The Transatlantic Vibes Shift
An impoverished Britain can follow America's example by reindustrialising, embracing technology, and rediscovering optimism
Towering columns
For the Financial Times, Janen Ganesh cuts through the rhetoric to expose the unwillingness of politicians to make the tough decisions needed to improve growth.
Britain’s problem is that almost everyone names growth as their priority, and almost no one means it. There is always another consideration that takes precedence, whether geopolitical, ecological, cultural or egalitarian. The result is the worst of all worlds: no serious drive for economic success, but also no tacit national agreement that we should bed down for a life of low-drama stagnation. Either of these would be a grown-up choice, with its own merits and costs. It is the fudge — which holds growth to be desirable in the abstract but in no specific form — that has Britain in its gelatinous grip.
A thousand newspaper editorials will tell you that Britain lacks a “growth strategy”. If that means policies, then Britain lacks no such thing, and almost never has. What is missing might be better called a “growth preference”: a settled view that, when growth comes into conflict with another goal, growth must prevail…If Britain aims to lure the best AI talent, it might have to cut tax on high incomes or capital gains. As soon as Starmer goes near that idea, a think-tank of the Resolution Foundation sort will nag him into submission with charts about the effect on inequality. Offered a choice of being a social democracy with 1.5 per cent annual growth or a more stratified nation with 3 per cent, some people choose the first…
…Labour wants growth, but not if it incommodes the unions, or “leaves people behind” or some such NGO press release inanity. What growth policy is left over, then? A finance minister asking her colleagues to suggest some red tape to trim. It would be daft to even talk of sacking Reeves. Yes, she has chosen to learn the hard way what was plain all along: that referring to spending as “investment” doesn’t fool actual investors; that “austerity” isn’t the problem in a country that hasn’t achieved a fiscal surplus since the millennium. But Britain doesn’t have a Reeves problem. It has a Britain problem. Deep down, we are happier with 1.5 per cent annual growth than we dare let on.
For the Telegraph, Nick Timothy criticises Labour for prioritising its spending splurge over genuine investment that could reindustrialise Britain.
Taxterity is the unavoidable outcome of Labour’s hasty decision to turn on the spending taps only three months ago, when it knew it faced low growth, high debt, an ageing population, and rising welfare spending. Reeves, who wasted four years as Shadow Chancellor without devising a plan for her time in office, seems now belatedly to understand. But it is too late and she has no idea what to do.
We need to join the dots between our economic problems. We are poorer, as a country, than we tend to think, and too many of our political debates focus on symptoms, not causes. Personal and public debt are driven by our over-dependence on consumption, not production, and on the foreign acquisition of our debts and assets, not selling enough goods and services needed overseas.
Labour will fail because they are trying to squeeze what they can from an economic model that ceased to serve us years ago. To address the causes of decline we need to reform our economy, reindustrialise and narrow the trade deficit. And for that we need almost total change: a smaller but more strategic state; an energy policy that puts security and economic competitiveness ahead of decarbonisation; tax and regulatory reform; planning, training and infrastructure policies that make sense; and improved public and private investment – which will require less day-to-day government spending. None of this will be easy, especially when we are dependent on foreign investors to pay the bills. But the mess made by Labour demonstrates the urgency of the need for change.
On his Substack, Stephen Webb explores how stagnant wages and rising prices have made Britain feel so much poorer.
The median British household has been hit hard on both sides of the ledger – stagnant wages and a nasty recent shock of inflation. This has been a huge driver of recent voter volatility all over the world. Kamala Harris even ended up suggesting price controls for groceries in an unsuccessful attempt to win back ground lost with people who felt the Democrats had been in denial about the impact of inflation.
The situation is arguably even worse in the UK, given the many years of stagnant per capita GDP. Looking at the excellent Office for National Statistics tool helps remind us what the median UK household actually spends their money on. Average weekly household expenditure was £567.70 in the financial year ending (FYE) 2023, a nominal increase of £38.90 from the previous year (7%); however, after accounting for inflation this was a real-terms decrease of £21.10 (4%). This is a truly dreadful outcome in a society which has been used to decades of rising prosperity. Ministers wanting to make a populist appeal should have these numbers constantly before them – what policies could make a difference to these sort of people? What does the median household spend tell us?
