The Economic Cost of the Culture War

Economics and culture can no longer be treated separately

Towering columns

For The Times, James Kanagasooriam believes the future of British politics will be defined by the rise of ‘culturenomics’.

“Culturenomics” means a cultural debate that has an economic cost embedded in it. Examples include the economic feasibility of net zero and the costs and benefits of immigration. Also, the pros and cons of affirmative action and workplace quotas, hiring practices sensitive to socioeconomic and racial status, and the role of diversity policies in corporate life.

Culture and economics have occasionally and obviously merged in the past. Remember Vote Leave’s promise of £350 million for the NHS? The evidence, though, is that for decades these tracks have been separate. In 2015 some of Britain’s top political scientists calculated which were the most economically right-wing constituencies (think most supportive of lower taxes and a smaller state)…

…The issue of immigration is also evolving away from a debate predominantly about culture and race into one that asks: does it make us wealthier or not? Both sides have their numbers. Supporters of higher rates of net migration point to it supplying health and care workers, propping up entire parts of the public sector and indeed Britain’s GDP growth; opponents cite strained public services, massive population growth and stagnant GDP per capita.

For The Critic, Miriam Cates made the case for restricting mobile phone use among under-16 year olds to tackle anxiety and loneliness among young people.

Those on the left blame economic conditions and structural inequalities for what’s happening to our children. Those on the right blame bad parenting or family breakdown or a liberal education. But none of those things have changed dramatically enough to explain the sudden decline in our children in just the last 15 years

But there is a common factor behind these worrying trends. That factor is the invention and mass adoption of smartphones and social media. As the work of American Psychologist Jonathan Haidt puts beyond doubt, the decline in children’s wellbeing across all measures — and all countries — began in 2010 and accelerated around 2014.

From suicide rates to self-harm to loneliness to gender confusion, the pattern is the same — an inflection point around 2010 and acceleration from 2014. The first front-facing camera iPhone appeared in 2010. By 2014, most adolescents had phones and social media accounts. Haidt demonstrates not only correlation but causation, with wellbeing collapsing at the same time across all Western countries, despite very different economic and social conditions. 

At UnHerd, Mary Harrington criticised the hypocrisy of centrists who were willing to go along with radical gender theory to protect their elite status.

No one likes being ignored, scorned, or shunned. No wonder so many Sensibles fall obediently into line on every [Truth Universally Acknowledged]. Take TV presenter and quintessential Sensible Kirstie Allsopp, who last year waded vigorously into the what she called “the trans moral panic” on the Stonewall side. Her reward was a pat on the back from the Daily Stormer of gender woo, Pink News, for opinions “backed up by science and facts”. It’s more accurate, though, to describe her opinions as (at the time) robustly supported by the moral hive-mind that determines and then enforces the Truth Universally Acknowledged….

…So, now the winds have changed, we find Allsopp also back-pedalling. It was never true, she asserts, that there was “no debate” on the issue of medical experiments on gender-confused children. Puberty blockers, Kirstie informs us, were bad all along. But we could always talk about it: “it is, and always has been possible to debate these things and those saying there was no debate are wrong”. All the people (mostly women) unfairly fired or bullied out of jobs, all the grannies punched in Hyde Park by men with special identities, the no-platforming, the intimidation, the threats, and the censorship — that wasn’t actually a thing.

Allsopp is the clearest indicator yet that at least where child gender vivisection is concerned, at least some of the grandes dames of Truth Universally Acknowledged may have paused broadcasting a [Truth Universally Acknowledged] in order to convince themselves, in the light of a new emerging groupthink, that the new consensus is what they believed all along. And because moral consensus precedes its “expert” rationalisation, so we also find that those who purport to stand for science and reason are also curiously quiet.

On Substack, Sam Dumitriu and Ben Hopkinson believe London’s 95 golf courses could be used for new homes to tackle the city’s housing shortage.

London’s 95 golf courses (excluding driving ranges and courses with fewer than 9 holes) take almost as much land as all other sporting activities combined. There are also a further 74 golf courses just outside London too. More of London is dedicated to golf than to football, despite the fact that many times more Londoners play football than play golf on a regular basis. 

