a moron is Carlos Ghosn? Was he always this stupid or did he have to take lessons? (from Trump university I assume). How do you know a politician is lying too you? His/her lips are moving. And if Mr Ghosn is reading this and think’s I’m not being a bit mean, I’ve some magic beans I could sell him, plus a mate of mine is looking to sell the Forth road bridge, I’m sure we could do a deal…..

…..Or perhaps we need to consider the possibility that Mr Ghosn is a little smarter than the average bear (to be honest, falling for such and obvious con trick is entirely out of character for him). Let us consider the following, he knows he was lied too, but that’s okay. He knows the Sunderland plant might not be viable outside the EEA. He’ll have to undertake massive layoffs or shut it down entirely. Its just he’d rather see the government be the bad guy and explain all of this to the plant’s militant workers, as well as helping to pay for the close out costs if the plant shuts.

So the sequence of events will be, he waits until towards the end of the brexit negotiations and its clear the UK is going to leave the EEA. He pops up waving his little letter from the PM and demands she pays up as promised. Given that she can’t afford to do that (as explained above), she’ll hum and haw and backtrack. He’ll say, you lied to me you lied to the Nissan workers, the deals off, I’ve no choice but to shut the plant down (on the eve of an election) and I’m suing the government for the costs of doing that. The government will make a show of resisting this, but then quietly settle the case out of court (they don’t want to face a scenario where a sitting PM has to testify in court, not least because of the political crisis that would emerge if she perjured herself in the witness box a few months before an election).

And we have to consider that Ghosn might be acting under orders from Paris and Tokyo. Nissan is after all a joint French and Japanese operation, which has close links to both of these governments. They know that if the Nissan deal were to collapse like this in the middle of brexit negotiations, it would be setting off a bomb under the UK economy. There would be a chain reaction of other car makers and companies effected by a potential hard brexit coming forward and warning their work forces of looming mass redundancies.

The Tories would be facing going into an election with falling poll numbers. And there ally Corbyn will be gone. Any significant threat of mass layoffs and his pro-brexit stance means he’ll face a rebellion from the labour party’s union supporters, who will hold another leadership contest and see someone else elected leader. Likely this new leader will come from the hard left of the party as a compromise (Owen Smith, Tom Watson, may be even Ken Livingstone). Naturally said leader can expect an immediate polls bounce and the Tories will be faced with the very real possibility of losing an election to a hard left candidate.

Hence they will come crawling back to the negotiating table and take whatever deal the EU offers that keeps them in the single market. They’d sooner face a backlash from the swivel eyed UKIP loons than see the loss of large chucks of the country and numerous marginal seats to militant and recently unemployed workers and a hard left labour party coming to power.

So the Nissan deal means Theresa May won’t be having her cake and eating it. It means she’ll be getting a double helping of humble pie.

The populist authoritarian tribe of the demagogue

I came across a piece by the Guardian encouraging its readers to break out of their bubbles and go read the views of those on distinctly republican websites, such as Reason or the American Conservative. While I appreciate the intent, the fact is there’s not much point. Regular readers of this blog will probably notice I occasionally reference these websites myself. The problem is that conservative voters don’t believe in conservatism anymore, Trump proves that.

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One could characterise republicanism as founded on four pillars – religious conservatism, a belief in small government, fiscal conservatism and strong on security. Trump breaks all of these rules. He’s a thrice married sex feint who thinks married women are fair game, fantasises about his own daughter and may have raped multiple women (or so they allege). There’s a big question mark over his religious beliefs, he is certainly not a regular attender at church. One could scarcely think of a worse choice if your a “values voter”.

As for small government, well he wants to impose trade tariffs which will basically jack up the price of many goods and services. By restricting immigration he’s basically dictating to American employers who they should hire. Keep in mind there aren’t many Mexicans in Ohio or the rust belt, they tend to congregate in the states where there are labour shortages. So if they leave or are forced out, who takes up their jobs? In short Trump is more of a central planner than either Obama or Bernie Sanders. As I discuss before, in relation to UKIP, anyone who even remotely considers themselves a libertarian or a believer in small government, you cannot be in favour of strict immigration controls. These two positions are simply incompatible. The American dream, that a migrant could come in and if he worked hard he could make something of himself, well that’s dead now.

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And as for cutting government debt, not only is that going to be abandoned under Trump, the only real question is how high does he push up America’s debt levels, some say $5 trillion, others say closer to $10 trillion, we’ll have to see. But certainly its baffling that any conservative, after all the stick they gave Obama over this issue, that they could then vote for Trump.

And as for security, well let’s just say Trump has a “unique” point of view. He’s clearly a Putin groupie, but the problem is that the US and Russia are rivals and its difficult to change that. Putin is currently installing nuclear missiles in Kallingrad, threatening not just NATO bases but US interests in the region. Putin’s allies include Iran, North Korea, China, Syria, Cuba, Pakistan and numerous others. In short, in almost any potential flash point Putin is either the likely enemy or the one supplying that enemy with weapons.