According to the ONS, the median UK household spends just over £550 a week, with Housing, Fuel and Power, Transport and Food the biggest single items alongside ‘other expenditure items’. It is striking what a high proportion of the items here are not really discretionary. You could make a case for saying that half to two thirds of the items here are pretty much essential. Obviously housing and energy, communications, food, most of transport and a range of the other household spend too. Higher inflation on these items than the rate of wage increases will mean brutal cutbacks in the smaller discretionary items.
In The Times, Janice Turner unpicks the arguments for easing surrogacy restrictions and its implications for women’s rights.
All pregnancies imperil the mother and, according to research by Queen’s University, Canada, gestational surrogacy involving heavy hormone treatment and embryo transfer trebles the risk of complications such as sepsis and pre-eclampsia. Surrogates are also offered bonuses to have riskier caesareans, even if medically unnecessary, for the convenience of western couples booking flights for the birth. Then there is the trauma of surrendering, while brimming with birth hormones, the baby you have carried, often within minutes…A political battle looms over a Law Commission report — which mainly consulted the surrogacy industry and would-be parents, while sidelining women’s groups — whose recommendations for legal reform came with an oven-ready white paper. The Tories rejected the lot. But in November, the women’s health minister Baroness Merron met the Law Commission, although she has so far declined meetings with women’s groups. So will Labour proceed?
For feminists, the report’s most worrying proposal is removing careful maternal protections inserted in law by the late Mary Warnock that make a surrogate the legal mother until a parental order is obtained. Reformers want those paying for the pregnancy to be default parents from the start, with the mother having six weeks — when she is probably recovering from the birth — in which to launch a legal bid to keep the baby. The report also proposes unfettered advertising to recruit surrogates, lowering the minimum age to 21 and removing the important condition to protect a woman’s physical and mental wellbeing that she must already have her own child.
If more British surrogates are recruited, goes its slippery logic, fewer foreign women will be exploited. Working-class women will, as usual, be political collateral. Moreover, the report also wants to make it easier for foreign-born surrogate babies to be imported, by allowing would-be parents to start immigration paperwork pre-birth.
At Compact, Nathan Pinkoski provides a comprehensive look at the history of multiculturalism in Britain and how it paved the way for social fragmentation.
Multiculturalists don’t pursue privatization, yet their vision requires the state to support and collaborate with minority civil-society organizations. These state-society partnerships end up eroding the functions of the postwar state. Over time, the state becomes more reliant and beholden to private actors; in Britain’s case, the representatives of Islam’s parallel polis. In the wake of the multicultural shift, authorities become more timid, erratic, and arbitrary in how they use their traditional powers. With neoliberalism, that applies to political economy. With multiculturalism, that applies to criminal justice…
…In the regime of asymmetrical multiculturalism, caprice has consequences. British multiculturalism is managed according to the flexible dictates of addressing “public order,” so that the meaning of “improving community relations,” and handling “sensitive community issues” changes over time. Consequently, Britain is a polity with a secret social compact: When the activities of favored minority cultures clash with liberal tenets, keep the peace by discarding the latter. British exceptionalism was a way to distract from that arrangement.
Clinging to old imperial and universalist aspirations of one shared civilizational project upon which the sun never sets, liberals believed that cooperation and community would be the eventual outcome of greater domestic ethnic diversity. Once the US-style civil-rights rules were set up, the self-regulating forces of an open society would ensure multi-racial harmony. This was the social equivalent of economic laissez-faire. Like neoliberals setting up the rules for the free market and realizing that these required more state interventions and more budget imbalances to achieve their goal, postwar liberals belatedly accepted more and more state interventions and greater moral imbalances to achieve theirs.
In the Financial Times, Peter Thiel argues that the Trump administration should expose the government secrets that lie behind recent elite failure.
