CapX

What is going to be the most meaningful shift in geopolitics for Britain for the next 20 years? Will it be the result of a trade war between America and China? The choice between charting an independent post-Brexit path or closer relations with an-ever centralising Europe? Increasing flows of migration from the global south northwards? The re-emergence of economic nationalism? AI? Only a fool would try and predict exactly. But an underreported trend, bubbling under the surface, means Britons are going to have to comprehend a whole new kind of geopolitics; energy politics. Energy politics is, of course, not new at all. Ever since the Industrial Revolution, it has been a key driver of world politics. But for a long time, secured by quirks of geography and history with a rich endowment of the material needs to supply our own energy needs, we in Britain have been able to forget about it. The demand for coal was one of the drivers of the industrial revolution, and Britain’s rich reserves of coal helped drive it. The huge natural reserves and accompanying embedded infrastructure gave Britain a stable energy source it could rely on; at the beginning of the 20th century, nearly all of Britain’s electricity was produced by coal-fired power plants. But as coal was replaced by oil, strategic questions about shortages began to worry policymakers – particularly after the Suez Crisis. The year after, in 1957, the government produced a white paper, ‘Capital investment in the coal, gas and electricity industries’, which proposed increasing nuclear generation to between 5000 and 6000 MWe – up to four times as much as had been proposed in a different white paper just two years before. The Magnox reactors, which were rolled out to meet this demand, eventually produced 4200 MWe. Thanks to oil and gas production in the North Sea, the UK started exporting more energy than it imported again in 1981. North Sea production hit its highest point in 1999, but by 2004, the UK became an energy importer again. ✍️Tom Jones https://lnkd.in/dzJNiFE2

The UK’s higher education sector is failing on multiple fronts: 70% of universities are set to lose money next year, and students are suffering badly from degrees that have ever shrinking value. The so-called ‘graduate premium’ – the average additional annual earnings graduates receive compared to non-graduates – has been trending down for over 15 years. It fell sharply in the most recently reported period, from £8,000 in 2022 to just £6,500 in 2023. Factor in £43,000 of debt and three years of lost income and the average graduate starts their career about £100,000 behind their peers. With taxes on the graduate premium, they will need over 20 years employment just to catch up. Many earning below the average will be worse off than if they had never gone to uni. A 2020 study found one in five graduates from the mid-2010s would have been better off financially skipping university. With the graduate premium since declining further, that figure is likely much higher now. The uncomfortable truth is that for many – perhaps even the majority – a university education no longer pays. The root cause is not too many people going to university. The real problem lies in how universities are funded and regulated. The truth is that the government pays universities to recruit students, not to educate them productively. Universities’ financial success is measured in headcount, not employment outcomes. Once a student has signed up, universities have their money, and it is left to regulation to try to ensure that the education is of value. As the evidence shows, this is a task that regulation is ill-suited for. People are complicated beasts, and all are unique. The future demands of the jobs market are ever-changing. Not only can regulation not account for this individuality, diversity and unpredictability, its very nature inhibits the provision of what is needed. ✍️Peter Ainsworth https://lnkd.in/eErmRfT7

During his first term as US president, Donald Trump adopted a forthright approach to the issue of Nato funding. It had been an issue that concerned previous presidents too, but Trump forced it into the open and demanded that member states pay their fair share on defence. An inconvenient truth is that his approach worked, with many European countries increasing or planning to raise defence spending. With a second crack at the whip, could his tariff policy inadvertently trigger the corrective actions elsewhere that have been called for over the last 20 years, with surplus countries (states which sell more than they buy) boosting domestic demand? Tariffs form a central plank of Trump’s economic policy. Their impact depends upon how high and extensive they are, and on how firms and other countries respond. Ahead of the 2008 financial crisis, much attention was focused on correcting trade imbalances, then seen as the big threat. In June 2006 the IMF hosted the first ever Multilateral Consultation on Global Imbalances. It involved five countries or regions who were ‘a direct party’ to those imbalances. These were China, the Euro area, Japan, Saudi Arabia and the US. The aim was an orderly unwinding of imbalances in a manner supportive of global growth. Yet by autumn 2007, the IMF’s World Economic Outlook proclaimed, ‘risks related to persistent global imbalances remain a concern’. ✍️Dr Gerard Lyons https://lnkd.in/dK7ciSBS

