Pretending the pandemic is over has been the disaster most experts said it would be

 

As I wrote over a month ago Boris Johnson, in an attempt to gain support among at least half of his MPs, the newspaper oligarchs and his party donors, threw science to the wind and all but declared the pandemic was over. No more compulsory masks in public spaces, no more free testing, no more having to self isolate, and a cut back in how we monitor Covid. It was a decision of utmost stupidity, and that stupidity has now become clear.

We knew about the BA.2 variant at the time Johnson made his decision, but he ignored it. The media, and the broadcasters are as much to blame here as the right wing press, translated Johnson’s politically motivated edict as a proclamation that the pandemic was over. Most people stopped wearing masks and acted as if the pandemic really was over. No doubt BA.2 would have led to another wave of infections anyway, but people acting on the signals the government and media gave them have undoubtedly made it more severe than it needed to be..

You don’t have to believe me or the experts to believe that. Our health minister has also said that recent increases were “primarily down to the increased social mixing we are seeing, as our country has opened up”. So cases and hospital admissions now look like they are similar to the previous Omicron peak. 1 in 16 is infected with Covid in the England, and it’s even higher in Scotland.

Some firms have tried to avoid the impact this is having on absences by requiring workers to ignore they have Covid and come in to work anyway, but many in the public eye have had to retract after adverse publicity. The more serious impact has been on schools and hospitals. 202,000 children were away from state schools on 17th March because of Covid, a rise from 58,000 just two weeks earlier. 1 in 10 teachers are also absent from school. Does the government think 'living with Covid' means more periodic disruption in many children’s education?

Hospital admissions have now been rising steadily for over a month, and in England are close to the peak levels seen in the first Omicron wave. Every bed taken up by a Covid patient means one less bed that could be used to start reducing the backlog of other cases that has built up over earlier waves. That effect is amplified if staff become sick from Covid. Does the government think 'living with Covid' means more periodic crises for the NHS?

But don’t worry. Our Health Secretary, Sajid Javid, says there is no cause for concern. He says this was all expected. In other words, more kids off school with Covid and more strain on the NHS is all part of the plan. But what exactly is the benefit of allowing another Covid wave to go unchecked? Does having more people off work ‘open up the economy’? Does having more kids off school help their education? Does having hospital beds fill up with Covid patients, and doctors and nurses off sick, make us more free? With no good answers to these questions, he has become the first UK Secretary of State for Health to champion a health policy  deliberately designed to make groups in society more sick.

Such is the determination of this government to pretend that the pandemic is over that their policy will probably survive the current BA2 wave, which may be nearing its peak fairly soon. After that the warmer weather will also probably keep any new variants at low levels until next autumn. It is only then that we will see the true cost of the government’s indifference to our collective health. Allowing a high level of infection at home, and doing too little about cases in countries that cannot afford mass vaccination, is the best policy for encouraging the development of new variants.  

To be fair, this government is not alone in using the fact that Omicron is milder than Delta, coupled with repeated vaccination being fairly effective against it, as an excuse to relax Covid protections. Politicians around the world have jumped on the combination of a milder (but very infectious) dominant variant and vaccination to tell people what they want to hear, which is that life can begin to go back to something more like normal. The UK is just at the extreme end of this movement, doing things like charging nurses for Covid tests.

That people would like to go back to normal is not hard to understand. For the majority of the healthy, fully vaccinated population, Covid in the form of Omicron is not the major threat it once was. So measures like wearing a mask for most people is about protecting others rather than protecting themselves. Apart from a small minority (that appears to include most Tory MPs), most people are happy to make the small sacrifice that mask wearing involves to help the more vulnerable, especially when they have vulnerable relations themselves or hear about fatal cases in the media. Equally most people do not have the time or inclination to follow Covid data themselves. So when the government says in effect that the pandemic is over, and the media act as if this is true, then most people will happily stop doing things like wearing masks.

There are also plenty of myths that make people comfortable with not wearing a mask. Some say ‘we are all bound to get it’, whereas the real question is how often do people get it (the new variants are great at reinfection), with each infection damaging the brain and increasing the risk of heart attacks, as well as increasing the chances of getting Long Covid. Some say ‘as long as you are fully vaccinated you are safe’, whereas the truth is that you are safer but not safe, and you get less safe the longer ago your last vaccination was. Some say Covid is now less deadly than flu, because it said so in their newspaper. The reality is that Omicron has a similar intrinsic severity as the original strains of Covid, but what has changed is immunity and vaccination. (So much for the virus variants getting milder.) The reality is also that my chances of getting Covid in the UK today are higher than my chances of getting flu.

These are myths propagated by parts of the press and not countered by a broadcast media divorced from expertise. The problem is not Covid fatigue. The problem is with both those who feed false information to the public and a broadcast media that no longer fulfils it’s public information role. While it may be an unusual experience for the medical community to find both government and media working against rather than with it, this is a pattern that has become increasingly common in recent years.

Most recently we had Brexit. We will become Global Britain, Brexiters told us, trading with fast growing nations rather than a moribund EU. The reality is that UK exports have stagnated while in the rest of the world they have grown, a reality that will come as no surprise to the experts on the economics of trade who predicted this result. It happened in 2010 when we were told that all the government needed to do was control its deficit and the economy would look after itself. The media went along with that, while most experts warned austerity would harm the economy and its growth that matters, not the deficit. The result of both fantasy-led policies is that GDP per head has grown on average by less than 0.4% a year since before the financial crisis. What is new with Covid is that the experts being ignored are doctors and medics rather than economists, but the government is the same colour and the BBC remains obsessed with providing balance rather than providing knowledge.

