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:

This devaluation exposes how poor Britain really has been for two decades

The decline of Sterling in recent days has caused the kinds of panic amongst MPs and commentators usually reserved for global warming, Brexit and early England exits from finals tournaments. As an economist, I can testify that currency economics is amongst the more arcane and complex – at least, to model. What traders do on a whim may reflect current issues, or longer term ones; but precious few really know – certainly not politicians.

First, we should be clear about what the exchange rate is or is not. It is not, for instance, a broad measure of “a country’s strength”, a term that has been bandied around by gammons and globalists alike as they face the prospect of achingly expensive holiday costs to Mallorca and Miami, respectively. Nor does it reflect “how rich we are”, as though a 20% fall in the pound makes people, in any real sense, 20% poorer than they were weeks ago. Exchange rates are a measure of value, particularly for lubricating cross-border trade, and more than anything are a measure of demand for money and assets within an economy, from abroad.

A strong economy can of course lead to a strong currency as people seek to invest into your country. Over time though, much of this will be ironed out through PPP as import prices start to rise over time reflecting demand. But currencies can also be artificially high, often for prolonged periods, due to trends such as the continued opening up of various asset classes to foreign capital, which can happen without the underlying economy producing anything more than it did before. I refer to this as the financialisation of an economy, a common feature throughout the Anglosphere from the 1990s onwards. Britain is particularly guilty, as seen below, and these numbers do not even reflect the unseen financial burden placed on UK taxpayers from housing foreign banks.

Ratio of bank assets to GDP

Source: TheGlobalEconomy

The consequence of all this is important: Sterling has been over-valued on a real economy basis for years – since well before Brexit or even the global financial crisis. The 2:1 exchange rate against the dollar reached in 2007, for instance, may be seen as the height of a monetary hubris unleashed by Thatcher but really bedded in by Gordon Brown, her true son. Everything was thrown into the financialisation of the economy and, as a second layer of back-up, the property market which saw Britons become richer by gross asset value but not usually by income or net assets. One way in which this washed through, therefore, was through looking at the gap between nominal exchange rates and PPP, where it could be seen that Britain was getting no richer compared to America than it had before or since. The yawning gap in the mid-2000s was totally driven by things other than the UK economy.

GDP per capita at PPP, US vs UK since 1990

Source: World Bank

In my humble opinion, something approaching parity between Sterling and the dollar had been due for a long while. I must admit to quite some surprise at how small the fall in Sterling was after the referendum in 2016, and had always assumed a rate of closer to 1.1-1.2 over the succeeding years. That it has taken a second crisis to cause the devaluation speaks more of the limited attention span and economic comprehension of currency traders, than it does of any lingering strength of the post-Brexit economy to punch above its weight.

The decline has now gone beyond my own instinct of where the “natural” level. This may be an exaggerated response to the budget from the markets, it may be my underestimation of British strength, or it may just be, like so much else, a temporary feature of the vagaries of the markets. On the other hand, it could signal a further long term deterioration of the structure of the UK economy. Either way, this decline had been coming for years and should have been expected. Even without Truss – indeed even without Brexit – we should have been at lower levels than what has been the case.

Because this “crisis” has really exposed how weak Britain had been for so long: continued poor productivity, an enormously skewed domestic economy with a whole political apparatus focused on maintaining house prices, and rampant financialisation to the detriment of the real economy. It is an unedifying sight to see semi-literate, over-reacting traders being observed and reflected by even less literate and even more hyperactive MPs and journalists. However more than anything, we should be digesting this new normal as the correct reflection of where we have been – and it may even help us plan properly going forward.

The asymmetries of Putin vs the West (or, why The Economist keeps looking stupid)

It has been some time since this blog has taken its title at face value and looked at some of the large scale asymmetries at work in the world around us. The Ukraine conflict, however, presents just such a chance. Plenty has been written on the subject now by armchair experts in Eastern European strategy, many of whom no doubt only recently become epidemiology experts too. I offer a few simple thoughts about the asymmetric nature of the game Putin is playing, and in every case I start with the panacean truisms one finds in the media.

“Russian GDP is not even as big as South Korea, it is overreaching itself!”

