Financial Times Europe - 06.09.2019

8 ★ FINANCIAL TIMES Friday6 September 2019

Name one rightwing

policy of Johnson’s

Robert Shrimsley (Insight, September

5) asserts that UK prime minister Boris

Johnson “is overseeing a radical right

takeover of his party”. In reality Mr

Johnson is attempting to free his party

of the old patrician guard — witness Sir

Nicholas Soames, who, like his

grandfather Winston Churchill in 1903,

faces deselection — which still believes

Brussels knows best on how we should

conduct government. Additionally I see

his chancellor, Sajid Javid, is embarking

on a very considerablerise in public

spending. Neither objective is in

character with rightwing politics, and

the latter has already attracted

comment y Bronwen Maddox in theb

same edition, who observes that such a

course “diminishes the Conservatives’

claim to be more fiscally prudent than

Labour”.

I challenge Mr Shrimsley, or any of

his colleagues, to come up with just one

major Johnsonian rightwing policy.

Stephen Hazell-Smith

Penshurst, Kent, UK

Adviser and his boss have

played into SNP’s hands

Robert Shrimsley (Insight, September

5) suggests that time alone will tell

whether the strategy of Dominic

Cummings, prime minister Boris

Johnson’s chief adviser, is genius or

folly. As a unionist, I regret that part of

the answer is already apparent.

The choice Mr Cummings wishes to

offer the electorate is not people versus

parliament, but English people versus

parliament. In their desperation to

court Brexit party votes, adviser and

boss are content to play straight into

the hands of the Scottish National

party. Indeed, through his complacent

neglect of the brilliant Ruth Davidson

and deplorable treatment of unionist

stalwarts such as Kenneth Clarke and

Rory Stewart, Mr Johnson appears

determined to lead an English National

party rather than a Conservative broad

church.

Prof Tim Luckhurst

Chatham, Kent, UK

Principal elect, South College, Durham

University; former editor of The Scotsman

A one-digit change and we

can get on with our lives

Theresa May’s Brexit deal should be

reintroduced into the UK parliament

with a one-digit change, switching the

date for Brexit from 2019 to 3019. This

would provide an appropriate period to

consider the matter. Brussels would

sigh with relief and Brexiters could

celebrate victory. Brexit would have

been achieved, enshrined in UK

legislation: Brexit means Brexit. The

rest of us would resume our normal

tasks.

Audrey Donnithorne

Hong Kong

Central bank policy must

align with climate goals

Philipp Hildebrand persuasively argues

for an unprecedented policy

framework to support the global

economy in the next downturn

(“ Central banks need new tools to

tackle the next downturn”, September

3). However, his four-point plan omits

a crucial fifth dimension: making sure

that any direct creation of central bank

money is tightly aligned with global

climate change goals.

In the current situation of profound

market and policy failures, direct

monetary financing could risk boosting

the high carbon economy just as we

need to accelerate the transition to a

zero carbon and resilient development

model. Past rounds of quantitative

easing have beenshown to be climate-

blind nd have an unintended biasa

towards status quo high carbon assets.

In line with the commitment that

governments adopted in the 2015 Paris

Agreement to make financial flows

consistent with climate security, any

new policy measures need to be

designed so that they drive down

carbon pollution, strengthen

protection against physical impacts

and do so in an inclusive way,

prioritising the needs of low-income

and vulnerable communities.

A strategy for “going direct” in terms

of economic stimulus therefore needs

to be accompanied with simultaneous

flanking measures to climate-proof the

package and channel new purchasing

power into places that need it most.

These include spurring the take-up of

renewable energy, ramping up energy

efficient new-build housing and

retrofits, driving the decisive shift to an

electric transportation system and

supporting the regeneration of

agriculture and land-use.

Nick Robins

Professor in Practice — Sustainable

Finance,

Grantham Research Institute on Climate

Change and the Environment,

London School of Economics, UK

Charity Commission asks

too much of its examiners

I was not surprised by yourreport

(August 28) on the Charity

Commission’s criticism of independent

examiners, but its expectations are

completely unrealistic. What started as

a simple idea of a common sense

check, which still works well on very

small charities, is wholly unsuitable for

more complex charities. Regulations

have become increasingly complex and

the brigade of volunteer independent

examiners has got progressively older.

