The Colour of Bitcoin

Stock markets tend to go up at the end of the year. Quite why this happens isn’t all that obvious, but it may be fair to say even stockbrokers feel the holiday spirit once in a while. The fact that stock markets tend to fall slightly in January and February may also be testament to this – I mean who likes January?

As much as it is a novel trait, it is dubious to impose such a trend onto the virtual currency market. Throughout December Bitcoin has been on a generally upwards sloping trend, with the new price heights the currency has reached bringing to the fore, quite prominently, concerns of a bubble. The trouble with virtual currency, unlike say, the dotcom bubble of the late nineties, is that virtual currencies are not simply new investment products within a new technology (almost like tech shares in the new online space), but possibly a catalyst – or at least a necessary tool – for the emergence of a truly digital economy. And, further, as regulators around the planet have been slow to act, the conditions surrounding the growth and innovation of the industry remain unbounded, and thus – apparently – unpredictable.

But the dotcom bubble is vitally important to remember in this discussion, not just because it was a bubble, but because it was a bubble formed within unexplored horizons. It is fair to look to dotcom when pondering the future of virtual currency. However, I aim to argue within this short piece that whilst the parallels between the current virtual currency market and previous bubbles exist, the likes of Bitcoin and others pose a unique challenge that warrants perhaps more concern than it is receiving.

How many sides to a Bitcoin?

To start, we must consider the two conditions of the most popular virtual currency, Bitcoin, that affect its would-be viability as a ‘real,’ currency.

The basic philosophy of a virtual currency is the philosophy of all fiat, namely that something has value because people believe it has value. I, amongst others, would suggest a thing only has value at the point it is used in the exchange of goods, which is to suggest money in the bank, or indeed your pocket, is only worth something when someone is willing to take it in exchange for an item you value (for the purposes of simplicity, I am ignoring the consideration of the value derived from a thing’s potential to be transacted, which I do believe is a form of value also, and I have written about previously). Given this proposition, I would suggest Bitcoin, with few entities accepting it as valid payment, has no value. Yet this argument is plainly void, and not really of concern here.

The immediate concern is of utility, namely a currency must be able to be utilised in order to have value. People may believe Bitcoin is worth several thousand dollars, but my point of contention would be it is worth dollars. Until there is an active trading market for Bitcoin, by which I mean you can buy and sell things in Bitcoin, the value of Bitcoin must always be determined as the value of an alternative, utilisable currency. Bitcoin in itself has no purchasing power. If one wanted to see a sign of a bubble, I would suggest mass investing into an item that in itself cannot be utilised for any valuable purpose is one, for the emperor most certainly has no clothes in this regard.

The second condition, much more unique to Bitcoin than a ‘real,’ currency, is the ability to mint more of it. There is only so much Bitcoin in the world, just as there are only so many dollars or pounds in the world. Yet tomorrow the Federal Reserve or Bank of England could choose to print more of their respective currencies. This would incur inflation, and impact confidence or alter interest rates. All of these things would impact the exchange rate, which is essentially the metric we are using to value currency (a weakness of the point above – Bitcoin must be valued against another currency, for the value of one unit of currency is meaningless without comparison. The point above is more trying to suggest the consequence of purchasing power, namely that Bitcoin has none, and thus its value might only be reflected in the dollar’s purchasing power). Of course, part of the appeal of Bitcoin and other virtual currencies are the absence of central banks and governments, in what some will surely see as a truly democratised currency. Yet without the ability to create more Bitcoin, I suggest Bitcoin is identical in substantive terms to gold.

Gold, just like Bitcoin, holds no intrinsic value in und itself. Nor will a shop keep accept a bar of gold or a transfer of Bitcoin, instead preferring the dollarized value. Finally, and returning to the point, there is a finite amount of gold on the planet, just as there is a finite amount of Bitcoin left to be, fittingly, mined. The consequences of this perspective are interesting – it may bring calm and alarm to the current situation. Calm as the volatility in the price of Bitcoin is similar volatility that has been seen in the price of gold for centuries, and thus we might question whether recent events are really a cause of concern. Alarm, because it means rather than betting on the future, as some Bitcoin speculators surely think, they are essentially betting on the price of gold and hoping – through the sheer act of betting – that the price rises. In short, and irrespective, the nuance is lost.

