Nigel Farage speaks

 

Are poor countries poor because of their poor people? Economic History in Small Doses 5

Girish Menon*

A bus driver in Mumbai gets paid around Rs.50 per hour whereas his equivalent in Cambridge gets paid £12 per hour. Using currency exchange rates, the Cambridge driver gets paid 24 times more than his Indian equivalent. Does that mean John the Cambridge driver is 24 times more productive than Om? If anything, Om would likely be a much more skilled driver than John because Om has to negotiate his way through bullock carts, rickshaws, bicycles and cows on the street.

The main reason why John is paid 24 times more than Om is because of protectionism. Some, British workers are protected from competition from workers in India, and soon from the EU, through immigration control.  (Technology has erased this protectionism in the relocation of many white collar jobs.) This form of protectionism goes unmentioned in the WTO (World Trade Organization) as countries raise their barriers to immigration of poor workers.

 Many people think that poor countries are poor because of their poor people. The rich people in poor countries typically blame their countries’ poverty on the ignorance, laziness and passivity of the poor. Arithmetically too, it is true that poor people pull down the national income average because of their large numbers.

 Little do the rich people in poor countries realize that their countries are poor not because of the poor but because of themselves. The primary reason why John is paid 24 times more than Om is because John works in a labour market with other people who are way more than 24 times more productive than their Indian counterparts. The top managers, scientists and engineers in the UK are hundreds of times more productive than their Indian equivalents, so the UK’s national productivity ends up being in the region of 24 times that of India.

In other words, poor people from poor countries are usually able to hold their own against counterparts in rich countries. It is the rich from the poor countries who cannot do that. It is their relative low productivity that makes their country poor. So, instead of blaming their own poor for dragging the country down, the rich of the poor countries should ask themselves why they cannot pull up the productivity and innovation in their own country,

Of course, the rich in rich countries need not get smug. They are beneficiaries of economies with better technology, better organized firms, better institutions and better physical infrastructure. Warren Buffet expressed it best:

 “I personally think that society is responsible for a very significant percentage of what I’ve earned. If you stick me down in the middle of Bangladesh or Peru or someplace, you’ll find out how much this talent is going to produce in the wrong kind of soil. I will be struggling thirty years later. I work in a system that happens to reward what I do well – disproportionately well.”

 

* Adapted from 23 Things they don’t tell you about Capitalism by Ha Joon Chang

Where do Indians migrate?

Conversation with Markandey Katju

Why rigged capitalism is damaging liberal democracy

Economies are not delivering for most citizens because of weak competition, feeble productivity growth and tax loopholes writes Martin Wolf in The FT

“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.”  

 With this sentence, the US Business Roundtable, which represents the chief executives of 181 of the world’s largest companies, abandoned their longstanding view that “corporations exist principally to serve their shareholders”.  

This is certainly a moment. But what does — and should — that moment mean? The answer needs to start with acknowledgment of the fact that something has gone very wrong. Over the past four decades, and especially in the US, the most important country of all, we have observed an unholy trinity of slowing productivity growth, soaring inequality and huge financial shocks.  

As Jason Furman of Harvard University and Peter Orszag of Lazard Frères noted in a paper last year: “From 1948 to 1973, real median family income in the US rose 3 per cent annually. At this rate . . . there was a 96 per cent chance that a child would have a higher income than his or her parents. Since 1973, the median family has seen its real income grow only 0.4 per cent annually . . . As a result, 28 per cent of children have lower income than their parents did.”

So why is the economy not delivering? The answer lies, in large part, with the rise of rentier capitalism. In this case “rent” means rewards over and above those required to induce the desired supply of goods, services, land or labour. “Rentier capitalism” means an economy in which market and political power allows privileged individuals and businesses to extract a great deal of such rent from everybody else. 

That does not explain every disappointment. As Robert Gordon, professor of social sciences at Northwestern University, argues, fundamental innovation slowed after the mid-20th century. Technology has also created greater reliance on graduates and raised their relative wages, explaining part of the rise of inequality. But the share of the top 1 per cent of US earners in pre-tax income jumped from 11 per cent in 1980 to 20 per cent in 2014. This was not mainly the result of such skill-biased technological change. 

If one listens to the political debates in many countries, notably the US and UK, one would conclude that the disappointment is mainly the fault of imports from China or low-wage immigrants, or both. Foreigners are ideal scapegoats. But the notion that rising inequality and slow productivity growth are due to foreigners is simply false. 

Every western high-income country trades more with emerging and developing countries today than it did four decades ago. Yet increases in inequality have varied substantially. The outcome depended on how the institutions of the market economy behaved and on domestic policy choices.  

Harvard economist Elhanan Helpman ends his overview of a huge academic literature on the topic with the conclusion that “globalisation in the form of foreign trade and offshoring has not been a large contributor to rising inequality. Multiple studies of different events around the world point to this conclusion.” 

The shift in the location of much manufacturing, principally to China, may have lowered investment in high-income economies a little. But this effect cannot have been powerful enough to reduce productivity growth significantly. To the contrary, the shift in the global division of labour induced high-income economies to specialise in skill-intensive sectors, where there was more potential for fast productivity growth. 

Donald Trump, a naive mercantilist, focuses, instead, on bilateral trade imbalances as a cause of job losses. These deficits reflect bad trade deals, the American president insists. It is true that the US has overall trade deficits, while the EU has surpluses. But their trade policies are quite similar. Trade policies do not explain bilateral balances. Bilateral balances, in turn, do not explain overall balances. The latter are macroeconomic phenomena. Both theory and evidence concur on this. 

The economic impact of immigration has also been small, however big the political and cultural “shock of the foreigner” may be. Research strongly suggests that the effect of immigration on the real earnings of the native population and on receiving countries’ fiscal position has been small and frequently positive. 

Far more productive than this politically rewarding, but mistaken, focus on the damage done by trade and migration is an examination of contemporary rentier capitalism itself.  

Finance plays a key role, with several dimensions. Liberalised finance tends to metastasise, like a cancer. Thus, the financial sector’s ability to create credit and money finances its own activities, incomes and (often illusory) profits. 

A 2015 study by Stephen Cecchetti and Enisse Kharroubi for the Bank for International Settlements said “the level of financial development is good only up to a point, after which it becomes a drag on growth, and that a fast-growing financial sector is detrimental to aggregate productivity growth”. When the financial sector grows quickly, they argue, it hires talented people. These then lend against property, because it generates collateral. This is a diversion of talented human resources in unproductive, useless directions. 

Again, excessive growth of credit almost always leads to crises, as Carmen Reinhart and Kenneth Rogoff showed in This Time is Different. This is why no modern government dares let the supposedly market-driven financial sector operate unaided and unguided. But that in turn creates huge opportunities to gain from irresponsibility: heads, they win; tails, the rest of us lose. Further crises are guaranteed. 

Finance also creates rising inequality. Thomas Philippon of the Stern School of Business and Ariell Reshef of the Paris School of Economics showed that the relative earnings of finance professionals exploded upwards in the 1980s with the deregulation of finance. They estimated that “rents” — earnings over and above those needed to attract people into the industry — accounted for 30-50 per cent of the pay differential between finance professionals and the rest of the private sector.  

This explosion of financial activity since 1980 has not raised the growth of productivity. If anything, it has lowered it, especially since the crisis. The same is true of the explosion in pay of corporate management, yet another form of rent extraction. As Deborah Hargreaves, founder of the High Pay Centre, notes, in the UK the ratio of average chief executive pay to that of average workers rose from 48 to one in 1998 to 129 to one in 2016. In the US, the same ratio rose from 42 to one in 1980 to 347 to one in 2017.  

