I Told You: The Irish Change the Question

There will never be a better example of Boris Johnson's unfitness for a responsible job than the Foreign Secretary's recent - disastrous - failure to recognise the importance of the Good Friday Agreement in the context of the Brexit negotiations. The Agreement is a full-scale international treaty, sponsored by the USA and registered with the United Nations. The idea that it could ever be buried in weasel words that slid over the crucial facts - let alone openly abrogated by unilateral decision by the UK [with or without the 'sanction' of a referendum] - shows a degree of lazy, slovenly negligence that is breathtaking.

It will be fascinating what twists and turns are now going to be enacted, in the full blaze of publicity.

Spectacular Naivete

Jacob Rees-Mogg speaks slowly and clearly. He has a reputation for expressing clear ideas, some of which are out of kilter with contemporary fashion; notably his strictly orthodox Roman Catholic attitudes to homosexuality and the procreation of children. Yesterday lunchtime he excelled himself in a discussion of the Commons committee report on the Brexit situation on the BBC2 show, the daily politics.

He displayed an astonishing degree of ignorance about the realities of contemporary human aspiration and about the nature of world trade. In his view, the mass of the British people want cheap food and cheap clothes; therefore the UK should open its borders to imports from the countries that can supply the cheapest food and the cheapest clothes.

He did not mention the need to have countervailing exports of British goods and services to other countries, with which to earn the foreign exchange to buy the cheap imports. he did not seem to have any awareness that the countries - like Bangladesh - that are home to the cheapest clothes manufacture have the least capability to pay for the high-tech exports on which the future of the UK depends.

It is a recurrent theme of this blog that the most advanced country, the USA, will never grant to Britain [or to the EU] truly most-favoured access to their domestic market, because they are anxious to nurture their advanced economic sectors: which is best done by enabling their innovating firms to make big enough profits continue with the research and development programmes. Even before Trump, and certainly after Trump, they will be unashamed to prefer US technology, entertainment, financial services and other highly profitable areas of activity. It is part of the American culture to preserve, protect and defend their own firms and their intellectual property.

As the world's second economy, China is notoriously prone to require firms trading into China to share their intellectual assets with Chinese 'partners'. Japan has been closely chauvinistic throughout its modern economic history, and India is developing on similar lines.

Thus, if Brexit Britain went down the route prescribed by Mr Mogg there would be a monumental and rapidly expanding balance-of-payments deficit.

Even more significant, however, is the implicit ignorance shown by Mogg about the pattern of consumer aspirations that has developed all over the world. Yes, the class of hereditary paupers that was created by the Thatcher regime [and subsequently consolidated as part-salaried welfare dependants producing low levels of output per head under Blair, Brown and Cameron-Clegg-May] does want cheap food and clothing. But they also want smart phones, computer games, access to popular music and sports coverage. A major reason why they want cheap food is to have enough money [and access to credit] to buy the high-end products and services that are most fashionable. Such a living standard is accessible to the poorer members of an advanced-economy common market: it is not available on WTO terms to a rapidly-declining economy that is denied access for its exports to the richest countries in the world.

Mogg has revealed to me the extent to which the extreme Brexiteers live in cloud cuckooland.

The Future of Britain and Ireland; and the Relevance of Donald Trump

Five Tory MPs yesterday labelled themselves even more firmly as people who were willing to risk the economic future of the United Kingdom outside the carapace of the European Economic Area. They also accepted - whether or not they see it in those terms - the possibility of a recurrence of the 'war' waged over centuries by the IRA and its precursors. By refusing to recognise that the only secure way to carry forward the peace accords that have been achieved in Ireland since 1970 is for the UK and Ireland to remain integral to the the Common Market, these people have exposed the entire population of both islands to a very real danger.

I have repeatedly pointed out in this blog that by subsuming enough of the identities of the two states in a community it was made possible for Britain to put huge subsidies into Ireland [via various European funds] that were sufficient eventually to secure the Good Friday Agreement. It would be insanity to reverse that process; and it is fervently to be hoped that by remaining in the same economic space - even without the UK participating in the political European Union - the peace can be maintained. The majority of the Commons committee on Brexit sensibly agreed that the half-baked notions for a sham land border between the Irish Republic and the UK, secured by unachievable and unaffordable IT, would never be satisfactory. Unless the Tory party can formally decouple leaving the European Union from remaining in the European Economic Area, there is no 'cast iron' means of securing an open border in Ireland.

It is - literally - a matter of life or death for the DUP to insist that Northern Ireland is fully part of the UK [for as long as the present peace and constitutional status can be maintained]. They must oppose any half-witted pretence that anything else will do.

The Irish government and its 26 associates in the European Union would be wildly irresponsible not to make this point: and, if necessary, make it the sticking point in the upcoming EU summit. It is a moot point whether Mrs May understands this issue.

Meanwhile, the British political class has united to excoriate the US President for riding out his ego by quoting from a fringe right-wing political outfit in the UK, The publicity of this episode has apparently caused a rush of interest in the group [which I will avoid naming], including a rush of membership applications. That issue may have caused bad feeling in the egotist in the White House, and has certainly increased the misplaced contempt that the British Grauniadistas express for him; but it is not the most important nor the most relevant point. The election of Trump to the presidency was the consequence of a massively effective populist campaign. Trump promised to 'make America great again' and one of the preferred ways of doing that is to discriminate against imports. The UK is not a massive importer of goods into the US; but the UK is probably still second to the USA in the generation and worldwide diffusion of intellectual property, especially in fields of culture, entertainment and key areas of scientific innovation. Any idea that Britain will be pushed to the front of some queue for special access to US markets is dafter fantasy than the idea that some cosmetic 'solution' will resolve the Irish border question. If the UK economy is not within the European Common Market, it will be out in the cold. It will shrivel, living standards will collapse and any idea of renewing economic growth through investment will be an impossible dream.

We have very little time to 'get real'. The shortest route to sense is to separate the vote to 'leave the European Union' from the Tory minority's obsession that this rolls-in the ideas of leaving the Common Market and the economic area. No second referendum is necessary: just a dose of common sense.

Personality, Effectiveness and the National Interest

The London Stock Exchange has been in the news for precisely the wrong reasons in the past few days. Following the announcement that the very successful, reputedly abrasive, chief executive was  leaving one significant shareholder took a very public stance to assert that the chairman should go and the chief executive should remain. Rumours swirled about clashes of personality, secret payoffs and dirty work at the crossroads. After entertaining the speculative journalists for a couple of weeks it is now announced that both chairman and chief executive are to go: the chief executive soon, the chairman in 2019. The publicity has been unsettling, and the Exchange is now said by some to be a vulnerable takeover target; with the owner of the New York Stock Exchange said to be a keen potential buyer.

There is no doubt that, despite regulatory and chauvinistic forces preventing a proposed merger with the German stock exchange, the chief executive has been very successful, multiplying the share price very significantly: he will no doubt leave with very significant financial reserves to underpin his aim to grow vines.

Over the decades, there have been many examples of chief executives who dominate and build up hugely successful companies; often for them to be ruined within a few years after the great man stands down. One of the most spectacular in my lifetime has been Arnold Weinstock of the English Electric Company. Over the spectrum from domestic appliances to world-class warplanes, this conglomerate company built a steady reputation for business success and thus declaring decent dividends. For most of the couple of decades while Weinstock ruled the company in a highly individual and essentially conservative way, the chair was occupied by the complementary character Lord Nelson of Stafford whose emollient, confident handling of the formal business of the company [including shareholder relations] left the chief executive the space he needed to manage in his own way.

