Disappointing and Dangerous

Disappointing and Dangerous

The Election results on May 1st is disappointing for progressives in this country and dangerous. Reform won a by-election in one of labour’s safest seats, won two Mayoralties and took control of ten councils, two from Labour (Kent & Durham).

Labour’s response has been stupid, by suggesting we should have campaigned harder, or disgusting, as in we need to be harsher in “Stopping the Boats”. Copying reform empowers them, Labour must stop it!

Furthermore, it is little noticed that in Lambeth, the Greens, in a council by-election, won a ward from Labour. This is proof at the polls that there is clearly a constituency to the left of the Labour Party as it stands today.

It is little understood inside Labour that the “hero voter” strategy failed; few Tories came to Labour in 2024 with many voting either Reform or staying at home. In his article, “How Labour could beat Reform”, Phil Burton Cartledge, quotes the study, ‘Getting to Know Reform Curious Labour voters‘ which shows that Labour needs to ensure it does not lose its progressive base who seem more ready to vote for another party then Reform voters do to vote for Labour. As is the case for the Tories, the votes aren’t there on the right to make the difference.

The reasons for dissatisfaction withy Labour are clear, possibly best or at least succinctly summed up by John  McTiernan on twitter, and in this thread. Labour is no longer trusted with the welfare state or public services. It needs to re-establish that trust by keeping its implicit as well as explicit promises.

After posting my thoughts, I was pointed at “Entering Faragia” by David Aaronovitch and have corrected my stats. He also points out that Liberal Democrats beat both Labour and the Tories which is further evidence that Labour faces an electoral threat other than Reform UK and the Tories. You might like to read the article as he examines the likely built in delivery failure of Reform’s promises, particularity a DOGE in every county, and questions the calibre of many of Reform’s candidates. He offers Labour three responses, which he describes as panics, firstly to steal Reform’s clothes, secondly, to forget the long term and thirdly to return to Corbynism, which I feel he summarises and characterises unfairly if only by omission. Aaronovitch feels these are all deadends but I would offer a fourth, a return to Starmer’s 10 promises made to the party while campaigning for leader. …

Labour’s new deal for Europe

ec-london

This is a comment on A new deal with the EU is exactly what Britain needs. Here’s how Labour will achieve it | Nick Thomas-Symonds | The Guardian  – www.theguardian.com, I have made it with the help of diigo, where the headline comment on my bookmark, part generated and part selected from the article says, ‘via Comment is free | guardian.co.uk, subtitled, nonsensically, “This isn’t about politics – it’s about pragmatism. Working with our allies will make British people safer, more secure and more prosperous.”‘.

The article says nothing new and repeats the isolationist nonsense fantasies of Labour’s triangulators that Brexit can be fixed. It includes the phrase “honour the referendum” despite the fact that it was nearly nine years ago, and we’ve had three general elections since then.

Quotes and comments

We are equally confident in what the UK can offer in return. It is a politically stable country, and the government has a huge mandate, with more than four years left to deliver our policies. This stability has already inspired the confidence of businesses across the world, unlocking tens of billions of pounds of long-term investment.

  • The statistics aren’t in yet to substantiate investment numbers,

Labour is rising to meet the challenges in this new era of global instability.

This is not about ideology or returning to the divisions of the past, but about ruthless pragmatism and what works in the national interest.

When it comes to security, Nato is the cornerstone of our defence.

  • Really? A fantasy of the Labour Right, NATO’s gone, for at least four years, but Trump’s isolationism has not come out of the blue.

All of this will be framed by the very clear red lines we set out at the election. We won’t return to the arguments of the past: there will be no return to the single market, the customs union or freedom of movement.

  • Well, it won’t work then. There isn’t a deal in which the UK wins at the expense of the EU. If only because, the queue of member states asking for their own opt-outs would be 25 long.

We will only agree an EU deal that meets the needs of the British people and respects the 2016 referendum result.

You can’t do both if you believe honouring the referendum means staying out of the EU but the referendum mandate was dishonestly won and is now nearly nine years old; I estimate that about 4½ million voters have died since then. …

Political Tech 25, a review

Political Tech 25, a review

I attended Political Tech 25 in Berlin in January. The slides and videos are sadly not yet ready but here is a reflection from my notes. I spent the first part of the morning in the plenary hall, and then visited the break out rooms. These notes cover insights into “elections and electioneering”, and “IT, Social Media and Persuasiveness”; I also cover a presentation from the Labour Party about their successful campaign in a separate document. Possibly the key lesson is that old school techniques still work, that AI is not yet used for communicating with people and the social media companies need to be treated as hostile spaces for progressives. I also include a short summary from the LP{ presentation. Use the "Read More" button to see my key learning points and links to the two documents,. ...