Not the same story

Of course, the parallels between the dotcom bubble and golden Bitcoin also exist. Ignoring some important considerations such as voting rights and dividend pay-outs, Bitcoin, gold and stocks might be grouped similarly, all owing value, but value found through conversion. Indeed, in a discussion with colleagues regarding the vast increase in the number of ICOs, the dotcom bubble was raised in the following context:

perhaps there is a bubble, and many of these coins are worthless and will be swept aside. But companies such as eBay and Amazon were born in the days of the dotcom boom. Right now, people are simply looking for the Amazon of virtual currency, whilst aware many more will fail.

The above is paraphrased, but the point remains clear. However, my issue with that line of thinking is it is too simplistic. Whilst accepting a bubble exists, the search for the Amazon of virtual currency assumes that the currency exists to be found. I would argue we cannot find hope in virtual currency in the same way we found hope in the late nineties because that assumes the likes of Bitcoin does something fundamentally different to, say, Ethereum. After all, Amazon did not survive whilst others failed because of random chance – they survived because they were better than their competitors.

If confidence in the virtual currency market is lost, just as in the days of the dotcom bubble, the loss will affect every currency. Some will argue that, within the coding of various coins, exist tangible features that enable them to rise above the rest. This may well be true, but until the market exists for these coins to be utilised, and thus these features’ benefits demonstrated, the differentiating factors are irrelevant. At least with a company like Amazon (in its early days) one could at least test out their recommendations service, even if they remained sceptical of the viability of the actual company. Currently, there is no logic in thinking the emergence of a bubble in virtual currency is just the same economic natural selection in progress. I suggest this is because our way of thinking about virtual currency is profoundly flawed.

Who are we betting on?

Why does the dollar exist? I’m sure there is a complicated historical reason, but the pragmatic answer is the nation of America required a currency for the purposes of conducting trade between themselves and others, just as the British did with the pound or the French with the franc. The currency existed not for its own sake, but because the country that backed it (with gold, most prominently) and utilised it existed. That concept of country was itself backed by the intangible sense of nationality, and the more tangible threat of firepower. Another question to consider is why did the dotcom bubble occur? One might find emphasis in the bubble part of that question, but fundamentally the dotcom bubble occurred because the internet came into being, which facilitated the creation of online companies.

For the most part, the trading of a currency is not the trading of a country, just as the dotcom boom was not about betting on the internet itself, but about betting on entities being founded in the online space. Colonisation may also be considered – the territory colonialists sort to settle was never in question; they were gambling on their ability to settle.

Really, beyond the question of is there a bubble in Bitcoin, and beyond the technical conditions that distinguish and make interesting virtual currencies, is what is the point of virtual currencies? We already have a largely online banking system, whilst the internet remains without sovereign status and the very real power of nuclear weapons protects the global financial order. To answer this question, I am going to move away from some of the metaphysics discussed above, and explain why I believe the question must not concern whether there is a Bitcoin bubble, but rather whether there is a much more explosive fragility in the virtual currency market itself.

The real problems of virtual currency

The rise of virtual currency is found in its alternative name – cryptocurrency. It is no surprise that the transactional market for the likes of Bitcoin stems from its use in the anonymous purchasing of illicit items. This aspect is, on the one hand, a criticism in itself, and on the other, a point worthy of praise – in the age of big data, with the need to ask questions about who owns our personal data, and the anonymity of cryptocurrencies may be a valuable tool in this area. It is not the purpose of this piece to argue for one hand over the other, though I do confess as an answer to my rhetorical question, “what is the point of virtual currency,” anonymity may serve as a valid reply.

But today, anonymity seems only a point of technical excitement for those in developer circles, and unable to explain the cacophony of speculation that surrounds Bitcoin’s December ascendance. Instead, I want to again consider the paraphrase above, as well as the novel story of the Ice Tea shop that increased its value massively simply by adding ‘Block Chain,’ to its name. A quick Google search will show that 2017 saw a meteoric rise in the number of ICOs (initial coin offerings), ranging from obvious jokes to serious propositions. And, importantly, the money generated in these offerings is real, and for some extremely large. This practice of rapid production for quick public offering does and should raise echoes of the dotcom boom or just a classic bubble, but unlike the dotcom boom there is a much more pressing concern – who is issuing these virtual currencies?