After Weinstock's retirement there came in people who teachers in Business Schools would undoubtedly rate higher than Weinstock on all the measures of formal competence that are emphasised by academic commentators [especially those in third-rate British business schools]. With major reorganisation, changes of name and restructuring, the next generation of managers destroyed the business in a very few years.

What is left of the 'clever end' of the old English Electric Company, the aeronautical facilities in the north-west of England that have survived until now within more recently cobbled-together conglomerates, are being reduced - and are very much under threat of closure - as a consequence of cuts to the defence budget, combined with the increasingly prudish opposition to the sale of aircraft and arms to regimes that purists consider to be oppressive. There is a very present danger that the United Kingdom will soon forfeit any capacity to build military aircraft: while Brexit [if the buffoons have their way] will lead to the slow exclusion of UK manufacturers from Airbus.

Lords Weinstock and Nelson together took a major part in enabling the UK to be at the very forefront of defence technology: and one of the ways in which they helped this process was by including the defence-oriented projects within a larger conglomerate that made significant profits from its consumer electrical goods. Thus the some of the defence contracts, for some of the time,  could be priced at less than full cost because of internal subsidy by the company. This pricing structure also applies to the suppliers of components for the major projects in the defence arena. It is extremely important in France, where the heavily-state-supported viability of the aircraft industry is maintained with constant nudging from the state.

Britain has lost both the Weinstocks and the appetite to enable them to maintain their niche in the "military-industrial complex" which is essential for any state that hopes to be a power in the world [or even in the neighbourhood]. Before the last dregs of the potential to restore the complex have drained away, it behoves the wider public to recognise what we have had, and are so close to losing for ever.

Corbyn and Bitcoin: Capitalist Catastrophes

A major Wall Street bank has released a piece of research which [inter alia] warns that the advent of a Corbyn-led Labour government in the UK would potentially have a more calamitous impact on London share prices that would  'Hard Brexit'. The markets have balanced out the 'risk' arising to future profits from firms if the government totally cocks-up the Brexit negotiations with the actual fall in the pound among world currencies and the day-to-day performance of the listed companies. The level of the stock market index would fall in the event of failure; but the possibility is factored in to buyers' calculations. On the other hand, the imponderable impact on the market of Corbyn actually becoming prime minister is inestimable. How far he would cling to his lifelong Marxist dogma [and how far his party would follow him there] cannot be predicated on any known basis of probability. Thus, the bank argues, there might be no 'floor' below which British stock prices would fall. Consequently, the Wall Street Crash of 1929 might be replicated, or even exceeded, once panic sets in among dealers who have no precedent for such a change in government to be assessed against.

The very worst case is a catastrophic Brexit followed by a collapse of the present government and the anointing of Mr Corbyn to preside over the chaos, while John McDonnell would try to enact some of his socialist plans. This is no longer an impossibility, with Dr Fox, Mr Davis and Boris Johnson working so hard to achieve the disaster that they cannot understand.

Meanwhile, the vicious charade of bitcoin continues. The 'price' of this nonentity is continuing to rise, giving strength to some of the unknown number of hundreds of other cryptocurrencies that are now on offer. An ever-wider range of investors, fearful of the very high level to which the world's leading stock indeces have climbed, have 'diversified' some of their holdings into these fanciful 'assets'. Some expect that [whatever they may say now] the central banks might have to buy cryptocurrencies to prop up the market: as they have propped up derivatives and other bets that existed before the crash in 2008. If the central banks do shore up the whole rotten fantasy, the real-world economy will be hammered even harder than it has been since 2008.

The prospect for Britain, host to the London market, is especially hazardous. Warren Buffer called derivatives 'weapons of mass destruction' but they have have been protected and the market in them has continued to grow. The traders in, and owners of, those assets remain complacent: that is what gives confidence to the cryptocurrency speculators. Real people have good cause to be worried; and Corbyn's communist-inspired views give no reassurance at all.

A Less-than-half-cock Strategy

Mrs May was talking in January about the importance of the 'Industrial Strategy' on which her government was supposedly working very hard. It has now been unveiled, and although there is some straight thinking in it there is also grave incomprehension of economic realities. Just to list a few:

*Brexit: it is vitally important that any drugs, designs or other innovations are marketable throughout the European Union on more-or-less the same terms as at present: otherwise, firms that are subsidised to employ teams of researchers in the UK will do the final stages of development within the Union so that the product is not inhibited by regulatory barriers from getting to its primary market. Innovative products will be held up at any border by licensing and regulatory systems, to allow indigenous companies in the potential importer countries to catch up. WTO Rules will not stop such chauvinistic chicanery. Even before the advent of Trump, the USA was notorious in that regard: while firms in emergent economies - including China and India - are not above simple intellectual theft.

*Profits can be shoved abroad by alien companies. So the British state will be sponsoring and helping alien-owned firms to develop products - employing some British scientists and technicians, true - but also allowed to import their own managers and experts for the duration of the period of product development. The manufacturing of the developed idea can that be conducted anywhere on the globe, and the pricing structure can be adjusted so that British taxpayer gets little back for the investment by the British state. Although some share of the intellectual property in some ideas may go to British universities and individuals, the vast majority will be owned by alien organisations; and can thus be alienated as they wish.

*Fake apprenticeships such as are being developed with schools and universities in the UK are most unlikely to produce people with the skill-set that is achieved by real apprenticeship in Germany. It is therefore unlikely that the programme will develop a strong and longstanding skilled workforce such as exists in the dreams of the contributors to the strategic plan. The ongoing delay in the actual launch of the Apprenticeship-MBA will provide no obstacle to the companies that have already agreed to participate in the Industrial Strategy.

*Any genuine development of science and technology in the UK is greatly to be welcomed. But I have observed personally for more than forty years that a huge proportion of the research that is carried out in the best British universities of technology - places like Birmingham, Manchester and Sheffield - is done by alien research students. Not enough Brits are capable of getting good degrees in science and technology, because of the awful state and status of science in schools. Side-tracking kids into fake apprenticeships where they simulate industrial processes instead of doing full-time hard learning will set the UK back in its development of the right skills for the twenty-first century.

My overwhelming feeling about the strategy is: "too little, too late"!

Most importantly, the 'strategists' still have not got lesson number one: that productivity improves only when productiveness gets the prime place. Productiveness is improved only when the profit from any activity is devoted to improving the plant, the processes, the materials used and the people employed. When that is done, productivity can improve and real economic growth [in the sense of generating more income-per-head from the workforce]  can be achieved. I do not see that productiveness will significantly be enhanced by this new Strategy.

Puerile Politics

The news media this morning tell me that some of the pathetic runts who have inveigled themselves into Parliament have come up with a spiffing wheeze. They suggest that as Mrs Merkel is in a possibly-terminal struggle for her political existence, the time is right to cut down the amount that the UK should offer to the European Union to settle our obligations as departing members.

