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It is easy to understand why those who are not fully down with the whole Green alarmist agenda are annoyed at the fracking ban under Rishi Sunak’s new administration. (In reality, local authorities could and would still try and stop it, even if it was legal at the national level.)
A problem with the ban, though, is that it says something about the approach of the Sunak administration: it is in thrall to the Precautionary Principle. Don’t do anything if there is the slightest risk of harm to the environment or if it upsets some local people. And that means that on issues such as house building, new nuclear power plants, roads, Heathrow third runway or a “Boris island” in East London, or anything else, the risk is that nothing much gets done.
Lest anyone think this is a purely Tory issue, it isn’t. A Labour government is unlikely to be like the Attlee/Wilson ones where there was at least a sort of working class affinity with industry. Trade unionists used to be proud of how they worked in mines, factories and shipyards. They got dirt under their fingernails, and they wore this as a badge of pride. Today’s post-modernist Left bemoans developments such as the demise of steel production, but fails to join the dots between this and the deliberate raising of energy prices through “Green transition” policies. Also, much of the modern Left does not reside in the industrial sector, but is more about the public sector. So the problem is one of a wider cultural/philosophical aversion to making things or doing things that are in any way “dirty”.
Meanwhile, countries such as India and China, or Indonesia, suffer no such inhibitions. And we will import energy and other products from nations that are likely to enforce less stringent controls on pollution. And yet the likes of Starmer, and various commentators, will bemoan the demise of UK manufacturing. But if we refuse to build reliable, cheap energy (wind and solar don’t count, being weather-reliant), then our demise as an industrial power will continue. (Fossil Future, by Alex Epstein, is a must-read and corrective to current alarmist nonsense, not least because it addresses the philosophy of the Greens, and provides an alternative. Too few debunkers of Greens do this.)
A few days ago I went to Battersea Power Station, now fully refurbished and turned into a shopping mall and apartment block, with various offices and things like art galleries. I can admire the architecture, the lovely industrial-style touches and the gantries and machinery. But what strikes me as symbolic of modern Britain is that we have turned a power station into a shop, and when the wind doesn’t blow and sun doesn’t shine, and we haven’t enough baseload power, the building will go dark. That’s where decades of evasion and Green ideology have taken us.
We are turning into a theme park.
Update: Germany is keen to be a theme park too. Major chemicals manufacturers, unable to withstand surging energy costs, are moving out, according to this Reuters report
“Restoring the fracking moratorium would be an error. To rely on imported gas when we have 50-100 years’ supply under our feet is not a stance rooted in science or economics, but political weakness in the face of militant protest groups and anti-development campaigns. This decision will not help the planet; the UK will become more dependent on gas imports, with higher emissions than local production. It will not help the growth plan; we will be borrowing to pay Qatari and US taxes rather than building an industry.
It will not help the low carbon transition; there will be fewer fossil fuel taxes to fund it and the cost of all energy sources will rise. It will not help our allies in the EU or Ukraine; surrendering further dominance of regional gas markets to Russian tyranny. It seems the Government and Opposition are determined to risk blackouts and freezeouts before taking hard decisions rooted in reality.”
– Andy Mayer, of the Institute of Economic Affairs (one of those evil organisations now safely removed from influencing our “sensibles” in government), talking about the decision of the new Rishi Sunak government to ban fracking. The quotation explains the imbecility of that decision. (I received the comments in an email; there is no weblink that I could see.)
Who needs vulgar industry anyway, when we can import all this stuff from grubby foreigners, daaaahhling.
