British Politics Guide

[Salmoneus]

I'm not so sure about some of this. What's wrong with 4% inflation? [/quote]
It's higher than 2%. It hurts the middle-class and in particular it hurts savings, so it increases the cost to the state of the welfare state, particularly (in the long term) as regards pensions. But more importantly, as I said before, the higher the inflation, the faster it tends to rise, so the harder you have to work to hold it down.
Think of it as path along a the side of a cliff. There's nothing inherently fatal about walking right at the edge of the path, right at the cliff-edge. But it gives you little leeway if things go wrong. You try to walk nearer the middle of the path, because it lets you be freer to deviate to either side.
It is, similarly, better to run at 2% inflation, so that an inflationary hit takes you to 5%, than to run at 4%, where an inflationary hit can take you to 12%. Because the higher it goes, the harder you have to work to keep it down, or else it gets out of control. [the last time we crashed out of a european system, in the ERM crisis, interest rates got up to 15%...]

It would be hard to prove claims one way or another, since where inflation really causes things to happen is in central bankers' heads; they are eternally terrified of the 1970s and therefore keep economies severely throttled at all times. The post-2008 experience hasn't been a great advertisement for near-2% inflation.

The recent recession hasn't really been relevant in that regard, because the problem was the opposite: central bankers were desparately trying to increase inflation. They did, and overshot, which is partly why the recovery was so slow, and only sped up once inflation had been brought under control a bit more. [Inflation encourages people to have less money in the bank, which makes it harder for banks to lend money while keeping to sensible ratios]. But in truth, at least in the UK inflation has never gotten back under control since - an inflationary boom was followed by a near-deflationary bust, and now it's rising sharply again.

And why would inflation hurt the rich?

I said that LOW inflation relatively hurts the rich. High inflation moves wealth from the middle class to the rich, whereas low inflation doesn't, so it's relatively harmful. [before you object: sure, recent economic policies have moved wealth from the middle class to the rich, but that's not because of low inflation, but because of low taxes and low spending and low regulation]. Low inflation favours savings over investments, and the rich have proportionally more investments.

Your argument seems to be that it's the middle class that are harmed by it... but that doesn't say anything about the rich one way or another. It's certainly suggestive that central bank policy is almost always pro-austerity and anti-inflation. It's a little strange to suggest that that policy is not what the rich want. (The rich may be foolish to want it, but that's another story.)

I realise that conspiracy theories are the fashion these days, but they're not always true. Governments care about the rich, but they also care about things like banks, and about votes. And in any case, in most western countries monetary policy is not longer controlled by the government.

Low inflation is targeted not because there's a cabal of plutocrats paying people off, but because economists agree that that's the best thing for the stability of the economy. And ultimately because the middle classes get really, really pissed off if you let inflation rise too high for too long.

Also, did you get the bank debt part backwards? Inflation lessens debt, at least if it's fixed-rate. And here, at least, the minimum wage doesn't keep up with inflation, so that definitely hits the poor.

Yes, inflation reduces the value of existing fixed-rate debts. But it causes higher interest rates, which means that new and variable debts cost more. Your mortgage might cost you less in real terms, but your credit card loans cost you more. Obviously the exact effects vary with the country: in the US, 90% of people have fixed-rate mortgages... but in the UK, only 50% of people do. What's more, 'fixed' rates aren't fixed - on average they're only fixed for two to five years at a time, so an inflationary episode lasting longer than that will hit even the fixed rates.
In the broader picture, new fixed rate loans incorporate not only current inflation, but the risk of future inflation, which gets higher as current inflation gets higher. So any increase in inflation has a disproportionally large effect on debt interest for fixed term loans (even before factoring central bank policy raising rates further). And that tends to push more people toward variable rate loans where possible.

So yes, if you specifically are someone who has a really big loan fixed at a completely invariable rate for ever, and don't intend to take on any more loans in future, then inflation is good for your debt. But overall, higher inflation will tend to increase the real debt levels of the middle classes.


