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The UK’s next prime minister could be its last

Great political parties can and do disappear. It is a fact of history. The Irish Home Rule Party disappeared in 1918. Around the same time the Liberal Party, the party of Gladstone, began to atrophy, and was ultimately eclipsed by the Labour Party.

In both cases, great events – the 1916 Rising and the first World War – changed politics forever in their respective countries. In the UK the Liberals were destroyed by the Labour Party, who reframed 20th-century politics as a battle between workers and capitalists.

These big events change the rules, and it looks like Brexit is one such event for the current crop of British parties.

Could the Conservative and Unionist Party go the way of the Liberals, outflanked by the Brexit Party – or some version of the Brexit Party – as England and Scotland become engulfed by the politics of identity?

And, on the other side of the house, as Jeremy Corbyn drags the Labour Party further to the left, is the Labour Party a similarly endangered species? Such a reconfiguration might see a revival of the Liberals (or some form of Liberals) in the centre ground after almost a century of playing third fiddle.

With respect to the British centre, we tend to forget that Tony Blair won three consecutive elections, with big majorities of more than 100 seats, from the centre or centre left.

Indeed, Margaret Thatcher’s catch-all Tories of the late 1980s was similarly all-encompassing. Just as Ronald Reagan converted millions of Democrats to Republicans in a phenomenon called the “Reagan Democrats”, Thatcher succeeded in capturing the centre. Britain’s centre voters – Blair’s and Thatcher’s centrists – are still out there looking for a home that they can’t find in either major party right now.

In this article let’s focus on the Tories.

Watching the Tory leadership debate this week, it looks like the next Conservative prime minister could be the last. Indeed, going further, the next prime minister of the UK could conceivably be the last prime minister of the UK.

Strange mix

The Conservative Party has always been a strange mix of older patriots, younger metropolitan professionals and large swathes of upwardly mobile middle England. Such electoral promiscuity has been a winning ticket.

Central to this electoral strategy was London and the cosmopolitan southeast, where the Tory tactic of low taxes for the rich appealed to the already rich and the wannabe rich.

In addition, the message of social liberalism, tolerance and openness to immigration is very much part of that metropolitan mix, designed to appeal to the aspirant, well-educated middle classes. This was Boris Johnson’s message when he was mayor of London.

Openness was also the message of Danny Boyle’s choreographed opening of the London Olympics – an uplifting era that seems far away now. In fact, it is no surprise that the Conservatives around David Cameron who plotted the downfall of Tony Blair and New Labour’s hegemony were known as the “Notting Hill set”, a toffish-gang of upwardly mobile, cosmopolitan metropolitans.

Post-Brexit the Conservatives have abandoned metropolitan England, allowing themselves to be remoulded in the image of Farage’s Brexit Party. This is a huge change. Without the big metropolitan centres of London, Manchester and the like, the New Brexit Tory Party is much more English in appearance.

It is a party of patriots rather than cosmopolitans, of the old rather than the young – infused, like English national football postmortem commentary, with a sense of profound grievance and spectacular over-confidence, where someone else is always to blame. This is not the England I know.

However, a Conservative Party that looks like this and seeks older, poorer, patriotic voters needs to change its policy pitch. There is no political point offering income tax cuts to the struggling middle, the poor or the retired. These voters want more social spending, better hospitals and better pensions. They want better state schools, public transport and, most critically, public housing.

Therefore, to beat the Brexit Party, the Tories have to shift to the left economically, moving to tax the elite, and to the right socially, scapegoating the foreigner.

Conundrum

Johnson faces a conundrum. To become the unifying Churchillian figure he so craves to be he will have to adopt the policies of Clement Attlee on the left and Enoch Powell on the right. In a post-industrial European country like England this is almost impossible.

England is a country with a population of 55 million and 417 people per sq km. It is heavily urban or suburban. The median age is 38, and one quarter of this huge population is under 18. Close to one third is under 30. In contrast, over-65s, who helped deliver Brexit, constitute only 18 per cent of England’s population.

England has a population growth of around 150,000 per year; add the 210,000 new immigrants who arrived last year, this gives it an upward population dynamic of 360,000 per year. These people need to live somewhere, and their babies will need schools, doctors and all sorts of other social services.

A Conservative party that decides to go for the older patriotic vote and the Brexit vote of Middle England will be going after a dwindling base. After Brexit, what will it have to offer? It can’t attract these people with the “Singapore of Europe” idea because the hybrid Singapore model is based on tax cuts for wealthy metropolitans (the people the Conservative Party has abandoned), coupled with a reduction in labour protection, standards and income for the patriotic working class (the people the party is supposed to be representing).

In the UK, these people want more, not less, protection and more, not less, social services.

The Conservative Party is in a bind. By going after the Brexit vote, which is huge and coherent only on the issue of Brexit, it risks losing all other voters and, when Brexit is done, the Conservatives will be on the wrong side of the argument. The Labour Party is similarly cornered, this time by its own ideology.

Compromise

Someone needs to compromise. In general when it comes to compromise politics is governed by the dictum that the right seeks converts, while the left seeks traitors.

This means that the right comes together under a new leader, picking the bits that are palatable while putting up with the less savoury offerings. We see this in the US when reluctant Republican patricians line up behind Trump, many holding their noses.

