Good Democracies Plan Ahead

Short-term thinking has fostered elite complacency and economic stagnation

Towering columns

For The Telegraph, Charles Moore reflects on how conservatism needs a full rethink if Western civilisation is going to reverse its decline.

It has been based on the false assumption that our way of life has permanently triumphed. Almost without trying, we believed, we would go on getting richer and freer. Everyone else would want to be like us. This led us to catastrophic generosity to enemies – for example, letting China into the World Trade Organisation – and cultural arrogance, such as devoting so much diplomacy to lecturing poorer countries about climate change and LGBT rights. 

This complacency also made us – particularly in Britain, the United States and the wider Anglosphere – incurious about the historical sources of our strengths. It created a vacuum in which the next generation can be taught that our past is a simple, horrible story of slavery and colonial exploitation. We ceased to think about the sources of growth and concentrated on distributing its benefits like confetti…

…“Just in time”, the prevailing business doctrine of the age that is now ending, was not idiotic. It maximised efficiency and saved cost. But it was hubristic. It assumed our settled, uncontested superiority. Sometimes, one civilisation is superior to its rivals. Unfashionably, I would argue that Western civilisation is. But no civilisation, however glittering, can survive, if it takes its prosperity and security for granted, and neglects the close relationship between the two. 

For The New Statesman, Mariana Mazzucato argues that Britain needs an industrial policy to tackle chronic underinvestment that is holding back growth.

Mission-oriented industrial strategy can turn challenges such as climate change, health crises and the digital divide into market opportunities, catalysing cross-sectoral innovation and investment. Britain’s leaders need to stop thinking in terms of focusing on growth first and social and environmental priorities second. Public investments, through grants, procurement contracts, loans, guarantees and debt- and equity-instruments, can create market opportunities that align with the government’s long-term goals, drawing in private sector investment focused on solving specific challenges. Waiting for the economy to start growing before increasing investment is like waiting for your car to start moving before putting in fuel…

…The third reset that is needed is to move beyond the false dichotomy between the innovation state and the welfare state. This distinguishes between the development of economic policy aimed at fostering dynamic, entrepreneurial activity on the one hand and delivery of social services on the other. In the US, the CHIPS and Science Act of 2022 bridged this divide by setting conditions on access to CHIPS funding – to support the US semiconductor sector – that require, for example, commitments from recipient firms to community investment, workforce development and provision of childcare for employees. By tying these provisions to an agenda focused on building cutting-edge manufacturing in tech, the act recognises the link between innovation and welfare…

…Public procurement should be another area of focus. With nearly a third of spending in the UK flowing through public procurement, this represents an occasion to use existing budgets more strategically. Moving beyond than the UK’s existing social-value framework, which allows commissioners to look at considerations beyond price when evaluating the potential public benefit of competing bids, the government should leverage the market-shaping potential of procurement to create market opportunities aligned with its policy goals.

At Project Syndicate, Daron Acemoglu believes democracies can overcome extremism by ensuring their economic models favour the interests of workers.

Democratic leaders have increasingly lost touch with the population’s deeper concerns. In the French case, this partly reflects Macron’s imperious leadership style. But it also reflects a broader decline of trust in institutions, as well as the role of social media and other communication technologies in promoting polarizing positions (on both the left and the right) and pushing much of the population into ideological echo chambers.

Policymakers and mainstream politicians were also somewhat tone deaf to the kinds of economic and cultural turbulence that large-scale immigration brings. In Europe, a significant share of the population expressed concerns about mass immigration from the Middle East over the past decade, but centrist politicians (particularly center-left leaders) were slow to engage with the issue. That created a big opportunity for fringe anti-immigration parties like the Sweden Democrats and the Dutch Party for Freedom, which have since become formal or informal coalition partners for ruling parties…

…Nonetheless, democratic institutions and political leaders will need to make a renewed commitment to building a fair economy. That means prioritizing workers and ordinary citizens over multinationals, banks, and global concerns, and fostering trust in the right kind of technocracy. It will not do to have aloof officials imposing policies in the interest of global companies. To address climate change, unemployment, inequality, AI, and the disruptions of globalization, democracies need to blend expertise with public support.

At The Critic, Sebastian Millbank calls for tougher law enforcement against the disruptive protests deployed by climate activists.

The problem with such fundamentalism is it tends to remove movements from the realm of reason and toleration. The zeal of a protestor willing to lose life or liberty to stop whaling or strip mining has morphed into the leisured nihilism of activists willing to risk a fine to throw paint on bits of our cultural heritage. The act of a person putting their body on the line to save something they love, has now become the grim, ideological fanaticism of believing nobody is innocent, and neutrality is impossible. 