Historically republicans have believed in “firm diplomacy” of speaking softly and carrying a big stick. The idea, of the president going to Moscow and bowing before Putin and kissing his ass (which seems to be Trump’s plan) is about as far removed from a tradition GOP policy as you can get. I mean imagine if Reagan went to Berlin and instead of demanding that the Russians tear down this wall, instead he say’s actually that’s a very nice wall, can you put me in touch with the builder and does he do work in Arizona?

Campaigners pose on a 'United To Stop Trump' cardboard wall in front of the Brandenburg Gate to urge Americans living abroad to register and vote in Berlin

And already Trump is showing every sign of planning to ignore the constitution and use the presidency as a means of getting uncompetitive advantage and bully special favours from foreign governments to the benefit of his businesses, even thought that’s illegal. He’s showing every sign that he’ll be getting up to African dictator levels of corruption.

All in all if American conservatives were true to their values, they should not have voted for Trump. They could have gone into the polling booth, closed their eyes and literally voted for anyone else and they’d have been voting for a better conservative candidate. Yet the exit polls show they did and they did so not despite his policies but because of them. The fact of the matter is the republican party did not win the election, they lost it, they weren’t even on the ballot. The alt-right won the election.

And here in the UK, the Tories too have abandoned their long held political philosophy, they are no longer the party of small government and prudent financial management. Instead they are now a party of xenophobic central planners, who practice political patronage, lavishing gifts on those who they favour for political reasons (Nissian, Hinkley C), punishing those who they dislike (such as wind farms or solar power). And with the UK’s debt now out of control and inflation rising, the cost of goods in the shops going up, they aren’t even pretending to care about the state of the public finances. They’ll still serve the rich (that was never going to change) but they have essentially abandoned their political philosophy.

In this post-truth world the reality is that so-called conservatives don’t believe in anything anymore. As Adam Curtis discusses in his latest film many will now vote for a candidate who tells the most outrageous lies, even though they know that he lies and he can’t possibly keep his promises. And he knows that they know that he lies and don’t expect him to keep his promises. Its just that they find his lies more comforting that someone else’s facts. Many now subscribe to a form of government that can be best described as “authoritarian populism”, which favours big brash chest thumping strong men over anyone vaguely sensible. That he’s insane and will drive the country over a cliff in the long run does not matter to many so-called conservatives now.

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This is why Hillary and the remainers lost, they played by the rules and came across as the class swots. As this video highlights, we have now fallen for the demagogue trap Socrates and Plato warned us about in the very early days of Greek democracy. They warned that voting is a skill people need to learn. Letting anyone just vote for whoever they like is potentially very dangerous, given how easily people can be manipulated by a charismatic leader……and they were saying this without knowing about the internet or 24 hr rolling news.

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The jocks have now taken over the asylum. For them politics is now a sort of sadistic game, where they’ll cheer the murder of an MP by a racist with 50,000 tweets. For sure they’ll use their former ideology as a stick to hit the democrats with, but ignore it when one of their own tribe does the same or worse. All they care about is their tribe winning and winning by any means, even those that involve lying and cheating.

So ya, you can go visit these conservative websites if you feel like it, but it won’t do any good, republicans stopped believing in these things along time ago.

Brexit review – 5 months on

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Its about 5 months since the referendum, so where are we in terms of brexit? Well, if leaks from Whitehall are to be believed, nowhere. Theresa May claims that she’s come up with a cunning plan, as cunning as a fox who won most cunning in show five times in a row. Only those leaks suggest that five months of work has actually produced…..nothing.

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Like a school kid who constantly refuses to do her chores because she says she’s working on her homework, we’ve now seen inside Theresa May’s schoolbook and there’s nothing there but a few doodles. There is no grand master plan for brexit and their probably never will be. A country of 60 million does not get to dictate terms to a continent of 500 million, we’ll get what we’re offered and we’ll have to take it.

And we can’t even guess what sort of brexit we’re going to get, the government’s apparent position sways between the hardest of hard brexits, the laughably delusional statements of Boris to more recently Theresa May implying to the CBI she’ll go for the softest of soft brexits and may take more than the two years to happen as she’ll try to negotiate a transition deal. In short brexit means brexit seems to mean whatever the Tories reckon will placate whichever audience they are talking too.

About the only certainty we can have about the brexit process is that the Tories will inevitably use it to go after hard won environmental protections and labour laws designed to protect the very “JAM” families they now pretend to be the champions of.

And what are labour up too? Why aren’t they trying to stop the Tories? Well because with Corbyn in charge they are a rudderless ship. Both he and the “muesli” brexiters in labour also want brexit, as they hope they can rebuild their socialist workers paradise on the ashes of the mess the Tories leave behind. Of course they’ll never get the chance to do so given the impossibility of them winning the next election.