Dad’s Army can cope no longer, and the

commission should reduce the

threshold for which audits are required

and ensure that the quality of those

audits is checked.

Jon Grant

Chipstead, Surrey, UK

Hong Kong protests have

united people of all ages

Jamil Anderlini has made an important

point: to have a real sense of what’s

driving the protests in Hong Kong,

speak with the protesters (“Why Hong

Kong’s ‘water revolution’ is spiralling

out of control”, September 1). But not

just with the young and their confusing

mix of real grievance (no future), fun

(how more vividly alive it is to be at the

front line than in a shopping mall) and

sex. It’s the older ones — the silent

majority — that are the more telling.

The larger demonstrations — such as

thereported .7m that turned out on 1

August 17, all the more remarkable as

an “unlawful assembly” — have

conspicuously been all ages, not just

the kids in yellow hats, from

professional couples in their 30s with

children in hand to the retired. And

what they say in quiet moments during

the protests — palpable contempt for a

government deaf for 20 years to their

legitimate economic and social

concerns and for a police force turned

visibly indiscriminate in its violence

and apparently in collusion with the

triads — leads on to conclusions

unexpected from these ages. That, for

instance, a businessman in his 60s —

for 30 years a chemicals trader

between Europe and China — on being

asked by foreigners what he wanted

from his protest, could reply

“democracy”. It’s also difficult to ignore

the strong sense of community at the

protests, despite the sharp differences

in age, economic status and views on

the legitimacy of violence.

At street level, it becomes clear that

this movement has already gone much

deeper and so will probably endure

longer than its predecessors in 2014 or

2003, not least because of its appeal to

all ages. Whatever the outcome of

current events — whether or not the

extradition bill is withdrawn — it’s

remarkable how a tin-eared

government has changed the landscape

of Hong Kong, militarising the young

but even more significantly provoking

older generations to find their voice.

The city of business has truly become a

city of politics.

Andrew Korner

Pokfulam, Hong Kong

Boris Johnson’s admiration for

Winston Churchill is well-

documented, not least in theprime

minister’s own writings n Britain’so

wartime leader. More than a few

people think — fear? — Mr Johnson

may be seeking to emulate his

illustrious predecessor in 10 Downing

Street, redeploying his allyingr

defiance from the beaches of

Normandy to the quagmire of Brexit.

Others wonder whether one should

look across the English Channel and to

Charles de Gaulle s inspiration for Mra

Johnson, who kicked off his

premiership this summer with a

cannonade of upbeat patriotism and a

vision of transformative, legacy-

defining rand projetsg.

Yet as we grapple with the latest

political upheavals in Westminster —

rules and conventions seemingly

overhauled by the hour; parliament

under attack from the executive; a

monarchy instrumentalised — maybe

we should turn to another page in the

history books o find a more suitablet

model to understanding the present

British leadership: Otto von Bismarck.

At first glance the “Iron Chancellor”

— a hardline Prussian who, through

cannons and codicils, unified

Germany and reshaped Europe —may

not seem an obviousinspiration for a

government committed to reclaiming

sovereignty and grandeur by

extricating itself from a series of

irksome international treaties. Yet the

master strategist may be more

relevant than he seems. He certainly

seems to have caught the imagination

of Dominic Cummings, Mr Johnson’s

chief adviser, seen by many as the

guiding force behind the latest

instalments of Brexit’s high drama.

Bismarck is something of a revered

travelling companion in Mr

Cummings’expansive blog posts s hea

sweeps across subjects ranging from a

looming potential conflict between the

US and China, technology, space and a

revisiting of the 2016 referendum.

Alongside speculation about “what

would Otto do” if gazing out across the

South China Sea, there are

illuminating insights into the

chancellor’s strategy. Bismarck “knew

events could suddenly throw his

calculations into chaos. He was always

ready to ditch his own ideas and

commitments that suddenly seemed

shaky. He was interested in winning,

not consistency.”