Most of the citizens I know - many of whom voted Leave - agree with Mrs May's public assertions that we should pay all that we owe, fair and square. It should have been possible to produce openly-published estimates of the amount many months ago, and most people are bemused that this has not been done. It is a matter of accountancy: the items should be listed, defined, quantified [in sterling] and a total determined. The UK government's tabulation may not tally with that of the Brussels bureaucracy, and an arbitration might be needed; but the whole thing should be open and and conducted in a fair minded manner on both sides.

This is the latest incident of low-mindedness among some politicians, whose behaviour has become a national embarrassment. The word puerile derives from the Latin puer - a boy - and is used to denote human conduct [chiefly by apparently-adult males] that seems to others to be very like the sort of behaviour in which pubescent males engage: often when they group together and goad each other on towards a greater excess of silliness. Every male adolescent is puerile at times: that is human nature. When grown men act in a puerile manner that is always embarrassing: when men in public life behave thus, it is a national disgrace. We have almost become used to fractions of the Conservative Party behaving in such a way: yet it is still painful, and the nation is shamed by it. That Mrs May is so weakened by her election debacle that she is at the mercy of such men is a national tragedy.

It is very hard to see where we go from here. It does appear that the government has ignored the idiots, for the time being, and agreed that we should make an increased offer to get the financial conditions of Brexit settled. It is devoutly to be wished that the government can hold to that decision and move on to substantive discussions.

Germany's Second State

It is a commonplace assertion that a cabal of German bankers and industrialists fixed Hitler's appointment as Chancellor in January, 1933, at a time when support among the electorate for the Nazis was waning. The business figures were scared that the Communists in alliance with the Social democrats could take power: then the Social Democrats would be dealt with and a Communist revolution would be achieved. To forestall that possibility, an alliance of the Nazis with other right-of-centre groups in parliament was cobbled together, and vonPapen was installed as vice-chancellor to provide a restraint on Hitler. vonPapen was easily set aside, but the Nazis followed policies that were endorsed, broadly, by both the bankers and the industrialists who got the orders for rearmament and the construction of the motorways.

Over the last weekend, as Mrs Merkel struggled to cobble a government together after her disastrous loss of seats in the parliamentary election, a cabal of German industrial and commercial bosses put out a statement to the effect that Brexit must be prevented. It looks likely that Germany will have to go through another election, in which the anti-immigrant, eurosceptic Alternative for Germany is likely to retain [or even improve] its share of the vote. If that election is to be avoided, Mrs Merkel must find coalition partners who will agree with the agenda suggested by the business lobby. If that election becomes necessary, Mrs Merkel will be replaced and a new coalition will have to be formed - probably on the lines of past left-right 'Grand Coalitions' that will start with the business sector resolution high on their agenda.

Several other European states want the EU to cut a deal with the UK, including the central European countries that have never submitted to Mrs Merkel's instructions to accept a share of the immigrants whose admission to the continent has caused her to loose her electoral power.

Unfortunately, the shambolic British Brexit secretary, David Davis, will flatter himself that his address to a business group in Berlin last week influenced at least the timing of this exercise of the influence of German's Second [or Secret] State's muscle; which has always been powerful within and behind Germany's politics. The massive economic success of Germany since the utter devastation of the country in 1945 has been driven by the lineal descendants of the people who put Hitler into power, and that lobby remains hugely powerful. Their recent announcement included a reference to the need for flexibility on the EU's principle of free movement of people, since it is well understood that immigration was a key element in the British people's vote for Leave; as it was the key to Mrs Merkel's electoral disaster in Germany itself.

Britain voted to 'leave the European Union'. The 'Tories for National Self-Destruction' [aka the headbangers] interpret that vote as meaning that the UK must leave the political club of Brussels and the Common Market. I have always assumed that it is only rational to split those two: we must leave the antidemocratic political institutions, but remain in the economic community [whether formally, or under the guise of a new trade deal]. That now looks feasible.

The Tories spent much of last week excoriating the MPs who have argued for such a solution. They will soon be vindicated. Then the real target for contempt, those who plan the economic devastation of the United Kingdom by quitting the European Economic Area, must be exposed and defeated. 

Derivatives: The Looming Disaster

As if the total failure of government in the face of Brexit was not enough of a problem for the British state all on its own, the potential catastrophe in the area of Financial Derivatives can make all other considerations trivial.

It is very hard for me - who has been a horrified observer of the development of this market through the thirty-or-so years when it has been in existence - to get my head round what is involved when derivatives meet Brexit. Most people have never had the time to understand this type of 'product', and have never felt the need to do so. Yet as far as the international financial community is concerned derivatives are by far the largest set of 'assets' that they trade in. The bankers have induced their customers, taking in all other financial traders and pretty well every firm that does real-world business, to take part in derivative business as part of the process by which unknowns and unforseeables can be wished away from the the business scenario.

As the financial world has plunged headlong into cyberspace, the possibility of counterfactual events unsettling the market has increased. In response, very clever people have developed ever-more 'advanced' derivatives. Back in the Thatcher era, when the concept was now, most derivatives were derived from real-world events; such as the incidence of severe thunderstorms in the American midwest. Insurers found that the damage that such storms could do to crops was severe; but it was highly specific to very small areas where the storm might well destroy the crop in one large field but leave the surrounding area unaffected. Meteorologists set up businesses, equipped with satellite observation and reasonably sophisticated computer programmes, that could certify whether a storm was likely to have hit a particular farm at a given map reference on a given date: this enabled an insurer of the crop to make a snap judgement, whether to accept the claim at once, or whether to investigate whether it was genuine.

This enabled a secondary business to be established, whereby the information derived about the probability of of an event [such as storm damage] occurring could be tidied-up and used as the basis of a bet on the probability of storms causing damage. Such contracts enabled insurers, and bankers who lent money to farmers, to hedge against the actual occurrence of damage. Most areas do not have storm damage in any period, so a derivative based on the probability of a storm occurring leads to no payout: but if a storm does occur, the insurer can claim against the contract and thus meet at least some of the costs of real storm damage.

Once real-event related derivatives were deemed to be viable, there was an explosive expansion of derivative contracts. The probability of an asteroid striking New York is pretty low: but a derivative can be envisaged to cover it, and offered to firms that may be anxious about concentrating their property investment in that city; and why not earthquake damage as well? Such contracts could support insurers' capital; but they soon became a means of dealing with any possibility for loss both in the real world and in the fantasy world that the derivative creators were  erecting in cyberspace. Nowadays, any improbable 'risk' can be subject of a derivative and companies are [effectively] required by their financial advisers to place their bets on the subject matter of the derivative that they want to sell.

This huge trade in bets based on synthetic probabilities is focused on the great financial centres in New York and London. The world, led by the other countries in the European Union has bought and sold derivative contracts that are legally based in the UK: and now some clever observers have pointed out that all London contracts - ever since the market was invented - have been governed by the law of England within the overall regulatory system of the EU. Some commentators have suggested that all these contracts would become void when the UK leaves the EU at midnight on 31 March 2019: unless they can all be re-written - which is an impossible task. The ministers in Mrs May's government do not even seem to be able to understand the need to keep lorries crossing the channel taking components to and from factories in the UK and on the continent: so how can they be expected even to listen to the apparently-esoteric arguments that will be put to them with increasing urgency about derivatives [and other 'products' like options]?

