In the Bleak Midwinter

Will falling inflation and the prospect of rate cuts bring hope to a Dickensian Christmas?

Towering columns

In the Telegraph, David Frost reflects on the historical rootedness of the Christmas story, for believers and non-believers alike.

No one, believer or not, can know for sure. But even to contemplate it is a reminder that the Christmas story is more than just a story: it is rooted in real people, in a real place, at a real time. No one can seriously doubt that Jesus was a historical figure, the man of Nazareth, rabbi and teacher in the Holy Land, crucified in Jerusalem. 

Nor is there a real reason to question the core of the Christian story: Mary and Joseph’s winter journey to Bethlehem, Jesus’s birth in poverty among the animals, the flight to Egypt, and the eventual return to that small house in Nazareth – or, of course, the contrast that St Luke draws between the temporal power, the long arm of Caesar Augustus far off on the Palatine Hill in Rome, and the spiritual power of the tiny baby in his mother’s arms in a nothing town at the edge of the Empire, yet destined to change the world. 

Christmas is our one remaining festival that has not lost that historical context. True, these days it may be less a religious event than a winter festival of goodwill to all men – and even that risks being lost, as that dreadful Marks & Spencer advert showed. But the central story of the Nativity is still there, and no one can entirely avoid reflecting on its meaning, just as Mary could not avoid the angel on that spring morning in Nazareth. 

Also in The Telegraph, Robert Jenrick says EU leaders have proved impotent in the face of the European migrant crisis.

[I]t has been left to individual countries to take on the fight against illegal migration themselves. And only a small handful have been successful at stemming the flow. As Poland has proven with their closely-guarded border fence, common sense measures like physical infrastructure are highly effective. However morally complex, Greece’s turn-backs of small boats have radically reduced arrivals and, I would argue, saved lives overall.

Few leaders have the determination to adopt such policies. Even the Meloni government, which has staked much on tackling illegal migration, has stepped away from the tactics likely to succeed. Visiting Italy earlier in the year, I was struck by the admirable commitment to saving lives at sea and evident professionalism of its coastguard. But it was clear that there was no operation tasked with actually stopping crossings.

So long as some EU states are unable to defend their borders, the flow of people into Europe will continue unabated. The demand to migrate is so high, and the business model of the gangs so lucrative, that routes into Europe will simply shift to target the weakest juncture. Years ago, a key route was from Turkey through to Greece, today the favoured route is from Tunisia into Italy. If Tunisia’s coastal defences improved overnight, we should expect to see displacement to Libya. And as long as EU politicians remain ideologically wedded to unfettered movement within Schengen – despite the clear, disastrous security flaws of doing so – migrant flows across the European landmass towards western European countries like the UK will continue.

The chronic inability of the EU to enforce its external borders will create deep political fissures within the bloc and terrible outcomes for EU citizens for decades to come. But it doesn’t necessarily preordain disaster for the UK. If all our near neighbours could enforce their borders with the same zeal as Poland, we would face a much-reduced challenge.

In The Spectator, Gray Sergeant says China is using the threat of trade sanctions to strong-arm Taiwan.

Beijing has long used trade as a tool to realise its ultimate cross-strait goal: the subsuming of Taiwan, with its liberal and democratic system, into its communist people’s republic. Sometimes this can involve handing out economic goodies, such as the measures seen in the 21-point plan to integrate Taiwan and Fujian announced in September. However, since the election of the Democratic Progressive Party’s (DPP) Tsai Ing-wen to the presidency in 2016, these approaches have been overwhelmingly coercive.

China began by curbing the number of its citizens allowed to travel to Taiwan for tourism; then it banned the import of Taiwanese pineapples. Additional restrictions on foodstuffs, from fruit to fish, followed. Beijing broadened its scope in August 2022 when the then-House Speaker Nancy Pelosi travelled to Taipei. Alongside unprecedentedly large military exercises near Taiwan, which included firing missiles over the main island, China’s customs administration suspended imports of an additional 2,000 Taiwanese food products. This handed Beijing, according to Chiu Chui-cheng, Deputy Chair of Taiwan’s Mainland Affairs Council, ‘enormous extortion powers’.

