However much you think Spurs need to spend, double it

We think Todd Boehly is an idiot, but it may be he alone knows how much investing in a new squad really costs, whilst we continue to underestimate it

The “ENIC Out” movement, which is seemingly gaining traction, has a number of complaints: the pace and scale of commercialisation, the prices of ticketing and matchday experiences, the incoherence of managerial appointments to name a few. But more than anything, there is a sense that Spurs just will not spend what is necessary to take the squad to the next level. The recent overreaction to the momentary news that Pedro Porro might not sign was a case in point.

I have previously written about how poor Tottenham really are and why the fans are somewhat wide of the mark in their financial expectations – particularly when unhelpful and misleading news comes out about “record profits” or our wealth rankings. But here I want to consider how misleading the headline numbers are about what is needed or how much a certain amount buys you, since we supposedly know what the gaps we need plugging are. A central defender and an attacking midfielder, for instance, will likely cost us some £125m between them. Factoring in another young talent and we can round that up to maybe £150m – the amount, incidentally, that ENIC put into the club back in the summer.

But the problem is this: that £150m will get you two players that you need, in theory only. The reality is that one of them will be a dud, and possibly both. We may need at least one more player, if not two more, just to bring us the likelihood of two decent players who fulfil our potential. This is a leads us to a risk-adjusted spending of more like £250m-£300m.

To think about how much we need to risk-adjust, I have gone back to every transfer Tottenham have done since the summer of 2015, and assessed broadly how successful they were for us. Why 2015? Well, it was the summer after the new 2016 Premier League TV rights package was announced in Feb 2015, leading to clubs spending more money in anticipation (the TV rights have stayed static since then). As an example, it was the summer of Anthony Martial’s £36m-rising-to-£58m transfer to Man Utd, a symbol, if ever one were needed, of the new age of spending.

Source: Sports Business Institute

Looking at these transfers, we then need to think about what the “hit rate” has been. For instance, if one in two signings have been successful, this would be a 50% hit rate and based on this, the amount we need to spend to get £150m of value is £300m. If only one in three signings have been a success, we would have to triple our spend, with £150m becoming more like £450m of real spending required.

There are two ways of looking at our hit rate: simple numeric (did a given player succeed?) or weight-adjusted (how much of his transfer fee as he worth?). Neither is perfect. The weight-adjusted number makes it difficult to account for free signings such as Perisic or Lenglet. The simple numeric figure treats players as more or less equal. I lean towards the simple numeric however, because for me the transfer fee is a function of the market you cannot control. Much as players supposedly try to ignore their own transfer fee in terms of the weight of expectation, the reality is that if we need a player for that position, we need him whether he costs £100m or is free.

Based on this, I have had a go at allocating Tottenham’s hit rate over time since 2015:

Source: Transfermarkt
Note: only total final fees are included (eg Lo Celso, Bentancur); exclludes players who are too early to tell

From this analysis, in turns out that indeed our hit rate on weight-adjusted transfers is about one in two, and on the simple numeric basis it is even worse, one in three.  We can argue all day about whether the success allocations I have given are right or wrong, but in the end this will not affect the final percentages much. I think it conveys a sense of, did a given player fulfil the expectations we would have had of them, particularly in making regular first team appearances, whilst he was there?

Taking these numbers therefore, to get the aforementioned £150m of necessary talent through the door, would actually cost ENIC between £300m and £450m of spending, given our track record. Is that a lot of money? Yes – but it also puts into perspective why the other clubs have been spending so much. If they are splashing out £1bn in transfer fees, the likelihood is they are only getting £300m – £500m in actual talent. The headlines are distorted.

So then the question arises, are we better or worse than the others? I have gone into a single other example below, that of Chelsea, due to their recent big spending. Comprehensively analysing other clubs is not only time-consuming, but I also do not know their players well enough. The assessment of Chelsea really is based on a mixture of comments from Match of the Day, Gary Neville and Twitter. I think it’s a reasonable reflection, but stand to be corrected.

It makes interesting reading though:

Chelsea have, if anything, been even worse than us over this period. And this makes intuitive sense of course, since for every N’Dombele they have had a Lukaku and a Pulisic thrown in for good measure. If anything, our possibly better hit rate on a weighted basis means we are more careful with our money, and do better with more expensive signings. Unsurprisingly.

To round this off, I would add one additional measure, which is that Chelsea do of course have a much better academy than us. Against our Harry Kane and, to an extent, Harry Winks, Chelsea’s free production list includes:

We can reasonably say that this has not only produced sellable talent, but has over time strengthened their squad significantly for a period. On this score, we could improve. Are any other clubs materially better than us? Off the top of my head, only Man City feel like they hit the target more frequently than others, and this may be poignant.

To bring this to its conclusion, when we think about our transfer needs, we should be realistic. If we feel we need, say, £150m of talent, double it (or more). If we have £150m to spend, halve it (or less). And do not be distracted by the headline spend of others – whilst they are buying more talent, they are not quite pulling as far ahead of us as we fear. What we need is to either improve our hit rate considerably (the role of Paratici et al), improve our academy, or find a backer who will spend not only what they need, but twice as much as that, just for us to make even a small improvement. Because the absolute money numbers associated with life in the Premier League will continue to astonish us – and Todd Boehly may well be ahead of the game on this.

Fiorentina, not Napoli, are the Tottenham of Serie A

Always attacking football; always some of the best players; always a few steps short – this is what unites two top table outsiders

Regular readers of this blog will know of my affinity for Spurs. So deep is it, in fact, that I actually enjoy periods like the current one, where hope and expectation collide with the reality that is, and has for my entire life been, Tottenham.

The side that I first came to support was that of Gary Lineker and Paul Gascoigne; fresh from my footballing consciousness having been waken by Italia ’90, and having just moved to the UK that summer, it was natural that as I cast around London clubs, Spurs were one of the obvious choices. Then came the highs – the FA Cup in 1991 , the arrival of Jurgen Klinsmann, the dazzling play of David Ginola – and the lows. The FA Cup in 1992; the 1995 FA Cup semi-final against Everton and Klinsmann’s departure; eventually the slow, excruciating 2000s. Cutting one’s football teeth on the Spurs of the 1990s was … interesting.

