As Theresa May went from crushing defeat on Tuesday to narrow victory on Wednesday, I’m sure I was not the only one reminded of Monty Python and the Holy Grail. Despite having had both his arms chopped off by King Arthur (Graham Chapman), the Black Knight (John Cleese) refuses to yield:
Arthur: Look, you stupid bastard. You’ve got no arms left.
Black Knight: Just a flesh wound!
The Pythons were never very good at ending their sketches, and so it is with Brexit. What was supposed to be a “meaningful vote” last week turned out to be entirely meaningless. The prime minister’s withdrawal agreement was thrown out by 432 votes to 202. Yet, little more than 24 hours later, there she was, having survived a vote of no confidence by 19 votes. Just a flesh wound. The danger exists that Brexit is not after all an attainable end state, but an interminable Monty Python sketch.
For many of those who opposed Brexit, the easy option is to blame this mess on Mrs May’s predecessor. “David Cameron gambled the future of the country on a simple referendum,” grumbled The Economist in an article entitled “The elite that failed” (written, no doubt, by one of Cameron’s Oxford contemporaries). But the real sin Cameron committed was not the referendum, a legitimate political expedient with numerous precedents; it was agreeing to the 2011 Fixed-Term Parliaments Act (FTPA).
This was one of the few things the Liberal Democrats were able to secure by going into coalition with the Conservatives after the 2010 election. “By setting the date that parliament will dissolve,” the deputy prime minister, Nick Clegg, explained, “our prime minister is giving up the right to pick and choose the date of the next general election.”
Actually, no. What the FTPA did was to end the custom whereby the monarch nearly always dissolved a parliament — in modern times on the advice of the prime minister — before its time was up. True, this was a power that some prime ministers sought to use to their own advantage by picking the moment most likely to give their party victory, but — as Theresa May proved in 2017 — the FTPA did not end that practice.
What the act really did, it turns out, was to destroy one of the old unwritten rules of British parliamentary life: that when a government suffered a heavy defeat, the prime minister resigned.
Under the old rules a prime minister could be forced to resign or call an election through a no-confidence vote or the defeat of a supply (public spending) bill. In practice, losing a vote on a key piece of legislation was considered sufficient reason to give up the seals of office.
Having split his party over the Corn Laws in 1846, Sir Robert Peel resigned after his Irish Coercion Bill was defeated in the Commons. Six years later Lord John Russell was brought down when his arch-rival Lord Palmerston got a majority of MPs to vote in favour of an amendment to a militia bill. Fast-forward to 1858 and Palmerston himself felt obliged to resign after his Conspiracy to Murder Bill was defeated on its second reading.
Like Peel before him, Gladstone was forced to resign in June 1885 after a defeat on an Irish issue. He was back as prime minister the following February, only to seek a dissolution when his Irish home rule bill was defeated on its second reading.
We think of the typical modern prime minister as leaving office only when defeated in a general election. But there are numerous exceptions. No fewer than four — Winston Churchill, Anthony Eden, Harold Macmillan and Harold Wilson — stepped down on grounds of ill health (or illness gave them a way out of political difficulties). Tony Blair handed over to Gordon Brown, despite being fit as a fiddle, because his poll numbers were crumbling over the Iraq War.
Four premiers resigned like Victorians, however. Indeed, two quit even after winning key votes because their margins of victory made them seem moral defeats. Neville Chamberlain resigned in May 1940, despite having won the division on the disastrous Norway Campaign.
During her 11 years as leader, Margaret Thatcher suffered only four defeats in the House of Commons, all minor. Her downfall came in 1990 despite her victory over Michael Heseltine in the first round of a Tory leadership contest. Ramsay MacDonald went in 1924 after a huge Commons defeat over a Communist newspaper. Finally, Cameron felt obliged to resign after losing the Brexit referendum.
