Escaping Stagnation

Neoliberal economics and identity politics are fuelling national decline

Towering columns

At the Mail Online, Andrew Neil criticises the cross-party push for Net Zero, which is unnecessarily accelerating further deindustrialisation of the UK.

UK industry has been paying prices for electricity 60 to 80 per cent higher than French or German industry: £113 per megawatt hour in the UK versus £61 in France and Germany. In the first two decades of this century, British electricity prices doubled, even when the price of the natural gas generating much of it was falling (before Russia's invasion of Ukraine) because of the extra cost of renewables essential to the Net Zero strategy.

So it's hardly surprising our industry has struggled to compete, especially when you realise that industrial energy prices in India and China are just one third of even Europe's lower energy prices. Port Talbot is merely the latest victim of Net Zero. Other steelworks have already fallen by the wayside. Our last aluminium smelter at Lochaber in Scotland is only kept afloat by vast taxpayer subsidies. Scotland's last oil refinery, at Grangemouth, was recently scheduled for closure.

The irony is that decimating our heavy industry does not, in fact, reduce global CO2 emissions. It is reckoned that converting Port Talbot to greener electric arc production will cut our CO2 emissions by 1.5 per cent. But that will be swamped by the rise in CO2 emissions elsewhere as we import more steel from countries, especially China, which still generate electricity with dirty coal.

On ConservativeHome, William Atkinson explains why the promise of more tax cuts might not have the political and economic impact the Government expects.

The overall evidence that tax cuts boost economic growth is mixed, depending on which taxes are cut. Cutting Corporation Tax is a non-no, since doing so would make a mockery of Sunak’s previous insistence on raising it. ConservativeHome has previously suggested a cut to – or abolition of – Stamp Duty, a measure which boosted economic activity during Covid. But neither of these are apparently Hunt’s priorities.

Having made full-expensing permanent in the Autumn Statement, the Chancellor’s focus is squarely on personal taxation. Reports suggest that Hunt will have between £6 and £10 billion of extra fiscal headroom to play with and that he is again thinking of following our advice to prioritise Income Tax cuts over Inheritance Tax…

…When the tax burden is still on track to reach its highest for 70 years, Labour is right to suggest that any cuts are lipstick on a pig. Sunak and Hunt may argue they have a longer-term plan towards a smaller state and tax burden or suggest Labour’s plans will inevitably mean further hikes. But voters cannot be fooled into thinking their taxes are lowering when they are not.

On his Substack, Neil O’Brien takes a deep dive into the data behind the scale and geographical variation in ethnic change and migration levels.

Like migration, ethnicity varies massively by constituency. On the one hand there are 47 seats in England and Wales where less than 5% of people are non-White British; and on the other hand, there are 39 seats where more than two thirds are. To pick two seats at random, in Richmond, North Yorkshire under 6% are not white British. In Holborn and St Pancras, nearly 64% are. In Wales and the North East over 90% are White British, in Greater London it is just over a third (36.8%)…

…This is one reason people’s experiences are so different, even within a single town. I used to get the bus to school in Huddersfield and pass a large piece of graffiti above Fartown saying FREE KHALISTAN, and I used to wonder where Khalistan was. (As an MP for the southern part of Leicester I know much more about it.) But even somewhere like Leicester, which people often think of as majority Asian, has massive variation within it. In the suburbs, 90% of people are white British: in east Leicester, less than a fifth.

This variation is often cited as a problem when there have been disturbances with a racial edge, but of course there are strong, rational reasons why people want to flock together - as my Kurdish experience at the top exemplifies. British politicians have never wanted hard-edged policies to prevent segregation, or force integration. The only example I can think of is a proposal in the 1960s to control where people could get mortgages, in order desegregate ethnic minority groups - slightly surprisingly that was a proposal put forward by Ken Clarke and others.

At Spiked, Joanna Williams says the High Court case against Michaela Community School could have severe consequences for social cohesion.

