“Friends, Romans, countrymen, lend me your ears; I come to bury Caesar, not to praise him.” – Marc Antony
Intro and roundup
Welcome to the supplement. As the weeks roll on, the news seems to get ever more miserable – economically, societally, and politically – and on the dawn of a new Prime Minister, what better way to sign off the old one than a good old-fashioned hatchet job that he has done, so ably, on so many over the years. This weekend marks back to school (for many), the end of parliament’s holiday, and the end of what’s traditionally been termed “The Silly Season” in the press (very little silliness to be chuckling about, which makes today’s effort all the more important in my eyes).
“Don’t Pay UK” is gathering more pace, as I see more and more ill-informed and factually inaccurate posts being shared on social media about the energy crisis. Of course, Boris, who struggles to tie his shoes without pinching a backside or two, has masterminded a magnificent plan to bankrupt everyone, as we head towards the “rent everything, own nothing” economy which an ever-more wrinkled version of Mr Smithers leads with glee. Or…..the markets are in crisis, the speculators are driving prices up ever further, and the less laissez-faire economies of France and Germany have stepped in earlier than we will have to (or in a more meaningful way).
What’s Boris’ legacy?
Boris will sign off with inflation predictions for next year at 22% (Goldman Sachs, this week) at the worst – I’m sure it won’t be long before there are even worse predictions. This represents an abject failure of fiscal policy following a pretty good and robust set of policies (from an economic perspective, only!) during the pandemic. If we hit 20% annualised over a calendar year, that would be the first time that’s happened since 1975.
It’s OK though – because our great soon-to-be-former leader has just told us to suck it up, and hang tough. Possibly easy to say if you went to Eton and are looking at either £100k+ per event on the after-dinner circuit, or Secretary General of NATO as your next job (or both, knowing Boris).
Where are the bridges? The bikes? The triumph of the olympics? Nowhere. You might spare a thought for brave Boris, who wanted Covid to rip through the population when discussing it in early March 2020, before performing a complete volte-face to go into lockdown – and then himself saw exactly how dangerous it could be, when in intensive care in April 2020. Had he passed on that basis I’m sure he would have been martyred before his time, despite his own apparent attitude being somewhat behind the reason for catching the virus, I’d speculate.
When we do get to Boris’ legacy, what do we have? Some expensive wallpaper in the PM’s flat in number 10, I suppose. Knocking on half a trillion more debt than when he came into power – a snip compared to his doppelganger across the pond, Mr Trump. No major concern since this is of course inflating away at the rate of knots, although in the process is doing its best to unwind the social fabric of the United Kingdom.
The Divided Kingdom
Ahhhhh…..the United Kingdom. Boris has also shown the way towards the Divided Kingdom, relatively soon – although that might be nothing on his successor, who has already done little to quell the calls for independence in Scotland, with comments around attention-seeking behaviour and Ms Sturgeon being someone who is best ignored.
This all seems a little unfair, perhaps, to a percentage of readers. What about the great levelling up phenomenon of the 2020s? Surely great things have been achieved there?
Boris the Keynesian (or is he?)
One of the great regrets of Covid from an economic standpoint for me was the ambitious £600bn infrastrucutre spend unveiled by Sunak in 2020 was just swept aside as the country needed the money to keep the NHS going (and the small matter of 11.7 million jobs, as well, amongst other things). Despite their differences, Boris and Rishi DID get this one right. Boris, without knowing what it means, is a Keynesian and this is one more potentially useful trait that he shares with Mr Trump (also unlikely to know what it means, of course).
So what does it mean? Well, it is someone who believes that the government should have a significant role to play in allocating resources effectively. The monetarist school – which gained a lot of popularity in the 1970s due to the ascendency of one of its most charismatic figures – the great Milton Friedman – prefers a smaller government, and hence lower taxes.
Why does that make sense and why do I like the approach? Because, to me, as government, you should be the board of directors of UK PLC. Step in to fund public goods (education, healthcare, there are many more), deliver when it makes sense, use the private sector to deliver when it makes sense. I’d have a strong lean on private sector delivery with public funding – the records tend to reflect a much more efficient performance with more bang for buck – but this only works if the regulators have teeth. You MUST have regulators with teeth – whereas Boris’ brief reign has been characterised by impotent regulation (and whilst we might accuse Boris of many things, there is a raft of evidence that he is not impotent, of course – quite the opposite).
Unfortunately, the persistent borrowing of Western nations, especially the US but the UK are hardly blameless here, means that there’s a new school in town. Modern Monetary Theory (MMT). One of the most dangerous “advances” in the world of Economics, which is still a young discipline, really. You can tell by my quote marks that I am a sceptic here. MMT feels too much like “borrow it all now and worry about it later”. Now – at 0% interest rates (early 2021) this would be, in some moderation (so that the lenders around the world do not lose faith in the system), a great idea as long as the money is invested in projects with what we could call a positive Net Present Value (NPV). One example would be for UK PLC – if we build a high speed train line and it costs £100bn, we would expect to be increasing the UK GDP and therefore the tax take by say £4bn per annum, rising with inflation. That 4% return would outstrip what we spend, and therefore it would be a good idea.
