The Great Divergence

Are US and UK politics pulling apart or just on different cycles?

Towering Columns

On his Substack, Yascha Mounk says Vice-President Kamala Harris wedded herself to extreme, identitarian positions alien to the average American voter.

A small cadre of extreme activists obsessed with an identitarian vision of the world—a vision that pretends to be left-wing but in many ways parallels the tribalist worldview that has historically characterized the far-right—has gained tremendous influence over the last years. And even those institutional insiders who were able to keep this influence at bay through clever rear guard actions were rarely willing to oppose them in explicit terms.

This was one of the most consequential vulnerabilities of Kamala Harris’ campaign. While running for the Democratic primaries in 2019, she wedded herself to a slew of identitarian positions that happened to be deeply unpopular. Sensing that the political winds had shifted, she did not reprise her flirtations with the idea of defunding the police or decriminalizing illegal border crossings. But neither did she have the courage to explicitly call out the ideological foundations for these deeply unpopular positions—or to reassure millions of swing voters that she would be willing to stand up for common sense when doing so might risk inspiring a little pushback within her coalition.

Donald Trump is far outside the American cultural mainstream. (Yes, I believe that to be true even after reckoning with his unexpectedly strong showing tonight.) But the problem is that Kamala Harris, the Democratic Party, and the wider world of establishment institutions with which they are widely associated are also far outside the American cultural mainstream. Harris’s campaign had many opportunities to address that problem. She could have asked her supporters not to self-segregate by race and gender the moment she became the official nominee. She could have defended a woman’s right to choose without condoning late-term abortions and stood up for the value of vaccines while acknowledging pandemic-era overreach by public health authorities. She could have chosen to make her case to the millions of swing voters who listen to the most popular podcast in the country. But she did not do any of that.

For UnHerd, Tom McTague offers an analysis of Kemi Badenoch’s vision of conservatism.

Badenoch’s muses provide further evidence of her unique post-colonial conservatism. In recent weeks, I have asked various Conservative MPs and leadership contenders to name their intellectual inspirations, and I’ve been struck by how quickly they have reached back to Margaret Thatcher and her milieu as if lost for contemporary ideas. Badenoch, by contrast, offers four influences, all of whom are concerned with loss. At least three of them are notable for their prominence in today’s America rather than Britain: Thomas Sowell, the voice of black conservatism in the United States; Jonathan Haidt, the American social psychologist; and Why Nations Fail by the Nobel prize-winning economists Daron Acemoglu and James Robinson. Her fourth muse is the English conservative Roger Scruton.

Her analysis of modern Britain is a combination of these influences. The thesis of Why Nations Fail, in Badenoch’s telling, is that the countries that succeed are built on trust — a trust that is being broken in Britain, as both Scruton and Badenoch would have it, because the political class has, for too long failed to stand up for the nation and to affirm what its members see as their inherited rights. She offers two examples of why trust in Britain is breaking down, both of which are distinctly modern and distinctly conservative. First: immigration; second: social media. “If you bring people to a country en masse with very different attitudes, and you don’t have a muscular emphasis on what is special about this country, what is different, why that’s important, it will erode,” she tells me. “You can’t just take it for granted. You can’t just assume that everybody understands these things.”…

…The language she uses to speak about nationalism is more strident than any other politician I have interviewed. When I ask her if she agrees with Scruton that the disquiet over immigration, as he put it, was the result not of racism, but “the disruption of an old experience of home”, she says she agrees “very much so — and I can say that because I also know how people react in other countries when things don’t look familiar”. She argues in this regard that nostalgia is not simply a negative emotion, but provides an “anchor on what used to be helps people stay rooted in a community”. This runs into a central theme of her leadership pitch: the duty of patriotism. “Citizenship is not about having a passport,” she tells me. “Citizenship, to me, means being rooted in a place, wanting it to succeed. It’s not about what you look like… you don’t just want yourself to succeed. You want your neighbourhood to do well. You want your neighbours to do well. You want the success of your country for the next generation, and you’re not obsessed about what’s happening thousands of miles away, either out of, you know, prurient interest, or because of some ancestral history that you might have.”