Bismarck, as the historian Robert

Gerwarth notes, was indeed a man of

“extraordinary flexibility”. He had few

constants: principally, loyalty to the

House of Hohenzollern and to

Prussia’s brand of Protestant

conservatism. Otherwise he was

prepared to switch, to make and

unmake allies and enemies depending

on the demands of the situation — and

to break the rules. If parliament was

proving tiresome, then it was simply

bypassed (sound familiar?). If the left

needed to be pacified, social security

was introduced.

He was given to theatrical gestures,

and was more than happy to cause a

scene. As Christopher Clark, author of

a history of Prussia, writes, Bismarck

courted instability. “He understood

that the outrage and conflict stirred by

provocative gestures were more

clarifying and more enabling to the

skilful politician than ostensible

harmony.”

At times this could prove somewhat

wearing. For all theperceptions of the

ruthless, at times cruel, master of the

politics of “blood and iron”, Bismarck

was also emotionally volatile, given to

bouts of hypochondria and dramatic

outbursts. He was even a bit of a

compulsive resigner — though his

threats to quit were never accepted.

“It is not easy being Kaiser under this

chancellor,” Wilhelm I once quipped.

Present-day sovereigns may

sympathise.

Championed y the nationalistb

right, reviled by the left, Bismarck’s

legacy has been the subject of pretty

much continuous dispute since his

death in 1898. In less contentious

terms, Bismarck also lives on in more

prosaic form.Pickled herrings,

sparkling water and schnapps are just

some of the products enlistinghis

name in the hope of boosting sales.

In his blog posts, Mr Cummings

concludes that Bismarck was a

“monster” and that the world would

have been a better place had one of

the various assassination attempts on

his life succeeded. Yet his appreciation

of the chancellor’s political skills and

tactics is clear.

We may be about to learn how

applicable they are today.

[email protected]

Otto is in the

House as Brexit

starts to get the

Prussian blues

Notebook

by Frederick Studemann

Yourseries of articles xploring thee

Labour party’s economic agenda fails

to appreciate the severity of the UK’s

current economic condition, and

reproduces a number of

misconceptions.

There is growing political

consensus that the UK’s economic

model is failing. The economy has

been performing badly formore than

a decade. Household debt has fuelled

the meagre recovery from the crash of

2007-08. Earnings have stagnated,

with many families borrowing to cover

basic expenses; an estimated8.3m

people annot keep up with debts orc

bills. The housing market is in crisis,

with young people set to be poorer

than their parents. Since the 1980s, the

wealthiest havedisproportionately

benefited rom growth, driving highf

levels of political disillusionment.

Action toprevent limate andc

environmental breakdown, and

prepare fortheir effects, is wholly

inadequate.

All political parties in the UK are

proposing increases in public

spending to meet these challenges.

Your headline “Cost of Labour’s

economic overhaul soars” (September

3) implies that Labour’s proposals are

unaffordable, but the Office for Budget

Responsibility analysis cited ignores

the impact of public spending on

growth, and thus on tax receipts. As

senior IMF economistshave noted ni

their critique of austerity, this

relationship is critical. Today the

government can borrow at negative

real interest rates: many pressing

infrastructure, education and

environment projects offer returns well

above zero and can therefore generate

higher future tax receipts, supporting

not detracting from fiscal

sustainability. Taxation levels in the

UK remain lower than in most

European countries.

But reform of fiscal policy is not

enough. Ownership of capital helps

determine in whose interests the

economy operates. It is a category error

to suggest a mechanism such as an

Inclusive Ownership Fund ouldw

“cost” companies or that the state will

“seize” shares. The proposal neither

reduces the book value of corporate

entities, nor requires them to pay cash

out. By requiring companies to issue

new shares and give them to a mutual

fund — mirroring the accepted practice

of issuing shares for executive

compensation — it ensures instead that

workers share in the wealth they

create.