The globalist response to almost any conflict has been to look to economic indicators – at least, the ones we are familiar with – as a measure of how powerful a country is or can be. I will give such commentators the benefit of the doubt that in most cases, they are aware there is some nuance and that localised imbalances can affect outcomes; but still, by and large, they will believe that historical determinism tells us that a country’s GDP will indicate the way the winds are blowing.

What Putin is exposing, however, is that for Russia (and China, amongst others), expenditure in materiel capital has to be matched with the commitment to expend human capital. On a GDP basis, many others will be more powerful than Russia; but judged on the basis of its hard resources multiplied by the factor with which it is willing to use them, Russia’s position on the world stage is not one of punching “above its weight”; it is very much a significant player (which, let’s be honest, is exactly how it is treated within the world of realpolitik). This is a case of asymmetric capital deployment.

The Western response in offering the Ukraine arms and supplies is a case in point: it costs the West nothing to do this. Indeed, given the realities of the military-industrial complex, offering military equipment which is in turn paid for through loose monetary policy actually helps the West. The problem is, it does not do much to help the Ukraine. Putin knows that no Western government at this stage is willing to lose the life of a single soldier in defence of Kiev; China knows likewise about Taiwan. And they are able to gamble that even with the best of wills in armament support, if the West has no boots on the ground, its commitment will be as fickle as the next budget discussion in Cabinet. Only blood counts.

So whilst it is absolutely true that Russia is not rich enough to match much of the West, it really does not matter because that is not the game being played. I suspect not a single Ukrainian soldier coming under a rocket attack is thinking to himself, “well the joke is on you, you’re overreaching your GDP base”. Unless the West changes its tune on how to respond, the Russian bear is not going to be paying too much attention. Instead, as one of my friends pointed out, “there is no significant military force standing between Russia and Paris today, a situation we have not faced for generations”. Another added, “but there is a lot of GDP standing in the way”.

“Russia is on the decline anyway, in ten years time this will be seen as a massive mistake!”

Again, this is very possibly true. After all, the big difference between the Russian threat and the Chinese threat is that it seems difficult to imagine Russia being more important in ten years time than today. Again however, I suspect this is cold comfort to the dying Ukrainian civilian, who is most probably not shouting to the incoming tanks “well you’re on the wrong side of history!”. As Keynes says, in the long run, we’re all dead.

The fact is that in this kind of game, a grenade in the hand is worth two on the production line. Most incidents like the Ukraine are not played out over the kinds of timeframe that the Cold War was; once an aggressor gets its way, it can be almost impossible to dig them out again other than at enormous costs which, as described above, people are unwilling to pay. Yet the fact is that Russia is doing this today, not years down the line when history has come to bite it. This is a case of asymmetric timing.

All powers are likely to rise and fall cyclically. Russia doubtless is on a down cycle already – but so what? History is not decided by trajectories (much as historical determinists and progressivists would love to believe), and still less are real objectives today affected by those long term trends. A power willing to punch today can easily and consistently outcompete the larger power waiting for things to fall into the natural order of things. Obama’s pushing of this wording is perhaps his most pernicious legacy as a clarion call to inaction.

“The whole world is watching this and will be judging Russia!”

Whilst the first two popular claims may well hold true, even if they are irrelevant, this last one is questionable due to one last great asymmetry, which constitutes the eternal dilemma of the policeman. The West is of course judging Putin – for now. Sanctions will come in. There is discussion of banning Russia from the SWIFT payment system for instance, as well as the removal of this season’s Champions’ League final from St Petersburg (Russia’s involvement in the Eurovision Song Contest however, has been subject to confusion).

The problem though, is precisely that the whole world is watching this – through the 24 hour news cycle, through social media, through memes. Yet the policeman’s dilemma is, why do I prioritise this over anything else? And with the fragmentation of Western attention, through so many channels, the cohesion of Western attention is less than in generations past, even as the volume of that attention is more. This is asymmetric focus.

The Russians know that Western observers struggle with creating a hierarchy of what is supposed to be important. Modern media has dampened our sense of proportionality, meaning that there is a perception of crying wolf. How much better or worse is Biden’s performance over the Ukraine, compared to the retreat from Kabul for instance? Or Obama’s red lines in Syria? Or his response to the last time Russia invaded the Ukraine? In the heat of the moment, everyone is entitled (as many are) to believe this is the most important issue in the world today; yet that same raw sensation will also see it be less to tomorrow. Maybe another invasion, maybe another form of Covid, maybe just forest fires will do the trick. Our lack of media curation has brought us to this.