Regarding the minimum wage, the effects are complicated. Yes, nominal price rigidity will lower the wages of the poorest... but in the process it'll also help reduce unemployment. The wage/unemployment payoff is complicated and depends a lot on specific factors of the local economy. [which is why demanding the same minimum wage in both new york and montana is not economically that sensible]

[alice]

A pertinent misleading headline, courtesy of my copy of The Complete Plain Words:

Sections of the population are being squeezed flat by inflation

[zompist]

I'm not so sure about some of this. What's wrong with 4% inflation?

It's higher than 2%.

This isn't even an answer. 1% is lower yet. 0% is even lower. -1% is quite a bit lower. It's not the case that inflation is always bad and deflation is fantastic. It's not linear. There's some sort of curve that gives an optimal inflation rate. The question is what that number is.

Here's a paper from the Kansas City Fed that explains why low inflation is a problem, and attempts to give the optimal number. As it happens it ends up with a rate below 2%, but some economists argue for a higher number, like 3 or 4%-- here's just one example.

The recent recession hasn't really been relevant in that regard, because the problem was the opposite: central bankers were desparately trying to increase inflation. They did, and overshot, which is partly why the recovery was so slow, and only sped up once inflation had been brought under control a bit more.

Well, we're obviously reading different economists, and perhaps living in different timelines. Here's recent British and US inflation:

https://www.economicshelp.org/wp-conten ... 00x441.png

https://marketrealist.imgix.net/uploads ... uto=format

And here's real GDP growth for UK, US, and Germany:

https://www.stlouisfed.org/~/media/blog ... .jpg?la=en

I don't know that there's a very clear story here, except that the US seems to be better at maintaining a consistent growth rate. The UK is slightly more variable and Germany is way more variable. I certainly don't see any evidence for "too much inflation" here.

The recession is very relevant because the zero lower bound actually happened, and that's one of the major arguments for a higher-than-zero inflation rate.

[Ares Land]

There's a concern, that I believe hasn't been mentioned so far, that policies intended to increase inflation might feed a bubble.

I'm not entirely sure about how valid that concern may be, but looking at the Eurozone there's something to be said about it. Interest rates in the Eurozone have been very low for about a decade -- inflation is fairly stable, but housing prices, while not quite at 'housing bubbles' level, are still pretty worryingly rising.

[dhok]

My boss is British, and the annual staff meeting + party was this evening. He revealed over a few beers that he voted Remain, but would now vote Leave.

I can understand voting Leave. I can understand voting Leave, and then wanting to switch. But...???

[Raphael]

??? indeed.

[alice]

Let's charitably assume that the "few beers" inadvertently reversed his polarity.

[Frislander]

I mean, if voting Brexit meant voting for people who actually knew what they were doing and weren't just using it as an excuse to turn this country into a tax haven/Little England then I wouldn't be sure which way I'd fall. But after this much of a cock-up (which we absolutely could see coming during the referendum) I have no doubt which in my mind is my preferred option.

[Salmoneus]

The EU is very unpopular already, and even more unpopular now that it's seen as sabotaging British sovereignty by refusing to give us stuff for free. I'm sure there are some people, instinctively Leave, but who voted Remain because they thought the EU was at least tolerable and the economic consequences might be severe, who have been sufficiently pissed off by the EU negotiators that they'd vote Leave now. There are also people (perhaps the same people) who feel they were tricked by "Project Fear", and who feel that the fact that God has not yet smitten us conclusively for having voted Leave means that the threat of consequences was always overblown, so would now vote Leave.

These people are less common that the people who have switched in the opposite direction, but in a country with tens of millions of people there'll still be a fair few of them.

It's always good to remember that our generalisations about groups are just that, and that every seemingly bizarre or incoherent position is taken by usually at least 5-20% of the population. There are black people who love Trump, and skinheads who vote Lib Dem, and even people who used to be Remain and are now Leave...

[Salmoneus]

Something unusual is happening: the government's about to get trounced in a legally-binding vote.

MPs are about to debate a motion from Labour for a humble address for a return. What this means in layman's terms is that if it passes, Parliament will tell the Queen to tell the Government to publish some documents - in this case, it's demanding publication of the legal advice the government has received regarding Brexit, which will be very embarassing*. It's very rarely-used procedure, but because it involves a royal command it's one of the most legally binding tools parliament have. Labour previously used it to force the release of economic advice (or the lack of any economic advice, as it happened, despite the government having sworn beforehand that the advice did exist).