Update: Ambrose Evans Pritchard in the Daily Telegraphs compliments the frackers of the US for helping to save the West (he’s not exaggerating) but argues that UK fracking is far less sensible as an investment proposition, and he may be correct. However, he goes onto laud the benefits of the UK going all in on Green, renewable energy, and talks about hydrogen, etc. But throughout the entire article, written with AEP’s typical brio, is not one single reference to battery storage capacity. Weather-dependent energy requires storage to deal with the baseload power issue. There may well be solutions in the skunkworks, but an awful lot is riding on this. There might well be a sort of “Moore’s Law” effect on renewables and affordability, but batteries are the key. And making batteries needs lithium, cobalt, and other minerals that come from places that are often not exactly very agreeable to the West. And there are environmental side-effects, including damage to water supplies (often far more serious than anything that fracking might cause.)
“Since the country [UK] seems to be heading back very rapidly to the 1970s it is worth asking: just what is keeping people in Britain, especially young people?”
– Ross Clark. He’s clocked the fact that far from net immigration being an issue, the challenge over the next few years is persuading anyone with a pulse to stay in the UK, if the prospect is of high taxes, weak growth, and all the rest of it.
Russia has always been a colonial power in denial. While conquering and ruling multitudes, it insisted that—in contrast with violent Western conquests—the indigenous peoples themselves sought Russian protection and that Russian rule was benign. This gap between rhetoric and reality is evident in the country’s current designation as a “Russian Federation”.
– Michael Khodarkovsky.
Update: Liz Truss has just resigned as PM.
Lord (David) Frost is one of the sanest observers of the UK political scene. He’s in favour of the pro-growth, lower-tax agenda that Liz Truss has made much of. He writes more in sorrow than anger that the time has come for Ms Truss to stand aside.
His article includes the nugget of insight around how, in the very early 80s, Sir John Hoskyns, advisor to Margaret Thatcher in her Policy Unit, had set out in a memo a series of “stepping stones” for reform and change. To make changes on energy, tax, inflation, house planning, etc, requires a lot of patient preparatory work, to ensure that reforms don’t alienate the public on a large scale, or rattle the markets. This is akin to a pilot on a ship or plane having a passage plan before leaving port or taking off.
A serious government needs to have a worked-out idea of where it is going, and how it is going to do it, and have contingency plans. For example: when contemplating the need to take on Arthur Scargill’s National Union of Mineworkers, following the damaging strikes of the early 70s, Mrs T. put Nigel Lawson in charge of energy (before he became Chancellor in 1983) and he built up coal stocks so that the UK had a buffer of coal during the likely strike. This is like a general marshalling his forces intelligently before going into battle.
My impression is that Truss lacked people around her who knew how to guide her in such a way. And this speaks to what in my view is a deeper problem with much politics today in the West: the lack of strategic thinking and understanding of statecraft. Politicians sometimes study subjects such as “international affairs” or “politics” in liberal arts degrees and masters’ degrees in university. There is the Kennedy School of Government in the US , to give one case. But I wonder how much actual practical knowledge of how to get things done is learned. (If any readers have been to these places, let me know.) In fact, they may simply spend time wallowing in forms of ideology; they’d be better off reading Robert Greene’s 48 Laws of Power, even if it appears to be a treatise on cynicism.
Perhaps the nature of those in public life has changed. Whatever else one might say of them, the old landed gentry and business class of people who tended to be Tories had an understanding of the processes of government and making change, although a lot of them were also capable of mass incompetence. On the Labour side, the experiences of unions and working in industry gave a certain realism and understanding of how tough life could be.
I worry that too few in public life have this sort of “ballast” in their lives. And we end up with people who don’t really know what they are doing.
Perhaps a more intractable problem is that so many people now assume that government, on the scale we now have it, is the “normal” state of affairs, and that anything taking us to a smaller State is terrifying. And it requires tremendous rhetorical skill, management capability and insight to show how a route to a saner state of affairs is possible, even exciting and enticing. This is doubly hard to do after a pandemic, and after when a large chunk of the professional middle classes had spent two years on furlough, watching TV and baking bread at home. And the sadder fact is that a lot of such people, although they will never admit it unless after several drinks, rather enjoyed the experience.