Just like the Ice Tea company (cynically) leveraged the furore surrounding block chain technology for profit, so too will celebrities leverage their fame to make a quite buck. Unlike the sale of shares in a company, or the entering of a loan agreement, or even the good faith transaction that occurs via crowdfunding sites, the launch of virtual currency comes with no obligation on the part of the issuer to honour or maintain the value of the currency. And, though the same could be said with a share issue, there is at least the acceptance of risk on the part of the shareholder that their investment may lose value. When we mentally evaluate virtual currencies, there is a danger we think of the purchasing of Bitcoin simply as a currency transaction, with no evaluation of risk because the cash in our wallet does not (often) become worthless overnight – why would the cash in our virtual wallet do anything different? (I don’t really want to talk about all of this here, but I think a mention of how the industry is branded and marketed is important. Calling virtual currency portfolios wallets as opposed to accounts, for example, associates the ‘investment,’ with something innocuous. Similarly, the presentation of trading websites, with an emphasis on user friendly access – not in itself a bad thing – should raise the alarms of a bubble. When something complex is sold as something simple, mistakes will happen)

But celebrities may simply operate on the periphery. Companies might choose to raise capital via a coin offering in the knowledge that they as the issuer have no obligation for the performance of the currency there after. If these offerings were then used in share buybacks, as has been the habit on Wall Street in recent years, we would see a massive and baseless shift surrounding corporate wealth. This, of course, ignores the fragility that is unearthed when considering the issuing of virtual currency by corporations – what happens to the value of all other virtual currencies when Google, Facebook or Apple engage in their own ICO? For virtual currencies, where value is derived entirely from the confidence people place in them, the above companies will certainly command a great deal of confidence – and belittle others as a result. Further, when these companies issue coins whilst retaining data rights to the coin’s ledger, they cement their monopoly positions, and destroy the benefits of anonymity. For those that praise the anonymous aspect, they must become aware of this. For the technologists that presume virtual currencies to be inevitable, they must re-imagine their paradise with various corporate logos.

Finally, we must consider the role of countries in this emerging market. As it stands today, when a country wishes to borrow money they issue gilts on the bond market, and repay those gilts in accordance with the conditions of – what is essentially – the loan. My question would be when will we see countries engaging in the virtual currency game, again, for the same benefits as those of already discussed? The phenomenon would, essentially, be the same – the leveraging of perceived prestige and security to create confidence in the ICO, only for it to be discovered later that neither the prestige nor the security are part of the deal. It is here we find another point of contention.

That same idealistic technologist mentioned above may well retort to much of my criticism that once the digital economy has fully developed, with the transactional capabilities of say Bitcoin proven, the problem of the reliance of confidence will be absolved much like the fiat nature of many ‘real,’ currencies is accommodated already. But, I argue, there are two fundamental problems with this logic when we introduce corporations and countries as players into this market. The first is that, in order to reduce their exposure and protectionist burden towards a virtual currency, a country might actively discourage the integration of that currency as a part of the economy. The second, and I suggest more realistic response, will be extremely tight regulation of virtual currencies such that the benefits are maintained for the issuer and not for the holder. In this new, imagined digital economy we must question whether it remains a free market economy.

Regardless – and I do believe the above rhetoric is weak – it would be a mistake to assume our current currency structures, which have developed over centuries, will immediately make the leap into the virtual world.

The involvement of nation states into the virtual currency market is not fantasy however, and I believe is much more inevitable than many realise. The primary example currently is Venezuela, which finds itself in the mists of economic turmoil. With an economy dependent on oil, and many traditional lines of credit unavailable to the Venezuelan government, the talk of an ICO for the country has been making the rounds. Some will argue this is merely a conflagration of headlines – on the one hand Venezuela’s crisis, on the other hand Bitcoin’s ascendancy – turning into an idea that will never actually come to fruition. I argue otherwise. If we are to believe virtual currency and the fully realised digital economy are inevitable, we must look to the game of empire played centuries ago by the world’s leading super powers to see they will either forge the path, or be left behind. Whilst nuclear missiles and battleships might ultimately maintain the dominance of the dollar, those same resources will, I believe, ensure a similar power for America’s eDollar.

In many ways, for the purposes of advancing the digital economy and maintaining a certain level of financial stability, the involvement of nation states into the virtual currency market may be the best outcome. Yet, assuming my prior cynicism is unfounded, that surely means the benefits of decentralisation and anonymity currently enjoyed by virtual currencies will be lost, in which case I return to a previous question – what is the point?