Best for Britain on Trumps trade war

Best for Britain on Trumps trade war

I subscribe to Best for Britain’s news letter and they sent me the following. I can’t find it on their web site and so I have posted it here. Their front page has a comprehensive response to Trump’s trade war and is worth a look. Unlike me they are not focusing on the need for the single market to access the protection of the EU’s Digital Services Act and in fact are fundamentally in the “Fix Brexit” campaign, but what they say is interesting.

quote

As you’ll no doubt have seen, the UK joins Brazil, Australia, and the uninhabited Heard Island – along with almost every other country in the world – in being slapped with a 10% tariff on all imports to the US. The EU has fared even worse, as they stare down the prospect of a 20% tariff. Unaddressed, this unprovoked and punitive move by Trump could wipe out all efforts to grow our economies, both here in the UK and in the EU.

We knew this was coming. Which is why we asked Frontier Economics to model how a better UK-EU trade deal could minimise the impact of Trump tariffs. The results should spur a simultaneous sigh of relief across Whitehall.

Not only would a common sense deal between the EU and UK cancel out the economic hit to the UK from Trump’s tariffs, it could also grow our economy by up to 1.5%. And those areas hit hardest by tariffs – manufacturing hubs like the Midlands and North East England – would see the greatest benefit. A deal that includes deep alignment between the UK and EU on goods and services would also shield the EU, reducing the impact of tariffs on the bloc by around a third. 

Those sighs of relief should ripple around the Cabinet table too when you add in the results of our latest polling. Three times as many people think we should increase trade with the EU in response to Trump’s tariffs, compared to just 14% who say we should be sucking up to Trump in the hope of an exemption.

If there was any doubt, Trump is no friend of the UK. His unprovoked trade war will be felt by ordinary people across the country, in our pockets and in cuts to public spending. Anyone seeking to spin this slap in the face as a ‘Brexit win’ should remember the thousands now at risk of losing their jobs, and that Brexit itself has caused far more economic damage than Trump’s tariffs ever could.

But if we tear down barriers to UK-EU trade, we can gain significantly more from our largest trading partner than we stand to lose as a result of back-of-the-envelope calculations made in Washington.

In these choppy geopolitical waters, we’ll keep pushing the government to make the right decision and seek stability for us, and for our EU neighbours. Thank you for your support in helping us do it. …

Liberation Day

Liberation Day

Today, or Yesterday depending on where you are the US announced a series of tariff increases around the world.

The FT explains how they calculated the tariffs; they engineered a number from the balance of trade deficit between the US and their trading partners. This has been a big surprise to most international trade economists. This is written in an amusing style asking questions on economics and supply chains, since the calculation method penalises, those countries supplying goods that the US cannot fulfil domestically, such as bananas and coffee.

In an article called, the stupidest chart you’ll see today, which I cannot understand, but they observe that a floor value of 10% has also been set, and comment,

One last thing not widely mentioned yet — there is also a baseline 10 per cent minimum tariff. Without this minimum, the UK would be treated with a negative tariff. So much for special treatment.

The original article points at the book Trade wars are class wars, where on its hosting page, they say,

Trade disputes are usually understood as conflicts between countries with competing national interests, but as Matthew C. Klein and Michael Pettis show, they are often the unexpected result of domestic political choices to serve the interests of the rich at the expense of workers and ordinary retirees. Klein and Pettis trace the origins of today’s trade wars to decisions made by politicians and business leaders in China, Europe, and the United States over the past thirty years. Across the world, the rich have prospered while workers can no longer afford to buy what they produce, have lost their jobs, or have been forced into higher levels of debt. In this thought‑provoking challenge to mainstream views, the authors provide a cohesive narrative that shows how the class wars of rising inequality are a threat to the global economy and international peace—and what we can do about it.

 …

The Newsagents on Trump, Trade and Debt

The Newsagents on Trump, Trade and Debt

In this podcast at the newsgents, the presenters talk about Trump’s tariffs and his liberation day and the impact on the UK’s public finances. This article is a reply.

The guardian reports US Department of State, channelling JD Vance, has raised the issue of “freedom of speech” in the current trade negotiations and are ‘concerned’ about the possible sanctions against an anti-abortion demonstrator who has been convicted of demonstrating too close to a clinic. The identification of ‘free speech’ as a trade issue is not just caprice. It was raised dramatically by JD Vance at the Munich security conference earlier this year.  It is part of their pro-oligarch agenda; they are frightened of European regulators and the massive fines levied on the US high tech firms and now that Musk has bought twitter, the social media companies and their ‘freedom of speech’ is a tool by which they seek to maintain their power.

I was curious that they identified the fact that Trump respects those that strike back and yet spoke favourably of Starmer’s weak response, particularly when compared with both the EU’s and the US’s neighbours.