But another thing happened in that decade: my first ever live football match which was an astonishing 7-1 victory that Fiorentina chalked up against lowly Ancona during the 1992-93 season of Serie A, and it is a match worth revisiting for a number of reasons:

Because in a season when Tottenham, with Lineker and Gascoigne gone, were the team of Dean Austin and Vinny Samways, Fiorentina were a world apart. I knew none of these names at that age, but I was watching Gabriel Batistuta, Stefan Effenberg and Brian Laudrup. The season was worth noting too, for Fiorentina were second in Serie A at Christmas that year, only to suffer the ignominy of relegation five months later. Batistuta, some may know, heroically stayed on in Serie B.

And for all the discussion that circulates occasionally about which team is the Spurs of Serie A – and in recent years, that has been Inter and more recently Napoli – I believe Fiorentina offer the best parallel. Not just because I happen to support both, of course, but because of the very real historical similarities which lead, in many ways, to fans with the same mindset. Below are a few reasons why.


The first is the alarmingly similar timelines between the two clubs. To put it bluntly, despite always being amongst it, both saw their glory days in the 1950s and 1960s. Fiorentina won their two Scudetti in 1956 and 1969; in between they reached a European Cup final in 1957, losing to the great Real Madrid side, before winning the Cup Winners’ Cup in 1961. Spurs, meanwhile, managed the first ever Double in 1961, and two years later also won the Cup Winners’ Cup. Both teams also made something of a habit of winning their domestic cups, two for Fiorentina and three (including that Double) for Spurs.

Fiorentina’s Cup Winners’ Cup final in 1961 (left) and Tottenham’s winners two years later (right)

Both clubs then had unremarkable 1970s, before making staggered comebacks in the 1980s for Spurs and 1990s for Fiorentina. But it cannot mask the most basic point that both clubs saw their glory days, in absolute terms, many eons ago. To an extent therefore, both clubs’ fan bases live disproportionately off the hero figures of a very different era, the Blanchflowers and Hamrins, the Greavesies and Antognonis – the curse of being a club with long traditions.

Top table

Secondly, despite meaningful success being rather long ago, both clubs frequently occupy a status that is considered at or around the top group within their league. Serie A aficionados will remember the era, in the 1990s, of the so-called ‘Seven Sisters‘, when Fiorentina ranked alongside Juventus, the Milan and Rome teams and agricultural powerhouse Parma in being considered perennial challengers for lo Scudetto.

Tottenham have for some years now been considered part of a Premier League Big Six of course; but the inception of the competition in 1992 is perhaps more telling. Spurs were part of a ‘Big Five’ then, large enough in terms of support and brand to be founders of the Premier League itself, alongside Liverpool, Manchester United, Arsenal and Everton. This confluence of long-running status with mixed recent success is a particularly curious one, and both clubs are to an extent, disliked for it.

Supposed ‘Spursiness’

Thirdly, a feature of both clubs’ mixed success is the perennially favourite issue of what others often referred to as “Spursiness”, the inability to get across the line despite fairly regular progress in competitions. This needs definition, of course, but it basically means failing at the final hurdle or losing matches we really should not, and often based on random things outside of our control. Lasagna-gate and Sissoko’s hand-ball after 22 seconds of the 2019 Champions League Final are marks of this for Spurs, or in my mind, losing the FA Cup semi-final against Manchester United in 2018.

Fiorentina have also lost a European Cup Final, but greater similarities lie in the failure of the side in the 1990s to capitalise on a once-in-a-generation squad to do better. Taking the Champions League by storm once or twice is all very well, but the side of Batistuta and Rui Costa always found themselves against Juventus and Milan who had a touch more, reminiscent of Tottenham’s 2015-2017 period where Kane and Dele consistently came second to Leicester and Chelsea.

Gabriel Batistuta and Manuel Rui Costa in 1998 (left) and Harry Kane and Dele Alli in 2018 (right)

Batistuta had to leave Fiorentina to fulfil his ambition of finally winning Serie A, with Roma in 2001. Hopefully not a portend of things to come with Kane.

Real “Spursiness”

This leads us nicely to the last point: players and style. Because more than anything, what unites Fiorentina and Tottenham is that regardless of how well we are performing, we often have some of the absolute star talents of the age, punching well above our station. Fiorentina are, above all, famous for a line of fantasisti including Giancarlo Antognoni, Roberto Baggio and Manuel Rui Costa. It is difficult to identify three greater creative talents, certainly in the history of Serie A. Even when Fiorentina were not winning trophies, they were still had game-changers.

Tottenham share this heritage too, since like Fiorentina, the club is known for a style of attacking football and the fans demand authentic entertainment even at the expense of winning (the Spurs side of this is well known, but it takes a lot to maintain this mentality in Italy.). Over a similar period, Spurs was the platform for talents like Glenn Hoddle and Paul Gascoigne – both arguably the last examples of game-changing creative talents in English football. Certainly the England team have not seen their like since.

This is not just a cheap point about both teams having good players from time to time. It is about consistently showcasing players who are amongst the very best in the world, in a system that shows them at their best, even when we are not commensurately successful. ‘Spursiness’ disparagingly refers to the lack of success, but surely the most notable thing is that even when we are not winning, we still have great, memorable players that everyone else wish they had.


What’s the point of all this? Well mainly, it’s to satisfy myself that there is some poetic link between the two teams in my heart. But were I to be more pretentious, I would say that the two fan bases are similar and should consider themselves so because of being united in the greatest frustrations, and greatest beauty, of the game. Both clubs’ fans are committed to a side that does it ‘right’, and that does not sacrifice style for the heartless wins. Does it mean we have a weak mentality? Perhaps. But it also means we can continue with a sort of righteousness which, if nothing else, drives other fans up the wall. That is worth celebrating.

