The Year of Humiliation

Geopolitical instability shows our inability to influence world events

Towering Columns

In The Telegraph, Tim Stanley says that Britain must become independent from the United States.

So it goes with contemporary Europe, where American corporations dominate and profit, yet also avoid paying a lot of tax. Ireland, for example, has rightly denounced Trump’s tariff war on the nations that oppose his aggressive takeover of Greenland – yet the country is a model of globalist acquiescence at the cost of sovereignty. It has embraced free markets (low corporate taxes) and free movement (mass migration), with the result that Dublin is outwardly Irish – still beautiful – yet unaffordable and embroiled in a violent identity crisis.

These are economic policies that its elites justify as essential to modern nation building (“we need money, we need workers”), and it’s striking that the SNP has proposed doing similar things should Scotland gain independence. As Grant observed in 1965, the modern nation state can only develop by opening its arms to global capitalism, but global capitalism “entails the disappearance of those indigenous differences that give substance to nationalism.”

In short, American capital has made all of us rich, but it has also made us duplicates of the US. I’m convinced that many Britons are desperately unhappy, even mentally ill, because they don’t feel like themselves anymore. It’s obvious in the way we now talk (badly) and emote (too often) but most apparent in our politics, which is imported and detached from our real history. Identity politics was Made in America: when federal agents shot and killed a protestor in Minnesota (murder in my book), Labour mayors felt obliged to write a letter of support for the Democrat mayor of Minneapolis. Why?

For The Critic, Robert Clark lays out Britain’s threadbare defences and inability to project power overseas.

Whilst most can readily agree that indeed Putin should be deterred from further acts of aggression in Europe, the legitimate concerns of the nature of our armed forces should now be fully laid bare – especially when the stakes are this high. Only this week the Chief of the Defence Staff, Air Marshall Richard Knighton, revealed in an extraordinary and heated evidence session with MPs of the Defence Select Committee, that Labour’s flagship defence strategy could not be fully funded — compounding dizzying estimates that the Ministry of Defence requires and additional £800 billion by 2040 just to meet current obligations.

Whilst these figures reveal the degree of financial mismanagement, a multi-year recruitment and retention crisis means the Army has missed their manpower targets consistently for a decade. There are problems with steel as well as flesh; with so few tanks now being upgraded to the next generation Challenger Three, there will only two regiment’s worth of tanks left for an Army that is supposedly able to field an armoured division.

That armoured division was Britian’s core promise to Europe for almost a century. In the last decade, due to this country’s obsession with ploughing money into the welfare state over the nation’s defence, that has been utterly trashed. We are now in a situation where we cannot even deploy 5,000 troops — never mind the government’s mooted Ukrainian deployment number of somewhere closer to 7,500.

In The Times, William Hague says the Greenland crisis must be used as a moment to rebuild our strategic power.

The best outcome of the Greenland crisis would be that it shakes western Europe from its torpor. The PM’s speech referred to the importance of “shaping the world around us”. But on current trends the world — particularly the US and China — is going to shape us more than ever before, with the continent of Europe humiliated and exposed as weak. Seeing this coming, some states are stirring into action: Germany’s defence budget is soaring; Poland and the Nordic countries are raising the resilience of their armed forces and civilian populations.

The prime minister should realise that to keep shaping the world around us we will have to wake up and shape up ourselves. Whether we will be protecting an international system based on law or defending ourselves in a lawless world, we will need to recreate essential instruments of our own power. That takes many forms, including a growing economy, a healthy population, strong education and pioneering technology, but it starts with defence. Britain needs armed forces that our enemies fear and our allies, including any US president, regard as invaluable.

The Greenland issue is becoming a grave danger to the cohesion and unity of the West. We have every right to look to Americans with a conscience to speak out. But we should also be looking at ourselves, at our own diminishing ability to influence events, and decide that we cannot sleepwalk into a more dangerous world.

For CityAM, Richard Ekins shows that the Chagos Islands deal is even less credible in the wake of US opposition.

