Backdating laws is a dangerous precedent to set

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It seems unlikely that Katie Lam, who is, apparently, a ‘rising star’ in the Conservative Party, gave even a millisecond’s thought to Wales, Scotland or Northern Ireland when she called for deportation on a scale which would restore a sufficient degree of ‘cultural coherence’ to the UK. It’s hard to interpret ‘cultural coherence’ as meaning anything other than ‘white, English-speaking’ though. It’s racist through and through, but then perhaps what gives her that rising star status is an ability to find new words to express racism without explicitly referring to race. It’s pretty clear that any minority which doesn’t fit her definition must be kept as small as possible, and can never be truly ‘British’, even if she really means English.

One aspect of what she had to say is particularly concerning, in her call for people who followed all the rules, and have been living in the UK entirely legally, to be deported on the grounds that the rules were wrong at the time. The immediate impact would be felt by large numbers of families which would be torn apart if one member were to be deported – unless, of course, she’s also planning to deport UK citizens who were born and raised here along with one or both of their parents. The secondary impact would be the loss of productive workers across a number of sectors of the UK economy, including in particular (although not limited to) health and care.

There is also a third implication of her proposed approach. If it were ever to be implemented, it would mean that none of us could any longer be certain that what we did legally 10, 20 or even 30 years ago is not retrospectively considered to be a criminal act. Changing immigration rules retrospectively might well appeal to those of a racist bent, but it’s a dangerous precedent to set. That it is official Tory policy to backdate rule changes by decades underlines just how far that party has moved from its traditional respect for the rule of law.

The danger hasn't gone away

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As the dust settles in Caerffili, there is widespread relief that the threatened victory for Reform Ltd didn’t happen, despite what some of the polls suggested. But whether it really signifies a victory for ‘progressive’ views over conservative ones is rather harder to determine. One simplistic analysis I’ve seen suggests that adding the Plaid, Green, Labour, and Lib Dem vote percentages together and comparing that with the total of Reform Ltd, Tories and UKIP gives a ratio of 61% to 38%, a very comfortable margin. (It’s not entirely clear where Gwlad fits in this analysis, but at 0.3% of the vote, it’s hardly a significant factor. Where the Lib Dems sit is another variable, it may depend on who you speak to and whether there’s an ‘R’ in the month, but again, at 1.5% it’s not a huge factor.)

Everything depends, though, on whether those who voted for the Labour candidate can really be seen as ‘progressively minded’ voters. On matters such as immigration, climate change and economics, Sir Starmer’s Labour is moving ever closer to the Reform/Tory position; in policy terms they don’t deserve to be included on the same side of the balance as Plaid/ Green. If their 11% gets moved from one column into the other, the result looks very different. Plaid and Green on 48.9% compared to Reform/Tory/UKIP/Labour on 49.2% is no longer a victory of any sort, let alone a sweeping one.

We don’t know what exactly happened to Labour’s traditional vote, but we can assume that some stayed at home, rather than voting at all. Of the rest, the more ‘progressive’ elements may well have switched to Plaid as a block on Reform Ltd. But we also know that there has been movement from Labour to Reform across the UK; there’s no good reason to assume that some of that didn’t happen in Caerffili. Not all Labour voters are as ‘progressive’ as myth and wishful thinking might suggest. Those who were left are probably Labour’s hard core – ‘My party, right or wrong’ – and are, at the least, generally content to go along with Starmer. That gives no reason to place them in the ‘progressive’ column.

There is a danger of complacency – because Caerffili sent Reform Ltd packing, maybe they’re not the threat many feared. But that complacency is based on an outdated and romantic view of the average Welsh voter as inherently ‘left’ of the average English voter. The views of Reform Ltd, whether expressed directly by them, or by the Tory and Labour parties rushing to ape them, have taken root more than we might care to admit. The danger hasn’t gone away.

Sucking money out of the economy

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We won’t know exactly how much money Rachel Reeves is planning to suck out of the UK economy until she stands up and delivers her budget on 26 November. There is a sense in which the actual number matters little – the underlying principles remain the same. One of the big ‘ideas’, a term which can only be used loosely, is to cut spending on benefits. It is true, of course, that, if the government spends less on benefits, then the gap between spending and income will reduce, and (assuming that to be a ‘good thing’, which seems to be the position of both government and opposition), the overall government finances will look ‘better’ as a result. But the thinking of those looking at government finances – whether Reeves or the Tories – seems to stop at that point, as though government finances can be considered in isolation. In reality they can’t.