It is difficult to overstate the harm fantasy-based governments and a supine media can do. With Covid the cost can be measured in lives lost, in operations delayed, in lost education and (initially) delayed, more prolonged lockdowns. With Brexit the immediate costs are reduced trade and UK productivity, output and incomes, but that means less resources available to the NHS and other public services. Austerity hit both directly, and we just don’t know how many died as a result of those cuts.

It really isn’t hard to understand why in the years before the financial crisis we had a successful economy where productivity was growing at least as fast as other major economies, yet since that crisis we have had a moribund economy falling behind other major economies. Before 2010 we had a (mainly) evidence-based government that took seriously the role of the State in enhancing investment, productivity and innovation. Since 2010 we have had governments that thought the best thing to do with the State was to shrink it and get it out of the way of the private sector, and whose flagship policies have caused severe damage to the economy, discouraging private investment and innovation. Champions of the ideology that has failed us since 2010 may try to pretend otherwise, but a combination of austerity, Brexit and now an ego-libertarian approach to our health are easily enough to explain the UK’s lost decade and the prospect of another to come.

Energy Prices in the UK and France: nationalisation or regulation, and Sunak's spring statement

 

A comparison of the extent of energy price increases for consumers in the UK and France has attracted a lot of attention. The French government, in a presidential election year, has been quick to limit the extent of any increase for the consumer resulting from massive increases in wholesale prices following the recovery from the pandemic and, more recently, Putin’s invasion of Ukraine. In contrast in the UK the regulator, Ofgem, has set a very large increase in its price cap, which will be painful for all UK consumers from this Spring. (On the origins of the price cap see Giles Wilkes here.)

This in turn has reopened the debate between two different styles of relationship between the government and parts of the energy industry: nationalisation (EDF is largely owned by the French government) or regulation of privately owned companies (as in the UK). Many consumers will naturally see the ability of the government to directly limit energy prices as an advantage of the nationalisation model. In addition much has been made of the large increase in profits of many energy companies.

Any discussion on this issue can easily get bogged down in details. It is important to distinguish between energy supply (e.g. BP and Shell) and distribution (in the UK, dominated by the Big 6). The profits of the former are bound to rise when prices rise by far more than the cost of extracting energy. In the UK Ofgem regulates energy distribution, and when energy market prices rise this increases the costs these companies have to pay. This is the reason for the rise in Ofgem's price cap, although that seems to be consistent with a recent large increase in profits of the Big 6.

I want to abstract from this detail by thinking about a single ('vertically integrated') energy company that both supplies and distributes. The reason is that I want to focus on the distinction between prices and profits (or who benefits from higher prices). It is possible for the government to allow higher prices, but to tax the profits those higher prices bring to companies, and use these ‘windfall taxes’ to transfer money to consumers or for some other socially useful purpose. I want to argue here that this is exactly what should be happening right now.

Prices send out signals to both consumers and firms. Higher prices imply a commodity has seen a reduction in supply or a rise in demand, which encourages consumers to economise on using the commodity where they can. Equally the higher profits that tend to come with higher prices encourage firms to invest more to produce more of the commodity. The price signal is doing a useful job on both accounts.

However with energy, which at the margin is produced by burning carbon, it is also vital that we think about climate change, which is proceeding largely unchecked in an alarming way. Global warming is sometimes described by economists as the world’s biggest externality, by which they mean that the need to reduce climate change by consuming less carbon is not reflected in prices.

From the point of view of reducing carbon usage the higher prices for gas and electricity are beneficial. It is good to encourage less use of energy because that helps reduce climate change. By widening the gap between carbon based energy production and renewables, higher prices also encourage green energy supply. However higher energy prices also encourage additional extraction of oil and gas, and national governments typically don't stop energy firms doing this (some may indeed encourage it).

It is in this context that we need to consider a recent proposal from the European Commission. They suggest member countries tax the profits energy companies made from recent energy price spikes and invest the revenue in renewable energy and energy-saving renovations. In doing this, the proposal suggests, EU governments would not be falling foul of EU rules.

The important point is that ‘excess’ profits are taxed, rather than what the money is spent on. Tax increases are not normally directly linked to how that money is spent (they are not hypothecated). In the UK more money is desperately needed by the poorest to help pay higher food and energy bills, and that is best provided by raising levels of Universal Credit. Whether the government does that from general taxation, some other means or from a windfall tax is incidental beyond media announcements.

The purpose of a windfall tax on energy companies is to ensure that the high profits made by these firms do not end up as paying for investment in non-green energy production, or as dividends or capital gains (from share buy-backs) to owners of the shares of those firms, but are directed to a more socially useful end. 

What are the arguments against taxing the profits generated by high market prices? Let’s look at an FT editorial entitled “Windfall taxes on energy companies are a bad idea”. Among many paragraphs, the only substantive argument appears to be this:

 

“Stability is key to promoting both investment and spending — both of which drive economic growth. Predictable and constant regulations are identifiers of a society governed by the rule of law.”

