It’s not easy for politicians to screw the economy.
Generally, the engines of commerce chug along, despite political tinkering under the hood.
Of course, some political events matter. Politicians like to whisper sweet nothings into voters’ ears. But some ideologies – driven by aggressive, regressive ideas – pour sugar into society’s petrol tank.
In 1956, after Soviet armoured vehicles rolled into Budapest, the global economy also tanked. The following ‘Eisenhower recession’ saw America’s output slump by -10%.
In 1981, Britain woke up to the harsh ideological medicine of the new Thatcher regime. Exchange rates had risen. Manufacturing output collapsed by almost a third. Over 3 million were out of work. With a record like that, only a war could get the Iron Lady re-elected.
In the early 1990s, the Thatcher government’s continuing incompetence led to record levels of business failure and house repossessions. National humiliation was complete when the UK was forced to leave the European Exchange Mechanism (ERM) on Black Wednesday. Speculators laughed all the way to the bank. With unemployment heading over 10%, workers wept all the way to the dole queue.
So, why do people keep self-harming in the voting booth?
Perhaps, like goldfish, we can’t see the water we swim in, and our collective memory is hazy. You don’t even have to be North Korean to share the delusion that you are now living in the best of all possible worlds.
Remember 1974? Objectively speaking, it was craptacular.
Wages were poor and houses were cold. There was an oil crisis. To save power, Heath’s Conservative government imposed the 3-day week. Inflation peaked at 20%.
Yet if you had a suit from Burton’s, a bottle of Brut and a couple of Bowie albums, you could feel superior to any European.
We didn’t even know what we didn’t know. We had Terry Jack’s ‘Seasons in the Sun’: all Europe had was Jacques Brel. (Let’s not even talk about the Scandinavians. Seemingly, they had home insulation AND sex.)
So, ignorance really is bliss.
However, right now, a wilful aversion to reality can be the only reason we seem to be ignoring all the flashing red lights in the UK economy.
It’s hard not to hear the wheels of industry grinding to a halt.
From British Steel to Jamie’s Restaurants, all kinds of businesses have been in serious bother, and Brexit hasn’t even begun.
Business spending has sunk to its lowest level since the financial crash of 2008, itself the biggest crisis since the Great Depression of the 1930s. Online business lenders Funding Circle slashed revenue forecasts by 40%. Manufacturing output is down about 4%; car production plunged 24%. Major car dealership Lookers issued a profits warning, as did Jaguar Land Rover.
In a generally tough period, a recent construction industry report noted: “Commercial building remained hardest hit by Brexit uncertainty. Civil engineering work also dried up…”
Businesses are voting with their feet too. The German newspaper World on Sunday suggested that, last year, 166 UK companies had chosen to base their main operations in Germany, an unprecedented number.
The mess of ‘Eton-omics’ has left British households with roughly 25% lower spending power than their German counterparts. Austerity and top-down ‘quantitative easing’ have raised prices while suppressing wages. As a matter of policy, precarious, part-time, often self-employed work has grown: cheap labour is preferred to business investment.
In brief, if the UK economy were a plane, the instrument panel would be ablaze with flashing warning lights, and the passengers screaming.
Don’t be surprised though to see the upper class twits behind this whole farrago wearing parachutes. Brexit’s own Jacob Rees-Mogg set up a fund in Ireland to dodge any little local difficulty which leaving the EU might cause his investment firm.
You can argue that many of these economic issues faced by British firms are systemic. It’s true that we’ve had persistently lower productivity than other countries. However, the allure of ‘Brand Britain’ helped mask much of our international weakness. Yet, the disaster capitalism of Brexit – the ‘red in tooth and claw’ creed and ravening greed of its adherents – has served to reveal rather than heal the fragile health of UK plc.
Indeed, I’d suggest that our relatively poor productivity is most easily explained by old school, class-ridden, hierarchical managerialism.
It’s a sad reflection of the unseemly underside of UK culture – doffing the cap to the privileged and putting the boot into the poor. In recent years, narrow-minded, destructive, deceitful ideas have been allowed to riot through public life like a Bullingdon Club night out.
Yet open economies do better: the kind of fair, tolerant, safe, stable, civic-minded democracies of which Britain used to be a shining example.
Even if Brexit made economic or geopolitical sense (it doesn’t), the direction of travel should give us serious pause. Angry, dogmatic economies do badly. Swamped with nepotism, inequality, corruption, intolerance, fear and violence, they’re set up to suck money from the many to the few.
If you work for a living, there’s good reason to fear another useless toff at No. 10. The man who infamously muttered “F**k business” looks set to bring chagrin to the whole economy.
With a fondness for dead languages and even deader ideas, Prime Minister Johnson is banking on bluster and a comedic sense of entitlement. I suspect he’ll find the EU less easy to knock over than a Japanese kid in a game of mini-rugby. He might hope that, one bounder to another, Donald Trump will give him a big hand. But, when a man with no backbone meets a man with a tiny heart, that seems unlikely.
Johnson’s failure to support Britain’s ambassador to the US has already told Trump all he needs to know. Johnson is not just chicken. He’s chlorinated chicken.
Brexit is an industrial-scale failure: of leadership, of honesty, of commitment to the common good.
Let’s hope it’s not the only industry we’ll have left.
Pete Martin is strategy director at AlwaysBeContent.com