Compare and contrast with Theresa May, who has suffered no fewer than 27 Commons defeats, 10 of them in connection with Brexit, her raison d’être as prime minister. In no previous era of British politics could a prime minister have survived a defeat as large as last Tuesday’s. The proximate reasons she is still in office are, first, that the hard Brexiteers lacked the votes to oust her as Tory leader and, second, that they and their Democratic Unionist Party partners dread seeing Jeremy Corbyn in No 10. But the root cause is that the FTPA has created a seductive presupposition that the next election should not be until 2022.
Kicking the can down the road is the default setting of modern politics, and the FTPA encourages it. But any time you buy for yourself is equally available to your opponents.
Consider two scenarios. In the “Victorian” scenario Mrs May would have resigned last week. Unable to win a confidence vote, Jeremy Corbyn would now be trying to cobble together a minority government. This would immediately reveal that Labour is as divided over Brexit as the Tories are. Any government he formed would be even weaker than May’s. If he somehow secured an election, he might win it, but only narrowly.
Now here’s the post-FTPA scenario. May continues as the Black Knight — in office, but not in possession of her limbs. Remainer MPs now aim to soften her withdrawal agreement, perhaps inserting full UK membership of the European customs union, perhaps punting Brexit back to the electorate for another referendum. Either way, the split within the Conservative Party grows wider. In the case of a second referendum won by “remain”, a substantial proportion of voters would defect to Ukip.
Eventually, 2022 would come around. But by now Labour would be up against a divided right and would have its best chance of winning an outright majority since 2005.
This is Black Knight politics. And it risks turning Brexit into a true holy grail. Just remember (as is revealed to Monty Python’s King Arthur), the grail is only to be found in “the Castle of Auuggggggh”. If that’s the sound Tories want to make in 2022, they should stick with Theresa May. But they should prepare for much, much more than a flesh wound.
Niall Ferguson is the Milbank Family senior fellow at the Hoover Institution, Stanford
As so often, South Park saw it coming. In “The Last of the Meheecans”— which first aired in October 2011 — the obnoxious Cartman joins the US Border Patrol, only to find himself facing the wrong way as hordes of disillusioned Mexican workers seek to flee the economically depressed United States back to Mexico.
Undaunted, Cartman makes it his business to stop them leaving. After all, without Mexican labour the American economy would grind to a halt.
Very often the Trump presidency feels as if it’s being written by Trey Parker and Matt Stone, the comic geniuses who created South Park more than 20 years ago. In this week’s real-life episode, Trump/Cartman shuts down the federal government in retaliation for the refusal by the Democratic Party’s leaders to approve the border wall he campaigned for in 2016.
In a preposterously solemn TV address from the Oval Office, Trumpman refers to the situation on the southern border as “a humanitarian crisis — a crisis of the heart and a crisis of the soul”. Hilarity ensues as Kyle (Chuck Schumer) and Butters (Nancy Pelosi) deliver their response crammed together behind a single lectern, in an unintended homage to Grant Wood’s painting American Gothic.
The result is that the government employees responsible for controlling the vastly larger flow of people into America through airports don’t get paid. Desperate to end the shutdown, for which he is being blamed, Trumpman declares a national emergency under laws that allow redirection of Department of Defence construction funds, provided it’s for military defence.
Trumpman’s attempt to use DoD money to build his wall is challenged and defeated in the courts, but he goes ahead anyway, only to run into a shortage of construction workers. The episode ends with the arrival of the “caravan” of Central American asylum-seekers (last seen in the November mid-terms episode), who gratefully accept jobs to build Trumpman’s wall.
Few if any commentators have had positive things to say about this episode of South Lawn (yes, that’s the area behind the White House where Marine One, the presidential helicopter, takes off and lands).
Writing in New York magazine, my old friend Andrew Sullivan went full Weimar Republic. If Trump does declare a national emergency, he warned, the president will have “gone over the line in erasing democratic and constitutional restraints on his personal power”.