Stability, the ultimate last resort of the conservative, is a non-argument in this case, as I would be quite happy to enshrine in the rule of law a tax schedule for these companies that taxes very high profits at a high marginal rate. Redirecting high profits to either green investment or higher benefits to the poor would also drive economic growth, with rather more drive than if the profits end up with shareholders. The editorial has all the hallmarks of some poor junior scribe being told to write something about why windfall taxes are a bad idea, and having to scrape the barrel to find any decent argument. I’m glad to see that Chris Giles, senior FT economics editor, has recently written in favour of windfall taxes on energy companies in the FT here. (More bogus arguments are debunked by Michael Jacobs here.)

One argument against nationalisation is that politicians come under huge pressure to keep prices low, as consumers (who are also voters) see the immediate benefit of lower prices, while the higher taxes, lower spending or whatever that is the counterpart of subsidizing energy is more opaque. A regulator is not under similar electoral pressure, and can ensure prices send appropriate signals. However such an argument against nationalisation can only be made if the government is prepared to implement windfall taxes on energy companies when their profits are very high, and that is something the UK government has not so far been prepared to do.

This argument is also central to the Chancellor's Spring Statement tomorrow. The Resolution Foundation sets out some of his options here. A cut in fuel duty, though widely expected, just subsidises CO2 emissions at a significant cost to the public. Hardly surprising from successive Conservative Chancellors who keep promising to put up fuel duty and keep failing to do so, making nonsense of claims this is a green government. On other measures, Sunak should focus on a large uprating in universal benefit which provides most help to those who need it, as the Resolution Foundation shows.

But there are few votes for him in helping the poor, so that outcome seems less likely to happen.

Postscript (24/03/22): Sunak's Spring Statement shows that Sunak has not given up hope of soon replacing Johnson as Prime Minister. He announced a set of measures that did little to tackle the cost of living crisis most people face, did little to help the economy, but was designed to appeal to a majority of Conservative MPs that Sunak needs to become Prime Minister. So what does his package tell us about the average Tory MP?

First, their ideology has not progressed much from Thatcherism. They want tax cuts and a smaller state, and Sunak used the cost of living crisis to give them both. With government spending plans already fixed in nominal terms, higher inflation produced a squeeze on spending but higher taxes, and Sunak used that additional revenue to produce some modest tax cuts. This ideology is completely unsuited to the times, as both Johnson and Sunak had acknowledged by raising health spending and taxes by far more in the Autumn, but it remains what Conservative MPs are comfortable with. Neoliberalism may be dying, but it lives on in the minds of many Conservative MPs. 

Second, most Conservative MPs still regard tackling climate change as 'green crap' that they have to make a token of supporting but will not let get in the way of their ideology or electoral fortunes. So we had some VAT relief for insulation and heat pumps (the token), but there was no windfall tax on energy companies (see above) but instead a cut in fuel duty to encourage more car use. The words net zero did not appear in his speech, perhaps because it didn't occur to Sunak that it should, but more likely because he wants to have those MPs that want to scrap the net zero commitment on board.

Third, Conservative MPs are landlords rather than tenants, so he promised to cut income tax rates before the election while at the same time putting up national insurance contributions. This is almost giving with one hand while taking with the other, except that national insurance contributions are not paid by anyone who gets their income from sources other than working, like landlords or that favorite Tory voting group, pensioners. A sure way of appealing to Conservative MPs is to appeal to their pockets. Overall, if we combine this statement with decisions taken last Autumn, the Chancellor is not helping working people deal with the cost of living crisis, but making that crisis much worse, as this OBR chart shows. The average wage is expected to fall by 1% before tax compared to last year, but by 3% after tax by next year as Sunak's tax rises take hold. 

The UK's cost of living crisis is in large part the Chancellor's choice as he puts deficit targets above the needs of working people.  

Fourth and worst of all, your typical Conservative MP does not care one jot about the poor or disabled, and indeed is quite happy to stigmatize those on benefits if that brings electoral advantage. Whereas the Conservative party pretends to be green, it doesn't even pretend to care about poverty. As I note above, the single most effective measure to help those who need it most to weather the cost of living crisis - to keep food on their plates and houses warm - was an increase in universal credit, but that was not part of Sunak's plan. Indeed the whole budget was designed to help middle earners at the expense of the poor, whose in and out of work benefits will be uprated by past inflation while current inflation is more than double this. The reason for this indifference has very little to do with Sunak's personal wealth, and rather more to do with who votes Conservative. The best way to appeal to a Conservative MP is to appeal to those likely to vote for them.

So we got a Spring Statement that Conservative MPs can cheer, but will allow an estimated 1.3 million in the UK to fall into absolute poverty. We got a Spring Statement that, combined with earlier decisions, will make the cost of living crisis far worse for the average worker, but is good for landlords, pensioners and those with unearned income. A Spring Statement that ignores the opportunity to divert record energy company profits into helping the poor and greening the economy. A Spring Statement that reflects one man's desire for power, and how unrepresentative and out of touch with working people most Conservative MPs are.  