The government’s case for surrendering the Chagos Islands is thus that unless we do so, ideally having agreed favourable terms with Mauritius, then Mauritius will leverage the 2019 Opinion into rulings from ITLOS and maybe some other unnamed bodies, which will make it impossible for us to operate out of Diego Garcia. As my Policy Exchange colleagues and I have shown, this is not a good argument for surrendering sovereignty. It also suggests that Mauritius is far from a friendly state. Handing over the Islands on this basis amounts to a surrender to the prospect of further abuses of international adjudication, in which the UK’s rights as a sovereign state are ignored. Lord Hermer KC, the Attorney General, seems to see surrender of the Chagos as an opportunity to display fealty to the (international) rule of law. In fact, it is a landmark for UK failure to stand on its rights, to resist a loss of integrity in international adjudication, and robustly to defend its strategic interests.

For the Chagos Islands are utterly vital for our defence interests, not least to our relationship with the United States, which the government is rightly trying to preserve in the current turbulence. The deal that the UK has agreed with Mauritius is limited in time and creates further vulnerabilities in terms of our strategic position, exposing future operations to new legal risks and to the prospect of third parties, such as China, subverting a future Mauritian government.

None of this can be justified in terms of justice for the Chagossians, most of whom are now British citizens and do not seem to support this deal. The UK-Mauritius Agreement pays lip service to their historic connection to the Islands but in fact leaves Mauritius entirely free to do as it wishes in relation to the Chagossians, with only a tiny fraction of the substantial payments to be made to Mauritius earmarked for them, with payment at the Mauritian discretion in any case. In addition, as Policy Exchange showed in a paper published only a fortnight ago, handing over the Chagos Islands will gravely compromise the protection of one of the planet’s most important marine environments.

In The Times, Dieter Helm writes about that we can save our industries from destruction if we redesign our energy policy.

How to get out of this mess? What is needed is an international competitive price of energy, and especially of electricity. How might this be achieved? The same way it was under the “bad old days” of the Central Electricity Generating Board (CEGB). Start with the price that would be competitive. How it was done in the UK (and in France) pre-privatisation was to charge industry the long-run marginal costs of energy, rather than the full fixed and sunk costs of the capacity.

Under the CEGB’s bulk supply tariff, there was an energy price and a capacity cost, to which was added, where appropriate, the transmission and distribution costs. Energy-intensive industry paid the first energy element, covering its variable costs, and it made some contribution to the capacity and network costs.

How could this be a sensible economic approach? Because everyone was better off with these industries rather than without them, as long as they made even a small contribution to the capacity and network costs. Think of the scenario where they are charged the full costs. Imagine that this is uncompetitive and the industries close down. Is everyone better or worse off? They are worse off, since these industries no longer contribute to the capacity and network costs — nor, indeed, to the wider economy. To head this off, set a competitive price by charging them the marginal costs and a little of the fixed and sunk costs.

At Conservative Home, David Willets says Conservatives must keep their focus on economic reform.

Britain has levels of investment, public and private, significantly below most of our competitors. Promoting effective public investment matters and that means speeding it up. Badger sets are still holding up major infrastructure projects when they aren’t even a protected species. This is absurd. And we should be going flat out to attract overseas investment, trying to get some advantage from Brexit. Grimly denouncing “black holes” in the finances or describing Britain as “broken” is no way to win over big international investment. We can boost wages with more effective, more productive work.

The good news is that the increase in employment over the past decade, notably amongst families on low incomes, has to some extent offset the effects of cuts in their benefits. There is still more we can do to get young people working. This is where increases in the minimum wage could do most damage. And it remains the case that people with a university degree are more likely to be working, more flexible and able to get back into work as business sectors shrink or grow, and more likely to be working into their fiftes and sixties. So perhaps tone down the attacks on universities just a bit.

The Resolution Foundation’s Economy 2030 Enquiry showed how important it is to revive our twin second cities. If Manchester and Birmingham performed like Frankfurt and Munich or Milan or Lyons our overall economic performance would be so much better. That means investing in radial transport links and also radical devolution. Andy Street helped shape that agenda and should be a key figure in shaping it again. It means more investment in the golden triangle of London, Oxford, and Cambridge.

On his Substack, Neil O’Brien outlines how the welfare budget is on an unsustainable trajectory over the rest of this Parliament.

Rachel Reeves’ Budget at the end of last year revised up forecasts for working age welfare spending significantly. In fact, over the 5 years from 2025/26 to 2029/30, the government is now planning to spend £36.4 billion more on benefits than they had planned to only a few months earlier.

The difference is shown in the chart below as the little grey gap. But it isn’t really that little. Spending in 2029/30 alone is now predicted to be nine and a half billion a year higher than it was in the spring forecast. That’s a lot of extra taxpayers’ money over just a couple of months. Overall, between Spring Statement on 26 March and Budget on 26 November, Reeves lost about £150m a day.