…Regardless of the economic impact [of China’s measures against Taiwan], Beijing’s approach should concern others around the world. As drawn out, and piecemeal as its measures might be (much like the Chinese military’s encroachments towards Taiwan), trade is being weaponised. As General Sir Nicholas Carter, the former Chief of the Defence Staff, has stated, in today’s world ‘a weapon…no longer has to go “bang”’.

On ConservativeHome, Harry Phibbs urges us to use the familial focus of the Christmas season to reflect on the importance of home ownership for conservatives.

A belief in the family and in property rights are basic to conservatism. How many couples are stuck in rented accommodation with an aspiration to get married and have children but waiting until they can afford to buy a house? Your own home with your own family is central to our understanding of Christmas even in the absence of religion. Cooking a feast in your own kitchen. Exchanging presents in your own sitting room, perhaps after watching The King’s Christmas Message. The scene can never be the reality for everyone – and some will not want to be part of it. But those in future generations who yearn to have that same pride and stability should not have their dreams thwarted by the housing shortage.

I will not repeat now, all the detailed policy prescriptions required: of design codes, zoning, sales of surplus public sector land, boosting the Right to Buy, flexibility over the Green Belt, street votes to add mansard roofs…crucially, of course, a bold liberalisation of planning restrictions. I simply assert that it would be entirely possible for us to have millions of beautiful, traditional new family homes built in this country and that such a big increase in supply would inevitably mean a big fall in prices. It is a political choice. Existing owners would see the value of their asset fall. But some could be placated if Inheritance Tax was abolished – they might have less wealth to send cascading down but more of it might reach its intended recipients rather than the Exchequer. It would help ease the transition to a real housing market if Stamp Duty was also scrapped – something that would help buyers while sustaining prices. Some might still be unhappy. You can’t please everyone. The tax cuts would mean spending cuts. Again a political choice – but not an impossible one.

So as we sit round the hearth, those lucky enough to have one, let us resolve to restore our mission of a property owning democracy. Let us make wider home ownership our New Year’s resolution. When there has been such an advance in prosperity there is no reason why housing should be such an important exception. The nation’s children and grandchildren should not be thwarted from achieving their birthright.

In the Financial Times, Gillian Tett throws light on the ownership structure of ByteDance, the owner of TikTok, amid increasing US concern regarding the platform’s pro-China, anti-Israel bias.

This is not (just) about accusations that TikTok’s user community has a pro-Palestinian slant; nor that social media is harming teenage mental health. Instead, this issue is ByteDance’s balance sheet: financiers close to the company recently told the FT that this shows more than $50bn in free cash, of which $5bn is earmarked for buybacks — a prospect that might tempt some investors to sell out, given the rising (geo)political heat…

…[P]arts of Congress and the US foreign policy establishment increasingly view the platform as a Chinese tool to manipulate American minds, either directly or by stoking dissent. One sign of this emerged last month when Nikki Haley, a Republican presidential candidate, accused the platform of a deliberate pro-Palestinian bias, citing research commissioned by Anthony Goldblum, a US tech investor. An arguably more striking — and inflammatory — set of data comes from a new study from the Network Contagion Research Institute and Rutgers University. Data previously shown to me by internet analysts suggests that pro-Palestinian posts have recently attracted dramatically more views than pro-Israel posts — a finding echoed by bot research from the Wall Street Journal.

But the really thought-provoking issue is a comparison between TikTok and Instagram. The two platforms attract a similar audience. But pro-Israel posts on Instagram are three times higher than on TikTok, adjusted for differing platform sizes, say NCRI and Rutgers. Pro-Ukraine posts are also notably higher on Instagram. The skew is far more dramatic for topics that are sensitive inside China, such the Uyghurs, Tibet and Taiwan, and pro-Kashmir content is 600 times more prevalent on Instagram than TikTok. “We assess a strong possibility that content on TikTok is either amplified or suppressed based on its alignment with the Chinese government,” the report concludes.