As the US essayist HL Mencken wrote: “For every complex problem, there is an answer that is clear, simple and wrong.” Pay linked to the share price gave management a huge incentive to raise that price, by manipulating earnings or borrowing money to buy the shares. Neither adds value to the company. But they can add a great deal of wealth to management. A related problem with governance is conflicts of interest, notably over independence of auditors. 

In sum, personal financial considerations permeate corporate decision-making. As the independent economist Andrew Smithers argues in Productivity and the Bonus Culture, this comes at the expense of corporate investment and so of long-run productivity growth.  

A possibly still more fundamental issue is the decline of competition. Mr Furman and Mr Orszag say there is evidence of increased market concentration in the US, a lower rate of entry of new firms and a lower share of young firms in the economy compared with three or four decades ago. Work by the OECD and Oxford Martin School also notes widening gaps in productivity and profit mark-ups between the leading businesses and the rest. This suggests weakening competition and rising monopoly rent. Moreover, a great deal of the increase in inequality arises from radically different rewards for workers with similar skills in different firms: this, too, is a form of rent extraction. 

A part of the explanation for weaker competition is “winner-takes-almost-all” markets: superstar individuals and their companies earn monopoly rents, because they can now serve global markets so cheaply. The network externalities — benefits of using a network that others are using — and zero marginal costs of platform monopolies (Facebook, Google, Amazon, Alibaba and Tencent) are the dominant examples.  

Another such natural force is the network externalities of agglomerations, stressed by Paul Collier in The Future of Capitalism. Successful metropolitan areas — London, New York, the Bay Area in California — generate powerful feedback loops, attracting and rewarding talented people. This disadvantages businesses and people trapped in left-behind towns. Agglomerations, too, create rents, not just in property prices, but also in earnings.  

Yet monopoly rent is not just the product of such natural — albeit worrying — economic forces. It is also the result of policy. In the US, Yale University law professor Robert Bork argued in the 1970s that “consumer welfare” should be the sole objective of antitrust policy. As with shareholder value maximisation, this oversimplified highly complex issues. In this case, it led to complacency about monopoly power, provided prices stayed low. Yet tall trees deprive saplings of the light they need to grow. So, too, may giant companies.  

Some might argue, complacently, that the “monopoly rent” we now see in leading economies is largely a sign of the “creative destruction” lauded by the Austrian economist Joseph Schumpeter. In fact, we are not seeing enough creation, destruction or productivity growth to support that view convincingly. 

A disreputable aspect of rent-seeking is radical tax avoidance. Corporations (and so also shareholders) benefit from the public goods — security, legal systems, infrastructure, educated workforces and sociopolitical stability — provided by the world’s most powerful liberal democracies. Yet they are also in a perfect position to exploit tax loopholes, especially those companies whose location of production or innovation is difficult to determine.  

The biggest challenges within the corporate tax system are tax competition and base erosion and profit shifting. We see the former in falling tax rates. We see the latter in the location of intellectual property in tax havens, in charging tax-deductible debt against profits accruing in higher-tax jurisdictions and in rigging transfer prices within firms.  

A 2015 study by the IMF calculated that base erosion and profit shifting reduced long-run annual revenue in OECD countries by about $450bn (1 per cent of gross domestic product) and in non-OECD countries by slightly over $200bn (1.3 per cent of GDP). These are significant figures in the context of a tax that raised an average of only 2.9 per cent of GDP in 2016 in OECD countries and just 2 per cent in the US.  

Brad Setser of the Council on Foreign Relations shows that US corporations report seven times as much profit in small tax havens (Bermuda, the British Caribbean, Ireland, Luxembourg, Netherlands, Singapore and Switzerland) as in six big economies (China, France, Germany, India, Italy and Japan). This is ludicrous. The tax reform under Mr Trump changed essentially nothing. Needless to say, not only US corporations benefit from such loopholes. 

In such cases, rents are not merely being exploited. They are being created, through lobbying for distorting and unfair tax loopholes and against needed regulation of mergers, anti-competitive practices, financial misbehaviour, the environment and labour markets. Corporate lobbying overwhelms the interests of ordinary citizens. Indeed, some studies suggest that the wishes of ordinary people count for next to nothing in policymaking.  

Not least, as some western economies have become more Latin American in their distribution of incomes, their politics have also become more Latin American. Some of the new populists are considering radical, but necessary, changes in competition, regulatory and tax policies. But others rely on xenophobic dog whistles while continuing to promote a capitalism rigged to favour a small elite. Such activities could well end up with the death of liberal democracy itself. 

Members of the Business Roundtable and their peers have tough questions to ask themselves. They are right: seeking to maximise shareholder value has proved a doubtful guide to managing corporations. But that realisation is the beginning, not the end. They need to ask themselves what this understanding means for how they set their own pay and how they exploit — indeed actively create — tax and regulatory loopholes. 

They must, not least, consider their activities in the public arena. What are they doing to ensure better laws governing the structure of the corporation, a fair and effective tax system, a safety net for those afflicted by economic forces beyond their control, a healthy local and global environment and a democracy responsive to the wishes of a broad majority? 

We need a dynamic capitalist economy that gives everybody a justified belief that they can share in the benefits. What we increasingly seem to have instead is an unstable rentier capitalism, weakened competition, feeble productivity growth, high inequality and, not coincidentally, an increasingly degraded democracy. Fixing this is a challenge for us all, but especially for those who run the world’s most important businesses. The way our economic and political systems work must change, or they will perish.

Is Migration Inevitable?

By Girish Menon

In Mumbai, it appears that the taxis and autorickshaws are predominantly driven by migrants from Uttar Pradesh. In Kerala, as captured in the film Njan Prakashan, most of the physical labour is provided by migrants from the Bengal region. In the UK the nursing profession is dominated by migrants from Kerala and I don’t have to mention the Gulf where it is rumoured that one can get by with speaking Malayalam. These anecdotes do not adequately capture the migration of people all over the world.

This has led to resentment among the sons of the soil living in their ancestral lands. One of them speaking about Polish migrants felt ‘The Pole should get up every morning in Krakow, take a flight to the UK, pick fruit from the farms, collect the high wage and take a late flight back to Krakow’.

This shows that some sons of the soil admit that migrants fill a void in their labour markets and are a necessary evil to be tolerated.

On the other hand: the Brexit vote, the clampdown on the Mexican border, the identification of aliens in Assam show that political authorities are responding to their protests against uncontrolled migration.

So, why does this problem arise? Why do migrants leave their familiar surroundings to go to unfamiliar places and insist on working in increasingly hostile circumstances?

For starters, it could be that despite all the hardships faced in an alien land the migrant feels that his lot is still better than by continuing in his homeland. The film Peepli Live captures the distress in Indian agriculture, where despite all the government initiatives the protagonist finds himself leaving the village to work on a dangerous construction site in a big city. It is natural to assume that such a migrant would end up living in an illegal slum in that city.

Along with this group of desperate migrants there is also a group of economic migrants, this writer included, who seem to arbitrage the global shortage of skilled labour.

In the film Thackeray, Bal Thackeray the founder of the Shiv Sena alleged that South Indians, especially Malayalees, monopolised jobs in Mumbai and with their ‘clannish mentality’ would block opportunities for the sons of the soil. This sentiment has been echoed by similar politicians all over the world.