This country is hurtling towards a disaster that will make the 2007-9 'crash' seem nothing. The calamity will occur in markets that the ministers probably don't want to understand: but those ministers will bear responsibility for the biggest-ever financial crisis if they continue on their present course. The headbanging Brexiteers are driving us all towards ruin: and if they succeed, they will plead innocence.

Ignorance and stupidity are no defence, in law or in the court of public opinion.

Mrs May: Deadline or Deadbeat?

Theresa May has announced her intention to confirm March 2019 as the date on which the UK will leave the European Union; and has indicated an intention somehow to establish that date in law.

On the same day, a spokesperson for the European Union has said that unless there is to be a 'hard border' in Northern Ireland [which no party in Ireland will accept; and which the British state cannot afford to enforce] Northern Ireland must remain under EU jurisdiction permanently: regardless of what arrangement will apply to the rest of the UK. The Democratic Unionist Party, whose votes in the Commons keep Mrs May in power, thus faces a huge dilemma. The one thing that can deprive them of their majority mandate in Ulster would be for them to be seen on the island of Ireland as the group who  would vote to enforce a hard frontier. However the DUP may decide that dilemma, there is a bigger one facing the UK government.

Can any UK government [Tory, Labour, fragile coalition - LibLab - or 'grand' coalition of three or more parties] contemplate bearing the cost or the odium of renewed conflict in Northern Ireland? This is an intractable question, to which I have drawn attention on previous occasions. The headbanging Brexiteers have put Ireland into the 'too difficult' file, as they busily fantasize about trade deals with countries that have no particular interest in doing Britain a good turn. Ireland has been a determining factor in British politics for centuries: and it is worth remembering that whenever the British think they have found an answer to 'the Irish question' the Irish change the question.

By a vote of 52% to 48% the UK population voted in favour of ceasing to be a member of the European Union: without any deep understanding of the implications of that question. Now that the ramifications of just a few of the implications are becoming clear, the proportion of the literate classes [especially of the civil service, which would have to administer Brexit Britain] that favours Brexit has declined rapidly.

Millions of people - including me - voted 'out' in genuine opposition to the ever-closer union of a corrupt political dictatorship [masquerading behind a facade of democratic institutions]; we also wanted to cock a snook at the British political class [represented by Cameron, Clegg and Osborne] who were the principal advocates of Remain and of austerity. None of us wanted to ruin the country economically. Some 'out' voters accepted assurances that that the world was open for free-trade deals on WTO terms. Some - me included - believed that, in the unlikely event of the 'outs' winning the vote, a continuance of the [Liberal-supported] government that had given us the referendum would negotiate terms that enabled stable economic life to continue. Nobody expected David Cameron to be such an utter coward as he proved to be. Nobody much minded what happened to Osborne: as he has demonstrated, he could move on to adopt half a dozen lucrative careers at once. On the day of the referendum nobody contemplated Mrs May being the prime minister; and we could not have conceived that she would place herself in thrall to people who actually would be prepared to see the British economy dismembered: starting with the crown jewels in the City of London.

Today, in the Silent Ceremony at Guildhall, a new Lord Mayor of the City will be installed. By the end of his year, the die will have been cast as to whether Britain will survive [and thrive] as an economy in association with the European Union, though with greater facilities for trade with the rest of the world.

Yesterday's two announcements - Mrs May's 'firm deadline' for leaving the EU, and the EU's comments on Ireland - are incompatible and will almost certainly ensure that no kind of Brexit happens in March 2019. Meanwhile, Mrs May's government looks increasingly unlikely to survive even to March 2018. The Tories will implode, even if the DUP do not simply repudiate their voting pact. Mrs May's chances of winning a by-election, even in the leafy home counties, are vanishingly small. Politics has become far too exciting; and that is before the inevitable mass movement against economic suicide begins to capture the headlines.

Some Distinguished Economists

I remember a time when the Econocracy had not yet emerged. Economics was beginning to flounder, as the NeoKeynesian orthodoxy that had been established in the nineteen fifties  began to reveal its fallibility in the emergence of excess inflation in the 'sixties; which was to lead to the chaos of the 'seventies and the rise of Monetarism that paved the way for the free marketeers who were the founders of the Econocratic hegemony that currently prevails.

For any reader who might happen upon this blog, and wonder what planet I am writing from, I explain that the term Econocracy has been created by the Post Crash Economics Society, a Manchester-based student movement that has successfully challenged the prevailing orthodoxy in formal Economics that has given us the 2007-9 crash, declining living standards, decayed industry, an intractable balance of payments deficit, austerity and [in a public backlash] the Brexit calamity. The Econocrats are the professors and established lecturers, senior lecturers, readers who demand of their students credulous adherence to the dogmas that have led to the ills in society and the economy that have just been listed. The Manchester group have produced the book - Econocracy -in which they explain the term in its context. They have also published research that shows how closely most university courses follow the 'official' line.

I was fortunate to pass through a university system that was vastly smaller than it is today: fewer than forty fully-fledged UK universities, and many of them had only one professor of Economics and up to six other teachers. I find it astonishing now to look back into old university Calendars and find that whole degrees were delivered by teams as small as four academics. The Great Man of the 'Economics profession' was Sir John Hicks [the first British recipient of the pseudo-Nobel prize], but the dominant individuals who decided who got appointed to which vacant chair in Economics were Lionel Robbins [Lord Robbins of Clare Market] the unchallenged boss-man of the LSE and Charles Carter, founder VC of Lancaster University and editor-in-chief of the highly influential Economic Journal.

Typically, syllabuses contained an element of Economic History [which would greatly benefit the students of today] and also a paper on the History of Economic Thought. Mathematical aspects were not prominent, and could often be avoided: in my own university it was even possible to evade the simple Statistics course by opting for Ethics. By 1945 all universities [so far as I know] had supplanted JS Mill as the basic source text by Alfred Marshall's Economics,  and they all taught about Neo-Keynesian macroeconomics. Paul A Samuelson and JK Galbraith were the best sellers among a raft of fat textbooks that combined those two syllabus areas; and when I joined the University of Sheffield as a research fellow there was a well-established game by which students tracked Prof JC Gilbert's lectures through the textbooks.

One great characteristic of the small number of leading professors of the subject was their difference in emphasis and research orientation. Bob Black at Belfast, Terence Hutcheson at Birmingham, and Ron Meek in Leicester provided a choice of interpretations that is painfully lacking today. Mark Blaug, though he went through much of his career in the shadow of Lord Robbins, was a good independent scholar. It is very sad for the subject and for the country that such a range of talent is not available today.

Redwood - Dead Wood - Tinder - Conflagration?

I have always thought that John Redwood was better than he is generally presented by the liberal media. He has seemed - to me - more sensible than the hard core of boneheaded right-wingers who have made the prime ministerial careers of John Major and Theresa May unnecessarily difficult. There was, of course, the extreme embarrassment of him being filmed [as Secretary of State for Wales] trying to move his lower jaw in time to the Welsh National Anthem: and failing utterly. But in general I saw him as a 'trier' who was honest and not lacking in intelligence.

Then I saw a bit of his performance in the House of Commons yesterday: oh dear!

The issue was Brexit. His face was distorted with extreme, vitriolic anger. He was fed up, he declared, with the people who do this country down. The remainers and the soft Brexiteers - from his perspective - belittle this great country. Of course we can stand alone in the world, and triumph economically [with the implication that this task is trivial compared to the glorious achievement of solitary Britain in 1940-42].

