The Burner Episode #222: One Time a Great Nation

Aaron Bastani asks: what does the pandemic reveal about Britain’s real position in the world? Plus, James Butler takes a look at the European tussle over how to pay for the recovery.

Transcript

Good morning. This is The Burner. I’m James Butler and it is Wednesday April 22. We are still in lockdown.

Perhaps the most striking news this morning comes from the front pages of the Financial Times, which updates its estimate for the real number of the UK dead to 41,000, after its analysis of the latest data from the office for national statistics. That estimate is more than doubled the official figure of 17,337 released by ministers on Tuesday, which as of today only counts those who’ve died in hospitals after testing positive with the virus.

The questions that we have been raising over the past few weeks about preparedness, capacity and about the seriousness with which the government has dealt with the pandemic [sit] right there in that number of 41,000. You might hope that it will be pushed in front of ministers faces this afternoon.

What if we were also to zoom out a bit, what other questions does the pandemic highlight? What does it reveal about Britain in its faded post-imperial period? Here’s Aaron Bastani.

Aaron Bastani, contributing editor at Novara Media and author of Fully Automated Luxury Communism

AB: Britain’s response to the coronavirus, particularly compared to other countries, not just in Europe but around the world, including the global South, Europe, Europe has got me thinking: Is the United Kingdom, particularly England, still a modern country? By which I mean, is it the cutting edge of technological innovation, manufacturing best practice as a society? And how does this relate to the perennial question that so plagues this establishment, [who is ever] eager to channel a greater national mythos in their own self interest. Namely, of whether Britain wishes to be a smaller player bound within multilateral coalitions or a great power making moves and alliances with other sovereign States in an ad hoc basis?

England minus London has a GDP of around $1.7tn, just over half Britain’s GDP as it presently is, or rather was at $2.9 tn that’s around the same size as Spain, both in terms of population and economic size. Similar sized economies are South Korea and Australia. Importantly, however, it’s an economy which has been marked for a long time by low productivity and low rates of technological employment. The value added by industries in London is high, but beyond there and strips of what is called the Silicon fan, it’s really only flashes rather than anything significant. Nobody walking down a high street in most cities and towns would have much reason to disagree.

One story from last month really drove this home for me, when experts warn that while the UK possesses the scientific knowledge to potentially discover a vaccine, or at least significantly contribute in a broader global effort, it lacks the manufacturing capability to mass produce such a vaccine. It’s fair to say that once such a vaccine is discovered, countries will pivot all production to domestic demands. The question then is, could Britain do the same? Right now, the answer appears to be no. This is the kind of industrial issue our political and media class have, at least until, now viewed as unimportant.

As one source told to Telegraph: “The geography of where you produce them [vaccines] calls the shots. You can’t export them without saying it’s okay to export.” They went on to add: “Nation States become pretty territorial when it comes to healthcare issues. And if you don’t have the capacity, you’d be the last in the queue to get the products.” The UK, it turns out, doesn’t have the capacity, which means at least for now will be lost in that queue.

Now, this technological or industrial weakness is also obvious in Britain’s response to coronavirus as a public health crisis in the here and now. Since early March, the Chinese government has given each person a unique QR code, which allows them to access trains, buses go to work and so on. This is attendant, it’s important to say, with major problems around potentially negative incentives, [like] people trying to make themselves sick to get immunity in future. Not to mention that the data has been inevitably inserted within the broader state panopticon of surveillance. And yet its technical audacity in execution and the speed at which has been released are hugely impressive.

Compare that to Britain where we now know 25% of our tests haven’t been working and some of the most memorable policies have been a social care badge meant to recognise the graft of care workers but which costs more than many earn an hour. Or Priti Patel’s call to draw a hand on your heart to highlight domestic violence. That’s before even mentioning centenarians walking kilometers in their back garden, raising money for the NHS through online crowdfunders. Now that’s not to diminish the impulse of charity or the big hearts of those individuals involved, but rather how such efforts highlight our remarkable lack at the level of the state and what you would expect from the British government: namely, decisive, well-resourced intervention.