Steven Rattner (best known for his work as President Obama’s “car czar” during the financial crisis) offered a few killer facts. First, as per South Park, the number of Mexicans seeking to cross the border illegally has plunged 92% since 2000. The majority of people now apprehended at the border are from dysfunctional Central American countries such as Honduras, El Salvador and Guatemala, and most are families or unaccompanied children.
Sure. But does that make Nancy Pelosi right to call extending the existing barriers along the US–Mexican border an “immorality”? Should we agree with the newly elected congresswoman and social media sensation Alexandria Ocasio-Cortez, who says Immigration and Customs Enforcement has “systematically violated human rights” on the border, whereas people trying to cross the border are “acting more in an American tradition than this president is right now”?
Implicitly — and at times explicitly — the American left is arguing for open borders. You don’t have to be a Trump supporter to regard this as folly. The historian Charles S Maier, a former colleague of mine at Harvard, is the personification of the old, decent, cerebral liberalism of the northeastern seaboard. But, as he argues in his outstanding book Once within Borders, “Borders are more than just barriers; for some they guarantee community and belonging.
“All our customary homelands,” he writes, “seem assailed by global trends that transgress once reassuring borders and spatial stability — by threats of terrorist attacks, uprooted refugees, tidal flows of international capital, the scary spread of new diseases, and the threat of climate change oblivious to frontiers. Peoples who have long enjoyed territorial security no longer feel sheltered.” In such a world, there is much to be said for the view of the poet Robert Frost’s farmer next door that “good fences make good neighbours”.
As Maier shows, since ancient times walls have principally served to keep citizens or subjects safe by excluding all kinds of invader. The Great Wall of China was a Ming dynasty reconstruction of a crumbling barrier erected 2,000 years earlier; the difficulty of protecting the Middle Kingdom from nomadic raiders was perennial.
Go to Jerusalem and you see the walls erected around the Old City by Suleiman the Magnificent, the Ottoman sultan. But they stood atop defences built by King Solomon about 2,500 years earlier. The zenith of the fortified wall came in the 17th century, when Sébastien Le Prestre de Vauban served as Louis XIV’s master wall-builder.
Jail walls aside, walls to keep people in, rather than out, have been less common. They came to the fore in the Cold War, when totalitarian regimes from Berlin to Pyongyang were forced to fence in their populations to prevent them from voting with their feet. Those sections of the Iron Curtain were what gave walls such a bad name in our time. It was not only Ronald Reagan who condemned them. Western leaders from Churchill to the present Pope have repeatedly inveighed against political barriers. And let’s not forget Pink Floyd.
Yet the notion of a world sans frontières was always hopelessly naive. It was easy to be against walls when they were imprisoning East Germans and North Koreans. It is a lot harder when the world’s most objectionable regimes make almost no effort to contain their citizens behind borders.
All over the world, people are on the move from messed-up countries — and there is remarkably little to stop them. According to a Gallup survey in 2017, more than 700m adults around the world would like to move permanently to another country. Of that vast number, more than a fifth (21%) say their first choice would be to move to the US. The proportion who name an EU country as their dream destination is higher: 23%.
Yet recent polling by the Pew Research Centre points to an equal and opposite resistance to mass migration by the people in potential destination countries. Across 27 states, 45% of those surveyed said fewer or no immigrants should be allowed in, while 36% said they wanted about the same number of immigrants. Only 14% said their countries should take in more. In America the proportion wanting more was 24% — only Spaniards are more welcoming — but that’s still less than a quarter. For the UK, the proportion wanting more immigrants is just 16%; for Germany 10%; for Italy 5%.
Cartman rarely has the last laugh in South Park. But the denouement may be different in South Lawn. If the choice is between open borders and defensive walls, history suggests walls — and those who build them — will win.
