Towering Columns
In The Telegraph, Daniel Hannan says that Donald Trump’s erratic economic and foreign policies are undermining global conservatism.
Trump is single-handedly destroying global conservatism. The parties that have traditionally been pro-American are tainted by association, however much they distance themselves from him personally.
The most extreme example was Canada where, prior to his annexation threats, the Conservatives were 20 per cent ahead in the polls. Then came the demands that Canada become a US state, demands backed by trade sanctions. Trump apologists sometimes suggest that the whole “51st state” shtick is just a bit of banter, but that is not how it was or is seen by our Canadian allies. Trump tore up the USMCA trade deal – the deal he had insisted on negotiating to put in the place of NAFTA, the deal he had hailed as “the fairest, most balanced and beneficial trade agreement we have ever signed into law” – in order to apply tariffs to Canadian exports.
The impact on Canada’s Tories, the pro-American party, the party that had decried Pierre Trudeau’s shameful flirtation with Cuba, was catastrophic. It did not matter that their leader, the outstanding Pierre Poilievre, was proposing a more rational response to the threat, namely energy abundance and economic resilience. A people under siege do not think rationally. They draw together against the aggressor. They rally to the incumbent.
For The Times, James Kanagasooriam analyses how the Democrats and Republicans are converging on a left-populism that attacks economic and political elites.
How did American politics end up in an arms race towards left-flavoured economic populism? I think it’s because the key question is increasingly about where power lies. There’s a growing consensus that America is governed by a tight web of coastal elites drawn from finance and tech, and voters don’t like it.
Nothing symbolises this mistrust better than the revelations around Jeffrey Epstein, succour to populist claims that America is run by those who don’t have its best interests at heart. Jon Ossoff, a Democratic senator for Georgia, has talked of the “Epstein class”. When we polled this loaded term with the definition of “a ruling class for the ultra-rich who play by a different set of rules”, 49 per cent of Americans thought the term and the description fair versus 28 per cent who thought not. All voter groups except hardcore Republicans showed similar levels of agreement. So it’s no surprise that Ossoff is edging up in polling for the Democratic presidential nomination.
The other angle of elite mistrust is growing scepticism about AI companies, their founders and the vast temples they are erecting — data centres. All have suffered a reputational backlash in the past couple of years, akin to the way banks were tarnished by the financial crisis. Voters obviously worry about bread-and-butter matters too. Our latest polling puts net approval of the Trump administration’s handling of inflation at minus 47 per cent. The maverick economist Marvin Barth, whose career stretches from onetime Alaskan fisherman to the Federal Reserve and US Treasury, thinks these two factors are intertwined, arguing that the Epstein revelations have worsened the perceptions of inflation among Republican voters.
In UnHerd, Jonny Ball warns against those who think that they can simply ‘Chinamaxx’ the country through copying its technocratic authoritarianism.
Besides, if Stalin’s despotism was incomparably more brutal than contemporary China, the latter’s naked authoritarianism is eclipsed in the minds of many by the dazzling growth rates, the TikTok-promoted public infrastructure, all a mirror-image of Western decline and crumbling prestige. What’s more, it’s all delivered by a Politburo of staid, practical Marxist engineers, themselves about as distinct from the average Western Leftist in habitus, manner and thought-pattern as is possible to imagine. The weed-smoking children of the provincial bourgeoisie may have chanted “Mao! Mao! Mao Tse-Tung!” back in the Sixties. But China is now a model not for ultra-Left utopianism, but for its technocratic, pragmatic refinement of a state-managed market system.
