‘It’s the economy stupid’…remember that phrase? It’s more relevant today than ever and the failure of capitalism to adapt post the 2007/08 crash, and its economic consequences, is a key reason for the rise of populism and the political crises we currently face.

An excellent article in the FT last week, ‘Why American CEOs are worried about capitalism‘ highlighted the growing concern of leading business people about the future of the current economic system. You can see why. Inequalities of wealth are rising. The gap between CEOs’ remuneration and their workforce is expanding rapidly to pre-crash levels – a multiple north of 300x. Obscene.

Stock markets and corporate profits are at new highs but a Republican ‘man of the people’ President has cut corporation tax, shovelling more money into the pockets of the rich.

In a Gallup poll last year 51% of American 18-29 year olds had positive views of socialism, similar to previous polls. But the proportion with a similar view of capitalism has fallen from 68% in 2010 to 45% now.

The article makes reference to fear starting to compete with greed. Do captains of industry worry about a revolution? Possibly but it is a bit ‘rich’ taking lectures from the likes of Jamie Dimon, Chairman and CEO of JP Morgan Chase, the epitome of aggressive free market capitalism, when he apparently paid himself $30 million last year.

Closer to home, inequalities of wealth are rising despite a more progressive taxation policy. This has been written about in these blogs before but if you own a house in the UK and have investments, the last dozen years or so have been good to you. If you work in the public sector, rely on rented accommodation and state benefits, they have not.

All this inequality, fuelled by social media of course, has led to voters’ anger and rightly so. But the solution so far has been populism. Oh dear.

Politicians speaking directly to the less well off, blaming globalisation, corruption and seeking solutions in economic nationalism are tempting siren voices. You can’t blame ordinary voters for supporting this analysis since everyone else has mostly failed to implement reforms that address core inequalities.

But the temptations should be resisted. Actions such as leaving the EU or the election of Trump and Italian and Eastern European populist governments for example will not improve the lives of voters. They will ultimately make people poorer, and at the expense of weaker democratic structures.

Responsible governments and, equally important, business, need to wake up, reduce disparities of wealth and work in the interests of all stakeholders. Global corporations need to pay their taxes! More long-term investment in infrastructure, social housing, health and well-being generally, and green technology in particular, to improve the environment we live in, is required. There are some good initiatives outside government from supporting organisations such as Focusing Capital on the Long Term (FCLTGlobal) and Coalition for Inclusive Capitalism to make our economic systems work better but these are barely scratching the surface.

This is an argument for the survival of mixed economy capitalism not a replacement of it, supported by democratic, transparent institutions. Our economic structures need to get back to their more inclusive past otherwise the lurch to populism will continue to the detriment of all of us, not least those most economically vulnerable.

Oh dear… Moderates Never Learn. Returning from a vacation in Eastern Europe where politics is starting to look positively benign in comparison to the UK, I see Farage is on the rampage.

And why not; he has a simple message. The EU is bad, British politics is broken, the 52% have been betrayed. Simple, powerful messages to an electorate who is fed up: fed up of Brexit, fed up of austerity, fed up of nothing getting done, fed up of feckless politicians. The list is endless and they can fight back with Farage.

In the other camps, chaos reigns. The Tories want to ditch their leader and literally loathe each other. Their MPs, even moderate Brexiteers, are increasingly at odds with each other and their membership, some facing deselection. Labour are torn between a customs union solution, Remain and a People’s Vote. Two thirds of Labour supporters voted Remain but this is not reflected by the same proportion of constituencies. They are as split as the Tories, with moderates also facing deselection for multitudinous reasons, but can hide it somewhat as they are not in government.

But the real problem, as ever in this polarised world, lies with the centre ground. Change UK or is it The Independent Group (?), vie with the Liberal Democrats, the Greens (probably on Europe only) and what few moderates there are left in the major parties, for the votes of where most of the public lies. And they are failing.

No single message. No single message even on Europe. They hand-wring intelligently on the nuances of policy whilst the public can’t discern what on earth they stand for. An article from Chuka Umunna in yesterday’s Independent talks intelligently ‘as a pluralist who believes tribalism is overrated’ on why a single Remain party can’t be formed, why candidates from similar minded parties can’t stand aside for each other, etc etc.