Losing in the High Court will not just damage Michaela. It will also strike a blow to adult authority in schools across the land. It would suggest that children and judges, rather than teachers and school governors, should decide on school rules. In many ways, Michaela should be applauded rather than slammed for its ban on prayer rituals. The school imposed the ban in order to maximise social cohesion. It wants to avoid pupils segregating themselves into religious groups. It wants pupils to see themselves as members of the same community, with a common identity and goals.

Michaela’s focus has always been on integration. At lunchtime, the school canteen serves only vegetarian food, so all faiths can eat together. The unity of the school community is elevated above the feelings of any one group. As Birbalsingh points out, this means everyone makes compromises. Christian families put up with revision classes on a Sunday. Pupils who are Jehovah’s Witnesses must study Macbeth alongside other students (they are usually forbidden from reading texts that feature magic).

In this way, the school becomes an important buffer against an outside world divided by cultural and religious identities. Inside, children can follow their intellectual and creative interests free from the pressures to conform to group demands. At Michaela, children are pupils first and members of religious and racial communities second.

For The Times, Iain Martin reflects on how the Covid enquiry has exposed the full dishonesty and incompetence of the SNP’s handling of the pandemic.

Despite the propaganda and soaring poll ratings for Sturgeon at the time, the outcome in terms of death and disease was not meaningfully different in the end between England and Scotland. The reality, we now know, is that when Covid arrived it was just as much of a scramble in Edinburgh as it was in London, and perhaps even worse in Scotland given the secretive nature of Sturgeon’s smug little cabal. The illustrious expert in infectious diseases Professor Mark Woolhouse at Edinburgh University told the inquiry yesterday that he had to email the chief medical officer in Whitehall, Dame Sally Davies, to get the then chief medical officer of Scotland to even listen to his concerns about policy. He also said Sturgeon’s decision to close schools during the second Covid wave was unnecessary.

Last week, Thomson was asked about recovered WhatsApp exchanges from mid-pandemic showing him encouraging colleagues, including the clinical director, Jason Leitch, to delete these very messages. Leitch said, sounding gleeful in the chat, that deleting messages was a pandemic pre-bedtime ritual.

Had Thomson been encouraging the destruction of these messages to evade freedom of information requests? After some awkward mental perambulations, Thomson said he might have been suggesting deletion because they had earlier in the conversation been discussing personal matters. Dawson asked, deadpan, wouldn’t personal matters be non-recoverable or redacted under the terms of freedom of information? Thomson’s face suggested he knew he had been stumped. The Scottish government’s defence seems to be that at some point it introduced rules recommending that politicians and officials destroy WhatsApp exchanges. This contrasts with the explicit promise made by a haughty Sturgeon in a news conference to keep everything for the inquiry.

For The Critic, Philip Pilkington warns that the UK does not have a strategy or the resources for engagement in a global conflict.

What is Britain to do in this emerging new world order? The grim reality is that, at the time of writing, Britain has no strategy. Being a mid-sized island economy Britain is very reliant on trade. Imports into the United States make up around 14.6 per cent of GDP, but imports into Britain make up around 36 per cent of GDP.

Yet, lacking ideas of its own, Britain’s first instinct is to simply copy the strategy of the United States. This is especially apparent amongst British conservatives who have become plugged in, via Twitter, to the American political debate in a manner that appears less and less healthy by the day. British politicians and commentators put their ear to the ground, listening to what is being said across the Atlantic and simply repeat the party line. If America hurls invective at the Chinese, Britain falls into line and even tries to one-up them. But what is good for the goose is by no means clearly good for the gander.

Consider the frankly strange statements of British Secretary of State for Defence Grant Shapps after the debacle in the Red Sea. A few days after the strikes, in his first major speech in his new ministerial role, Shapps said that Britain was entering a “pre-war world” and within five years would be at war with China, North Korea, Iran, and Russia. One wonders if Mr Shapps is familiar with basic statistical realities. Combined these four countries have armies of around 8.2 million soldiers, active and reserve. The British army currently comprises just under 76,000 full-time personnel, just over 4,000 Gurkhas, and around 26,500 reserve personnel. In Mr Shapp’s world war scenario, every British soldier would be fighting 77 Chinese, North Korean, Iranian, and Russian soldiers. These sorts of numbers can be overcome in Hollywood movies, but not in the grim reality of war where one warm body is as good as another.