Reducing benefits reduces the spending power of some of the poorest in society, which – in economic terms – reduces overall demand in the economy. (To those not glued irrevocably to economic mantras, it also impacts people’s lives, health and welfare, but I don’t really expect either Reeves or the Tories to worry unduly about that.) One of the key differences between the Tories and Labour on this is that the Tories seem committed to ‘giving away’ part of the money saved in the form of tax cuts, whilst Labour seem more committed to larger reductions in the current account deficit. Superficially, in overall economic terms, reducing taxes decreases the size of the hit to the economy of that reduced demand, but that ignores the way in which the costs and benefits are distributed. Reducing the spending power of the poorest (which is what benefit cuts do) whilst increasing the spending power of the richest (which is what tax cuts do) means that inequality continues to rise. It’s where simplistic economic analysis starts to break down – the total numbers tell us one simplistic story about the overall impact, but the detail tells us that there are winners and losers. That detail is important. Well, to most of us it probably is. But most of us includes neither Reeves and Starmer nor the Tories.

Nose-holding might not always be entirely dishonourable

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The deliberations of the committee awarding the Nobel Peace Prize are secret. It’s just as well; it’s easy enough to imagine how much hilarity Trump’s hyped-up claims to have solved several wars (some of which the ‘participants’ didn’t even know had happened) would have caused the members. It’s also easy to imagine the extent to which Trumpian anger would have boiled over had that hilarity become publicly known rather than merely widely assumed.

It's probably reasonable to assume that his blatant campaigning for the prize might just have rubbed a few people up the wrong way as well: it’s not the way things are usually done. It’s hard to believe that a man who renamed the Department of Defence as the Department of War; whose government demands a stronger warrior culture and the abandonment of any rules of engagement which might prevent US forces from unleashing fear and intimidation; who is determined to unleash maximum lethal force on the streets of his own country; and who has taken to random extra-judicial killings of people in boats in international waters might not have struggled a little to be seen as a ‘man of peace’.

He might, though, have just the tiniest bit of justification in his jealousy about how Obama got the award so early in his presidency. What exactly had Obama done at that point to justify the award other than having learned to string a sentence together and avoid being called George Bush? Neither of those two things are entirely inconsequential, but they’re not exactly epoch-making either. Brokering a ceasefire between Hamas and Israel is no mean feat, although since it appears to have happened only because Trump effectively ordered Netanyahu to stop the bombing there are questions about whether it could have been done earlier. His expectation that he could announce the ceasefire one day and pick up the prize the next was always a long way short of realistic.

If the ceasefire holds and turns into a lasting peace, then maybe next year or the year after he might actually deserve some sort of recognition even while continuing to attract condemnation for many of the other things he does. He doesn’t understand the connectedness and maybe we shouldn't even expect him to; for him, the self-styled great deal-maker, every deal should be judged in complete isolation. It’s part of his natural transactionalism. There may even be a sense in which holding out the possibility of the prize which he clearly covets so much might encourage him to stick with the Israel-Palestine peace process for longer than his usual gnat’s length attention span. The probability of that happening currently looks very low, but if a nod-and-a-wink now made such an outcome more likely, might not a bit of collective nose-holding be worthwhile?

What is racism if not judging on skin colour?

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When I look at current leaders of the Tory Party, I don’t see a single white face. It’s a stupid, racist comment to make, of course. But is it really more racist than Jenrick’s comment that he didn’t see another white face on a visit to an area of Birmingham? How many people did he see, and in how big an area, over that fateful 90 minutes? Without such statistical context, it’s impossible to draw any meaningful conclusions about what it means for integration. How much bigger was his sample than the sample of one in the first sentence above? It’s worse than that, though. Suppose all the faces had been white, but they’d all been Poles or Romanians? How would he have known? And why would that have been more acceptable to him?

Both Jenrick and his party leader claim that his remarks weren’t racist, but leaping to a conclusion about the extent to which people are, or can be, ‘integrated’ into UK society (whatever that means – and other than dispersing them more widely geographically, it’s not at all clear that Jenrick knows what it means either) based purely on one visible characteristic, skin colour, is about as close to a textbook definition of racism as one can get. Maybe he really, genuinely isn’t a racist himself, but he knows that more than a few voters are, and he knows how to appeal to their prejudices.