They are principled and refreshing; but will lose and lose heavily. In this era of populism the public currently has no patience for cross-party, nuanced messages. Farage will triumph if the EU elections go ahead, Labour will be weakened and the Tories flattened. As for the middle ground…I am reminded of that picture of a black hole…light sucked into oblivion by the force of gravity.

The centre ground is where the country should be governed from. ‘Muscular moderatism’ should triumph. But it won’t as currently presented. We better hope these European elections don’t happen.

A trip to Eastern Europe beckons so there will be no blogging for a while. Post Easter, anything could have happened on Brexit so it is extremely dangerous to make any predictions. But where angels fear to tread…

The UK Government has asked the EU for an extension of our departure date to 30th June (previously already asked for and rejected) but Donald Tusk jumped the gun by floating a ‘flextension’. Yes, Brexit is even changing our language…The EU will potentially offer us a year-long extension which can be cut short if a deal is reached. Makes sense since nobody has faith in Theresa May, or indeed her successor, achieving anything soon and the timetable can’t keep being re-visited. My feeling is that the EU, as usual, will win this minor skirmish.

European parliamentary elections in the UK look more likely which will be a disaster for all. Brexiteer support will flourish in the UK and it could infect European politics more widely. What a proverbial car crash.

That takes us to the May/Corbyn talks. Wouldn’t you like to be a fly on that wall! The chances of these succeeding are slim as Theresa May would have to accept a customs union and possibly a People’s Vote, splitting her Party in the process. This has always been an anathema to her although she might simply have had enough. There are also dangers for Corbyn. If an agreement was reached he would then own the departure settlement which has perilous electoral implications for Labour.

That takes us full circle to the Withdrawal Agreement. Yes, shock, horror, it is still not dead and maybe the only chance to leave the EU soon. Surely, even hard Brexiteers get this. Umm…

So there you are. No more to add except, at least for now, Happy Groundhog Day!

No Brexit commentary today. By Wednesday, we could have a Withdrawal Agreement, Theresa May’s resignation, a softer Brexit option, the implosion of the Government, more pointers to a General Election, a second referendum…Time to wait a little.

So let’s look elsewhere, at politics overseas. There has actually been, or there are about to be, some seismic changes.

North America

Trump survived the Mueller inquiry intact as expected…sadly. He is too stupid and disorgansised to have actually colluded with Russia even if they helped him win his election. This leaves the Democrats high and dry. They are disappointing at best. They failed to manage expectations around the inquiry, see the answer to Trump as moving further to the Left and have a myriad of mediocre candidates (ex Beto O’Rourke?) for President in 2020. The leading two Democrat figures are Biden and Sanders aged 76 and 77 respectively, the former now caught up in a ‘me-too’ moment of indiscretion. Oh dear, Trump is on course for a second term.

In Canada, the previously popular Trudeau is fighting for his political life after a corruption scandal. He is alleged to have influenced a bribery inquiry involving the engineering and construction firm SNC-Lavalin, a company helpful to him in Quebec. He has lost his top adviser and two cabinet ministers so far and really should resign if he is seen to have led a cover-up. Like many charismatic centre-left politicians, he should pay the price for his hypocrisy. However, liberal democratic politics can ill afford such mistakes.

Populism 2, Liberalism 0.

Middle East

Israel’s PM, Benjamin Netanyahu, is to be indicted on charges of bribery, fraud and breach of trust, but with his formidable nationalistic, fear-mongering campaigning skills, is possibly on course to snatch victory out of the jaws of defeat in Israel’s elections on 9th April. He has ratcheted up anti-Arab rhetoric, claiming Israel is for Jews alone, and is pursuing a successful dirty tricks campaign against his lead opponent, the less experienced but highly respected former leader of the Israeli army, Benny Gantz. If the Trump-loving (it is mutual) Netanyahu wins, he will insist all charges are dropped against him and there will be no Middle East peace initiatives for a generation.