And Labour are going to win. Because a) the DUP say they'll support Labour this time, b) the ERG (the brexiteer group) have said they'll abstain, and c) a bunch of remainer Tories will also rebel. So this may be one of the most substantial government defeats on a substantive, non-matter-of-conscience issue in a long, long time.
[I can find a 306-231 vote on under-occupancy penalty application criteria under the Coalition, where the two parties disagreed, and a 317-286 defeat on sunday trading under Cameron; but then it's back to 1996, when the government was (unsurprisingly) defeated 317-168 in an attempt to cap MP salaries. There was a 280-208 defeat in the late 1970s over welsh devolution issues too. Oh, and a 204-118 on scottish devolution issues as well. ]

Apparently though there's now talk of the government capitulating before the end of the debate, in order to avoid being on record losing so thoroughly.





*I don't know why, but it's bound to be. The options include:
- the government is shambolic and hasn't been taking any legal advice on the issue of the age
- the government has been receiving advice, but has been completely ignoring it
or
- the government has been receiving advice, taking it into consideration, but then lying to the country about it.
It's theoretically possible the government has been neither incompetent nor deceitful, but that seems very unlikely... ignoring and/or concealing legal advice in order to push through pre-determined policy objectives thought up on the back of a napkin is basically how the UK government works. [and no, that's not a party-political thing, it was just as bad under Labour].

[Ares Land]

Apparently though there's now talk of the government capitulating before the end of the debate, in order to avoid being on record losing so thoroughly.

What would the consequences be? Does that mean there's a chance for new general elections? Or just a change in leadership?

In other news I learned that Boris Johnson had a brother in politics. (Yeah, I'm late to the party. I suppose he's too low-profile for his existence to be reported overseas).
EDIT: oh, and if Boris Johnson is BoJo, doest that mean his brother is JoJo? Sounds too silly to be true. Then again, "too silly to be true" is a constant in politics.

[Salmoneus]

Apparently though there's now talk of the government capitulating before the end of the debate, in order to avoid being on record losing so thoroughly.

What would the consequences be? Does that mean there's a chance for new general elections? Or just a change in leadership?

Of capitulating, or of losing the vote? The former, no consequences. The latter, probably no immediate consequences.

Losing a vote like this, even by a big margin, isn't fatal, because while it inconveniences the government it doesn't stop them governing - this wouldn't have been a vote of no confidence. Nor would May have lost enough votes in her party to make her leadership any more untenable than it already is.

However, by avoiding the vote, they got the BBC headline "Brexit almost completed" (paraphrasing), with text below about the government agreeing to publish some legal advice. If they'd had the vote, they'd have gotten the headline "government rocked by rebellion over brexit", and everyone would have had to go on TV and give interviews about how it wasn't important, it didn't show the government lacked support or that they were doing anything wrong, and the PM's job was totally safe, which would in turn have provoked a wave of grumpy rebels to say the exact opposite. Best case scenario, they have a day or two of embarrassing news coverage; worst case, the debacle pushes the last couple of necessary Tory MPs over the line and triggers a leadership election.

[what would happen in a leadership election? Depends. May would hurriedly consult ministers and backbenchers to work out who would be standing against her, and would talk to party people about how much support she could expect from members. If strong candidates emerged and May thought she wouldn't even make the final two (i.e. the popular ballot), she'd then resign; if she thought it would be her against someone else who was likely to beat her, she'd probably resign but maybe not given her stubbornness; but if strong candidates indicated they'd be sitting this one out and it would be her against a token hardliner rebel, she'd contest it and win, and probably be strengthened in the process. In any event, a leadership change wouldn't necessarily trigger a general election - the situation for the tories isn't great, and any new leader would want to have time to increase their public profile (they wouldn't be that well known among the public unless it's boris or maybe JRM), and to put brexit behind them, before having to go to the country. What could trigger elections is the brexit deal itself - if it's impossible to get a deal through parliament, elections are theoretically possible, though hard to see them happening in time. More likely might be agreeing a temporary deal, then having fresh elections to give the leader more freedom in future negotiations. Another possibility would be brexit alienating the DUP so much they refuse to support the government, which would eventually require new elections.]