Batistuta uniting Tottenham and Fiorentina against the Scum in 1999

An Argentine-Brazilian currency is insane, but still interesting

Monetary unions rarely fall down on their economics, but do so rather on the political competencies of the participants

The reaction to this week’s announcement from our Argentine and Brazilian friends, of tentative plans for a monetary union, met with predictable – and mostly justified – derision. “This is insane“, tweeted Olivier Blanchard from that bastion of economic propriety, the IMF. Below the line comments on the FT included one wag which described this as “a version of the Euro where every member is Greece”. And no wonder, since the announcement was accompanied by the kind of hubris more befitting Argentina’s junta days than now – “It is Argentina and Brazil inviting the rest of the region” they said, as though they occupy anywhere near the global status of their erstwhile Brazilian partner these days.

Yet, this is consequently a poignant moment to reflect on currencies, economies and the lessons of the Euro – to date, the only effected currency union in existence (there are a few others, but these are paltry). There are in reality two main drivers of such things: one ‘imperial’, the other ‘democratic’.

The ‘Imperial’ model of monetary union is where the economics of one power dictate the others. Historically this includes arrangements such as the Sterling Area, but in today’s more consensual world it more regularly indicates some states wishing to copy or import the strengths of a neighbour. In the Euro, it was very apparent that the motivation for many countries was the ability to import Germany’s low inflation and depreciation – basically, to emulate and outsource the role of the Bundesbank. This was certainly true of Italy, and even if they do not admit it, the French. The Euro became (and is) and consensual imperial project on behalf of Berlin. I, for one, have no qualms at all about such a thing.

But the Euro, and its predecessor the ERM, was also conceived of as the other model, the ‘democratic’. In this world, the new currency would marry German manufacturing with French agriculture and British finance. This provided not only a balance, but also allowed the EU to exceed the sum of its parts – it relied on complementarity and relative equality. At that point, too, the only countries involved were wealthier ones, not the collection of rich and poor that it became. The problem was that over time, two truths emerged: Britain was too Eurosceptic to join the Project, and France was in fact nowhere near equal to Germany. Therefore, the ‘imperial’ model superseded the ‘democratic’.

This was aided by the fact that Germany, suffering from the after-effects of reunification, entered the final straight pre-Euro in an artificially depressed exchange rate. The best way of looking at this is through this exchange rate effect on current accounts over the period:

Source: Eurostat

The reversion of this undervaluation over time inevitably led to German economic and monetary dominion over the rest of the Eurozone. Economic empire became a reality and, although there are plenty of high profile problems requiring German taxpayer bailouts of, say, Greece, this simply became the “cost of empire”, in exactly the same way the UK home population had to cover the balance sheet of the British Empire after the 1850s.

If we therefore look at the proposed Argentine-Brazilian ‘Sur’, we have to ask ourselves before we dismiss it, what are the objectives and how might they be achieved? The Argentina peso is a basket case, but the Brazilian real is not exactly the Deutschmark either. Regardless of recent crises therefore, the Sur must be based on some sort of complementarity: theoretically a commodity exporting superpower whose overwhelming dollar reliance might be transformed into a monetary of its own, aided by some flattening of the cycles between various commodity prices. The trade between the two countries, interestingly, is much more diverse than one might think:

Brazil exports by value to Argentina (left) and vice versa (right) in 2020

Source: The Observatory of Economic Complexity

Now, none of this is to suggest the Sur will work. On the contrary, guessing today, it seems unlikely to ever take form. Neither Brazil or Argentina represent a clear imperial winner over the other. Neither is notably better managed (though Lusophile lobby would contend that Brazil has had a better recent innings). Yet neither are they clearly complementary: although Brazil is Argentina’s largest export destination, at just 14% this is not determinative; on the other hand Argentina accounts for just 4% of Brazil’s exports, dwarfed by its relationships with China and other emerging markets.

In fact, far from being different, Argentina and Brazil are probably too similar. Apart from a history of poor public policy, the strengths outlined above are their weaknesses too: both countries are still overly focused on commodity trade. Dollar-based raw materials account for two thirds of each country’s exports. Indeed logically, both might be better adopting the Dollar instead of looking at such a doctrinaire project – Argentina’s experiment with the peg over the 1990s, whilst it collapsed ignominiously at the end, was in retrospect quite successful at the core objective of halting inflation – which has since returned with a vengeance.

So neither model of currency union are obvious, for now. Yet, the reasons it may succeed or fail ultimately are not economic, since economics is the servant of politics. The Euro’s greatest weakness has not been economic but political, the Project falling between these two contrasting motivations of democracy and empire. If the Sur starts life with a clearer assertion at the outset, it may have some rationale. The lack of an obvious imperial winner between the two countries, ironically, actually gives the project greater clarity – this will be democratic and complementary, or it will be nothing.

It will probably be nothing, of course. Or, we will quickly discover that Argentina is in such a hole that Brazil effortlessly becomes the imperial power in this relationship. Either way, I await the political will behind this idea to manifest, before I judge the dream quite so harshly, and there remains a lot to learn from the Euro along the way.

In defence of … Empire

The Muse bids me consider the good, the bad and the necessary forms of power

Two decades ago, the subject of empire, which had long fallen under the pall of apologetic navel-gazing in academia and in political discourse, experienced something of a revival. On Home Counties coffee tables in around 2003 emerged books such as Niall Ferguson’s Empire: How Britain Made the Modern World and, a couple of years later, his follow up Colossus: The Rise and Fall of American Empire. Both were made into TV series, leading to rather bitchy comments from my own tutors at Oxford over exactly how much of a sell-out he had become. Ferguson moved on soon to NYU and latterly Harvard, where he continues to be a proponent of sorts, of the imperialist revival.

He was not the only one however. A far more academic book, though still accessible, from a few years later in 2009 was John Darwin’s After Tamerlane, which charted the Asiatic land empires over the period 1400-2000 and took a nuanced view on empires, their existence, longevity and, buried amongst the prose, their benefits. The obvious point being that:

[A] propensity in human communities has been the accumulation of power on an extensive scale: the building of empires. Indeed, the difficulty of forming autonomous states on an ethnic basis, against the gravitational pull of cultural or economic attraction (as well as disparities of military force), has been so great that empire (where different ethnic communities fall under a common ruler) has been the default mode of political organization throughout most of history. Imperial power has usually been the rule of the road.