Populism 0 (1), Liberalism 0.

South America

The homophobic, nationalist, possibly corrupt (even though elected to combat corruption!), Trump-loving President Bolsonaro of Brazil, advised by a fan of Steve Bannon, wanted to commemorate the country’s former military regime with celebrations at garrisons nationwide yesterday.  He recently stated that ‘democracy and freedom only exist’ insofar as the armed forces wanted it. Only the intervention of the generals, now seen as the main force of social cohesion following Bolsonaro’s election, restrained him saying ‘that time has ended’.

Populism 1, Liberalism 0, Generals 1

Eastern Europe

In the Ukraine, a comedian (not knowingly a Trump supporter) has just won the first round of Ukraine’s presidential elections, second round 21st April. Playing a teacher who is unexpectedly elected president in a TV series, with no political experience, he is seen as an antidote to corruption and low standards of living. We shall see.

In Turkey, Erdogan faced crucial local elections yesterday. Terrified his party, the AKP, could lose control of Ankara and Istanbul (looks like they have) due to widespread voter discontent, he sought to make the elections about national security and to quote the FT; ‘survival in the face of threats from a dark alliance of external and internal foes’. Food prices have been suppressed, the lira has been artificially boosted and debt is running out of control. An economic crisis is imminent. 

Populism 2, Liberalism 0 so far

Lastly Brunei…

Their new laws come into effect this week.which will punish adultery and homosexual sex with death by stoning. Quite Game of Thrones.

Populism 10, Liberalism 0

Total: Populism 15 (16), Liberalism 0, Generals 1. And that is before we know about the final chapters of Brexit…

Incredibly, yes incredibly, Theresa May may still get her Withdrawal Agreement through, although the window of opportunity is shrinking by the hour. An hour is the new measurement in politics by the way; because too much happens in a day, let alone a week…

However, at least 20 Tory MPs currently aided and abetted by the DUP, may hold out regardless, unwilling to sacrifice any compromise on methods of EU departure, including the PM’s guaranteed resignation, on the altar of a pure Brexit. Wow.

And, as a reminder, think who those DUP allies are. A bunch of illiberal, old-fashioned, pork-barrel driven politicians opposed to abortion and same sex marriage; everything modern Tories should abhor. A potential nail in the coffin for the Tories’ longer term survival, to be re-visited at a later date.

Tomorrow we have a series of indicative votes on other options of how, if at all, to leave the EU. The Government lost three further highly-able, moderate ministers last night who voted for this measure. There will not be enough ministers to cover the workings of government at this rate.

And there are real dangers in these indicative votes. The potential to tear the Tories apart is huge with leading government figures voting all over the place. Imagine Philip Hammond voting for a single market/customs union option versus many of his colleagues for example…It might be the second longer term nail in the Tories’ coffin, which is why May, so anxious to keep her beloved Party together, was keen to avoid indicative votes, let alone because it also takes parliamentary control away from the executive.

Incredibly (see above), there is a small chance that if Parliament is split fairly evenly between various options, then the Withdrawal Agreement splutters into life. But this is hard to rely on because of the Kamikazi 20.

The Tories are almost fatally split particularly because of those die-hard Brexit purists. If the Cabinet divides across various indicative vote options, if TM can’t get her Withdrawal Agreement through and resigns; if we crash out of the EU without a deal, precipitating chaos, or if Brexit is delayed beyond May then a General Election is the only solution left, probably followed by a second referendum.

The Tories will pay the price and rightly so. The Kamikazi 20, possibly supported by the DUP, will take the lead in being responsible for causing this unwanted General Election. If it happens, it may end the hegemony of Conservative-led administrations for at least a generation, if not longer, as politics re-aligns. As for The Independent Group, they are not even a Party yet, but things are looking increasingly bright for them. Good!

What a period of Mayhem. There was no majority for Theresa May’s deal second time around and no majority for no-deal. Parliament is gridlocked and poisonous, the clock is running down and Brexiteers see their chance of ever leaving the EU diminish by the day.