In future posts I will come back to the reasons why we are seeing more people on benefits, and growing claim amounts from people on benefits. The short answer is a combination of:

• A labour market reeling from higher taxes and more regulation,

• A series of benefits where people have learned how to play the system, (“system learning” in the jargon) and people have become more likely to seek a claim,

• The growth of mental health claims, particularly among younger people.

For The Critic, Alex Yates makes the case for the intellectual bankruptcy of a left that has failed to keep up with the modern world.

Just as the left has failed to provide a cogent analysis of the economic trends of the last decades, so too has it failed to understand the enormous impact of demographic changes wrought by mass migration. Opposition to immigration has been treated as a pathology to be deconstructed or explained away rather than a rational political position, with adherents to such views categorised either as unwitting victims of false consciousness, or irredeemable bigots cruelly lashing out due to their own failings. National identity is treated as an anachronism, something the left always assumed would naturally dissolve away as class identification superseded such confused and artificial divisions. When the left has approached British national identity, it has been either to deconstruct it as artificial and therefore implicitly invalid, or to scold it for its association with perceived historic wrongdoings and upholding the categorical evils of white supremacy, colonialism, racism, and so on.

Britain is indeed confused about its own national identity, having never properly interrogated what it meant to be British once the Empire had dissolved and its settler colonies gone on to develop national identities of their own. Since the turn of the century, multiculturalism was imposed from above as the guiding light of Britain’s post-Imperial identity. There was no rigid definition of Britishness, no need to be of a certain ancestry or even to have been born in the country. A piece of paper declaring one British would suffice, with adherence to a set of vague liberal values preferable but not mandatory. But demographic developments have rendered this vague definition unsustainable. Much to the left’s consternation, older conceptions of national identity tied to ancestry have been growing in popularity despite a concerted effort by all organs of the state to convince people otherwise. So what is the left’s response? What convincing alternative do they put forward? “Mr Blobby patriotism” and a conception of British identity centred on TV adverts and fart jokes.

Such a profound failure to confront the realities of modern-day Britain means that the left will continue in its failure to deliver in government and form a coherent understanding of why it keeps failing. Instead of taking this moment to look outwards to the country and offer a constructive vision, the British left can offer only a continued project of deconstruction of Britain’s institutions and passing obsessions with global social movements — climate, Black Lives Matter, Gaza — that elicit flashes of fanatic zealotry before being dropped and forgotten. Perhaps before continuing to misdiagnose why Britain is broken, the left would do well to look inward and analyse why it too has ended up intellectually broken.

Wonky Thinking

New research from the Institute for Family Studies has found that families which pray regularly are likely to have larger numbers of children in Europe. The research has found that prayerlessness is now a majority-phenomenon among young females in the UK and Belgium. Germany and Spain are near the tipping point. Moreover, a 2% increase in GDP per capita raises fertility by just 0.0081—the same effect as a mere 1.12 percentage point increase in the share of women who pray. This suggests that faith is as important as the economic fundamentals in determining fertility rates. Christopher Sandmann explains his research.

Sympathetic observers with whom I’ve shared my results are quick to argue that higher fertility rates among the religious are plausible; however, they should be attributed to cultural norms linked to religiosity, not active religious practice. This is certainly possible. But how would we know? Polite society’s taboo not to talk about religion only ensures that the question remains unanswered.

Keynes famously argued that ideas change the course of history. I agree. Ideas are powerful. But only so if they are believed. A norm, lacking belief, has the qualities of a decapitated chicken: it might keep on running for show, but won’t overcome obstacles like the opportunity cost of parenthood. Indeed, one must be out of their mind to pursue parenthood just because tradition demands it. I am reminded of the title of a book on parenting: All Joy, No Fun. If you are not prepared for true joy, the lack of fun will bring great disappointment. Joy is reserved for those who are prepared to serve. Faithless countries with greater vote shares for conservative parties have certainly not experienced a baby boom as of late. As I see it, the association of faith and tradition has it all backwards. Deference to tradition is the exact opposite of faith in an active, living God. Rather: where the faithful do adhere to past wisdom, they do so out of discernment, not deference to past tradition.