“….it is more useful to see Liz Truss’s rise and fall as symptomatic of an identity crisis among free-market policy-makers across the West, as they wake up to a world in which can exist neither as competent technocratic administrators nor as a radical liberalising movement. This new world is one in which both Thatcherism and the Blairite Third Way are dead. What those commentators suffering from Brexit Derangement Syndrome appear to have missed is that the country is reeling from what many hoped was a transitory crisis, but now seems to be a permanent paradigm shift: one in which high inflation is endemic and the welfare capitalist model that has been propped up by cheap credit for the past 20 years is vanquished.”
– Sherelle Jacobs. Daily Telegraph (£)
I wonder if people will talk of these times in the way they once discussed the tumultuous Corn Law/free trade debates that led, eventually, to the formation of the Liberal Party (Whigs and Robert Peel supporters joining) and the Tories, led by Lord Derby and later Disraeli, languishing in opposition for 20-plus years. Stephen Davies of the Institute of Economic Affairs (and a Manchester man who relishes the traditions of classical liberalism and economics in that city), argues that big realignments are going on. I think, contrary to his view, that economics is as important as “culture wars” stuff to what is causing politics to shift. The public has just had a big lesson in why economics matters. It matters a lot.
“The Tory vision of the country is, or should be, one where people are busy – working, thinking, travelling, prospering, bettering their lives. It involves building things and going places. It involves houses and factories, roads and cars, ports and airports, as well as parks, countryside and gardens.”
– David Frost, a former member of the Boris Johnson administration, who resigned in part over things like tax hikes. I get the impression that his views are falling on deaf ears among many Conservative MPs, for whom building things, travelling, entrepreneurship, or of how life should be about a sense of adventure, are all terrible things to be banned or viewed with suspicion. Maybe we will get a political realignment at some point, where the Tories revert to their 19th Century default of being the party that largely resisted, or was snooty about, industry and an upwardly mobile class, with a different party championing such things. It may not happen, but I get the sense that there is a lot of change in the political culture at the moment. If you are a young, ambitious person, what on earth does much of the UK political order have to offer if you detest politics and want to just get on with life? The answer, for many, will be to leave.
“The revived fortunes of fossil fuels, especially coal, may explain some of the weakened resolve for decarbonization. Global bank lending to fossil fuel companies is up 15 per cent, to over $300 billion, in the first nine months of this year, from the same period in 2021, according to data compiled by Bloomberg. This is Wall Street just doing its job: making money. Banks earned more than $1 billion in revenue from fossil lending during the first three quarters, in line with 2021. Why quit business with a booming sector over a distant climate goal?”
– Alistair Marsh, Bloomberg. ($) The US news service has been pushing the whole “Green transition” agenda in recent years in its coverage, at the behest of founder Michael Bloomberg, so there is something darkly amusing watching the organisation concede that decarbonisation has been a big loser for investors in recent months. If you are JP Morgan, BlackRock, Bank of America Merrill Lynch or a small investment house in Massachusetts, you have to explain to clients why you hugely lagged the stock market because of your “Green” decisions.
As the late Richard Feynman once said apropos the Space Shuttle, nature cannot be fooled. That applies to economics as well.
“You couldn’t force lockdowns without laptops, Zoom, Amazon deliveries, cloud computing, Slack, QR codes or Netflix. Without them, lockdowns would have lasted two, maybe three weeks tops before the utter destruction of the economy forced everyone back to the workplace. Instead, we took the Faucian bargain of technology-enabled yearlong lockdowns because it was doable. Silicon Valley’s tools became shackles.”
– Andy Kessler, WSJ ($). Tech is great, and these channels would be useful in any sense, but it is certainly true that for a segment of the population (such as those with media influence and in government), they made lockdowns far more “doable”. For a fan of tech such as me, that is an uncomfortable thought.
“Faucian bargain” – very droll.