That is why May is likely to get her deal through at the very, very last minute. Unloved though it is, it is Brexiteers’ only guarantee of ever leaving the EU in the foreseeable future.

And May’s deal should really please everyone ex the side-show of the back-stop. The UK leaves the EU with 21 months to forge a new trading relationship. It allows Brexiteers to negotiate a clean break. It allows Remainers a chance to reverse the decision one way or another, possibly encompassing a ‘Norway option’ during this time.

If we can bear to look forward, the next issue is who are the casualties of all this chaos?

First, the Prime Minister. Theresa May made many initial mistakes with her red lines and triggering Article 50 which all unravelled when she lost her majority in an unnecessary General Election. But since then she has been tenacious; admirable in her dedication to getting a deal done which she believes delivers on the referendum result (whatever people understood by their vote), and which rescues her reputation.

The problem is that her suspicious, distrusting, unfriendly, often wooden approach to her premiership has allowed her enemies to multiply. There has been no bridge/coalition building. No reaching out to make new friends in seeking a deal. No sense that she can think laterally and ‘out of the box’ to create new solutions. Her rigid focus has been her strength but ultimately her fatal weakness.

Many thought she would soldier on post March 29th for quite a while, drifting closer to the next election with perhaps a wild hope she could defy the odds and fight in 2022. No longer. She has been wounded too many times; her colleagues are sick of her. From all sides of the EU debate, her Party wants a new leader and a fresh approach to the next chapter with Europe and, indeed, domestic policies generally. She will go before she is pushed, ahead of November. She will have to find a life outside politics, but with a legacy certainly better than her predecessor.

Second, and a fervent hope, the next casualty will be the DUP. How unedifying watching this recalcitrant, prejudiced, mediocre bunch of old cronies hold the government to ransom. Nobody, ex the Right of the Tory Party, likes them or wants them. Northern Ireland voted to remain, future Tory governments will want their revenge. They will be rightly punished at the next election if not before.

Last, the Tories’ European Research Group. Awful in their disloyalty, grandstanding, and hatred of the EU, any future leader of the Tory Party, from whatever wing, will want to distance themselves from them. If they do not, The Independent Group will flourish, fueled by Tory defections, and the Tories will be out of power for a generation, if not forever as currently constituted.

Hard to believe, but ultimately some good one way or another may come out of this awful mess.

Politically the news just gets grimmer. Here in the UK we face another chaotic week with the possibility of no deal, no government and no PM by Friday, as Theresa May forlornly throws the dice on her Withdrawal Agreement for the last (or almost the last) time. She got some movement from the EU yesterday but there is a mountain to climb as MPs put Party and personal interests before those of the country. The possibility of a catastrophic collapse in our parliamentary system over Brexit is becoming very real. Whatever happens, the cumulative damage of the past two years will take a generation to repair.

But elsewhere the news is also grim as the fall-out from a populist surge gathers pace. Take events in Hungary for example. Orban, the rampantly nationalistic premier, has curtailed a free press and promoted homophobia, xenophobia and anti-Semitism, the latter used most notably to try and run George Soros out of town. His party, Fidesz, is likely to be thrown out of the moderate centre-right European People’s Party in the European parliament only to join forces with ruling parties in Poland and Italy to create a far-right alliance.

In Poland, the Law and Justice party (somewhat of a misnomer) is trying to curtail judicial and media independence with some success. Matteo Salvini’s League party in Italy whips up anti-immigration sentiment, and in recent weeks has even shown solidarity with the Gilets jaunes in France as they oppose moderate Macron. All three of these parties in Hungary, Poland and Italy fuel prejudice in the name of populism.

In Germany, courtesy of Merkel, far-right populists are again present in mainstream politics and such politicians are never far from influence in France.

Then in the US, Trump uses barely concealed racist rhetoric to identify with his populist voter base. His America First policies pull US influence from the world stage as he embraces the likes of the new far-right Brazilian president, Bolsonaro, Kim Jong-un and Putin, but shuns the liberal democratic leaders of the EU, Canada, Australia, let alone NATO as a whole. Only his erratic behaviour and the constitution’s checks and balances keep him from inflicting more damage on America’s future, but it is an amoral presidency. In Russia, Putin’s nationalistic and murderous hold on power strengthens as he plunders the State with wholly fascist intent.