On the other side of the Atlantic, the process of soul-searching brought on by the foreign policy of George W Bush generated much writing, with 2010 alone producing three prominent volumes in the shape of Empires in World History by Jane Burbank and Frederick Cooper, The Rule of Empires written by Timothy Parsons and Empire for Liberty by Richard H. Immerman; this unsurprisingly coinciding with the accession of Barack Obama, probably the most forthright anti-colonialist (and perhaps anti-British) man to occupy the White House since Grover Cleveland in the 1890s.

However, after that burst of activity, Empire has again experienced decline in the perceptions of the liberal public – not least through the sophistry of race relations which re-emerged through the 2010s, accelerated by Trump’s election, BLM and in my world, the absurdity of movements such as #RhodesMustFall (though I am glad to report that as of this moment, Rhodes’ statue still looks down majestically from its cupola on the High). Iraq and Afghanistan have gone the way many feared; perceived Russian and Chinese aggrandizement continues. ‘Empire’ has not had a good innings. Yet the lessons about why they are good, bad or necessary are still overlooked, and I feel obligated to rehearse them once more.

First, Empires bring peace; and their decline brings conflict. Whilst this may sit in cognitive dissonance with how history is taught today, the reality is that for a majority of peoples governed under imperial structures, lives were more stable under this regime than what they might otherwise have. This is not only empirically true – Spain and North Africa for instance were largely left in peace for three centuries between the Punic Wars and the Crisis of the Third Century, despite not being Roman “heartland” – but also logically. See also China, Byzantium, the British and French empires and even the dysfunctional American equivalent (though as Ferguson says, Americans just aren’t very good at empire). Ethnically-focused nation states must be more prone to friction with neighbours than an empire which is first and foremost self-interested in minimising that friction. No successful empire has ever seen greater violence and destruction in its borders, than its alternatives.

Secondly, Empires bring prosperity. Much like any political system, the proof is in the pudding and there are very few examples of empires which successfully exist for long based only on coercion. Even the Empire in Star Wars, for instance, would have had more adherents than resistance and the Jedi should probably have asked themselves why they were in such a minority for so long – probably because their own scattergun and slightly racist alternative proposition could not even persuade Ewoks, let alone the merchants, professionals and other middle classes of the Empire that their mess was better. Most complaints about empire comes from self-indulgence, and nowhere was this more plainly set to rights than in Monty Python, whose sketch in The Life of Brian was a thinly-veiled lampoon of anti-colonial opinion across Asia and Africa:

Lastly, empires bring diversity. Given the propensity to celebrate everything “D&I” these days, it is worth pausing to think about how much empires, rather than nation-states, and created and sustained true multi-culturalism. Ultimately, empires are agnostic about the culture they carry, and as they expand absorb ever greater amounts of what they oversee. It is notable for instance, the Prime Ministers such as Thatcher and Blair were eminently more parochial than similar bourgeois classes a century earlier, whose relatives would have grown up in India, the Sudan and elsewhere serving as bureaucrats and engineers. Whilst Europe has provided some remedy to this parochialism, it is not complete: since the decline of empires in the 1960s, modern (western) nation states and their governing classes know less about the world around them than ever before, leading to everything from half-baked trade pacts like the WTO to neo-conservative adventures in the Middle East. The borders of empires are soft and porous; the borders of nation states are hard – and with it hardened views on identity and inclusion.

Coming from a family that emigrated under the auspices of Empire from China to India to Britain, I take a personal pride in the system that allowed for this to occur. Britain offered an attractive cultural and civilisational prospect, of course, and its contemporary weakness in this needs addressing; but more importantly it was the infrastructure of empire that served so many millions of people so well, for so long. It gave opportunity, egality, stability to the very poorest in society, at the expense, ironically, of the “home” nation.

Empire is here to stay, not just because of legacy but because its really quite a popular system. The definitions may vary over time, but the principles of expansion and peaceful, productive dominion of a periphery by the centre will remain permanent. A decade ago I argued that we were witnessing the emergence of a new “community of empires”, given the way not only Russia and China, but also India, Brazil and others were run. Some of this has come to pass, others are slow burning. But before we continue to trample the legacy of empires, we should remember why they appealed; since they are an inevitability, perhaps it is better we embrace their positives rather than engage in futile self-flagellation.

In defence of … Anglicanism

The Muse rallies to the Church Militant

It is perhaps too easy, when reflecting on the Church of England, for one’s mind to come back to Lord Melbourne’s supposed comments, later oft-quoted by Churchill and others. First, he may have mused that “things have come to a pretty past, when religion is allowed to invade the sphere of one’s private life”. Latterly, he is claimed to have said that “I must be considered more of a buttress than a pillar of the Church, since I support it from the outside”. Apocryphal or not, such is the nature of Anglican navel-gazing that it becomes only one short jump from that, to a certain Oxford Chaplain in the early 2000s making the astonishing claim (belied by the monotonous drone of its delivery) that “Anglicanism is practically atheism”.

(Never mind that Melbourne was a Whig, mocking the Tory Party at Prayer; nor also that Melbourne famously was involved in two sex scandals before his term of office was up)

Some may be surprised by the strength of my religiosity, given the rationalist leanings of my writing. However upon leaving Oxford I was at one stage minded to emulate my close friend in taking Orders at St Stephen’s House, even if one of my motivations was a very temporal love of the vestments. Anglicanism in particular burns strong within me. A good friend of mine recently decided that it was of little consequence to convert (in my mind, rather too glibly) from Lutheranism to Catholicism, citing the latter’s stauncher conservatism. This caused a rare rupture between us, and also provoked me to revisit then underpinnings of the faith that called to me all those years ago; because amidst all the clowning of recent decades that brought us everything from schism over gay bishops to payday loans, taking us from Thomas the Beckett to today’s Pound Shop iconoclast Justin Wellby, the underlying reasons for adhering to the Church of England, for all its faults, remain clear.