The UK’s economic model has failed

before. In both the 1940s and 1980s,

major policy changes were made in

response. At first seen as overly radical,

they were later accepted across the

political spectrum. Since 2008 the UK

economy has again been failing, with

today’s political crisis one of the

consequences. This is precisely the

time when bold ideas are needed from

all political parties.

David Blanchflower

Professor of Economics, Dartmouth

University; former Monetary Policy

Committee member

Victoria Chick

Emeritus Professor of Economics,

University College London

Stephany Griffith-Jones

Financial Markets Director, Initiative for

Policy Dialogue, Columbia University;

Emeritus Professorial Fellow, Institute of

Development Studies, University of Sussex

Susan Himmelweit

Professor Emeritus of Economics, Open

University

Sir Richard Jolly

Professor, Institute of Development

Studies, University of Sussex; former

Deputy Director of Unicef

Mariana Mazzucato

Professor in the Economics of Innovation

& Public Value; Director, UCL Institute for

Innovation & Public Purpose

Thomas Piketty

Professor, Paris School of Economics and

EHESS

Dani Rodrik

Professor of Economics, Harvard

University

On behalf of 82 signatories. For the

complete list go to http://bit.ly/FTletter

The UK’s failing economic model demands such bold ideas

Letters

FRIDAY6 SEPTEMBER 2019

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‘It looks like it’s been drawn with a

sharpie’

As it seeks to portray itself as a
credible government-in-waiting, Brit-
ain’s Labour party likes to play down
the radicalism of its economic agenda.
Jeremy Corbyn’s media outriders argue
that his programme merely aims to
bring the country into line with the rest
of Europe, and is akin to German or
Scandinavian social democracy. Asthe
FT’s in-depth appraisalof his plans this
week has shown, such assertions are
misleading. Voters who may soon have
to decide whether to back Labour in an
election should be in no doubt what
they would be opting for.
The agenda is untried and radical. It
has no precedent in Europe, beyond a
rapidly aborted Swedish scheme.
Instead it is a one-way bet. At worst it
would destroy investor confidence and
usher in economic disaster. At best, it
would be an expensive wasted oppor-
tunity to solve the country’s problems.
The impulse that lies behind
Labour’s plans is not social democratic
but socialist. None of Britain’s EU part-
ners pursues the policies Labour
proposes of transferring large sections
of the private sector into government
hands and xpropriating shares with-e
out compensation. Such an approach
risks delivering for UK workers not the
comfortable living standards of egali-
tarian northern Europe but economic
stagnation and a return to the bad old
days of command and control.
The party’s goal is to undo much of
the Thatcherite revolution of the
1980s, which curbed the power of the
unions and privatised many state
assets, by means of its own revolution-
ary project. Margaret Thatcher’s poli-
cies, while often brutal, led to a neces-
sary shift in the balance of power
between labour and capital that helped
deliver stronger economic growth and
rescue Britain from relative decline.
Some of that agenda went too far.
Outsourcing of vital state services has

brought mixed results and sometimes

scandal — Theresa May’s government

was forced to renationalise the prob-

ation service this year. Many legitimate

questions remain over how formerly

state-owned utilities, especially the

water companies, are regulated.

Britain also experienced a sharp rise

in inequality after the Thatcher-era

reforms. Deindustrialisation and anger

withgrowth that left many behindhas

helped fuel political alienation. The UK

combines spots of excellence in serv-

ices and high-value manufacturing

with industries based on access to large

numbers of low-paid workers. The pro-

liferation of often precarious jobs has

left workers feeling they lack a voice.

Yet overall the UK has benefited

from its openness and liberal economic

model: foreign direct investment and

foreign management techniques have

helped rescue previously moribund

sectors, notably the car industry, which

hasleft state bailoutsand fraught

industrial relations behind. Plans to

expropriate shareholders will frighten

investors and put progress into reverse.

The Corbyn project would be a tremen-

dous shock to business confidence.