     

Denying national self-determination from Ukraine to Scotland, and the lessons of Brexit

 

What makes Putin's invasion of Ukraine so unforgivable? The three most obvious factors that have led to popular revulsion against what Putin and the Russian army is doing seem to be the unprovoked use of lethal force, the subjugation of a nation with a clear national identity, and the fact that a tyranny is attacking a democracy. (International organisations classify Ukraine as a less-than-full—but aspiring—democracy.) [1]

One thing that seems to matter to Putin, but not at all to Western public opinion, is history. That Ukraine was once part of the USSR, or perhaps more relevantly a Russian empire, is discounted because most people outside Russia believe, rightly in my view, that it is what those in Ukraine currently think that matters. It also seems reasonable that it should matter not at all that some in the invading nation (in this case) think otherwise. Ethnic cleansing is often justified by selective appeals to history.

The same applies to 'provocations'. It should be the right of an independent nation to choose who to align itself with, although those already in that alignment obviously also have a say in who is part of that club. The idea that the expansion of NATO somehow justifies Putin's aggression is absurd, and belongs to an age of empires rather than today's world. Would-be empires run by tyrants require a certain realpolitik from other nations, like don’t use your fighters to shoot down theirs, but it does not justify invasions.

If the combination of the use of lethal force, subjugation of self-determination and a democracy makes the Ukraine case clear, is one more important than the others? NATO used lethal force in bombing Yugoslavia, in response to their ethnic cleansing of Albanians in Kosovo, killing around 1,000 members of the Yugoslav security forces in addition to about 500 civilians. The argument would be that this action may have saved more Albanian lives, as well as protecting the national identity of Kosovo. It seems harder to justify the use of lethal force just to replace a tyrant by a democracy, although that argument was sometimes made for Iraq. This is partly because there are many shades of what counts as democracy, as well as doubts over it’s durability.

All this suggests that it is the denial of national self-determination that is crucial in thinking about the invasion of Ukraine. Imagine if opinion in Ukraine was equally divided, between those who wanted to be part of Russia and those that wanted independence. (Please note, this is not the case in reality.) I suspect Western opinion about the invasion, while still condemning the use of force, would be more complex. The right of people to choose who governs them seems to be critical, and a prerequisite for any democracy for those people. Equally if Ukraine had offered only peaceful resistance to Putin’s army, would we no longer care about the invasion? That seems very unlikely.

It is in this context that we should see the UK government’s current refusal to grant Scotland a second referendum on independence. The government line that it is too soon after the 2014 referendum is completely irrelevant, because it should not be the UK government’s choice to make but a choice for Scotland. The UK government denial overrides the right of Scottish people to self-determination. The argument also implicitly belittles the importance of Brexit, which Scotland voted against, which is a rather odd thing for the government that championed Brexit to do.

That is the first potentially controversial point I want to make. It is an important one, as I have no doubt the Conservatives will attempt to suggest during the next UK general election that any future Labour government would threaten to break up the Union by being ‘soft’ on Scottish independence. The reality is that it is their own policy of denial that is indefensible.

My second potentially controversial point is that any referendum to decide on Scottish independence should learn the lessons of Brexit. Brexit has been a disaster for England, Scotland and Wales. Pretty well every claim made by Brexiters has turned out to be false. Given the commonalities between Scottish independence and Brexit, it would be strange indeed, and completely foolish, if these lessons were not learnt.

Interestingly public opinion also tends to see the results of Brexit as largely bad, according to a recent poll analysed here by John Curtice. A clear majority believe that Brexit has worsened the cost of living, made it more difficult for us to sell goods abroad, led to a deterioration in the NHS and the economy as a whole, and reduced our influence in the world. If Brexit has had any effect on wages, more people think it is negative rather than positive. Non-EU immigration is worse rather than better. There are only two Brexit positives in the poll: controlling our own affairs (which is just another name for less international cooperation), and our vaccination programme. The latter is hardly surprising given the number of times Johnson makes this, generally uncontested, claim. As our vaccination programme was formulated while we were still in the EU, you can decide yourself how valid that claim is (or read this).

So what does the Brexit disaster tell us about referendums like any future one on Scottish independence. The first lesson is that referendums, like all elections, are only as good as the information provided during them. A second, related point is that alternative outcomes need to be defined as clearly as possible, and if this is not possible it makes complete sense, and should be obligatory if practical, to hold a second referendum when those details are clear. (The first referendum in effect becomes a decision on whether to open negotiations.) A third lesson is that margins of victory need to be large to avoid decisions which do not survive an immediate test of time. The way so many politicians involved in the Brexit decision schemed to ensure that just 52% on the day, of an electorate that excluded key parties, could take us out of Brexit remains one of the more shocking aspects of the whole Brexit debacle.

The first point is relevant to non-partisan media organisations. Your job is not only to ensure equal time between two sides, but also to explain the, often complex, issues so voters can make an informed choice. That means often championing the truth over whatever mystification one side wants to confuse voters with. In other words, knowledge and facts should always win out over balance.

The key points are the second and third. Whether the majority needed to decide independence should be 55% or 60% is up for debate, but allowing 50.001% to decide on something that will last decades is at the very least just asking for trouble, instability and regret. As any independence referendum will take place before negotiations between the rUK and Scotland, any referendum is open to counter claims from either side about what the result of those negotiations will be. It therefore makes a great deal of sense if a second referendum is held after the negotiations where the actual agreed terms of separation are known.