Conclusion

To conclude, Bitcoin is quite clearly in a bubble at this moment in time. But this bubble is not the serious point of contention when we consider virtual currency. As I have argued, the problem with virtual currencies is that they are masquerading as real currencies, with no sovereign state nor regulation to maintain their value – only confidence. I suggest confidence is a dubious thing, and I believe I make a compelling argument in comparing the investible nature of virtual currency to the investible nature of gold. I also dismiss the claims that the current virtual currency market is simply the re-imaging of the dotcom bubble by pointing out that all virtual currencies suffer from the same flaws, and thus the emergence of an Amazon of virtual currency is a fallacy position.

I believe absolutely that virtual currencies are here to stay. Really, this is why I believe governments will end up embracing virtual currencies, rather than persisting with the current policy of reactionary regulation. And despite my apparent tone in places, I do not dislike them.

However, I believe in the same capacity that we must – as a society – debate the role of big data and social media from a health and liberty perspective, so too must we approach virtual currencies with caution. I remarked above that the bubble of Bitcoin has formed in the unexplored horizon of virtual currency; I am not the first to make the parallels between the American Frontier and the digital economy. But the Frontier eventually met the Pacific Ocean, at which point consolidation, integration and regulation of the territories was vital to ensure prosperity. We must do this now with virtual currency, though the decisions we make will fundamentally influence the shape of the digital economy, and who holds power in the digital economy. It is futile to argue about a bubble in Bitcoin – whether it explodes tomorrow or not is irrelevant, virtual currencies are here to stay. Let’s accept that fact, and have a much more profound discussion about what we want this technology to be.

Two-year degrees are a short-term fix

The Conservative government pledged in their election manifesto to increase the number of students participating in two-year undergraduate degrees. The up-take thus far has proven disappointing. With explicit benefits touted by the government for would-be students, and implicit benefits more quietly touted for the government itself, the apparent fault for this lack of up-take lies with the universities.

Let’s consider the economics. Completing an undergraduate degree in two years would, in theory, lead to graduates holding less debt than their three-year counterparts. In the face of higher tuition fees, as well as the general increase in the cost of living, reducing the duration of the course seems desirable. Further, the graduate may now enter the job market sooner.

Both reduced debt and earlier work have benefits for the government also, who act as the lender of student finance and collect taxes on earnings. Politically, such an endeavour is also useful, for the nagging issue of tuition fees may be placated by this new, cheaper, alternative. Alternative is also important to recognise; in a market dominated by three and four-year courses, two-year courses offer more choice, which all parties concerned may see as a positive. (I use the word market, and a discussion of choice, dubiously, as we shall see)

Greater choice must certainly be a selling point supported by the universities. If such a course could be packaged to bolster the notion of employment (which, even if false, will inevitably happen), universities will classify this as another positive. Yet, the argument must return to economics, and it is here we find the opposition. For a two-year course to be offered as a cheaper option, the reduced cost must be borne by someone, with the appetite for such a subsidiary not with the government. Two-year degrees would demand universities alter their teaching structure and receive less for the pleasure.

There is an argument that two-year courses would attract more students and increase demand for the universities. Yet such an argument seems dubious; there is already a notion in this country that we have enough graduates – further, even a smaller amount of debt to one’s name may still be viewed as unnecessary debt in the eyes of someone unconvinced university is for them. Two-year courses are not likely to generate sufficient demand.

What they do, however, is alter certain perspectives regarding higher education. Immediately it should be stated, as someone who believes in the abolition of higher education tuition fees, I regard two-year degrees not as a bad thing, but as a half measure. The desire to learn should not be prevented due to monetary barriers. Arguments made by the government in regard to this policy seem to acknowledge this is the state of higher education for some. Indeed, spend any time around a university campus and one will hear such stories, coupled with nihilistic approaches to the debt itself.

The latter statements compliment the point we now return to. The system of higher education in its present form is not sustainable. It is not sustainable due to the burden of debt, certainly, but it is also unsustainable given the growth in online education. If the appeal of two-year degrees is that they are cheaper, then the appeal of an online course (considering only the cost) must be several magnitudes greater. Of course, degrees, it is argued, offer something more. Yet this effect seems diminished as universities continue to promote the employability aspect of their courses, rather than the old adages of expanding one’s mind. At post-graduate level such adages return, but with a slight wink and a healthy dose of employability skills thrown in. Regarding employability, online courses are most certainly a threat.