In contrast, when asked to compromise the left tends to look for traitors, attacking each other over the minutiae of dogma, rather than seizing the bigger opportunity.

Brexit has kicked off such a row in England that compromise might be difficult even for the traditional right. This implies an opportunity for the centre ground when the dust settles.

The UK’s next prime minister could be its last

Great political parties can and do disappear. It is a fact of history. The Irish Home Rule Party disappeared in 1918. Around the same time the Liberal Party, the party of Gladstone, began to atrophy, and was ultimately eclipsed by the Labour Party.

In both cases, great events – the 1916 Rising and the first World War – changed politics forever in their respective countries. In the UK the Liberals were destroyed by the Labour Party, who reframed 20th-century politics as a battle between workers and capitalists.

These big events change the rules, and it looks like Brexit is one such event for the current crop of British parties.

read more

The Government needs to cut spending now – but it will not

One of the most essential, but least well-understood aspects of macroeconomics is that economics is counterintuitive. This is because macroeconomics, unlike accountancy, is more concerned with the collective than the individual.

The rule of thumb that dominates economics – again, as opposed to accountancy – is that what is good for the individual is not always good for the collective. When things are going really well and demand is very strong, like now, the Government should, counterintuitively, act to dampen it.

When demand is strong and people and companies are spending, the State should save and build up a surplus. Because, as night follows day, there will be a downturn, when people stop spending.

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Trump’s gut instinct on China might be right

As the China-US trade war sends international stock markets reeling and threatens to escalate, economic history can help us make sense of it.

For example, recently in Russia, during an inevitable conversation about the UK and Brexit, some Russian friends compared the much-loved (in the West), Mikael Gorbachev to Boris Johnson.

To our ears, Gorbachev is the brave hero who brought democracy to the Soviet Union. Comparing the great Russian reformer with the buffoonish Johnson appears unfair and harsh, but many Russians dislike Gorbachev intensely. They accuse him of having – like Boris Johnson – no sense of responsibility.

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Green surge has created a political battle

The Berlin taxi driver was a bit groggy on Tuesday morning. The night before, Union Berlin, the East Berliner football team – used to playing second fiddle to the more celebrated West Berliner Herta Berlin – won promotion to the Bundesliga for the first time in the club’s history. Next year, Union will be lining out against giants such as Bayern Munich, Bayer Leverkusen and Borussia Dortmund. It had been a long night in the city.

After the essential few minutes on football and a quick natter about Berlin in springtime, when this tree-lined city turns green, we switched to politics. He was proud to tell me that Berliners know how many trees are in the city (430,100) but don’t know how many immigrants live in the city.

In one sentence he framed German politics on the day after the European election, when the big story was the surge for the Greens in what was West Germany and the dogged gains for the Alternative fur Deutschland (AfD) in the old East Germany.

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Ireland again faces a global property cycle fallout

When Zeus heard that the boy Apollo, his child with one of his lovers, Leto, had incensed Zeus’s wife, Hera, by killing the python Hera had sent to kill Apollo and his twin sister, Artemis, he banished the twins to Delphi for eight years.

While there, Apollo, a god of many talents and traits, one of which was that he couldn’t lie, established the Delphic Oracle. The mortals could ask the Sybil, the high priestess who looked after the oracle for Apollo, to tell their future.

The Sybil would then interpret the prediction in a ridiculously ambiguous riddle, so as to be never exactly right but never specifically wrong. Such ambiguity allowed the gods to cover their backs and left the mortals scratching their heads.

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Grand Canal Dock and a story of manic speculation

Last week Uber, the taxi-sharing app, floated on the New York stock exchange. As a result the company is now worth just over $65 billion.

We are entering the 11th year of a bull market, and because success tends to breed a disregard for the possibility of failure, investors expressed “disappointment” at the shares’ performance in the first few days of trading.

Does this tell us where we might be in the global economic and financial cycle? Tech insiders are said to be “disappointed” at this valuation of more than $60 billion for a taxi firm with precious few assets, that has no immediate prospect of making a profit, and burns through $2 billion of shareholders’ money a year.

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Rural broadband plan is a gift of billions to private firm

The Irish State is going to pay the lion’s share of the upfront cost of rolling out broadband around the country and then is going to gift this infrastructure to a private investment company. Take that in.

The private company has the potential to sell off these assets at a profit – even if the State allows itself some clawback of such funds. That is what private companies tend to do.

As a result, over the next 15 years or so the average Irish citizen will end up transferring billions to a small number of people. And we still won’t own the infrastructure.

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It makes economic sense to legalise drugs

The corner of Middle Abbey Street and Marlboro Street in the centre of Dublin is a heroin bazaar. Every day about 10am, almost in the shadow of our national theatre, dozens of addicts line up in a reasonably orderly queue and one dealer arrives with a plastic bag of wraps of heroin and a second dealer holds another plastic bag open for the cash.

This goes on in broad daylight. Once the deals are done, the addicts head off, usually up one of the lanes off O’Connell Street or down to the Liffey boardwalk to bang up. The street dealer heads off to get more gear from a bigger dealer higher up the chain.

And the miserable cycle of dealer, addict, money, heroin, crime and destitution, rotates with life-numbing daily regularity.

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