There is definitely some merit in their arguments too. 

In the UK around 2004 Tony Blair allowed free labour market access to newly joined  East European citizens. At the time there were no protests; the ruling Labour Party had ‘abolished boom and bust’ and the labour market was booming with wage hikes. The migrants were doing jobs that Britons did not want to do.

The feeling of anger only began following the 2008 financial crisis. The EU imposed strict austerity on the Euro member countries creating high levels of unemployment in their member states. The UK’s high minimum wage then acted as a magnet for migrants from the EU.

At the same time, in 2010 David Cameron’s UK government was ideologically committed to austerity and ‘balancing the budget’. They introduced severe funding cuts for schools, healthcare and welfare benefits. Thus, if you were an unemployed Briton living in Stevenage you suddenly discovered that the unemployment benefits were cut forcing you to look for a job while UK employers preferred foreigners for their higher productivity. This Stevenager’s family members also had to compete with Spaniards for reduced school places and Poles for access to the highly restricted health service. 

Thus the revulsion to the foreigner may not have arisen without the deliberate and untimely austerity imposed by the Conservative-Liberal Democrat government.

So, is migration inevitable? Yes and no.

From a theoretical perspective, only having free movement of capital but not permitting free movement of labour goes against free market logic and globalisation. This is also a violation of Ricardo, because labour rich countries are being prevented from benefiting from their comparative advantage. So, if there is free movement of capital, goods and services then, unlike Boris Johnson’s argument, it is incumbent on labour rich countries to demand free movement of labour.

Nonetheless, there will always be some economic migrants who will arbitrage the wage differentials in the world. Also, there will be others who are fleeing political persecution in their respective countries.

However, some of the migration can be controlled. There could be a universal basic income available to all the inhabitants of a common market. This basic income could be determined on the basis of the minimum income required to live in the most prosperous province in a common market. Such an income will enable the prospective migrant to live a luxurious life in his depressed province and act as a deterrent to migration.

In the UK, some Conservative party members who colluded in imposing austerity and who lauded the growth of food banks have convinced Stevenagers that their economic woes are solely due to foreigners. This fear was fortified enough to win the Brexit referendum. Now the question remains if the EU elite will accept their demands for a free movement of goods and services and end the free movement of labour.

Since the interest of the EU elite are not the same as its peripheral members I will not be surprised if they collude with Johnson’s cohorts. Will this lead to peripheral members of the EU asking for an exit as well? I will not be surprised.

Prof. Wolff on "The Basic Economics of Immigration"

Five ingredients for a populist backlash - Niall Ferguson

Britain’s immigration debate is not only about economics

Culture, identity and a sense of fairness matter just as much to many people writes  CAMILLA CAVENDISH in The FT

Last summer I was sitting in a café in Boston, Lincolnshire , interviewing Karol, its enterprising Polish owner. He arrived in England to pick lettuces ten years ago, worked his way up to factory packing, and then started this little restaurant on a side street. Sipping tea, he told me of his high hopes for the pierogi dumplings cooked by his wife. 

I had sought out Karol as an example of the kind of immigrant we want in Britain — friendly and hard-working. He was sheepish about his very limited English, though, and said that his wife and parents, who have joined him, barely speak it at all. Their customers, he said with a tone of regret, are almost all Polish, Romanian and Lithuanian. Here on the east coast of England, the old residents and the new arrivals are largely living parallel lives. 

 This was perhaps inevitable. The population of this little town grew at more than double the average rate for England and Wales in ten years from 2004. This followed the decision of the Blair government to open the UK to the eastern European accession countries without a transitional period. There was a 460 per cent increase in immigration. Unsurprisingly, Boston registered the highest Leave vote of the 2016 referendum: almost 76 per cent. 

Boston is an extreme example, but it is only one of many places I have visited where we have utterly failed to integrate people — including, sometimes, those of Pakistani and Bangladeshi origin. The government has been attacked for attempting to limit low-skilled immigration in this week’s white paper. But it is trying to respond to a deep malaise which is driving far-right populism in both Europe and the US, and even in previously moderate Sweden. 

As Britain tumbles towards a future which I still hope will see us clinging on to the EU, not crashing out of it, I am concerned that so many members of the establishment continue to paint anxieties about migration as purely economic, the misplaced rage of those “left behind” by globalisation and the financial crisis. 

While these are clearly factors, this explanation overlooks the fact that the challenge is not merely an economic one, of wages and productivity — it is cultural, too. The Migration Advisory Committee, which has done so much to provide objective analysis of this fraught subject, has stated that migration from the European Economic Area “as a whole has had neither the large negative effects claimed by some, nor the clear benefits claimed by others”. Something else is going on: boiling resentment at years of being ignored by the ruling classes who have benefited most from immigration. 

Academics including Eric Kaufmann and Jens Hainmueller have shown that attitudes to immigration in the US and Europe are not as highly correlated with personal economic circumstances as many commentators assume. Many Leave voters and supporters of US president Donald Trump have been influenced more by deep fears about the impact on national identity. 

Economists will argue that consumers benefit from cheaper vegetables in the supermarkets. But Boston voters who might prefer to pay a bit more to preserve their sense of identity should not be lightly dismissed. If we do end up remaining in the EU, we must not simply breathe a sigh of relief and resume business as usual. 

This week’s argument over the proposed £30,000 income threshold for new arrivals will no doubt continue through the consultation period. So will the debate — vital for the NHS — over how to define a “shortage occupation”. But £30,000 was not plucked out of the air. It was based on the committee’s finding that EEA/EU migrants as a whole pay more in than they take out, in services and benefits — but only when they earn roughly £30,000 or more. 

This goes to the heart of what many people feel deeply: that no one should take out more than they have paid in. During David Cameron’s renegotiation of the terms of the UK’s EU membership in 2015-16, polls showed that many people were aware that British taxpayers were paying child benefit to children who lived in Warsaw and had never set foot in Britain. 

Mr Cameron bumped up against not only the theology of free movement of people, but also the incompatibility between Britain’s free universal healthcare and school systems, and contributory social insurance schemes in other member states which require far higher levels of prior contribution before getting entitlement to benefits. 

The white paper states that people who arrive speaking only basic English are required to become more fluent; but I have interviewed many people who have survived for over a decade with no English at all. It makes a nod towards reducing entitlements for short-term workers, but does not address the question of contributions from people who want to put down roots and bring dependants, beyond the blunt instrument of income thresholds. We must bring back the contributory principle to our welfare state. 

I would never argue that immigration was the sole factor driving the Leave vote in the 2016 referendum. Nor will it be the sole consideration in any “people’s vote”. But we ignore it at our peril. This week, it felt as though the debate had shrunk back into convenient tracks. 

I hope that my friend Karol will succeed. Of course, if we crash out of the EU on March 29, high tariff barriers to agricultural imports will probably bankrupt our farms — and his café business. If that happens, Boston’s problem will no longer be too many people, but too few. 

How one man’s story exposes the myths behind our migration stereotypes

Robert, a Romanian law graduate, didn’t come to the UK to undercut wages. But he ended up in insecure low-paid work writes Aditya Chakrabortty in The Guardian

 

Anti-Brexit protesters in November. ‘The likes of Robert make the easiest human punchbags. You rarely see him or the millions of other EU citizens living in Britain on your TV.’ Photograph: Daniel Leal-Olivas/AFP/Getty Images


Amid all the true-blue backbench blowhards and armchair pundits who will occupy the airwaves this Brexit week, one thing is guaranteed: you won’t hear a word from Robert. Why should you? He commands neither power nor status. He has hardly any money either. And yet he is crucial to this debate, because it is people like him that Brexit Britain wants to shut out.