It was painful and tragic to see him reduced to such a stupid and irrational argument. In descending to this lack of serious content his speech was about the best argument against his side of the issue that I have yet encountered.

The hard Brexiteers ignore the realities of the economic situation in the world. WTO Rules do not offer a safe basis on which the UK can instantly build a pattern of close trade deals with countries outside the European Economic Area, as has so often been stressed in this blog. Tariffs are not the key issue: regulations and quid-pro-quo deals that get round WTO standards dominate in world trade agreements, and the UK does not have the intellectual resources of trained manpower that would be needed to get even tentative interim deals in place by March 2019; or, indeed, by December 2021.

By declining to vote in the Commons yesterday, on the motion to publish the dossiers on 52 sectors of the economy and the potential impact on them of leaving the EEA, the Conservative Party again displayed that it has lost control of the House. It is almost certain that when these dossiers are released, they will provide a massive stock of ammunition for the remainers and will seriously undermine the sanguine daydreams of the hard Brexiteers.

The resignation on the same day of the  highly-regarded Defence Secretary, on grounds that most men [and many women] of his age and origin would think to be spectacularly trivial, indicates to me that Sir Michael Fallon welcomed an excuse to get out from under the bonfire that is being built in the Tory party.

Redwood is - in political terms - dead wood, tinder dry; ready to support a conflagration that could end the two centuries of Conservatism as the dominant political organisation in the United Kingdom. The arch-Brexiteers would [apparently] force the collapse of the May government if their diabolical mission to undermine the economy is defeated. An election before Christmas has become a strong possibility; thought not yet probable.

Corbyn has always regarded the EU as a capitalist club: so he has been against it, even though Labour under his leadership notionally supported the remainers in the 2016 referendum: where millions of old-Labour voters went the other way. I doubt if the Labour leader has a clear view of what the European Economic Area is: and it is problematic whether Keir Starmer can bring him to a sensible stance on that matter. This is the one factor that could loose a December [or February] election for Labour. Politics have suddenly become much more interesting: and more frightening!

Tinkering With Time

During the First World War it was considered a masterstroke to create 'daylight saving': now known as 'summer time'. The idea was copied among the combatants, and during the second such war most countries adopted it, with several opting for a period of 'double summer time' to increase the effect of shifting the clocks forward during the northern summer.

This was in a horsepowered world, where almost all factories and homes were lit by gas, as were the streets and places like railway stations. The best force in the Second World War, the German Army, suffered in Russia particularly badly because it was still reliant heavily on horsepower, and as the horses died [often to feed the under-provisioned troops] the mobility of the army was massively diminished.

At the end of the Second World War it was simply taken for granted that the annual shift to summer time, by at least one hour, was economically [and thus militarily] efficient; and summer time was carried forward all over Europe. In the few years when the date that Britain [or some other country] opted for a different date from other countries' choice to change the clocks, massive chaos was ensured. So even though Britain's clocks are one hour behind those on the continent all year, the date on which they shift to summer time is mutually agreed.

There is now a growing lobby of those who argue that with a different technological environment there is no need to retain summer time. Poland has indicated that they may opt out of the shift to summer time as early as next year. There then follows the subsidiary argument, should a fixed all-year time be based upon the present winter time, or on one [or more] hours away from that?

The UK was able to impose the Greenwich meridian as the zero point for the global navigation system, and Greenwich mean time followed as a norm for the Empire [only after the failure of a huge push from the French for the Paris meridian to be adopted]. It seems obvious to Brits that if there is to be a standard all-year time frame it should be Greenwich: after all, the mornings are brighter for more of the year that way, and street lighting nowadays is sufficient for children to get safely home after school. Farmers point out that their animals do not understand the eccentricity of humans shifting clock-time, so they have to work by GMT all year anyway.

There will be no quick resolution of the issue, even after Brexit; but it would be a relatively low-cost way of the Brexiteers emphasising the difference that quitting the EU could make; regardless of what the Poles may do.

FOOTNOTES:

1. I was not at all surprised when the 'heroes' of the Catalan independence movement scuttled off to Belgium yesterday. Their stance always seemed to be a posture; but I did not think that they would cave in so completely. People who believed in them must be hugely disappointed, especially the young. As all the opinion polls show that the minority in favour of independence is shrinking, even without the unnecessary police violence in the recently aborted 'referendum', it seems that the election this December will settle the matter, at least for a generation. In this context, the flight of the leadership should be a major turning point.

2. Equally unsurprising is the gathering news that crooks and spivs joined the Trump bandwagon last year; and some are now being arraigned. The whole campaign was an ad hoc affair: populism necessarily depends on such eclectic coalitions, and Trump himself is not necessarily damaged by the present revelations.

Budget Lobbies

A British Government Budget is due to be presented to the Commons next month, therefore the lobbying has begun. Besides the usual sectoral claims from welfare interests and business, a whole range of Brexit-related fears and expectations are being pressed for the Chancellor to take note of.

The situation is bedevilled by the Brexit situation - which no-one, inside or outside government has any grip on - and further complicated by the fact that the Chancellor's 'responsible' stance [largely what the business community have demanded: to keep as far in to the European Economic Area as possible, after formal withdrawal from the EU] is under vicious and sustained attack by the headbanging Brexiteers.

Behind all this, lie crucial social and economic facts. There is no doubt that the National Health Service, the schools, the police and the armed forces are grossly underfunded. This is not simply an issue of how many billions of pounds are spent on those services: nobody can deny that aggregate allocations by the government are increasing [though some services, like the police and prisons, are struggling with the effect of previous real-terms cuts]. The essential point is that what the government has allocated is much less that is needed to meet the expectations of the changing population.

Osbornian austerity has been in force for seven years, during which the economy has stagnated. Real terms economic growth, especially in material output from factories and farms, has in most sectors declined. There is now a major milk shortage in western Europe, including the UK, because the supermarkets drove down the price of raw milk so far that hundreds of farmers went out of the business [at huge personal loss, with the slaughter of thousands of specially-bred animals]. More conspicuously, manufacturing output has declined, and productivity in most sectors of industry is at best the same as it was in 2005. Since the population is larger than it was in 2005, including more school-age children and over-seventies, the needs of education, health and welfare are growing: and the state's spending on educational and social services has not kept pace. Meanwhile, the capabilities of the health service improve and extend life have greatly advanced: if only those improving resources and facilities can be afforded, with people trained and available to provide them.

The state should be spending massively more than it is. The Chancellor and his team know this all too well; but they are steeped in the Osbornian dogma that extra spending can only come from extra taxation or extra government borrowing. Extra taxation will reduce the money that people and firms can spend on their items of choice, so 'demand' will decline; so the private sector of the economy will decline in total turnover. Extra borrowing will give the government and taxpayers higher interest bills to pay in the future: so it is an imposition on future generations that would be inexcusable to impose it. So the Treasury team is stuck with the existing austerity mantra.

This is not the whole picture, however. It is unfortunate that the deeply untrustworthy John McDonnell has been the cheerleader for an alternative proposition that really should be implemented.
In the medium term, the only way of paying for increased and improved public services is by getting more tax from the whole economic system because it is growing. A really growing economy can both pay more wages to employed people and yield more taxes for pensions, benefits, hospital, schools, police and the other essentials.