The first is theological. There is little point dwelling on the underlying arguments for or against Transubstantiation or Grace, or justification through “faith alone”. What you believe is what you believe; but it is important to focus on the fact that for all her bells and smells, Anglicanism is a cornerstone of Protestantism, which itself is, in the words of historian JM Roberts, “the closest thing England came to have as a national identity”. Whilst one can quibble about some of the liturgical and even ecclesiastical disagreements between denominations, the gap between Protestantism and Catholicism is much clearer and unbridgeable. And no amount of watering down of Anglicanism dogma changes the fact that it is not, even at its Highest, Papist.

The second is intellectual. Readers of this blog will note the importance I place on the need for intellectual coherence and defensibility. Of the various Christian denominations, Anglicanism is by far and away the most intellectually capable and rigorous. Arguably, the Church of England is the only mainstream denomination which sustains a robust intellectual tradition, and it is no surprise that we created all the intellectual lights of other denominations too as a result. At opposite ends, both Henry Newman and John Wesley started life in the Church of England before going off to renew Catholicism and found Methodism respectively. Anglicanism’s very Establishment is why this is true, and its interconnectivity with the institutions of education and learning are the evidence. And of course, Newman and Wesley were both intellectually vibrant whilst within the Establishment; and they both atrophied the moment they left.

Why is this important? Well, faith is all well and good, but intelligence is a gift from God also. As intelligent people, it is right and proper that we seek to square the circle between blind faith and the powers granted us to reason. The Divine Clockmaker demands not only belief in the clock, but an understanding of its mechanics. Therefore any religion which emphasises only the spiritual, to the point even of being anti-intellectual, is being irresponsible towards its adherents. The Catholic Church, of course, is successful amongst the global poor precisely because it aims for the spiritual lowest common denominator; it should be of no surprise that it is so warmly welcomed by cults that, for instance, worship rocks since Catholicism more or less engages in rock-worship itself. Only Anglicanism breaks out of this spiral and in a sense, we have been a victim of our own success. However this is a price worth paying.

The last, and possibly most important point, is civilisational. Outsiders will often mock the provenance of the Church of England as being the result simply of Henry VIII’s proclivity for divorce. To that I say: so what? Faith needs to be theologically coherent, as outlined above, but it also must come from and speak for a people. It is right and proper that the Anglican church is an expression of everything Britain and the Commonwealth is. It must reflect the identity and culture of the temporal powers that underpin it – its churches and cathedrals, its social mores, its language. It is entirely wrong to suggest that a Church should not be so specific as to be “local” to one culture or place, that is precisely what it should reflect. The more it is bound and tied to a geography, the stronger it is – much the same as government or currency. Its ‘exportability’ will then reflect the strength of that underlying culture – much like government or currency. And on this is the strength of its civilisational proposition, and its capability of being Universal.

Because I can say that we have pretty much the best of what every other denomination has, and more. You want bishops? We have a proper Episcopalian Succession. You want some Papal States? We have a whole Commonwealth united in Confessionalism under the King as Head of the Church. You want Protestantism? We practically invented Consubstantiation. You want Church Councils? We have the Synod. On top of all this, we have the pre-eminent choral tradition which puts Catholic services to shame – Evensong is basically one long concert and the Establishment means we have some of the best choirs, organists and composers. Last but not least – and perhaps the clearest expression of how Anglicanism is tied to and enhances the national identity from which it emanates and patronises – we have the linguistic contribution to English from the Book of Common Prayer and the King James Version of the Bible.

Anglicanism is decidedly not atheism. Rather, it is the thinking man’s religion and it is, in concentric circles, England, Britain, the Anglosphere and the Commonwealth. The fact that urban liberals are too uninterested in faith today to recognise this, just as they were under Lord Melbourne and for centuries prior, changes none of this. The Church of England is one spiritual, temporal, ecclesiastical and liturgical whole. It is far too polite to demand being taken seriously; but anyone who disagrees with this is not taking religion seriously at all.

In defence of … a Musical education

The Muse demands I consider what is it that makes one look the most clever

I have had a relatively academic-leaning background, particularly at school. Having attended, each in their own right, “name schools” (or 名校 as the Chinese would call it), where my studies have taken in everything from the use of silk as alternative monetary policy in Middle Byzantium, to the human bitchiness which decided large matters of state in colonial American religion, to the surprising retrogradation in literacy in China during the 1990s, I feel well-placed to observe where learning happens. And surprisingly, when I look back on all the years I spent becoming over-qualified and under-educated, by far the most intellectually rigorous subject has been: Music.

To take a step back, I have been a semi-professional musician through most of life, and (time for a humblebrag) have been involved in top tier choral establishments, understudied at the Royal Opera, headlined at St Martin-in-the-Fields and much else besides. However it was at A-level that I last studied music academically – and yet, despite being at Oxford and Tsinghua and having collected reams of letters after my name, that Music A-level remains the most intense course of studies I have undertaken.

Let us consider what the constituent parts of this course were:

  1. Technical exams – as I recall, two 90 minute exams of listening to recordings, identifying musical language and testing one’s “ear” for marginally off-tune notes in a flurry of orchestral music
  2. Composition exams – I think back in amazement at being made to sit at a piano to compose a chorale in the style of JS Bach, on a given tune, in just 60 minutes
  3. Performance exams – by far the easiest, this comprised submission of my Grade 8 exams, but also involved recordings of group participation
  4. Academic exams – I believe my first ever three hour essay paper (these were to come thick and fast later at Oxford) tackling such pressing questions as – I kid you not – “Discuss the contribution of Handelian organ concertos to the development of concerto-sonata form” or “Do Florestan or Eusebius survive deeper into the Romantic era?

I would make three observations about this which build to my central case as to why academic Music is such a strong subject for any child to take.

The first point to make is the sheer range of demands that Music A-level placed on a student. I do not believe any other subject required such a diverse range of talent, and needed decent quality in each one – just being a great pianist was not enough to pass, let alone obtain a high grade, in this subject. It comprised a properly academic core, but also made you perform and be highly technical and abstract. It is perhaps the most multi-dimensional subject that can be studied, certainly at the age of 16. Being made to digest and memorise a complicated score such as Schumann’s piano concerto in A-minor – its structure, language, tradition and technique – is something I have never encountered since.

