Yves here. I suspect a lot of UK readers will be more inclined to argue, like Richard North, that Johnson is moving the UK towards a a Singapore on the Thames, or what Richard Murphy calls the Freeports model, which leave the hollowed out, former industrial areas in even more desperate shape. This was Murphy’s take:
Nothing I have yet seen so starkly states what Brexit is all about.
For Johnson the first objective of Brexit is to place greater controls on labour. The intention is to ensure that by controlling free movement labour itself can be controlled, and so too can its price be kept at rates the government would desire. And that is low, of course.
And his second objective is to create freeports. He will claim that these are all about creating regulation free hubs for enterprise. This is completely untrue. There is no evidence that regulation free ports have ever generated work, wealth, much employment, or free market enterprise, come to that. This is unsurprising. That is not what freeports are about, at all. Freeports are instead about permitting the free movement of capital beyond the control of the state and without the imposition of any taxes.
Quite bizarrely, given that freeports are effectively declared to be outside the country that creates them, one of the major objectives Johnson has for Brexit is to carve whole chunks of the UK out of the control he claims to have just taken back, and to pass it over to the free loaders who frequent freeports.
To understand how freeports really work I suggest watching this video. I know it’s not in English, but it’s good, and explains how the Geneva freeport works to handle diamonds, gold, armaments, fine art and rare wines, all beyond the control of authorities and all beyond the reach of tax:
The aim of freeports is to undermine the state.
It achieves this by suspending the law.
Freeports permit illicit activity.
They permit wealth to be accumulated in secret.
That wealth is beyond the reach of tax.
Research suggests that much of that wealth is also shielded by anonymous offshore shell companies that disguise the ownership of an asset even if it can be located.
The object is to ensure wealth can accumulate without constraint.
This is the paradox that Johnson revealed in his video. He wants to control and constrain people. He will use that power to oppress, not just those who want to come to the UK but also, of course, those who wish to leave the UK as well. The market in labour will be constrained. People will suffer as a result.
At the same time the market in illicit wealth will be liberated to traffic at will. The cost will be to us all, in lost tax revenue, increased inequality and the undermining of the rule of law. Additional jobs will be few and far between.
And let’s not for a moment pretend that any freeport activity supports markets: creating ring fences always creates unlevel playing fields that will always, by definition and in practice, undermine effective markets. So there is nothing in this policy that is about wealth creation: it is all about wealth expropriation and extraction.
This is what Brexit was for. And Johnson admitted it last night. One day people will realise.
In addition, readers liked this minority reading at Consortium News on the Labour general election wipeout, which contended that Labour’s share of the vote wasn’t shabby, but it got killed on seats due to the rise of the SNP, and not losses to Tories. The subhead is “Post-election commentary speaks of Corbyn’s party achieving ‘its worst result since 1935.’ Alexander Mercouris shows why that is a serious misrepresentation.”
By Marshall Auerback, a market analyst and commentator. Produced by Economy for All, a project of the Independent Media Institute
Call him an upper-class Etonian twit if you like, but the reality is that Boris Johnson, not Donald Trump, might be the 21st century’s first genuine blue-collar conservative. Since becoming prime minister, Johnson has represented a profound break from the prevailing market fundamentalist ideology of the past 40 years in terms of both his rhetoric and, more importantly, his actions. His policies evoke a 1970s-style economic corporatism (much derided by Margaret Thatcher) or, in more historic terms, a reversion to a kinder, gentler form of “one nation conservatism.” In the words of UK-born, U.S.-residing pundit Andrew Sullivan, the core of Johnson’s ideology is an appeal to “the working poor and aspiring middle classes, [by being] tough on immigration and crime, but much more generous in spending on hospitals and schools and science.”
Is it for real? Recall that this was also the promised policy formula that helped elect Donald Trump president in 2016, but which he hasn’t implemented while in office. By contrast, Johnson’s actions suggest a more serious intent, which could have long-lasting consequences for British politics and beyond. The center-left of Europe and the U.S. ignores this phenomenon at its collective peril.
To caricature Johnson as a “British Trump” is a lazy narrative that grossly mischaracterizes what he has done already during his comparatively short tenure leading the United Kingdom. When Donald Trump first entered the White House, his then-chief domestic policy adviser Steve Bannon pushed the president to raise taxes on the wealthy and embark on a big program of infrastructure reconstruction to consolidate his political gains with white working-class voters who provided him with his margin of victory in 2016. Of course, we now know that Trump rejected this advice, as the president hewed instead to Paul Ryan’s austerity politics, attacking existing health care plans, and government social welfare programs, all the while promoting corporate tax “reform” where the benefits skewed heavily toward the top tier. Similarly, on infrastructure, Trump has done nothing, and so far as immigration policy goes, his signature proposal to build a wall has been a case of “sound and fury, signifying nothing.” Trump and the GOP accordingly paid the price in the midterm elections of 2018, one of the biggest congressional wipeouts over the past half-century.