Robert is a migrant, under a prime minister who keeps trying and failing to impose an arbitrary cap on migrants to this country. Born in Timişoara, Romania, he now lives in a democracy that barely batted an eyelid when Nigel Farage said it was OK to be worried about Romanian neighbours. And Robert gets all the brickbats hurled at foreigners down the ages – that he’s only here to take your jobs and claim your benefits (at one and the same time, mystifyingly), to undercut your wages and give nothing back.


What’s left is a 38-year-old tearing himself apart over his broken life. ‘I’m an idiot,' he says. ‘I’ve wasted myself.'

The likes of Robert make the easiest human punchbags. You rarely see him or the millions of other EU citizens living in Britain on your TV. Nor do you hear about them from a political class forever chuntering on about the will of the people, yet too aloof from the people to know who they are or what they want, and too scared of them to engage in dialogue.

Yet Robert (he’s asked that his surname be withheld) is no caricature. It’s not just how he dotes on his daughter and has a streak of irony thicker than the coffee he serves up. It’s also how his life in Britain proves that those declaimed causes of Brexit are both too easy and too far off the mark. However sad his story, it also shows where our economy really is broken – and how it will not be fixed by kicking out migrants.

We met a few weeks ago at his flat on the outskirts of Newcastle upon Tyne. Too bare to be a home, its sole reminder of his old family life is a little girl’s bedroom, kept in unchildlike order for his daughter’s weekend visits. He and his wife split a few months ago, he says, when the family’s money ran out. What’s left now is a bank account in almost permanent overdraft and a 38-year-old man tearing himself apart over his broken life here. “I’m an idiot,” he says. “I’ve wasted myself.”

But please, spare him the migrant stereotypes. Low-skilled? Robert came to the UK in 2008 with a law degree and speaking three languages. Low aspirations? Even while grafting in restaurants and hotels, he fired off over 100 applications for a solicitor’s training contract. That yielded just one interview, in Leeds. Local firms that were happy to have him volunteer for free proved more reluctant to give him a paying job. He ended up in a part of the country that has spent most of the past 40 years trying to recover from Thatcherism’s devastation, and which is even now paying the price in cuts for the havoc wreaked 10 years ago by bankers largely based hundreds of miles away. In a country where relations between regions are as lopsided as they are between workers and bosses, the odds were stacked against him from the start.

Finally, Robert signed with a temp agency, PMP Recruitment, which in August 2012 placed him with the local Nestlé factory. And that’s where trouble really began.

He had just enrolled in the precarious workforce, which at the last count numbered just over 3.8 million workers across the UK. Never guaranteed work, he had to wait for the offer of shifts to be texted to him a few days beforehand. He did days, nights, whatever was given, and started on the minimum wage in Nestlé’s Fawdon plant – a giant place churning out Toffee Crisps and Rolos and Fruit Pastilles. It was no Willy Wonka-land.

Robert began by “spotting” – standing on a podium overlooking the Blue Riband production line and pulling out imperfect chocolate bars. Seeing the conveyor belt spool along for hours on end made him dizzy, and another recently departed worker tells me he couldn’t bear to do it for long (Nestlé says it has “rotation processes for work that is particularly repetitive”). Stubborn pride made him stick it out for 12-hour shifts. “Leave your head at home,” workmates would advise and, amid the exhaustion of shifts and raising a family, that’s what he did. But bit by bit he noticed things were wrong.

As an agency worker, he says he was doing the same tasks as Nestlé staff, but for less money. They got a pay rise, he alleges, that agency workers didn’t. He would do work classed by the company as “skilled” but instead got “unskilled” rates. His former workmate, who doesn’t wish to be named, tells me this was common practice: “If Nestlé wanted you to come in at an awkward time, they’d say, ‘We can pay you skilled rates’.” Over the years, Robert estimates that he lost out on about £26,000 of income.

Robert was in no man’s land. He was spending his days working for Nestlé but was not their direct employee – even though he gave five years of service at Fawdon. Nor did he have much to do with his recruiters at PMP, a nationwide agency. As for the plant’s trade unions, he saw them as “a waste of space”. He was trapped in an institutional vacuum. The chair of the Law Society’s employment law committee, Max Winthrop, describes such arrangements – working for one company while on the books of another for years on end – as a “fiction”. “The most generous way you can look at it is, it’s a confusing situation. The least generous is that it’s a deliberate attempt to throw sand in everyone’s eyes so we can’t see the true nature of the relationship.” Nestlé says that of its 600 staff at Fawdon, 100 are agency, all via PMP. Over the years, Robert says he saw hundreds of agency staff come and go.

When Robert raised the issue with Nestlé managers, he alleges that shifts were no longer given to him. Finally, just before last Christmas, he resigned. He then tried to get other agency workers to join him in taking Nestlé to court, but they were, he says, “too nervous”. So he launched an employment tribunal case alone and, a few weeks after we met, Nestlé settled out of court. One of the conditions of the settlement is that he cannot discuss it, but Robert knows this article will appear. Citing confidentiality, Nestlé did not want to comment directly on his case but says that, since 2014, all staff in its factories get the living wage, and “we refute any allegation that working conditions at our Fawdon factory are below standard”.

On his PMP payslips Robert also noticed that – as a result of the “recruitment travel scheme” in which the agency had enrolled him – some months he was getting less than minimum wage, a situation for which Winthrop says he “cannot find any justification”. He took PMP to court too, and a couple of months ago was awarded over £2,000 in back pay. PMP wouldn’t comment for this piece, other than to say it is appealing the verdict.

The best way to defeat a crass generalisation is with specifics, and what Robert’s story tells you is it’s not the migrant worker doing the undercutting here. He even tries to get his British-born workmates to join him in a class action for what’s rightfully theirs. The real problem is instead the imbalance of power between the worker and the employer, which is happily maintained by the same politicians today who claim they want to help the “left behind”.

PMP and the 18,000 or so other employment agencies in Britain are overseen by a government inspectorate of just 11 staff. The director of labour market enforcement in the UK, David Metcalf, admits that a UK employer is likely to be inspected by his team only once every 500 years. Were I an unscrupulous boss, I would take one look at those numbers and ask myself: if I do my worst, what’s the worst that can happen?

What keeps Robert here now is those weekends with his daughter. But after 10 years in Britain he’s learned something else too, about the reality of a country that claims to welcome foreigners, even as they punish them. An economy that promises a better life to those it then sucks dry. A society that kids itself that it’s a soft touch when really, it is as cold and hard as any interminable overnight shift.

Will UK house prices ever rise again?

The recent gains could turn out to be a huge historical anomaly writes Merryn Somerset Webb in The FT

If there is one thing that drives financial journalists in the UK to distraction it is celebrities. Every weekend the money pages of newspapers carry interviews with various semi-famous people asking them about how they invest. Every weekend the semi-famous people say they don’t invest in the stock market or save into a pension because it is too complicated. They invest in property instead. Buy houses, they say, and you have something “you can see”: You “know where you are with bricks and mortar”. 

The problem with this is simple. You might think you know where you are with bricks and mortar. But the truth is that you probably don’t — unless you have a complete grasp of how population trends, interest rates and political priorities have shifted over the past century and how they might shift again over the next. Just because the period in which most of us have become adults has been one of almost nonstop property price growth does not mean that it makes sense to extrapolate that growth indefinitely. It might not.

