Nationalisation is about more than price

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Two days ago, the CBI warned us that Labour’s nationalisation plans would cost taxpayers around £200bn, as well as ongoing costs for such things as maintenance and development of the infrastructure.  Labour’s response, accusing the CBI of "incoherent scaremongering" was, I thought, being rather too kind on the CBI; one would really expect those at the top of UK industry to have a rather better grasp of economics than this.  Richard Murphy has explained very well why the CBI’s statement is utter nonsense – buying assets doesn’t increase total net debt and borrowing money to purchase revenue-producing assets can actually reduce net debt charges.

It’s not often that I agree with the Institute for Fiscal Studies, but their comment that "Economically what matters is whether these assets would be better managed by the public or the private sector" seems to me to hit the nail on the head.  And the real problem with Labour’s proposals is that the history of nationalised industries in the UK has not been a happy one.  Interference and micro-management from Whitehall have often meant that potentially profitable industries have ended up making losses and become a drain on public finance rather than a contributor to them, and their productivity record has often been poor.  The record of ministers and civil servants when it comes to running businesses leaves, shall we say, a lot to be desired.  Things don’t have to be that way, however.  Nationalised industries can be and often are successful elsewhere; the UK’s past experience isn’t an inevitable determinant of future prospects.

There are also some non-economic arguments about whether certain industries – particularly those which one might regard as ‘natural monopolies’ – should be run as public services for the benefit of all, or as private enterprises for the benefit of shareholders.  Apparently ‘profitable’ rail services are only ‘profitable’ because they receive public subsidy – in essence, those subsidies end up paying dividends to shareholders.  It is entirely reasonable to question whether that is the best way of spending the public money which goes into the railway network.

The real cost with Labour’s nationalisation proposals isn’t the cost of purchase itself, it is any additional costs incurred after nationalisation as a result of introducing a different business model.  Sticking with the railways as an example, a political decision to prioritise increasing capacity and reducing prices to encourage passengers to shift from road to rail would lead undoubtedly to a net increase in ongoing government expenditure.  Whether (or rather, to what extent) that would be matched by corresponding savings elsewhere (for instance on roads), or less easily quantifiable benefits such as environmental improvements, is a difficult question to answer.  It is not, though, primarily an economic debate at all – it is a political debate about priorities and the sort of society in which we wish to live.  The CBI’s headline about an “eye-watering” price is a diversion from the entirely proper debate about alternative approaches, as well as being incoherent in its own terms.

Misreading the Labour Party

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In the dying weeks of her premiership, desperate to try and save her Brexit deal, Theresa May engaged in negotiations with the Labour Party.  I’m not sure that she ever really thought that she would win over the party as a block, but there did seem reason to believe that some of the concessions she made on maintaining standards in relation to issues such as workers’ rights might have been a way of peeling off enough Labour MPs to get her deal approved.  Ultimately, it failed.  Despite all her attempts to demonstrate a willingness to protect standards and rights, and even potentially seek a closer post-Brexit relationship with the EU, the number of Labour MPs willing to buy it was limited to the usual suspects.

The new PM has adopted a different approach.  Whilst the details remain unclear, all the indications are that he has scrapped the commitments to maintaining standards and rights and is seeking a less close relationship with the EU than that enjoyed by Canada, let alone that enjoyed by countries such as Norway.  Yet it seems that he is attracting the support of more Labour MPs than ever Theresa May managed.  If only Theresa May had realised that the way to get more Labour MPs to support her deal was to promise to weaken employee rights, reduce standards, and increase the amount of damage done to trade and employment, things might have turned out very differently for her.  How could she have misread them so badly?

Where can we find the kryptonite?

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As a child, I used to enjoy reading DC comics with their array of superheroes, each of whom had his or her own unique superpower.  Superman was the first and I always thought the best.  Who wouldn’t want to be able to fly as well as having super strength and being generally invulnerable?  I doubt that the PM would have read such comics.  I could be wrong, but they don’t strike me as typical Eton fare and, as far as I’m aware, they aren’t available in an ancient Greek or Latin version.  On the other hand, when you have a whole pantheon of Greek gods to choose from, each with their own special abilities, who needs to burden their minds by reading about more modern superheroes?

