End Times and New Beginnings

Is a global economic reordering already underway?

Towering Columns

In The Telegraph, MPs Nick Timothy and Adam Jogee set aside political differences to oppose the bill to legalise assisted suicide, arguing it could introduce a de facto “duty to die”.

The legalisation of assisted suicide would change our relationship with the medical profession. Although no medical professional would be obliged to carry out assisted suicide, doctors would not, under this Bill, be prevented from suggesting assisted suicide to patients who have not raised it as an option. Neither does it allow them to opt out of discussing assisted suicide or referring patients to doctors who are willing to carry out the act.

More fundamentally, assisted suicide would change our relationship with the vulnerable, infirm and elderly. The very existence of the choice to die would change our relationships even with those we love. And the pressure to choose to die would not necessarily come from relatives but within. Consider a grandparent with a terminal illness confronting the cost of a care home, and comparing it with the cost of eliminating a grandchild’s student debt. A right to die could become a duty to die.

In Oregon assisted suicide is legal and its model is cited by campaigners here. There, a far higher proportion of those who request assisted suicide do so because they feel they are a “burden” to their family than because they are in unbearable pain. In the Netherlands, where assisted suicide accounts for one in twenty deaths, applications granted included one from a teenager with depression. In Canada, a disabled man who feared eviction from social housing received a doctors’ permission to die. A Paralympian was offered euthanasia equipment when she sought a wheelchair lift for her home.

Campaigners here say they propose safeguards to prevent the legal scope of assisted suicide broadening in this way in Britain. But nobody believes that the scope will not broaden, and the logical endpoint – a grimly utilitarian approach that puts a value on human life – is the same.

In The New Statesman, Pamela Dow charts the rise of Human Resources as an unproductive drain on the British economy.

What is the impact of HR growth? Definitely more HR. Bureaucratic theories from Max Weber, Patrick Dunleavy and Yascha Mounk show how individuals maximise power, expanding prestige and budgets. While there is demand from graduates, HR job supply is conditional on the HR function having the power to sway employers’ choices. In Britain the share of HR directors on boards has increased sharply, from 47 per cent in 2005 to 85 per cent in 2017. More than 70 per cent of FTSE 100 companies have a chief HR or people officer on their executive committee.

The UK legal and policy framework has also been fertile ground for HR growth over the past 20 years. The Equality Act assigns rights that have been interpreted well beyond their intent of fair opportunity, and definitions of “protected characteristics” are increasingly unhelpful. For example, graduates checking “disability” on their application to the Civil Service Fast Stream rose from 11 per cent in 2014 to 23 per cent in 2020. At the time, this allowed candidates to skip an assessment stage, perhaps an incentive to disclose an anxiety disorder. The civil service now is less certain how many people are blind, bipolar, using a wheelchair, or with self-diagnosed ADHD. It’s not a great leap to appreciate both the work this creates for HR, as well as the impact it has on productivity…

…Many are studying the ways in which Britain is lagging behind its neighbours, in productivity, growth and state capacity. But in HR we are a superpower, leading the world in supply and demand. The first step is to acknowledge there may be a problem. As the report from last year’s Inclusion at Work Panel recommended, senior leaders in all sectors might look closely at what their HR functions are both costing and achieving. A second step might be to question whether all HR jobs need to be graduate level. Most start-ups and small teams now use AI tools for standard contracts and compliant policies. Larger organisations might find that with these tools school leavers, well managed, can easily provide the HR support they need.

Also in the New Statesman, Sohrab Amari assesses the realignment of the American labour movement towards the Republican Party.

Trump’s economic nationalism and opposition to mass migration promised to tame labour arbitrage: the ability of corporations to play populations and jurisdictions against each other by offshoring jobs and/or importing foreign-born workers willing to toil for less. Many workers in manufacturing (and more tangible forms of labour generally) viewed his tariffs as a job-protecting shield. Trump was thus renewing a pattern familiar in the late 19th and early 20th centuries, when working-class people and labour leaders, like the AFL’s Samuel Gompers, would tactically rally to the GOP, the party of economic protectionism, even though Republicans favoured bosses when it came to industrial relations.

