Ours is a time of paradoxes. For example, even as information technology has empowered enormous and open-access social networks, politics in Britain continues to be run by the tiny and exclusive old-boy network. The contest for the Conservative Party leadership will decide who is Britain’s next prime minister. Seven of the original candidates were Oxford men. The two remaining candidates, Boris Johnson and Jeremy Hunt, are respectively the former president of the Oxford Union and the former president of the Oxford University Conservative Association. Johnson went to Eton; Hunt was head boy at Charterhouse.
Of Britain’s 54 prime ministers since Sir Robert Walpole, 27 were educated at Oxford and 19 at Eton. If Hunt defies the bookies by winning, he will be the second Old Carthusian to occupy No 10. (The first was Lord Liverpool.)
Johnson is believed by some to be the British Donald Trump. Aside from big hair and body mass, however, they have nothing in common. Although born into a wealthy family, Trump was and remains a social outsider, sneered at by Manhattan’s Upper East Side. When he announced his bid for the presidency four years ago, Arianna Huffington said she would cover his campaign in her Huffington Post website’s entertainment section. Johnson was already a member of Britain’s social and political elite before he even got to Oxford.
Trump was early to see the huge political potential of social media, joining Twitter in 2009. He has 61.5m followers. Johnson was late to the game, joining in 2015. He has 614,000-plus followers, 1% of Trump’s total — and fewer than a third as many as the Labour leader, Jeremy Corbyn.
Trump notoriously communicates at the level of a 10-year-old. Johnson speaks the archaic jolly-good-egg English of PG Wodehouse. Last week, apropos of the Irish backstop, he told the BBC’s Laura Kuenssberg: “We were the authors of our own incarceration.” Trump would simply have said: “We locked ourselves up.”
“People are yearning . . . for this great incubus to be pitchforked off the back of British politics,” Johnson declared. If MPs failed to deliver Brexit, they would face “mortal retribution”. Boris isn’t Trump. He’s Wodehouse’s spoof demagogue, Roderick Spode, the 7th Earl of Sidcup.
Moreover, this quintessential product of the old elite is three weeks away from being anointed prime minister by another old elite. At the last general election, 46.8m people were registered to vote, of whom 69% turned out. But Britain’s next leader will be chosen by one-third of 1% of the electorate: the 160,000 people who pay the £25 annual subscription that is required to become a member of the Conservative Party.
For most of the 20th century, mass-membership political parties were the organisations that ran democracies. In 1953, the Conservatives could claim to have nearly 3m members. The number of individual members of the Labour Party peaked in 1952 at 1,015,000; there were more than 5m corporate (mainly trade union) members.
Today, as in most European countries, the parties have withered away so that Social Democrats and Christian Democrats alike resemble enthusiasts for an anachronistic hobby such as stamp collecting.
The Tory party looks like a classic case of an obsolescent hierarchy: 97% white, 86% middle class (ABC1), 71% male, 54% from southern England and 44% over 65. Fully 84% oppose a second referendum on EU membership and two-thirds of Tory members favour a no-deal Brexit. Why not just ask the Oxford Union to choose the new prime minister?
Here is a further paradox: the British political landscape, under the strain of Brexit, increasingly resembles a continental European system. The age of two-party dominance, despite a fleeting resurgence in 2017, looks to be over. According to the Britain Elects poll aggregator, four parties now have the support of more than 15% of the electorate. YouGov places the Brexit Party — registered by the true British Trump, Nigel Farage, less than six months ago — level with the Tories on 22%. There are similar stories of fragmentation in most EU countries. Ironically, as Britons seek to leave the EU, they are becoming more politically European than they have ever been.
The final paradox has to do with the logic of Brexit itself. Since the 1980s, British Euroscepticism has rested on the belief that the European Economic Community that we joined in 1973 was inexorably morphing into a federal superstate. Here was Margaret Thatcher in her seminal Bruges speech from September 1988: “Working more closely together does not require power to be centralised in Brussels or decisions to be taken by an appointed bureaucracy . . . We have not successfully rolled back the frontiers of the state in Britain only to see them reimposed at a European level, with a European superstate exercising a new dominance from Brussels.”
For a time, especially as the continental leaders forced through their ill-conceived monetary union, this seemed a legitimate fear. Tory journalists, not least the young Johnson, covered every step in the direction of Bundesrepublik Europa with febrile excitement. True, some of the quotes were made up, but the central thrust of Euroscepticism was correct: with its distinctive history, Britain could not possibly tolerate the loss of sovereignty inherent in the federalist project.