This policy option does require the government to borrow massively more money: earmarked for investment programmes of improved infrastructure [roads, railways, hospitals and housing] that provide economic returns by providing a healthier and happier and less-stressed workforce.But the government should foster much more borrowing and spending for investment in industry, agriculture and offshore activities both around the British isles and around all the UK's overseas territories [which have been wasting assets since they ceased to be needed as coaling stations and watering points for historic commercial shipping]. It is clear that robotics, 3-D printing, artificial intelligence etc are major components of the future pattern of industry; and that Britain is still a major contributor of new ideas. These are both in microprocessors and in new and improved materials that can stand the more extreme demands of the new era. The government should foster at least a dozen of the  technologically fruitful universities as hubs around which other universities, research associations and individual firms can gather their work on new things. There will always be depressives who say that you cannot guarantee which ideas will be successful and which not; so you should do nothing. That is not how the great achievements of the past were made. Bold ventures must take bold chances, and expect some failures: while experienced managers can spot cases where the money is running away faster that output is developing. And the state should provide a lot of money [from borrowing] to float the whole thing.

Companies have built up the biggest reserves ever, and have paid large dividends while not investing in new plant or higher productivity in their existing plant, and they have bought-back shares; or they have bought other companies [usually proving the old adage that the sum of the returns from two merged companies is rarely more than half of the combined return before the merger]. They should be taxed on what they hold in reserve, taxed more on what the declare for dividends, and given massive tax relief on genuine material investments. It is all so simple, so obvious!

New and improved plant is the only way to enhance productivity. Enhanced productivity is the only way to get substantive economic growth. Economic growth is the only way to get more taxation painlessly out of an economy. Taxation is the only way for governments to get the money they need to spend. Simple!

Brexit Buffoons and the WTO

Nobody who voted, either way, can claim to have understood the full implications of a 'Remain' or of a 'Leave' vote in the 2016 Referendum on Britain's place in the European Union.

It is almost certain that the great proponents of Remain - Cameron, Clegg and scaremaster Osborne - had no idea in advance how they would interpret, then implement, the Leave vote that occurred. Cameron ran away from responsibility:and even a gold-plated palace would not be a sufficient environment in which to write the exculpatory memoirs from which he hopes to make a pile of pennies. The fact that he has bought a sort of gypsy caravan, reminiscent of certain dead children's writers, for the purpose displays his ability to compound folly with ever-deeper illusion. Since the guilty men and their followers [and their mentors] had put the question to the nation, they should at the very least have had transparent contingent plans. They evidently did not. Nor did the civil service have anything like an adequate plan for what would happen after Cameron ran away, Clegg went into obscurity with his party, and Osborne's toxicity with the electorate was recognised by the new prime minister [of whose judgement and capabilities Osborne had been a vigorous critic when they had sat together in cabinet]. Evening Standard editor Osborne has been intermittently sensible in his comments on the Brexit situation, but he remains so much in the public mind as the author of the twin disasters of the Cameron era - austerity, and 'operation fear' in the Brexit campaign - that his political resuscitation is most improbable.

The prominent 'leavers' - who were far fewer than the high-profile 'remainers' - appear to have undertaken even less preparation than the remainers to meet the contingency that their side would actually win. The clownish assertion - written on their battle bus - that the net amount someone had calculated on a chewing-gum packet as the net annual payment made by the UK to Brussels would instantly be available to allocate to the National Health Service, resonated with a population that was all too aware that osbornian austerity was depriving family and friends of treatment that could be available. Whether the sum was in any way valid as an arithmetical calculation or an allocable fund did not count with those who used it. It was merely one  of a few desperate claims that they made to align themselves with a population that was disgusted by the failed political class and utterly unconvinced by the econocratic arguments that underpinned austerity. Boris Johnson became a more popular buffoon, becoming recognised outside greater London. Michael Gove surprised people with his articulateness: only to earn buffoon status for himself by his last-minute, half-cock, ill-considered decision to stand for the party leadership after Cameron scuttled away [thereby sparing the party from the embarrassment of having Johnson as their leader].

Mrs May began her period as prime minister well, with conciliatory speeches and the dismissal of Osborne; since which she has got everything wrong that was within her power to influence. She called an election unnecessarily then threw it away. She activated the withdrawal procedure with the EU before she had any clear plan. But from the start she made clear her utter incomprehension what she was dealing with, when she said 'Brexit means brexit': while everybody knows that the word itself is totally meaningless. While she has struggled, with a group of spectacularly inadequate ministers, to define what Brexit might mean the country has drifted towards the disaster of leaving the EU with no interim deal that will keep the UK effectively [under deep make-up] within the European Economic Area.

This has created a field day for the couple of dozen Tory MPs who appear really to believe - in their enfeebled minds - that the World Trade Organisation [WTO's] tariff regime will enable Britain to survive as 'the fifth-largest economy in the world'. The whole point is, that it is NOT tariffs but REGULATIONS that are used by all countries and economic communities to keep out unwelcome competition. Inside the European carapace the UK necessarily conform to the rules, and thus its trade with other  EU members states can move freely. To loose that benefit, with the block that sends and receives about half of Britain's imports and exports, would be irreplaceable. The assumption that German motor manufacturers and French wine growers will 'see us right' is infantile. Professor Minford's calculations of the 'benefit' for Britain of trading on WTO terms with the global community - including the EU - are agonisingly bereft of any allowance for the predominant pattern of restrictions on trade, that would be tightened against an innovative economy such as the UK if we were adrift in the world and thus are extremely dangerous. But those are the argument to which the headbangers adhere: because they have nothing else. Yet they hold the government in awe; and are increasing their power to ruin the country. I will have to return to this topic in the coming days, as the argument gets more fraught approaching the deadline for the next meeting of EU heads of government.

Intelligence, Common Sense and Politics

Neither 'pure' intellectual capacity nor the applicability of a person's perception to the events in the visible and audible world around her [or him] can be measured with any degree of accuracy. Yet there is a common assumption within society that some peoples' processing-power for complex and abstract thought is greater than other peoples'; while other people are seen to have a greater-than-average capability to assess the movement of events and the actions of other people in ways that are useful guides for themselves and for others who trust them to base their own actions on. It is usually assumed that people with the highest perceived 'intelligence' are often not very 'practical': and very often it is manifest that a person of highly-rated academic intelligence is not capable of managing all aspects  of their everyday life in a way that the generality of their community would consider to be sensible.

President Macron is well on the way to getting himself regarded as a vain and shallow man by allowing his acolytes to assert that he is 'too intelligent' and his utterances are too complex for ordinary folk [and press reporters] to understand. Some of President Trump's most obviously-infantile tweets are when he asserts that he is of superior intelligence; and he appears to be quite singularly lacking in both pure intellect and common sense. Boris Johnson is often asserted to be of a very high intelligence; but even those who quote this as a qualification for even higher office than he now holds also admit - often, before they are challenged on the point - that he lacks both assiduity in his current duties and any sort of empathy with the 'common man's' reaction to life's vagaries. Rowan Williams was elevated to the Archbishopric of Canterbury on a reputation for extremely superior intelligence: he was an utter failure in the role, as his sermons wandered off into incomprehensibility and his actions showed an almost total failure to address real-world situations.