When the Left held the reins of authority within the Labour Party during the Corbyn-era proper — between 2015 and 2019 — explicit political alignment with “socialism with Chinese characteristics” might have been tempered by widespread concerns over the plight of the Uyghurs. That particular issue seems to have abated as an international concern. The Left’s enthusiasm for the Chinese model might also have been dampened by the status of the rising giant as the workshop of the capitalist world, a giant FDI magnet producing iPhone headsets for an insatiable Western consumer market. But China has changed and so has our unsteady geopolitical era. The CCP’s “Made In China 2025” plan, initiated in 2015, fired the starting gun on a decade of overhaul for the manufacturing sector. Since then, the country has shifted from producing Western-designed goods in low-waged, low-productivity factories to promoting domestic innovation and industrial automation in high-growth, high-tech sectors. What’s more, the mask of American global power has been removed: with Trump in the White House, Washington’s empire, it’s finally clear, sustains itself not for the spread of democracy, human rights or individual liberty, but for the protection of its own extractive rights. Given all this, the old, neat categorisation of a benign Western hegemon versus a malign “revisionist power” in Beijing becomes far harder to rationalise.
But the case against Chinamaxxing doesn’t depend on any of this. China’s successes are very real, but they are not directly replicable across all of time and space. Jacques was right that China would develop sui generis, but the conditions that made that development possible were sui generis, too: a vast supply of surplus rural labour; a young, growing population; an open American consumer market; and a steady process of globalisation driving inward investment. There may be lessons for how the CCP has managed that particular historical moment, but not for how to manage a medium-sized, open market economy that is dependent on services, with a centuries-long tradition of liberal individualism, an anarchic political culture, entrenched property rights, and habeas corpus.
For The Financial Times, Janan Ganesh writes that Trump’s war in Iran has destroyed the idea that the MAGA movement has a grand global strategy.
In fact, Asian democracies, even those with which the US has mutual-defence treaties, are left in constant doubt about his commitment to them. Last week, Trump asked the Pentagon to cut short a series of military drills with South Korea. The reason for this snub, which will have emboldened China and the communist part of the peninsula? “My very good relationship with Kim Jong Un of North Korea”. Thus spake the Metternich of South Ocean Boulevard.
There is no through-line here, no grand plan. Trump doesn’t stint Ukraine in order to free up resources for the Indo-Pacific. He stints Ukraine because he feels like it. He acts out of personal chemistry, commercial self-interest, a few life-long beliefs and, yes, strategy. The last of these elements just tends to be overstated in the mix. (Though not by himself. The last person to go on about a Trump geostrategy is Trump, who is candid about his personal approach.)
So who is left of the Trumpsplainers? Who, even after Iran, squints to see order in the bedlam? There is Elbridge Colby, the Pentagon’s policy chief, whose rationalisation of his boss’s random doings is creative, as a man who is always spotting faces in clouds is creative. For example, what Asian democracies regard as on-off US support Colby describes as “flexible realism”, which is the kind of think-tank jargon that could cover any conceivable policy at all. But he is staff. Staff have to abase themselves. The question is how people with no career at stake — Trumpsplainers are often in finance and tech — came to see Trump as someone of underrated strategic genius.
In The American Conservative, Fred de Fossard argues that the country’s open door migration policies have been bad for both Britain and migrants.
The campaigners for permanent settlement have highlighted the poor working conditions in the care sector. Indeed, the visa is so badly designed that many people moved to Britain to work in care homes that did not exist. Evidently, exploitation in this route exists, and the Guardian provided examples of workers living in sheds, feeling like indentured servants to exploitative employers. But even those workers seem to be far keener on achieving permanent settlement instead of returning home.
This points to a fundamental truth about modern migration from the Third World to rich countries, which puts questions around post-colonial resentment, welfare tourism and overall fiscal contributions in the shade. Life, living standards, and opportunity are simply so much better in Western countries than in the developing world. Even a life of borderline destitution in the UK provides someone with more opportunity in countries like India or Nigeria—the two largest sources of legal migration in recent years—and the ease of international travel has made this a much more attainable prospect for people the world over.