Short version: in the UK, governments don't fall because they lose votes - because if there's a vote that could make them fall, they don't have it. Government's very, very rarely lose votes at all, and they're almost never on really critical issues - if they can't get major legislation through, there's no point even pretending to be a government, so they're forced to call new elections once it becomes clear they're in that position, generally long before anything important comes to a vote.

In other news I learned that Boris Johnson had a brother in politics. (Yeah, I'm late to the party. I suppose he's too low-profile for his existence to be reported overseas).

He does, yes. He started out as mini-Johnson, but has sort of become sensible-Johnson. Amusingly, he's retained to some extent the liberal cosmopolitan beliefs Boris has strategically jettisoned. His profile isn't very high - he's the sort of guy you don't hear about, but when you hear about him think "oh yeah, he exists!", largely because of his surname. Apparently he's reasonably respected in politics, though.

[alice]

It's theoretically possible the government has been neither incompetent nor deceitful, but that seems very unlikely... ignoring and/or concealing legal advice in order to push through pre-determined policy objectives thought up on the back of a napkin is basically how the UK government works. [and no, that's not a party-political thing, it was just as bad under Labour].

Oh Sal, how could you possibly be so cynical? Don't you realise you're talking about the Mother of Parliaments™?

A couple of more hypothetical questions about British politics come to mind; what would happen if:

1. TM resigns and triggers a leadership election, and it turns out nobody else actually wants the job;
2. As a result of an as-yet unforeseen calamity, the existing political parties cease to be viable, and newer political groupings need to be made?

[Salmoneus]

I'll offer some answers to those questions, but first...


BREXIT!!!!

For days, but particularly today, the government's been saying Brexit's almost worked out except for a few minor details like Ireland and the customs union and whatnot. I didn't bother posting about that because... well, it's been "95%" done for months.

But it turns out that today, Brexit has actually, theoretically, been agreed!

Nobody knows what the agreement is. Top ministers are having one-to-one briefings (read: screaming arguments) with the PM this evening, and there'll be a day of Cabinet meetings tomorrow, and presumably somebody will tell the press something. We can probably assume that the PM has finally bitten the bullet and gambled that the EU have found a way to word "NI remains in the EU" that's sufficiently unclear so as not to trigger the unionists (both in the DUP and in her own party - the Tories are, a reminder for anyone who doesn't know, officially The Conservative and Unionist Party).

This is potentially huge. Not just because, well, it's the future of our country at stake, but because if true this will be the first concrete change in the conversation since the Referendum. Everything has been kept in stasis waiting for this decision, and now that it's been made it's possible some other things will go bang. It'll be much harder to paint this as Schroedinger's Brexit (simultaneously both soft and hard brexit, so long as nobody looks) once the official wording is released. And that means challenges from both sides are possible.


A reminder: for this deal to become law, whatever it is, it'll now have to go through three further stages: it must be agreed by Cabinet before it can be put to Parliament; it must be agreed by Parliament**; and it must be agreed individually by each EU state, most importantly Ireland. Many things can still go wrong. Along the way, the PM would also like it to be agreed by her party (because otherwise she'll be out, even if the deal goes through), and ideally by the Scots (because otherwise Scotland will demand independence).

Speaking of which, two SNP MPs have already called for independence on hearing the news.


*apparently the PM's briefing with the health secretary lasted over an hour. It would be nice to think she was explaining all the legal language in great detail over a relaxed cup of tea, but I suspect that the duration actually indicates that there was a degree of repetition in the discussion, and perhaps some exchanges of views...

**I honestly can't remember/understand how 'legally' necessary a parliamentary vote is at that stage, but that doesn't really matter - if Parliament don't agree, they'll insist on a vote.




Oh, and the EU says a deal hasn't been agreed. Maybe we've just reached a unilateral consensus? Anyway, I think their point is that a DRAFT deal has been agreed, but isn't set in stone.

[zompist]

Looking forward to a play-by-play from Sal, because THINGS ARE HAPPENING.

May got the agreement through a contentious cabinet meeting! And then the Brexit Minister resigned! (Wasn't he, you know, in charge of negotiating it? Did he just not get a chance to read it till now?)

Read a few BBC stories about this. My impression is that every faction in Britain finds that the latest events confirm their own view.