By contrast, Stephen Hawking has shown, notwithstanding his extreme physical challenges, that he can combine both superior intelligence with the ability to explain theoretical physics to a wide audience. Clement Attlee is often described as the most under-rated prime minister of the twentieth century, and there is no doubt that he mastered every aspect of leading the country through the biggest-ever government-led socio-economic change in modern history; he was notoriously taciturn [thus leaving the fewest possible hostages to fortune] but he always ensured that he was clearly understood by the audience to which he addressed his comments.

The context in which I raise these issues is the present sorry and shameful state of the Brexit issue. A Tory whip who I shall not bother to name has demanded that university heads tell him the names and syllabus summaries of the lecturers who teach students about Brexit: the universities are rightly rejecting those demands, in most cases, as being unacceptable political interference with 'academic freedom'.  The request is not necessary, anyway, as separate data which have recently been released show that a significant majority of lecturers on European affairs in UK universities are emphasising the extreme economic risks that will arise from Brexit, and the almost-certain economic damage that will be done by a 'hard Brexit' or a no-deal situation. Leaders from virtually every sector of business, large and small, are pressing similar views on the government: unless something very close to membership of the European Economic Area [EEA] succeeds EU membership, the effects on the economy, on jobs and on living standards will be catastrophic.

The point is being learned, in most places other than the headbanging quartile of the Conservative party, that tariffs are not 'the big issue': what would be lost by exit from the EEA are common regulatory standards which allow the free passage of goods and services between the member countries. It is the loss of common standards in everything from medicines through nuclear controls to aviation that would really bankrupt Britain if we walzed away into oblivion.

It is impossible to make a positive judgement of the intellectual capacity of the 'other two' Brexit ministers who are meant to form a team with Boris Johnson as Foreign Secretary. Liam Fox [Trade Secretary] talks about future trade possibilities as if tariffs and WTO rules are all that really matter - which is fantasy - and David Davis gives increasing cause for worry. As 'Brexit Secretary' Davis is Mrs May's point-man on the 'divorce' negotiations with the EU, and he told the Commons Committee on his chosen subject yesterday that no definitive motion may be put before the Commons until after the Brexit deadline has passed [in March, 2019]; thus implying that whatever has been agreed, or failed to be agreed, by that date will be the future context for the nation to live with. This displays a lack of both intelligence and common sense that is truly spectacular. 'Number Ten' has already begun to 'clarify' what he may have meant, beyond presenting a further demonstration of the government's complete lack of competence. But is it crystal clear that any academic who is honestly and objectively trying to give her students an understanding of the events that are shaping their future lives must be highly critical of the process that is in hand and of the competence of the people who are conducting it.

Mrs May's Incomprehension

In an emotional Commons sitting yesterday, Mrs May displayed her total incomprehension of the realities of life for the very people she has said she wants to convince that 'Britain is a country that works for everybody'. She absolutely refused to pause in the roll-out of the new single benefit, even though Tory MPs had lined up to warn her of the stress that this was causing in households up and down the land. She lauded the principle of the benefit, and gloated that it was forcing people to take low-paid jobs [though, of course, she did not formulate it quite in those terms].

The government more generally have emphasised that people can get an advance of 50% of their benefit for the six-plus weeks they have to wait to draw the main sum; downplaying the speed with which repayment of the advance is required once receipt of the benefit is confirmed. It is a matter of indifference to the government whether the 'helpline' charges 50p+ per minute or is free: no doubt, if more people can access, it more of the callers will find it constantly engaged.

The same day, figures were produced that show that more than a quarter of young mothers all over the country and of the people in north-east England lead the large league table of people who are locked-in to low-paid jobs, with no hope of shifting to better situations in the short term. Thus more people are more deeply depressed than have ever been since the introduction of the welfare state; with the food banks planning for a bumper Christmas this year.

A long way beyond Mrs May's comprehension is the fact that as more people are driven into low-paid employment, that is also low-productivity employment.  So the more people 'gain' from the single benefit, the lower will be the average wage and the less will be the average output per head over the whole workforce: so the lower will be the average 'productivity' of labour: brilliant!

Today Mrs May is off to Brussels, to reveal her equally profound incomprehension of the plain English, French and German in which she and David Davis [and their team] have been told what the EU expects before they are willing to talk about giving Britain special access to the EU single market after Brexit. The Tory headbangers have sent her a formal warning not to be led into making any 'concession' to the EU: as if the UK has any real choice in the matter. Of course, none of the clots who have issued the warning lives on the breadline. None of them are dependent on the minimum wage, or on the single benefit; indeed, many of them have no need to earn their current income at all as they are rentiers or pensioners [or both]. So none of them will be in the categories who would experience extreme deprivation in an economically-isolated UK; but there are millions of people in Britain whose precarious living standards would be smashed to smithereens under WTO Rules. Thus these Privy Councillors and party hacks are showing the same arrogance of affluence as Mrs May and her Secretary of State for Work and Pensions showed yesterday. They are flexing their power to destroy the Conservative Party: perhaps they should be allowed to do just that; before the final vote in Parliament on the implementation of Brexit is held.

A Macron-Merkel Plot to 'Destroy' London?

The world has been so intrigued by the bizarre conduct of President Trump that far too little attention has been paid to the oddity of the French president. Mr Trump has been ridiculously intrusive in sharing his rapidly-changing views with the media and in the Twittersphere: M Macron has been tight-lipped to an unusual degree; and there have been many reports of his contempt for the media. He has been reported as saying - to his own staff - that there is no point in him giving interviews and press conferences because his intellect is so far superior to the norm that people simply will not understand his statements and his answers to questions. His path to office has been engineered by the old establishment of the 'higher schools', who experienced the agony of the Hollande regime and were determined to seize upon the national consensus that politics had reached a nadir. Thus they presented a new sort of candidate from a new generation: a man with few friends and a most peculiar private life. His allies engineered a parliamentary landslide, and he appears to be in an unassailable position with a clear popular mandate - to be 'different' - backed by a parliamentary majority.

With these assets, he is attempting - as half a dozen of his predecessors did - to attack the established position of the trade unions and of the farming interest, and to try to change the culture of work generally in France. Given the fact that recorded French 'productivity' is very much greater than the British, and not far inferior to the German, it is unclear why he thinks that such disruption is desirable or necessary; but he is having a go anyway: and it fills column inches in the press.

His career record includes a few years with a major international bank, where he greatly refined his spoken English and learned how far ahead of French practice in banking and finance are the systems in new York and London; and how much bigger are the financial markets in those centres - and in Singapore - than in Paris. He also gained a perspective an the depth of support that the London finance sector has, from a huge array of specialist lawyers and a raft of support professions such as actuaries, arbitrators, loss assessors and adjusters. Some English-speaking critics reckon that he has developed a profound envy of these markets, and that he came into office with a determination to push Paris as a rival to those centres even though the ancillary trades there are massively under-developed.

Doomsters in London have now come up with the idea that he has decided to use the Brexit opportunity to diminish London massively: and that he has enlisted Angela Merkel and the gnomes of Frankfurt to his plot. This is seen as the hidden agenda behind the determination of a loyal, ambitious and deeply egocentric Frenchman, Michel Barnier, to use his role as EU negotiator with the UK to delay and diminish whatever settlement the UK can achieve with the EU. This sort of conspiracy theory can be very powerful in times of massive uncertainty; and the absence of any such plot  - as with any negative argument in politics - is ultimately impossible to prove.