By a curious coincidence (?), Handsworth, the part of Birmingham dishonoured by Jenrick’s presence, just happens to be next door to Smethwick, scene of an infamous electoral battle in 1964 which the Tories won on the basis of a campaign based on the number of non-white faces in the area. The Tory candidate that time round denied being racist too. It’s probably being excessively charitable to suggest that Jenrick might simply be too young to remember how well that worked for his party.

Would Trump really bomb Tel Aviv?

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A few days ago, Trump gave Qatar an astonishing guarantee of security, promising that he would view any armed attack on the tiny energy-rich nation as a threat to the United States itself and be ready to take military action in defence of Qatar. Given that, in a way that I don’t pretend to fully understand, the ‘right to self-defence’ has somehow morphed in recent years into a right to mount a wholly disproportionate retaliatory attack, the pact must surely mean that anyone attacking Qatar should expect a massive response from the US military. And which country is most likely to launch a military attack on Qatar? Based on recent events, the most obvious answer is Israel.

Maybe Netanyahu has given Trump some sort of promise that he won’t do it again, so Trump doesn’t think the question will arise. But neither of them are exactly famous for keeping their word. A Trump promise to Qatar based on a Netanyahu promise to Trump doesn’t immediately strike me as a reliable basis for the security of anyone. In normal times, a $400 million bribe in the form of a free aeroplane might be enough to get something in return; but then again, in normal times, the idea of the President of the USA accepting a $400 million bribe would be unthinkable. One wonders what else Trump has extracted from Qatar in his latest protection racket payment for the defence pact. After all, the first bribe didn’t stop the US allowing Israel to bomb Doha (and even if Trump is personally and unprecedentedly telling the truth when he says that ‘he’ had no advance knowledge, the idea that the largest US base in the region wasn’t warned in advance is for the birds). There must surely be something else involved. Another golf course or hotel perhaps?

There is another aspect to Trump’s promise as well. If an attack on Qatar is treated the same as an attack on the US itself, does the NATO guarantee of mutual assistance extend to that circumstance as well? Has Trump effectively promised that the whole of NATO would attack Israel if another bomb were dropped on Doha? No, I don’t seriously believe that he has – although that doesn’t necessarily mean that he doesn’t think that he has. Whatever the Qataris have given Trump in exchange for this latest guarantee, they would be very foolish to depend on it ever being honoured.

Where's the ideological response to Tory nonsense?

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Accusing the ‘Welsh’ Tories of possessing principles of any sort would be a foul calumny, but lacking any basic principles isn’t the same as lacking certain fundamental ideological beliefs. One of those is that tax cuts are axiomatically a good thing, and they are at it again today in the Senedd, calling for a cut in income tax and the abolition of business rates for small businesses. These changes, they claim, will put more money in peoples’ pockets and boost economic growth.

The Welsh government (and the Welsh budget) are fundamentally different creatures from the UK versions, and don’t have the same freedoms. It’s a consequence of the difference between devolution and independence: an independent government in control of its own currency and with debt mostly denominated in that currency can spend as much as it wants to as long as the physical resources are available, and that spending isn’t constrained by the availability of money through taxation. The Welsh government has no such freedom: it’s budget, and its ability to borrow or transfer money between financial years are limited by external dictat, and over a period, it must balance the books. It means, in essence, that whilst it’s not true that a UK tax cut must be balanced by spending cuts, it is very definitely the case that a Welsh tax cut must be balanced by spending cuts. And the Tories know it, even if they didn’t spell it out.

What that translates to in practice is that, whilst the tax cuts proposed by the Tories may make individuals and small businesses feel better off initially, they will either have fewer (or worse) services delivered by the Welsh government (and by the local authorities who receive large transfers from the government in Cardiff), or find that they have to pay more for the same services out of the ‘extra’ money they gained from the tax cuts. More people will end up paying for private health care, or private tuition, for example. There will be those who argue that that is a ‘good’ thing, and that those services can be provided better or more cheaply by private providers. Whether that is true or not (and I’m not at all convinced by the arguments) is irrelevant to the economics here – a subject for another day. The point is that those who gain most from the tax cuts will be better able to afford such things than those who gain least – and that is especially so for those who earn so little that they pay little or no income tax already.