Niall Ferguson is the Milbank Family senior fellow at the Hoover Institution, Stanford
Back in the 1970s the joke was that rundown Glasgow was Disneyland. “Aye, because this disnae work, and that disnae work . . . ” Well, we all live in “Disnaeland” now. You voted for Brexit? You ended up with Theresa May and now three options — her deal, no deal or some other deal (involving Norway), none of which has a majority in either the Commons or the country, implying another three options: another Tory leader, another referendum or another general election.
You voted for Donald Trump? You ended up with Nancy Pelosi back in charge of the House of Representatives and Robert Mueller rounding up the suspects.
You voted for Emmanuel Macron? You ended up with the gilets jaunes smashing up the Arc de Triomphe.
You invested in stocks? It didn’t work. Bonds? It didn’t work either. Bitcoin? That really didn’t work.
As 2018 draws to a less than happy close, it’s tempting simply to conclude that nothing works. Populism doesn’t work. Centrism doesn’t either. The same applies to investing. What 2018 offered you was a hundred ways to lose money.
What turned our planet into Disnaeworld? My answer to all democratic leaders is that you really cannot win — for seven reasons.
1) You can’t do anything about demographics, and for most democracies these are terrible.
2) You have inherited welfare states that transfer resources from younger to older voters, but the latter tend to be more numerous and turn out more in elections, so you can’t reform welfare and survive.
3) Your safety valve is that you can borrow from the bond market, and interest rates are very low, but that’s now changing and you can’t do anything about it because central banks are independent.
4) Your ageing population creates a demand for foreign labour and students, but immigration is politically unpopular, even when the immigrants come from northern Europe and genuinely ease skills shortages.
5) You might just be able to overcome these problems if there were a real external threat, but the truth is that ordinary people just aren’t that scared of Vladimir Putin or Xi Jinping, much less Kim Jong-un.
6) As for climate change, ask Macron how his proposed fuel tax is going.
7) Finally, social media have made it almost impossible for you to control the narrative. You can tweet to your heart’s content, but you are firing a water pistol into an ocean of extreme views and fake news.
So politics is a doomed venture. The best-performing democratic leader at the G20 in terms of longevity and popularity was Angela Merkel (13 years, 50% approval), the worst Macron (19 months, 26% approval and falling). That is because Merkel long ago learnt that the key to popularity is always to take the line of least resistance. She’s a strategic disaster but a tactical genius.
Can investors make money in a world of abject political failure? It’s not easy, I admit, but it’s not impossible.
First, don’t make the mistake of thinking authoritarian regimes are a better financial bet than democracies. Just look at G20 countries’ stock markets. True, in dollar terms the Saudi Arabian stock market has outperformed the others this year (it’s up 9%, which goes to show that investors care a lot less about royally ordered assassinations than journalists do). Russia has also done better than America. But Turkey has been the second-worst performer (down 43%) and China the third worst (down 27%).
The key is to buy the rumour and sell the news — or rather buy ahead of the hope and sell ahead of the reality check. Nearly every new government is given the benefit of the doubt by markets unless its leader is a raving Marxist. You should just assume that most glad, confident mornings will be over within one or two years of any election.
Brazil is a good illustration. The Sao Paulo stock market has jumped 15% in the past three months, buoyed by the election of the populist firebrand Jair Bolsonaro. Investors hope (as do I) that Bolsonaro’s Chicago University-trained finance minister, Paulo Guedes, will reform pensions, simplify taxes, slash red tape and stabilise the debt. The reality check — when these hopes encounter the swamp of Brazil’s Congress — lies ahead.
Can Bolsonaro avoid the fate of Mauricio Macri, who was the darling of the markets after his 2015 election victory in Argentina and now has a 35% approval rating and a nasty recession on his hands? Maybe, but he will deserve his nickname, “Myth”, if he does. In June 2017 I speculated that populism had a half-life of about a year. The cases of Messrs Macri and Macron show the same rapid decay also afflicts political centrism.
All political lives end in failure, Enoch Powell once said. These days, it seems, failure comes long before the careers end. The least popular leader at the G20 last weekend was the outgoing Brazilian president, Michel Temer: after less than 2½ years in office, he has a 7% approval rating.