What is driving it? Activists will claim it is that they have not been listened to, and that things are quickly getting worse for the planet. We are, we are told, running out of time. I don’t deny the seriousness of climate change or, more generally, the centrality of conserving our natural world as a basic duty of society. Yet nothing could be further from the truth than the idea that governments aren’t listening. Not a single mainstream party in the UK election has left the environment and climate change off the agenda. The Labour Party, on track to win this election, is promising to eliminate our carbon emissions by 2030. Those emissions are already half of what they were in the 1990s. By any measure, green activists are getting what they want, at least in this country. 

The answer, of course, as with so many recent protest movements, is not mass discontent, but rather elite discontent. It combines potent feelings of self-importance and guilt, the desires of a class unable to express its sense of superiority in aristocratic terms turning to ideology, and at the same time burdened by a sense of shame at its own power and wealth. Just Stop Oil activists are often children of the elites, such as poster child Phoebe Plummer, a public school girl who appears on TV interviews wearing designer clothes and grew up in a Chelsea mansion. Behind the frontlines of activism, the real key to the visibility and radicalism of these contemporary movements is simple — money and an increasingly professionalised “protest” movement. The sudden rash of highly provocative protests in the UK is anything but organic.

For The Times, Daniel Finkelstein considers the anti-capitalist implications of the boycott of Baillie Gifford over investments linked to Israel and fossil fuels.

The Fossil Free Books campaign, which forced the investment management firm Baillie Gifford out of sponsoring book festivals, is a good example. It combines performance, the use of peer pressure and the linking of apparently unrelated causes. Most of the coverage of the attack on book festival sponsorship has suggested that the campaigners oppose Baillie Gifford because it invests in fossil fuels and Israel. I think this has it the wrong way round. What is actually happening is that the protesters oppose fossil fuels and Israel because they are being invested in by Baillie Gifford.

In other words, the target is the people who manage investments, and the very idea of investment. The target is capitalism. And the aim is to create a political force capable of challenging Starmer inside and outside of parliament. Israel and fossil fuels are indeed connected. What connects them is Baillie Gifford. This is the reason why Fossil Free Books doesn’t focus on, say, Iran, which would be a much more obvious target for a campaign trying to reduce oil production. To believe that book festivals can simply move on to a different, “cleaner” sponsor is to misunderstand what is happening. Baillie Gifford was chosen as a target precisely because it hardly has any investments in fossil fuels or Israel. If that firm can be driven out, almost any sponsor can.

And what of the observation that lack of sponsorship might lead book festivals to close? This isn’t an eventuality that would embarrass the protesters. It is a desired outcome. The aim is to degrade life under capitalism so that the system begins to crumble. The fact that this — bringing down capitalism one book festival at a time — appears ludicrous doesn’t mean it isn’t the aim. The same people thought Corbyn could win a general election, after all. And it doesn’t mean it won’t represent a serious challenge.

At UnHerd, Thomas Fazi reviews the European power dynamics that reinforce control from the centre and mitigate the influence of national electorates.

As soon as Macron called a snap election in response to Le Pen’s crushing victory last week, the “spread” between French and German government borrowing costs immediately rose to the highest level in years. Now, this could be seen as a “natural” reaction of financial markets to the prospect of a “populist” majority coming to power in France — and this is certainly how much of the media is framing it. But this ignores the fact that, ultimately, the spread is determined by the central bank — in the EU’s case, the ECB — which always has the power to bring down interest rates by intervening in sovereign bond markets. Markets only have power over states insofar as the central bank refuses to act…

…This does, of course, run contrary to what should be the ECB’s principal job: keeping the spread down, or at least mitigating its rise, and thus allowing the democratic process in France to proceed as smoothly as possible. But unfortunately, the ECB isn’t a normal central bank; it’s a full-blooded political actor that has no qualms with coercing governments to comply with the overall political-economic agenda of the EU. It seems inevitable, for instance, that if Le Pen were to win the next election, the central bank’s pressure on France would only increase: expect hysterical takes on France’s ballooning fiscal deficit, despite the fact that France has had a higher-than-average deficit for years, though this was never a problem so long as pro-EU governments were in power.

It also goes without saying that this strategy plays perfectly into Macron’s hands, who can point to the turbulence in financial markets to paint Le Pen as an economic menace. Le Pen, it seems, is about to learn that dropping her anti-euro agenda might help her get into power, but it won’t help her hold onto it, unless she jettisons her economic populism and aligns herself with the establishment on major economic and foreign policy issues.