The second point is the obvious one that Music remains by far and away the most esoteric of subjects, given its requirement for dealing in the abstract and a mathematical mind. In the Medieval curriculum, Music formed part of the Quadrivium, the Greater Four science subjects and more or less represented the study of numbers in the context of time (the other subjects being Arithmetic, or pure numbers; Geometry, or numbers in the context of space; and Astronomy, or numbers in the context of both time and space). To look at it another way, Music as an art is far more intellectual than, for instance, visual arts and far less reliant only on emotional reaction as a measure of its efficacy – the work of Bach combines both the aesthetic of a Rembrandt with the technical skills of a master watchmaker. Is there a higher intellectual form of artist than Wagner, for instance? Is there even a Wagner equivalent within the other “arts”? I would wager, no.

Lastly, Music makes you a rounded, high-brow person in a way little else does. One of the great things it trains you for is performance – you are spending most of every day performing for someone or other. This constant need to “put on a performance”, and not be afraid of the limelight, but also to work in a form of harmony not found in many other parts of life outside of the sports field, is unparalleled; the ability, too, to “make do” and be pragmatic when things go wrong is equally important. Given the way we are headed on automation and the economy, it seems very likely that the ability to “perform” will be more important than ever as the only human jobs remaining will be those focused around selling and marketing – something Music is inherently suited to.

This is what musicianship is all about – and the long-haired kid displays this phlegm even better

Of course I do not attribute all my development to just one subject, and the above is written with a musician’s right to exaggeration; but it is also not completely tongue-in-cheek.  I rarely meet a group of people of a given industry who have a higher median amount of intelligence than musicians; neither are there many industries that would provide better dinner-party company. Yes, musicianship breeds in-jokes and a certain arrogance (humility and music have not, in my experience, been a natural coupling) but by God does it make fun, interesting people – people who can talk big, entertain spontaneously, pull together groups and networks, and who have a vocabulary which articulates and impresses. The fact that most of this is directed towards complaining about others is by the by; the important thing is that Music makes you look very, very clever.

So parents all! If your child is inclined towards Music, do not start hand-wringing. Your precocious offspring is probably just taking the first step towards become future employable, and annoying though they might become, take comfort in the fact that they will be a better sort of person.

British politics is now unconnected to power – we need leaders who understand this

We should look to candidates who prioritise things they can actually do something about

Politics is fundamentally about power, one would think. Liz Truss barely had any when she arrived; now she has gone. Sunak has a little, but not a lot, more. Boris had it in spades in December 2019, but had lost it by earlier this year. Elsewhere I have written about the extent to which Cameron’s 2015 election victory represents something of a modern high, by mandate and power, albeit subsequently wasted.

Yet the politics of the UK these days is largely reminding me of the quote, usually misattributed to Kissinger, that “academic politics is the most vicious and bitter form of politics, because the stakes are so low”, aka Sayre’s Law. The fact is that, like academics eyeing each other warily across the High Table (Maurice Bowra’s adage that he felt “more dined against than dining” was just such an exposition), politicians of the United Kingdom of Great Britain and Northern Ireland are now squabbling over an ever-diminishing realm of authority, and this should impact electoral choices.

The Truss-Kwarteng debacle a few weeks ago demonstrates the limitations of what an “independent” medium-sized country actually are. Whilst on the face of it we can deplore financial markets and globalisation, and say to ourselves that this happens even to the greatest powers – Bill Clinton’s healthcare reform in 1994 foundered “fucking bond traders” – we also know that size matters. Taking on the financial markets as a large economy is different to taking one on as a small one. This is a rather Manichean world and Britain is showing itself to have neared the dividing line.

Of course, this could all have been better managed and the specifics of the Truss administration made a bad situation worse. But with Sunak coming in, we can judge whether simply a more articulate and deft touch would make the difference, much as Leopold II succeeded Joseph’s reforms in the 1790s. In fact, he will not, because Sunak understands precisely that Britain can ill-afford to operate outside the bounds of economic convention dictated to us, from the major institutions via the capital markets. Britain cannot have a truly independent monetary or fiscal policy, and Sunak will not want to test this again. This is because of two factors: first, Britain simply is not big enough, with an economic hinterland of adequate heft, to support Sterling and the government borrowing markets on its own. It is almost uniquely globalised in terms of its financing and the shift to this model in recent decades (see my previous note on exchange rates) means that Brexit or not, this will not improve. Secondly, Britain is buffeted about by two economic forces – the EU and the US – who do carry their weight. Interest rates in both will effectively dictate British interest rates; the only scope for freedom are in those occasional periods of divergence between the two:

Source: IMF database, figures annual

Interest rates are of course only one lever of economic power (albeit an important one in a financialised economy); but the recent reaction to Kwarteng’s budget shows that fiscal tools are equally to be judged by the narrow minds of financiers of little imagination, and it was not only the exchange rate that collapsed for a time, but also the cost of borrowing which rose (Clinton’s “bond traders” in action). The notions that Britain could just “do its own thing” was always fanciful, at least without accompanying “pain” which no politicians are as yet prepared for.

So what does all this mean? Well for me, as an active Conservative Party campaigner and even one-time candidate, it means thinking about leaders who will actually will do something because they are focused on areas which a domestic agenda can still influence. Truss vs Sunak was a false dichotomy because neither promised actionable agendas. I supported Kemi during the last leadership contest, first because I agree with her, and secondly because those areas were one a Prime Minister of the United Kingdom of Great Britain and Northern Ireland can actually do something about.

I am more or less talking about kulturkampf in a broad sense. Readers of this blog will know that I prioritise issues of identity above most other things because nation-building is both important and something of a lost art in the globalisation age. Kemi’s most impressive speech for me was her response to the House during Black History Month in 2020, where she laid out some very obvious but important points about British culture:

“Our history is our own; it is not America’s. Too often, those who campaign against racial inequality import wholesale a narrative and assumptions that have nothing to do with this country’s history and have no place on these islands. Our police force is not their police force. Since its establishment by Robert Peel, our police force has operated on the principle of policing by consent. It gives me tremendous pride to live, in 2020, in a nation where the vast majority of our police officers are still unarmed.

