Why is it so hard to admit the poor are getting richer?
“The root cause of our national discontent is simple. We had a referendum, but the losing side refuses to honour it. We are therefore stuck in a political groundhog day; forced to replay the same exhausting, exhausted arguments over and over again. Two years on – tempers are fraying.”
– Tim Dawson (@Tim_R_Dawson) – Twitter.
“In Britain, the Marxist hatred of profit subsists happily with a Jane Austen-like coyness about where one’s money actually comes from. In Jane Austen, Trade is ungentlemanly; in Marx, it is wicked; in British literary circles, it is both. Given the nature of the output of British literary circles, this wouldn’t matter very much, except for the fact that the attitude has filtered down into the rest of the intelligentsia, and is nearly universal in the public service.”
– Theodore Dalrymple.
“When Theresa May, in 2017, promised “strong and stable leadership in the national interest”, she cannot have had this in mind. The long, agonised collapse of her premiership has left the Conservative Party in search of its sixth leader since the turn of the century and its third since 2016. The party has been crushed at the local elections and came fifth in the European Parliament elections, posting the lowest share of a national vote in its history. It has no legislative achievements since 2016, no discernible economic policy and no obvious vision for the future.”
– Robert Saunders in The New Statesman, ‘The closing of the conservative mind’.
One of the strange beauties of the Brexit process is the wondrous nature of this wrecking ball as it takes on all comers in its game-changing attempts to demolish the British Establishment and subvert the wider status quo. Our relations with an overbearing and unaccountable EU ? Check. Quisling MPs ? Check. The BBC ? Check. Is there anything Brexit cannot endeavour to reset – the House of Lords; the influence of Big Business, big banks and crony capitalism; faith in the objectivity and even relevance of the mainstream media ?
What the Brexit process has also revealed is the strange dearth of ideas at the heart of what were formerly our two main political parties. British Conservatism, suggests Robert Saunders, has broken with three of its most important traditions. It has stopped thinking; it has stopped “conserving”; and it has lost its suspicion of ideology. Historically, the Conservative Party has been a party of ideas, but not of ideology. Today, that relationship has been reversed: a party in thrall to ideology is reduced to boardroom banalities and half-remembered hymns to a Thatcherite past. Like an ageing Eighties tribute band, the party flubs wearily through the same tired playlist, barely noticing that the stadiums are empty, the hairstyles ludicrous and the fans long departed. In this sense, its Brexit woes are only the manifestation of a deeper problem: the closing of the Conservative mind. Not that Labour should spend too much time crowing about their own recent intellectual ‘progress’ or adherence to their own traditions. Richard Johnson, for The Telegraph:
For many Labour MPs.. moves to block a no deal Brexit are not some noble attempt
to prevent chaotically “crashing out” of the EU without a deal; they are simply a
prelude to blocking Brexit altogether. The party’s embrace of a second referendum,
likewise, is not a desire to clarify the Leave vote, but an effort to ignore it altogether.
Refusing to honour the 2016 referendum represents an abandonment of the Labour
Party’s democratic traditions. These traditions have important bearing on the current
Brexit discussion because they are intuitively understood in many working-class
communities and help to explain why one in three Labour voters backed Brexit..
It seems many Labour MPs have grown detached and ignorant of these fundamental,
democratic traditions. Many Labour MPs, instead, have sided with a form of liberal
technocracy which sacrifices democratic control for protections from Tory
governments. To use Benn’s phrase, they think ‘a good king is better than a bad
At least the Conservative Party leadership contest is now (belatedly) throwing off some interesting policy suggestions. If you need to consider how far the Labour Party has fallen in the intellectual sweepstakes, just take a look at the calibre and composition of its shadow cabinet, or their advocates in the mainstream media. Would anyone really die on a hill for Polly Toynbee ? Perhaps the strangest thing about the Brexit process and the hugely debased level of current political debate is that the objective evidence on behalf of liberal, free market capitalism has never been stronger in world history. Daniel Hannan – the best Cabinet politician the Conservatives never had, because they were too stupid or spiteful to allow him a domestic constituency in which to stand, leaving him stuck in the European Parliament – asks a straightforward question:
Why is it so hard to admit the poor are getting richer?
The rich are getting richer while the poor get poorer. It’s a platitude, almost a truism.
Except that it’s not true.