In the real world, superpowers are much more mundane.  Boris Johnson’s seems to be a remarkable ability to look people directly in the eye, tell them the most outrageous lies, and be believed.  And then repeat the same trick, with the same people, time and again – even after they’ve discovered that all his previous statements were lies.  It’s quite a party trick.  In the last couple of weeks, he’s pulled the same trick on members of his own party, the DUP and the Irish Taoiseach. In an absolute triumph for hope and optimism over experience, they’ve all said that they believe him when he says he can produce a deal which will satisfy everybody, if they’ll just leave him in power for long enough to do the opposite.

In the comics, there was always a limit on a superpower.  It would have been boring if there was never any possible means by which the superhero could be vanquished.  In Superman’s case, it was kryptonite, which came in a complete spectrum of different colours, all of them having different effects either on our hero or else on other key characters in the plot. It was an update on the more classic concept of an Achilles’ Heel, something which would probably be more familiar to the PM.  The questions to which all those of us wishing to put an end to the Greek tragedy playing out before us need an urgent answer are what does ‘Johnsonite’ look like, and where do we get some?

Johnson's super power?

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When Boris Johnson formed his cabinet after being selected as the leader of his party, it was widely reported that all of those appointed had been asked to confirm that they would, if necessary, support the UK leaving the EU without an agreement.  It is becoming increasingly apparent that a number of them had their fingers crossed behind their backs as they duly confirmed that they would.  They had assumed that the PM was just bluffing, and that they would never be called upon to honour their commitment.  And indeed, that was probably what he led them to believe – he has, after all, been almost consistent in his insistence that the EU members would agree to destroy their own internal market for the benefit of the UK if only they truly believed that the alternative was for the UK to press its own self-destruct button.

Whether he really believes that is an open question, not least because I’m not sure that he really believes anything other than that he is born to rule.  A bigger question is what one earth possessed so many members of his own party to believe what he was telling them, given his long record of having what might euphemistically be called a ‘complicated’ relationship with the truth.  Worse still, they’re still at it.  Yesterday, Damien Green and a few of his mates went to meet the PM to make it clear that there are a large number of Tory MPs who will not support any move for the party to fight the forthcoming election on a ‘no-deal’ platform.  After the event, they claimed to have looked him in the eye as he pledged that the party would not shift to a no deal position, despite the lengthy briefing issued from ‘an anonymous source’ in his office the previous day declaring that that was exactly what they would do.  And they believed him.

I don’t know what it is, but Johnson certainly has something about him.  What is it that enables apparently rational and thinking people to have a meeting with a proven inveterate liar, who has a habit of saying the first thing that comes into his head and then saying the opposite later, to come away from a meeting with him believing that they, uniquely, and despite their own previous experience to the contrary, have extracted an honest statement from him?  Perhaps I’m being too kind in my description of them as ‘apparently rational and thinking’.

Re-interpreting the facts

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From the outset, a major part of the case put by the Brexiteers has revolved around the idea that the institutions of the EU wield power that rightfully belongs to sovereign states and weaken those states in the process.  As Ian Dunt put it in an article in the Irish Times, “Their entire working assumption about world politics was that international cooperation sucked power from the nation state”.  In isolation, and from a theoretical rather than empirical view, it’s not wholly unreasonable.  It is, after all, a formulation of the fear which led some independentistas, including myself, to oppose membership of the EU back in the 1970s.  There is a problem, though, when people cling to a theoretical view which is not grounded in empiricism, and which events prove to be unfounded.

One of the things that the whole Brexit process has demonstrated is the way in which a group of nations acting collectively can actually strengthen rather than weaken the individual parts.  Specifically, the Republic of Ireland has ended up with a stronger hand in the process than its very much bigger neighbour, because the EU institutions have sought to protect member states against the demands and exceptionalism of a would-be non-member.  It is almost the exact opposite of a world view in which, as Dunt puts it again, “…international relations [is] a zero-sum game in which big countries are winners and small ones losers to be gobbled up”. 

