By “liberalism” I mean what is considered under this term in the US. By “to blame” I mean “for the rise of Trump and similar nationalist-populists”.
What are the arguments for seeing liberal triumphalism which began with the collapse of Communism in the 1990s as having produced the backlash we are witnessing today? I think they can be divided into three parts: economics, personal integrity, and ideology.
The Resolution Foundation’s study found that the current parliament would be the worst for living standards for the poorest half of households since comparable records began in the mid-1960s and the worst since the early years of Thatcher’s 1979-90 premiership for inequality.
The King’s Fund suggest that a 3.5% annual real-terms rise in NHS expenditure, combined with the provision of ‘moderate’ and ‘higher’ social care needs free at the point of use, would bring total health and social care expenditure up to between 11 and 12 per cent of UK GDP by 2025. This compares with the 16.9% of GDP spent by the US and the 11% spent by France on healthcare alone in 2015.
If UK economic growth continues at an annual average of 2%, by 2025 GDP at 2013 prices will be around £2.2 trillion compared to £1.8 trillion in 2015, an increase of £400 billion. In 2013 terms an increase in spending on health and social care to 12% of GDP would represent around an additional £60-70 billion annual spend in 2025. Yet even with this increase in health and care expenditure, the nation as a whole would still have over an extra £300 billion to spend on all other goods and services, public and private. The King’s Fund’s recommendation is thus eminently affordable.
Average house prices in England and Wales have almost tripled in the last 15 years, from just over £70,000 in 1999 to about £215,000 in 2014. Apart from a reduction in 2009, at the height of the global financial crisis, house prices increased every year during this period. Behind this average lies considerable regional variation, with average prices in the prime London area of Kensington and Chelsea reaching £1.3 million in 2014. Continue reading
Recently, there have been increasing calls for dialogue on a universal basic income (UBI) from political parties, think tanks (including the Royal Society for the Encouragement of Arts, Manufactures, and Commerce (RSA)), civic activists, trade unions, and leading entrepreneurs such as Tesla chief executive Elon Musk. These calls are a response to growing income insecurity, some sense that welfare systems may be failing, and as a preparation for the potential effects of automation and artificial intelligence on employment prospects in industries that might be better served by machines.3 UBI-style pilots are planned in Finland, the Netherlands, and Canada as a potential answer to these questions and concerns.4
The UK has long depended on heavy flows of investment from abroad to make up for the weaknesses in its own corporate and financial institutions. In 2015 the UK ran a deficit in its external trade in goods and services of 96 billion pounds ($146 billion in 2015), or 5.2 percent of GDP, the largest percentage deficit in postwar British historyand by far the largest of any of the G-7 group of industrialized economies. By comparison, the US ran a deficit of 2.6 percent of GDP, while Germany earned a surplus of 8.3 percent, Japan a surplus of 3.6 percent, and France broke even. In the memorable words of Mark Carney, the Canadian-born Governor of the Bank of England, the UK must depend on “the kindness of strangers” to remedy its trade gap.
The reason for this unusual dependency is that for decades the UK has been unable to produce enough goods that the rest of the world wants to buy. According to WTO statistics, between 1980 and 2011 the UK’s share of global manufacturing exports was halved, from 5.41 percent to 2.59 percent, so that by 2011, according to UN statistics, the dollar value of UK merchandise exports at $511 billion was not far off the level of Belgium’s at $472 billion, an economy with one six the UK’s population, (and not included in the Belgian figures, the value of German exports routed through Belgium ports).
Looking at export industries such as IT products, automobiles, machine tools, and precision instruments, all strongly dependent on advanced R&D and employee skills at all levels, the UK’s performance looks even worse. The period of 2005-2011 is especially revealing because it includes both the years of the Great Recession and the collapse of trade between the advanced industrial economies, but also years in which their trade with China and other BRIC economies such as India and Brazil grew rapidly. Since one of the chief claims of the Brexit campaigners has been that there are now these exciting new markets in BRIC countries waiting for British exporters to conquer, it is worth looking at how British companies actually performed during those years.
Unusually perceptive of the political and historical roots of monetary union, the author begins and ends his book by reminding readers of Altiero Spinelli’s call for “the definitive abolition of Europe’s division into national sovereign states” (p. 1). The common currency, even though not specifically mentioned in the Ventotene Manifesto, may be seen as the most radical answer to Spinelli’s call to end the nation state. At the same time, the success or failure of the euro could well turn out to be the ultimate test of Spinelli’s proposition.
The book has little sympathy for objections inspired by a narrow reading of “optimal currency area” theory (interestingly, its original proponent, Robert Mundell, came out in favour of the creation of the euro). In contrast to American economists such as Kenneth Rogoff (“a giant historical mistake”) and, more recently, Joseph Stiglitz (“fatally flawed from birth”), Sandbu argues that the architecture of the common currency has been wrongly blamed for the Eurozone crisis, and has been used as a decoy by policy makers for their own unforced errors.