A large proportion of London’s golf courses are publicly-owned. In fact, if London’s publicly owned golf courses were a borough, they would be larger than Hammersmith and Fulham. Yet councils get little in return as they lease them to golf clubs on the cheap. For instance, one golf course pays just £13,500 in rent to Enfield council for 39 hectares. That’s £3,000 less than it costs to rent a one bed flat in Enfield.

Some golf courses are on the edge of London and are surrounded by nature – making them inappropriate for development – but more than 1,420 hectares of golf courses (including 565 hectares of publicly owned golf courses) are within walking distance of train or stations, busy bus routes, and town centres. Building on just half of these sites at terraced house densities would deliver more than 30,000 homes, while allowing the rest to be turned into genuinely open spaces for Londoners to enjoy nature, walk their dogs, and exercise.

For The Telegraph, Robert Jenrick argues that a Labour government would deepen Britain’s transformation into a technocratic state.

Bureaucracy will balloon. Already the laundry list is endless: a single enforcement body for workers’ rights, nationwide Climate Export Hubs, an ironically-named “Office for Value for Money”. There is seemingly no challenge that Labour believes cannot be fixed with ever-more powerful arms-length bodies. Rachel Reeves intends to “hard-wire growth” with a new “fiscal lock” designed to give the OBR the final say on budgets set by the government. Decisions will not be made by elected politicians, but by these “experts” who subscribe to the economic orthodoxy. Whatever noises Starmer makes about “lowering taxes for working people”, their prescription will always be to raise taxes and grow the state.

Executive power is already seeping away from Ministers. Last October, when Steve Barclay, then Secretary of State for Health, ordered NHS Trusts to stop recruiting directly to dedicated EDI roles, the chair of NHS England appeared to reprimand him for daring to tell the NHS how to spend taxpayer money. What Labour propose means even less democratic oversight and accountability when, clearly, far more is needed. The NHS has failed to translate significant increases in doctor and nursing numbers, not to mention a £20 billion rise in health spending in real terms since before the pandemic, into more patients being treated.

Of course, Labour has nothing to fear from the quangos or officialdom that they wish to empower, because they are already ideologically aligned. They believe in racing at breakneck speed towards Net Zero, accept the supposed virtues of mass immigration without question, and recoil at our decision to leave the EU.

In The Tablet, Michael Lind argues that long-term demographic trends are creating a Democratic majority that will push the Republicans further to the extremes.

Most demographic trends still favor the Democrats and hurt the Republicans. Democratic constituencies continue to grow as shares of the American electorate, while core Republican electoral blocs are steadily declining…

…In the zero-sum competition of a two-party system like ours, a party whose core demographic constituencies are shrinking must win over voters from the other party. But instead of trying to detach and annex large chunks of the Democratic Party with an attractive vision of the American future, today’s GOP seems determined to repel potential converts with the extreme positions on abortion demanded by Republican evangelical Protestants and the continuing hostility of Republican libertarians to popular entitlements like Social Security and Medicare.

Apart from a few reformers like J.D. Vance, Josh Hawley, and Marco Rubio, most Republicans are mentally stuck trying to repeal the New Deal of the 1930s and the sexual revolution of the 1960s. These anachronistic conservatives are the equivalent of nostalgic William Jennings Bryan agrarians ranting about the gold standard and the oppressed farmers in the middle-class suburban America of Eisenhower. And the nostalgic Goldwaterites and Reaganites themselves seem positively modern and forward-looking compared to subcultures of the online right like Trad Caths nostalgic for the Hapsburg Empire, nerdy Nietzscheans fantasizing about an aristocratic or neo-monarchical eugenic caste society, and neo-agrarian homesteaders and homeschoolers who scorn the fruits of the Industrial Revolution.

Wonky thinking

Policy Exchange published their new report Tehran Calling: The Iranian Threat to the UK by Dr Paul Stott. The report describes how Iran’s subversive activities in British politics, religion, education, and culture can be curtailed. Recommendations include ending the issuing of visas to Iranian clerics, proscribing the Iranian Revolutionary Guard Corps under terrorism legislation, and completing the investigation into the Iranian-directed Islamic Centre of England.

