Sunday, July 14, 2019

A 'winter of discontent' and Brexit

The ship of fools (from a 1549 German woodcut) is an allegory, originating from Book VI of Plato's Republic — written in 360 BCE (Before Common Era) — about a ship with a dysfunctional crew (Wikipedia): "Imagine then a fleet or a ship in which there is a captain who is taller and stronger than any of the crew, but he is a little deaf and has a similar infirmity in sight, and his knowledge of navigation is not much better. The sailors are quarreling with one another about the steering––every one is of the opinion that he has a right to steer, though he has never learned the art of navigation and cannot tell who taught him or when he learned, and will further assert that it cannot be taught, and they are ready to cut in pieces any one who says the contrary."

Brexiters dismiss warnings that a 'No Deal' departure from the European Union on October 31, 2019, will trigger chaos at ports with risks of food and medicine shortages coupled with massive disruptions to international supply chains.

Boris Johnson was a teen when Britain had its infamous 'winter of discontent' (see below) that had such a deep impression on voters, the Labour Party was locked out of Downing Street for 18 years.

A bleak Christmas and beyond, with the media dominated by public chaos and protests across the country, coupled with a precarious majority in Parliament, would be a baptism of fire for the political chameleon.

Philip Hammond, chancellor of the exchequer, warned in early July that a disorderly UK departure from the EU could result in a £90bn "hit" to the Treasury. 

"The government's analysis suggests that in a disruptive no-deal exit, there would a be a hit to the exchequer of about £90bn," he told a committee of MPs.

Jacob Rees-Mogg MP, a Johnson ally, whose economics guru is Patrick Minford, a 76-year old retired Cardiff University economist, dismissed Hammond's estimate as "pure silliness" and countered that Britain could gain £80bn annually adding up to £1.1tn in 15 years.

Sane Brexiters acknowledge that an economy which relies on Ireland for one of its biggest global trade surpluses will endure lower growth until the sunlit uplands are reached by a 'Global Britain' that will become a top world exporter!!

Anyone who takes 15-year-long economic forecasts seriously is either a fool or a charlatan.

If Boris Johnson, as prime minister, announces that Britain is leaving the EU without an exit deal, poisoning relations with other European countries, he would be crossing the Rubicon. Would he fear overtaking the record of George Canning (1770-1827), the shortest-serving prime minister, who died after 4 months in office?

Johnson said in his 2013 Margaret Thatcher lecture:

"What, finally, amigos, would she do about Europe? Last year we heard Charles Moore (former Daily Telegraph editor and biographer of Thatcher) tell us that she had decided to pull out, and since Charles has papal infallibility, I accept that – though it is obviously one of those things that is a bit easier to say to your trusty biographer when you are out of office and you aren’t immediately besieged by a panic-stricken foreign office and CBI and nervous international investors and the White House on line one saying you are out of your mind, lady.

As it happens, I don’t think she would pull out of the single market that she helped to create; not like that, not if she was now the tenant of Number Ten. I think she would recognise that there is a chance to get a better deal. It’s time to sort out the immigration system so that we end the madness."

Johnson said in a BBC's leadership debate: "There will be no tariffs, there will be no quotas because what we want to do is to get a standstill in our current arrangements under Gatt 24, or whatever it happens to be, until such a time as we have negotiated the [free trade agreement]."

But Bank of England governor Mark Carney told BBC News: "The Gatt rules are clear... Gatt 24 applies if you have an agreement, not if you've decided not to have an agreement, or you have been unable to come to an agreement.

"We should be clear that not having an agreement with the European Union means that there are tariffs."

Article 24 of the General Agreement on Tariffs and Trade (Gatt) (Article XXIV) — Gaat was the international trade body that preceded the World Trade Organisation (WTO).

The UK could decide to continue applying zero tariffs to goods and services being imported from the EU in order to minimise disruption to trade and prices. However, under rules set out in Article 1 of Gatt (which are commonly known as Most Favoured Nation [MFN] rules), it would have to offer the same terms to every other one of the 163 WTO members and British farmers wouldn't welcome that.

Theresa May has said: "The question of Gatt 24 is perhaps not quite as simple as some may have understood it to be."

Winter of discontent

The phrase 'Now is the winter of our discontent,' is the first line of William Shakespeare's play 'Richard III,' written in the period 1592-1594. It coupled with succeeding lines reflect an optimism that bad times are ending and sunnier times are ahead.