Wonky thinking

The Information Technology & Innovation Foundation (ITIF) published National Developmentalism: The Alternative to Neoliberalism and Neo-New Dealism by Robert D. Atkinson. The author outlines the different economic policy options facing the United States, highlighting the limitations of right-wing Neoliberalism and left-wing “Neo-New Dealism”. Atkinson offers National Developmentalism as an economic strategy to boost productivity and wages, generate innovation and respond to the rise of China.

Neoliberalism, the economic policy doctrine of free trade, free markets, and limited government that has prevailed since the early 1980s, has run its course. Many policymakers across the political spectrum are now skeptical of unfettered globalization, decry large corporations, and lament the plight of workers. So in an echo of the New Deal era, when the Roosevelt administration and a Democratic Congress (later joined by many Republicans) executed an abrupt about-face—rejecting the perceived failings of laissez-faire economics on the dubious pretext of responding to the Great Depression—the pendulum has now swung decisively away from neoliberalism. The Biden administration and lawmakers in Congress often disagree in heated terms on the specifics, but a striking, broad-strokes consensus has nonetheless gelled around the contours of a neo-New Deal economic agenda marked by redistribution, global economic autarky, and worker-centric animus toward corporations and markets.

This is a grave mistake. If implemented, neo-New Dealism might generate a one-time reduction in inequality, but it would come at the longer-term cost of economic stagnation, fiscal crisis, and greatly diminished U.S. international competitiveness and global power. In its worst form, neo-New Dealism could severely erode the meritocratic, individualist capitalist system as America has known it.

Many of those who have turned toward neo-New Dealism hold a deep skepticism toward corporations, markets, and American global power. Few of these (mostly liberal) advocates will be convinced to abandon their campaign to transform the U.S. economic system, even if presented with a more attractive economic doctrine. On the other hand, many on the Right and the Center who have migrated to versions of neo-New Dealism, have done so because they understand America needs an alternative to the heavily weathered neoliberal doctrine. But with only one option on the table, neo-New Dealism has replaced neoliberalism, to paraphrase Prime Minister Margaret Thatcher, as the only alternative.

It’s time to recognize that neoliberalism and neo-New Dealism are not the only options. Instead of allowing economic policy to swing backward like a pendulum, policymakers should look forward and embrace a new entrant into the marketplace of doctrines: national developmentalism, which holds that the key role of government is to foster industrial and economic development and that international economic policy should be crafted to maximize U.S. economic competitiveness and global power.

National developmentalism puts per capita income growth first—because growing productivity is the only way to continue improving everyone’s living standards over the long term—and only after achieving robust growth would it prioritize efforts for greater fairness and increased government-funded redistribution. National developmentalism embraces selective globalization, with even deeper integration with allies and other nations that play fair, but with markedly less integration with nations that do not, especially China. In all aspects of government, including tax policy, regulation, spending, and government procurement, national developmentalism would embrace firm-size neutrality, recognizing that on most policy factors, large corporations outperform both small businesses and government enterprises. National developmentalism puts neither consumer welfare nor worker welfare first; rather, it seeks to advance national economic welfare—which, if accomplished, boosts consumer and worker welfare. And finally, national developmentalism recognizes that companies competing in markets generally maximize national welfare—but only when government policy works to maximize organizations’ dynamic capabilities (firms’ ability to constantly innovate in what they produce and how they produce it), especially for large corporations, and where needed, seeks to align those interests with national interest. In short, America needs a new socioeconomic doctrine that both parties can embrace, and national developmentalism offers the best path forward.

In the New Statesman, philosopher John Gray and entrepreneur Peter Thiel discuss science and its relationship to broader civilisational change. The conversation discusses the contribution of the current cultural moment to economic stagnation and holding back innovation, fuelling the popularity of a pessimistic Malthusian worldview.

JG: It’s fascinating the way in which the product of these revolutionary changes in the economy and society and thinking produces a proliferation of rackets, in science too. And I guess that’s connected with fakery. Fakery, that’s to say so many of the phenomena around us are fakery.