Since the Conservative Party’s seismic defeat in July, the Party has turned itself inside out trying to wrangle with the result. A leadership campaign and short-sighted media discussion on whether the Tories had moved too far to the Right to be electorally successful ensued. But this was all viewed through the prism of New Labour and Tony Blair’s route to power over a quarter of century ago. The debate revolved around the notion of a ‘centre ground’ as the only position from which parties can claim electoral victory. But a new report by James Frayne for the Centre for Policy Studies shows that the Right-Left paradigm actually plays no role in the thinking of British voters. In fact, according to polling from Public First, it was the least likely reason for people not voting Conservative this time round. Go back three decades and Margaret Thatcher had already made clear how the Conservative Party could battle Labour’s centrist shift. Echoing Keith Joseph, ‘It is not the centre ground’, she said, ‘but the common ground – the shared instincts and traditions of the British people – on which we should pitch our tents. That ground is solid, whereas the centre ground is as slippery as the spin doctors who have colonised it.’ Rather than meeting Keir Starmer on his ‘centre ground’ turf, the Tories must find their own route back to power by returning to the common ground. But what is the difference between the two? The centre ground is often considered to be the moderate approach, a bridge between Right and Left, but which may undermine core principles. It is, in other words, the midpoint between two groups of politicians. ✍️Josh Coupland https://lnkd.in/ehp8zUpm

This is a young Government. Labour have only been in power for five months. Yet already it has a tired, worn out feel about it. There is a sense of drift and pessimism. Every couple of days, a new sleaze scandal appears in the media. This should be the phase when ministers are swanking and swaggering on the airwaves, basking in the limelight, confidently proclaiming the progress they are making for the brave new world. Yet do they come across as enjoying themselves? They do not. They come across as hunted and downtrodden. If they admit the Government is doing badly, that would be a gaffe, a story, a pit: ‘Minister breaks ranks…’ Yet if they insist the Government is doing well, that is so absurd a claim as to invite ridicule. So they try to say as little as possible. The Prime Minister engages in the displacement activity of constant foreign travel. The farmers are protesting in their tractors, opinion poll ratings are sliding and civil war in Downing Street saw the ousting of Sue Gray. Nearly three million people have signed a petition calling for an early general election. One could say the Government has already run out of steam – but it didn’t really build up much puff in the first place. This week comes the ultimate signal of malaise: a relaunch. The ‘missions’ are to be reset. There will be a ‘Plan for Change’ with a different set of targets. The pledge repeated so often at the election – to make the UK the fastest-growing economy in the G7 – is to be dropped. Probably realistic. Not only is our Government throwing sand in the engine of our economy with more tax and regulations, but others in the G7 are going in the opposite direction. We can expect to see new governments coming in next year, not just in the United States but also in Canada and Germany, which will be determined to unleash free enterprise rather than hobble it. The promise to build one and half million homes over this Parliament is also likely to be downgraded. The Housing Minister Matthew Pennycook says it will be ‘more difficult than expected’ for the government to achieve, and the pledge seems to have become merely a ‘target’. Why should a new set of targets have any more credibility? ✍️Harry Phibbs https://lnkd.in/eSH2KsBM