There is a real and growing threat to liberal democracy across the West. I am no longer with Matthew Parris’s recent analysis in The Times on this. We can no longer assume we can ‘muddle through’.

Which takes us to the UK, that bastion of moderation. We have Government ministers warning that failure to implement Brexit will lead to the rise of the far-right. As if this should dictate policy!! We have moderate women MPs subject to horrific online abuse and harassment by our own version of Gilets jaunes outside parliament, whilst the police looked on, initially failing to intervene. We have Tommy Robinson raising hundreds of thousands of pounds as he peddles his Islamophobic views. We have anti-Semitism rife and excused within the Labour Party. We have a Tory Party driven to the right by the ideological toxicity of the Brexit debate.

Nothing can be taken for granted anymore and moderates need to rise up. In the UK, and probably much of elsewhere, the vast majority of voters and politicians sit broadly in the centre ground, but they need to wake up and be counted. Two cheers at least for The Independent Group. It will be too late when, through complacency, we realise the liberal democratic politics of the last few decades, and the benefits it has brought, has gone.

A week on and what do we know? Very little except Labour’s Tom Watson is taking the split more seriously than Corbyn. Nine Labour MPs have left their party, eight forming a new group. Joined by three Tories, the Independent Group has legs.

But these are Labour legs. Corbyn is a disaster. Stubborn, ignorant and stupid. He is building a far left party riven with Stalinism and anti-semitism. His international policy embraces Putin and Maduro. On economics, there is no room even for moderate capitalism, which is why he dislikes the EU and its strictures on state aid. The split with his colleagues is across the board, philosophically and policy-wise.

The Independent Group is therefore a real alternative to today’s Labour Party and many more Labour MPs may join. Pro EU, a mixed economy, NATO and for social justice that accepts inequalities of outcomes providing people have an equal start in life; one day it could be a powerful threat to both Labour and the Tories: Blairite without the baggage.

Not today, however. The Conservative Party remains largely intact and will stay that way…for now. The schism amongst Tories is mainly about Brexit, and in this respect, the defection of the three Tory MPs is oddly timed. Why not wait and see what May delivers? If the Withdrawal Agreement gets over the line there is still scope to push for a second referendum during a transition period, which is what most seems to unite these three.

My feeling is the Tories will re-group post March assuming no no-deal armageddon. There is still more that unites than divides them. Widely differing views on hard and soft versions of a free market economy have always existed and been accommodated through compromise. Many MPs will also want a close, constructive relationship with the EU going forward.

Except…except…This is all on the proviso that Tory MPs free themselves from an often extremist clique and a bullying party membership, ultimately reverting back to a more non-ideological stance; moving closer to the centre ground, where winning elections and holding power are what matter. But if leaving the EU continues a further lurch to the right, with fierce in-fighting over a future relationship with Europe and purer free market economics, then all bets are off. More moderate Tory MPs will desert to the Independence Group and then it becomes an equal menace to both major parties.

How will this resolve itself? Assuming there is no implosion of the government in the coming weeks, then all eyes should focus on the Tory leadership. I detect a hardening of opinion against Theresa May and I doubt she can survive beyond 2019 regardless of the outcome on Europe. She is almost entirely friendless now, with her seemingly narrow, unimaginative, suspicious (who can blame her suspicions!) premiership alienating too many colleagues.

Time for a change. But if that wind of change comes from a direction anywhere near the European Research Group then watch the Independent Group prosper from all sides. And like today’s Labour Party, the Tories will get exactly what they deserve.

The country’s governing class is enmeshed and transfixed by Brexit and there is little bandwidth for any other policy initiatives. That is a problem. Some of society’s imbalances which contributed to Brexit in the first place are getting worse.

Austerity was a necessary initial response to collapsing public finances post the crash of 2008 but few predicted the impact of quantitative easing (essentially pumping money into the financial system) that accompanied it.