Our First Amendment frames the rules of engagement for domestic fights over free speech, but the global reach of the internet tempts its adversaries into a global war. Can we believe that a Brazilian judge banned X without American backing, in a tragicomic perversion of the Monroe Doctrine? Were we complicit in Australia’s recent legislation requiring age verification for social media users, the beginning of the end of internet anonymity? Did we muster up even two minutes’ criticism of the UK, which has arrested hundreds of people a year for online speech triggering, among other things, “annoyance, inconvenience or needless anxiety”? We may expect no better from Orwellian dictatorships in East Asia and Eurasia, but we must support a free internet in Oceania…
…Our ancien regime, like the aristocracy of pre-revolutionary France, thought the party would never end. 2016 shook their historicist faith in the arc of the moral universe but by 2020 they hoped to write Trump off as an aberration. In retrospect, 2020 was the aberration, the rearguard action of a struggling regime and its struldbrugg ruler. There will be no reactionary restoration of the pre-internet past. The future demands fresh and strange ideas. New ideas might have saved the old regime, which barely acknowledged, let alone answered, our deepest questions — the causes of the 50-year slowdown in scientific and technological progress in the US, the racket of crescendoing real estate prices, and the explosion of public debt.
Perhaps an exceptional country could have continued to ignore such questions, but as Trump understood in 2016, America is not an exceptional country. It is no longer even a great one. Identity politics endlessly relitigates ancient history. The study of recent history, to which the Trump administration is now called, is more treacherous — and more important. The apokálypsis cannot resolve our fights over 1619, but it can resolve our fights over Covid-19; it will not adjudicate the sins of our first rulers, but the sins of those who govern us today. The internet will not allow us to forget those sins — but with the truth, it will not prevent us from forgiving.
Wonky thinking
In Foreign Affairs, Oren Cass makes the conservative case for reindustrialisation. Decades of globalisation and financialisation have made western economies weaker and less productive. Consumption has grown at the expense of invetsment. Advantages in critical technologies have been lost to hostile competitors like China. The second Trump term presents an opportunity to change course.
National security provides the best starting point from which to build the case for a Trump economic agenda and with which to order its priorities. Security, after all, demands not only hard military power but also technological leadership and economic resilience. In principle, it is the one area in which no disagreement exists about the need for an active state role in strengthening the industrial base. In practice, however, there are disputes about the correct role for government, because national security necessarily includes the entire range of technologies and supply chains vital to economic renewal.
For instance, leading-edge artificial intelligence capabilities are a top national security priority. That, in turn, requires leading-edge chip production, the infrastructure to support enormous data centers, and the energy abundance to power them. Next-generation defense technology, including in space, is also an obvious priority. So is basic competence in shipbuilding and thus forging the metals from which ships are made. Unfortunately, when it comes to metals, critical minerals have become a serious vulnerability for the United States—one that China has already begun to exploit. Thankfully, the United States has deposits of nearly all necessary resources. What is needed is the will to extract and process them.
In fact, the full development of the United States’ natural resources is an ideal cornerstone for the new economic strategy. Helpfully, energy policy is one area where conservatives acknowledged the need for policy to promote outcomes beyond what the market might deliver. Beyond critical minerals, a robust natural resources agenda would pursue regulatory reforms to open land use for both resource extraction and construction, speed up review and permitting processes, and encourage cost-benefit analyses to fully account for the social value of housing and infrastructure, industrial capacity, and energy output. Pumping more oil and gas would go a long way toward encouraging investment and lowering prices; so would new factories deploying the latest communications and automation technologies.
To see how such reforms would help foster economic development, consider Micron Technology’s planned $100 billion semiconductor fabrication facility in upstate New York. The project was supported by CHIPS. Yet it remains mired in environmental review even after Congress passed a law exempting CHIPS projects from the process because the Army Corps of Engineers determined it sits partly on a wetland. The Trump administration should insist on filling the wetland.
In addition, the administration should push for technology-neutral incentives that benefit all energy production—not just solar and wind. The goal should be to experiment with and scale whatever works. Nuclear power, for example, may stand at the cusp of a renaissance. Geothermal power may be ready to make a debut, thanks to design breakthroughs and the unquenchable demand of data centers. To help capitalize on both sources—as well as all other forms of energy—the United States will need to dramatically upgrade, expand, and harden its grid. Trump should clear the regulatory and financing obstacles that stand in the way of achieving these ends. He should remember that key energy technologies not only give American industry a major advantage but also underpin vital industries in which the United States should pursue global leadership.