Wonky thinking

The Information Technology & Innovation Foundation released its 2023 Hamilton Index, which shows that China is running away with key strategic industries.

Between 1995 and 2020, OECD nations’ global market share dropped by 26.8 percentage points across all Hamilton Index industries. (See figure 10.) Within the OECD, the slope was even more pronounced for the G7 nations that have led the global economy since World War II— their overall market share in Hamilton industries dropped by 27.9 percentage points. (See figure 11.) By contrast, China’s overall market share increased by 21.9 points. (See figure 12.) During this period, China’s gains were strongly correlated with U.S. losses (an R coefficient of -0.79).

The largest declines for the OECD came in basic metals, where the bloc’s market share dropped by 46.2 percentage points, and electrical equipment, which declined by 40.1 points. It was a similar story for the G7: Its largest declines were in electrical equipment (a decline of 41.5 points), followed by basic metals (a decline of 38.8 points). China was the big beneficiary in both cases: Its biggest increases in market share were in basic metals (a 39.5-point increase) and electrical equipment (32.4 points).

It would be one thing if the growth of China’s advanced industries were proportional to the growth of its overall economy. But it hasn’t been. China has made a strategic decision to outperform in these industries, and it has succeeded in relative terms too: It produced 47 percent more than the global average in 2020, while the United States produced 13 percent less than average.

To appreciate the enormity of that gap, consider that to match the advanced-industry share of China’s economy, U.S. output in these industries would need to expand by nearly $1.5 trillion (69 percent). This would require doubling U.S. output in pharmaceuticals, electrical equipment, machinery and equipment, motor vehicles, other transportation, computers electrical and optical, chemicals, basic metals, and fabricated metals.

Between 1995 and 2020, global production across all Hamilton Index industries shifted to nonOECD nations: Their global market share increased by 26.8 percentage points. But the real story was the extent to which China drove that gain. Industry by industry, it was China’s growth that propelled the lion’s share of the non-OECD bloc’s progress.

The largest of those increases occurred in traditional industries such as basic metals (where the block realized a 46.2 percentage point increase in its market share) and chemicals (a 33 percentage-point increase). But thanks to China, the non-OECD bloc also captured substantial increases in market shares in more advanced industries such as computers and electronics (a gain of 30.1 percentage points) and motor vehicles (28 percentage points). But the reality is China’s gain has come at the expense of most of the developing world. Before the Chinese government decided it wanted to dominate manufacturing—especially advanced industries— many developing nations, in part because of favorable labor costs, were growing their manufacturing. Since China’s rise, that growth has slowed and, in some cases, stagnated.

The Centre for Social Justice published Two Nations: The State of Poverty in the UK. The report is the first of two reports in a commission on socio-economic disadvantage in the UK after Covid and successive lockdowns.

The country is deeply divided. There are those who are getting by and there are those who are not. Those left behind face multiple disadvantage and entrenched poverty. For these people work is barely worth it, their lives are marked by generations of family breakdown, their communities are torn apart by addictions and crime, they live in poor quality, expensive, and insecure housing, and they are sick. Our analysis has found that 40 per cent of the most deprived report having a mental health condition compared to just 13 per cent of the general population.

Breakdown Britain, which launched the Centre for Social Justice 20 years ago, conducted an unflinching inquiry into what life at the bottom of society was really like. This landmark report identified family breakdown, addiction, worklessness, serious personal debt, and educational failure as the key drivers of poverty and disadvantage across the nation. Nearly 20 years on, Two Nations: The State of Poverty in the UK revisits those five key areas and provides an in-depth analysis of life in the most disadvantaged communities today. A situation which got worse as a result of successive lockdowns.