I would additionally add that, in all of human history, sanctions have only ever to my knowledge worked in one example: South Africa. In this case, it worked because the target society of the sanctions (white South Africans) looked up to and respected those sanctioning them – they cared. Not the case with Russia, or with China. Probably not even the case with India. The corollary is that asymmetric focus is only solved when the matter is close to home – culturally, ethnically. Sweden, for instance, is not a member of NATO, but will still be able to count on American and European physical support in the event of a Russian invasion in a way the Baltic states might struggle with. Let’s be honest, because they’re white. This is the only thing which cuts through the ADHD of modern life. Are the Ukrainians really white enough and middle class enough for people to sustain their care? We will find out.

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If this sounds cynical, that is because it is. Asymmetries unlock many of the answers where there is more heat than light and war has been so unknown for so long. As long as Putin is playing a different game, the constant refrains about meaningless measures will remain rhetoric whilst real people are suffering. Grasping these asymmetries can lead to small but very effective changes in policy, and consequently enormously different outcomes. Given that the US purported to know about the coming invasion so long ago, a single battalion of American soldiers, under the guise of ordinary joint training exercises, would have made Putin pause for thought.

One must always ask oneself, “what would Putin do?“.

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PS – where now those anti-nuclear deterrent voices?

The Five Blogs of Christmas V – How the Empire was built

My muse has given me leeway until the end of January to complete “Christmas”, giving me just enough time to examine the bigger picture

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Between 1781, when Lord Cornwallis surrendered to the Americans at Yorktown marking the end of the First Empire, to 1942 when Percival surrendered to the Japanese at Singapore and effectively marked the end of the Third Empire, Britain did pretty well. By and large there was not a single concession in between those two dates – with British phlegm being marked by a few remarkable victories interspersed with some even more glorious catastrophes, such as the Retreat from Kabul; the Charge of the Light Brigade; the Sieges of Cawnpore and Khartoum; Isandlwana; and the Somme. The noble, defiant ignorance of the lower classes characterised Empire and was the basis on which it was built.

Since that time, we have had sailors like Arthur Batchelor blubbing away “when the Iranians, who called him Mr Bean, took away his iPod.” We have had a second withdrawal from Kabul where pets were being prioritized over people. Foreign policy has been of a somewhat reduced nature, and with that comes the question: have the British changed? Are we now a weaker nation, no longer capable of seizing the moment and battling for a greater cause?

I say, no. And I think we can see exactly where Britain remains as strong as she ever was. Here I examine the keystones of the imperial character, and how they still manifest themselves.

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Defiance

At the Battle of Jellalabad in 1842, Sir Robert Sale organised the Somerset Light Infantry to hold off thousands of Afghan jezails (after the inglorious / glorious massacre of British forces to the last man at Jugdulluk) for five months. Not only did these men of Taunton refuse to concede, but went on to capture 300 sheep from their assailants for provisioning.

Today this obstinacy and refusal to lie down continues, as shown by these courageous characters, who dressed as traffic cones for a stag do, blocking a local road and finally having to be arrested by the police:

Competitivity

Such was his desire to serve his country, Captain Scott and his four companions famously died in 1912, frozen to death in their vain attempt to be first to reach the South Pole. Yet this was a theme which had centuries of tradition for Britain, particularly in its rivalry with France. The imperial race that took us to the Americas and later the colonisation of Africa before they could, created much of the land holdings which allowed for the idea that Britain had an empire “on which the sun never set”.

And who are the heirs to Captain Scott? Step forward these men:

Cunning

The Great Game raged between Britain and Russia over the Northwest Frontier region over much of the 19th century. A war that never quite was, Britain strove to counter and undermine the Russian ambitions in the East at every turn, leaving no stone unturned to do so including setting up trade routes and client states. Likewise, when Britain wanted a war with Spain or France, she relied on privateers and pirates to harass her rivals until a war was inevitable – perhaps none more so than the provocations that led to the Second Anglo-Dutch War, where the Royal Africa Company was established to seize Dutch ships and outposts along West African coast.