Even if you are half persuaded this should happen, there is no chance that it will happen. As with Brexit, these fairly straightforward observations will get mired in partisanship. Partisanship from those who see that they make independence more unlikely on one side, or from Brexiters who resisted such common sense with their referendum on the other. But a key ingredient that made Brexit such a disaster is also present with independence: a desire to make your own decisions against an economic cost that while large and real is open to obscuration and wishful thinking. To those that think a referendum on Scottish independence should not learn these lessons, I ask how can you be sure that a narrow margin for independence based on the dubious claims of one side will not suffer the same fate as Brexit? Perhaps you don't care?

[1] That this is happening in Europe, to ‘people like us’, with widespread media coverage that does not attempt any kind of balance (see last weeks blog), helps a lot as well, as a simple contrast between the plight of Ukrainian and Afghan refugees shows. But this observation does not invalidate the justified anger over Putin's invasion.

Information wars

 

Contrast public perception in the UK of Putin’s invasion of Ukraine with the US and UK invasion of Iraq. There is, rightly, no attempt to balance the reality of what is going on in Ukraine with Putin’s propaganda. National self-determination for Ukraine is being overridden by the use of lethal force based on the fantasies of empire by one man, or a small group of men around him. But the reality of the Iraq war was not so different. The invasion was the project of one man, George Bush, or a small group of men around him, with the UK following because our Prime Minister thought he should.

Yet with Iraq public perceptions were different, because the misinformation was coming from our own governments. We were told there were stocks of chemical weapons that could be used against us, or at least our allies, whereas in reality there were no chemical weapons. The bigger lie in the US was that Iraq was somehow linked to Al-Qaeda, whereas anyone with any knowledge knew that this was nonsense. We were freeing Iraq from a tyrant, whereas in reality we were undertaking a national rebuilding process with little idea of how to go about it, with what turned out to be disastrous consequences.

Information is crucial, and what information people are given, or choose to believe, can determine the outcomes of elections just as they can determine how wars are perceived. The influence of Russian money on the UK Conservative party, and on certain UK elections, has been public knowledge for many years for anyone who cares to look, but it has taken Putin’s war against Ukraine to make this knowledge more widely known.

We can start with our Prime Minister Boris Johnson. He overruled advice from the security forces (e.g. MI6) and made Evgeny Lebedev a Lord of the realm. Lebedev’s father was the senior KGB spy in London in 1988 and is a pro-Kremlin oligarch with interests in Russia, supporting Vladimir Putin and his annexation of Crimea. Evgeny Lebedev is also one of the UK’s press oligarchs, owning the Independent and the Standard. Johnson even got involved in where the government placed advertising contracts, to ensure his newspapers got a significant share. Johnson’s relationship with him goes back a long way. When he was Foreign Secretary, he slipped his Metropolitan Police protection officers to attend parties at Evgeny Lebedev’s palazzo. Was he compromised in some way at these parties?

The Conservative party, and a number of government ministers, have accepted large sums of money from Russian oligarchs. None of this money has been returned by the party as a result of Putin’s war. The party co-chair, Ben Elliot, runs a company providing a “concierge” service for the super-wealthy that has counted many Russians among its clients. He remains in post.

All this matters because we know that part of Putin’s war with the West has involved attempts to influence elections, including the Brexit referendum and Trump’s election as US president. An all-party report on Russian links (the ‘Russia report’) was delayed repeatedly by No.10 Downing Street. It concluded that the government can only say there is no evidence that such attempts have been successful because it hasn’t looked for the evidence, presumably because it doesn’t want to.

If Johnson and the government wanted to show that all this money and influence would not compromise their actions in response to Putin’s war on Ukraine, they have failed miserably.

So far the UK, possibly the only country in Europe to insist on a visa for Ukrainian refugees, has accepted only 50 refugees, just 1% of those who have applied, out of a total of an estimated 1.5 million refugees in Europe as a whole. France accused the UK of a "lack of humanity", saying that 150 refugees were turned back at Calais for lacking a visa.

According to Chris Bryant on 4th March, “following the invasion of Ukraine, the UK has imposed targeted sanctions on 34 individuals or entities. The EU has imposed over 500 targeted sanctions; the US over 200. Of the “Navalny 35” list, UK 8, EU 19, US 15. UK has only imposed sanctions on 11 Putin oligarchs so far.” The EU has urged the UK to act faster before assets are spirited away, yet the UK measures seem designed to do the opposite. According to the Times, the government has cut the budget of the anti-corruption unit tasked with investigating dirty Russian money in “Londongrad”. Finally it must not be forgotten how this government appears to be following Putin’s authoritarian example. Just as Russia jails those protesting about the war, soon our government will have the power to jail protesters for just making a noise.

All this suggests a direct link between the UK’s relatively slow response to the invasion of Ukraine, and the strong dependence of Conservative ministers and the party on Russian money. We should be targeting Putin, not the Russian people, Johnson claims. But is there any evidence that Johnson or others in government have put any effort into distinguishing between the two? When other bodies do flag misgivings on that account, Johnson overrules their advice. Everything the government does, once you look closely, allows them to continue to keep the Russian money flowing to them.

Yet ironically, the talk among Conservative MPs, which will be echoed in large parts of our oligarch’s press, is that the Prime Minister is having a good war. Wars where you are a bystander and do little but sound righteous make good copy, it seems. The reality is that, thanks to Brexit, the UK is at best a bit-player in international attempts to put pressure on Putin and those around him, and at worst an embarrassment because we have so much Russian oligarch money in London and have done so little about it. But those around the Conservative party think the war, and plenty of the usual lies and bluster from the Prime Minister, will put partygate behind them.