[Moose-tache]

What's this 39 billion pounds being "given away?" I assumed the so-called divorce deal where the UK settles up all its debts and payments would be in a separate agreement. But McVey seems to think the EU deal is writing a check to the EU for no reason.

I swear Brits should be glad the US exists, because they are the only thing keeping you from being the stupidest people on Earth.

[zompist]

Looks like another cabinet member resigned, and May is presenting the plan right now to Parliament. Again, from a cursory reading of BBC News: the safe position for everyone is to reject the deal, even though a) no one has a better plan; b) whatever various factions want from a better deal, either the other factions or the EU won't allow it; and c) rejecting it probably wraps things up for May.

Still don't get why anyone else would want her job, unless it's a No Dealer who thinks everything will be just fine. (They're the government, didn't they get a secret briefing or something which told them what would actually happen?)

[Frislander]

Is it me or has this deal basically managed to be just as much of a unifier of everyone's ire as Chequers?

I swear Brits should be glad the US exists, because they are the only thing keeping you from being the stupidest people on Earth.

Bold of you to assume we haven't known that for years.

[Salmoneus]

(Wasn't he, you know, in charge of negotiating it? Did he just not get a chance to read it till now?)

Good question!
Theoretically, cabinet ministers are independent, and do their jobs by themselves, with Cabinet to co-ordinate them, and the PM to chair Cabinet as 'first among equals'. So theoretically Brexit is entirely Raab's responsibility.
In practice, however, the independence of ministers has been gradually eroded - Heath sacked them en masse, Thatcher dominated them, Blair put in place a new system where policy was just decided by a couple of Blair's unelected friends tossing around what-ifs on a settee over some pizza and deciding that whatever sounded most popular would be the new direction of the government, and ministers were used just to fill out forms the PM wasn't interested in (key terms here being "the Kitchen Cabinet", and "SPAD", a new class of decision-maker neither elected like ministers nor professional like the civil service, but just some 20something whose dad was a big donor).
The May government seems to run on similar lines, only without the advisors. So policy just... don't get made.

More seriously, cabinet ministers retain some authority when the PM isn't looking, but when the PM is interested in an issue her views override those of the minister. Brexit has been basically the only thing anyone in government has been interested in, so the Brexit secretary has had no say in it at all. I guess he'd say that he's been managing the department that provides the advice and so on, although really it's done nothing.

Eg, regarding the briefings you think the government's had - they haven't. Because a) they never bothered to actually do studies of the economic effects of Brexit, and b) because backbench MPs wouldn't be trusted with them anyway because they leak like sieves.

----------------------

It is unusual, though, a minister resigning because the PM has forced them to follow the directly opposite strategy from their own. I guess it's because although Raab knew he didn't like what was being planned, it hadn't officially happened yet, so he could claim to be trying to change it.

Weirder is the cabinet meeting where this was discussed, where Raab actively supported this agreement. About ten ministers opposed it, and tried to stop it, but were defeated - McVey called for a formal vote on the record, but it was refused. Instead, those ten then immediately leaked who had said what. Collective cabinet responsibility (CCR) means that all ministers are taken to have agreed with all cabinet decisions - otherwise they have to resign - so they resort to unofficial leaks of their positions. But such a big leak of actual Cabinet discussions is very unusual. Anyway, at that meeting Raab supported May; but later he leaked that he'd only done so "with a heavy heart". Evidently he then decided that was strategically mistaken and that he had to go further. [or, he may have intended it all along. Resigning in principled protest at the agreement is great for him; being the one to torpedo the agreement by seeing it voted down in Cabinet might not be. So he may have supported it in order to oppose it].

McVey would have gone anyway - she's clearly angling for the top job, but doesn't have a big enough profile, so has to do things like this - but people are saying the minor resignations are following Raab, and that there's more to come, probably. Raab's being seen as a potential challenger to the PM - so while Johnson and Davis' resignations were "i'm getting out of here to position for a future challenge" moves, Raab's might be a "let's have a challenge now, who's side are you on?" move. If you're going to quit the government, now may be the time - the Brexit Secretary has resigned over the Brexit deal that's actually on the table, so the window to resign and still claim it was about Brexit is narrowing.