Mrs Merkel grew up, graduated and worked in the German Democratic Republic, and presumably had to learn Marxist dogma sufficiently to be allowed into university and into a research post. There is very little evidence that her education since 1990 has included any significant familiarisation with serious political economy. Her chancellorship has been supported by strong and well-informed ministers who have dealt with economic affairs and with business: she has read appropriate speeches, but no significant initiative has been attributed to her [other than the catastrophic decision to open Europe to mass immigration, which will mark her rule throughout future history]. It is possible, but improbable, that she has actually committed to any scheme systematically to attempt to smash the London market which - as is being stressed today - is an irreplaceable asset to world trade that even Germany and France rely upon heavily.

As a boy growing up in Lancashire, I became used to hearing older people say: "The French will never forgive us for saving them in two world wars", whereupon a minority said: "the First World War, yes: they don't like admitting that they needed us. But in the Second they hated us for disrupting their comfortable collaboration with the Nazis: remember, we bombed them and fought our way through France. DeGaulle was very much in a minority until the Americans put him in power."

It would be no surprise to discover that Macron grew up surrounded by the French mirror-image of such sentiments.

Austria's Choice

Today, there is to be a general election in Austria. Thanks to the actions of Angela Merkel two years ago, the conclusion of the election in this neighbouring country to Germany was clear before voting began. The overwhelming majority of Austrians agree that there are now too many Muslims in the country, that the strain they have put on the social assistance and housing and education and health systems is unacceptable; and that no further significant immigration - however desperate the plight of people claiming to be 'refugees' might be - should be permitted. The government that will emerge from the election will be a coalition with a more right-wing structure than any since the re-unification of Austria [after allied occupation] in 1956. The two stand-out policy positions that it is expected to adopt are to seal the frontiers of the EU against immigrants, and to review and restrict access to the social security and related systems.

Neigbouring Hungary has had a government with policies designed to minimise immigration from outside the EU for several years: access to that country is very heavily controlled, with high wire fences and a strong presence of border guards. To the south-west of the Hungarian frontier is Austria's border with Italy, which has already been 'strengthened' to limit the onward passage of any of the tens of thousands of economic migrants who reach Italy by sea every year. No doubt that border will further be toughened: but there will also be sympathy for the Italians in their situation of receiving the migrants, which is resulting in right-wing politicians rising through 'populist' movements there, too.

There will be resistance in Austria to any attempt by Germany to impose any quota of Muslim [or, indeed, any other category of] immigrants on any EU country. It is widely expected that Austria will adhere to, and may even join, the 'Visigrad' group of countries [Poland, Czech Republic, Slovakia and Hungary] that have 'ganged up' to resist pressure from Germany and France. Thus there is already the making of a very powerful subset of the EU that will simply decline to go along with aspects of the settlement that the USA imposed on 'liberated' Europe after 1945. The Liberal Consensus to which Roosevelt and Truman, Churchill and deGaulle subscribed is fading fast.

The right-wing AfD in Germany has gained seats in the Bundestag, sufficient in number to harass whatever coalition government Mrs Merkel may be able to cobble together. France has a completely unproved president; and there are huge questions as to whether his parliamentary majority and constitutional authority will be enough to overcome the inertia of the trade unions, farmers and other vested interests. It has been noted above that Italy has strong and growing right-wing parties, and the legacy of Fascism is ceasing to be seen as an embarrassment. Those countries in north and west Europe that have a couple of centuries of constitutional government [Belgium, the Netherlands, Sweden, Finland and Luxembourg; plus non-EU-member Norway] have all seen some emergence of minority anti-migrant movements. The three Baltic States [Estonia Latvia and Lithuania] have no significant problem with Muslim immigrants; they have suffered, to varying degrees, net emigration to the more affluent west of the EU.

The Balkan EU members, and aspirants to membership, want to prove their democratic credentials; but they have limited resources to accommodate immigrants [balanced by limited means of keeping them out]. They will sympathise with [and envy] the countries to the north that have the means and the will to seal their borders to a significant extent.

Thus the European Union that is harassed by the Brexit issue is a very different political and emotional structure than it was at the beginning of 2015: the year in which Cowardy Cameron launched the Referendum as an election pledge. It is quickly becoming an entity about which any true democrat would have serious questions. Britain is so beset by a useless government that it has not yet faced up to the point: but there is a growing doubt as to whether we would wish to join, if that was the issue before us.

Mrs May Drags Out the Agony

Putting aside the disasters of the recent election and the very recent Tory Conference, as best she may, the Prime Minister will today fantasize in the House of Commons about 'progress' in the talks with the EU about Brexit.

From what has been released in advance, she plans to develop on the charade that she enacted in Florence a couple of weeks ago, when she spoke to much of her Cabinet, the British press and a few bored Italian officials about where she thought the negotiations had got to. She was spectacularly vague on all the relevant points about which EU officials and commentators had already asked repeatedly for clarification and specificity. She apparently intends to say to the Commons that she has now made everything crystal clear, and that the EU must now 'respond' by offering concessions.

The truth is, that David Cameron led to Tories to their surprise victory in the 2015 election by promising the referendum on leaving the EU. He confidently expected that this would produce a massive vote in favour of remaining, which would bury the Tory exiteers who had been a pain to the party since John Major accepted the Maastricht Treaty. The Liberals were removed from the scene, effectively, in 2015 by the kicking that they got for aligning with the Tories in the 2010 coalition that had increased student fees. Labour lost votes in Labour heartlands in that election, partly because they opposed the idea of the referendum. So, against all expectations, the Tories won the 2015 election; but their majority in the Commons was only half the size that would be needed to marginalise the thirty-or-so Conservative nutters who apparently believe - really believe - that Britain can survive as an independent economy in a world characterised by regional trade pacts, point protectionism and chauvinistic policies to protect sectors of the economy that are essential for national defence. These headbangers airily assert - contrary to all the available evidence - that if we boldly go where no sane man or woman would go, we will reap the same sort of rewards as the UK gained when we were both the only industrialised economy in the world and the most dominant imperial power. The sheer silliness of such thinking - or, maybe, absence of the power to think - needs no further comment.

By losing the election this year, Mrs May found herself left with around thirty MPs who are determined to devastate the economy in pursuit of their delusion. They will support Boris Johnson remaining in high office, and they are apparently demanding that the Chancellor be sacked for making reasoned statements about the probable economic effect of a 'hard Brexit'. Mrs May is evading giving a strong lead, and this will weaken her already-impossible position and contribute to the ultimate demise of the Tory party as we have known it.

The only powerful and patriotic thing that she should do - starting with her Commons statement today - is to say that the UK has been shamefully imprecise in the Brexit talks so far, to give a specific cash offer on the 'divorce bill' [making it quite clear that mediation is available] and make a sensible offer as to what would be the relations of UK courts and the EU Court in the period after March 2019. Then she should outline sensible terms for a post-Brexit relationship with the European Economic Area and defy the headbangers to force a general election that Labour would be likely to win.

The bonkers Brexiteers should be flushed out and forced to say - precisely - where the 'facts' arise that nobody else can see. Then they should fall into line to avert a Corbyn government.

The clock is ticking on Brexit, and Mrs May's attempts to evade the implosion of the Tory Party - though entirely comprehensible - are ruinous.