The latest Deutsche Bank Long Term Asset Return Study (written by Jim Reid and his team of analysts) takes a proper look at the evidence. It turns out that fast-rising house prices in the UK are a relatively recent phenomenon. They have risen on average 3 per cent a year in inflation-adjusted terms since 1939 (a total of 834 per cent). But before that they mostly fell — 50 per cent in inflation-adjusted terms from 1290 to 1939. These data are obviously not precise — Reid points out that the housing market has changed beyond all recognition over the past 800 years and that the numbers have been collated using “many assumptions”. However, you get the general idea. Perhaps our celebrities should be spending less time assuming their financial future will be the same as their financial past, and more time asking two questions: What changed in the middle of the last century? And will it change back? 

The answer to the first question brings us to demographics. The world began to change in 1796 when Edward Jenner introduced the first vaccine for smallpox (the major killer of the time) and so created a dramatic rise in life expectancy and the beginnings of a rise in the number of people in the world: the global population rose by a mere 0.17 per cent a year until 1820 but 0.98 per cent a year from then to 2000 (this rise was what allowed the industrial revolution to happen, by the way). However, it is the past 70 years — the ones most of us use as our map for the future — that have been genuinely dramatic: from 1950 to 2000 the global population more than doubled, from 2.5bn to around 6.1bn.

That has had all sorts of consequences — ones that have long looked mystifying if you don’t understand population but which have looked rather predictable if you do. If you had looked properly at birth rates in the G7 in the postwar period you would not have been surprised that inflation and unemployment rose in the 1970s as the baby boomers began to both “jostle for their first jobs” and to consume global resources on a huge scale, says Paul Hodges chairman of London-based strategy consultancy IeC. 

You would have expected stock markets to start to boom in the 1980s as those same boomers moved into their thirties and forties and started to pour cash into investments to finance their retirements. And you surely would have known that all those babies growing up in the affluent stability of the postwar world would want to form their own households and would be encouraged by rising global affluence to want to do so in bigger and better houses than their parents. You might also have noted the political power of the boomers and guessed that the regulatory environment would be shaped to suit them — think tax relief on mortgage payments and no capital gains tax on the sale of primary homes in the UK, for example. And so it began. Demand pushed up prices — and pushed them up even more in low-supply Britain than elsewhere. 

As prices rose baby boomers figured that homes looked like a hot tip of an investment and, enabled by the rise of the fiat money system (the final collapse of any link to the dollar to gold in 1971 meant money supply was able to rise with the population), bought more. Nearly half the 2.5m buy-to-let investors in the UK now say they are “pension pot” investors. They own one house to live in and another as an investment. Perhaps, says Reid, “housing is the ultimate population-sensitive asset”. “As a small island with heavy control over new home building, high population growth but limited supply has put massive upward pressure on prices over the last several decades.” 

He is right of course. But it is worth noting that the whole thing could never have happened without the full support of the central banks. One of the consequences of population growth was the abolition of a formal connection between currencies and gold, something that has allowed governments and central banks to print money and shift interest rates around as they like. That, in turn, has given us a long period of very low interest rates — which have shoved a rocket booster under house prices. In the UK, the actual monthly cost of buying a home fell dramatically after the financial crisis and has been more or less flat for several years. Even as the price of houses has risen, the fall in interest rates has kept the mortgage cost of buying much the same. 

On to the second question: will this all change back? Is it possible that we might be moving into an age of static to falling house prices? It is. Listen to the pessimists and you might think the global population will soon double again. But the rate of growth peaked long ago (in 1968 at just over 2 per cent a year). It is now down to more like 1 per cent. The main driver behind the extraordinary past 70 years is receding: the baby boomers are more likely now to be sellers than buyers. You could argue that the attractiveness of the UK as a place to live means our population will rise indefinitely and so will property prices — but to do so you would have to pile a lot of assumptions on top of each other: that the UK remains desirable; that it remains desirable enough that people are happy to pay a hefty premium for a house in it; and that it remains open to high levels of immigration. 

At the same time interest rates are beginning to drift up again. Jim Reid notes that the 1950-2000 period has been “like no other in human or financial history in terms of population growth, economic growth, inflation or asset prices”. It may stay that way. 

Worse (for those who want house prices to rise forever), legislation is on the turn. In the UK, the fast rise in house prices has created a class of winners and another of losers. The losers have had enough — and our cash-strapped government is now on their side. 

So second-homebuyers have been hit with council tax rises and an additional rate of stamp duty (an extra three percentage points). Buy-to-let investors have seen a sharp reduction in the scope of the tax relief available to them on their rental income as well as a shift in power back towards tenants (in Scotland in particular), stricter affordability requirements on their mortgage applications and a raft of new energy efficiency rules and licensing laws. They also pay capital gains tax at 28 per cent when they sell their properties (it is 20 per cent on everything else). There are also calls for new wealth taxes on all UK property — or sharp rises to council taxes at the top end. All four major UK parties are now showing interest in land value taxes and in scrapping what tax exemptions there are left for property owners. 

The recent budget didn’t have much in it, but space was found for two measures — a cut in the capital gains tax relief on houses that were once main residences, and a consultation on a 1 per cent surcharge for non-UK residents buying UK property. It doesn’t look good does it? 

So when will the shift to what was normal in the housing market 80 years ago begin? You could argue (and Hodges does) that it began in 2000 as the baby boomers started to shift down — and that the boom since 2009 has been a last gasp of a soon-to-slow market. With the Brexit fog all about us and fallout from the financial crisis still clearing, it is hard to tell what is causing what. But look to London and that makes some sense: prime London house and flat prices are down 30 and 25 per cent, respectively, since their peak several years ago and most data now show nationwide prices rising slightly less than inflation. 

There’ll be volatility here for a while — a post-Brexit bounce seems inevitable, for example, and a bout of consumer price inflation is likely over the next decade (you can see it coming in rising wages), something that might make holding real assets such as property not the worst idea in the world. But if prices revert to very long-term means, the period in which all our celebrities have made their property fortunes is going to turn out to have been a huge historical anomaly. I wonder what the ones who are being asked “property or pension” in 30 years will say.

The Tories keep getting blamed for the terrible events they caused. To be honest, it’s out of order

Mark Steel in The Independent

Amber Rudd says she finds the cases of families who were threatened with deportation, and harangued for documents they never had, “heartbreaking”. So she deserves respect for having the strength to carry on, while she suffers from a broken heart like that.

She also denies there was ever a “target” for removing immigrants, so we can only imagine how poignant a moment it must have been, when she was told “home secretary, you know when your government boasted before the 2015 (actually 2010 election) election it would ‘cut net migration to tens of thousands’? And an Inspection Report stated there was a ‘target of removing 12,000 immigrants?’ It turns out some people in the immigration office interpreted that as implying there was some sort of target.”
She must have cried and cried and howled, sniffing, “I know it sounds silly, but I can’t help feeling that makes this government partly responsible.”

Hopefully she’ll have had plenty of friends consoling her, saying reassuringly: “Oh home secretary, you mustn’t blame yourself. All of us set targets for removing people, regardless of the fact we’ve been told by an array of institutions this will cause appalling hardship to innocent people. You’re a good person. Stay strong, Amber, stay strong.”