It’s a reality which logic dictates ought to lead to a change in outlook, but the cognitive dissonance involved has all been too much for them.  The EU’s support for Ireland’s position has led to some Brexiteers complaining that the EU is not being tough enough in bringing that small country into line for the benefit of the larger ones – in the same way as they themselves have simply over-ridden any and all objections from Scotland or Wales to their approach.  For them, that is the natural order of things.  If their complaint sounds like the complete reverse of what they were previously saying about ‘Europe’ dominating its member states, it’s not because they were previously wrong; it can only be because ‘Europe’ is using Ireland to pursue its own devious and nefarious objectives.  Every fact or event which undermines their own world view can be and is simply re-interpreted in ways which confirm and strengthen it.  It makes rational debate close to impossible.

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Yesterday’s poll showing that only one third of the electorate support exiting the EU without a deal is being interpreted by some as an indication that the PM is going against public opinion and should be reconsidering.  That seems to me to misunderstand the point – having around 34% support is enough under the UK’s electoral system, and the PM is more likely to interpret it as a very encouraging finding.  He doesn’t need the support of a majority, and public opinion on this one issue is unimportant.  All he needs is to ensure that all that 34% vote goes to his party (and of course that all his party’s candidates support no deal) and he could win the forthcoming general election with a thumping majority of seats.  And at the moment, that is the outcome which the polls are suggesting.

Personally, I’m not convinced that the polls are correct, or that the strategy will work.  Firstly, there is a real question as to whether the overall national figures will translate evenly across constituencies; in this election it seems likely to me that individual constituency battles (for instance those involving 'expelled' Tories) will be more important than has traditionally been the case.  Secondly, there is Scotland where the likeliest outcome is the annihilation of the Tories as an electoral force.  Thirdly, a Lib Dem surge in parts of England may well take a number of seats from the Tories, thereby pushing the winning line further out of reach.  And finally, there is a serious question as to whether long-term Labour voters who support Leave will really turn out and vote for the traditional enemy in the numbers which the Johnson strategy requires.  A hung parliament still seems the most probable outcome to me.

Let us suppose, however, that that analysis is wrong, that Johnson manages to unite most of that 34% behind his party as well as hanging on to less-convinced traditional Tory voters in sufficient numbers to win a large majority of parliamentary seats.  What then?  I wonder if he’s even thought forward to that point – he does, after all, have something of a reputation for flying by the seat of his pants.  It seems to me that his troubles, far from being resolved by a quick no deal Brexit, would be just starting. 

In the absence of a withdrawal agreement there would be no transition period, and all existing arrangements with the EU would, legally, come to an immediate end along with all the EU-brokered trade agreements.  For all Trump’s old talk of quick deals, negotiating a deal would probably take at least 5 years and probably more – the UK will not be dealing with Trump at the point of signature but with his successor (although that’s probably a plus rather than a minus); and negotiating other deals will probably take longer.  There would be customs checks at the border across Ireland, and the UK would be starting a long drawn-out process of negotiating a trade deal with 27 EU countries acting in concert, all of which it has spent 3 years mightily p***ing off, and for whom dealing with all the issues which were supposed to have been dealt with in the Withdrawal Agreement will be their starting point.  And all those voters who thought that the supposed difficulties of no deal were just Project Fear start to disover the truth.

His main objective (continuing to occupy the post of PM) would have been achieved, but I wonder how long it would be before letters started arriving in the in-tray of the chair of the 1922 Committee…

Carts and horses

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From the reactions amongst MPs to the proposals which the PM outlined in the Commons yesterday, it looks as though phase 1 of the Brexit process (where the Conservative Party negotiates with itself) will soon come to an end.  Given another week or two, the governing party may well be able to mobilise a majority of MPs behind its proposal.  Once they finally get to that stage – clarity as to what the government and MPs want and are prepared to vote for – it would be quite a sensible time to send a letter to the EU, triggering the start of the Article 50 process.  There’s just one small problem…

Leaving the door wide open

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I know that I’m not the first to point out that the kerfuffle involving a backbench MP at the Tory conference could have been completely avoided if the security check had been carried out five miles away from the conference venue, or even at his house before he left, and he had been given a clever electronic device to track his movements all the way to the venue and into the room in question.  Under such a system (perhaps we could call it ‘alternative arrangements’) there would have been no need for a security check at the entrance to the room because the check would already have been done elsewhere, and the electronics would tell the security team exactly where he was at any given time.  And with no need for a security presence on the door, there could have been no confrontation and no fuss.