Whenever a tax cut is proposed which leads to cuts in what the government can do, it necessarily promotes a further disparity between those who can afford to bridge some or all of the gap and those who cannot. Some won’t be able to do so at all and will suffer as a result; others will see all the gains from their tax cuts swallowed up by extra costs; and the luckiest few will end up banking the difference. It goes to the heart of the argument for funding some basic services in society collectively, through taxation and public bodies, as opposed to leaving individuals to find the money to pay themselves or go without. Concentrating primarily on the financial effect on the Welsh government and its budget – which seems to be Labour’s response – is to miss the underlying ideological point. For too long, the argument about collective provision rather than individual provision has gone largely unmade, an omission from the debate which helps only the Tories.

Reeves is sidestepping the real question

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One of the neat rhetorical tricks used by politicians is to present an inaccurate view of what their opponents say and show how easy it is to dismiss. It helps them ‘score a point’ as well as allowing them to fail to engage with the underlying argument. The Chancellor, Rachel Reeves, was at it this week, refuting the suggestion that governments can simply create all the money that they need and then spend it. She’s right in principle; but I’m not aware that anyone has actually made the argument that she dismissed. Of course there are constraints on how much government can spend, but the debate is about what those constraints are, not whether or not they exist.

She argues that the constraints are twofold, which are closely interlinked: the amount of money which the government receives through taxes etc. and the need to abide by the fiscal rules she has laid down. But, in the first place, the rules she has laid down are entirely arbitrary. She has set them, and she could remove them or vary them. The UK never had any fiscal rules at all until Labour introduced them in 1997, and they have been changed regularly ever since, usually when a new Chancellor takes office, and sometimes during the period of tenure of a single chancellor. And a government which controls its own currency, and whose debt is mostly denominated in that currency, can create as much money as it wants to, any time it chooses, and can always repay any debts it incurs. Since money is merely a means of measuring and trading debt, and all debt has to be matched by an asset somewhere, the total net debt in an economy, in its simplest form, is always zero. It’s an over-simplification, yes, but it doesn’t matter how much extra money the government creates, the total net debt in the economy will always be zero. It cannot be otherwise. There is a non-trivial issue, of course, about how that debt and those assets are distributed, but that’s another issue which the chancellor seems wholly unwilling to address, and it doesn’t affect the simple fact that money creation is potentially unlimited.

That doesn’t mean that there are no constraints on the goverment, just that ‘money’ isn’t one of them. The real constraint on money creation and spending is the availability of real resources in the economy. If there are unused resources which could be put to work, the money to do that can be created. If there aren’t then the most basic rules of economics apply – more money competing for the same resources causes inflation. The question which we should be asking is not whether the government can create and spend money to improve services and improve living standards, but whether and to what extent the resources needed to do those things are available in the economy. It’s not an easy question to answer. As one example of the impact of government spending, increasing benefits (by, for instance, scrapping the two child cap) puts more money into the economy which will then be spent, potentially driving employment - in this case, largely in the retail sector. Roughly 4.7% of the working age population in the UK are currently unemployed, but how many of them are really available and suitable for the right work in the right places when the government spends more money, before generating demand no longer soaks up unused human resources but starts to compete for existing employed resources? The best answer that can be given without a lot of work is ‘some, but not all’.

But being a difficult question to answer is no excuse for not asking it and trying to find an answer; hiding behind her own rules and an alleged lack of money is just a very lame excuse for avoiding the question.

Starmer is avoiding honestly facing the problem of racism

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At the weekend, Starmer told us that he didn’t think Reform Ltd voters were racists, merely frustrated. It’s a sweeping statement to make. Although it’s entirely reasonable to suppose that some Reform Ltd voters are not racists, it doesn’t follow that none of them are. It also doesn’t address the converse: whilst it may well be true that voting for Farage’s lot doesn’t make someone a racist, it doesn’t follow at all that being racists doesn’t drive people to vote for Reform Ltd. Whilst it’s not an absolute, 100% causal link, it’s not a bad indicator. Racists have a strong tendency to think that Farage is expressing their views, and not without justification.