Perhaps Johnson is mindful of this. In his victory speech, he acknowledged that voters in the traditional Labor heartlands merely “lent” their votes to him, and that more needed to be done to consolidate their long-term support. With that in mind, he has already backed off his party’s original plan to cut corporate taxes by 2 percent, so that his government could spend more on voters’ priorities, including the state-funded National Health Service (on health care, Johnson’s Conservative Party is farther to the left of most of the Democrats now running for president other than Bernie Sanders, let alone Trump and the GOP). On infrastructure, Johnson has greenlit approval for the construction of a high-speed train line to the Midlands and northern England, a $130 billion venture that many have derided as a wasteful money pit, but which the PM views as a crucial means of regenerating these depressed regions outside the home counties. As a transport concept, the High Speed 2 (“HS2”) benefits might be marginal: Huge expenditure and big dividends to builders. In reality, light rail is all the UK probably needs. But the proposal was symbolically important, of course. And the amounts approved represent something well beyond tokenism, as the project constitutes one of the largest infrastructure spends of its kind anywhere in the world.
At the same time, Johnson has been able to culturally connect with voters in the post-industrial Midlands and northern England, who wanted nothing to do with Labor’s “woke” identity politics. Historic indifference to their deep, often unstated misgivings about where the country and its culture were going was often dismissed as racism, much as Hillary Clinton derided a large chunk of Trump supporters in 2016 as a “https://www.bbc.com/news/av/election-us-2016-37329812/clinton-half-of-trump-supporters-basket-of-deplorables” rel=”nofollow”>basket of deplorables.”
Even on immigration (where we see echoes of Trump and the charges of racism have become most pronounced), it should be acknowledged that Johnson’s prioritization of a skills-based immigration policy is not inherently restrictionist (in fact, both Canada and Australia, the models for his new immigration policy, have high net immigration rates).
Unlike Margaret Thatcher or Ronald Reagan, the new British PM’s goal is not to roll back the frontiers of the state but, rather, to use it to mitigate inequality by enhancing middle- and working-class wage growth, arrest the stagnation of dying communities and, above all else, reassert the primacy of the nation-state as the central organizing foundation for society (as opposed to subsuming it into a larger supranational political grouping). In Johnson’s vision, the state, labor and business would all play major roles in the promotion of national economic development, as well as restoring the social contract long shredded by economic neoliberalism on the left and radical free-market libertarianism on the right. Of course, a range of powerful trend lines are working against this model: the scale of challenge to make necessary advances in scientific and medical research to sustain a human population in the billions requires international collaboration, the tidal wave of merged investors and industry continues at a rapid clip, and the globalized telecommunication process is homogenizing culture and taste across the planet.
In fiscal policy terms, Johnson’s rejection of the Treasury’s prevailing austerity bias has been particularly noteworthy. The former chancellor, Sajid Javid, had repeatedly insisted that the UK should run a balanced budget by 2023, the maintenance of which would have severely hampered the Johnson administration’s ability to offset potential trade shocks emerging from a more restrictive trade relationship with the EU, as well as mitigating the government’s ability to embrace a robust national industrial policy post-Brexit. The resultant clash was brought to a head when Johnson forced out his chancellor, by issuing an ultimatum to Javid to fire all his advisers—a condition that the chancellor later said “no self-respecting minister” would accept.
The clipping of the Treasury’s wings (and the corresponding resignation of Britain’s chancellor of the exchequer) has been caricatured by Johnson’s opponents in both Parliament and the press as the actions of an insecure, power-hungry prime minister seeking to centralize power. But in reality, the move represents a long-overdue move to cut down the Treasury’s stranglehold over the totality of economic policy relative to other government departments and paves the way for an expansionary post-Brexit budget.
It is true that government spending under Donald Trump has not been marked by deficit fetishism. But unlike Trump, much of Boris Johnson’s anticipated spending bonanza is largely being directed toward the working and middle classes, as opposed to society’s top tier.
By and large, Johnson’s policy reflects the embrace of a national industrial policy that collides with the prevailing neoliberal notion that the government should be nothing but a neutral umpire, delegating all entrepreneurial activity and innovation to the private sector. That is an idea akin to Holy Writ in Brussels. The problem with this view, as I have written before, is that it arbitrarily restricts the range of fiscal activity that can be undertaken for broader public purpose:
When governments occasionally find a way to redistribute the benefits of [extracting value from the economy] to the broader population [rather than to the top 1 percent], whether via a minimum wage, tighter regulation, state intervention, or similar policy, these measures are invariably castigated as wrongheaded, inevitably leading to less efficiency, sub-optimal growth and lower standards of living.
The Johnson government’s prioritization of redistributing fiscal resources to the country’s poorer northern regions runs in the face of these neoliberal shibboleths. The regions on which he is focusing have long been the losers of globalization at the expense of London and the southern home counties, which boomed as communities in the rest of the country began to wither away.