So she’s proved her leadership qualities and overcome the heartbreak she feels so deeply, to explain: “We are deeply bountifully humongously sorry, but I would remind the country that three years ago, we thought it was popular to scream about chucking out piles of immigrants, so we can hardly be blamed if that has turned out not to be true after all. Now if you’ll forgive me, I must take some more antidepressants. I’m heartbroken you see.”

Theresa May must be even more heartbroken, because she was home secretary at the time. Some people suggest this means she had some knowledge of the targets, but that would be unfair, as she was busy sending out vans with signs on the side saying “illegal immigrants, go home”, so she can’t have had time to write down lots of numbers as well.

But now they love Caribbean people so it’s worked out fine in the end. Soon Amber Rudd will feature on a dancehall track with Shaggy, about the Windrush families, that starts “Dem tell I sad tale dat send chill trew I blood, Me weep so many tear dey call I Heartbreak Rudd.”

And the prime minister will end her apology by saying “I would now like to repeat my message for my Caribbean bredren. Listen up rude boy, me send out one love for me have pain in I ‘eart. But blame be upon dem raasclat immigration official, for me is vexed upon why dey carry out act what I tell dem do, Selasie I.”

She must feel even worse than Amber Rudd, because last year she made speeches such as “Brexit must mean control of the number of people who come to Britain. And that is what we will deliver.”

It would be ridiculous to imagine this was designed to create the impression she was in a rush to cut immigration, which was why Conservative Party spokespeople sometimes mentioned cutting immigration as few as 46 times in a three-minute interview.

Sometimes, if a minister was asked for a statement about the standards of maths in schools, or whether England would ever win the World Cup, they wouldn’t even mention their pledge to be tough on immigration until the ninth word.

So it’s a puzzle how anyone in the immigration office got the impression they were required to be a little bit zealous in the area of immigration.

It’s possible a pattern could emerge here, in which Conservatives start to feel sorry about other matters that they get unfairly blamed for just because they caused them.

For example, they’re dreadfully shocked about the lack of health and safety regulations in housing, even though David Cameron can’t possibly have predicted that his pledge to create a “bonfire of regulations” might lead to a reduction of regulations.

Iain Duncan-Smith will declare he’s appalled by stories of disabled people having their benefits stopped after being declared “fit for work”, when he can’t possibly have known this was going on, which is why he’s “truly awfully shocked and immeasurably saddened and exploding with volcanic sadness”.

Then they’ll announce they are devastated by the revelation that cutting benefits for the poorest people while asking the wealthiest people for less in tax made the poor poorer and the rich richer.

But they will add that cutting the top rate of tax was in no way designed to lower the top rate of tax, and they certainly don’t ever remember setting a target to cut the top rate of tax. It was probably down to some heartless tax official, and he’ll be in right trouble when they catch him.

But much of the Labour Party must be on Valium as well. Because throughout the years of the coalition, they went along with many of these measures. They were so concerned to appear tough on immigration that they had special mugs made, saying “I’m voting Labour, for controls on immigration.”

If they’d had the money, they would probably have made other household goods with the same message, such as toilet rolls and Ventolin inhalers. The Labour leaders from that time must be heartbroken.

So they should make one joint statement together, to cover all their heartbreak, that goes: “We’re really sorry, we had no idea our policy of being proudly, relentlessly foul would lead to any foulness.

“When one lot screamed, ‘Vote for us because we’re really foul’ and the other lot shouted, ‘That’s not fair, we’re quite capable of being disgustingly foul’, we didn’t know we’d misjudged the situation and foulness wouldn’t always be popular. So we’re all really really sorry, even though it’s not in any way in the slightest tiddly bit our fault.”

Windrush saga exposes mixed feelings about immigrants like me

Abdulrazak Gurnah in The FT

In 1968, soon after arriving in England from Zanzibar as an 18-year-old student, I was talking with a friend while a radio played in the background. At some point we stopped talking and listened to a man speaking with tremulous passion about the dangers people like me represented for the future of Britain. 

It was Enoch Powell and we were listening to a clip of his “Rivers of Blood” speech. I knew little about British politics and did not know who Powell was. But in the days and weeks that followed, I heard him quoted at me by fellow students and bus conductors, and saw television footage of trade union marches in his support. 

I have lived in Britain for most of the past 50 years and have watched, and participated in, the largely successful struggle to prevent Powell’s lurid prophecies about race war from coming true. But it would be foolish to imagine that all is set fair for the future of Britain and its migrant communities, because every few weeks we are provided with another example of the obstinate survival of antipathy and disregard. The treatment of the children of the “Windrush generation” who moved to the UK from the Caribbean several decades ago is the latest such episode. 

The injustice is so staggering that Theresa May, the prime minister, and Amber Rudd, the home secretary, have been forced to apologise. But the consequences for Caribbean migrants who grew up in Britain of the “hostile environment” for illegal immigrants could hardly have been news to them. 

In 2013, at the instigation of the Home Office, vans emblazoned with the message “Go home or face arrest” drove around parts of London with large immigrant populations. It may not have been intended that the clampdown on illegal immigration would snare such embarrassing prey as children of migrants who spent a lifetime working in the UK; but political expediency required that this small complication be ignored until it went away. That it has not is a result of the work of welfare, legal and political activists to make sure that the abuses against migrants and strangers are kept in plain sight. 

Before the second world war, there was no law to restrict entry or residence in Britain for people who lived in her colonial territories. That is what it meant to be a global empire, and all the millions who were subjects of the British crown were free to come if they wished. There was no need to worry about controlling numbers because, if they became a problem, they were sent back, as happened after the race riots in various British port cities in 1919. In a rush of imperial hubris, the British Nationality Act was passed in 1948 to formalise the right of British colonial subjects to enter and live in the UK. 

If the 1948 law was a desperate recruitment poster for cheap labour disguised as imperial largesse, the purpose of the successively meaner pieces of immigration legislation that began in 1962 was to slow and ultimately stop the arrival of dark-skinned former subjects of the British crown. It continued Britain’s centuries-long prevarication between sanctuary and xenophobia. 

Why has the Windrush saga been so embarrassing for the government? The answer has to do with Britain’s fraught relationship with the Caribbean and a history of racial terror instigated and supervised for centuries by British money and power. Caribbean institutions are still largely modelled on British ones and, until recent disillusioning decades, the Caribbean sense of identity was linked with a connection to the British empire. It is remarkable that this should be so given the brutalities of the plantation economies that prevailed in the Caribbean territories. This is an ambivalence that Caribbean intellectuals have reflected on for more than a century. The most perfunctory browse through the writing of the region will provide examples of its intricate legacy. 

What is now referred to as the Windrush generation was far from homogeneous. It included peasant workers, nurses, teachers, writers and artists. They came in response to the recruitment drive and because they were ambitious for a better life. They are in Britain for the same reasons that all migrants are here. 

In time they brought their children, and those children grew up, were educated and worked all their lives in this country. As any stranger knows, particularly if he or she is black in Europe, it is vital to keep your paperwork in order. What recent events have shown is that not all the children of the Windrush generation did because they were confident that they were at home and had no need to prove their right to be here. It seems they reckoned without the ruthless politics of contemporary Britain, in which xenophobia and hatred do not repel, but instead win votes. 

The Windrush saga has made headlines this week, but it has been going on for months — the bullying letters, the threatening sanctions against employers, the loss of employment, the withdrawal of benefits and healthcare, the detention and expulsion. Bullying in pursuit of bringing down the immigration numbers is never just or humane. But it is wrong to deny these people what are evidently their moral and legal rights. Their contribution to British society and culture has been immense. 