When asked directly whether Reform Ltd were trying to appeal to racists, Starmer’s response was a flat “No”, before proceeding to waffle about frustration and economic decline. Given that he’d already said that he thought that Reform Ltd policies were racist, this is a somewhat astonishing contradiction. What on earth is the point in promising outright racist policies if not to appeal to racists? His problem is that – just like Farage and Badenoch – he too is trying to appeal to racists. Not only to racists, of course; and maybe not so blatantly as Farage, but in a sense, that just makes it worse. Offering skimmed or semi-skimmed racism legitimises the full fat version, and can make voting for the real thing more acceptable.

Pretending that anger whipped up by the tabloids over migration is really just about the impact of economic decline and that people’s ‘concerns’ can be addressed by improving the NHS and putting more money in their pockets is wilfully turning a blind eye to the pernicious presence of racism. There is more racism, and even more latent racism, around than most of us would really like to acknowledge, even if racist voters don’t all choose to vote for Reform Ltd. It’s understandable that a PM tanking as badly in the polls as Starmer would be fearful of losing more votes to Farage, but aping his rhetoric in milder terms looks more like panic than a thought-through strategy. Whilst he might be more comfortable competing with other ‘right wing’ parties for the votes he’s losing in that direction, it seems as though he’s oblivious to those deserting Labour for the ‘left’, although there is evidence to suggest that he’d actually find it easier to get those back than those who’ve gone over to the Farageist dark side. It might be easier to pretend that it’s all about economics, but it isn’t honest.

Money spent by government doesn't generally simply disappear

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One of the arguments against the Nation of Sanctuary policy which the Tories and Reform Ltd advance is that they want the money spent on the project diverted instead into local communities. The Reform Ltd candidate for the Caerffili by-election probably put it most clearly saying that we should “bring that money back to communities”, but the same point has been expressed in different words by others. It’s economically illiterate (or should that be innumerate?). Where do they think the money used for the project goes? It doesn’t simply pass from the government into a big black hole labelled ‘refugees’ pockets’; it gets spent. On accommodation, on food, on language lessons, on venues, on helping people to integrate and find work – and all that expenditure goes ‘back into the communities’. Much of the spending leads to payment of VAT, and the money which becomes other peoples’ income (as most of it does, eventually) leads to payment of Income Tax and National Insurance. It might not be a big project where the sponsors can put up a giant billboard declaring that it was funded by the Welsh Government, but the cash mostly ends up in local communities, circulating and providing income to people.

There’s a more general point there as well. The above doesn’t only relate to the Nation of Sanctuary. When the government pays out benefits and pensions, that money doesn’t just disappear either. It, too, gets spent in communities and ends up as income for other people, generating tax receipts as it does so. Looking at all government expenditure as though the money spent has gone and disappeared for ever is looking only at a single part of the flow of money: the economic effect of that expenditure is much wider. When it comes to this variety of economic innumeracy around benefits, Labour are as guilty as the Tories and Reform Ltd. There’s something else that we know for certain as well: the less well-off people are, the more likely it is that none of the money they receive will be saved, and all of it will be spent, mostly in the communities where they live.

Having said that, there is one important way in which spending by the government can make money disappear from our communities, and that is when it ends up in the pockets of the richest. As, for instance, when benefits are cut to enable tax cuts, something which always benefits those who pay most tax. Those who can afford to save often do. And money saved is money no longer circulating, no longer providing an income to someone else. Worse, some of those savings end up in offshore accounts – disappearing not only from local communities but from the whole country. Yet that, in effect, is the economic policy supported by Labour, Tory and Reform Ltd alike.

There is scope for debate about what the most effective method is for a government – any government – to put money into local communities. Is it through large, highly-visible projects which feed through into incomes, or is it by making sure more directly that all citizens – yes, and guests, whether temporary or permanent – have sufficient income and/or publicly-funded services to be able to meet their needs and live a decent life? Which approach has the greatest effect in the shortest timescale is a legitimate subject for debate. We should remember though that the two aren’t even mutually exclusive: the constraint on what we can do isn’t the availability of money, it’s the availability of resources, an economic truth which has been known for decades. Claiming that one way of spending money simply makes that money disappear is a dishonest way of avoiding that truth, while blaming the poorest for their own plight and facilitating the accumulation of wealth in fewer and fewer hands.