The United Kingdom has now experienced over three decades of Iranian influence and power projection within its borders: from the Rushdie fatwa in 1989, the 2022 cinema protests against the ‘blasphemous’ Lady of Heaven movie, to the current threats to Iranian dissidents and journalists based in the United Kingdom. As Iranian flags fly at pro-Palestinian protests in this country, this report details how the Islamic Republic of Iran constitutes a multidimensional threat to British society – one which requires urgent government action.

Iran is presently a hostile state to Britain, listed alongside China and Russia as an opponent in Security Service statements. It seeks to interfere with our online systems and takes British citizens hostage. In that, it replicates the modus operandi of other authoritarian enemy regimes. Yet Iran also seeks to wield significant social and cultural influence in this country, declaring and imposing blasphemy codes, and creating institutions here that project power on behalf of the Islamic Republic of Iran. It is the latter dimension of the Iranian challenge that is the primary focus of this report.

In Jack Straw’s 2019 book analysing British-Iranian relations, The English Job: Understanding Iran, 5 the former Foreign Secretary offered a potted guide to the byzantine nature of the Iranian state, noting how rival interest groups tended to advance different and often competing policies. This makes it hard to understand, explain and react sensibly to what can seem irrational or self-defeating policies. This is not a bug but an integral feature of the Khomeinist state, where the Supreme Leader acts as final arbiter in all things, deriving his power from holding in balance the rivalries that such a system deliberately encourages.

The challenge for the United Kingdom is not necessarily to read these competing trends (though that can be at least as well achieved by judicious use of open source and expert analysis readily available outside Iran, as it can through the heavily circumscribed work of our Embassy there), but to limit the damage from those actions of Iran which threaten our domestic national interests, in particular our social cohesion and liberal democracy. This report seeks to make clear the nature and scale of the Iranian ideological and physical challenge and propose action to mitigate the damage it can do.

Research from Senior Partner Acha Leke and Consultant Igor Carvalho at McKinsey found that family-owned businesses (FOBs) often outperform their competitors. This provides valuable lessons in long-term planning and good governance as well as desirable business for investment.

We confirmed that FOBs outperform non-FOBs in terms of TSR, but we wanted to understand the actions under the control of management that allowed FOBs to outperform. When we looked at economic profit—which includes accounting profit and opportunity cost—we saw that FOBs outperformed non-FOBs by 17 percent on average in the past five years. When we look at the economic spread—which is ROIC minus the weighted average cost of capital—the outperformance was even more significant, at about 33 percent over the past five years.

We not only saw nuances for growth, but we also got some insight into the inherent challenges that FOBs face. For example, FOBs tend to underinvest in research and development, which limits innovation and entrepreneurial risk-taking. They’re a little bit more cautious, and they grow slower than non-FOBs during postcrisis periods. Many also face governance challenges due to family ownership.

We synthesized our learnings on the 120 companies that make up the top quintile to develop a value creation formula: our “4+5 formula.” The 4+5 formula, broadly speaking, is based on four critical mindsets and five strategic actions. The four critical mindsets are traits or characteristics that were common to all FOBs but were expressed more clearly by some of the top-performing FOBs. The first one is a clear purpose that extends beyond the bottom line. The second is a clear long-term perspective or orientation with a willingness to invest in the future. The third is a cautious approach to finances; FOBs have a conservative approach to how they structure their growth that affords independence and resilience. And the fourth is an efficient decision-making process that is centralized and streamlined.

The five strategic actions are actions or best practices that set outperforming FOBs apart. First, they have diversified portfolios with a significant share of revenues coming from beyond their core business. Second, they allocate capital dynamically to high-growth areas. Third, they excel at both capital efficiency and operational excellence. Fourth, they focus relentlessly on talent—attracting, developing, and retaining top talent. And fifth, they have very strong governance processes, which is a key area of ventures for FOBs.

Book of the week

We recommend Victory at Sea: Naval Power and the Transformation of the Global Order in World War II by Paul Kennedy. The author looks at how Great Power rivalry was shaped by the battle for supremacy between the six naval powers of America, Britain, and France against Germany, Italy, and Japan. Naval power was a critical part of the shifting balance of power away from Europe between 1936 and 1946.