The data supports this distinction. When I include church attendance in my regressions, it proves insignificant for fertility—whether or not prayer is also included. This could reflect data limitations, but it may indicate that interior transformation through active prayer, rather than social participation, drives the effect. My sense is that the insignificance is reflective of the dynamics of irreligiosity and demographic decline: Individuals stop worshipping with others before they stop praying. And loss of prayer precedes demographic decline. In today’s Europe, belief still exists outside of church pews. The body of the faithful, however, has disintegrated into many disjoint parts.

Why?

Many Europeans (perhaps unknowingly) have grown up to become existentialists: we create our identities on a blank sheet of paper. In ‘existentialism is a humanism’ Sartre writes: “man first of all exists, encounters himself, surges up in the world — and defines himself afterwards.” I sense that no generation that has felt this more strongly than mine, which came of age after the Cold War. When first conceived, such philosophy feels like freedom: It promises liberation from parental missteps, history’s errors and severs supposed obligations before citizenry and God. It is also redemptive: If we define ourselves, we need no longer call our selfishness as such. Our Augustinian brokenness is a construct, no longer caused by sin but imposed on us by an oppressive ideology. This is redemption without sacrifice. We are free.

Seen through the lens of existentialism, prayer is as effective as meditation or a self-help group. It becomes an act of self-expression, self-creation. Part of the personal project of curating among the pleasures in life. The greatest prize that this philosophy offers is the aesthetic: sublime music, the sensual as in romantic passionate love, grandiose architecture as in temples of art, enriching culinary experiences, and mere observation of nature. The aesthetic is not a small prize. God’s creation and the wealth of human experience that may live within it truly are wonderful.

The Prosperity Institute calls for the complete separation of climate and energy policy. The climate change agenda, the report argues, has warped energy policy and led to a series of failed policy agendas that have burdened Britain with higher bills and diminished capacity.

Over the last four and a half decades, when they were each given the chance to take the lead, the markets worked and the British state failed. Why? Because energy policy was used as a tool of industrial policy in the vain hope of creating a world leading offshore wind industry; Whitehall committed the error of adopting multiple conflicting policy objectives (e.g. decarbonizing the grid and keeping energy bills down); and policy was captured by vested interests.

The foundational error of Phase Two was subordinating energy policy to climate policy. If you have a climate policy, it should be economy-wide, not sector-specific, as this leads to continuous state interventions and becomes a licence for rampant rent-seeking. The essential first step to energy policy rationality is to separate energy policy and climate policy.

Policymakers should then define what they want their policy to achieve and the policy instruments to achieve it. Policymakers also need to face up to the risks posed by Britain not having enough dispatchable capacity, thanks to the political decision to push coal off the grid. If they want energy prices to fall, supply needs to increase, which means having more non-intermittent generating capacity. This is likely to require a rapid build-out of gas-fired capacity, or even coal.

Whichever party or parties form the next government, they have only one chance to get energy policy right by applying the lessons of the past and decisively breaking with two decades of policy failure. The fundamental step is to divorce energy policy from climate policy. Parliament has, since 2007, enacted legislation to lock-in Net Zero energy policies, such as the Climate Change Act 2008. Such legislation needs to be repealed or amended. Additionally, this paper recommends:

• Shutting down the current Department of Energy Security and Net Zero (which has overseen the worst policy disaster since 1945 and has been captured by vested interests), and replacing it with a new department focused exclusively on policy.

• A wholesale clear-out of Ofgem’s senior leadership.

• Establishing a New Generation Task Force to replace around 20 GW of missing nonintermittent capacity, consideration being given to use of the Government’s balance sheet on value-for-money grounds via Ed Miliband’s Great British Energy.

Podcasts of the Week

John Bew on the UnHerd this week says that the Davos World Order is finished and that the country needs to see Greenland as an emergency “break the glass” moment on defence and security spending.

Quick Links

The United States temporarily lifts threat of tariffs on UK and Europe over Greenland.

New research has found that Government u-turns have already cost taxpayers £8.2bn.

The government has cancelled 29 local government elections for 4.5m electors.

The government u-turns on a ban for under-16s using social media.

The security services say that the risk of the Chinese mega-embassy cannot be completely eliminated.

Pubs are the only businesses to be spared from business rate hike.

Government report says that judge-only trials will not wipe out backlog.

The UK refuses to join the Trump-backed ‘Board of Peace’.

Former Shadow Justice Secretary Robert Jenrick said ‘reindustrialisation’ should be an economic priority.