Just because migration offers the individual migrant opportunity for a better life does not mean that the people of the target country have any obligation to provide it. A migration policy based on the notion that immigration is a form of reparation for colonialism is not a recipe for a happy or prosperous society. Milton Friedman was correct that welfare states and open borders cannot coexist, but one should go further and state explicitly that Britain’s immigration policy must operate to the benefit of the British people. Any grants of citizenship should be made on the basis of a migrant’s proven potential contribution to the country and likelihood of assimilation to the British way of life and wider British family. A nation clearer about its intent and interest in the welfare of the British people above all would ultimately attract fewer people intending on exploiting its welfare state and, conversely, likely become more appealing to those who might wish to play a real and positive part in Britain’s future story.
Wonky Thinking
Last week, Onward published “Firm Foundations: The case for cheap and reliable power”, the latest in its series of papers on reforming the country’s energy system and bringing the costs of energy down. The report lays out the business case for shifting away from a reliance on renewables to building the energy system around nuclear and gas.
Onward have commissioned an independent study to quantify the full system costs of continuing with the current policy direction, versus cost savings that can be achieved by taking a new approach. It models a power system that prioritises firm generation capacity, responding to demand, rather than forcing consumers to react to the vagaries of the British weather. This plan includes a diversified mix of nuclear, renewables and gas generation, which builds a much cheaper power system that can be used to electrify and decarbonise more of the economy.
The savings are substantial. The alternative policy pathway saves £320 billion between 2030 and 2050, and reduces system costs by 20% in 2040 versus “business as usual”. Savings are made across four major areas:
£137 billion in network spending, thanks to a higher utilisation firm power system with supply located closer to demand
£94 billion from lower wholesale prices, thanks to the removal of carbon taxes
£67 billion in lower spend on balancing and ancillary services
£22 billion across generation subsidies and the Capacity Market
Realising savings of this scale requires a shift away from the current central planning model, to a system that allocates the costs of intermittent generation to the causative generators, rather than sending a bill to the end consumer. This paper sets out an alternative policy pathway, to build a power system that allows consumers to access affordable electricity when they need it, cutting bills and increasing economic growth. In turn, cheap electricity can drive the adoption of electric vehicles and heat pumps, via consumer preference, and not state mandates. This is a win-win, for growth and the climate.
On Substack, Neil O’Brien digs into new IFS data on graduate earnings and finds that nearly a third of graduates are experiencing negative returns (36% for men, 25% for women), with earnings after graduating closely linked to prior attainment at GCSE and A-Level, calling further into question the policy of mass expansion of higher education.
The series of papers on graduate returns which the IFS have produced are superb - and hats off to them for their work. The finding that university was not worth it from an economic point of view for nearly a third of 2007 graduates is very striking. It should lead to a change in policy. In fact, it has already influenced the Conservative pledge to re-introduce number controls on higher education, and use the savings to fund more high quality apprenticeships and the abolition of of real interest rates on Plan 2 student loans.
But there are good reasons to think this may be an underestimate of the problem. The graduate premium had continued to decline since 2007, and as the IFS turn to later cohorts, they will need to figure out what to do with people with lower prior attainment who are now going to university. We can see that some of the apparent earnings premium is not higher hourly productivity, but more hours being worked - and that female graduates are more likely to be working more hours due to lower/later childbearing.
The further dramatic expansion of mass higher education in the 2010s was justified by analysis of average graduate earnings premiums which now look very crude and misleading. As the analysis gets better we see more nuance - but overall, the picture is looking worse and worse.
Podcast of the Week
On The Ezra Klein Show, Klein talks with Brad Setser about the second ‘China Shock’. The first shock was caused by a massive expansion of Chinese industrial output in low-value areas of global manufacturing. The second shock is the emergence of China as a manufacturer at the technology frontier and pushing Western economies out of production in the key industries of the future.
Quick Links
43% of Britons now say that migration has been mostly bad for the country, up ten points in ten years.
Nearly twice as many adults back building new homes where they live than oppose it.
Dodgy care homes were allowed to issue 100,000 migrant work visas.
1,800 people in Japan moved a 360 tonnes castle.
Investors sold off assets in record numbers ahead of Labour’s planned tax rises last year.