While they spoke of the short term economic results as a possible constraint on Trump’s behaviour, I suggest that the only constraint that concerns him is his popularity which since he can’t run again is of limited use to him. Curiously, I read an article by Lawrence Lessig today suggesting the founding fathers deliberately excluded term limits on the grounds that a desire for re-election would act as a moderator on behaviour. They were particularly concerned about kleptocracy, although Hamilton used the word plunder.

In the second part of the interview, they speak to Andy Haldane, once Chief Economist of the Bank of England. He argues that the trade war will blow Reeves’ plan off course as it lacks what he and others call fiscal head room. He argues that higher taxes will need to be raised but that the bond markets will live with a plan that works i.e. delivers growth, which he argues needs to be based on defence industries.

Itr was always unlikely that Haldane would argue that since the purpose of the golden rules and even the growth strategy is to reduce the national debt, what needs to change are the rules, the independence of the Bank of England and Office of Budget Responsibility (OBR). The progressive inventors of the fiscal golden rules argued that that their purpose was to protect investment. The purpose of Reeves’ iteration of the rules is to pay off the debt.

One justification against borrowing to fund investment, is the interest costs but Google reports that “As of 2023, Japan’s government debt to GDP ratio was 255.20%, while the UK’s was around 98.5%.” How can Japan fund their debt while the UK cannot?

I also question the efficacy of the government’s proposed industrial strategy; historically private sector capital has not invested in UK innovation which has been funded by retained profits.

It is frustrating that commentators like Haldane can’t or won’t mention easing trade barriers with Europe as a means of stimulating export led growth and that no digital liberty campaigners are arguing to rejoin the single market in order to implement the Digital Services Act which the US social media companies rightly fear.

Reeves’ rules are aimed at the wrong policy outcome, and her capitulation of judgement to the OBR is a democratic mistake which merely constrains her room for manoeuvre. In my view its time to review the independence of the Bank of England and the existance of the OBR. Economic policy should be the outcome of a democratic process, not a technocratic black box built by the dead.  

I say more at this article on my blog, and on industrial policy at Chartist Magazine.  …

Macro-, Welfare and Hero-voters

Macro-, Welfare and Hero-voters

Why are Labour yet again looking at the DWP budgets? The reasons are based on the wrong macro-economic theory but also on political values and electoral strategy.

There are 2½ theories on how the economy works. The first is neo-Keynesianism which understands that a national economy is unlike a household, policy focuses on expanding demand, usually by focusing on exports or investment. The second theory is quantitative monetary theory (QMT) which focuses on money supply and interest rates. Labour’s leadership have chosen the latter but the Labour government’s desire to squeeze Social Security otherwise known as welfare budgets is based on a mean puritanism and should be condemned and opposed.

The fear of inflation by both the Parties and the markets are seen as a constraint on public finances, but inflation is either demand pull or cost push. If not caused by external factors, QMT believes in increasing the interest rates to take money out of the economy and reduce demand, Keynesianism’s response is to increase taxes. Recent inflation has been caused by external shocks and as such could be ameliorated by a more interventionist energy pricing cap.

The ”Golden Fiscal Rule” of Corbyn’s leadership was designed to protect investment, not the deficit.

Progressives should be arguing that the deficit is not a constraint on government activity, not that we will fund that deficit with wealth taxes. Wealth taxes are necessary as part of “from each according to their ability” and both Income/wealth equity and the business cycle stabilisers require a guaranteed decent benefit floor. More equal societies grow better, so it is right that we implement wealth taxes and maintain benefit levels, but this is because it’s the right thing to do, not to fund the expenditure.

Another failure in the growth strategy though is that Labour are not investing in Higher Education or research nor in social/commercial structures to encourage the adoption of technology and of course, the elephant in the room for inward foreign investment and import/export is Brexity and the European Union.

On electoral strategy, in his article in the Express of all places, Andy Twelves says, “There’s a deep-rooted misconception in British politics. The belief that winning elections depends on endlessly chasing voters who are fundamentally sceptical of you.”. This would seem this is true, but in the words of Capt. Blackadder, “there’s one problem with this theory”, and it also didn’t work in 2024.  The Labour Party is continuing its so-called strategy of courting “hero voters” who are polled as not wanting to pay for those they see as feckless. Again, it is a task for progressives is to defend universal benefits, it’s the right thiong to do and a positive contribution to economic growth.

Image: from free malaysia today Licence: Attribution 4.0 International CC BY 4.0 …

Starmer’s choice

I wrote something on JD Vance’s speech to the Munich security conference. This was part of the series of policy repositioning for the trump administration. My article was published on labour hub, in it I reference Vance’s speech to the Munich Security conference, i note the oligarch’s hypocritical and fascistic agenda, the foreshadowing of the crippling of NATO, and talk of the UK’s alternatives pointing out that we seem to be re-joining the EU one agency at a time.