Over the past three days, the Republic of Ireland has been counting votes from its snap general election and the results might seem like something of a paradox. The Irish electorate remains clearly disillusioned with its political ‘elite’, but the combined strength of the traditional parties, Fianna Fail (FF) and Fine Gael (FG), means that it will probably get more of the same in government. Meanwhile, despite an inaccurate exit poll that claimed it would be Ireland’s largest party who would win, the only obvious loser was Sinn Fein. The left-wing, republican party lost a substantial chunk of the anti-establishment vote that it dominated in 2020. This failure can be explained by its incessant involvement in scandals, an unconvincing line on immigration and its all-consuming obsession with pursuing an all-Ireland state. During the campaign, its leader, Mary-Lou McDonald, boasted that by 2030 Sinn Fein would deliver a ‘border poll’ on the Republic taking over Northern Ireland. That claim now looks hopelessly out of touch with the public’s priorities. Indeed, one of Sinn Fein’s political opponents, FG’s minister for public expenditure, Paschal Donohoe, said that it would soon become ‘one of the weakest opposition parties in Europe’, when a new government is formed in Dublin. This defeat was particularly humiliating because after the 2020 election, many commentators predicted that ‘the Shinners’ would inevitably lead the next Irish administration. At that contest, Sinn Fein won the popular vote for the first time in the modern era. In fact, last year, before anti-immigration riots swept Dublin, the party’s support was running at 37%, according to opinion polls. It seemed that Mary-Lou McDonald could look forward to becoming the next Taoiseach (Irish prime minister). Instead, she will now have to explain to activists how she managed to lose almost half of Sinn Fein’s prospective voters. ✍️Owen Polley https://lnkd.in/eUPG4DSb

Direct exchanges of fire between Israel and Iran. Long-range Russian missiles hitting Ukraine. Drones over our airbases. Official warnings of a cyberattack on Britain that might ‘turn out the lights for millions’. China preparing to take Taiwan. Are we spiralling into a new global conflagration? Can anything prevent it? All our options are fraught with peril. Using British weapons in Russia plainly carries a risk. But so does letting Ukraine lose. Dictators on every continent would note that Nato was unable to protect an ally against a rogue state. As the ascendancy of the West wanes, things look altogether colder and darker. Grant Shapps, then the Defence Secretary, showed remarkable prescience a year ago when he observed that we had moved from a post-war to a pre-war world. How did we arrive here? The decades after 1945 saw an unprecedented decline in violence. Wars between states became rare, and a taboo grew up around aggression. The American military historian John Lewis Gaddis called it ‘The Long Peace’, noting not only that people were less likely to fall in wars, but also that the worst Cold War scares – the Cuban missile crisis, for example – looked more dangerous at the time than they really were. In 2011, the brilliant Canadian philosopher, Steven Pinker, extended Gaddis’s thesis. Pinker’s book, ‘The Better Angels of Our Nature: Why Violence Has Declined’, showed in meticulous detail that, whether we measured wars, insurrections, homicides, violence against women or anything else, we were living in the most peaceful era ever. The reason Pinker took such pains over his statistics is that he knew they were counter-intuitive. Violence is more eye-catching than its absence. On being told that our world has never been more tranquil, our first reaction is, ‘How can you possibly say that? Don’t you watch the news?’ Naturally, no newsreader is ever going to say, ‘Good evening, there is no war in Vietnam today, nor in Yugoslavia, nor in Iraq.’ ✍️Daniel Hannan https://lnkd.in/e-eimc39

I have never been on Bluesky, but I already hate it. The fast growth of this new social media platform seems to be primarily driven by the most annoying and irritating characters on X. But that is also precisely the reason why I believe that Bluesky is more than a passing fad: it has the potential to lastingly change the social media landscape, and even if Bluesky itself does not do that, a platform quite like it will. Let’s remember how, a little over two years ago, Elon Musk’s takeover of X (formerly Twitter) triggered a debate about the market power of social media platforms, and the appropriate policy responses. Musk’s critics argued that social media platforms were essentially the public square of the 2020s, and that they should be run accordingly – not as the personal plaything or vanity project of a billionaire. They should, at the very least, be heavily regulated by the state, and better still, taken into public ownership. That argument was, of course, always somewhat self-serving and hypocritical: it was presented by people who had never expressed any such concerns as long as X was under progressive management. But this does not, in itself, make it wrong, and it is certainly not a reason to dismiss it. There was a serious economic argument behind it, which we could steelman as follows: 'In economic terms, social media platforms are network goods. A network good is a good characterised by strong network effects and a network effect is when the value of a good increases with the number of its users. E-mail accounts were not especially useful in the mid-1990s, because there was hardly anyone you could have written to. By around 2000, they had become quite useful, because lots of people now had one and another few years later, e-mail use had become so widespread that it was almost indispensable to have an account.' Languages have strong network effects too. The reason why millions of people around the world spend a lot of time, money and effort on learning English as a second language is not that they all want to read Shakespeare in the original. It’s that lots of other people speak English too. Few people put any such effort into learning Icelandic or Faroese, because they lack those network effects. ✍️Kristian Niemietz https://lnkd.in/e7UiEtfB