After all, this is the country which not that long ago developed the de Havilland Comet, the world’s first commercial jet airliner, which had the world’s first nuclear power station. Commercial one, at least, and was one of a select handful of countries to enjoy a satellite launch capability. More importantly, it did that while educating its young for free offering housing [inaudible] and not to mention generous pensions and public health care as well.

While the demise of Britain’s post-World War state has been a topic of much debate and contestation, the same discussion hasn’t really prevailed when it comes to the similar downfall of its industrial and manufacturing base. Until recently it just seemed like common sense that industry was something for developing countries, while high GDP economies like Britain had moved into intangibles like financial, legal services, real estate, and the digital economy.

Yet, it seems to me at least, that the coronavirus has been a coup de grâce, a realisation which has been growing for some time: that maybe industry is a good thing. While making money from property [and having] London as a financial hub – outsourcing the country’s public services or privatisation of its rail, [inaudible] and water – might make for far easier returns but from the standpoint of national security, by which I mean things like vaccines rather than a big red nuclear button and progress, it’s probably a bad idea.

Britain, it must be said, hasn’t had industrial policy in a meaningful sense for four decades. This was obvious under Margaret Thatcher, whose mantra was simply that the market knows best, but it was also true under Blair and Brown. And while the latter was something of an improvement, particularly in on climate change, even his industrials tzar was one Peter Mandelson. This has meant that Britain is falling significantly behind in areas like industrial robotics – we have fewer industrial robots than the Czech Republic or Thailand – renewables, manufacturer, AI, biotech, and much more.

That poses a few problems.

The first is it leaves Britain in a difficult spot to engage with the major issues of the 21st century [such as] automation, demographic aging and climate change, to name but three. What is more [is that] the absence of an industrial policy means that good high value jobs aren’t really being created. [This is] something which will be increasingly problematic as the high street and offline retail generally ground to a halt under coronavirus, but after which probably aren’t going to come back.

Before the crisis, we were repeatedly told by multiple agencies, including Public Health England, that we were well prepared for any pandemic. This being repeated by Matt Hancock and indeed Boris Johnson. But we weren’t. Why? One major reason was austerity, as last week’s revelations in The Sunday times put it: “Several emergency planners and scientists said that the plans to protect the UK in a pandemic had once been a priority and had been well funded for the decade following the 9/11 terrorist attacks in 2001. But then austerity cuts struck. ‘We were the envy of the world,’ the source said, ‘but pandemic planning became a casualty of the austerity years, when there were more pressing needs.'”

The last rehearsal for pandemic was the 2016 exercise code named Cygnus, which predicted the health service would collapse and highlighted a long list of shortcomings, including, presciently, a lack of PPE and intensive care ventilators. And yet the government did nothing. That same piece quotes a senior Department of Health Insider, who says: “I had watched Wuhan but I assumed we must have not been worried because we did nothing. We just watched. A pandemic was always at the top of our national risk register — always — but when it came we just slowly watched. We could have been Germany, but instead we were doomed by our incompetence, our hubris and our austerity.”

What we’re seeing here with the coronavirus is the convergence of the legacy of Thatcher and Blair, with that of Cameron and May, of hollowed-out industries meeting a desiccated state and ever weakening public provision.

This also applies to creating infrastructure for the issues I’ve already highlighted, [such as] aging, flooding and the decay of our high streets – all of which were issues before this virus, but which would be massively intensified in its aftermath. In China, mobile payment systems are used by almost 1 billion people while in Britain we still use contact lists. Now, that’s more than just an insipid consumer observation. By the way, if you want to subordinate deep learning and AI to major public policy problems like dealing with a pandemic, you’re gonna need lots and lots of data available to public authorities and the quickest way to do that is digital payment system. Now, the creation of these things comes with huge responsibilities. However, it isn’t that Britain’s government as some kind of moral quandary with your data, [it’s] rather [that] austerity, rather than progress, has been the name of the game for our political class for the best part of 15 years. It’s as if time has stopped and all they care about really is shareholder value in filling their own pockets. And for a long time those were synonymous with an idea of the future. But that’s most certainly gone.