Two Nations has found a yawning gap between those who can get by and those stuck at the bottom. This gap was stretching apart after years of increased family fragility, stagnating wages, poor housing, and frayed community life, but the lockdown implemented during the COVID-19 pandemic was the dynamite that blew it open. During lockdown: calls to a domestic abuse helpline rose 700 per cent; mental ill-health in young people went from one in nine to one in six; and nearly a quarter amongst the oldest children;4 severe school absence jumped by 134 per cent; 1.2 million more people went on working-age benefits; 86 per cent more people sought help for addictions; prisoners were locked up for more than 22 hours per day, and a household became homeless every three minutes.

Looking back over the past two decades, progress has been made in some key areas: unemployment has fallen; literacy rates amongst young people have improved; overall crime rates are down by some measures; and absolute poverty – which measures poverty in purely monetary terms – has also declined. But those at the bottom of society barely feel these benefits amongst the general experience that life has become more difficult, challenges have become more complex, and poverty has become more entrenched.

Book of the week

We recommend Daniel Pitt’s new book, “Conservative Critique of Liberal Political Obligations.” Pitt argues that liberal theories of obligation based on justice and universalism fail to account for our particular obligations to our own country.

I argued that our non-voluntary national identity is an answer to the question of who we are. I argued that accounts of political obligation should ground one’s obligations to one’s country, and for all and only its members, thereby accounting for particularity requirement. Political obligations should obligate the people who reside within our country’s territory, and who share our political inheritance that has been bequeathed to us from our ancestors. Consequently, I argued that our political obligations to our country arise through our associative membership within a given place to our co-nationals. This argument is a more plausible and a fuller answer to meet the particularity requirement.

There are, however, interesting implications. The implication is that any theory of political obligation is required to meet the particularity requirement, and an associative account based on co-nationals is a strong theory to meet this requirement.

There are also unsolved questions. For example, how can universalised principles of political obligation be particularised to one’s country? I believe, that I have demonstrate that the framing of the just institutions theories based on the universal principle of justice are currently inadequate to meet the particularised obligation to one’s country. Nevertheless, the question remains in relation to other universalised principles. Another unsolved question is the role that piety and gratitude can and does play in grounding and justifying political obligation. Moreover, would the justification of political obligations grounded in associative obligations to co-nationals based on national identity be augmented by incorporating the concepts of piety and the debt of gratitude within it?

Quick links

The Office for National Statistics revised GDP estimates for the second and third quarters of 2023, showing zero or negative growth.

The inflation rate fell from 4.6% to 3.9% last month.

The Chancellor said there is a “reasonable chance” banks may cut interest rates next year, having suggested he is considering 2024 tax cuts “if we are able to”…

…yet Government borrowing was higher than forecast in November.

The Home Office reduced the new minimum salary threshold migrants must earn to come to the UK on a spousal visa to £29,000.

The Government announced a new tax on imports based on their carbon content.

After announced tax changes, someone earning £50,000 pear year in Scotland will pay £1,542 more in tax in 2024-5 than someone in the rest of the UK.

Hamas reportedly rejected Israel’s proposal of a week-long ceasefire in exchange for release of hostages.

The Pope and Latin Patriarch of Jerusalem made statements condemning the killing of civilians at a Catholic church in Gaza, but the Israeli army denies responsibility.

86% of British Jews say they are not satisfied with the BBC’s coverage of the conflict in Gaza.

The French parliament passed legislation toughening laws on access to welfare for migrants.

China’s President Xi told US President Joe Biden that China plans to “reunify” with Taiwan.

Sir Keir Starmer said it may be time to look again at legalising assisted suicide.

The supreme court of Colorado ruled that Donald Trump is disqualified from running for the presidency on the grounds of having supported an “insurrection”.

The European Court of Justice ruled FIFA and UEFA abused their positions by stopping clubs from joining the breakaway European Super League - but the UK Government has maintained its position.

NHS bosses warned that strikes may put cancer and maternity patients at risk.

BioNTech invested $150 million in Rwanda for its first African mRNA plant.

Newly appointed Polish premier Donald Tusk has started unwinding judicial reforms that caused the EU to withdraw funding to Poland.