When it became clear the law had caught the wrong people, someone should have called a halt instead of pressing on with the bullying. As Sentina Bristol, the mother of Dexter, a 57-year-old man born a British subject in Grenada who died after several months of going through this process, observed of the government in a recent interview: “They are intelligent people, they are people of power. We expect better from them.”

Visas and global poverty

Rafia Zakaria in The Dawn

IN a recent report, the Centre for Global Development made a surprising and somewhat startling observation. Looking at the data from several recent studies, they noted that even the very best international development programmes to reduce global poverty could only produce outcomes that were 40 times less successful than the income gain people in poor countries experienced when their citizens were provided greater labour mobility. In simple non-economist terms, it means that visas work faster and better to reduce global poverty by a lot than even the very best international development programmes.

The visa, then, with the promise of mobility that it holds, is one of the few single things that has the greatest capacity to eliminate global poverty than anything else in the world.

What is true, however, is not always popular, and this is certainly true of the visa solution. While this may be true, the extent of the discrepancy between the effectiveness of international aid programmes versus work visas is quite alarming. A study published in Science magazine reveals how intensive and highly targeted programmes directed at poor countries like Pakistan and Ethiopia were successful at reducing poverty even if they were far more expensive to implement and produce.

Even so, the mood of the announcement was triumphant; pricey as it may be, their study had found that international aid could work. The fact that work visas and access to labour markets work better was never mentioned.


The international aid system is a moral hierarchy, with the aid grantors at the top.

The omission is not surprising. As another study has noted, the infrastructure of aid depends on hierarchies in which Western experts imported into impoverished environments diagnose how and what poor countries must do to escape persistent poverty. Even while development lingo has evolved to include terms like ‘local involvement’ and ‘community input’, no project is complete without the messenger experts of the West arriving to impart their pearls of wisdom.

Behind all of this, there is a hierarchy at work and it always involves donor countries and their experts being at the top. This is even more visible in public presentations of development work at this or that conference; in one example, noted in the report (but recurrent everywhere), an organiser had to fight to ensure that at least one Arabic speaker be included in a panel on international development in the Middle East and the North African region.

It’s not just panels and experts that are the problem; it is also the impact of these interventions on local populations. Take, for instance, the issue of ‘capacity building’, a term of art deployed when aid is handed out in poor communities but little improvement is seen in their metrics.

At this point, ‘capacity building’ enters to save the day, that is, to introduce skills, such as financial management, entrepreneurship, etc that would hypothetically enable better results and prove the development programmes effective after all. Few of these ‘capacity-building’ programmes actually deliver the promised, improved results.

The reason is simple. Contrary to the assumption that aid grants exist solely to eliminate global poverty in the world’s most wanting populations, the international aid system is also a moral hierarchy. The aid grantors are at the top; they have the most and know the best, but in addition to all that they are also morally superior, willing to grant assistance with little expectation in return. They are the world’s altruists, whose purity of purpose lends them the authority that no others possess. They can pretend that they are doing good while expecting nothing at all in return.

When this moral aspect of international aid and aid giving in general is noted, the international aid system can be recast not as a means of actually helping the poor (because visas and labour mobility would accomplish this with far greater efficacy) but rather a means via which a moral hierarchy is created and maintained — the world’s wealthy, also the world’s noblest, inhabiting its summit, and the wanting at the bottom.

Seen against this, the purpose of development programmes may not actually be to reduce poverty or eliminate it but rather to enable the continued existence of this moral hierarchy. Per its dimensions, the world’s poor are not simply to be pitied but also morally wanting, often too lazy or devoid of initiative to figure out how to lift themselves out of their hapless circumstances. They are the ignoble, always awaiting alms from the good and noble.

Permitting some programme of labour mobility would dismantle this structure, whose moral currency permits the West to justify wars, trade restrictions and so much else that enable the maintenance of Western dominance. Research shows that an individual’s own desire to change his or her circumstances, one that aligns with the provision of work visas, is the best predictor of success in escaping poverty. Even while development professionals create metrics for this and that, measure effectiveness through complex statistical models, these basics that show a better route than the system of international aid are ignored.

Even while virtual platforms of communication enable organisation and discussion across national and continental boundaries and time zones, even as jet travel puts the world at our disposal and makes movement across borders a regularity, Western countries continue to rely on the archaic premises that borders are real, racial and religious difference are threats and the basis on which opportunities are distributed. It is not the lack of capacity or initiative among farmers in sub-Saharan Africa or shepherds in Ethiopia, then, that explain the persistence of global poverty, it is the inability of these people to travel freely to work where the jobs are.

Who do I blame? Eight reasons we ended up in this Brexit mess

Ian Jack in The Guardian

Who’s to blame? There’s no need to ask for what. The problem is where to start. In history lessons at my Scottish high school, the teacher would first divide the causes of a war or other catastrophe by numbers: 1 for long term and 2 for immediate; and then subdivide those broad categories by capital letters, A and B, and so forth; and further subdivide those categories by Roman numerals, (i) and (ii) and so on; and then subdivide again by small letters, (a) and (b) etc. All of which we would copy into our jotters with our Platignum fountain pens. So that the German gunboat sent to Agadir in 1911 found its place as 1C (ix) (d) under nationalism, colonialism and Franco-German rivalry in the list of underlying reasons for the first world war.

It would be good to crystallise the causes of Brexit in a similar tabulation – to have them pinned down and ranked in order of importance so we could understand how it happened, like a soldier in the Flanders mud at last establishing the chain of events, beginning with the award of Bosnia-Herzegovina to Austria in 1878, that had led to his present awful position.

But there isn’t room for that degree of precision. In any case, it’s hard to be so precise. The reasons that follow mix the broad and the narrow.

1. Deindustrialisation The 1980s changed Britain, most of all above the line between the Wash and the Bristol Channel. Between 1979 and 1986, jobs in the manufacturing industry shrank from 7m to 5.1m. Of all the jobs lost, in services as well as manufacturing, 94% were to the north of that line. Deindustrialisation neither began nor ended in the Thatcher years, but it was under Thatcher’s premiership that shutting down factories, shipyards and mines began to seem like a perverse government ambition rather than the consequence of economic misfortune. Wealth and opportunity moved south. The social ruin was terrible. Skills were lost, traditions ended. Part of what it meant to be British disappeared. What was supposed to happen to places such as Oldham and Paisley? Nobody knew. Worse, it seemed nobody cared.

2. Immigration “Nobody asked us,” said the beleaguered inhabitants of the old industrial settlements, and it was true: nobody had. Nor had anyone explained that we, the natives, would need to think differently about where we lived and the kind of people we were – that integration, if that was the hope, needed adjustments on both sides. Nevertheless, immigration had begun to die as a political issue until, in 2004, Tony Blair’s government decided to open the UK labour market to the eight eastern and central European countries that had joined the EU. Only two other member states, Sweden and Ireland, did so as freely. Between 5,000 and 13,000 migrants were expected; within the first year, 129,000 turned up. Blair and other senior Labour figures later conceded they had made a mistake. “Nobody asked us!” said the people who felt strongly about it. (And then, in June 2016, somebody did ask.)

