"The markets won't allow it"

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Faced with rising energy costs, largely as a result of Trump’s disastrous war in Iran, the former Tory Chancellor, Jeremy Hunt, told us that: “The markets wouldn't allow the kind of intervention I was able to do in 2022”, and suggested that any assistance to households would have to be far more targeted. There are, of course, good arguments both for and against targeting of assistance, and that’s an argument which will continue for the foreseeable future, whether in relation to energy costs or any other policy. Governments will make choices; the question, however, is whether they will make those choices on the basis of their own judgement as to what is right, or whether they will follow the neoliberal line that ‘the markets’ have such a stranglehold on policy that they will make the decision. Sadly, the current Chancellor seems to be as much in hock to that neoliberal argument as her predecessor.

Markets, as argued here previously, are an effective way of matching buyers and sellers, and can perform a highly valuable role in any economy. But markets which constrain, or even determine, government policy have ceased to be a tool of society and have set themselves up, instead, as our masters. ‘Markets’ are not objective arbiters of right and wrong, they don’t come out of nowhere with rules set entirely by themselves. They are, rather, a human construct, designed and built by people with the aim of facilitating economic activity. They are not impersonal forces which react in a considered way to events in accordance with predictable rules – market movements are the agglomeration of a large number of individual bets about the probable direction of future movements or, rather, bets about the way in which other participants will bet on those future movements. The idea that governments should allow their policies to be determined by markets which have been captured by gamblers and speculators is a complete abdication of responsibility, and a capitulation to vested interests.

Giving credence to the idea that ‘markets’ can and should control what governments can do comes naturally enough to those who support neoliberal economics and the obsession with abiding by arbitrary fiscal rules. The problem that we face is that the government and the official opposition are united in swallowing the lie – Reeves and Hunt are interchangeable. Austerity and economic inequality are two sides of the same coin – we’ll only escape from both when we re-establish the role of markets as servants rather than masters.

Protecting citizens doesn't mean impoverishing them

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Whether a US major actually said “It became necessary to destroy the town to save it” in justification of the destruction of Ben Tre during the Vietnam war remains a matter of conjecture. That it describes the more-than-occasional absurdity of the military mindset is less open to question. It’s reflected in Donald Trump’s apparent belief that bombing the whole of Iran back to the Stone Age is a way of freeing Iranians from an oppressive regime: the difference is more a matter of scale than of substance. UK politicians aren’t immune to the same way of thinking, as Tory leader Kemi Badenoch demonstrated a day or two ago. According to her, the way to prepare for war with Russia is to cut benefits, pushing more families into poverty in the process. ‘It is necessary to starve them in order to save them’, apparently.

Politicians and military chiefs seem to delight in telling us that Russia will be ready to attack us in five years’ time, a ‘truth’ which underpins their obsession with increasing military spending at the expense of anything and everything else. Whilst it is true that the loss of soldiers and equipment in Ukraine over the past 4 years means that Russia is hardly ready today to launch a major attack on the rest of Europe, and that it would take time for them to rebuild their forces and replace the losses, the evidence that they will be ready to launch said attack in five years’ time is not exactly obvious. And, in any event, it assumes firstly that the losses in Ukraine stop rather than continue, and secondly that Russia’s leaders will have learnt nothing from the cost of invading a single country which will in any way influence their thinking about attacking an even larger ‘enemy’. It rather looks as though ‘five years’ has been selected as the timeframe of choice by NATO’s political and military leaders because it’s close enough to sound imminent, but far enough away to allow people to believe that a huge redirection of resources into military hardware might make a difference. A betting man might suggest that, five years from now, the alleged threat will still be five years in the future. But the demand for more resources will continue to grow.

But here’s the other side of that five-year coin, as it were: it’s also enough time to pursue an alternative course of action, aimed at preventing a war rather than preparing to fight one. The warmongering politicians and military leaders demanding the impoverishment of the population in order to be ready to fight another major war in Europe may well sincerely believe that the best way of preventing a war is to convince ‘the other side’ that they would lose and lose heavily if they attempted it, but the danger of such an approach is that that ‘other side’ instead sees every improvement in equipment, and every deployment of troops, as a sign that an attack on them is being prepared, and reacts accordingly. Whilst I really don’t believe that NATO’s eastward expansion was an intentional precursor for an invasion of Russia (one of the concerns allegedly underlying the Russian invasion of Ukraine), I can understand that things might look different when viewed from Moscow.