MOOC companies such as Coursera generate revenue largely through recruitment, with their students having been taught content curated for specific employers. The variety of courses offered by various education sites is also expansive. For the traditional university model, two-year courses do little to compete on either market choice or employability; instead they are a continuity of the current model with benefits that only address internal issues with the current model. They do not consider the changing nature of higher education – the external issues such as MOOCs.

Again, I do not dislike two-year degrees as an idea. I think there are a great many financial benefits for both students and the government, and perhaps even going so far as to change the norm from three to two years would be wise? Yet it feels like a sorry offering at this current time. Never has higher education felt more like an industry; simultaneously, never has an industry felt less innovative. Fees must fall so as to break the stranglehold whilst not disenfranchising those who now dream of going to university. But fees must also fall so that universities may return to teaching students as if they are students, and not economic units.

There will be some that dismiss this as liberal daydreaming, but it is not. Inevitably employers will begin recognising qualifications offered via online education platforms. When that happens, the credential value of an undergraduate degree will be the same of one earnt online, and the most dominantly factor will become cost. Yet universities will never be able to compete on price, and must offer something else in return for the higher mark up. In this regard, student experience has value, and embracing innovation in education is invaluable.

Two-year degrees do neither. By gaming the cost at the expense of other elements, they do not tackle the growing competition. By continuing the current higher education model, they do not embrace innovation. And by regimenting the university process, they reduce the value of other things universities have to offer.

Middle of the Road

I find myself stuck finding a position regarding the government’s introduction of T-Levels¹ and the Chancellor’s recent promise of more maths education.² There are a few things to acknowledge. The first is that we need skilled workers and that young people should have the opportunity to gain skills and pursue their ambitions. The second is, as a lover of mathematics myself, I do not object to a more comprehensive push for maths education.

The reason I find myself stuck is I must ask the question of whether these initiatives are really building an effective future labour force? Goos and Manning (2007) paper ‘Lovely and Lousy Jobs,’³ does a great job of explaining this issue.

The long-held belief is that automation (which doesn’t necessarily mean computers - automation has been happening for years, as we will come to see - but often does mean computers) would first reduce the demand for low-skilled work, as these were (apparently) simple jobs. The result of this automation would be an up-skilling of the workforce, which would be wonderful. This is the sentiment behind the government’s current strategy (which, I reiterate, I don’t condemn), and they have good reason to think this way.

Automation is a very popular topic in business schools, and whenever I am discussing it with my colleagues I raise the point of Adam Smith. Smith spends a respectable portion of The Wealth of Nations discussing the shift from an agricultural economy to an industrial economy.⁴ I proclaim, in said conversations, that all society need do is embrace change and implement the necessary skill-shift to accommodate the new dynamic, in the same vein as Smith, and any automation fears would be set aside (I am simplifying here). In this sense, the government’s policy seems to come from a sensible place (Smith I mean, not me).

Yet Goos and Manning argue that rather than targeting low-skill work, automotive processes target routine work, irrespective of skill requirement. And if we think about it, this makes a lot of sense. Computers can do extremely complicated and time-consuming mathematics almost immediately. In terms of raw cognitive power, computers have humans beat every time. In terms of abstract cognitive power, less so.

A good example of this is accountancy. Services such as Quick Books threaten many of the small accountancy firms.⁵ This is because of automation, yet many people would not classify accountancy as a low-skill profession. However, it is one that can be automated with a certain level of ease, and as such it has become susceptible to our digital overlords.

Whilst the consequence of low-skilled automation should be the up-skilling of the workforce, the consequence of routine automation is that only those roles that are physically and cognitively difficult for computers to perform will see growth in human labour demand. This is the infamous polarisation of work and the hollowing out of the middle class, where low-skilled but physically demanding jobs such as a cleaning see growth, high-skilled and cognitively challenging work such as a CEO remain in demand, and middling jobs fall away.⁶

Returning to the government’s policies, this is where my issue lies. The Chancellor recently stated he would like the British people to have good jobs, which is a noble but mathematically difficult ambition - we can’t all be CEOs. Similarly, mathematical knowledge will always be useful, but it will not be a distinguishing factor for many top jobs in a world where we all have impossibly powerful calculators in our pockets. Technical skills perhaps offer a ray of hope - for the time being trades such as electrician look pretty safe. But again, there is finite demand for all these things.