PT: I don’t know if it had to happen that way, but one of my colleagues says that institutions have embedded growth obligations, EGOs, in short. A healthy institution has exponential growth. A healthy, exponentially growing company, for example, creates more jobs and everybody can get promoted. Other institutions have their equivalents. And then at some point, the growth stops, and you have a choice. You can become more honest and say, well, you know, the university isn’t growing anymore. There’ll be very few faculty slots available. If you’re in a PhD program, we’re gonna make sure that 80% of the students drop out of the program within six months so they don’t waste their time. Or, the thing that I think unfortunately happens a great deal, is you just lie and the and the institutions become sociopathic. They pretend that the growth is still going on and then it’s only years and years later that people figure out that there are no jobs.

To tie it back to wokeness, wokeness is designed to distract from and cope with this structural reality. Say you have 10 graduate students in a chemistry program and there’s a job for only one of them at the end. You’re engaged in a Malthusian struggle, fistfights over beakers and Bunsen burners. Then somebody says something slightly racist or slightly inappropriate. What a relief – you can throw that one person off the overcrowded bus! That kind of phenomenon is perfectly natural, and could be avoided with more growth.

JG: Indeed, because what you just said is that the solution to non-growth is persecution. You can eliminate various people from the competition by cancelling them, pushing them out. They’re not there anymore. They’re what was termed in the first constitution of the Soviet Union, back I think in 1918-1919, “former persons”. So if you make these people former persons, at least they’re not competitors anymore, they’re out. This person, it has a function, it has a role, even an economic or a career structure role.

PT: It’s always important to understand the persecution is not as ideological as it’s dressed up to be. In an American academic context, when I wrote the Diversity Myth book back in the 90s, I believed that academia discriminated against conservatives and libertarians like myself. And I think that was true for one cohort of baby boomer academics who got PhDs in the 70s and couldn’t get tenure in the 80s. But by my generation, who received PhDs in the 1990s, it was obvious there was no job because I was conservative. And so the conservatives were actually not discriminated against: it was the Gen X and millennial liberals that were discriminated against, because they all had the delusion that as long as I say the correct party line, I’m safe.

That was of course also the delusion that the the party line communists had when they were disproportionately targeted by the Stalin show trials in the 1930s. Section 58 of the Soviet Penal Code punished you for counter-revolutionary activity. The key to understanding that was that everybody was guilty. There were just some people who were not being prosecuted for the time being. And so, in this world of extreme scarcity, you know, eventually everybody gets somehow deplatformed or ejected.

Book of the week

We recommend The Identity Trap: A Story of Ideas and Power in Our Time by Yascha Mounk. The author provides an in-depth account of how identity politics emerged and came to dominate public institutions across the Western world. Mounk argues that universalism and humanism can lead to far better routes to greater equality than identitarianism.

Another such march through the institutions is an important part of the explanation for what has happened in Canada, the United States, and (to a lesser extent) the United Kingdom over the course of the past decade.

What I call the "short march through the institutions" provides a key part of the explanation for how the identity synthesis went from an ideology that was influential in some corners of campus in 2010 to one that had a firm grip over some of the world's most powerful foundations and corporations by 2020…

The short march started on campus. In the span of a few decades, enrollment in departments dominated by scholars who embrace the identity syn-thesis, such as gender studies and media studies, increased manifold. Over the same time period, the influence of postmodernism, postcolonialism, and critical race theory also grew in more traditional humanities and social sciences departments. By 2010, the advocates of the identity synthesis were teaching hundreds of thousands of students around the country every year.

Even students studying science, business, or engineering were now likely to learn about these ideas when fulfilling course requirements outside their major field.

Students were even more likely to encounter a version of the identity synthesis outside the classroom. From 1976 to 2011, the number of students at American universities nearly doubled. The growth in the size of the faculty failed to keep pace, with the number of professors increasing by just 76 percent. But the size of non teaching staff skyrocketed over the same time period, with the number of administrators on American campuses growing by 139 percent and the number of other professional employees, such as student affairs officers and mental health counselors, growing by a staggering 366 percent. Professors had once comfortably outnumbered other administrative and professional employees at American universities; by the end of the 2010s, they were in the minority.