With a major war raging on European soil, and with the White House and the Kremlin both occupied by madmen, seeking to de-escalate and build trust instead of planning a war isn’t going to be easy, but it’s the only rational approach for Europe to follow. Those who would lead us into war are fond of telling us that the first duty of any government is the protection of its citizens, but there’s an unspoken addendum: ‘even if it means impoverishing them’. I wouldn’t phrase the ‘first duty’ like that. It takes a very narrow view of the meaning of ‘protection’. If we rephrase it to say that the first duty of any government is to maintain and improve the wellbeing, welfare, and living standards of the population, priorities start to look very different. And they don’t include pushing people into poverty in order to fight a war.

Who's checking what the US are doing from UK bases?

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A few hours before Trump’s deadline for Iran to surrender, it was reported that heavily-laden B52 bombers were taking off (or at least attempting to) from RAF Fairford, presumably en route to Iran. Whether they were armed with conventional weapons or nuclear weapons we may never know, but we can only assume that the jets were turned back in flight after Trump agreed, instead, to negotiate the terms of his own surrender, based on an Iranian document which Trump described as “a workable basis on which to negotiate”, and which would require, amongst other things, the payment of reparations to Iran and the removal of US bases from the region. Trump clearly blinked first, although under what pressures from within his own administration remains uncertain.

Whether it’s really a sound basis for a lasting peace is another unknown at this stage, but the use of a UK base for launching those B52s is an issue which shouldn’t be allowed to go away. Starmer has taken what appears to be a very principled and legalistic stance in demanding that UK bases only be used for ‘defensive’ actions to protect British and allied lives in the Persian Gulf, and he has banned their use for offensive bombing campaigns against Iran. But here’s the question: does anyone really believe that those B52’s, whose take-off was timed so that they would arrive over Iran at about the time that Trump said he wanted to destroy an entire civilisation, were in any way involved in a ‘defensive’ mission rather than part of his planned attacks on civilian infrastructure?

When a bomb falls on an Iranian hospital, school, bridge, or power plant, who in the UK government knows whether it came from a plane flying from a UK base or not? Is anyone checking the mission details and flight logs of all US military aircraft departing from the UK to see whether the US is abiding by Starmer’s rules or not? Starmer has banked a certain, albeit limited, quantity of kudos for setting strict rules, but if adherence is not being monitored (even Starmer, surely, couldn’t be stupid enough to take Trump’s word about what he is doing), then those rules are meaningless. Accepting the word of the US president and then turning a blind eye to what happens in practice would not be the principled stance as which it is being presented.

Laser-focused complacency might not help

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In Blazing Saddles, Cleavon Little’s Sheriff holds a gun to his own head and gets out of a sticky situation by telling the townsfolk that “The next man makes a move, the n***** gets it”. In the real world, Trump’s approach to Iran seems to involve telling them that he’s going to bomb them for another two to three weeks, and if they then agree to his terms, he’ll walk away and reserve the right to bomb them again whenever he feels like it, but if they don’t agree to his terms, he’ll walk away anyway and reserve the right to bomb them again whenever he feels like it. He doesn’t quite seem to realise that he isn’t creating as much fear as he thinks, merely telling them that they just have to hold on for another two or three weeks. When Boris Johnson kept threatening to walk away from EU talks unless they gave the UK everything he wanted, the EU’s response was along the lines of “bye!”. That sheriff had no real power to compel anyone to do anything, but it was a comedy, and in fiction, characters will do whatever the scriptwriter tells them to do. While there are undeniable comic aspects to both Trump and Johnson, their lack of control of the script meant that neither could compel their interlocutors to do what they wanted – and those interlocutors weren’t playing it for laughs either. Trump, in business as in politics, has always over-stated the strength of his own hand and depended on bullying, violence and threats to obtain compliance; Johnson was just a typical English exceptionalist.