Stand back and look at the economic trends across the decades and it’s evident that the UK is stagnating at best and collapsing at worst. Because of this, you are £10,700 a year poorer, Britain faces being a diminishing country in the world and for the first time ever the younger generation(s) are set to be worse off than their predecessors. Across major metrics, the lines go down. These are bright warning lights on our country’s health and if they falter it affects every facet of our daily lives – from the healthcare the sick rely on, to the infrastructure we all depend on, to the streets we want to feel safe on. Governments have repeatedly promised to reverse this trend and to prioritise growth. Whether it was David Cameron’s 2010 pledge to ‘Get the economy moving’, Theresa May’s 2017 manifesto to create a ‘Strong economy that works for everyone’, Rishi Sunak’s pledge to ‘Grow the economy’, or the 2024 Labour manifesto to ‘Kickstart economic growth’. Successive governments have stated they want the lines to go up. Successive governments have failed to deliver it. With this failure, you and your children are left poorer, with fewer opportunities and in a country that is blown by the geopolitical winds rather than shaping them. The excuses used to justify this failure are often Black Swan events that are beyond any government’s control. From the long-tail effects of the financial crash, to an unexpected Brexit vote, to the global Covid-19 pandemic and most recently the war in Ukraine and the subsequent energy crisis. As reasonable as these appear on first receipt, they betray the truth. Instead of using these events to rethink our economic resilience and approach, the government of the day continues the same pattern of inaction. In truth, the decades of decline we’re experiencing are because successive governments have failed to grasp the fundamental issues that need to be resolved. They have failed to set an ambitious and practical roadmap for growth. Instead they default to safe tweaking of tax and spending dials while confidently stating that they are ‘fixing the foundations’, ‘fixing the public finances’, or ‘fixing the roof while the sun is shining’. With this lack of ambition and use of repetitive slogans, the British people have become disillusioned and are starting to believe the problem is insurmountable. ✍️@NwprtNarrative https://lnkd.in/em3f4Dh6

One of the great benefits of working in think tank world is that you can have genuinely robust conversations in the office. From euthanasia to the price of a pint, there are few topics I haven’t debated at some point with a colleague sat opposite me. While enjoyable, I understand that not all working environments can be like this. Most people, quite rightly, do not go to work with the expectation and indeed hope of some verbal sparring over the major issues of the day. They would rather get on with their job in relative peace until it hits 6pm and they can go home to the loving embrace of their partner. Curating this safe professional environment requires rules – rules set by the bogeymen of many a drunken CEO, a human resources (HR) team. Understandable. No one should have to go to the office with the lingering fear that they may be harassed, molested or abused by a colleague. But when does a healthy appreciation for workplace boundaries become a toxic – to use an HR buzzword – obsession with power? According to a new paper, the line is a blurred one. The study, conducted by The Network Contagion Research Institute and Rutgers University Social Perception Lab, found that diversity, equity and inclusion (DEI) materials really screw people up. DEI, by the way, is the credo regularly preached by HR professionals which argues that racial majorities must be re-educated to a point where they no longer hold a ‘subconscious bias’ against minorities. The main takeaway from their research is that a lot of DEI rhetoric caused test subjects to not only perceive prejudice where it didn’t exist, but also to become more authoritarian in their outlook. So authoritarian were some participants that a decent chunk of them started to agree with adapted Hitler quotes that replaced the word ‘Jew’ for ‘Brahmin’. Troubling, yet fundamentally unsurprising findings. The critical theorists who come up with this stuff and their henchmen in HR argue that by virtue of your race, gender or sexuality, you are either inherently bigoted or inherently repressed and must have your thought manipulated accordingly. ✍️Joseph Dinnage https://lnkd.in/eZi_6eKf