In National Affairs, Jon Askonas & Michael Toscano consider the impact of technological change on families. They believe social conservatives should engage more with how technology shapes the cultural and economic dimensions of the family. This is set to accelerate with new developments in gene-editing and artificial wombs. Social conservatives need a comprehensive analysis of this challenge and solutions to match it.
Technology doesn't just shape the family: Given that the family is the primary unit within which basic human capacities are practiced, the patterns developed there in response to technological advances tend to radiate out across all of society. Technological change, therefore, has the power to either enhance or undermine entire communities in which the family and its members participate.
Rapid technological change has upset centuries-old patterns in the span of mere decades. It's hard to think of a part of the human experience that has escaped unscathed. These new technologies have not emerged in response to the needs of families and local communities; they are instead driven by the scientific, military, and economic imperatives of far-off actors.
Until very recently, the power over and responsibility for life within a society rested in the hands of families and communities. Localized activities as fundamental as sharing family meals, educating children, assisting neighbors, discussing the affairs of the day, finding and marrying a spouse, tending to sick loved ones, and attending communal and religious functions formed the topsoil of human social life. Technological change occurred, of course, but it usually did so gradually, and in a way that was responsive to local authority and agency. A community forced to submit to alien customs and authorities was, to great thinkers like Aristotle and Montesquieu, an enslaved and subjugated one. Neil Postman channeled this sentiment in Technopoly when he wrote: "A family that does not or cannot control the information environment of its children is barely a family at all."
Yet such is the family's situation today. Postman wrote those words in the era of the television, the VCR, and FM and AM radio. Whatever challenges those technologies posed to families back then, the content was the same for all within earshot, and if the messages were unacceptable, parents could switch them off. Contemporary media technologies, by contrast, are individualized and secretive by nature, leaving most parents with even less authority over their household's knowledge and beliefs. Conservatives today must reassert the authority of families and local communities over the technologies that shape their everyday lives. The aim should not be to impose one way of doing things on everyone, or to decide which technologies are right for all, but to restore power and responsibility to local actors….
…Conservatives should oppose mandates and incentives that push technologies reliant on distant power centers, especially when those technologies have second-order effects on the family's or community's way of life (as when Google offers free Chromebooks to public-school systems). They should fight electric-vehicle mandates and subsidies, as well as the growth in public conveniences and government services that require the use of a smartphone; and they should oppose the imperative to make even basic appliances "smart," which turns everyday tools into systems of surveillance while also making them more heteronomous.
In an interview with the Hoover Institution’s Uncommon Knowledge, venture capitalist and Techno-Optimist Manifesto author Marc Andreessen discussed technological and political change in Silicon Valley. Big Tech’s move to the Right comes at a time when vast swathes of public policy will be transformed by advances in AI, robotics, defence, and energy.
Book of the week
We recommend Kicking away the ladder?: economic development in historical perspective by Ha-Joon Chang. Written during the height of the post-Cold War neoliberal consensus, the author examines how rich countries acquired their wealth. Britain and America became economically developed because of industrial policy, not laissez-faire. This is the lesson learned by East Asia economies with great success but became forgotten in the West.
As the intellectual fountain of the modern laissez-faire doctrines, and as the only country that can claim to have practised a total free trade at one stage in its history, Britain is widely regarded as having developed without significant state intervention. However, this could not be further from the truth…
…The 1721 reform of the mercantile law introduced by Robert Walpole, the first British Prime Minister, during the reign of George I (1714-27) signified a dramatic shift in the focus of British industrial and trade policies. Prior to this, the British government's policies were in general aimed at capturing trade (most importantly through colonialization and the Navigation Acts, which required that trade with Britain had to be conducted in British ships) and at generating government revenue. The promotion of wool manufacturing…was the most important exception to this, but even this was partly motivated by the desire to generate more government revenue. In contrast, the policies introduced after 1721 were deliberately aimed at promoting manufacturing industries. Introducing the new law, Walpole stated, through the king's address to Parliament: 'it is evident that nothing so much contributes to promote the public well-being as the exportation of manufactured goods and the importation of foreign raw material'. The 1721 legislation, and its subsequent supplementary policy changes, included the following measures. First of all, import duties on raw materials used for manufactures were lowered, or even dropped altogether. Second, duty drawbacks on imported raw materials for exported manufactures - a policy that had been well established in the country since the days of William and Mary - were increased. For example, the duty on beaver skins was reduced and in case of export a drawback of half the duty paid was allowed. Third, export duties on most manufactures were abolished. Fourth, duties on imported foreign manufactured goods were significantly raised. Fifth, export subsidies ('bounties') were extended to new items like silk products (1722) and gunpowder (1731), while the existing export subsidies to sailcloth and refined sugar were increased (in 1731 and 1733 respectively). Sixth, regulation was introduced to control the quality of manufactured products, especially textile products, so that unscrupulous manufacturers could not damage the reputation of British products in foreign markets.