What, then, might cause this political landscape to alter, and alter drastically? The 1920s turned out to be more of a decade of Great Power recovery and military stabilization than of change following World War I’s convulsions. The “Russia Danger,” whether czarist or Bolshevik, had been pushed into a corner. The French Third Republic, which was close to being smashed by 1917 or so, had been shored up—or had shored itself up. The British Empire, which had buckled but not been broken by the strains of mass warfare, found itself territorially enhanced in the peace settlements and in the curious state of looking much stronger than it felt. Italy had preserved its narrow place in the big boys club, and all that Mussolini wanted was a better position in it. Japan’s navy, which by 1917 had been carrying out antisubmarine patrols in the Mediterranean, was now to be seen only in Far Eastern seas. And the American giant, which in 1918 seemed poised to be the sole arbiter of the struggle for “mastery in Europe,” had gone into serious, grumpy retreat—from League of Nations membership, from a guarantee to France, and from much else except for its pressing to have Allied war debts repaid. As the 1930s began, with the Powers striving desperately to stabilize their stock markets and currencies, the broad political desire for conservatism that was latent in Baldwin’s Britain, Tardieu’s France, and Hoover’s America had if anything grown and was hardly going to be replaced by a cautious, isolationist Roosevelt. There seemed to be no grand, unfolding sweep of history occurring here, as the Powers made clear when agreeing to a further freeze on naval armaments at the 1930 London Naval Conference. If World War I had let many genies out of the bottle, the intention in these postwar years was to stuff as many of them back in as possible…

…Warship scenes of this time tell the acute observer an awful lot about the Great Powers, it can be argued, because they reveal their naval priorities and expenditures, and because the fleet deployments of the late 1930s inform us what their respective governments thought to be the most vivid manifestations of strength and influence in this age. They tell us relatively little, though, about the relative economic weights of those nations, were they ever to be mobilized for a serious and long-lasting struggle. But if, of course, intense mobilization of national power for such a total war did come about, then the navies of the world—along with the air forces and the armies—would have to be greatly transformed. Lenin’s “locomotive of war” as the mover and disrupter of things would have arrived once again, with even greater propulsive force. And the grand sweep of history would bear down on the sea power of the age.

How does one know, the renowned Cambridge diplomatic historian Zara Steiner famously asked as she composed her great two-volume study of the interwar years, when one era is over and a new era is slowly beginning? How does one guess, at a time of relative placidity, that one is crossing or at least approaching a watershed in world history? The individual can’t, was her answer. How, then, could the captain of a visiting French or Italian naval vessel, paying a courtesy call in Malta’s Grand Harbour in 1936 or even 1938 and seeing the great warships HMS Hood and HMS Barham across the bay, guess that within ten years all such vessels would be gone and the Eurocentric world order would be over? That there would be no more great naval guns left, save for as museum pieces or on mothballed vessels in a few faraway US ports? That the extensive networks of the naval bases owned by the European colonial powers, like Dakar, Alexandria, Singapore, Saigon, and Malta itself, were only a decade or so away from extinction, after having been the prized strategic chess pieces of all navies since the age of Blake and Napoleon? He could not. Nor, indeed, had we been there, could we have guessed.

Quick links

Inflation fell to its lowest level in two and a half years at 3.2% in March…

…but food prices continue to rise at an annual rate of 4%.

The UK’s economic prospects have been downgraded for the second time in three months by the IMF.

Annual growth in average weekly earnings increased by 5.6 in the three months to February 2024.

The average annual wage in the United States has grown significantly since the Financial Crisis, leaving Britain far behind…

…and remains strong when adjusted for the dollar’s purchasing power.

Polling shows that people most like to vote Conservative are 70-year olds, which is up from 39-years old in the 2019 General Election.

The Conservatives received their lowest ever polling level with Ipsos at 19%.

Chinese GDP grew by 5.3% in the first quarter of 2024, partly due to increases in industrial production.

The CEO of DeepMind said that Google will spend over $100 billion to develop artificial intelligence.

The 2021 Census shows that 15% of people in the UK were born abroad but there are six London boroughs where the majority was born abroad, including Brent at 56.1%.

A research paper claiming that having a baby is the worst thing to do to the environment has been downloaded 948,000 times.

No local authority in England and Wales has a Total Fertility Rate above replacement level, with Barking and Dagenham coming the closest at 1.98.

In the twelve months to March 2024, private rents increased by 9.2%.

Visitor numbers to the UK from overseas residents has recovered from the 2019-22 slump caused by the pandemic.