Wonky thinking

The Legatum Institute has published its report Woke Capitalism in Britain: Diagnosis, Prognosis and Cure by Fred de Fossard. The author looks at the legal and cultural contexts for the spread of environmental, social and governance-centred investing (ESG) in the UK and United States, arguing that regulatory reform is required to stop the spread of corporate practices that enforce progressive ideology.

Britain has one of the world’s most sophisticated and successful financial services economies. Since the deregulations of the 1980s, the City of London and Canary Wharf have, together, powered much of the British economy. They have provided finance to new technologies and innovative businesses, and the financial services sector provides over 10 per cent of Britain’s tax revenue and accounts for over 3% of the country’s gross domestic product alone.

This is the jewel in the crown of the British economy. Any discussion of trying to “rebalance” the British economy should not ignore that all nations should maximise their strengths wherever possible. In Britain’s case, financial services and associated top-level professional services have helped restore the United Kingdom to the status of the fourth-largest exporter of goods and services in the world this year. It is in the interests of all that Britain has the most prosperous, dynamic, and competitive financial services sector possible.

However, we have a problem. Britain’s two financial services regulators—the Financial Conduct Authority and the Prudential Regulation Authority—are in danger of eroding Britain’s competitive edge in financial services, and British prosperity. As this paper by Legatum Institute shows, the regulators have also embraced the tenets of “woke capitalism” in regulating the industry, adding another layer of ideologically-driven regulation and governance. Last autumn, regulators announced consultations on implementing DEI policies into their rules for all regulated businesses. If introduced, these policies could expand reporting requirements around gender and ethnic diversity in hiring, and diversity targets in hiring and promotion decisions.

This would be an extraordinary and damaging move. It is anti-meritocracy and opposes freedom of association. Such policy should only be enacted with Parliamentary consent. It is doubtful that it is even within the FCA’s statutory objectives to secure an appropriate degree of protection for consumers, to protect and enhance the integrity of the UK financial system, and to promote effective competition in the interests of consumers.

The problems don’t stop there. The Government is committed to supporting green ventures that would not stand independently without regulatory preference or subsidy. For example, the Competition and Markets Authority is relaxing antitrust enforcement rules for green enterprises. The Government is introducing mandatory climate-related disclosures to businesses and will attempt to encourage other regulators worldwide to copy them.

At The Free Press, Sir Niall Ferguson asks if the United States and its allies are the new Soviets in today’s Cold War. America might look strong in some regards but the Western superpower is struggling to cope with public debt, divisive ideologies, failing health, and an entrenched gerontocracy. It could be the case that China understands the geopolitics of the 2020s better than its American rival.

Even more striking to me are the political, social, and cultural resemblances I detect between the U.S. and the USSR. Gerontocratic leadership was one of the hallmarks of late Soviet leadership, personified by the senility of Leonid Brezhnev, Yuri Andropov, and Konstantin Chernenko. But by current American standards, the later Soviet leaders were not old men. Brezhnev was 75 when he died in 1982, but he had suffered his first major stroke seven years before. Andropov was only 68 when he succeeded Brezhnev, but he suffered total kidney failure just a few months after taking over. Chernenko was 72 when he came to power. He was already a hopeless invalid, suffering from emphysema, heart failure, bronchitis, pleurisy, and pneumonia.

It is a reflection of the quality of healthcare enjoyed by their American counterparts today that they are both older and healthier. Nevertheless, Joe Biden (81) and Donald Trump (78) are hardly men in the first flush of youth and vitality, as The Wall Street Journal recently made cringe-inducingly clear. The former cannot distinguish between his two Hispanic cabinet secretaries, Alejandro Mayorkas and Xavier Becerra. The latter muddles up Nikki Haley and Nancy Pelosi. If Kamala Harris has never watched The Death of Stalin, it’s not too late.