She is dismissive of citizenship tests, believing instead that patriotism must be promoted organically by everyone in society. Above all, it has to be felt. “[Britain] is not a dormitory. It is not a hotel, for people who are just passing by who want to make some money — and yes, there is a place for that, but we should want people who want the success of the UK.” For a Tory free marketeer, it is striking that she feels able to attack the global super-rich for using Britain as a “hotel” just as much as she attacks some of the poorer arrivals who she claims see the country as a dormitory.

In The Telegraph, historian Robert Tombs fears that Britain’s institutions are sliding towards bias and corruption.

So many people running our institutions have the same background, the same opinions, the same ambitions. They progress from quango to quango, from boardroom to boardroom. Gamekeepers eagerly turn poachers. The result of failure or even misbehaviour is simply to move on. They are the epitome of the “anywhere” people, with little connection to place or community, and little loyalty to institutions that are merely stepping stones to something more lucrative. There are, fortunately, exceptions. But the scandals show that the exceptions are not enough. 

The causes seem plain. We live in a more diverse and mobile society. Old inhibitions against misbehaviour are weakened: we don’t worry about what the neighbours might say if we don’t know who they are. But there is another problem, which can be mitigated, though with difficulty. We have far too many unaccountable institutions. 

Partly because of an old liberal tradition of limiting central authority, and party through a Gladstonian/Thatcherite belief that markets themselves create discipline, we have created a horde of arms-length bodies that behave as a law unto themselves. We have charities that do not depend on individual charity but on the largesse of government departments. Quangos, NGOs and public corporations like the Post Office exist on public money, but are not accountable to the public. They also provide vast amounts of taxpayers’ money to each other. 

At ConservativeHome, Henry Hill argues there is no plausible pathway towards a smaller state without re-thinking what the state does.

[I]t’s just a fact that there is no way towards a meaningfully smaller state, or to substantially and sustainably lower taxes, without cutting services and entitlements. They’re most of what the state does, and a smaller state would need to do less – at least if it is to keep doing anything well. We tried the alternatives. David Cameron and George Osborne tried to do austerity whilst avoiding hard decisions by salami-slicing the whole thing without making any fundamental changes to the footprint of government; the result was what John Oxley has dubbed ‘Sh*t-State Toryism’:

“There are few things that the state identifiably stopped doing under Cameron and Osborne, but lots of things it did less and less well.”

Then, Liz Truss attempted to simply deficit-finance £40bn of tax cuts. The market wouldn’t wear it, at which point she was doomed (although it would have been an education to see her try and get the hurriedly-promised £40bn of spending cuts through the Commons). By the end, Rishi Sunak was just carving some exceptions into vast stealth taxes and calling those exemptions tax cuts. Remember Labour’s ‘retirement tax’? That was just fiscal drag, which which he was hitting everyone else. For whatever reason, this did not pay the political dividends of the actual tax-cutting budgets of yore.

On top of the above there have been endless reviews and hunts for efficiencies. Perhaps there are still some to be found. But the orchard has been picked through so many times that the odds of finding low-hanging fruit are small. Asking departments to make cuts, especially if you protect their big-ticket items, means trawling a bramble-thicket which are either practically or politically difficult to stop doing – and having to endure lots of stories about nasty ministers cutting this or that nice little thing…

…Faced with all that, MPs could be forgiven for listening to those who say the Tories should simply abandon the ‘ideological’ small-state stuff. Why not try to win the victory over ourselves? The last election suggests we’re beatable. Sadly, that easy exit is as false as all the others. Today’s Overton Tightrope leads nowhere; the 50-year forward projections of health, social care, and pension spending point to a future where government does nothing else. We can already see this playing out, in microcosm, in local government.