Which brings us to the supreme court ruling due next month. Theresa May’s strategy here seems to be that of the typical arrogant Tory, assume you’ll get your way (ya that worked well in the referendum didn’t it!) and then run around in a panic when you don’t and blame others for the mess you waded straight into. Her plan B is to put a three line piece of legislation to parliament. That would be little short of an insult to the democratic process. The most important bill in recent UK history cannot be three lines long. Not least because such a bill would be too opaque and at risk of further court challenges.

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And keep in mind what parliament really wants here is to be consulted about the brexit process. They aren’t comfortable with the idea of turning Theresa May into an all seeing and all knowing dictator for some ill defined period and parliament reduced to that of a debating club. The government says they can’t involve parliament, because that would give away our (entirely non-existent) strategy. Well there’s a simple horse trade there, have a closed session of parliament and tell MP’s what Theresa May’s “bloody good idea” is. Then vote on article 50. Of course they won’t do that (because she doesn’t actually have a plan), and therefore there’s a chance of defeat in the commons. I’m doubtful the lords would endorse such a bill, as it would essentially be a case of the PM trying to cynically get around a court order. If the lords say no, then that puts a delay of at least 6 months to a year onto the process.

And the SNP and Northern Ireland assembly also want it determined if that have some say in the process. If the court says yes then that delays brexit yet further, or at worst kills it stone dead (or at least until after a border poll in Northern Ireland and an 2nd indyref in Scotland, this one called by Westminster).

And what is the state of the public finances? Well the guess is that we’re looking at a £122 billion hole in country’s finances, much of which will have to be borrowed. Its now likely the UK debt will exceed 90% of GDP by the next election (a level unseen since 1964) and likely exceed the symbolically important point of 100% within the next decade. And as former Chancellor Alastair Darling has pointed out this is arguably a hard problem to fix than he faced in the financial crisis . That was a temporary blip, this is an ongoing crisis that can only be stopped by massive public spending cuts or a significant hike in taxes.

And of course there’s the Trump factor. Some Tories were secretly hoping he’d win, as that would make things easy for the UK. But much as I warned, no, the only think we can be sure about trump is that he’s unpredictable. He’s now trying to instruct the Queen as to who she should pick as her Ambassador to the US. And his first instructions to Farage? go sort out those Scottish windfarms. Yes Trump things he’s entitled to dictate the energy policy of Scotland. And this is the great white hope of the brexiters!

Nigel Farage, the interim leader of the United Kingdom Independence Party (UKIP) holds a platter of Ferrero Rocher chocolates during a party in London

You’re ambassador, lord Farage will see you now

Actually my guess is that Trump may not be in power by the time negotiating with the Americans comes up, he’ll likely have been impeached or had a little “accident” before then. I still say there’s an outside chance he won’t even be inaugurated, especially with allegations of voter fraud now swirling. Bottom line, you can’t rely on the Americans to bail you out, they’ve got bigger problems to deal with.

Given all of the above you would question the logic of pushing ahead with the aggressive timetable Theresa May has set. It would make far more sense to now delay the brexit process for at least a year in my view. Trigger it say in 2018 instead. This would give time for the legislative hurdles to be dealt with and for the government to actually come up with a strategy and consult parliament about that process. Also the fact is that 2017 is not a good time to be negotiating such a thing, there’s elections in Germany and France this year and possibly in Italy too. We’re not going to get anything sensible out of the EU because they have no idea who will be in charge of these countries in 6 months time. Waiting a year would give time to resolve this, talks when they do start, will be at a much swifter pace.

Of course the downside to delaying brexit, the whole reason why Theresa May is insisting on her current strategy is that this would mean the 2020 elections would straddle the brexit process. We’ll be voting on the next parliament about the same time brexit talks are winding up. My response is, good that’ sounds like an excellent idea. It gets around calls within her own party and the lib dems for a 2nd vote on the terms of brexit. If you like the deal she’s got, vote Tory, if you don’t vote labour, if you’d rather stay in the EU after all vote lib dem, if you want hard brexit and become airstrip one of the Trump empire vote UKIP.

So if’s that simple you may enquire why is Theresa May going out of her way to avoid this? After all the poll suggest she’ll likely win the next election anyway. Well the answer is very simple, I suspect if we got the PM drunk and asked her that question the response would be BECAUSE YOU MORONS VOTED FOR BREXIT.

Many voted brexit because they feel the government doesn’t listen to them, it was an act of political self harm, a cry for help. However as I warned prior to the referendum the likely outcome wouldn’t be a government that’s more caring and listening. Its one that would be more hostile, authoritarian and much more willing to lie and deceive the public. After all voters have just shown they can’t be trusted with important decisions.

So let us be clear, this is why the PM is so reluctant to trust either the public or even her own MP’s with a vote. Because both have shown themselves to be woefully unqualified to make important decisions anymore. Brexit means chaos and brexit means a UK that is significantly more authoritarian. So congratulations to any brexit voters who voted for this.