For the past two weeks, a stock narrative has been that UK Chancellor of the Exchequer Kwasi Kwarteng’s “mini-budget” was reckless and rattled the markets, and he should have been more cautious, set out the debt and borrowing side first, not talked about reversing Rishi Sunak’s tax hikes to corporate tax, NICs, etc, and got fully on board with the idea that what the UK needs are the highest taxes since Clement Attlee. This, apparently, is what the clever people in the Square Mile wanted, happily cheered on by much of the media, and the damper ends of the Tory Party.
But given a few days to think about this, what strikes me as what a lot of hysteria there has been, and how heavy taxes remain. This story in the Telegraph today shows how “fiscal drag” caused by static tax thresholds means millions of UK taxpayers will, in real terms, be worse off because their tax bills are going up, not down.
So the idea that we are going to move to some sort of Reaganite low-tax country was always a bit overdone. It suggests that fashionable opinion has so totally imbibed forms of socialism that anything a bit different sends people crazy. (The performance of the International Monetary Fund, an organisation that should be shut down, is a case in point.) It suggest that those Tory MPs threatening to unpick even the smaller tax hikes need to ask themselves why they are Tory MPs at all.
“The point is that Britain was in an economic mess before Ms. Truss took office, and there is no alternative universe in which policies that have failed for 12 years suddenly would start working on the cusp of a global downturn. The choice is the gamble of a major policy overhaul, or the certainty of steeper decline. So yes, U.S. Republicans, do take note of Ms. Truss’s travails in Britain. The Tories squandered their reputation for competent, free-market economic management. They now find that it’s hard to win back at precisely the moment they and the country need it most.”
The Wall Street Journal (I seem to be quoting it a lot these days), giving its transatlantic take on the past 12 years of Conservative fecklessness and some occasional sensible moves. Its verdict on the Bank of England is particularly damning:
The Osborne Treasury and the Bank of England under Governors Mervyn King and Mark Carney set the tone by “looking through” above-target inflation for four years from 2010-13, and again in 2017-19. The central bank ignored its price-stability mandate in order to hold interest rates at historic lows while suppressing government borrowing costs with quantitative easing.
This stoked asset-price inflation, especially in housing, while suppressing productive investment and real wages. Inflation-adjusted pay fell 6.7% from 2009-14.
Mr. Carney’s successor Andrew Bailey poured on generous monetary stimulus during the pandemic, and he has been slow to withdraw it as the inflationary crisis deepens. One day before Mr. Kwarteng’s tax announcement, Mr. Bailey gave markets a bad surprise with a dovish 50-basis-point increase in interest rates rather than a 75-point raise that would follow the Federal Reserve’s lead and match the severity of U.K. inflation.
No wonder markets were primed to question Britain’s policy credibility when Mr. Kwarteng unveiled the new tax plan.
On the bright side, at least we hopefully won’t hear much more about Modern Monetary Theory.
Addendum: I have ordered Edward Chancellor’s book, The Price of Time, and will review it when I get my copy. It is getting good reviews. We shall see!
Sterling is recovering a bit against the dollar. I wonder if some hedge fund types that have shorted the pound have been squeezed out.
Update: In response to bad polls and the fact that many Tory MPs are more or less social democrats with a blue label, the Chancellor has reversed his removal of the 45% top tax rate. So, combined with national insurance and other taxes, top earners face a marginal rate around 60 per cent, which is high even by European standards. Needless to say, this is unlikely to help the party retain power unless there is a dramatic improvement in the economy. And even if there is, the “it’s time for a change” will be hard to resist. Labour can get rid of its nuttier members and get into power.
“The unemployment rate was 3.5% in July, the same as in February 2020, but the U.S. has three million fewer workers. Where did everyone go? This in an economy with 11.2 million job openings. It’s mostly men 25 to 54 who haven’t come back to work. Now a McKinsey study suggests that 40% of workers are thinking of quitting their jobs. Does anyone want to work anymore?”
– Andy Kessler, Wall Street Journal ($).
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Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
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