The rise of the internet dooms the European federalist project as surely as it does the old political parties. A hierarchical structure of recognisably 1950s provenance, the EU has proved unequal to the challenges of three network-propelled crises: the US-originated bank panic, the Arab revolutions and the trans-Mediterranean migration surge. The political backlash against these failures, of which Brexit is just a part, has been a death sentence for the project of “ever-closer union”.
A new generation of right-wing populists — of whom the most talented is Matteo Salvini of Italy’s League party — has worked out that it’s easier to remain inside the European tent but constantly to bitch about it, than to exit. Soon there will be enough populist governments to erect a permanent barrier to further integration inside the council of ministers. In any case, almost no north European leader takes seriously the proposals for European reform of Emmanuel Macron, the French president. He is the last federalist standing.
So an Old Etonian is about to become prime minister because he looks “to the manner born” in the eyes of a tiny, self-selected electorate and is willing to promise them the magical Brexit they still believe in. In reality, Brexit is an impossibly expensive and complicated divorce from a spouse who is terminally ill. It’s like seceding from the Holy Roman Empire.
One day we shall realise what a colossal waste of time and energy all this has been. Speaking of modern networks, we would be vastly better off if we had spent the past three years mining bitcoin.
The revised and updated second edition of Niall Ferguson’s The Ascent of Money will be published by Penguin on Thursday
“Linkage” was a term introduced to American diplomacy by Henry Kissinger at the outset of the Nixon administration. Linkage could be an explicit gambit — for example, making “progress in settling the Vietnam War . . . a condition for advance in areas of interest to the Soviets, such as the Middle East, trade, or arms limitation”. But it was also an implicit reality in an increasingly interdependent world.
Few commentators on international relations would credit Donald Trump with such sophistication. When we think of the current president, the word “links” tends to conjure up images of golf courses rather than grand strategy. And yet his administration’s foreign policy is too frequently underestimated. Linkage is central to it.
The context is different, of course, because the Soviet Union has dwindled into Vladimir Putin’s Russia, while China under Xi Jinping is now the rival superpower. And today there is no foreign policy mess like the Vietnam War, sapping American strength and tearing the country apart. Yet the world is even more interdependent in 2019 than it was 50 years ago. Linkage is all around.
Consider the following linked issues. First, there is the Trump administration’s use of tariffs to force China to change its behaviour with respect to trade. Second, there is the tech war, which is being waged not only against the Chinese firm Huawei but more generally in the area of artificial intelligence. Third, there is Washington’s effort to alter the Middle East balance of power to the disadvantage of Iran — an effort that nearly led to a retaliatory airstrike on Thursday after the Iranians shot down a US drone.
Finally, there is the president’s desire to keep the American economy growing, which explains his renewed pressure on the Federal Reserve and especially its chairman, Jerome Powell. Investors probably ought to be more worried than they are about the US-China trade war, as well as the danger of conflict with Iran. But as long as the Fed looks like giving Trump the rate cuts he wants, markets remain exuberant, consumers stay confident and the 2020 re-election campaign is on track.
A recent visit to Washington taught me two things about the new linkage that I had not fully grasped. First, the administration wants to ramp up the pressure on Xi. Tomorrow, the vice-president, Mike Pence, was due to deliver another key speech on China. The one he gave at the Hudson Institute in October focused on the geopolitical rationale for a tougher American stance. This new speech was going to come at Beijing from a different angle.
Pence’s speech was originally scheduled to be delivered on the 30th anniversary of the Tiananmen Square massacre, but Trump himself responded to Chinese pleas to avoid that most sensitive of dates. (This is the kind of linkage the president loves. Giving Xi a low-cost break such as this ensures he has the upper hand at the G20 in Osaka.) Pence’s speech was to focus on the Chinese government’s mistreatment of political dissidents and religious minorities, both Muslim and Christian.
This would have upped the ante at a time when Beijing is reeling from the vast show of people power in Hong Kong that forced the suspension of a law to facilitate extradition to the mainland. The great vulnerability of Xi’s regime is not its lack of democracy; few Chinese expect to see free elections in their lifetimes. It is the lack of the rule of law that people resent — which is why so many yearn to invest their money in America.
As he loves to do, the US president has teased both Beijing and Wall Street by promising “an extended meeting” with Xi in Osaka. On Friday he postponed Pence’s speech. I suppose Trump might, on a whim, agree a trade deal over dinner. But that would run counter to all the other moves his administration has been making. It seems more likely that, unless there are big concessions on the Chinese side, Trump will slap yet more tariffs on Chinese imports. With the Fed poised to cut rates next month and the stock market at new highs, Trump has no incentive to let Xi off the hook. Better to save the trade deal for election year.
