Economics

It has become commonplace for news reports to refer to almost any civic unrest, or even unusual patterns of voting, as evidence of ‘resurgent nationalism’ — implicitly suggesting a visceral hatred of foreigners and a desire to set the clock back to the glory days of racial homogeneity and casual homophobia. We should be wary of accepting this media trope: for one thing it may arouse far more fear than is warranted. But apart from the needless fear it generates, it is also slightly dubious to suggest that it is the gilets jaunes or the Five Star Movement or the supporters of Brexit or even Donald Trump who are acting intemperately.

Most people were scandalised by John McDonnell’s proposal to promote a four-day working week. But before we get incensed about giving people more leisure during their working life, we need to ask another question. If it really is so vital to the economy that people spend more time at work, then why does the government spend £41 billion every year (a third of the cost of the NHS) providing tax relief on pension contributions? This merely encourages older and more experienced employees to leave the workforce several years earlier than necessary. Remember, five years needlessly spent in retirement is 20 years that could have been spent enjoying a working life of three-day weekends.

History records many well conceived and apparently logical grand plans for the betterment of mankind. Sadly such ideas almost always fail. Why is this? One possibility is that they fail precisely because they are logical. The dictates of logic require the existence of universally applicable laws. But humans, unlike atoms, are not consistent enough in their affinities for such laws to hold very broadly. For example we are not remotely logical in whom we choose to help. Will wealthy Germans help poorer Germans? Yup. Greeks, however? No chance. Utilitarianism makes perfect sense — right up to the point you try to apply it. As Orwell said, ‘To an ordinary human being, love means nothing if it does not mean loving some people more than others.

In this week's podcast, we discuss Meghan and the monarchy – is Meghan Markle good news for the Establishment? And what are we to make of her anyway? We also discuss the potential for Tory rebellion on the customs union, and ask, does economic research back up higher government spending? As the royal baby is born earlier this week, all eyes are on the monarchy. But he’s not the only new arrival to the family in recent times – Meghan Markle will be formally joining the monarchy in less than a month’s time. So what are we to make of the new Princess? For this week’s cover, Jenny McCartney thanks God that Meghan is not a spoilt, entitled Chelsea Sloane, and Julie Burchill writes that Meghan is a modern ‘adventuress’.

The shipping industry contributes around 2% of all global carbon emissions – a figure comparable to the entire CO2 emissions of a country the size of Germany.  In many ways that isn’t surprising: shipping powers the world economy, and carries 90% of all international trade. But although people understand the link between trade and prosperity, they quite rightly demand it is done in a responsible and environmentally friendly way. Globalised trade has brought rapid growth and helped see a remarkable fall in extreme poverty around the world, but it is not without negative consequences. Scientists say that to stave off potentially dangerous levels of warming later in the century, global emissions need to decline quickly to near-zero.

The Russian economy is not in the greatest of shapes. That being the case, one would have thought friendly diplomatic and economic relations with the West would be a priority for Vladimir Putin, given his need for cash to build weapons against threats from superpowers such as Estonia. A little Roman history would help. As has been well documented, the collapse of the Roman Empire in the west in the 5th C ad heralded something of an economic dark age for Europe for some 200 years. The long-nurtured Roman economic networks extending east as far as China simply could not survive the break-up that would create the beginnings of today’s Europe. The ancient sources, as well as the archaeological record, make clear just how connected that world had been.

Michael Gove never intended to make his most famous remark. In an interview during the EU referen-dum campaign, the then justice secretary was told that the leaders of the IFS, CBI, NHS and TUC all disagreed with him about Brexit. He had tried to reply that people have ‘had enough of experts from organisations with acronyms saying that they know what is best and getting it consistently wrong’. But he was picked up mid-sentence by his appalled interviewer. ‘Had enough of experts? Had enough of experts?’ Gove’s partial quote was held up to ridicule, as if it embodied Trump-style populist rage; the battle of emotion against reason.

From ‘The food shortage and how to meet it’, The Spectator, 2 December 1916: A rise in prices, if properly understood and properly used, will be our salvation, not our injury. High prices help conservation, and, what is still more important, they help supply… If we artificially cut down prices here, we sterilise instead of stimulating the impulse to feed us from abroad. We are in effect saying to the world: ‘If you are such fools as to send us food, we warn you that you are not going to obtain inflated prices. You will get nothing more here than what we choose to tell you is a fair price. Our people, even if they want to do so, are not going to be allowed to pay you a penny more than we think suitable.

The exchange of letters this week between Mark Carney and Philip Hammond made it very clear who the supplicant was. The Governor of the Bank of England informed the Chancellor of the Exchequer that he was prepared to extend his term by one year. Carney pointed out that while the personal circumstances that had made him want to limit his term to five years had not changed, this country’s circumstances had. So he would be here a little longer. Things had seemed very different a few weeks ago, when Theresa May bemoaned the consequences of the Bank’s monetary policy in her party conference speech. ‘A change has got to come,’ she had warned. ‘And we are going to deliver it.