Unfortunately, it also neatly parallels some of the real problems for his proposal in relation to the EU-UK border on the island of Ireland.  Whilst the MP would have been checked and verified, what if his wife had simply gone directly to the room in question?  With no security clearance, she would have no clever device to monitor her, and with no security on the door, no infrastructure to detect her presence and no clever device, she would cross the boundary into the room ‘invisibly’ as far as the security team were concerned.  Without a physical control to ensure that only people who’d gone through the ‘clearance centre’ could reach the entrance to the room, the entrance would, effectively, be unsecured.  Now, one might ask, ‘does it matter if one stray extra individual gains access to the room?’  Maybe not – but if it doesn’t then the security check was irrelevant and unnecessary in the first place.  The point is that the security presence on the door wasn’t there to admire the documents held by the authorised and put a tick in a box somewhere; it was there to prevent access by the unauthorised.

A system which depends on goods and associated documents being presented at a clearance centre (or being checked at the factory) before proceeding but with no means of ensuring that everyone does so is a system which controls the movements only of the honest.  For the dishonest, it’s an open door.  And here’s the thing – the point of checking customs documentation and goods at the border isn’t to admire the beauty of correct documentation, it is to identify, deter and prevent the movement of goods which don’t have the correct documentation or on which the correct duties haven’t been paid.  If the PM had insisted his own party followed the ‘plans’ which he is putting forward, he might begin to understand why they’re not a viable approach for any territory which wants to control what does or does not enter its markets.

It's not just words - it's the context

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In responding to complaints about the language he and his team have been using, the PM chose to concentrate on justifying the use of particular words.  His response to that more limited issue was not at all unreasonable – words like ‘traitor’, ‘betrayal', and ‘surrender’ have indeed been common political currency on all sides for a very long time.  The response does, though, miss the point, which is more to do with context than actual words.

When Henry II asked, “Will no one rid me of this turbulent priest?”, the problem wasn’t with the description of the Archbishop as being ‘turbulent’; it was with the ‘will no one rid me’ part of the sentence.  The adjective, in itself, could be interpreted as mere banter, just like the words which Johnson has been using.  But when placed into a context where the person described is also referred to as needing to be ‘got rid of’, (and where it is said in the hearing of individuals willing to carry out the getting rid of) the context makes the whole much more threatening.  It has the effect of legitimising (in their own minds at least) the actions of those believing that they are doing what the king wants them to do, even if they haven't directly been tasked with murder.

That is precisely the problem with Johnson’s language.  In a context where people are receiving death threats, and his team are openly suggesting that the way to stop the threats is for those receiving them to knuckle down and obey those making the threats, continuing to describe those receiving the threats as unpatriotic traitors amounts to legitimising both the threats and those making them.  Allowing him to justify the use of particular metaphors by referring to past use of the same words is ignoring context – and letting him off the hook for an utterly irresponsible approach to public debate.

FPTP doesn't do what its supporters claim

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One of the most common arguments against proportional representation is that it potentially allows extremist groups or parties to gain a foothold in elected bodies.  That is undeniably true; to the extent to which an extremist party enjoys public support, it will gain representation in a fair voting system.  But designing an electoral system around the need to exclude certain viewpoints from winning seats doesn’t strike me as being either a legitimate design criterion or the best way of countering extremism.  It is the ideas which need to be confronted and dealt with, not the electoral expression of those ideas.

Current political circumstances also cast considerable doubt about whether it’s only a proportional system which allows a platform to extreme groups.  What the Brexiteers have shown is that if a small faction manages to seize control of an existing political party, they can impose their will on the majority by gaining only around 30-35% of the vote.  Even better (from their point of view), using such an approach means that they are likely to ‘inherit’ a fair proportion of the existing vote for that party as a result of electoral inertia, so they don’t even need to win the argument for their viewpoint.

What the Brexiteers in the Tory Party have shown us is that we need to change the system which gives total power on the basis of a minority of the votes, as can all too easily happen with first-past-the-post; gerrymandering the system itself to exclude extremists doesn’t always work.