Among those MPs that are pushing to invoke Article 16 because they don’t like the border checks in the Irish Sea which they originally signed up to, there are those that see a new opportunity following the additional hike to energy prices created by the war. They want to roll back on our climate change commitments. Not content with damaging the country, they want to help destroy the planet as well. Johnson seems to be sympathetic, in part for reasons discussed here.

If they get any kind of hearing in the broadcast media, you will know that the wrong side is winning the information war. The obvious way to reduce our dependence on the global price of oil and gas is to speed up the development of alternative sources of cheaper energy, precisely what this group wants to slow down. As long as you are using significant quantities of oil and gas, you will be dependent on their global price. The more renewables we use, the more the marginal cost of energy will diverge from its (lower) average cost, and the more scope there will be to recycle energy company profits back to help vulnerable consumers. Yet these same MPs are opposed to doing even that. They are using the same topsy turvy logic that created Brexit’s ‘Global Britain’, a country that now does less global trade with the rest of the world following Brexit, and doesn't like to mix with foreigners.

Most of us are powerless in information wars, just as we are powerless in Putin’s war on Ukraine. These information battles are not won on twitter or in blog posts, but in editorial decisions by broadcasters and, occasionally, by editors of right wing newspapers. We can only hope, that after partygate and with the obvious failures of Brexit, the broadcast media becomes rather less deferential towards the Prime Minister and the party he leads.

Why the price of Johnson staying in power is measured in yet more human lives

 

Next weeks blog is early because of topicality and grandchildren. It is probably a failed attempt at transforming raw anger into meaningful prose.

Both the Financial Times and Times have good accounts of what the former calls Boris Johnson’s money network, following earlier analysis in Open Democracy. (See Peter Geoghegan’s book Democracy for Sale in particular.) I have talked before about the ‘Leaders Group’, a longstanding club for Tory donors who enjoy monthly lunches with ministers, but there is also an even more select ‘Advisory Board’. This, according to the Times, “granted privileged access to the prime minister, ministers and advisers at the top of government.”

Before linking this to policy over Covid, it is important that we are clear about what is going on here. The official line is that this is just a group of people with money helping the Conservative cause. But as all the accounts above make perfectly clear, that is the half-truth that allows the myth of that official line to persist. What those who donate large sums are doing here is not just supporting the Conservative cause, but also buying direct access (and therefore inevitably influence) with whichever minister they choose.

Equally others might ask what is new here. The CEOs who run our large companies have always had the ability to contact ministers when they needed to. I have in the past talked about institutionalised links between finance and the Treasury, which gives banks in particular direct access to key areas of government decision making. But that is access based on power, not money. Who does and doesn’t have power matters hugely of course, but it is not what is going on with Johnson’s money networks.

What is giving those who are part of that network unrivalled access to ministers and the Prime Minister is money, pure and simple. Those with money may also be powerful, but their access through the leaders group and the Advisory board is based on financial donations to the Conservative party. Once again, that individuals have been able in the past to use party donations to buy influence is not new. What is new is its institutionalisation, which has happened gradually over the last decade and is now under Boris Johnson, it seems, complete.

It is no surprise that Johnson has given priority to completing his money network. He himself is not that wealthy compared to some other Conservative ministers and is also hopeless with money: he needs a lot of it and hates raising it. But he also knows the Conservative party today needs to spend so much more than its rivals because its message is so often dishonest (see here for a clear example). This is what gives donors all the leverage they need with Conservative ministers.

This is partly why I have over the past few years described the UK under the Conservatives, and the US under Trump, as an elected plutocracy - government by the wealthy, for the wealthy. Once access and influence within a governing political party becomes institutionalised to the extent that it now is in the Conservative party, then it becomes legitimate to talk about an institutionalised plutocracy. That does not mean that those with money always have the final say - normal politics still functions to a degree - but critically it becomes almost impossible for us to say how big an influence those within the money network do have on government decisions. In normal democracies we would describe a plutocracy by another, equally valid, name: corruption.

Nor is this corruption confined to the party leader and his ministers. Many Conservative MPs are now in the market for becoming paid lobbyists for particular firms wanting favours from the government, as Open Democracy reports. Paterson was not one bad apple, but part of an increasing pattern in this Conservative party.

Covid policy has become, very unfortunately, a good example of this plutocracy in action. The Times report goes on: “According to a source, board members — whose investments spanned property, construction and big tobacco — were alarmed by the effect of Covid-19 on their businesses. A number of those present requested swift action, including the relaxation of measures designed to stop transmission.” How much influence does that have? We just do not know, but to pretend it has no influence on what the Prime Minister decides is no longer a tenable position.

More well known has been the constant pressure from the billionaires who own the right wing press, both directly and through their papers, to relax any protections from catching Covid, and to ‘get back to normal’. Of course this influence is plutocracy institutionalised as well, just a more familiar one mediated through money buying newspapers. But we also have perhaps a majority of his mask phobic MPs who are constantly pushing in the same direction. As MPs should take account of what the electorate thinks, the UK remains in theory an elected plutocracy, rather than just a pure plutocracy, but on Covid the majority of mask-phobic MPs in the Conservative party are certainly not representing their electorate. 

