Post by Carl LaFong on Aug 7, 2023 22:19:34 GMT
fall off a cliff.
Nobody seems to know how to save the UK from its current trap, but I have a revolutionary suggestion.
The received wisdom is that Britain is in the gentle throes of managed decline. That after the reckless ecstasies of Brexit and the abortive Truss experiment, it must now soberly face up to its unremarkable post-imperial destiny. Many see something quintessentially British in the country’s ongoing slide – an unsensational story of disgruntlement, dysfunction and decay. Nobody seems to care that the ruling class has given up on freeing the country from a doom loop of high taxes, low growth and crumbling public services. Few bat an eyelid as the US economy heads for an “immacculate soft landing”, while Britain’s still reels from inflation and public sector strikes.
But the UK’s fate is not merely to become steadily poorer, crankier and rougher round the edges – a place where, year by year, you become slightly more likely to spend your life renting, be accosted by mentally unstable beggars on the street or die of curable cancer. The risk however is that such a scenario – one of slow-burning misery rather than a full-blown emergency – may in fact be too optimistic. The country is not so much slumping along a downward slope as hurtling towards a cliff edge.
Britain is fast approaching a state of emergency. By most people’s definition, the country is almost broke. Even with taxes at a peacetime high, the state is borrowing billions to pay for unsustainable spending. After the authorities bungled how they issued public debt, debt servicing costs are now the fastest rising in the G7.
As the proportion of over-65s soars, the country is sitting on a public sector pension timebomb. Health spending is now so gargantuan that the British state will soon look like a mere subsidiary of an unreformable NHS. This is aside from the dire state of the economy, which has effectively been in a vegetative state for the past 15 years.
All this wouldn’t be quite so terrifying if Britain could spend its way out of crisis, emulating Japan’s escape from its lost decade. But as the Liz Truss experiment showed, Britain may not be in a position to take on any more debt, whether for a tax-cutting bonanza or a Biden-style stimulus package.
And yet there is widespread complacency among the elite about the possibility that Britain could be heading for a genuine crisis – one that the fiscal and monetary authorities’ old levers may be incapable of containing. Economic experts still sneer at the possibility that a country like the UK could ever run out of money, arguing that sovereign defaults are the preserve of the developing world and countries without independent central banks. Are they really certain that financial markets will forever look at Britain and think the country is a going concern?
Unless Britain changes course, it is not unthinkable that it is now a contender to become the first wealthy Western country to collapse from the pressures of demographic trends and financing its welfare state. Or that it will have to incur the humiliation of falling out of the G7, rubbing shoulders in world rankings with Argentina and Poland rather than the US and Germany.
The question is how on earth we get out of this trap. Some might be tempted to imagine that what the country needs is another leader in the Thatcher mould – someone imbued with the right mixture of patriotism and stubbornness to force-feed the country tough medicine. But this makes one very hasty assumption: that anyone actually knows in detail what needs to be done.
British decline is a genuine mystery wrapped in an enigma. Not a single economist has been able to convincingly explain the country’s “productivity puzzle”, for example. Despite pursuing endless strategies to tackle regional inequality, the chicken-and-egg conundrum, whereby companies base themselves in London to recruit the best talent, and workers, in turn, flock to London for the best jobs, remains frustratingly unresolved.
In political and media circles, the story arc of British decline is histrionic and garbled. Brexit is the most popular culprit, even though stagnation predates it. “Evil bankers” are also blamed, even though flat productivity since 2008 suggests the euphoric banking boom obscured, rather than gave birth to, a deeper malaise. Another lazy argument is that Britain’s decline is post-imperial karma. The post-Second World War German economic miracle ought to put such superstitious self-flagellation into perspective. One question that has caused enless controversy among historians but is absent from policy chat is whether Britain at the height of its imperial power took a catastrophic wrong turning – gambling from the late 19th century through the post-war period that it could maintain an empire through shipping, and finance, and shoring up the pound rather than industrial prowess.