Johnson’s measures also send profoundly important political signals. They are designed to build on his recent political success where he breached Labor’s “Red Wall,” the party’s traditional working-class base in the manufacturing and mining districts of northern England, which largely supported Brexit and turned to the Tories during the December election for the first time in decades. Johnson’s political endgame is to ensure that these newly acquired working-class constituencies are converted to long-term electoral strongholds for the Tories.
The consequences of that kind of electoral success could have long-lasting implications. With his policy actions so far, the British PM is appealing to a mass of working-class constituencies long alienated by successive governments, both Tory and Labor, that prioritized the European Union’s technocratic market fundamentalism. To put it in U.S. terms, the equivalent would be the Republicans converting the Midwest into a permanent GOP regional stronghold (which would almost certainly relegate the Democrats to perpetual minority party status). In the meantime, the opposition Labor Party experienced its worst result since 1935 and more recently lost a municipal by-election in northeast England, where a 20-year-old Tory candidate decisively took almost 50 percent of all votes cast.
On the immigration policy front, the new Conservative government has introduced a new policy that prioritizes skill, largely modeled after the Australian and Canadian points-based systems, whereby a non-resident who is able to score above a threshold number of points in a scoring system that might include such factors as education level, income, skills in high demand, language fluency, existing job offer, etc., is given priority for immigration.
This policy too has predictably engendered charges of the Tories pandering to racists. What has many critics up in arms is that among the “essential” criteria is being able to speak English (even though proficiency in a country’s native tongue helps to engender more social cohesion, less cultural alienation, easier links to studies, and other such benefits). It should also be noted that language requirements are not unique to the UK (Canada likewise prioritizes fluency in its two official languages, English and French).
Other provisions of the new immigration law include having a job offer to qualify for entry and being above a designated “skills threshold.” Again, there is nothing particularly novel about these features: Virtually all EU countries demand economic self-sufficiency as a prerequisite to the free movement of people.
Nor is a points system that prioritizes skilled labor inherently restrictive. To mitigate short-term disruption to businesses, the new proposed legislation does provide alternative social safety valves, retaining existing youth mobility schemes and family reunification from the existing immigration laws. Finally, even though the law might create short-term disruption for service industries, notably in food and beverage, as they wean themselves off cheap sources of external labor, there are long-term benefits to the proposed new policy, as the Telegraph’s Matthew Lynn notes:
In truth, curbing low-skilled immigration can change the economy for the better. Why? Because it will force the economy into higher-productivity, higher-wage industries.
Just take a look at the evidence from the places where it has been tried. According to OECD data, each of the main countries with a points system has done significantly better than the UK at increasing output per worker. Taking 2010 as 100, GDP per worker has risen to 110 in Australia, to 107 in Canada and 103 in New Zealand, but only to 102 in Britain (the OECD average is 106). Our output [per] person has barely grown over the past 10 years.
It will also revalue these service jobs, as a smaller labor pool makes those job openings harder to fill.
A skills-based system also changes the migration pattern from the same regions. We are seeing evidence of this in the U.S., as Professor Michael Lind highlights in his new book, “The New Class War: Saving Democracy from the Managerial Elite.” Lind notes, for example, that an increasing number of South Americans in the U.S. are educated professionals—World Bank officials from Uruguay, etc. And in neither the U.S. nor Europe is there a backlash against Indian doctors or Chinese engineers (except in the case of H1Bs, but that is a matter of labor exploitation, as Matt Taibbi highlighted in a recent Rolling Stone piece).
Boris Versus EU
What about the big elephant in the room, namely Brexit and the UK’s future trading relationship with the EU? Boris Johnson’s domestic political jiujitsu has understandably discombobulated his negotiating interlocutors in the EU, which likely means a much more contentious negotiation about the evolution of the post-Brexit relationship between the UK and EU. Hints of the challenges lurking became evident when Boris Johnson’s chief Brexit negotiator, David Frost, warned Brussels that the UK would not under any circumstances sign up to EU rules in a trade deal with Brussels, which circumscribed the former’s sovereignty and enforced the EU’s regulatory and legal framework via the European Court of Justice. To be sure, these are but the opening shots in what is likely to be a difficult negotiation, but in contrast to the previous administration of former Prime Minister Theresa May, Johnson’s government is reversing the government’s priorities: national sovereignty over the maintenance of frictionless trade, rather than the opposite.
The reality is that Johnson’s nationalism represents a vision that is ultimately irreconcilable with that of Brussels, a fact that the EU is only beginning to grasp as it establishes its negotiating brief. Brexit was never an end in itself, but a means to a very different sort of destination for the UK. As such, not only is the UK a regulatory rival of the EU, but also, in a broader sense, it presents an ideological challenge to much of the prevailing framework that has dominated policymaking globally for over half a century, but which is likely ending. Johnson will succeed if he can re-establish a social contract among business, labor and government constituents, a modern-day tripartism that replaces today’s incipient caste system, characterized by a steadily growing underclass, often foreign-born, in menial, dead-end personal service jobs. Rather than simply deriding him, the Left would do well to pay heed. Failure to do so could have catastrophic consequences for them.