When Boris Johnson’s position as leader of his party was under serious threat as a result of him lying to parliament over partygate, he announced plans to end all of what he calls ‘restrictions on freedom’ associated with Covid, and which I would call protections against catching Covid. That included removing the legal requirement to self-isolate and free testing. The timing was no coincidence, but a survival tactic. He needed to get the large number of his mask-phobic MPs on his side, but he also needed to keep the support of the press and the party’s donors (the leaders group and advisor board). So, putting scientific advice in the bin, he did what they wanted.

This is perhaps the most blatant example of UK elected plutocracy in action since Brexit, and it is also likely to have the biggest effect on some people’s lives since Brexit. But it is far from the only example. As Russia started it invasion of Ukraine Boris Johnson, having talked big beforehand about what he would do, produced a set of sanctions that can only be described as pathetic, The Conservative party’s own considerable funding by Russian oligarchs remains untouched. Russian money has, despite what Johnson says, successfully destablised Western countries through support for Trump and the Leave campaign, and as the Russia report made clear Johnson's government pleads ignorance because it hasn't looked. It shouldn't just be people around Biden who are worrying about the extent to which Johnson is compromised by his and his party's Russian links.   

Countless health professionals have condemned the ending of Covid protections including mandatory self-isolation as rash and premature. Of course the media will find some health experts who agree with the government, but it’s the overall plurality of scientific opinion that matters here, just as it was with economists and Brexit. As with Brexit, it is clear where that plurality lies, and so the media has no excuse ignoring what health professionals are saying.

This government, whose Covid policy always had a very loose connection with science, has now severed the connection with scientific and medical advice completely. It and its supporters have chosen to bask in the (temporary?) glory of declaring victory over the virus instead, a glory that - when it comes to self-isolation at least - most people would rather not have. This is Covid policy for the unrepresentative donors, newspaper owners and MPs who have a phobia about masks, rather than those who elect our government.

Of course the virus will not be impressed by whatever victory Johnson declares, but it will relish the new contacts that his decisions allow. Infection levels remain at around the same high rate they were before Omicron hit, after the last time (we should not forget) Johnson declared victory over the virus on ‘freedom day’ last summer. Covid levels remain high in many schools. Nearly one thousand people died last week from Covid. If we are lucky, and no new variants start pushing UK cases up, we should have seen a steady decline under previous arrangements as we head into Spring. That might be the time to start relaxing some measures. Johnson is doing it now because it helps keep him remain Prime Minister: more people will die unnecessarily as a result, and more people will get Long Covid as a result.

However we may not be lucky with new variants. One may arise with the same infectiousness of Omicron (and, crucially, the ability to reinfect those who have had earlier variants). We already have BA.2. It is also quite possible that a future variant will involve greater vaccine escape, and it is also possible (despite widespread belief) that a future variant could be more life threatening than Omicron. Learning to live with Covid means investing in measures that reduce its impact, not pretending the disease doesn't exist. 

The government’s approach seems to be to ignore this threat, and by testing less hope that only those that catch a new variant will notice it. Whatever he may say, the message those pushing him to ignore Covid are putting out is that the pandemic is over, and people don’t need to wear masks in crowded spaces, don’t need to protect vulnerable people by paying for tests and wearing masks, and don’t even need to self isolate if they catch Covid. By pandering to this line, Johnson will be responsible for its consequences.

All Johnson’s talk of personal responsibility is designed to hide an uncomfortable truth: he is making it harder for most people to behave responsibly, and he is allowing others to be irresponsible. We ban smoking in certain public spaces rather than give smokers ‘individual responsibility’ not to smoke there, when it is obvious who is smoking, so why should individuals be personally responsible over who they do or do not give Covid to, when others cannot tell who has Covid?! He has made England a less safe place, and many will die as a result. He is ignoring scientific advice to be more cautious because his position is under threat, and so he is giving in to the ego-libertarian factions that now control the Conservative party: the right wing press, mask-phobic MPs and the donors to the party that make up the UK’s elected plutocracy.

This week, when compulsory self-isolation ends, has been a sad day for most people in England who would rather not catch Covid, but will now find that much harder to avoid doing so. It is a sad day for the influence of medical science, which has gone the same way as economics as a guide to what our government does. It is also a sad day for our democracy, when the survival of one man means that party donors, newspaper editors and anti-science MPs have become more important than the electorate.

We are in an unprecedented era of UK relative macroeconomic decline

Long time readers of this blog will be familiar with this chart, of UK real GDP per capita since just after WWII.

It shows a remarkably constant trend rise of output/income per head of 2.25% per annum since 1955. The booms of the mid-70s and end-80s, and the recessions of the early 80s are only just visible, but thankfully the trend in GDP per capita always reasserted itself. Until, of course, the period after the Global Financial Crisis, when it didn’t in a quite spectacular way.

Not only did we not bounce back in any way from that recession, but GDP per head started growing more slowly. (These observations are so much clearer when using GDP per head, rather than GDP which is strongly influenced by inward migration.) I watched and blogged in horror as the gap between the previous trend and what was actually happening to living standards [1] kept growing wider.