Nor is it entirely clear how to defuse the booby traps embedded in the British economy. Cut the wrong wire – by trying to aggressively reduce taxes (as Truss attempted) – or push through a Rooseveltian Green New Deal (as Keir Starmer dreams of doing) – and you risk speeding up the detonation timer. Slash the welfare state and you risk a repeat of the austerity stagnation fiasco. Try to crush inflation through rate hikes and you court a full-blown mortgage crash.
But Britain is not entirely lacking in genius. Instead of searching for a messianic hero of the moment (a figure who almost certainly does not exist within the ranks of either major party anyway), maybe what is needed is no less than a national effort akin to the Manhattan Project or the cracking of the Enigma code at Bletchley Park. Perhaps what the UK must do is to gather a team of brilliant, unorthodox, eccentric free-thinkers – economists, entrepreneurs, technologists, historians – to unlock the sphinxian riddle, not of nuclear physics or cryptology, but of the “British disease”. Of course Dominic Cummings’ mission to bring the Manhattan model to Westminster, recruiting ‘weirdos’ and ‘oddballs’ as policymakers to Downing Street, was consumed by court politics before it even had chance to be crushed by the blob.
The Manhattan Project remains the model of what can be achieved against the odds, away from the political sniping, petty bureaucracy and self-indulgent pessimism of the centre. The father of the atomic bomb Robert Oppenheimer deliberately chose the New Mexican hills because he understood that the frontier embodied the paradoxical American character -- that is its stubborn individualism coupled with a remorseless commitment to civilising progress, wherever that might lead. Perhaps Britain’s experts should be invited to set up shop in our own answer to the frontier, on one of our craggy, windswept Scottish islands, where the paradoxical brilliance of the British character that has been long forgotten, a combination of self-possession and wandering openness – might be free to bloom.
This could well be just an airy dream. Maybe our politicians are too cowardly and second-rate to follow through with building a democratic mandate to push through a complex, multi-stage and painful remedy anyway. But as Britain dangles on a cliff edge, we have little choice but to think differently and try something drastic.
www.telegraph.co.uk/news/2023/08/07/britain-isnt-managed-decline-it-is-about-to-fall-off-cliff/
Nobody seems to know how to save the UK from its current trap, but I have a revolutionary suggestion.
The received wisdom is that Britain is in the gentle throes of managed decline. That after the reckless ecstasies of Brexit and the abortive Truss experiment, it must now soberly face up to its unremarkable post-imperial destiny. Many see something quintessentially British in the country’s ongoing slide – an unsensational story of disgruntlement, dysfunction and decay. Nobody seems to care that the ruling class has given up on freeing the country from a doom loop of high taxes, low growth and crumbling public services. Few bat an eyelid as the US economy heads for an “immacculate soft landing”, while Britain’s still reels from inflation and public sector strikes.
But the UK’s fate is not merely to become steadily poorer, crankier and rougher round the edges – a place where, year by year, you become slightly more likely to spend your life renting, be accosted by mentally unstable beggars on the street or die of curable cancer. The risk however is that such a scenario – one of slow-burning misery rather than a full-blown emergency – may in fact be too optimistic. The country is not so much slumping along a downward slope as hurtling towards a cliff edge.
Britain is fast approaching a state of emergency. By most people’s definition, the country is almost broke. Even with taxes at a peacetime high, the state is borrowing billions to pay for unsustainable spending. After the authorities bungled how they issued public debt, debt servicing costs are now the fastest rising in the G7.
As the proportion of over-65s soars, the country is sitting on a public sector pension timebomb. Health spending is now so gargantuan that the British state will soon look like a mere subsidiary of an unreformable NHS. This is aside from the dire state of the economy, which has effectively been in a vegetative state for the past 15 years.
All this wouldn’t be quite so terrifying if Britain could spend its way out of crisis, emulating Japan’s escape from its lost decade. But as the Liz Truss experiment showed, Britain may not be in a position to take on any more debt, whether for a tax-cutting bonanza or a Biden-style stimulus package.