The other thing I now understand better is the administration’s Middle East strategy. As Trump revealed when he cancelled the planned airstrikes, he is not itching for war. Temperamentally, Trump is just not a war president. His goal is to maintain the pressure on — and the isolation of — Tehran for diplomatic reasons. No journalist I know takes seriously Jared Kushner’s Middle East peace initiative, the first part of which will be unveiled at a conference in Bahrain this week. “Dead before arrival” is the conventional wisdom. But I take the contrarian view that the timing is propitious and the design of the plan ingenious.
When you reflect on the changes there have been in the region since his father-in-law’s inauguration, two things leap out at you. The first is that Israel is no longer beleaguered, surrounded by foes. It has become part of an American-led Arab-Israeli coalition against Iran. The second is that the Palestinians, whose status as victims was once so useful to both Arab nationalists and Islamists, have been marginalised.
Previous peace initiatives put the big constitutional and territorial questions first. Big, but insoluble. Kushner’s goal is to begin with the small matter of money, which in reality is not so small. Large-scale investment in the West Bank and Gaza, funded in part by the oil-rich Gulf states, stands a chance of weaning at least some Palestinians away from Hamas. The lesson of the Arab revolutions was that there is a constituency of small businessmen who are as sick of the rackets run by terrorists as they are of the extortions of venal governments.
The unforeseen hitch has been the failure of the Israeli prime minister, Binyamin Netanyahu, to form a new coalition, which is sending his country back to the polls in distant September. That is bound to weaken the linkage between economic opportunities and political concessions.
“Linkage . . . is not a natural concept for Americans,” Kissinger once admitted. “Our bureaucratic organisations . . . compound the tendency to compartmentalise. American pragmatism produces a penchant for examining issues separately: to solve problems on their merits.” That’s what they teach you to do at law school. But Trump’s contempt for the bureaucratic mindset means linkage comes quite naturally to him.
Still, let’s not get carried away. Linkage can backfire if a single failure causes a chain reaction. Linkage also needs allies to play their part — whereas the Europeans would prefer to be non-aligned in the tech war, neutral in the trade war and signed up to the old Iran nuclear deal.
No matter how ingenious, linkage may not compensate for the effect of Trump’s wrecking-ball style on American influence around the world, which can best be summed up in a single world: shrinkage.
Niall Ferguson is the Milbank Family senior fellow at the Hoover Institution, Stanford
‘It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.”
Thus Charles Dickens begins A Tale of Two Cities. Would that the greatest of all novelists could return to us for a week! For it would take Dickens in his prime to do full justice to Donald Trump’s impending state visit to the UK.
At its best, a state visit to this country dazzles the foreign head of state. Not much dazzles Trump, apart from his own very stable genius, but being greeted by the Queen tomorrow should come close. She has, after all, reigned since Trump was five years old. She has been receiving US presidents since Dwight Eisenhower.
The best of state visits are also solemn. The president and the first lady will go to Westminster Abbey to lay a wreath at the tomb of the Unknown Warrior. The Trumps will also attend events to commemorate the 75th anniversary of the D-Day landings, arguably the greatest of all Anglo-American undertakings. Trump is not noted for his solemnity, but even he should be moved by these sites of commemoration.
Yet this seems certain also to be the worst of state visits. For Tuesday, the Stop Trump group has promised “a diverse carnival of resistance”, at which it will doubtless chant childishly: “Say it loud, say it clear, Donald Trump’s not welcome here!” Up to a quarter of a million people are expected to participate in anti-Trump protests in London and elsewhere. If permission is given, the 20ft-tall inflatable “Trump baby” will hover over Trafalgar Square.
Conspicuous by their absence from the festivities will be Jeremy Corbyn, the leader of the opposition, and the US-born Duchess of Sussex, née Meghan Markle — perhaps because she is still on maternity leave; perhaps (or so the Daily Express speculated) because she has previously described the president as “misogynistic” and “divisive”.
On his state visit in 2011, Barack Obama addressed the two houses of parliament at Westminster Hall. No such honour will be bestowed on his successor. John Bercow, the Speaker of the House of Commons, said in Washington last week that “nothing has happened since” 2017 — when he opposed inviting Trump to address parliament — to change his mind about the president’s “racism” and “sexism”. A carriage ride to Buckingham Palace was deemed appropriate for China’s president, Xi Jinping, in 2015. There will be no gold coach for Donny from Queens.