Talk of English exceptionalists brings us to the current PM, Keir Starmer, who tried to tell us yesterday that the UK is somehow uniquely well-placed to weather the current economic storms resulting from an ill-thought-out war. He has a plan, he told us, although detail on the content of said plan was remarkably short. From what little he did say, it seems to consist mostly of being laser-focused on waiting to see what happens and then being resolutely determined to do as little as he can get away with. The picture of the UK being painted by some others, i.e. as being perhaps more vulnerable than others to some shortages, seems not to have penetrated his laser-focused complacency. Maybe things won’t turn out as bad as some of the doom and gloom merchants are prophesying; maybe Trump's expressed admiration for Charlie Windsor will lead him to moderate his behaviour rather than add a king to the list of those publicly humiliated by him, but neither seem to be the soundest of foundations on which to build any sort of strategy. As a work colleague of mine once observed, ‘if you can keep your head while all around are losing theirs, you probably don’t know what’s going on’. A message intended to reassure, from someone who seems not to know what’s going on, doesn’t exactly hit the target. Even if the target is laser-focused.

Pressing concerns of the aristocracy

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As the world stands on the brink of an economic disaster brought about by the deranged occupant of the White House, and we ordinary mortals contemplate even further pressure on the availability, let alone the price, of essentials such as food and fuel, spare a thought for the trials and tribulations of that far from ordinary band known as the English aristocracy, the last of the hereditary members which are now, at last, being expelled from their cosy sinecures as part of the legislature of the United Kingdom. My thoughts lie particularly with the 7th Baron Carrington who was apparently disturbed by the possibility of losing his esteemed slot as the Lord Great Chamberlain, a post whose responsibilities include such important matters as 'attending upon' the sovereign and members of his family if they are ever present on the parliamentary estate, and organising the state opening of parliament (although I have a sneaky feeling that the actual ‘organising’ might just possibly be done by minions rather than by the noble lord in person).

It is obvious to all (well, all those who count, at least, including the Prime Minister who has agreed that the role should continue to be hereditary even if it is no longer accompanied by a seat in parliament) that the best way of choosing someone to fill this role is for the incumbent to inherit it from his (I believe that it’s still always going to be a he) forebears rather than to conduct any sort of assessment of their skills and abilities. The UK is, after all, a very special sort of meritocracy, in which merit is imparted by breeding. With a huge sigh of relief, the Baron can now be certain that the position is secure for himself and his descendants for generations to come.

Well, not exactly. The role might be hereditary after a fashion, but it’s shared between three families, passing from one to another whenever the sovereign changes. And one of those families has a 50% share, meaning that they get the job with every alternate sovereign, and the other two families have 25% shares, meaning that they only get the job once in every four sovereigns. Worse (if you happen to be a Carrington) is that the Carrington share is split 11 ways between different members of the family. What that means in practice is that the current incumbent has only been in post since the death of Elizabeth, and if Charlie Windsor pops his clogs tomorrow, no Carrington will hold the post again until Charlie’s first (currently unborn) great, great grandchild ascends the throne (if the monarchy lasts that long) in a century or more’s time. Even then, it may not be a descendant of the current incumbent, since the descendants of the 11 members of the family who jointly inherit the quarter share of the job will need to agree which of them should take the job.

Still, securing that somewhat tenuous privilege is clearly more important than the sort of thing which concerns we lesser souls.

War and its beneficiaries

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The dire warnings about the impact of the war in the Middle East on the global economy are mostly valid, and the fault lies squarely at the feet of Trump for failing to foresee the obvious consequences of his actions. The longer it continues, the more we will all suffer. In strictly economic terms (a very important caveat), however, it isn’t all bad news. Capitalism thrives on destruction – using up all those munitions generates orders for replacements; every aeroplane lost requires a new one to take its place; violent demolition creates opportunities for redevelopment. I’m not suggesting that any of this is a good thing for humanity, it’s just that there have always been some who benefit from war, and current wars are no different. The euphemistically-named ‘defence’ industries and their owners will be amongst the beneficiaries, obviously.

For the rest of us, though, it underlines the folly of looking at anything in ‘strictly economic terms’. Production of munitions will certainly generate employment and economic growth, as will the rebuilding programs which will be needed after any war. But pure economics ignores the human and moral aspects. There’s a lesson there as well which goes much wider than a specific military conflict, or even war in general. Government and politicians who bang on about growth and jobs invariably ignore other aspects in pursuit of increased total material wealth (which inevitably accumulates in the hands of the few). Mechanistic economics pays too little attention to questions about the non-monetary value of activity, let alone the morality of it, and whether it really serves the needs of humanity.