On the history of black people in Britain, again, our history of race is not America’s. Most black British people who came to our shores were not brought here in chains, but came voluntarily because of their connections to the UK and in search of a better life. I should know: I am one of them. We have our own joys and sorrows to tell. From the Windrush generation to the Somali diaspora, it is a story that is uniquely ours. If we forget that story and replace it with an imported Americanised narrative of slavery, segregation and Jim Crow, we erase the history of not only black Britain, but of every other community that has contributed to society.”

I commend everyone to watch this.

We can debate the specifics of her message here, but the important point is that she can campaign and do something about this. There is a culture war to be won, through the media, through institutions, through agency capture and other machinations if we really want. These are all within the remit of a leader. What she cannot do anything about, is bring interest rates into the realm of fairness for savers and the hard working rather than constantly inflating domestic household debt. At least, not for now – although if you get the identity question right, at some point down the line you can begin to ask the people for the sacrifice needed to finally rectify the economy and bring it back to something which serves the population and not the other way around.

Britain needs to break out of its mindset that it still carries the kind of status and power which allows for true independence. It is this wrongheadedness which led to one specific strand of Brexit support for which I have no sympathy whatsoever – the Dan Hannan school of “Singapore on Thames”. If these politicians spent half as much of their time trying to change things that are changeable, instead of pursuing doctrinaire dreams of economic engineering, Brexit might actually be made to work. In the meantime, the economic shackles we live under continue to demonstrate what a poor economic choice Brexit was. Better panem et circenses.

Not all emerging markets are the same (Part 2)

Tent vs marquee economies (or why Indonesia is bad and Vietnam is good)

I previously looked at the SE Asia economic picture overall and drew out some pretty stark contrasts. I want now to focus specifically on two markets I know well, both of whom have cheerleaders: Indonesia and Vietnam. Only one of them, I would suggest, has a bright future. Against these, as ever, I find it useful to benchmark against China, the one regional example of an economy that has made progress.

In fact, based on statistics previously discussed, even in a basic way Indonesia has constantly under-performed Vietnam (and indeed most peers) over the period 2010-2020:

Source: World Bank, Credit Suisse Global Wealth Report 2022

It is poignant that once we move beyond real GDP, the variation is marked. Both Indonesia and Vietnam have experienced significant population growth – but even factoring that in, Vietnam has sped ahead on a per capita basis. In terms of nominal GDP, Vietnam comes close to China levels of growth and, incidentally, does so with a currency which has not depreciated against the dollar anywhere near as much. In median wealth, Vietnam, coming from a low base and with CPI not much less than Indonesia, is still notably ahead. And lastly in household consumption – that portion of GDP growth that we consider “good growth” – Vietnam is more than double Indonesia even though the latter experienced the greater part of a commodity boom during the period. In other words, Vietnam, from a standing start, has led everyone in the region bar China; and is the only country to come close to matching China’s remarkable overall levels of growth.

So much for the past – but what about the future? Well the problem comes in understanding the structure of the economy, and in particular the effects of inequality, inflation and where relevant, currency depreciation. Indonesia’s under-performance is due to both a long-standing inequality and inability to distribute the proceeds of growth into a mass middle class, as well as peculiar governmental weakness at tackling inflation and currency depreciation, which are linked.

Source: World Bank, Credit Suisse Global Wealth Report 2022, Bloomberg

As a demonstration of the former, I tend to use my own measure of inequality, which is to look at the “wealth multiple” of mean-to-median assets per capita. The higher the multiple, the more unequal the economy. I find Gini coefficients to be too muted in their outcomes, and most of the public sources such as the World Bank still inhabit a pre-Piketty world focusing on income distribution rather than asset distribution – but all this will be in a future post. What is important is how much higher Indonesia’s wealth multiple is compared to the two post-Communist economies which are doing better (for the record, others such as the Philippines are unsurprisingly even worse). Both Indonesia and Vietnam have experienced high levels of inflation – but, of course, this comes against the background of Vietnam’s much higher rates of nominal GDP growth. And above all, whilst most of currencies have weakened against the dollar, none have been so spectacular in their depreciation as the Rupiah.

2020 exports by industry for Indonesia (left) and Vietnam (right)

Source: The Observatory of Economic Complexity

Indonesia has been sustained by commodity cycles in the past and may benefit from another which has recently commenced – but the problem is, this is only arrow in its quiver. For me, there are two broad models of economic emergence, which I visualise as “tents” and “marquees”. A tent is simple, and has a couple of simple poles which hoist the whole fabric. These poles can raise a high summit point, but they are frail and narrow. A marquee takes longer to assemble, but has multiple poles and is usually more robust. Indonesia’s reliance on commodities – and its marked inability to produce an export-quality value-adding sector (for instance, manufacturing) – makes it a tent. Vietnam, whilst its summit point is still lower than that of Indonesia, is supported by multiple sectors. Importantly, this also means producing a wider “middle”, which somewhat depicts the creation of a real middle class.

Tent vs marquee models of economic development

In short, whether you are an entrepreneur, a foreign investor, or just the common man on the street, Vietnam is a much better prospect than Indonesia. This reality belies the generic theoretical focus on demographics and real GDP, and correlates to the empirical and anecdotal evidence from the streets. Anyone who goes to Jakarta and then Saigon will feel a difference in energy and enterprise. In Indonesia – much like Thailand or the Philippines – a few rich incumbent families own practically everything. Jakarta, by another shorthand metric I like to use, has no pavements: the rich go by car and the poor have nowhere to go. Saigon has middle classes who walk around urban landscapes. Likewise, the streets of Saigon are full of absurd little shops where the emerging consumer is upgrading their life (not anything I would personally buy, but nonetheless); Indonesia instead has little between the gleaming malls and the warung.

From a business level, it shows through as well: the long-hoped-for mass ownership of four-wheel vehicles in Indonesia has never really materialised – passenger car growth over the decade is half that of China and Vietnam, and behind even Thailand. Modern retail (for instance hypermarkets) has never yet had its day in the sun, instead being swamped with by the low-end providers like Alfamart and Indomaret. Banking has not had the traction expected, particularly in additional services; but meanwhile low-end app-based financing is common place. And at the end of the day, Indonesia’s new economy champions still tend to feel much lower in quality of management than even their regional competitors – Go-Jek vs Grab, for instance.