It should be noted: Raab has rushed to explain that his resignation is in no way a criticism of the PM - just because he thinks she's betraying the country by bungling the most important moment of a generation does not mean she shouldn't continue as PM. She's a wonderful leader and he completely supports her and gosh, he'd never think of challenging here, what a suggestion. This is what everybody says*.

Read a few BBC stories about this. My impression is that every faction in Britain finds that the latest events confirm their own view.

Yep. We can all agree that a) we were right all along, b) this is shit, and c) this is someone else's fault.


Given the catastrophe of no-deal, we need this agreement to be accepted, at least in outline (though it's only a draft so there is still some room to make small adjustments). But... I don't see how that happens now. The DUP (or at least, their leader in westminster) have declared that a) the prime minister has broken her promises to them; b) the deal reduces the uk to the status of a vassal state; and c) the deal destroys the UK. So i'm guessing they won't vote for it. So that's ten votes missing. JRM, the unofficial leader of the ERG, has been almost as scathing, and asked the PM to her face in Parliament why he shouldn't demand that she be sacked as leader, so I'm guessing that's a big chunk of ERG's 50-odd votes that won't be there. There's probably going to be at least a couple of Remainers won't back it, and a smattering of leavers outside the ERG, particularly those with their own ambitions. The Lib Dems are opposed, but maybe some of them could be persuaded on pragmatic grounds, and there'll be maybe 10-20 Blairites who'll back it (more to oppose corbyn than out of principle). But it's hard to see how the government isn't still dozens of votes short.


The current strategy is not allowing a vote. The government earlier managed to back out of the requirement to have a vote by instead promising to have a vote (I've been reminded). They still promise there'll be a vote. But the government want the vote to be on the FINAL deal - ideally probably two hours before B-Day**, so there's no hope of any third option between this deal and no deal; but a lot of parliament want a vote on this draft deal, with the possibility to then renegotiate elements of the deal before B-Day.


Meanwhile, it's rumoured that the 1922 has now received enough letters to trigger a leadership election. It's not clear to me how quickly the 1922 would be forced to do that, however. If it's true, they could probably call one now... or maybe they could wait until their next weekly meeting, and then agree to an election some time in the future...? Wouldn't last until March 29th, though!

The ERG is having an emergency meeting in about 4 minutes, apparently. This is presumably co-ordinating a response to the deal, and suggests at least some of them want to go further than grumbling in parliament. Nuclear options include calling for a leadership election, or indeed calling for a general election, or at least calling for a binding vote in parliament.






*from Yes, Minister:
Hacker: But supposing somebody would say "Does that mean you refuse to stand?" You know how these media people try to trap you.
Sir Humphrey: Well, Minister, it's not my place, but on previous occasions, a generally acceptable answer has been "While one does not seek the office, one has pledged oneself to the service of one's country. And if one's friends were to persuade one that that was the best way one could serve, one might reluctantly have to accept the responsibility, whatever one's own private wishes might be."
Hacker: [taking notes] "...private wishes might be." yes, I think I've got that.


**I don't know why we're not all calling it B-Day. Seems like a wasted opportunity. Maybe it's just that politicians and the media haven't thought that far in advance.

[Salmoneus]

Can't hang around here all day today, but a quick updates:

- the PM has now been standing in the Commons being insulted by every single MP in turn for approximately three hours. Oh, now they've stopped - not because they'd stopped queueing up, but because they ran out of the allotted time and will have to come back another day. The BBC are reporting that it was over an hour before any MP expressed support.

- the ERG say they now have at least 84 Tory votes against the deal, which means that it's basically dead in the water - even if the government strings this out to the last moment and hopes that panic changes some of their mind, that seems an impossible obstacle to overcome.

- Jacob Rees-Mogg has officially expressed no confidence in the Prime Minister, which according to previous unofficial reports suggests that the PM is only one MP away from a leadership challenge.

- the ERG is indeed apparently debating removing the PM. JRM's announcement he'd already submitted his letter was apparently greeted by thumping of desks. Surely there's got to be a challenge now...



This isn't important but just an amusing note: a few days ago Raab, then then and now former Brexit Secretary, admitted "he hadn't quite understood the importance" of the Dover-Calais link to the British economy...