There’s nothing mystical or divine about an economy – it’s a human construct, designed by humans and operating in accordance with rules laid down by humans. It’s our collective choice whether we design economies to facilitate the accumulation of wealth by a few, or to meet the needs of all. It’s our choice whether decisions are made on purely economic grounds or whether they’re made after considering whether humanity as a whole benefits. It’s a mark of the extent to which a social, human construct has been captured and placed at the service of a tiny minority that we live in the world we do. And it’s a measure of the success of the ideology underpinning it that so few understand that it is not the natural order of things, but the outcome of that capture.

Taming the markets

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It is a given that Trump’s statement about talks with Iran is a lie. Working out which part of his rant is the lie is much harder – maybe there are no talks at all; maybe there are some sort of indirect talks taking place through an intermediary; maybe (as Trump himself has hinted) the talks are taking place with someone who has no authority to hold them (and therefore to implement any agreement), and whose life is under threat if the regime currently in power find out he’s talking to Trump; perhaps he’s even talking to the late Shah’s son in the mistaken belief that he can put him back on the throne. With Trump, any or all of these are possibilities: the nearest thing to a certainty is that the statements coming from the regime in Iran are more likely to be true than anything Trump says. Only time will tell which lie he is telling.

Meanwhile, one of the apparent certainties is that the words emanating from Trump’s phone fingers can and do move markets. As a direct result of Trump’s claim about talks, conveniently issued shortly before markets opened, oil prices fell and stock market prices rose – two of the outcomes most highly valued by a man who measures the success or failure of everything in terms of increasing the wealth of himself and his billionaire friends. Superficially, it’s a puzzle as to why this happens. After all, those involved in the markets know as well as I do that the truth is a stranger to Trump’s lips, and that whatever he says now will probably be reversed in days, if not hours. What makes them place such trust in his words?

The answer to that lies not in what any of those involved in speculative buying and selling themselves believe might or might not be true, but in what they think that other speculative traders might or might not believe. If you believe that everyone else is going to be selling oil (pushing the price down) or buying stock (pushing the price up), then it becomes a race to sell or buy before everyone else does so in order to turn a quick profit. (And if you can get hold of some advance information, speculation – or even simple betting – becomes easier. It’s an obvious hazard when dealing with a ‘leader’ who sees personal and family enrichment as an entirely legitimate goal.)

That brings us to the problem with markets. As a mechanism for matching genuine sellers with genuine buyers, markets are an extremely effective process. They have, though, been largely hijacked by people who have no interest whatsoever in the ‘things’ they are buying and selling; it is the process of buying and selling in itself, with the prospect of turning a quick profit, which attracts them. Commentators describe volatile markets as a ‘problem’, but that’s only true for those genuine buyers and sellers. For speculators, volatility equals opportunity. The consequences of that volatility are felt in the ‘real’ economy by all of us, whilst a minority redirect wealth to themselves. For as long as legislatures allow this situation to continue, markets and the economy they support end up controlling us, when they should be serving society as a whole. Where are the politicians willing to tackle this scourge?

Trump can't make all the rules

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When I was a child, the kids from our street used to go into the fields at the end of the road and play commandos. Well, it was the 1950s, and ‘the war’ might not have been a memory for us, but it was still fresh to our parents’ generation. It was a game which would often dissolve into acrimony as debate raged over whether one or other of us was ‘taking his shots’; a debate in essence as to whether the imaginary bullet had hit or missed its target. Even the world’s best ballistics expert would have been unable to answer the question – tracing the trajectory of an imaginary bullet fired from an imaginary gun is no simple matter. And we didn’t have such an expert on hand anyway.

It was a childish debate, of course – but then we were children and children are allowed to be childish. But it seems to me that Trump – a man-child if ever there was one – has got to a similar stage in his war against Iran: the Iranians are just not taking their shots. He believes that he has ‘won’, but the loser is declining to oblige him by meekly accepting defeat. Six decades ago, we children learnt that no matter how determined any one of us might have been to set his or her own rules for the game, it only worked as long as the rest of us agreed to be rule-takers. It's not a lesson that everyone learns.

Trump has lived his entire life believing that he alone sets the rules, and that rules set by others can be ignored. Mostly, he’s had that stance validated by the behaviour of others, even if that behaviour has been the result of threats, bullying and aggressive law suits which many of his targets have chosen to settle rather than drag out at huge cost. And now he’s got himself into the most powerful position on the planet, with huge resources of weaponry at his disposal, and he’s encountering more push-back than he’s ever encountered before. Iran might be the bloodiest and most obvious source at present, but it’s also increasingly coming from other governments, which he sees as vassals, declining to prostrate themselves before him and do his bidding without question.