Fuelled by cheap cash, surging house prices and stock markets over the past decade have resulted in huge disparities of wealth. If you own property and shares you have done well. If you rent, rely heavily on benefits and public services, and are employed in the public sector, you have not. Austerity was always the ‘boiling frog’ of politics. Its real impact, initially almost imperceptible, gradually gets worse. The pain after 9 years, as cut lands on cut, is now excruciating.

Theresa May rashly said the age of austerity was over starting with an ill-thought out cash bung at the NHS, but it is not. In England and Wales, 40% of councils anticipate further cuts to front-line services rising to 71% regarding social care services. Central government funding cuts to local authorities since 2010/11 have now reached nearly 50% according to the National Audit Office. Short term cash boosts to paper over the cracks have made little impact.

Zero or sub-inflation rises in public sector remuneration are now also really biting. Teachers’ pay, for example, to name just one public service, is down nearly 10% in real terms causing recruitment shortages across the board.

And then a perfect storm of higher utility bills has just arrived. This week it was announced energy bills could rise by as much as 10% for 15 million households along with council tax rises of 5%. Again according to the National Audit Office, an estimated 8.3 million people in the UK are unable to pay off debts or household bills.

Our economy is one of the largest in the world, but pressures are building. Growth is grinding to a halt as Brexit bites and inequalities and the north/south divide continue to expand as austerity bites. Whilst record levels of employment are a real success of this government, many jobs are poorly paid, long hours service roles. Productivity and business investment are weak and our relatively small manufacturing base could be further eviscerated by leaving Europe.

What is most needed, as a minimum, are constructive, well thought out reforms to social care (green paper currently stalled due to lack of ministerial time), housing and taxation (subjects for another blog) from a talented, moderate Tory government. To coin a phrase, however, that sounds like a reference to ‘unicorn politics’; the involvement of a beautiful, magical beast who happens to take an interest in politics but doesn’t actually exist…

Society’s imbalances, will be made worse by leaving Europe but the government is unable or unwilling to alleviate the pain. Just like austerity, it feels Brexit is another of those ‘boiling frog’ policies. The consequences will only dawn on many of us (just ask Sunderland…) when it is too late.

A fascinating poll in last week’s FT confirms what many of us know as we argue vociferously with friends, family and colleagues over Brexit. Britons now identify much more strongly with Remain or Leave tribes than with political parties. 77% very or fairly strongly identify with views on Europe compared to just 35% who identify on the same basis with political parties.

The split on Brexit is brought home by attitudes towards a second vote. Remain voters want another referendum regardless of how such a vote is framed. Leavers’ views vary with only 10% wanting one (versus 2/3rds of Remainers) if there is an option presented of remaining in the EU.

A second referendum would split the country and probably solve nothing anyway. Although all five polls this year show Remain in the lead, the vote is close and anything could happen in a referendum campaign. Why would there be more honesty in campaigning second time around?

So that really leaves us with the PM’s Withdrawal Agreement. Disliked by everyone, it is just about reluctantly acceptable as a compromise for everyone if all else fails. This is what is happening. There is the small issue of the EU agreeing to re-negotiate the Irish backstop…umm…but this week it still feels the most likely outcome.

So the real divide in British politics today is Europe and it will continue post almost any version of a Withdrawal Agreement. The two sides are increasingly clearly defined; moderate, socially liberal, mixed economy supporters, not threatened by the EU, versus the hard right and left who may disagree economically but are socially more illiberal on the whole and see the EU as either a capitalist or socialist conspiracy. Incredible, and well done Corbyn, for his contribution to this impasse when he could have achieved so much more.

So it seems now is the time for a new centrist party. Step up the David Millibands, Yvette Coopers, Chris Leslies and Chuka Umunnas of this world. Today’s Labour Party has abandoned you and you represent a settled consensus across much of the country based on today’s political dividing lines. You never know, if Tory madness continues, many moderate Tories may join you too.

That just leaves an anti EU alliance on the other side of the debate arguing among themselves about whether a pure socialist or free market nirvana awaits us in a post EU future. It sounds like political hell and is probably what they deserve.