For his part, Trump can be depended on to fuel the flames of British condescension. The hapless Theresa May will not be enjoying the president’s interviews this weekend, in which he repeats his criticism of her handling of Brexit and his praise of her rivals Boris Johnson and Nigel Farage.
Trump’s latest advice is a startling intervention in British politics. He backs the “excellent” Johnson to succeed May, urges him to threaten Brussels with either litigation or the non-payment of Britain’s EU dues, and recommends that he “walk away” if he doesn’t secure concessions. In short, Trump wants a no-deal Brexit.
On the whole, I expect the reception we give Trump will be authentically Dickensian, in the sense that Dickens personified English anti-Americanism. When he visited the United States in 1842, Dickens was scathing, as readers of his American Notes and Martin Chuzzlewit will recall. (He especially loathed the US habit of chewing tobacco and spitting, which he found “anything but agreeable, and . . . most offensive and sickening”.)
The British habit of looking down on American vulgarity has a long history. As Andrew Roberts shows in his magnificent biography of Sir Winston Churchill, even our greatest prime minister had a period of, at best, ambivalence about the land of his mother’s birth. Yet I would urge readers to take a long, hard look in the mirror before joining in the anti-Trump clamour.
For a start, let’s reflect on the catastrophic mess British politics has become. So badly have the Tories bungled Brexit that they are now staring electoral disaster in the face. Thrashed in the local elections, annihilated in the European elections, they now live in mortal dread of a general election. A YouGov poll last week put the Liberal Democrats and the Brexit Party ahead of the Conservatives. If an election were held today, more than 200 Tory MPs would lose their seats.
Even among Americans, Trump is not a popular leader, it is true. Many Republicans privately worry about their party’s future when they see how he polls with younger voters. Compared with the Tories, however, the Republican Party is in rude health.
Whoever succeeds May as Tory leader and prime minister — and I would not bet the house on it being Trump’s buddy Boris — will find themselves in exactly the same predicament as her. With too few votes to pass the existing withdrawal agreement, but no majority in the Commons for a no-deal Brexit, the new prime minister will soon find there is no renegotiation on offer in Brussels and no chance of a further extension beyond October without either an election or another referendum.
The country seems to be sleepwalking towards a Corbyn-led coalition of Labour, the Lib Dems and the Scottish National Party, with the prospect of not one but two more referendums — one that may well undo Brexit, another north of the border that might just undo the Union. You may be tempted to sneer at America because the president is a vulgarian. But isn’t Trump entitled to sneer at us, too?
In our complacency, we fail to notice that with every passing year we British become more American in outlook. “How are you?” I ask my older children, who were raised in England. “Good,” they reply. But they should really say “Fine” or “Well” or — the correct English response — “Mustn’t grumble”.
Two weeks ago, 3.2m British viewers sat up until the early hours of Monday to watch the final episode of the US series Game of Thrones. And heaven knows how many people will turn their backs on cricket’s World Cup to watch the New York Yankees take on the Boston Red Sox at baseball in London on the weekend of June 29-30.
It is the best of times, it is the worst of times. By most objective measures, life on both sides of the Atlantic has never been better. And yet most of us feel closer to Dickens’s winter of despair than to the spring of hope. Our sole consolation is that somehow things in America are worse. I hate to break it to you, but they’re not.
Niall Ferguson is the Milbank Family senior fellow at the Hoover Institution, Stanford
As presidents go, Donald Trump is unlikely to be remembered for his principles. But he has one. In Fear: Trump in the White House, Bob Woodward describes how the president wrote, “Trade is bad”, in the margins of a draft speech. When his economic adviser Gary Cohn asked why he believed this, Trump replied: “I just do. I’ve had these views for 30 years.”
This is true. In 1987 Trump published an open letter “To the American people” as a full-page newspaper ad. “It’s time for us to end our vast deficits,” he declared, “by making Japan, and others who can afford it, pay.”
In an interview with The Wall Street Journal in 1999, Trump speculated about waging a trade war against Japan. “It’s not going to last very long,” he explained, “because Japan, if they don’t sell to this country, they go out of business, OK?”
He has been nothing if not consistent — except, of course, that Japan has been replaced by China as the principal (though by no means the only) target of Trump’s protectionist policy. On the campaign trail in 2016, he repeatedly threatened to impose a 45% tariff on all Chinese imports. Back then, the journalist Salena Zito memorably observed that “the press takes [Trump] literally, but not seriously; his supporters take him seriously, but not literally.” On trade we should have taken him both seriously and literally.