This guile remains in the blood of the British, as shown by Surrey farmer Robert Fidler, who for four years between 2001-2005 fought the tyranny of the Planning Permission board of Reigate, by hiding an enormous folie de grandeur behind haystacks. The local council was not aware of this military build-up until the it was revealed with a flourish:

(Note: Fidler ultimately lost the case and had to tear down the house in 2016, but it was the effort that counted)

Opportunism

Many wrongly see the height of the British Empire as that conveyed through the formal life of Late Victoriana: reviews at Spithead, Great Exhibitions, the Delhi Durbar. Yet as I have noted before, the real peak of Empire was a century or more earlier, with James Wolfe’s victory at Quebec in 1759, and Robert Clive’s victory over local warlords at Plassey two years earlier. Throughout this period, the British displayed unparalleled buccaneering spirit, just as they had in battling the French in the pirate wars. Britain stumbled into her Empire accidentally, on the whole, but she never missed a chance to assert herself at the expense of others.

This remains perhaps Britain’s greatest trait. When a container ship sank off Devon in 2007 – before the financial crisis when household balance sheets were still bloated by overvaluation and there was no desperation in the air – the reaction of the Great British Public was to scavenge as much as possible before anyone could catch them.

This was magnified a few years later, when rioters in London turned out to be just as keen to loot from JD Sports as they were for social justice.

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And what of the French?

Our cousins across the Channel had a slightly different imperial experience. For a start, due to losing key engagements such as the Battle of the Saintes, France was largely left with bin-ends of empire such as the bone-dry sub-sahara. In Indochine, their most enduring contribution to civilization was the forcing of Vietnamese to eat baguettes and pate.

But they too were famed, whilst the contest lasted, for a sort of cunning. In the Americas for instance, the French were willing constantly to get into bed with local tribes in order to align short term interests against competitors such as British or Dutch. This came to a head in the French & Indian War (the Seven Years’ War) where they used the Delawares and Shawnees against the British colonists. However, whereas in the British this was a noble astucity, a dignified shrewdness of mind, in the French this can only be seen as double-faced artifice, the constant scheming of a younger brother who can never quite get what he wants.

Nowadays, French ingenuity is demonstrated in such activities as getting a free ride in defence spending through NATO, hijacking the European Union for their own ends, and this:

So I suppose we are all back to where we started …

The Five Blogs of Christmas IV – The Art of Ambiguity

My muse takes me to the subject of architecture, psychoses and the joy of leaving people guessing

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Readers of this blog may have noticed that I delight in the equivocal; indeed I find some of greatest artistic genius to be where the audience cannot quite nail down what it is they are supposed to be interpreting from something – or better yet, where several viewers will argue vociferously that they do understand it, but they cannot agree on what it is.

History of Art was, as with any non-science undergraduate at Oxford, a pastime one was shamed into knowing something about. Architecture in particular, given our surroundings, was a prime amateur concern: we had, after all, buildings spanning a period of eight centuries through which to decide that, of course, the University’s prime of life had been several hundred years ago and nothing constructed since Keble had any merit at all. I marveled regularly at the vista along Catte Street from the King’s Arms, a view which took in the Clarendon Building, the Bod, Hertford, All Soul’s, St Mary’s and of course the crowning centre of Oxford (and the closest answer tourists have to the question “where is the University?”), the Radcliffe Camera.

When studying this building as a dilletante, I learned that, apart from being Gibbs’ masterpiece, it was filled with traces of his Italian Mannerist heritage. Supposedly this was reflected in the complexity of cascading lines from one level to another, which were never straight and direct but staggered. And this was all very interesting, but to me, as I stood there occasionally breathing it in from the corner near Brasenose, there was something altogether more genius about it: I could never work out whether it was wide or tall.

Buildings and their designers aspire to something. Verticality is clearly a feature of modern urban skyscrapers; three centuries ago, breadth was more in vogue. But depending on the angle, the Rad Cam would be either imposingly tall or strikingly broad. It poses the onlooker an artistic and intellectual question which they cannot answer. Moreover it demands of you an emotional response which cannot be easily defined – and your response depends not only on your perspective, but on your mood, on your psychology, and on who you are.

For some time I had supposed this was an illusion of my own creation. Perhaps only my own deep-lying schizophrenia led to this. But over the years, as the internet came to catch more and more of our collective lives, I realised that you could see this in others too. If I were to Google “sketches of the Radcliffe Camera”, it turns up dozens of pictures; and within these casual drawings one can discern the same uncertainty and lack of consensus amongst everyone else.