Mrs May is not the only dead politician walking. To persevere in politics today you need to be like Glenn Close in the final scenes of Fatal Attraction. You keep coming at the electorate, wild-eyed and apparently unkillable. Boris Johnson thought he had drowned you in the bath, but no.
How was it possible to make money in 2018? The answer: load up on healthcare stocks. If all you did in January was invest in that sector and sell the rest, your total return to date has been 19%. This makes sense. The most extraordinary trend of recent years has been the deterioration of life expectancy and health quality in America. The opioid epidemic is only the most shocking manifestation of this crisis. Not only is the American population ageing; it is ailing.
True, many households lack adequate insurance or savings to cover their costs in the event of serious illness. But most individuals will gladly economise on everything else if it will enable them to buy treatment and medication for themselves or a loved one. In other words, when everything else has gone belly up, you can be sure that the last dollars in the last pockets will be going to the health insurers, healthcare providers and drug companies.
It did not need to be this way. Democracies could have learnt from one another, copying and sharing the Swiss system of decentralised government, the New Zealand system of prudent public finance, Japanese healthcare, Canadian immigration, German energy efficiency and so on. Future historians will wonder why best practices did not spread in that way.
Perhaps they would have, if the brightest people in my generation had gone into politics rather than finance. Without quite meaning to, the bankers contrived to make one thing easier than it had ever been before: government borrowing. Vast global markets for government debt and interest rates at truly unprecedented lows — that was what enabled the political class to duck all difficult decisions, leaving the next generation to sort it out. Now the bankers wonder why their children are all socialists.
Well, sooner or later they’ll get the chance to vote for socialism. And then they’ll find out the true meaning of Disnaeland. Because believe me, kids: nothing disnae work quite like socialism.
Niall Ferguson is the Milbank Family senior fellow at the Hoover Institution, Stanford
At the Congress of Vienna in 1815 the delegates danced almost as much as they negotiated. As the Prince de Ligne put it: “The congress dances a lot, but it doesn’t make progress.” The dancing was a distraction. What mattered was that the monarchs of Europe — or, to be precise, their ministers — established a new order in Europe. After the upheavals of the French Revolution and Napoleon’s short-lived and unruly empire, five great powers combined to limit the threats posed to monarchy and aristocracy by liberalism and nationalism.
It was not a perfect order, but it made the 19th century a great deal more peaceful in Europe than the 17th, the 18th or the 20th. Actually, the congress did make progress.
Something similar can be said about this weekend’s meeting of presidents, prime ministers and central bankers in Buenos Aires: the G20 dines a lot, but it doesn’t make progress. In reality, it matters little whether Donald Trump rekindled his bromance with Xi Jinping last night or poured a bowl of soup over his head. The real question is: will the G20 change the balance of power in the world?
Trump’s critics are ready with their answer. In a pre-emptive strike, my old friend Fareed Zakaria argued last week that the summit would represent “peak America”. He wrote: “Nothing animates the Trump administration more than its opposition to multilateralism of any kind.
“And so, as the world gets more chaotic, the forces that could provide order are being eroded. And as is so often the case, China simply watches quietly and pockets the gains.”
As I said last week, we’re certainly beyond peak Trump. But peak America?
Let’s remind ourselves when and where all this “G” business began. It was 45 years ago — on March 25, 1973 — that the US secretary of the Treasury, George Shultz, met his counterparts from Britain, France and West Germany in the White House library. That group added Japan soon afterwards and Italy in 1975, by which time two of the original participants (Helmut Schmidt and Valéry Giscard d’Estaing) were heads of government. In 1976 Canada joined to produce the G7.