Brisco sums up the principle behind this new legislation as follows: '[manufacturers] had to be protected at home from competition with foreign finished products; free exportation of finished articles had to be secured; and where possible, encouragement had to be given by bounty and allowance'. What is very interesting to note here is that the policies introduced by the 1721 reform, as well as the principles behind them, were uncannily similar to those used by countries like Japan, Korea and Taiwan during the postwar period...With the Industrial Revolution in the second half of the eighteenth century, Britain started widening its technological lead over other countries. However, even then it continued its policy of industrial promotion until the mid-nineteenth century, by which time its technological supremacy was overwhelming…
…It is important to note here that Britain's technological lead that enabled this shift to a free trade regime had been achieved 'behind high and long-lasting tariff barriers'. It is also important to note that the overall liberalization of the British economy that occurred during the mid-nineteenth century, of which trade liberalization was just a part, was a highly controlled affair overseen by the state, and not achieved through a laissez-faire approach. It should also be pointed out that Britain 'adopted Free Trade painfully slowly: eighty-four years from The Wealth of Nations to Gladstone's 1860 budget; thirty-one from Waterloo to the ritual victory of 1846'.
Moreover, the free-trade regime did not last long. By the 1880s, some hard-pressed British manufacturers were asking for protection. By the early twentieth century, reintroduction of protectionism was one of the hottest issues in British politics, as the country was rapidly losing its manufacturing advantage to the USA and Germany: testimony to this was the influence of the Tariff Reform League, formed in 1903 under the leadership of the charismatic politician Joseph Chamberlain. The era of free trade ended when Britain finally acknowledged that it had lost its manufacturing eminence and re-introduced tariffs on a large scale in 1932.
Quick links
Britons are 39% worse off than Dutch equivalent due to housing costs 44% higher than the western European average.
Government officials are looking to restore a supercomputer project in Edinburgh as well as introduce changes to visa rules for foreign AI workers.
High industrial energy policies caused the UK chemicals sector’s output to be 38% smaller than in 2021.
British Steel closed a blast-furnace last year after using the wrong kind of coal and scrapped plans for new steelworks in Teeside.
Looking for Growth published its National Priority Infrastructure Bill to fastrack nuclear power and other critical projects.
YIMBY planning reforms in New Zealand tripled housing starts and cut rents by 21%.
China reached a trade surplus of nearly $1 trillion and its exports to Russia in 2024 were 134% above 2019 levels.
The US was part of a global minority that do not restrict access to advanced AI chips, until President Biden announced new export curbs.
Chinese companies are devleoping D-Day style barges for invading Taiwan, flying cars, and a robotic dog capable of running 100 meters in under 10 seconds.
TSMC's Arizona Fab 21 is making a yield and quality of 4nm chips on par with Taiwan fabs.
Meta made immediate cuts to DEI programmes for hiring, training and suppliers, and Zuckerberg criticised Apple for failing to innovate.
Synthesia, which produces lifelike video avatars, raised $180 million to become one of the largest AI companies in the UK.
Chinese officials are considering selling TikTok to Elon Musk.
Sweden looks at constitutional change to allow citizenship to be revoked.
CEO of Coca Cola presented the first ever Presidential Commemorative Inaugural Diet Coke to President-elect Trump.