Yes, the rich are getting richer. But the poor are getting richer faster. According to ONS figures released last week, the disposable incomes of the wealthiest fifth of households are, on average, £200 a year above where they were before the financial crash. For the poorest fifth, the rise is £1,800. In proportionate terms, the difference is far more noticeable. Families in the top quintile are 0.5 per cent better off than they were, those in the bottom quintile 15 per cent better off. Now it’s true that disposable income is not the only measure of wealth. The splurges of money-printing since the credit crunch have served to drive up asset prices, favouring those who own houses and shares over those who don’t. Still, even quoting the income figures enrages a lot of people. The fixed belief of many on the Left is that inequality must always be rising – a belief directly lifted from Karl Marx, who called it the theory of immiseration. It was false when he wrote it, and it is false today. Far from creating a tiny oligarchy and a vast, dispossessed proletariat, capitalism enlarges the middle class wherever it is practised. Global living standards, having risen very slowly before modern capitalism developed, are now rocketing. The number of people living in extreme poverty has fallen from 38 per cent in 1990 to 9 per cent today. What is the earliest kind of heating you remember from your childhood home? Right. Now try to tell me that we are no better off. Forty years ago, being poor in Britain meant not having a television, hot water or an indoor toilet. Confronted by rising living standards, poverty campaigners moved the goalposts, defining poverty as living on less than 60 per cent of median income – a measure that gives Britain a higher “poverty” rate than Bangladesh. But, even by that definition, “poverty” is in decline. It’s a problem for those who start from the assumption that indigence must be getting worse, and then cast around for ways to sustain that prejudice. Unable to identify any rise in relative or absolute poverty, they fall back on an absurd non-measure. “So, if poverty is down, how come there are more food banks, eh, eh?”
For the same reason that there are more smartphones: they didn’t exist 20 years ago.
In 2004, the Trussell Trust, the wonderful organisation that operates Britain’s national foodbank network, was running just two centres. The heroic work of the volunteers has brought relief to many people facing hardship. But, as their founder says, food banks do not measure poverty.
The economist Ronald Coase liked to observe that if you torture data enough, it will confess to anything. Even so, the almost terrified determination with which poverty pessimists clutch at their grievances is bizarre.
During the referendum campaign, Remainers stamped on any hint of snobbery in their ranks. Since the vote, they have been less circumspect. Although most of the 48 per cent have accepted the outcome, some openly flaunt their contempt for the patriotic masses.
The New European, a paper set up for irreconcilable Remainers, carries an article by Yasmin Alibhai-Brown which ticks every box. Yasmin mocks Leavers as “ill-taught”, while contriving to fill her column with basic howlers – claiming, for example, that the Vikings settled here in 373 AD (their first raid was 420 years later). Brexit, she says, means “dull small island life, grey, inward, with shops full of pies and chips”.
In what sense is Britain a “small island”? Geography? Economics? Global reach? What does Yasmin imagine to be the big, powerful islands? Borneo? Madagascar? And what’s wrong with pies and chips? Her implication is clear enough. It’s what poor people eat: those “ill-taught” bigots who failed to listen to their betters on polling day.
Such attitudes, revealed in daily Europhile tantrums, help explain why two thirds of us now want to get on with Brexit.
As asset managers, we believe in liberal, free market, laissez-faire capitalism. Somewhat bizarrely, perhaps, that means that the bulk of our (sole, small, global, value) fund is invested in Asia. Because that’s where the growth is. But, again somewhat bizarrely, it’s also where the true value lies. We can acquire shares in fast-growing Japanese and Vietnamese businesses on multiples simply unavailable in the Anglo-Saxon markets. Consider Vietnam. Every single one of our top ten Vietnamese company holdings generated a return on equity (net income divided by shareholders’ equity) last year of over 16%. (The best performer generated a return of 49%.) But every single one trades on a price to earnings (P/E) ratio of less than 10 times.
Or consider Japan. The FT recently carried an interview with George Roberts and Henry Kravis, the co-founders of private equity specialists KKR.
The pair view Japan as their “highest priority” outside the US, as big companies – including Hitachi, Toshiba and Panasonic – sell off non-core subsidiaries, and creating “potential gold mines for private equity”.
According to the FT, Roberts believes that the improvements in Japanese transparency and corporate governance that were started by current prime minister Shinzo Abe and his administration, “now [have] the momentum to survive beyond his time as prime minister.” As a result, Japan represents “the best value today,” according to KKR co-founder Henry Kravis. If you’re a value investor and not looking in Asia, you’re looking in the wrong place.
In a late development, the boring Remainer and self-confessed “leftie liberal, anti-racist, feminist” Yasmin Alibhai-Brown has now said that the minute Boris Johnson becomes Prime Minister, she will leave the country. That wondrous Brexit wrecking ball swings on.
|cookielawinfo-checkbox-analytics||11 months||This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".|
|cookielawinfo-checkbox-functional||11 months||The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".|
|cookielawinfo-checkbox-necessary||11 months||This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".|
|cookielawinfo-checkbox-others||11 months||This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.|
|cookielawinfo-checkbox-performance||11 months||This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".|