3. Cultural dementia The phrase is the title of a new book by a historian of modern Europe, Professor David Andress, who argues that France, the US and Britain are all engaged in “particular forms of forgetting, mistaking and misremembering the past”. This is more deadly than straightforward nostalgia, which is a form of homesickness. As a population we are older than we have ever been, but in Andress’s words we seem to be “abandoning the wisdom of maturity for senescent daydreams of recovered youth”, and along the way “stirring up old hatreds, giving disturbing voice to destructive rage and risking the collapse of [our] capacity for decisive, effective and just governance”. An example of the daydreams is the belief that the nations of the old empire are “queuing up” to sign trade deals with the country that once ruled them. Empire 2.0.

4. The Dam Busters Last year, the Sun campaigned for a knighthood to be awarded to the last survivor of the RAF crew who carried out the bouncing-bomb raid in 1943. “Give him a dam gong!” was the front-page headline – an adjectival pun. I was in the local newsagent that morning when a man came in, saw the Sun and shouted passionately: “Yeah, give him a medal. If it weren’t for fuckers like him we’d all be speaking fucking German.” I grew up with war films and saw The Dam Busters when it first came out in 1955. Somehow, for reasons I’ve never seen successfully explained, England’s enthusiasm for the second world war (or an Anglocentric version of it) has grown as the event itself has receded, perpetuating old notions of difference and moral superiority. This leads us to ....

5. English exceptionalism Sitting at the top table of nations, punching above our weight, a freedom-loving people ever ready to fight faceless bureaucracies and red tape (Brussels now, but formerly “the little Hitlers in the town hall”): thanks to these predominantly English ideas, especially popular among Tory party members, the UK has fought an expensive battle against the force of gravity throughout my lifetime. Since the day, in fact, when the foreign secretary, Ernest Bevin, wanted an atom bomb with “a bloody great union jack” slapped on the side of it.

6. The playing fields of Eton Their damaging contribution to contemporary British politics includes David Cameron, Boris Johnson and Jacob Rees-Mogg: a too-confident incompetent, an opportunist and a cartoon version of the ruling class. The first is especially hard to forgive.

  An anti-Brexit campaign bus in London. ‘It would be good to understand how it had happened, like a soldier in the Flanders mud at last establishing the chain of events that led to his awful position.’ Photograph: Jack Taylor/Getty Images

7. The newspapers Graham Robb concludes his recent book about the English-Scottish border, The Debatable Land, by wondering how the Europe referendum could have such different results in contiguous constituencies on either side of the boundary. In the north, 56% voted remain; in the south, 60% voted leave. Migrants are sparse in both places. Robb thinks Scottish voters had been “sensitised” to the benefits of EU membership by the independence referendum of 2014, while on the English side “confusion and ignorance” flourished. Robb blames poor education, but what about the Daily Mail, the Sun and the Telegraph? The electoral influence of newspapers may shrinking now, with their circulations, but they are far more rabid in England than in Scotland, and inform far more of the public debate.

8. Complacency During the Scottish referendum campaign in the summer of 2014 I met a painter and decorator on the island of Bute who said he was voting for Scottish independence. “You have to.” Why? He knew people in Sunderland, “and every one of them wants to leave Europe”. Sunderland, with its big car factory that exported cars to the continent? Surely not. “Yes, they want to leave.” He laughed at the daftness of it. I didn’t believe him.

Trump an evil genius who wrongfoots opponents who underestimate him

Gideon Rachman in The Financial Times 

When Donald Trump described himself as a “very stable genius”, even some of his supporters sniggered. The US president is clearly not a genius in any normal sense of the word. Rex Tillerson, his own secretary of state, is reputed to have described his boss as a “f***ing moron”. 

 But Mr Trump has a legitimate claim to three other kinds of “genius”: political genius, instinctive genius and evil genius. Moral disgust with Mr Trump means that his opponents are reluctant to credit him with any kind of intelligence or success. But that kind of thinking, while understandable, is also dangerous. It is one reason why the president frequently wrongfoots his opponents. 

 As Mr Trump pointed out, when making his own immodest claim to “genius”, he achieved something unprecedented in modern American history. He was a complete political outsider who won the presidency on his first attempt. His enemies would point to the current government shutdown to suggest that the president is nonetheless completely unfit to govern. But Trump supporters will respond by pointing to a growing economy, and the passage of the first large-scale tax reform in more than 30 years. 

 Mr Trump campaigned on themes — protectionism, isolationism, opposition to immigration — that the political establishment was convinced were sure-fire losers, and even un-American. His political instincts told him otherwise. Steve Bannon, Mr Trump’s estranged campaign manager, was the man with the grand theories about economics and culture, larded with references to obscure and sinister European philosophers. Mr Trump was guided by an instinct that told him that he could smash taboos and not just fail to pay a price, but actually be rewarded. 


 His ideas about race and immigration are nasty — but they are also widely shared, and not just in America 


The number of Mr Trump’s offences against truth and decency are too long to remember, let alone list. But they have a common theme. Time and again the mainstream media (of which I am a proud member) would proclaim that he had gone too far this time and that he was surely finished. Time and again, Mr Trump would prove them wrong and come back stronger. The things that failed to kill him politically — in particular racism and misogyny — actually made him stronger. 

 That is why it is also legitimate to describe Mr Trump as an “evil” genius. He has deliberately used lies and offensive language to stoke up America’s culture wars and racial tensions, confident that he will benefit politically. There is a direct connection between the current row about the president’s complaint about immigration from “shithole countries” and the campaign that launched his political career — the “birther” lie that President Barack Obama was not born in the US. 

 Mr Trump and many of his supporters are tacitly defending the idea of America as a “white country”. The president’s opponents are right to describe this as a racist vision. But they may be wrong in thinking that this is a decisive argument. By the 2040s, the US is predicted to be “majority-minority”. Whites will be still be the largest ethnic group in the country, but they will be less than 50 per cent of the population. By railing against Mexicans, Muslims and Haitians, and calling for more immigration from Norway, Mr Trump is appealing directly to voters who feel angry about that racial and demographic shift. The current government shutdown is also linked to these issues, since it is caused by the president’s refusal to accept an amnesty for illegal immigrants who arrived as children. 

 It should never be forgotten that a majority of white Americans voted for Mr Trump. Are these voters likely to turn away in disgust now because of the president’s “shithole country” comments? Or are they more likely quietly to agree? The record suggests that Mr Trump knows exactly what he is doing. 

 His ideas about race and immigration are nasty — but they are also widely shared, and not just in America. Japan accepted 28 refugees in the whole of 2016, and precisely three in the first half of 2017. It is virtually impossible for non-ethnic Chinese to gain citizenship in the People’s Republic of China, whose citizenship laws make explicit reference to “Chinese blood”. The EU has been split down the middle by the Polish and Hungarian governments’ refusal to accept EU-mandated quotas of refugees. The demand to “take back control” of British borders was fundamental to Britain’s Brexit vote. And the decline in Angela Merkel’s political fortunes in Germany has been closely linked to the chancellor’s decision to open her country’s borders to more than 1m refugees. 

 No European country has yet elected a Trump figure. But the continent’s politicians are tying themselves in knots trying to combine liberal principles with practical politics. President Emmanuel Macron speaks the language of tolerance, but is actually speeding up deportations of illegal migrants and tightening border controls. And nobody in Ms Merkel’s CDU party is campaigning for the Hungarian government to rip down the border walls that helped to stop the flow of refugees into Germany. 

 The fears and hatreds that the US president exploits exist well beyond his base. Liberal politicians need to find more effective policies and language to deal with those fears — or the “very stable genius” may continue to outsmart them.