In the 21st century a country like Britain can’t hope to be among the major powers and, in reality, such a label only really applies to China, the US and the EU – if the last ever summons the necessary political will of full of political integration. But the problem is that much of Britain’s electorate, and even more of its political class and right-wing media, thinks that label applies to them too.

Now, there’s nothing wrong with aiming to be a medium-sized power that collaborates with others, which is what we should be, in my opinion. But Britain’s problem is that, right now, that’s not where its future lies, [not] in the mind for many of those in charge. This, of course, dovetails with their ideology [of] low taxes, financial services, weak state, manufactured goods always being imported from abroad, which is all fine until you need to start doing things like produce tens of millions of vaccines rapidly or address climate change or reorder resources to accommodate an increasingly old population.

What decades of neoliberalism has left us with is an inability to solve problems as a country, a political class who are uncomfortable with anything not entirely dependent on the market, and a technological base inferior to what appears at first glance at least [to that of] much poorer countries. In short, this is what a country in historic decline looks like. That is, as ever, the result of political choices.

JB: My thanks to Aaron for that. There’s lots in there to think on, especially on how this crisis has, in so many ways, stripped back some of the myths Britain likes to tell about itself and what its place in the world really is.

To my mind, one of the major questions which emerges from this period is likely to be – that Aaron alludes to there – about what security looks like [and] what it really entails. It’s probably going to reconfigure a bit away from questions about terrorist actors towards resource security and domestic capacity or to the transformation, likely over the course of this century, with climate change beginning to bite. But, how far? Well, given [that is has] been a nearly 40-year period, a 40-year project, to effectively beggar the country on those fronts, I suppose it’s an open question. There will be strong political resistance to making those real questions again – striking, as it does, at the heart of what conservatism has really been about as a governing philosophy.

Now, it is my conviction that we must show even greater determination in overcoming our differences. That was what the president of the European Council Charles Michel wrote in his invitation letter to EU leaders on Tuesday evening, ahead of Thursday’s video call. So, what’s going on with the European recovery where the money needed right now at least has a name, the European recovery fund? What might it actually look like? Hmm.

There are those who want solidarity i.e. actual financial transfers between states, faithfully really greater redistribution outside national bounds. Italians, especially, [are] also calling specifically and very singularly for corona bonds to finance the recovery. However, the Italians are gradually realising that it’s probably not going to happen and so they’re warming to other possible methods as well.

Central and Eastern Europeans tend to wish to avoid transfers away from them and towards the South. But [they] don’t object to, in principle, [to] the idea of greater redistribution if their own pots of cash from the European union actually increase. This highlights the extremely flexible nature of euroscepticism among Eastern European countries especially, [one that] is rarely as existential and dramatic as your scepticism here in Britain – although [it is] sometimes invoked as a parallel by right-wing Brexiteers.

All of this is opposed to the attitude in the north of Europe, especially in the Netherlands, which thinks of itself as the more frugal and mature part of the union, as opposed to those laxer polities in the South. [There’s] a great deal of prejudice, and frankly contempt, here from these nations. [These, who] have broadly reaped historical advantages over the course of the latter part of the 20th century, but prefer to think there’s something innately virtuous about their purported frugality versus stereotypes of Mediterranean financial incontinence. Germany has been among the worst at this, although there are other peculiarities to the German setup in Europe – the strength of its economy and the way it uses the expanded labour market of Europe, especially to its East.