Last year Trump imposed a succession of tariffs on imports, beginning with washing machines and solar products and then targeting steel and aluminium. He also imposed tariffs on Chinese imports worth $200bn (£157bn). Earlier this month, just when trade negotiations between Washington and Beijing seemed close to a conclusion, Trump carried out his threat to hike those tariffs from 10% to 25%. He has since begun the process to extend the 25% tariff to nearly all US imports from China. As happened last year, China has retaliated by slapping tariffs on US goods.
The president’s song remains the same. “Tariffs will bring in FAR MORE wealth to our Country than even a phenomenal deal of the traditional kind,” he tweeted on May 10. “An easy way to avoid Tariffs?” he asked a day later. “Make or produce your goods and products in the good old USA. It’s very simple!” And: “We will be taking in Tens of Billions of Dollars in Tariffs from China.”
The economics profession — and nearly everyone it has taught in the past 50 years — begs to differ. One recent paper, written before this year’s escalation of the trade war, calculated that “the full incidence of the tariff falls on domestic consumers, with a reduction in US real income of $1.4bn per month by the end of 2018.”
Not only do the tariffs raise the prices American consumers pay; American manufacturers and farmers are losing out as a result of China’s retaliation. Soya bean exports to China, for example, have plummeted. With opinion polls suggesting an increase in public support for free trade agreements since 2016, Trump’s strategy looks economically and politically suicidal.
Yet there is method in his madness.
If tariffs really are so self-destructive, the economic history of the United States presents something of a puzzle. From its very inception (a revolt against British control of, among other things, import duties), the American republic relied on tariffs as a source of revenue and as protection for its own nascent industries. As exporters of cotton, the Southern Democrats were the free traders; the manufacturers of the North, first as Whigs, then as Republicans, favoured an “American System” based on protection.
Though many other factors contributed to making America great, tariffs certainly did nothing to slow the rapid growth of the US economy in the 19th century. By 1872 it was the world’s biggest. Meanwhile, tariffs had become a domestic-political stick with which (as in the case of the 1828 Tariff of Abominations) the North beat the South. Later it was tariffs that divided the east of the country from the west.
Economists tend to remember with horror the 1930 Smoot–Hawley bill, which raised tariffs just as the world was tipping into depression. But the new rates were only slightly higher than those that had been imposed in 1922. It was not until the later stages of the Second World War that the United States finally committed itself to free trade, and only gradually thereafter — with a major hiccup in the 1970s — that average duties were lowered.
For roughly 150 years, in other words, the United States was a protectionist power. Tariffs were a large part of what the nation’s elected representatives fought over on Capitol Hill. The era of free trade has been precisely half as long. If it began in 1941, with the Atlantic Charter, it ended with the election of Donald Trump 75 years later.
Trump’s trade war is doubly political. Primarily, as I have argued before, it is designed to check China’s rise, and — though a blunt instrument — it is undoubtedly causing significantly more pain to China than to the US. Taking account of the gains to US producers and the government (in the form of revenue), the net cost of tariffs to the United States is in fact just $7.8bn a year — 0.04% of GDP.
True, the return to protectionism may also cost shareholders some of their wealth. Many big corporations will take a hit as they reconfigure their global supply chains. But the Chinese leadership miscalculated badly in thinking that it could make last-minute improvements to its trade deal with Trump. It thought he would make concessions rather than see US stocks take a hit. Wrong. Trump isn’t going to make a bad deal with China when he can simply lean on the Federal Reserve to “match” Chinese monetary policy with interest rate cuts.
The second political dimension of Trump’s tariffs is — as is always true of tariffs — domestic. Sure, there are losers. But at the last census farmers amounted to just 1% of the US population. And the principal losers, a recent study shows, are “workers in heavily Republican counties”. They don’t seem very likely to vote for a Democrat — especially if the nominee is Joe Biden, who thinks the Chinese are “not bad folks” and “not competition for us”.
Americans agree with Trump, not Biden. In 2018, only 38% of Americans had a favourable view of China, down from 44% the previous year. And 58% worried more about China’s economic strength than its military strength. True, not everyone thinks that tariffs are the way to counter China’s rise; but Republicans clearly do, even if Democrats don’t.
Republicans up for re-election next year are watching carefully how the trade war plays in their states. Right now, it’s playing well. As one red-state political veteran put it, “If we can’t take a few tariffs in the short run, how can we ever beat China in the long run?”
The widespread perception of Donald Trump as unprincipled is wrong. He has one principle: the protection principle. It may not be great economics. But history suggests it could be pretty good politics.
Niall Ferguson is the Milbank Family senior fellow at the Hoover Institution, Stanford