Both the duties and the political views of these administrators are, of course, variable. But a significant share is actively promoting the identity synthesis. The Office of Student Affairs at Sarah Lawrence, for example, has offered seminars on such topics as "Understanding White Privilege" and "Stay Healthy, Stay Woke." Meanwhile, administrators at the University of California have instructed students to refrain from using "offensive" phrases like "melting pot" or "there is only one race, the human race." A growing number of universities even empowers administrators to intervene when students use "microaggressions" in conversation with each other, encouraging students to report infractions to an anonymous hotline.

The influence of the identity synthesis is especially pronounced at America's most prestigious institutions. Top research universities took the lead in the establishment of new academic disciplines centered on the study of some form of identity. They were more likely to hire young scholars deemed to be at the cutting edge of their disciplines. And they have much more lavish budgets to pay an army of administrators to propagate the core theses of the identity synthesis, compelling students to participate in an ever-growing number of trainings and orientations. (Yale, for example, now employs more administrators than it enrolls undergraduates.)

All of this made the most elite institutions in the country more likely to have a political monoculture on campus. The political composition of faculty and university staff is one indication of this. At American colleges, incoming students are twice as likely to say that they are liberal as to say that they are conservative. Faculty are even more likely to lean left than their students: professors are six times more likely to say that they are liberal than to say that they are conservative. Administrators have a still clearer political slant: they are twelve times more likely to call themselves liberal than they are to call themselves conservative.

Quick links

Manufacturing and services increased to a 7-month high from 52.1 in December 2023 to 52.5 in January 2024, as measured by the composite PMI output index.

Borrowing in the year to date was £5 billion lower than predicted by the OBR due to a smaller-than-expected deficit in December 2023.

Toughening salary thresholds for private sector visas will not end low-wage migration in the public sector, warned a Migration Advisory Committee member.

The average worldwide cost of shipping a 40-foot container went up by 23% in the week through January 18 to $3,777 following Houthi attacks in the Red Sea.

AstraZeneca expected to expand operations at Speake near Liverpool and receive a state aid package worth up to £100 million.

The number of children with two MMR doses by their fifth birthday has fallen below 80% in the most deprived areas since the pandemic.

Cornwall Insight reduced their forecast for the Ofgem energy bill cap in April to £1,620, which would be 35% lower than it was a year ago.

Voters switching from Conservatives to ReformUK has reached record highs and Labour is attracting 12% of former Conservative voters.

Labour’s lead over the Conservatives is higher today than it was at the same stage of the 1992-1997 parliament.

Industrial electricity prices trebled between 2004 and 2021 before the Russian invasion of Ukraine.

Leading physicist confessed that net zero recommendations from the Climate Change Committee were based on insufficient data.

The Migration Observatory found that study and work routes allowed an 80% increase in non-EU arrivals between 2019 and 2022/23.

Internal Treasury analysis advised ministers that increasing immigration would do more to promote economic growth than tax cuts.

Migration Advisory Committee chair Brian Bell warned that the government is still incentivising the use of foreign low wage labour in the health and care sector.

The UK’s nuclear deterrent is supported by 53% of people with 31% against.

Sir Kier Starmer delivered a speech on civil society, claiming that “the Conservatives are "tangled up in culture wars of their own making”.

The Home Office paid £230 million to a refugee charity that has campaigned against government policy on migration, including the Rwanda scheme.

A ‘British-Africans’-only bursary for law students was launched by British Transport Police.

President Macron embraced the campaign slogan of right-wing candidate Eric Zemmour, “France remains France”, in a bid to outflank the populist right in this year’s European Elections.

67% of the public are opposed to giving the vote to the 3.5 million UK citizens who have been living abroad for more than 15 years.

The Victoria & Albert Museum and British Museum are lending 32 items to Ghana under a three-year loan agreement.

Shakespeare’s Globe has been criticised for casting a non-disabled actor to portray the murderous and tyrannical Richard III in a new stage production.

Sathnam Sanghera published Empireworld, a polemical sequel that neglects historical nuance and embraces posturing with poorly-written prose, according to a reviewer.