And yet there is widespread complacency among the elite about the possibility that Britain could be heading for a genuine crisis – one that the fiscal and monetary authorities’ old levers may be incapable of containing. Economic experts still sneer at the possibility that a country like the UK could ever run out of money, arguing that sovereign defaults are the preserve of the developing world and countries without independent central banks. Are they really certain that financial markets will forever look at Britain and think the country is a going concern?
Unless Britain changes course, it is not unthinkable that it is now a contender to become the first wealthy Western country to collapse from the pressures of demographic trends and financing its welfare state. Or that it will have to incur the humiliation of falling out of the G7, rubbing shoulders in world rankings with Argentina and Poland rather than the US and Germany.
The question is how on earth we get out of this trap. Some might be tempted to imagine that what the country needs is another leader in the Thatcher mould – someone imbued with the right mixture of patriotism and stubbornness to force-feed the country tough medicine. But this makes one very hasty assumption: that anyone actually knows in detail what needs to be done.
British decline is a genuine mystery wrapped in an enigma. Not a single economist has been able to convincingly explain the country’s “productivity puzzle”, for example. Despite pursuing endless strategies to tackle regional inequality, the chicken-and-egg conundrum, whereby companies base themselves in London to recruit the best talent, and workers, in turn, flock to London for the best jobs, remains frustratingly unresolved.
In political and media circles, the story arc of British decline is histrionic and garbled. Brexit is the most popular culprit, even though stagnation predates it. “Evil bankers” are also blamed, even though flat productivity since 2008 suggests the euphoric banking boom obscured, rather than gave birth to, a deeper malaise. Another lazy argument is that Britain’s decline is post-imperial karma. The post-Second World War German economic miracle ought to put such superstitious self-flagellation into perspective. One question that has caused enless controversy among historians but is absent from policy chat is whether Britain at the height of its imperial power took a catastrophic wrong turning – gambling from the late 19th century through the post-war period that it could maintain an empire through shipping, and finance, and shoring up the pound rather than industrial prowess.
Nor is it entirely clear how to defuse the booby traps embedded in the British economy. Cut the wrong wire – by trying to aggressively reduce taxes (as Truss attempted) – or push through a Rooseveltian Green New Deal (as Keir Starmer dreams of doing) – and you risk speeding up the detonation timer. Slash the welfare state and you risk a repeat of the austerity stagnation fiasco. Try to crush inflation through rate hikes and you court a full-blown mortgage crash.
But Britain is not entirely lacking in genius. Instead of searching for a messianic hero of the moment (a figure who almost certainly does not exist within the ranks of either major party anyway), maybe what is needed is no less than a national effort akin to the Manhattan Project or the cracking of the Enigma code at Bletchley Park. Perhaps what the UK must do is to gather a team of brilliant, unorthodox, eccentric free-thinkers – economists, entrepreneurs, technologists, historians – to unlock the sphinxian riddle, not of nuclear physics or cryptology, but of the “British disease”. Of course Dominic Cummings’ mission to bring the Manhattan model to Westminster, recruiting ‘weirdos’ and ‘oddballs’ as policymakers to Downing Street, was consumed by court politics before it even had chance to be crushed by the blob.
The Manhattan Project remains the model of what can be achieved against the odds, away from the political sniping, petty bureaucracy and self-indulgent pessimism of the centre. The father of the atomic bomb Robert Oppenheimer deliberately chose the New Mexican hills because he understood that the frontier embodied the paradoxical American character -- that is its stubborn individualism coupled with a remorseless commitment to civilising progress, wherever that might lead. Perhaps Britain’s experts should be invited to set up shop in our own answer to the frontier, on one of our craggy, windswept Scottish islands, where the paradoxical brilliance of the British character that has been long forgotten, a combination of self-possession and wandering openness – might be free to bloom.
This could well be just an airy dream. Maybe our politicians are too cowardly and second-rate to follow through with building a democratic mandate to push through a complex, multi-stage and painful remedy anyway. But as Britain dangles on a cliff edge, we have little choice but to think differently and try something drastic.
www.telegraph.co.uk/news/2023/08/07/britain-isnt-managed-decline-it-is-about-to-fall-off-cliff/
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