The little blip at the end is the pandemic of course, and once again using GDP per head shows clearly how we are yet to fully recover in terms of living standards. At the end of 2021 GDP per head was almost 4% lower than it was in 2019. (Once again, it shows how misleading using GDP data is if you are trying to gauge anything to do with welfare.) Remarkably GDP per head at the end of 2021 was only around 5.5% higher than it was at the end of 2007! (That is annual growth of less than 0.4%!).

However, using a constant trend rate of growth of 2.25% as a reference point was a convenience rather than a realistic aspiration. The main reason is that trend growth has for some time been slowing down across the world. What to use instead? In the chart below, I compare the UK to the global technological leader, the United States. I make no attempt to make a realistic comparison of levels of income per head, which is in any case distorted by factors like workers in the US have less holidays than we do in europe, for example. I’m just concerned with the trend rate of growth in GDP per capita.

I have scaled US GDP per capita (red line) so that it matches the level of UK GDP per capita from the mid-50s until the mid-80s. UK and US living standards were growing at a similar rate over that period. There was much angst in the UK at the time about economic decline, but that in part reflected a dynamic Europe, and also we were not catching up with what is generally agreed is a large level’s gap with the US. You can see by eye that US trend growth in GDP per capita starts to decline as we reach the middle of the period. 

The first interesting deviation from parity of growth rates starts in the mid-80s, and is clearer if I redraw the chart starting in 1979.

UK GDP per capita continued to grow at a constant rate in the 1980s and 1990s, while US GDP per capita growth started to decline from the late 1980s. This divergence grew wider during the period of the Labour government, such that by the end of 2007 we were ahead of the US trend by 6% compared to previous levels. You can tell many stories about this apparent success story, but it does correlate with more detailed studies of trends in growth over this period: the UK was more than holding its own, and catching up in level’s terms with the US and to some extent France and Germany.

But that is just the backdrop to the main point of this post. Since the GFC, the UK has been doing worse than the US consistently, reversing all of the post-mid 80s gains. Half of the 6% gain was lost during that crucial austerity period from 2010-12. Of course all countries around the world did badly through a common policy of austerity after 2010, with the important exception of China. Only in China was a substantial Keynesian expansion created that offset the impact of the GFC. But, compared to the US, the UK lost ground.

The next major period of UK decline began shortly after the Brexit referendum. By the end of 2019, that initial 2007 6% gain had fallen to little over 1%. The policy response in the pandemic made it worse still. By the end of 2021 the UK had fallen to just over 2% below the US line, reflecting a stronger (stimulus led) US recovery from the pandemic. If we take the period from the start of 2010 until the end of 2021 as a whole, UK GDP per capita appears to have grown by 6% less than US GDP per capita. That is, since 1955, an unprecedented period of economic decline for the UK.

To show this isn’t an artefact of my method, here is a small table

Country	GDP pc 2010	GDP pc 2221	Total growth	annualised
UK (ONS)	30027	32514	8.3%	0.7%
US (BEA)	202068	234497	16.0%	1.4%
Germany (ES)	31940	35250	10.4%	0.9%

In the table I’ve included data for Germany (the only major EU country with data for 2021 on Eurostat). Germany is also falling behind the US, but by less than the UK. The reason is straightforward - Germany is also addicted to an austerity mindset.

This is the reality behind the government’s bluster of strong and steady growth. Macroeconomic success should be measured in terms of GDP per head, and not the size of some government deficit. Forget cherry picked statistics after the UK suffered the largest fall in GDP during the initial pandemic. This is the reality - an unprecedented decade of relative macroeconomic decline that started in 2010, and with Brexit still influencing growth there is no end in sight.

This analysis ties in the underlying growth in the economy, taking out the direct impact of migration, with the UK’s so called cost of living crisis. These are not separate problems, but as Rachel Reeves highlighted in a recent speech they have a common cause, which is weak UK growth. The government cannot at the same time appear fatalistic about falling living standards and yet try to talk up UK economic performance, because to do so is mutually contradictory. Advancing living standards, particularly those at the bottom of the income distribution, is what good management of the economy is all about.

It is always relatively easy to find reasons why this UK macroeconomic decline is all bad luck, and nothing to do with policy. It always is. But since the Conservatives came to power in 2010 they have had two big economic ideas which directly influence macroeconomic performance. The first was prioritising reducing the deficit over the recovery from the GFC recession and, more recently, the pandemic recession. The second was Brexit. Both have been disastrous for the economy, and predictably so as they went against basic economic principles.

There is a refusal among Conservative MPs and ministers to recognise the recent reality of UK macroeconomic decline we are now living through (and its contrast to  our earlier strong performance), let alone their responsibility for it. Instead they live in a fantasy world, and try to convince us their fantasy is real. Apart from the regular use of cherry picked and misleading statistics, we have a situation where the queues of lorries waiting to be checked at Dover are nothing to do with Brexit, they tell us, but because of EU red tape. You wouldn’t want such people in charge of the most trivial tasks, let alone managing the economy. It is time to recognise the reality of recent UK macroeconomic decline, and to assign responsibility for it in two huge failures of economic policy.

[1] GDP per head is equivalent to the average income generated by domestic output per head. Of course that average is hiding the gradual redistribution of income towards the 1% in the 1980s and 1990s, a redistribution which has had a significant impact on median wage growth during that period. Finally the purchasing power of median UK earnings has declined because of two recent depreciations in sterling: the first during the GFC and the second after the Brexit referendum.