His instinctive reaction has been to fall back on the learned behaviour which has served him so well in the past – turn up the volume on the threats, insults and bullying. If – when – that doesn’t work, what will he do next? The world’s best hope is that he falls back on his other standard ploy: lie and claim victory. Repeatedly. Whether the other players will let him off the hook so easily remains to be seen. Not taking their shots can be habit-forming.

Avoiding the real issue - again

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Last week, this blog referred to the question of a falling birth rate, and the alleged ‘problems’ it creates. The Sunday times (paywall) carried an article this week about a new report from a think tank calling itself the Centre for Social Justice on the same issue. The report itself, Baby Bust, is available here. The main factor on which it alights is that it is all the fault of immature men, who are entering the adult work force later and thus deferring parenthood for men and women alike. But it was the ‘solutions’ which caught my eye.

Leaving aside the socially conservative proposals about incentivising marriage and encouraging mothers (not fathers, note) to be stay-at-home child carers, moving to ‘household’ rather than individual taxation – all massive steps backwards, particularly for the status and role of women in society – it was their proposals for education which leapt out at me:

“Reduce the school leaving age and get most young people into the workplace as early as possible”, and

“In a similar vein, we should drastically reduce the numbers of 18-year-olds going to university.”

They didn’t suggest to what age the school leaving age should be reduced. I suspect that they don’t want to go back to sending 8 or 10 years olds down the mines (or aren’t prepared to say so), but it seems clear that they want to at least reverse the increase from 16 to 18. They also want to increase the retirement age to qualify for the state pension. My interpretation of it all was that their idea of ‘social justice’ seems to mean that working class boys, and women in general, should know their place and understand their station in life, as though the 1950s was some sort of golden age. It was a depressing read, and no surprise to find the foreword written by a Tory Shadow Minister.

But, to return to last week’s post, what it’s really all about is looking for a ‘solution’ to a ‘problem’ in a way which avoids the need to look at how the economy serves society, and above all at wealth distribution within society. ‘Social Justice’ which protects the wealthiest at the expense of the rest is an Orwellian use of language, to say the least.

Davey has right diagnosis, but wrong cure

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There are few government policies that are so financially ruinous that they cannot be made more so by a determined politician. And this weekend, it was Ed Davey’s turn, for the Lib Dems. His diagnosis – that the US is no longer a dependable ally and relying on them to allow the use of missiles which are leased from the US may make them potentially unusable – is accurate enough. His cure, however – that the UK should develop a completely new set of missiles on its own – would add vast amounts of additional cost to a programme which is already hugely expensive. It would also have a lengthy timescale before it could be ready for use, and one of the known unknowns is whether the US will remain a hostile actor for the whole of that period.

Whether it would make the weapons any more usable is another open question. Their value as a deterrent has always depended on a series of assumptions. That the UK has the ability to fire them at all without US permission is certainly one of those, but there are others: that ‘the enemy’ will simultaneously be mad enough to launch a strike which will incinerate millions and make large areas of the earth (maybe even all of it) uninhabitable and sane enough to be deterred by the thought of millions of their own citizens being incinerated in return; that the orders given to the submarine commander instruct him to launch in certain circumstances and that the commander, contemplating the scale of destruction already wreaked on the planet, would follow those instructions; and that the enemy would not already have located and destroyed the submarine. That’s a whole load of caveats, without even considering whether the system would actually work anyway.

All of that matters only if the possession of nuclear weapons had anything at all to do with war, peace or deterrence. If, as many suspect, it’s actually more to do with a post-imperial mindset amongst UK politicians – Labour, Tory and Lib Dem alike – that still doesn’t accept the reduced status of the UK in the world and clings to the belief that what the UK PM thinks is of any importance, then whether they work or not is largely irrelevant; the important thing is whether the UK is accepted by other states as being what its leaders think it is. It fails, though, even on that level. One of the consequences of diverting so much resource into a single weapons system is that the UK doesn’t have the sort of forces which can actually be of use, leading to boats spending three days bobbing about in the English Channel. Some of us might think that’s a positive, of sorts – but I doubt that it’s what Davey had in mind.