The reasons for all this are manifold, and would warrant a full academic paper (although some of the topics around cultural traditions may not even make it past the censors of modern publishing). But what is clear is that, following from the previous post, there are better and worse markets and Vietnam and Indonesia, often compared together amidst a group, are good examples of this contrast. I would hazard that Indonesia’s presumed consumption take-off may simply never materialise. People talk of Indonesia sitting at the heart of the revolution in EVs – which is questionable – but even if it happens this may never feed through to the population. Certainly, alone amongst the beneficiaries of the last commodity boom over 2006-2012, Indonesia saw little gain for median families, and such wage growth as came was washed out by its rampant inflation. Indonesia seems destined only to be constantly extracted from, by local families or foreigners. Personally, if I had a dollar to invest today, the choice between these two is pretty clear.

Not all emerging markets are the same (Part 1)

ASEAN is not a single place – there are winners and losers

Emerging markets have frequently been grouped together in the expectation that evolution in one could be carried across to others, and thereby allow investors in particular to draw large thematic lessons. The Asian Tigers was one example, BRIC was another; the Economist even spent an inordinate amount of time trying to find a successor to BRIC, all versions of which were unsatisfying. Southeast Asian economies are often put into one bucket, too, given what appears to be a similar stage of development between several of them, their proximity to the regional influences from Japan and China, and most of all due to the supposed progress of ASEAN.

However, taking a dispassionate view there is little reason to see these markets as similar enough to have a common investment principle. Indeed, I would argue that several of them face diverging fortunes and I very much like some of these markets and do not have time for others. There is a surprisingly limited amount of analysis from the outside on these markets individually; and when they are written, they are often quite amateurish.

So let me get to who is Good and who is Bad in SE Asia. To begin with, it is worth looking at the macro numbers over recent times to consider which countries if any, have actually made progress. On the face of it, many in the region have performed decently compared to their OECD brethren. Yet ultimately the variation beyond real GDP, to which analysts are constantly beholden, shows quite a difference.

Source: World Bank, Credit Suisse Global Wealth Report 2022
Note: “Middle classes” refers to population with greater than US$10,000 of wealth per capita; standard deviation calculation excludes Australia which is only included for comparative purposes

For a start, whilst real GDP numbers look somewhat comparable and almost clustered towards the 4%-6% range, this becomes markedly less so when looking at other metrics, and the standard deviation shows this. These others are important, too: we look at nominal GDP from an investment perspective because earnings and returns are nominal, not real. Per capita numbers wash out the effects of rapid population growth as an artificial bolster for underlying growth. Middle class population tell us how any of this notional growth is actually converting into mass consumers.

Much can be read into these figures but the most stark representation of it all, for me, is looking at total growth in recent years. Below is the total cumulative nominal GDP growth since 1990 for all the main countries in the region:

Source: World Bank

It turns out there are really only two groups of economies in emerging Asia: those that have generated huge amounts of growth and those which are just trundling along. China and Vietnam come from different bases but share the enormous benefits of a post-Communist economic surge; almost everyone else is unremarkable – both developed Singapore and Australia are not all that different to supposed stars such as Indonesia, Malaysia or the Philippines. China and Vietnam have performed not just better, but better by an order of magnitude.

This has a knock-on effect on middle class consumption. Using the Credit Suisse data, I tend to look at the numbers of people who have US$10,000 in assets as a guide – what I call “true population”. China of course has created a huge true population who can and do consume – but elsewhere we can see why our views should be moderated. Indonesia, for instance, has 250m people; but only a fifth of them are real and – as per the table above – their track record of growing this has been poor compared to Vietnam for instance, which has a smaller true population but is growing it quickly.

Source: Credit Suisse Global Wealth Report 2022, own calculations

I will delve more deeply into Indonesia and Vietnam in future posts, but the overall message here is clear: SE Asia is not a single type of market and there are clear winners and losers. The reasons why can be explored elsewhere but simply having a large population is not going to mean a country will develop within the time-frames we need to make money. Demographics is not destiny, and political and economic systems matter. Investors and companies ignore this at their peril.

The Return of Theresa May?

The shenanigans of the Conservative Party gives me a moment for some fun: what if the Tories really did cast out another leader now, just a few weeks into her tenure?

First, I should emphasise that I do not predict at this point that Liz Truss will be removed. Nonetheless, neither do I think it completely unlikely, since MPs will grasp at almost anything which they think may help them get re-elected and, let’s be honest, nobody wants to face unemployment in this current environment.

So my logic is as follows:

  1. Liz Truss may be deposed by MPs seeking to try and move on quickly from the current crisis (25% chance)
  2. MPs will not give members a choice again, if this occurs. Instead, they will avoid the whole thing by presenting a single candidate as a fait accomplis (100% certain).
  3. MPs will look to the past, not the future, when seeking their consensus candidate. With an election only two years away, I do not believe many will want to “try something new”, but rather look for a caretaker that minimises the damage from an election that seems almost certainly lost (70% likely).
  4. There are only a few candidates suitable for this role, balancing out their status, past experience and willingness to serve. I believe only former PMs, Chancellors or high profile leadership candidates would be options. May is on obvious candidate (100% true).

There are really only a few names who can make this list. Boris is too recent and probably uninterested. Sunak and Javid, two former Chancellors, will both want to distance themselves from this irretrievable mess and believe they still have future careers. Several others, such as Hammond or Rory Stewart, are no longer MPs. To my mind, only three people would “do their duty” and lead in the current circumstances” Michael Gove, Jeremy Hunt and Theresa May.

So who knows what will happen? Gove seems too opportunist. Hunt might work but is a little faceless. I do think Theresa May has one quality, which is that she is dogged and hard-working and will provide some reassurance. Moreover, she has dealt almost entirely in crises. As a caretaker, there would be many worse. All this gives me the chance to return to one of my favourite memes: