I have already reviewed 2020 from the perspective of Tax Research UK, but the wider perspective is worthy of comment, if only as the groundwork for looking forward in another post.
There are many reasons to be glad that 2020 is done. Most, of course, relate to COVID. Too many people have died in the UK and around the world from this disease. Already it is one in a thousand people in the UK. That is a horrible statistic. My sympathies go to all who have lost relatives and friends. My thanks go to all who cared for them. It seems that the NHS and those who work in it have been far too readily forgotten, already.
Of course, there are upsides, like the development of vaccines, but so far there are many more downsides to note. Saying so, I am going to avoid statistics and reiteration of the news. And I will sweep the other major event of the year, which was Brexit, into the analysis. There is good reason for doing so, because when looking at the political economy of the UK in 2020 some big themes emerge.
What we saw in 2020 were five emerging themes. First, the Tories ceased to be the party of mainstream business interests and became, instead, the party of speculators and rentiers. Nothing else could explain their indifference in Brexit. Cronyism, on the other hand, explained their approach to Brexit. It is a very long time since abuse on the scale seen this year was a feature of UK politics, and amazingly the public appears quite indifferent to it. Underpinning the government approach to both issues was deliberate prevarication to facilitate what, I am sure, was thought to be the gain to be made from confusion. It was a trait I forecast as theme of government in my 2011 book, The Courageous State, where I described its practice as the activity of the cowardly state. I defined that as the form of government that, when recognising a problem, runs away from it always believing that the market will find a solution because chaos inevitably provides an opportunity for gain. And so we ended up with a Brexit deal on Christmas Eve, and the adoption of the Great Barrington approach to herd immunity in the UK, with as yet unknown but likely to be horrendous consequences.
Second, we saw hopelessness in Opposition. The Torties had only two advantages over Labour in 2020. One was that, as a result of deceit and lies they were in power. The other was that they know what they wanted, even if their goals were wholly anti-social for the vast majority in the country. Labour, on the other hand, lost Corbyn, and the indecision that had been a feature of his period as leader, and gained Starmer, and absolutely no sense of purpose at all. If there is a single overwhelming characteristic of Labour to note in 2020 it is that it has not the slightest idea what it wants, who for, and why. I wish I could say otherwise, but this is the most certain explanation of why it is not light years ahead in the polls when, given the performance of the government, that is where it should be.
Third, and in contrast, issues relating to the future of the Union, saw rapid change. The SNP has succeeded in communicating precisely what it wants. It has also managed to keep a lid on the massive disquiet on Sturgeon's position on a second referendum within the party for the time being, even if I cannot see it lasting beyond May. As a result, the party has had an extraordinary year, and support for independence has grown, considerably. That it will happen at some point is now the obvious conclusion. When the majority of a population want to be rid of their colonial power it happens, eventually, and usually sooner rather than later.
Northern Ireland, meanwhile, was simply abandoned by the UK. That's the best that can be said for the Tory position. For all the claims, bluster and utter nonsense said on the issue by Johnson, he walked away and left it to its fate. As a consequence, the whole of the UK is in an extraordinary position of constitutional isolation. It's very hard to think of a situation where one, supposedly sovereign country, is so utterly divided, with part within and part without an international trading bloc, and with an internal border of some significance within it that represents a considerable obstacle to trade. The British indifference to Ireland has reached its apotheosis and next there must come some form of Irish reunification. It seems inevitable now. I am angry for the people of Northern Ireland; they have good reason to feel abandoned, whatever their views on the future, and that is not healthy.
Fourth, climate change has hardly registered this year. We will live to regret that. The Green New Deal remains no more than a vague promise. Time is being lost, and is potentially irrecoverable.
At the same time, and fifth, the economics of austerity has not been defeated. Labour and the Tories both subscribe to it. The household analogy remains firmly embedded in their economic narratives. Neither shows the slightest understanding of the reality of macroeconomics. Modern monetary theory has never been more in the public eye, and is being run away from on all sides. Tories fear it undermines austerity. Labour fears the Red wall will not like it. Marxists criticise it because they claim it does not embrace an adequate theory of class. And all of them cannot spot that what it describes is the potential for recovery within the economy that we have, which none of them apparently want to partake in. So, we end up with meaningless debate o when to raise taxes, who to impose taxes on, and what cuts to impose rather than having the thinking we need on the big picture of how we can invest and return to full employment whilst delivering a sustainable economy that modern monetary theory makes possible.
If there was, then, a summary of 2020 it would be that this was the year when the leading politicians sweated the small stuff, for personal gain, or for not knowing what else to do, whilst the big issues of coronavirus, the constitution, the economy and even the future of the UK as a country went on around them without them apparently noticing or caring. If ever we looked to have an unsustainable political system then this was the year to see it in action.
It's been a pitiful year for politics and the political economy. People have died as a result. The fabric of society has been undermined. The UK is falling apart. And the official Opposition seems unwilling to assume its role as the creator of alternatives. It's been deeply depressing, and it may well get worse before it gets better.
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It has been a bad year on many fronts – you could add China’s approach to Hong Kong, and populistic nationalism and authoritarianism creeping forward in Europe and elsewhere, the debacle over A levels and GCSEs (likely to be repeated in 2021, it seems to be, with repercussions for another 4 years at least) – but there have also been a few brighter spots. The increasing attention paid to the NHS and social care, and very rapid medical advances. Marcus Rashford’s campaign firstly getting children fed and secondly tearing the mask off Conservative indifference to children going hungry. Wider acceptance that MMT is a description that works (although I think it falls to the Marxists to create a “theory of class” consistent with MMT that they find adequate, if they think it needs one; I doubt it is needed, any more than an “adequate theory of class” is required to accept the accurate description of the world provided by evolution by means of natural selection, the period table, or quantum mechanics). And indeed wider recognition that the market needs proper regulation to achieve pro-social aims, and that monetary price is not the only or indeed most important measure of worth: see Carney’s recent Reith lectures. And the successes of the Good Law Project. Black Lives Matter hopefully leading to some real change, or at least the recognition of the need for change. Biden winning (rather than the alternative).
Let’s hope the statement of total recognised gains and losses shows more ups than downs next year. There is a very long way to go on climate change, and in many ways I fear it way well be too little, too late.
Happy near year, everyone!
Thank you for adding new perspectives
And for your contributions this year
It looks like you are receiving significant amounts of grant funding, much of it from charitable sources.
In the interests of transparency, and given that you regularly demand it from others, will you be publishing your full tax returns, both for the LLP and because LLP’s are opaque, your personal tax return?
It would set a good example to others, meet your own standards and shouldn’t be difficult assuming you have nothing to hide.
The full accounts of Tax Research LLP – providing much more information than required by law – are on line for you to see
My share of the profit transfers straight to my tax return
I have nerve asked for company or personal tax returns to be online
Sad that anybody with an ability to reason has to write off the Labour Party under Starmer but the party has a long history of adopting the elite establishment’s line of thinking which we now call Neoliberalism or of late Rentier Capitalism. This goes right back to Philip Snowden, a supposed Christian Socialist and former Labour Party administration Chancellor of the Exchequer, advising Churchill to go back on the Gold Standard in 1925 (that’s nearly a 100 years of muddle-headed economic policy from the Labour Party!):-
https://spartacus-educational.com/Gold_Standard.htm
https://spartacus-educational.com/REsnowden.htm
Sadly you also find it in British interpretations of MMT which are insufficiently rigorous. What, for example, happened to the “Functional Finance” policy aspect of MMT in this Postscript paragraph of the GIMM’s Accounting Model of the UK Exchequer (See page 117)?
“As shown in the accounting examples, government expenditure is realised in the first instance as additional reserves in the banking sector. Taxes serve to directly offset this effect by removing reserves from the banking system and thereby contribute significantly to the offsetting objective. Since expenditure and revenue flows cannot be expected to precisely match, the security dealing activities of the Debt Management Office act as an additional, bi-directional balancing component. On days when spending into the banking system exceeds revenue, the Debt Management Office sells securities and thereby removes the remaining additional reserves from the banking sector. When revenue exceeds expenditure, and reserves are therefore lost from the banking sector, securities are purchased by the Debt Management Office and this returns banking sector reserve balances to parity with respect to Exchequer operations.”
What too happened to the government simply declaring the bank base rate, paying interest on reserves to the banks, and leaving the quantity to do what it will.
https://gimms.org.uk/wp-content/uploads/2020/12/An-Accounting-Model-of-the-UK-Exchequer-Google-Docs.pdf
There clearly needs to be a political upheaval in the UK based especially on updated economic thinking which includes a clear understanding of how fiat monetary systems work but how will it come to to pass. Alexandria Ocasio-Cortez in the United States is trying to work within the Democratic Party in the United States to achieve this kind of radical change. The next four years will allow us to see if she makes any impact.
https://www.theguardian.com/us-news/2020/dec/30/democrats-party-joe-biden-working-class-americans
Meanwhile further stagnation would appear to be the order of the day in the UK.
People like Paul Embery in his book ‘ Despised’ that I am now reading (well, making myself read) seems to advocate using empathy with concepts like ‘liberal elite’ and ‘woke’ to enable Labour to reach out to the electorate. To me these seem like fascist tropes that seem intended by the Establishment to divide and conquer.
I have yet to read his book completely, but you have to ask what is going through his mind to use such language? He’s a trade unionist and a Labour party member. I’m trying to keep an open mind as I grapple with his book.
Reading this review – https://mancunion.com/2020/12/18/review-despised-paul-embery/ – it looks as though Embery is on the other side of that argument – criticising Labour for detaching itself from working-class aspirations to follow woke, guardian-reading etc
Yanis Varoufakis wrote this article.
He quotes Bertolt Brecht’s apt and elegant aphorism: “Because things are the way they are, things will not remain the way they are.” There is hope, he says.
https://www.project-syndicate.org/commentary/seven-secrets-revealed-by-2020-by-yanis-varoufakis-2020-12?utm_source=facebook&utm_medium=organic-social&utm_campaign=&fbclid=IwAR1NN5HAPcSNarvA-rqkCh791dBnyeAq69Inj1tk_3awortX5zd6C7YJY_M
I agree both Northern Ireland and Scotland have been given a great opportunity to free themselves of English rule and good luck to them. I have always sympathised with Paul McCartney’s “Give Ireland back to the Irish” and Johnson has done what his right wing English nationalists wouldn’t have let any other English politician do while totally screwing over the Unionists.
My concern is the dirty tricks the tories and their security service minions will pull to try and dig themselves out of the hole they have cynically put themselves into.
I agree with your list and others here too.
One thing I would add though is that this year for me has led me to understand more about global money laundering and the threat it is to our democracy and how it might combine in England with BREXIT and the ‘chumocracy’ we have seen in action.
This game we play that pretends money is just ‘money’ – something neutral and to be accepted without question – fills me with a lot of foreboding. I wish to live in a world of values that are lived – not just uttered and then forgotten.
A warning from USA that Biden is looking to UK to clean up its act on international money laundering:
https://rusi.org/commentary/get-serious-illicit-finance-threat-us-uk-special-relationship
I expect waffle and bluster to be voiced by UKGov but no substantive action to be taken
And you are right to think that
I sympathise with your personal exposure to Covid and its after-effects (previous post). I only discovered your blog this year with the extra browsing time afforded, and hadn’t known about that.
I cannot say I disagree in general with your points above. But I will say that household economics makes so much instinctive sense to all of us (I’m afraid I can’t create money like the government) that that is a very hard message to convey. Please, just keep chipping away.
And I personally am not writing Starmer off yet. Admittedly there is no other party for any of us to pin our hopes on at the moment, and he has an extremely complex set of balls to juggle. But his approach seems to have worked for the moment, though my feeling today is that if it had been me I would have asked my MPs to abstain (or at least, not to oppose but to support or abstain according to their conscience).
But the main thing is that I grew up thinking that politicians’ motivation should be and I would like to think used to be the national interest – as they saw it, not necessarily the same as me but that is democracy. It is dreadful to have a party in power that even in an extraordinary crisis sees its priority as supporting its cronies.
Agree with that conclusion
Headline of the year for me was ‘Scandal as price of tattoos due to Covid restrictions rises above the price range of benefit claimants’.
It’s very unfortunate that the AV referendum was not presented as an opportunity to have a pop at the establishment in the way the Leave one was – it was the one which would have have reordered our appallingly outdated establishment, preventing the lunatics, of either tendency, from taking over the asylum.
It is difficult not to be incredulous or even terrified to see this meltdown of what was some kind of functioning democratic state.
To add another aspect to Richard’s themes, – the corporatist takeover of the BBC by the government, to the extent that, in Putinesque style ,only an approved set of questions can be asked.
These dont include why the £10bn ‘Find Test, Trace, Isolate & Support’ system has been effectively abandoned. It is the only way, along with lockdowns which could have saved many of the additional 30,000 covid deaths since the rejection of the explict science advice on 21st Sept.
That fateful rejection itself amounts to deliberate killing – ( culling?). Is this a version of what Germans were seeing in the thirties – but not being explicitly fascist – just as sinister?
Tom Kibasi puts it well in today’s Guardian—about the political and media elite….
…..’ a lack of critical thinking and remoteness from the real economy, from manufacturers to farmers to financiers. …a predilection for political drama and titillation at wanton destruction rather than for sober and serious analysis. And with the official opposition not offering any opposition whatsoever, it has exempted the government from any serious scrutiny.
https://www.theguardian.com/commentisfree/2020/dec/30/no-deal-brexit-hoax-doomsday-scenario-credible-eu-uk-politics
Thanks
The saddest things for me about the truly astounding Marcus Rashford and the work he has done, and continues to do, is that opponents first tried to say that the issues involved were far more complex than merely feeding children — where there’s a will, there’s a way — then they tried to say there was no point helping because parents or guardians would only go and spend the money in brothels, bookies and pubs — not even remotely true in every case, I suspect, but surely it’s not beyond the wit of man to devise an effective distribution system to feed children anyway — and when that didn’t work, they tried to question Marcus’s motives and those who were helping him — of course, he needed help with logistics, communication and whatever else, he’s a full-time footballer after all. I couldn’t care less if Jay Z and Roc Nation are involved. That’s not the point — hungry children are. To doubt his sincerity and motives when he has lived the experience of he and his family not having enough was inexcusable. No compassion. Infuriating and depressing at the same time.
Happy New Year, Richard, and all who come here
Spot on Ralph
Happy New Year
This time last year millions of people in the UK were mourning the loss of hope for the future of the UK. We had witnessed years of cronyism, political corruption and down right lies. It was the first time ever I saw in the new year without any hope. That was before COVID was properly born . The result of the 2019 election was catastrophic for the ignorant people who handed the future of our country to a bunch of liars and thieves. COVID highlighted everything wrong with our country after 10 years of unnecessary Tory austerity and underinvestment in our public services and building a society for the people. I now hear many of those people beginning to realize they made a mistake. Too late. It’s done. None of their destruction can be reversed. We have a one party state.
Happy New Year to you and (the majority of (!)) your contributors Richard – ta very much for a little bit of sanity. There’s an expression I use fairly often, in with friends family and clients, and it seem appropriate here, it’s from Soren Kierkegaarde a search engine tells me: “Life can only be understood backwards; but it must be lived forwards”
As to what is to come…? Well, only one way to find out really, and that’s to keep on keeping on. Best wishes to all.
And to you
Interesting to note that yesterday’s guest editor if the Today programme, Evan Spiegel, chose to include, in the final 10 minutes of the programme, Prof. Margaret MacMillan describing the economic vandalism ( my words) of the Reagan presidency and it’s long-term consequences.
Mr. Spiegel, co- founder of SnapChat, appears to recognise that the world economy faces long-term issues in turn, and that the solutions lie in a more social and cooperative approach, than the dog-eat-dog and devil take the hindmost approach currently worshipped by our rulers.
In a nutshell, we need that which is lacking at the moment: a vision of a better future for all, the desire to start building it – and we must learn from the tenaciousness of the neoliberal for this – the will to achieve it.
We have the ideas, and you are a leader in articulating them, Richard, but the political side are clearly somewhat lacking
As Tory regimes usually degenerate into corruption and rioting, with the former now strongly established, how long before the latter begins to assert itself, during which we will learn the true mettle of the Opposition?
All best wishes for the New Year to you and yours, and all who read and post on here.
One thing remains constant, whatever happens the very rich get richer.
Also, whilst seemingly a decent chap a knighthood for a tax exile seems a bit off.
[…] have reviewed the last year, both from the perspective of this blog and from that of the political economy. But what of 2021? Knowing that 2020 proved how foolhardy any form of production might be, what do […]
Happy New Year, Richard and thanks for all your information and effort this year. Top notch.
And a Happy New Year to everyone who reads this site.
Craig
And to you Craig
Thanks for your outstanding efforts Richard, your blog is a wealth of information, ideas and interesting comments below providing food for thought, and today’s recasting of
Torties – negligence their forte all too apt. Keep up the good work. You certainly kept us sane here in this maddest of years.
I will try
I promise no more than that