Meanwhile, a trio of Republican senators began advocating for a pro-worker GOP. In 2019, Florida Senator Marco Rubio delivered a speech at Catholic University in DC, drawing on the teachings of Pope Leo XIII to call for a “common-good capitalism” . Afterward, Rubio supported organising drives at Amazon warehouses. He justified his stance in “anti-woke” terms, to be sure, but it was of a piece with a broader rethink on political economy.

Senator JD Vance of Ohio, and soon-to-be vice-President, made similar gestures, most notably joining a United Auto Workers picket line in October 2023. As a legislator, Vance’s most significant initiatives were crafted alongside economic progressives, including a railroad reform bill that targeted neoliberal-style “just in time” scheduling in the industry (with senator Sherrod Brown of Ohio); a bill to claw back compensation from executives at failed banks (with senator Elizabeth Warren of Massachusetts); and still another bill to lower insulin prices (with senator Raphael Warnock of Georgia), among others.

On ConservativeHome, William Atkinson says Tory Leader Kemi Badenoch must respond to disillusioned voters’ concerns about migration numbers, not just culture.

Rather than treat Brexit as a springboard to a new economic settlement, successive Conservative governments doubled down. Pledges of getting numbers down to the tens of thousands – or at least controlling and reducing, as per the 2019 manifesto – where sacrificed to enable Boris Johnson to be able to look his brother in the eye, and be invited back to Financial Times lunches.

Sow the wind, reap the whirlwind. Our failure to control immigration – both legal and illegal – was the overwhelming reason why 42 per cent of Brexiteer voters who backed us in 2019 departed in July. Reform UK gained almost a quarter of our support. As Gavin Rice has detailed, immigration being too high was the number one reason why voters switched. Even a majority of those who went to the Lib Dems thought it should fall “a lot”.

…Through the personnel pantomime, Reform have made clear May’s elections are in their sights. Their previous underperformance at a local level should be compared with the simple message that Payne suggests that they will have: “councils are broke, council tax is too high, and local services are struggling”. Even if Tory losses are kept to a minimum, Reform will advance at our expense. All of this is a roundabout way of suggesting that Badenoch needs an answer to the Reform challenge sooner rather than later.

In The Times, Iain Martin warns of the economic consequences of pursuing net zero too hard and too fast.

[F]inancial penalties are imposed on manufacturers who fail to ensure that 22 per cent of cars and 10 per cent of vans sold in the UK are electric: “This is due to rise to 28 per cent and 16 per cent next year, increasing annually thereafter to reach 80 per cent for cars by 2030.”

Manufacturers warn this is all too much, too fast. In response, Jonathan Reynolds, the business secretary, said the Luton decision could have been a lot worse. He is right. Vauxhall said that although Luton will close, its plant at Ellesmere Port in the northwest is safe — for now.

These production and job cuts have forced ministers and officials to start negotiating with manufacturers. The government seems surprised by the backlash. But what did it expect? On net zero policy, this is simply the rubber hitting the road and the red light on the dashboard flashing a warning sign, or whichever other automotive metaphor you prefer. The economic reality is stark. Growth is weak and energy prices are too high. The car companies will also know that the election of Donald Trump presages enormous change, about which the British government is rightly nervous.

On his Substack, Alex Chalmers warns of the dangers of UK under-investment in conventional Armed Forces.

I sometimes hear that the UK’s strength is its technology or special forces. These are more valuable than mass. This may well be true, even if there’s scant evidence of the former in defence. But when a country like Estonia, Poland, or Finland is putting a meaningful proportion of its adult population on the line, while the UK can’t deploy equipment or people at scale, can we reasonably expect to have an equal seat at the table?

In the worst case scenario, a future conflict with Russia could overlap with a confrontation in the South China Sea. A recent RUSI report noted that in the event of a crisis in the Taiwan Strait, European nations risked facing critical gaps in missile defence and anti-submarine warfare. It’ll be all hands to the pump.

The isolationist will say that this doesn’t matter. What happens in Chișinău doesn’t matter in Crewe. But this is where sangfroid can tip over into being sans brain. Even if we put morality aside, a Russian-dominated or conflict-ridden Central and Eastern Europe would be dire for UK interests. Bilateral trade with Poland alone is worth £30 billion a year. Major UK companies have significant market presences in these countries, while Eastern Europe is deeply integrated into UK manufacturing supply chains for automotive parts, electrical components, and agriculture products.