In The Telegraph, Guy Dampier questions why pro-immigration advocates do not want officials to publish comprehensive data on migrants’ net fiscal contribution.

Studies like that from countries like Denmark and the Netherlands have shown a significant divide between immigrants from developed countries like Japan and the USA compared to those from Africa and the Middle East. On average a Japanese immigrant to Holland provides €250,000 more in tax than they cost. However, an immigrant from the Horn of Africa costs an extraordinary €600,000 more on average than they contribute. 

Similarly the Danes were able to show that in 2022, while 15.2 per cent of the population was made up of immigrants or their descendants, they made up 29.7 per cent of those convicted for crimes, including a disproportionate number of rapes and robberies. When the government decides who should be allowed to immigrate to Britain, we should want them to make sure that those coming here don’t pose a threat to the British people.

This isn’t about demonising immigrants. On the contrary, more data should enable a more dispassionate debate. If immigrants to Britain really are very fiscally beneficial or commit little crime, then pro-immigration advocates should want to be able to prove that. It’s the absence of information which produces so much rancour. Instead, this is about understanding how immigration is changing our society and helping the Government to make better-informed choices on immigration policy. The Government should commit to being honest with the British people – and publish the data.

Finally for UnHerd, Julius Krein lays out the challenges and opportunities for US industrial policy.

[S]uccessful industrial policy is perhaps best thought of not simply as consumer austerity but rather as “deferred gratification”, or investment in the future. Notably, the Chinese government has actively suppressed domestic consumption in favour of industrial investment throughout the last several decades, and yet, contra Western economic orthodoxy, has presided over a miraculous rise in living standards, in addition to its growing geo-economic power. That is not to say, however, that the path forward for the United States will be easy. On the contrary, American industrial policy faces a number of obstacles and complications. First, US government agencies have relatively little expertise in designing and executing industrial strategy, certainly when compared to their Asian counterparts. The US government itself is poorly structured for this end, with limited institutional capacity to integrate foreign policy and economic policy.

Second, advocates of US industrial policy often have diverging goals in mind. Some focus on the defence industrial base, others on the “energy transition”, others on “creating jobs”. In a Venn diagram, these circles would intersect, but they are not identical. Such diffuse ambitions may impede both the passage and implementation of successful industrial strategy, as previous criticisms of “everything bagel” industrial policy have shown.

Third, the largest corporate and financial actors in the US are at best ambivalent about industrial strategy. They are deeply dependent on China, and are also prime beneficiaries of the “fissured economy” model in which intellectual property rents are separated from capital investment and labour. Furthermore, policies like the Chips Act passed in large part due to the support of incumbent industry lobbies, though policy design suffered in various ways as a result. It remains to be seen whether the United States can pursue industrial policy in critical areas that, unlike semiconductors, do not have powerful incumbent lobbies.

Finally, and perhaps most importantly, a critical ingredient present in the canonical East Asian industrial policy success stories is absent in the United States. Namely, the “Asian Tigers” each used global export markets, particularly the US market, as a competition check: companies that increased export share received more industrial policy support; those that did not were cut off. Without the export-market check, there is an increased temptation to subsidise “zombies”, rather than orient industrial policy investments toward improving productivity and competitiveness. US industrial strategy, therefore, may need to place greater emphasis on stimulating domestic competition. Another option involves using government procurement and investment to create milestone-based contests. In Operation Warp Speed, for example, the government offered contracts only to vaccine developers who met certain thresholds, such as Moderna and Pfizer. Unfortunately, such contracting models remain more the exception than the rule in US policy.

Wonky Thinking

On his Substack, Neil O’Brien re-assesses the success of the National Funding Formula (NFF) for Schools.

After decades of trying, it was a huge achievement to create a proper funding formula. As well as being fairer and more accountable, this also enables other reforms and gives greater certainty to schools.

The schools formula has to juggle many demands. For example, I have always been keen on the lump sum, which helps small local schools and village schools stay open, with wider social benefits.