To take these six at random, one can see all sorts of Freudian influences in the proportions observed. The “wide” school revels in grandeur, but is at the same time intimate and close; the “tall” school is aspirational, but distant and cold. Do these characteristics reflect something about the artists? Do the “tallists” have intimacy issues, or are the “wideists” overly deferential? Who knows. But one would be hard pressed to imagine that these sketches tell us nothing.

So much for other people. Above all, this reflects for me the occasional brilliance – inadvertent perhaps – of James Gibbs. He may not have achieved this in any other of his works – St Martin-in-the-Fields is a fine church, and the Fellows Building at King’s splendid – but neither of them had ambiguity. None of them left the observer with more questions than answers. But in the Rad Cam, the glorious and unanswerable paradox perceived in the eye and the mind are on full display. Many others, including Wren and Hawksmoor, arguably never surpassed it.

To not know what you think yourself is unfortunate; but to leave other people not knowing what you think – that is genius.

The Five Blogs of Christmas III – Battles of the Spurs

Missed a couple of days, but the Muse is now thinking about football …

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Hard-battling, controversial 2-2 draws have become a hallmark of Tottenham in recent years, with the recent game against Liverpool a case in point. Whilst many fans will remember other specific moments such as Ajax away in 2019, this series of draws symbolized life under Pochettino and will, perhaps, do so under Conte. I think the thing about them is not only their indication of our resilience when the team is at its best, but also that scoring goals was the mainstay of our key contests against the bigger clubs, not just defensive stability – something we all hope remains true.

Below, then, is a potted history of Tottenham as told through these glorious matches.

March 2016: Tottenham 2-2 Arsenal

This really kicks off the Pochettino and arguably the Kane era, since the most important part of it was that goal to give us the lead. The Arsenal of 2016 was still at the tail end of Wenger 2.0, the less successful but still fluid attacking side containing Özil and Sanchez at their peak, and a Hector Bellerin understood to be going on to great things at Barcelona.

Interesting to note that Kevin Wimmer was still in and out of our back line at that point (his £18m sale to Stoke must surely rank as one of Levy’s financial masterpieces), and Lamela playing his part, but the core of the great team, including a Dembele and Dier midfield, was in-place. We would have been happy with the result overall, but with Coquelin having been sent off in the 55th minute, it could have been more. The dropped points would start to count.

May 2016: Chelsea 2-2 Tottenham (aka “The Battle of Stamford Bridge”)

This remains perhaps one of my favourite displays from any Tottenham side, ever. The sheer determination of our boys to play the man, not the ball, is satisfying every time I rewatch it. It was a testament to the fact that for all the good football that Pochettino had started to instill in this young squad, there was also steel in them, a guttural identification with the club and the fans. Every poke, kick and punch was being unleashed on behalf of us, the supporters, and we loved every moment of it.

There are a lot of heroes here:

  • Dembele majestically exerting his power like a coiled big cat ready to pounce, including poking Diego Costa in the eye at the margins of a melee
  • Vertonghen pulling Diego Costa’s shirt and then feigning an Oscar-winning “who, me?” performance.
  • Lamela stamping on Fabregas’s hand
  • Rose lunging in on Willian and getting himself and his adversary booked
  • Kyle Walker throwing bodily fluids at Diego Costa
  • Dier chopping down Hazard like a lumberjack and then calmly walking away
  • Kane constantly pretending to be a voice of reason, mostly by pulling Diego Costa away from the fray (yes Costa was a major focus of our attentions)
  • Ryan Mason hauling down Hazard for no good reason other than he does not want to miss out in the story
  • Pochettino trying to calm it all down like a gangster patriarch who ultimately is more pleased to see blood than no blood

None of this conveys the full emotion of it all though. It is all the other moments, when Chelsea players are attacked by not one but two Spurs players in quick succession; or when a hard tackle against us (and there were plenty) was immediate answered by a comrade putting one through the offender. The players were playing for each other; there was joy; this was only the beginning, they would have thought.

One thing is for sure – this match would never have survived VAR, and that is a crying shame because this is what football is all about.

Jan 2017: Man City 2-2 Tottenham

In a foreshadowing of what would come a couple of years later, Pochettino’s team took it to Guardiola in his first season at the Etihad, fighting back from 2-0 down to pull level. Spurs have had a strangely strong record against City ever since Pep arrived, and this was one of the undeserved results we pulled off.