Wonky Thinking

Conservative Leader Kemi Badenoch laid out principles for future immigration policy at the Centre for Policy Studies, calling for an absolute cap on numbers and an end to visas for those who will not make a net contribution.

Our Government’s primary responsibility must be to its own citizens.

Yes, economists sometimes argue that immigration can increase a country’s wealth, but they are not thinking about the effect on individual people. In Government there’s little detailed analysis about the impact of different types of immigration on living standards or on wage levels.

There’s even less analysis on the pressure on public services, or housing, or the welfare system, as a result of mass migration. Sometimes there’s even a squeamishness about discussing the negative aspects of immigration. This is not just a question of money. It’s a question of fairness. And perhaps most importantly, most British citizens don’t want to change what’s good about our country. Even those who have recently arrived don’t want to change these things. They came here because of what our country is - a secure and free society. Most people want to preserve that.

So we need a new approach. We will not accept the claim that we can only deliver growth by accepting mass migration. We need a new approach, which will mean that young people can build their lives in a country which does not have these pressures on housing and public services.

We will not accept the claim that we can only deliver growth by accepting mass migration. We need a new approach, which will mean that young people can build their lives in a country which does not have these pressures on housing and public services.

And a new approach that starts by asking why government doesn’t seem to be able to deliver that. The answer is because the system is broken, and until you accept that, any politician, all politicians, are doomed to fail. We have to get the diagnosis right.

So we will review every policy, treaty and part of our legal framework - including the ECHR and the Human Rights Act. And in designing our detailed policies, we will put the following elements at the core:

A strict numerical cap, with visas only for those who will make a substantial and clear overall contribution.

A fully transparent approach, publishing all the data, so that for the first time everyone can see the real costs and benefits of different types of migration.

A reconsidered approach to citizenship and settlement - making the path to a British passport a privilege to be earned not an automatic right.

Zero tolerance for foreign criminals remaining in the UK. And, of course, an effective deterrent for illegal migration.

Overall our plans will look at all immigration routes - family, study, asylum, and work - and at all ways people can enter the UK.

We will look at the access of migrants and any dependents to welfare and public services. And we will need to improve the data and economic modelling that decision makers rely on. But I want to end on something very simple. We can argue about the effects of migration on the economy.

We can discuss the impact on public services and housing, and we haven’t done that enough. But fundamentally - this country is not a dormitory or a hotel, it is our home. We need to look after it. I want to rebuild the trust between the Conservative Party and the British people, I know we have got a lot of work to do, but the first step is to accept that mistakes were made, and to learn from them.

As the new Party Leader I want to acknowledge that we made mistakes. Yes, some of these problems are long standing - this is a collective failure of political leaders from all parties over decades - but on behalf of the Conservative Party it is right that I as the new Leader accept responsibility, and say truthfully we got this wrong. I more than understand the public anger on this issue. I share it. The Conservatives will develop a detailed plan for immigration to put before the British public before the next election.

The Productivity Institute published Regions, cities and finance: The role of capital shocks and banking reforms in shaping the UK geography of prosperity. The report examines the way that the UK’s financial markets and capital allocation have held back regional growth outside the South East.

Our analysis demonstrates that today, the capital market risk-pricing partitioning of UK cities and regions is on a continental-wide scale, with interregional investment risk-spreads within the UK which are of the order of 250-300 basis points, the sovereign pricing range between the UK and Romania or Chile. In addition, our analysis here implies that monetary policy, and in particular QE Quantitative Easing, only had beneficial effects on the London economy, and appears to have had no beneficial traction whatsoever on most of the rest of the UK.

Ironically, the Bank of England assumes in its models that monetary policy is systematically neutral across regions, and that this was also assumed to be the case in particular during the period of QE 2008-2014. Our findings, however, suggest that in the post-crisis era this was a fundamentally mistaken view, and that monetary policy traction was highly regionally concentrated, and may well have exacerbated the regional divides between London and the rest of the UK. The evidence presented here suggests that UK national growth cannot be increased unless we are able to find ways to rejuvenate investors’ long-term and large-scale confidence in the economically weaker UK regions. In particular, rejuvenating the central business districts (CBDs) of the UK’s second-tier and third-tier cities would appear to be absolutely crucial for spurring wider regional growth. The fact that the effects of monetary policy, and in particular QE quantitative easing, are so regionally concentrated, suggests that regional financial transmission mechanisms within the UK are highly ineffective and overly skewed towards London. This raises the question as to the effectiveness of the whole of the UK banking and financial system in serving the UK interregional economic system, and in particular in helping to rejuvenate the commercial centres of cities in non-core regions.

The disparities in the prevalence and functioning of financial institutions in the UK are even more in evidence in equity markets. Business angels are heavily concentrated in London and the South-East with between 50 and 60% of the total angel population being located there. That means that other parts of the country are largely devoid of business angel communities. The consequence is that many would-be start-ups elsewhere are not only deprived of equity to get going but also do not receive the advice and support they need from mentoring and networking to grow their businesses.

After the first rounds of finance, later stages involve the participation of more formal institutions, in particular venture capital and private equity firms in the provision of equity finance. They are the essential link between institutional investors in capital markets, in for example the City of London, and the entrepreneurs developing and growing their businesses in the regions. The provision of equity finance requires engaged, informed investors, intermediating between the large diversified institutional investors in major international financial centres and small growing businesses across the country.

Like business angels, venture capital firms are a vital source of advice and information as well as finance on how businesses should grow. But in Britain they too are heavily concentrated in London and the South-East, with some two-thirds of venture capital firms based there, leaving many parts of the rest of the country without the development capital needed to scale-up their businesses.

Furthermore, much private equity in Britain (between 70 and 80%) is focused not on funding new and growing businesses through venture capital but on restructuring existing firms, especially the buyout of companies listed on stock markets by their management. So, the prospects of raising equity finance for entrepreneurs looking to start and grow their businesses beyond the immediate vicinity of the City of London are bleak.

Book of the Week

We recommend Thomas Picketty’s Capital in the Twenty-First Century. The acclaimed economist gives his seminal analysis of global capitalism in the wake of the 2008 financial crisis, arguing that when returns to capital exceed economic growth social inequality will always compound.

The distribution of wealth is one of today’s most widely discussed and controversial issues. But what do we really know about its evolution over the long term? Do the dynamics of private capital accumulation inevitably lead to the concentration of wealth in ever fewer hands, as Karl Marx believed in the nineteenth century? Or do the balancing forces of growth, competition, and technological progress lead in later stages of development to reduced inequality and greater harmony among the classes, as Simon Kuznes thought in the twentieth century? What do we really know about how wealth and income have evolved since the eighteenth century, and what lessons can we derive from that knowledge for the century now under way?

These are the questions I attempt to answer in this book. Let me say at once that the answers contained herein are imperfect and incomplete. But they are based on much more extensive historical and comparative data than were available to previous researchers, data covering three centuries and more than twenty countries, as well as on a new theoretical framework that affords a deeper understanding of the underlying mechanisms. Modern economic growth and the diffusion of knowledge have made it possible to avoid the Marxist apocalypse but have not modified the deep structures of capital and inequality - or in any case not as much as one might have imagined in the optimistic decades following World War II. When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based. There are nevertheless ways democracy can regain control over capitalism and ensure that the general interest takes precedence over private interests, while preserving economic openness and avoiding protectionist and nationalist reactions…

Quick Links

A majority of voters back assisted suicide in principle but a smaller majority (54%) support the measures in the current Bill.

The Office for National Statistics revised the net migration figure for the year ending June 2023 to 906,000, with 728,000 estimated for the following year…

…and non-EU net migration quintupled between 2019 and 2024.

Vauxhall is to close its plant at Luton, with the firm citing EV targets as part of the reason for the decision.

Former Attorney-General Dominic Grieve said the assisted suicide bill could contravene obligations under the European Convention on Human Rights (ECHR).

US President-elect Donald Trump has signalled that he intends to upend the North American trade pact.

70% of US under-30s say they are neurodivergent.

The International Criminal Court (ICC) issued an arrest warrant for Israeli premier Benjamin Netanyahu.

Finland published an analysis of the fiscal contribution of migrants, finding Somalis and Iraqis to present significant net losses.

Green activists in Germany used public money to discredit nuclear energy.