The MMT issue is that fiscal prudence is out of the window. Boris has skirted dangerously close to MMT in the past, although in complete fairness during the pandemic it was very difficult not to do this. The choices of language that some might remember: “We will do whatever it takes” (he wheeled this one out a couple of times – one to support the economy during Covid, one to protect the territorial integrity of the UK in a dispute with the EU, exacerbated by his masterplan of Brexit, of course).
The most prevalent religion in the world
We must always remember in this situation – money is all about belief. With no gold-backed currency, you MUST believe that the £10 (or, if you are lucky, £20) notes in your wallet are meaningful and are backed by the central bank, and will be accepted universally. “I promise to pay the bearer on demand.” What if that promise was broken? Unthinkable collapse and an economy where only hard assets are meaningful (and, inevitably, a rebirth of money back to a something-backed currency). Money is the most widespread religion in the whole of the world, and particularly in the case of the US dollar – used in 40% of all international trade transactions, despite the US “only” having 10% of the international trade market themselves. If we cause doubt in the Great British Pound (which we have, of course, thanks Boris) then we see a very weak currency. Fortunately for us, our neighbours in the EU have done no better in recent years and thus Sterling is currently holding its own against the Euro.
This is the situation we are left in. We desperately need demand destruction, but to let the energy crisis rip (Boris’ solution, an incredible homage to his Covid solution – almost as if he isn’t a detail guy?) WILL kill tens of thousands this winter, if not 100,000+. We could easily have a pandemic level of death on our hands. Lack of heat and lack of food are the likely major causes, although suicide will also be a major concern and a significant killer. This single lack of care for the common person on the street – those who lent him their votes – those who trusted him – nears sociopathy and leads to this week’s image. Boris reminds me of Nero (rather than Caesar) – fiddling whilst Rome burned. I’m not the first to use this analogy about him – I hadn’t seen it before but I was hardly surprised when I googled it and found several other comparisons in the same vein.
Climate change sorted though – right?
Still, he’s sorted the climate crisis out, hasn’t he? Led from the front? Enforced legislation that will be remembered forever for its role in steering the ship to the good old net zero target of 2050? I think you know by now this is a bit of a setup. He voted against a bill in 2019 that was set to force the government to “bring forward a green industrial revolution to decarbonise the economy and boost economic growth.”
This is worse than ideological. It is fundamentally stupid. One of the very large thorns in the Green Party’s side is their want to move to a world where there is no growth. We will need to get there, but if you fail to manage that transition properly, then a few strikes and a “don’t pay your bills” campaign will be the least of your problems. What we absolutely need is what Boris was slow to the party on realising – a profitable transition to renewable energy. This made a lot of sense BEFORE Russia invaded Ukraine, and of course makes so much more sense now. Infrastructure, in spite of the 2020 plans, does not and should not just mean rail, roads, ports, airports and internet – but also energy infrastructure.
We know the electricity grid needs massive investment. We know that the waterways are Victorian. We know all of this can be renewable, and can create jobs, taxation income, and growth of the right sort. It won’t be fast, or simple, but there is a clear path in terms of the direction of travel that I believe could now bring both sides of the aisle together – a positive from the war.
The sort of chat you might expect (if you agree) from our Prime Minister, of course. Instead, he preferred a speech showcasing Kermit the Frog (remember that one?) – making a laughing stock of himself, and by extension, our country. I can only assume Boris must be a gigantic fan of karaoke – given that the literal translation is “empty orchestra” – or perhaps, empty words. As recently as 2013, after a cold winter or two, he suggested we should be giving more airtime to the climate change denial side of the argument – he has flip-flopped with as much ease as he did on the referendum.
Well – that’s all quite cathartic. Frankly, I could go on bashing Boris all day, but no-one can do as good a job of making Boris look like a prat as Boris himself. He, perhaps, has finally achieved his megalomaniac boyhood dream – but the record will reflect on a leader that considered himself Churchillian, but ended up Orwellian, or even dystopian – or even reptilian. He stacks up poorly compared to some of the more average leaders of modern times – despite no shots of running through fields of wheat – and although his old pal, the pig poker David Cameron himself went out in a puff of ignominy, Boris appears to have even outdone that as the most damp squib of exits.
Let’s all bear in mind too……he isn’t even gone yet! I’ve always had a feeling he’d want to go out with a bang – perhaps his own take on January 6th 2021 and Capitol Hill. Next week – normal service will be resumed as we will know a lot more about what our new PM is planning to do to make a difference to this upcoming winter of discontent, and I’ll talk about some recessionary tips and toolkits it might be worth brushing up on. Until then – keep calm, carry on, and fix your mortgage rates while you still can……..