Not until 1994 was Russia represented at such meetings, only to be ejected in 2014 after the annexation of Crimea. Not until 1999 was the G20 created to provide a more representative group of big economies. It’s a motley crew. The EU is represented in its own right; Spain, Holland and Switzerland are excluded, despite being top 20 economies, to make way for the EU, Argentina and South Africa. Yet a clear majority of participants — 16 — are democracies. The autocracies — China, Russia, Saudi Arabia and Turkey — are there only because they have signed up to the various global institutions created by the US and its allies after the Second World War.
True, China would very much like to exploit Trump’s personal unpopularity with other world leaders. Under Xi, the People’s Republic has mounted a highly ambitious effort to expand its global influence, not only by exploiting its economic power through trade and investment agreements, but also by attempting (in the words of a startling report published last week) “to penetrate and sway — through various methods . . . [best] summarised as ‘covert, coercive or corrupting’ — a range of groups and institutions, including the Chinese-American community, Chinese students in the United States and American civil society organisations, academic institutions, think tanks and media”. Such efforts are not confined to the United States.
The free world is waking up to this, and with good reason. I’ll believe it’s peak America when China signs a trade pact with two other G20 members that has a clause comparable to the one in the new US-Mexico-Canada agreement (USMCA) — signed on Friday — which states that if one of the three partners enters a free trade deal with a “non-market” country, the others can exit USMCA and form their own bilateral trade pact. The non-market target of that clause is of course China.
Though Argentina is the host of this year’s G20, the biggest Latin American economy by far is Brazil. You will look in vain for evidence of peak America in Sao Paulo, where I spent most of last week.
Northern hemisphere media coverage of the right-wing populist Jair Bolsonaro’s election victory in Brazil in October has been overwhelmingly negative, focusing on his military background, his inflammatory language and his political resemblance to Trump. “Jair Bolsonaro’s climb to power has been marked by divisive rhetoric and offensive speech,” tut-tutted The New York Times. “Our planet can’t take many more populists like Brazil’s Bolsonaro,” lamented The Guardian. “How did a far-right, pro-torture, dictatorship-praising populist become Brazil’s president-elect?”
In truth, the resemblances between Bolsonaro and Trump are superficial. Both men certainly expressed socially and culturally conservative sentiments that had long been taboo in elite political circles. Both directed their fire at corrupt and failing political establishments. And both certainly understood better than their opponents how to exploit the political power of social media. But there the resemblances end.
First, Bolsonaro’s focus is on law and order, not immigration. Brazil saw more than 60,000 murders last year, as many as China, the US and Mexico put together. Second, Bolsonaro has joined forces with the Chicago University-trained free-market economist Paulo Guedes, whereas Trump’s one and only principle is protectionism. Bolsonaro’s vision is of a country rejuvenated. By contrast, Trump has appealed to the nostalgia of older voters.
The incoming Brazilian government is committed to fiscal consolidation, the privatisation of state companies, tax simplification and market liberalisation. This is the kind of economic reform Brazil desperately needs. It has the ninth-largest economy in the world, but ranks 125th in the World Bank’s ease of doing business index, behind Iran. What Guedes is talking about hardly sounds like the Chinese model — more like Margaret Thatcher does the samba. And indeed Bolsonaro was openly hostile to China on the campaign trail, declaring: “The Chinese are not buying in Brazil. They are buying Brazil.” He even visited Taiwan.
All over the world, from big Brazil to tiny New Zealand, countries are having to choose sides as the Sino-American antagonism escalates from trade war to cold (or cool) war. It’s not such a difficult decision, however squeamish you feel about “Individual 1” (the codename special counsel Robert Mueller has given Trump). For the difference between Trump and Xi is that the former is the temporary representative of a constitutional democracy, while the latter is the emperor for life of a one-party state.
The G20 dined a lot in Buenos Aires rather than danced. Regardless of the diplomatic chatter, it didn’t signify peak America. Many people also thought America was over the hill when the G4 first met back in 1973 (another difficult year for the presidency). They were wrong then. They are wrong now.
Niall Ferguson is the Milbank Family senior fellow at the Hoover Institution, Stanford