The plum pudding in danger via wikipedia
The return of great power politics via wikipedia

I reference reports of J D Vance’s speech to the Munich security conference, where he criticised the EU and member state governments for suppressing free speech, failing to halt illegal migration and running in fear from voters’ true beliefs. He refused to meet the German Chancellor and yet met, during an election, with the leader of the far right AfD (Alternative for Germany).

I note his arguments on free speech are partisan; US oligarchs want American rich people’s voices to be heard and amplified by privately-owned social media companies and fear Europe’s regulation of them being based on a demand for truth. We also note the hypocrisy of the US free speech advocates’ attacks on ideas, books and teachers in schools, universities and libraries in the US. His comments on not relying on foreign technology providers by which he meant China, may come to haunt him as Europe examines its defence supply chains.  

Trump’s call for European NATO to increase their defence budgets to 5% of GDP is a naked attempt to build budgets for the US arms industry, just as the UK’s requests to have a side treaty on defence and security with the EU is also at least partially based on the economic interests of BAe.

Trump’s arguments about what does his money, that is, the arms shipments to Ukraine, buy, has a moral vacancy but it is clear that the view that ‘the business of America is business’ has returned to the White House. The crudity with which Trump pursues his views of US fiscal and commercial interests is echoed by the UK Labour Government in positioning its ‘EU reset’, arguing for changes in agreements which only benefit Britian from their limited, primarily electoral, point of view. 

In the Labour Hub article I suggest, the choices facing the Starmer administration are bleak while Starmer seems to be seeking to avoid Trump’s tariff increases, on defence the choice is stark. The UK can either continue to act as a vassal state of the United States or develop more effective partnerships with the European Union. It should be noted that Vance has questioned the need for NATO joint command. Labour’s foundational commitment to NATO, is looking weaker than it once was.

Starmer’s ambition on EU cooperation is limited, I have argued that the UK should use the withdrawal agreement review clauses to re-enter the customs union and the single market. The suspicion is that for the Starmer Administration, the single market is a step too far because of its requirements for a free movement of labour and Labour’s fear of the Tories and Reform UK.

Today’s military questions and the need for ‘security of supply’ strongly imply that the UK should join the European Space Agency and possibly the European defence agency.

The proposed military and security side treaty is looking less and less attractive to both sides because in order to protect our democracy against the attacks from US social media companies and US owned AI search engines, the UK needs the umbrella of the EU’s competition & digital regulators, this needs membership of the single market. We have already rejoined Horizon (the R&D programme) and the Euro HPC joint undertaking, and Northern Ireland is still part of the single market. At what point do we say, we need our MEPs, Judges, Commissioners and Council seats back or will we just be rejoining the EU an agency at a time. …

The pan-European Mediterranean convention and EU/UK relations

The pan-European Mediterranean convention and EU/UK relations

In January, Marco Sefcovic, suggested that the UK as part of the negotiations to improve relations between the UK and the EU should consider joining the pan European Mediterranean convention (PEM); he also stated but the EU would consider such a proposal seriously. Sefcovic is the commissioner responsible for trade.

Mark Pennycook, the minister for housing, was asked to the same day what the government’s response was and repeated the redline mantras stating that the government had no interest in signing up to PEM. The following day he was contradicted by an anonymous government source who said that PEM would not breach Labour’s red lines. It was later stated by Reeves, that she would be happy to consider membership of PEM, although how this is part of her portfolio rather than a Cabinet Office matter I am unsure.

The PEM is an agreement on rules of origin, the effect of which is that assembled goods, using EU components do not have to pay a customs duty on the EU inputs when exporting to the EU. The Guardian have published an explainer, with two quotes, one suggesting it’ll have little effect and the other suggesting it’s an important and useful reform. It is hard to see how it will reduce paperwork and trade friction, in some cases it will reduce the sale price within the EU making British exports more competitive. It’s not a customs union.

Membership of PEM had been pushed by the LME, both at labour’s national policy forum in 2024 and they attempted to get it on the agenda of labour’s conference in 2023. The party leadership rejected these proposals and ensured the international trade with the European Union was not debated at conference. Even LME’s moderate, some might say fig leaf, pro-Europeanism seems unwelcome to Starmer’s Labour.

The Government policy consists of three proposals articulated in the Labour manifesto: a veterinary agreement, mutual recognition of qualifications and help for touring artists (& their crews and equipment). These positive proposals are underlined by three noes, no to the customs union, no to the single market and no to free movement of people.

The government also seems to be uninterested in clever hacks to the treaties and they seem to ignore the fact that the EU also has an agenda, and a stronger negotiating position and more expert negotiators. The EU will require that the UK meets all the terms of the withdrawal agreement, and there are eight disputes open at the moment. On top of this, there is the UK reluctance to talk about the EU’s proposal for a youth mobility scheme and the EU are also keen that the fishing agreement is rolled over. …