At present the formula is pretty weak at targetting additional funding to lower-achieving areas, and if we include London it doesn’t do so at all. The creation of the NFF baked in quite a lot of historic decisions and patterns which don’t reflect today’s patterns of underperformance.

One reason for this is that the Schools Block does not target low achievement directly. The High Needs block does, so we already kind of crossed that issue of principle. But I can see why people would be nervous about “rewarding failure” if you tied higher funding to lower school performance.

However, you could add a metric which looked at low outcomes in the area. Philosophically, the justification for having measures like EAL, lower prior achievement, deprivation etc in the formula is that you are trying to level up opportunity where it is lowest. But as the scatterplots above show, their impact is only to make funding very weakly correlated to low opportunity. You could instead use a measure that targets low performance and fewer opportunities directly.

You can argue for higher or lower levels of effort to level up opportunity. But it seems to me that however much effort you want to put into this, you should want efforts to be more on target than they are now.

Under the NFF there has been a marginal compression in the variation in funding levels in different places. But this probably more reflects falling relative deprivation in London than anything else.

In general, the NFF is not changing the pattern of spending at the level of the local authority much, and measures like the minimum per pupil funding element are marginal. It remains a good thing and allows people starting new schools to have some clarity on how much money they might get. But to bring low funded/low achieving places up closer to average funding the formula would have to change more than it has.

Book of the Week

We recommend David Goodhart’s The Care Dilemma: Caring enough in the age of sex equality. Goodhart argues that the modern emphasis on workforce participation has left a gap when it comes to caring for children, the elderly and sick. The values of professional elites have devalued the family and domestic realm, contrary to the values and interests of most ordinary people.

If a patriarchal society is one that undervalues the role and contribution of women, then the patriarchy is alive and well in the meagre pay packets of social care staff, the emptying maternity wards and the one year old child clinging desperately to its parent as it is dropped off for a long day at nursery…

…Compared with 1964, the average British person is richer, better educated and freer to choose their life course, especially if a woman. They are also more likely to live alone, to suffer from depression, less likely to have children and, if they are a child, much less likely to live in a stable family.

Enormous changes to family life lie behind this double-edged transformation. The changes are also responsible for a seldom articulated tension between women’s new choices and proper care for the dependent young and old. The challenge we face now is how to reduce that tension not by returning to the 1960s but by raising the status and value of the traditionally female realms of care.

Consider it an investment problem: how can we invest enough in the things we say we still want—having and caring for children, and decent care for the disabled and the growing army of the elderly—while maximising choice, including the choice not to care? This is the care dilemma.

Quick Links

Donald J. Trump won the US presidency. He is forecast to win every swing state and the popular vote, while Vice-President Harris did not outperform Joe Biden in a single state.

New data revealed that nearly a million graduates have never earned enough money to repay any of their student loans.

The UK has among the highest industrial electricity prices of all the developed economies.

The National Institute of Economic Research claimed the rise in employers’ national insurance will raise only a tenth of what the government predicted.

The Chairman of the Office for Budget Responsibility said Labour’s increase in health spending will not necessarily improve NHS output.

A son has claimed his father took his own life following the the announcement of the tax on family farms.

Natural gas contributed 47% of electricity generation in the week to 5th November, compared to 15% for wind and solar combined.

The revenue raised by increased tuition fees will be entirely swallowed by the extra costs facing universities from Labour’s national insurance rise.

A British woman faces death by stoning in Pakistan after being forced to marry her uncle to secure his UK visa.

Russia has been suspected of plotting to place incendiary devices on US-bound planes.

Every incumbent political party facing an election this year lost vote share - for the first time since records began in 1905.

Australia is planning a social media ban for all under-16s.

M&S will pay an extra £60 million in employers’ national insurance contributions next year.

HS2 spent £100 million on a tunnel to protect rare bats.

The populations of developed countries may have to become 40-50% foreign-born to sustain population stability.

Demographic change may favour US Republicans in the electoral college by 2030.