A pluralistic approach to corporate

forms, including employee-owned

companies, is welcome, but Labour’s

planned inclusive ownership funds are

anything but. The funds would see not

workers take ownership but the state,

as dividends over £500 would go into

public coffers. It has all the costs of a

wealth tax but privileges a select few.

Most of all, the project is a wasted

chance. Nationalisation would absorb

government funds, expertise and time

with little upside. State ownership of

companies would do nothing to

improve productivity, address regional

inequality or tackle poverty. A more

conventional social democratic project

could do all three. Labour’s agenda is

not the answer to Britain’s challenges.

At worst it could do great damage, at best it is a missed opportunity

Labour’s agenda is not

the answer for Britain

After months of protests, Hong Kong
chief executive Carrie Lam has said she
willformally withdraw he controver-t
sial extradition bill that sparked them.
This has long been one of the protest-
ers’ key demands. But the move has
come far too late. The Chinese authori-
ties — which must have approved it —
are sorely out of touch to believe this
step will end the unrest. They will have
to reckon with what protesters really
want if they are to bring the dangerous
stand-off to an end.
Had Beijing withdrawn the bill when
the mass peaceful protests against it
began, it might have been enough to
quell the dissent. Instead, authorities
followed the pattern of their response
to the 2014 “Umbrella” rallies calling
for universal suffrage. Those sit-in pro-
tests, defending a right enshrined in
Hong Kong’s Basic Law, were met with
measures such as the closure of book-
stores and the stifling of media.
The same heavy-handed approach
has been deployed against the “water
revolution”, which has adopted five
demands. Giving in to what is no longer
the most significant of the demands
will not persuade protesters to leave
the streets.
The bravery of the Hong Kong dem-
onstrators, the majority of whom have
been peaceful, must be commended.
To reach this point, they have faced
down tear gas, rubber bullets and beat-
ings by thugs accused of being mem-
bers of triad criminal gangs. Neverthe-
less, they must halt the spiral of vio-
lence if they wish to regain the moral
high ground. The water revolution may
be leaderless, but cooler heads should
prevail in the debates on tactics.
Clashes risk giving Beijing grounds for
even tougher responses.
Implementing the other demands of
the protesters would go a long way to
reducing anger. Ms Lam has already
announced that two senior officials

would join an existing inquiry into the

causes of the protests. Committing

instead to a new, independent inquiry

demanded by protesters would be a rel-

atively simple compromise to offer.

A far bigger step would be for China

would be to offer Hong Kong universal

suffrage. In a leaked audio recording,

Ms Lam admitted she is aservant of

two masters— the people of the city,

and the mainland government. This

tension has fundamentally under-

mined Hongkongers’ trust in their poli-

ticians. Yet Beijing is extremely

unlikely to show flexibility on this

point. Giving Hong Kong universal suf-

frage would risk demands for democ-

racy spreading across the border.

If China cannot bow to this demand, it

must reduce its reliance on the often

vengeful tactics that have prolonged

and fuelled the protests. For months

there has been talk of squashing dis-

sent in Hong Kong through military

intervention, with troops massing on

the border. Yetsuch a heavy-handed

action would, paradoxically, weaken

China’s position.

The inevitable bloodshed would

alienate a large proportion of Hong-

kongers, funnelling support towards

independence movements. It would

damage Chinese companies which

have enjoyed access to international

capital markets through Hong Kong —

the world’s fifth-largest stock market —

and deprive Beijing of a crucial access

point to the west. And it would entirely

close off any possibility of a voluntary

reunion of Taiwan with the People’s

Republic of China.

Beijing should look at the damage its

actions have done to Hong Kong’s repu-

tation, its financial sector, and to its

people and their livelihoods. At some

point, even the authoritarian Middle

Kingdom must ask itself if it would not

simply be easier to let Hongkongers

finally choose their own leaders.

Withdrawal of extradition bill has come too late to defuse the tensions

Lam’s concession will not

end Hong Kong protests

SEPTEMBER 6 2019 Section:Features Time: 9/20195/ - 18:57 User: dana.prince Page Name:LEADER USA, Part,Page,Edition:USA , 8, 1