Another notable feature of late Soviet life was total public cynicism about nearly all institutions. Leon Aron’s brilliant book Roads to the Temple shows just how wretched life in the 1980s had become. In the great “return to truth” unleashed by Gorbachev’s policy of glasnost, Soviet citizens were able to pour forth their discontents in letters to a suddenly free press. Some of what they wrote about was specific to the Soviet context—in particular, the revelations about the realities of Soviet history, especially the crimes of the Stalin era. But to reread Russians’ complaints about their lives in the 1980s is to come across more than a few eerie foreshadowings of the American present…

…Look at the most recent Gallup surveys of American opinion and one finds a similar disillusionment. The share of the public that has confidence in the Supreme Court, the banks, public schools, the presidency, large technology companies, and organized labor is somewhere between 25 percent and 27 percent. For newspapers, the criminal justice system, television news, big business, and Congress, it’s below 20 percent. For Congress, it’s 8 percent. Average confidence in major institutions is roughly half what it was in 1979…

…A bogus ideology that hardly anyone really believes in, but everyone has to parrot unless they want to be labeled dissidents—sorry, I mean deplorables? Check. A population that no longer regards patriotism, religion, having children, or community involvement as important? Check. How about a massive disaster that lays bare the utter incompetence and mendacity that pervades every level of government? For Chernobyl, read Covid. And, while I make no claims to legal expertise, I think I recognize Soviet justice when I see—in a New York courtroom—the legal system being abused in the hope not just of imprisoning but also of discrediting the leader of the political opposition.

Book of the week

We recommend Inventing the Individual: The Origins of Western Liberalism by Larry Siedentop. The author challenges the historical narrative of liberalism and individual rights emerging as a challenge to Christian authority and morality. Instead, the Church enabled its growth and flourishing, meaning liberty is a product of historical and institutional forces.

More than anything else, I think, Christianity changed the ground of human identity. It was able to do that because of the way it combined Jewish monotheism with an abstract universalism that had roots in later Greek philosophy. By emphasizing the moral equality of humans, quite apart from any social roles they might occupy, Christianity changed ‘the name of the game’. Social rules became secondary.

They followed and, in a crucial sense, had to be understood as subordinate to a God-given human identity, something all humans share equally. Thus, humans were to live in ‘two cities’ at the same time. We can see this breaking out of moral enclosure everywhere in the New Testament. In particular, we can glimpse the merger of Judaism and Greek philosophy in St Paul’s conception of the Christ, a conception remarkable for its universalism. For Paul, the love of God revealed in the Christ imposes opportunities and obligations on the individual as such, that is, on conscience. The Christ thus becomes the medium of a new and transformed humanity. In one sense, Paul’s conception of the Christ introduces the individual, by giving conscience a universal dimension. Was Paul the greatest revolutionary in human history?

Through its emphasis on human equality, the New Testament stands out against the primary thrust of the ancient world, with its dominant assumption of ‘natural’ inequality. Indeed, the atmosphere of the New Testament is one of exhilarating detachment from the unthinking constraints of inherited social roles. Hence Paul’s frequent references to ‘Christian liberty’. This was not simply an opposition to the Jewish law. It was a fulfilment, made possible by the discovery of a ground for existence antecedent to inherited social rules and roles. This is the moral atmosphere revealed when Jesus restricts even the claims of the family if the service of God requires it, something which churches have since often toned down.

In contrast to some later Hellenic philosophy, the New Testament assertion of a basic human equality ceased to be a speculative stripping away of social conventions, an exercise which had at times served chiefly to demonstrate the superiority of the philosopher to local prejudice. Instead, this stripping away revealed the need for a moral response to the individual freedom implied by equal standing in the eyes of God. Jesus’ insistence that ‘the kingdom of God is within you’ (as the early church often proclaimed) was designed to invoke such a response, to create an individual will. Thus, to earlier speculations about equality, the New Testament added the duty of reciprocity – the obligation ‘to love thy neighbour as thyself’…

…But if Christian beliefs provided the ontological foundation for the individual as a moral status and primary social role, why did the latter take more than a millennium to develop? We should not be surprised by this fact. There were many other causes at work. The implications of moral intuitions generated by Christianity had to be worked out against prejudices and practices sometimes as old as the social division of labour. That, in turn, involved learning how to create and protect a public role for conscience, first of all by forging a conceptual framework that could be deployed to criticize existing social practices. It was something that took centuries. And it involved fierce controversy, frequent back-tracking and frustration.

Quick links

Inflation fell to 2%, hitting the Bank of England’s target for the first time in nearly three years…

…but the Monetary Policy Committee decided to hold the bank rate at 5.25% for the seventh meeting in a row.

The average net additions to housing stock in the UK has actually increased from 198,000 in 1970-80 to 207,000 in 2013-23.

The Supreme Court ruled that Surrey council should have considered the climate impact from expanding oil drilling, threatening future oil and gas projects.

Polling forecasts Le Pen’s National Rally and Zemmour’s Reconquest party leading in 352 seats in the French National Assembly but Macron’s party leading in just 3 seats.

The Church of Scotland is selling 100 historic churches due to falling attendance rates.