City still had a back line of Zabaleta, Otamendi, Kolorov and Clichy which explains some of this, but their attack was already potent. Sané and De Bruyne scored in quick succession in the second half, but Dele and Son (coming on for Wimmer) responded. But the real controversy was Kyle Walker’s clear push on Sterling which went unpunished, leaving Man City enraged much to the amusement of all. Both of our goals were also fairly spectacular, Dele with a trademark late run into the box for the first, whilst intricate interplay including a penalty box backheel from Kane set up the second. This was some of our best football.

Feb 2018: Liverpool 2-2 Tottenham

This match was so full of controversy that I even wrote a whole separate blog about it. Liverpool, of course, are poor losers at the best of times, and even worse winners; there is nothing quite as satisfying as seeing them upset. This topsy-turvy match (just as VAR was being introduced and finding its feet) saw a Liverpool side which already had almost all their pieces in place, including three of the current back four, and the famous front three. However they did have Lovren alongside Van Dijk and, perhaps worse, Karius in goal.

There was reams of column inches written after this match, but the highlights included a Wanyama goal which is probably the peak moment of his entire career. Kane uncharacteristically missed a penalty in the second half, but manned up to take and score a second one five minutes into injury time to draw us level again – and hush Anfield up. But it was the nature of the penalties – Kane’s supposed dive for the first, and Lamela (yes, him again) winding up Van Dijk for the second – which really stand out. We should not underestimate the benefits of gamesmanship that Lamela brought to this team.

Feb 2018: Juventus 2-2 Tottenham

Thus far we have only referred to Premier League matches. Tucked in between them though, was the footnote of our battle against Juventus in Pochettino’s slow season-by-season progress in the Champions League. Ultimately we lost the tie, with Juve coming to Wembley and giving a masterclass at match control, we being haunted by the words of Giorgio Chiellini.

But in this first leg at the Allianz Stadium, we actually fell behind to two Higuain goals in the first 9 minutes, demonstrating a certain immaturity, before heroically making a come back. Kane and Dele combined before half time, and while Higuain then hit the crossbar, Eriksen finally scored a free kick – albeit not a pretty one – to leave Juventus irritated at our resilience. As with the 2019 matches against City and Ajax, not eventually winning does not mean we do not have these memories in the bank; and what is more, we clearly learned from all this in order to go further the next time round. All part of growing up.

Aug 2019: Man City 2-2 Tottenham

It is easy to forget that despite Pochettino being sacked in November, the 2019-2020 season had actually started pretty well with a 3-1 home victory against Aston Villa, with new signing N’Dombele scoring, followed by this dazzling draw against Guardiola’s 98-point previous season champions. Bear in mind also that this came after perhaps our most controversial ever VAR match, against City in the Champions League quarter-final just months earlier, where a 94th minute Sterling “goal” was disallowed.

Somehow, VAR managed to disallow yet another goal, this time in the 93rd minute from Gabriel Jesus. So despite City chalking up 30 shots against us (10 on target) compared to our 3 (2 on target, 2 scored), we walked away points shared after first Lamela and then Lucas equalized – the latter just 19 seconds after being on the pitch. Frankly, even Poch and Guardiola had to laugh. Little did we know what was still to come.

“What just happened?”

Sep 2019: Arsenal 2-2 Tottenham

Just two games later, a bit of a different story. Arsenal (now managed by the short-lived Unai Emery) were looking pretty vulnerable, and had entered their phase of having little in the way of a recognized defence. It was hard to take seriously a back line comprising names such as Sokratis, Kolašinac and an ageing David Luiz; having said that, Aubameyang and Lacazette will always be able to sting – as they did here.

For once this was a tale that went against us, possibly indicating what was to come. Taking a 2-0 lead to the cusp of half time through Eriksen and then a Kane penalty, we still looked every inch the top four challengers we had been over the previous three seasons. But Lacazette’s strike just before half time changed the shape of things and it was Arsenal who would end up celebrating being able to battle back for a draw. The only thing to raise a smile for us was that yet again, VAR ruled a goal off against us as an 80th minute effort from Sokratis was deemed to have been offside in the build-up – from Kolašinac. What a great team that Arsenal side was.