In Britain, the winter of 1978-1979 was the coldest since 1963 and there was no optimism. The period is called the 'Winter of discontent' (while a Sun newspaper editorial correctly quoted Shakespeare, the word 'our' was dropped from what became the popular name for the period) because of the massive series of public and private sector strikes against a pay limit of 5% set by the Labour government.

Annual consumer inflation in the UK had fallen from 24.2% in 1975 to 8.3% in 1978. The rate would rise to 13.4% in 1979 and 18% in 1980. Nevertheless, while real disposable household income per capita rose slightly in 1975 and fell in 1976 and 1977, the overall increase in 1975-1978 was 6.9% according to the Office for National Statistics.

A strike by 57,000 Ford car workers in Britain from late September 1978 with a settlement of a rise in pay of 17% prompted an article in The Economist on November 4, 1978, 'After Ford, the Deluge?' Bread rationing was imposed in the same month when a bakers' strike led to panic buying while truck drivers started an unofficial strike in support of a 25% pay claim. Oil tanker drivers on strike caused disruption to industry and business. To avoid a BBC broadcasting blackout over the Christmas period, the government had agreed to a 12% pay deal — again breaching its 5% pay ceiling. By the end of January, water workers, ambulance drivers, sewerage staff, and dustmen were involved in industrial action.

The Sun newspaper reported in January (see image below) that The Sun "is much slimmer than usual again today. This is because of acute shortages of newsprint arising from the lorry drivers' strike."

Rubbish was piling up on the streets while a strike by gravediggers in Liverpool resulted in bodies clogging up mortuaries — accentuating the sense of chaos in the country.

Helmut Schmidt, chancellor Federal Republic of Germany, Jimmy Carter, president of United States, Valéry Giscard d’Estaing, president of France, & James Callaghan, British prime minister, at a Guadeloupe, Caribbean, summit, January 5/6, 1979

On January 10, 1979, a suntanned James Callaghan, the prime minister, arrived at Heathrow Airport from the four-nation summit, and he decided to hold an impromptu press conference. It was a disaster.

The PM had been preceded with pictures in the Daily Mail of him swimming and soaking up the sunshine with his staff. 

Responding to an Evening Standard reporter's question "What is your general approach, in view of the mounting chaos in the country at the moment?"

Callaghan responded:

"Well, that's a judgment that you are making. I promise you that if you look at it from outside, and perhaps you're taking rather a parochial view at the moment, I don't think that other people in the world would share the view that there is mounting chaos."

The PM also accused the journalists of being jealous.

The Sun newspaper headline "Crisis? What Crisis?" on January 11, was subsequently used by the Conservative Party during its election campaign.

Inside the tabloid on Jan 11 was an editorial by Larry Lamb, the editor, titled, 'Now is the winter of our discontent.'

British Prime Minister James Callaghan at Heathrow Airport, Jan 10, 1979

On March 28, 1979, the British government lost a no-confidence vote in the House of Commons triggering a general election — the first time an election had been forced by the House of Commons since 1924, when Ramsay MacDonald, the first Labour prime minister, lost a vote of confidence. The months of chaos paved the way for Margaret Thatcher to enter Downing Street after her May 3, 1979, general election victory.

MORI (now Ipos Mori), the polling firm, in November 1978 reported that the Conservatives led Labour by 43% to 42% but just two months later, at the end of January 1979, there was a 19-point gap (55% to 36%). On election day — May 3, 1979 — MORI reported in the Evening Standard a forecast of 45% for the Conservatives, 37% for Labour, and 14% for the Liberals. The final voting result was 45% Tory, 38% Labour and 14% for the Liberals.

Richard III 

In Shakespeare's 'Richard III,' the duke of Gloucester, the future King Richard, speaks in a monologue addressed to himself and to the audience:  

"Now is the winter of our discontent
Made glorious summer by this sun of York;
And all the clouds that lour'd upon our house
In the deep bosom of the ocean buried."

His elder brother had secured the English throne as Edward IV. They were both sons of the duke of York.

The so-called Wars of the Roses were the civil wars fought in England and Wales between the Yorkist and Lancastrian royal dynasties in about the period 1455-1485. While historians differ on the start of the warfare, the general consensus is that the Wars of the Roses ended with the battle of Bosworth in 1485, when Henry Tudor (the future Henry VII, the first Tudor king) defeated and killed Richard III.

Brexit & Global Britain: UK's top global trade surplus in 2018 with Ireland?

From economic heyday of British Empire to EU and BrexitBritain's best economic performance in history has been during EEC/EU membership 1973-2018