Giuseppe Conte, the prime minister of Italy, meanwhile accused the Netherlands of tax dumping and Germany of basically exporting too much in an interview with the Süddeutsche Zeitung on Monday. In any case, it looked like earlier this week Angela Merkel was softening a bit, she said: “Germany will participate in solidarity-based responses — over and above what we already have with the €500bn,”. That’s a recognition that something needs to happen here. She pointed [to] some mechanisms for the commission to take on some of the financial responsibility, but she’s not budging on corona bonds per se and the Italians, quite rightly in my view, want to avoid the European Stability Mechanism (ESM) and the risk of punitive austerity which may, and probably would, follow.

However, Merkel[‘s] softening looks more like a move to give France what it wants, thus keeping the Franco-German alliance stable, or [at least] more stable than it has been in recent weeks. At the heart of driving the political direction of the union. So let’s see what happens there, but there is at least agreement on the size of the fund needed. How we get there still looks pretty rocky.

One intriguing suggestion comes from the subject of wide-ranging antisemitic conspiracy theories just about everywhere: George Soros. Soros argues in a piece for Project Syndicate that the EU should issue perpetual bonds. [These would be issued on the] principle [that they don’t] have to be repaid. It draws a comparison with the bonds that Britain issued to fund both its participation in the Napoleonic War and the First World War. Now, he argues that both the relative fiscal burden would be light because only the coupon payments would need to be made – [only] 0.5% and [in turn] that would be €5bn on a €1tn Euro issuance. And that’s something that could be easily absorbed within the European budget. It’s not a bad idea, but it would send those North European treasuries rocketing into space from sheer fury. The Dutch finance minister might well join future video calls from somewhere orbiting Saturn. So perhaps not.

Meanwhile, the European health commissioner Stella Kyriakidou suggested that Europe actually needs new powers at the European level to step in and act and that this has been highlighted by the virus itself. [There are] lots of [other] pro-European Federalists making arguments like this at the moment, especially on the economic front. I don’t think it amounts to very much at all, but if nothing else, it’s certainly a test of some of the old questions about how European integration proceeds, if at all. Is it something that arises as a consequence of various acute and sharp crises? Or do those crises in fact reveal just how much in fact the nation state, the power of the nation state itself, has been strengthened by the European union? And how much decisions are still made primarily at the national level?

Here in the UK, however, obviously parliament has returned mostly via video link and Keir Starmer makes his debut as leader in the Commons this afternoon, taking prime minister’s question time. Although this will only be] against Dominic Raab, [who’s] deputising for Boris Johnson as he recovers from coronavirus at the Chequers. [It’s] probably wise for Labour to actually send him to the Chamber for that one, as Starmer’s mastery of zoom video conferencing has not so far proved a impeccable on internal Labour Party calls. A recent membership call [inaudible] his disembodied voice while the camera remained trained on Angela Rayner. I expect this may be to offer a little bit of insight into exactly how Starmer’s leadership, and especially his approach to opposition, during this admittedly tricky crisis period will shape up. So far, the one word that has struck me for this is just this: timid. This is especially true of interviews recently where he has gone out of the way to stress that no government will get everything right. Generally my sense is that you could rely on much of the press and especially the lobby to do this kind of defence of the government for you so you don’t need to do it yourself. And if they do say, wow, are you claiming that the government would get everything right? You can simply say no, of course not every government will get everything right, but few get things as wrong as this one. Anyway, we waited with bated breath.

A quick look at the Commons Order Paper also shows in the session following PMQs – where there’s an update from Matt Hancock, the house secretary to parliament – [that] there will be a question from Jeremy Corbyn, [who’s] rising from the backbenchers for the first time since departing the leader’s office.

Regardless, expect more questions and perhaps further scandal over PPE and testing today. Matt Hancock’s target of 100,000 tests a day by the end of the month might well start to come back and bite him. Perhaps that won’t just bite him from the opposition, perhaps he’ll be a useful scapegoat as the pressure grows on Number 10 itself.

Okay. Please do get in touch, especially from around the world on [email protected] Otherwise, stay safe, stay home, wash your hands and don’t be a prick. That’s it. This is The Burner.

I’ll see you tomorrow.

 

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