Dec 2021: Tottenham 2-2 Liverpool

Which brings us to the present day. Fresh in the minds, we had Kane scoring his first proper goal of the season, his almost celebratory near-sending off moments later, and the corresponding red card handed to Andy Robertson instead (after – guess what – VAR again!). In the meantime Liverpool, who until that point were arguably the best team in the country and maybe in Europe (this has changed a little since), came back to equalize and then lead, before Son brought us back again.

Ironically, in this list of historic matches, this last one may be the least controversial, though it may not be the least significant. Conte finally tried a 3-5-2, and gave lifelines to Winks and Dele for the first time since he arrived. If things progress well, there is every likelihood that we look back on this game as the moment which came to define his change at the club.

More than anything though, this last 2-2 draw really harks back to all those previous 2-2 games, where Spurs really had the heart and soul to battle against the odds (with a little help from VAR at times, one would have to admit) and attain decent results against decent teams. And it is notable that so many of those results were away from home, meaning that at our best we were really taking the game to the opposition. This is the most heartening aspect of that period; we can only hope that better yet is to come.

North Shropshire was never much of a surprise

Tory mauling in North Shropshire by-election was self-inflicted by Boris  Johnson | Financial Times

Since the by-election in North Shropshire, described variously by lazy journalists and commentators as “stunning” and “shocking“, a lot has been written about how historic the North Shropshire result has been. Clearly, it was an extremely poor showing for the Tories and, arguably, for Boris personally. The actual historical context, of the seat being held by the Tories for two centuries, is also somewhat true – it certainly has not been held by Labour or the current Liberal Democrat party before this. However, the Tories of two centuries ago were clearly not the Tories of today, so unlike some of the Red Wall seats which fell to the Tories in 2019, the historicity of this claim is rather tenuous – those seats, for instance Workington or the Don Valley, were literally in the camp of just one party (Labour) since 1918.

So much for the soft stuff. The statistical context is even more important. The fact is that whilst North Shropshire was a bad result, it nonetheless was much to be expected. Most obviously, incumbent governments will of course always suffer during mid-term by-elections, since there is little reason for voters to turn out for anything other than “sending a message. In the 146 contested Parliamentary by-elections since 1979, only 7 have resulted in the incumbent party of government not losing vote share. Most of these have some particular backstory to them as well, such as the Blaenau Gwent or Glenrothes by-elections under Labour. Gains by the Tories such as Copeland or Hartlepool are, by definition, remarkable.

The second most obvious point to make is that by-elections in the aftermath of major crises – domestic or global – will always magnify this swing effect. The statistical evidence is more limited here, but it is worth noting that the greatest swings against have tended to come in the wake of enormous economic dislocations, in the early 1990s for the Tories (Newbury and Christchurch) and in a statistical basis of one, in 2009 for Labour (Norwich North). These represent the only times since 1979 that real GDP growth has slipped into negative territory, and it shows. Since Covid-19 has created an economy dislocation some 2.5x greater than the 2008 crisis, it stands to reason that anti-government swings will be larger still. It is imperfect but it stands up to scrutiny.

Most importantly however, it should also be noted that swings against incumbent governments have, over time, been larger and larger. This is a secular trend divorced from specific party politics, since it has continued as a trend throughout various Tory and Labour governments. Below is a chart of the swing against in all by-elections since 1979 where the ruling party has lost a seat. Not only can you visually see the increasing size of the swings against, but statistically it also works out that whereas in the 1980s a government could expect an average swing of ~-15% against at an election, by the 2010s one could expect a ~25% swing against on average. Swings have increased by 10% in and of themselves.

The obvious question to ask is why this has occurred, to which I will only for now speculate. The first reason is the ongoing evidence of partisan de-alignment since 1979, which has become more pronounced even after 2010. The second could be the ongoing evolution of social media and its impact on the 24 hour news cycle, something which actually affects by-elections more than general elections. After all, electorates are used to being inundated during a general election and have done since the 1930s. But the amount of national focus on individual by-elections, first from television and now through social media, has made both dealignment as well as the “bloody nose” concept more pronounced. Regardless of the specifics, governments are going to find it ever harder to win by-elections.

This is not to say that the Conservatives had anything other than a poor result. But long-term increases in anti-government swing + largest economic dislocation in a century = almost certain defeat for a government. Boris still did worse than he needed to; but anyone believing this was not the opposition’s to lose is kidding themselves.