We already see the problem of over-qualified and under-demanded people in this country, given the number of graduates taking low-paid work.⁷ My fear is that a promise that would have worked previously is now just offering false hope.

I say this as someone who has optimistically espoused the wisdom of Adam Smith. The intention of the government is to train young people in the skills needed for the digital economy, much like Smith advocated for the industrial economy. Yet that wisdom needs to be dragged into the 21^st century. To answer this, I refer to The Second Machine Age by Brynjolfssen and McAfee.⁸

In this book, the authors argue that computers and humans are greater together than as the sum of their parts. Where computers can process data in a way humans never could, humans can apply the data and derive complex social links that a computer would be blind to. Behind every good algorithm is an insightful observation.

I have always been a supporter of a social contract for the digital age. Automation and human work is part of that contract. The solution in terms of up-skilling and re-skilling is to be more radical, and to embrace what we do well which computers do not. T-Levels have merit, but alone they do not tackle the growing polarisation of work. As part of a long-term strategy, the solution is complex, though it almost certainly involves investment in technology, robust institutions to ease the transition in work and a willingness to embrace new ideas about education and skills-training. Our role in work is changing, and so must we.

References

¹ https://www.gov.uk/government/news/education-secretary-announces-first-new-t-levels

² https://www.thetimes.co.uk/article/philip-hammond-to-give-schools-cash-for-teaching-more-maths-pupils-n8j7gdc52

³ Goos, M, Manning, A (2007) ‘Lovely and Lousy Jobs’ The Review of Economics and Statistics, 89(1), pp. 118-133

⁴ Smith, A (2012, 1776) ‘The Wealth of Nations’ Wordsworth Editions Limited, St. Ives

⁵ https://www.accountingweb.com/technology/accounting-software/can-software-really-replace-accountants

⁶ Autor, DH, Levy, F, Murname, RJ (2003) ‘The Skill Content of Recent Technological Change: An Empirical Exploration’ The Quarterly Journal of Economics, 118(4), pp. 1279-1333

⁷ https://www.theguardian.com/education/2016/aug/13/quarter-of-graduates-are-low-earners

⁸ McAfee, A, Brynjolfssen, E (2014) ‘The Second Machine Age: Work, Progress and Prosperity in a time of Brilliant Technologies’ Norton & Company Ltd., London

O-turning

The trouble with the Budget is it’s mired in show business - it’s made into a pivotal event. And it is, politically, but not to the extent as the BBC covered it, with a pre-show followed by a four hour long pre- and post- speech analysis which included a tracking aerial shot of Mr. Hammond’s Jaguar as he made his way to parliament. Now, I’m not criticising the BBC, in part because I adore the absurdity of it all. I’m just setting the scene.

Of course, almost as much show business and performance went into the address itself as did go into the coverage of it. A jokey Budget is how many newspapers are describing Mr. Hammond’s hour-long delivery in the Commons. Some will argue it shows confidence and gives the government a much-needed sense of swagger; some that it shows Mr. Hammond fighting for his corner; some will say it shows a government and a Chancellor who is already sinking, so why bother to be bothered about further perceptions?

From my point of view, and what is almost a defence of the Chancellor, though the jokes were awful, when we all know the content of whatever is said will be reduced to a half-dozen bullet points by the commentators covering it, why not give them more cheesy content to sift through? But this, nor the other reasons suggested, are really the reason the Chancellor put on a show.

Though more jovial than most, Mr. Hammond’s tone and turn of phrase was just mimicry of what is seen in that chamber every week, and indeed what was seen immediately before during PMQ’s. Politicians speak in such a way as to embed their real politicking within a defensible question or statement. Many see it as annoying, or sycophantic. Yet that is the reality, and one the Chancellor cannot shy away from.

When he speaks about his decision to, “choose the future,” as if he had a choice, or about his desire for his children to live in a country where people have good jobs, as if this were somehow a new revelation, surely the intention is to paint himself as some political visionary. Yet it says something about the orator, I suggest, when the entirety of a speech’s punch is found in the rhetoric. Indeed, those same words could have come out of Michael Gove’s mouth and they would have had the same impact. In a profession based on candidacy, this is a problem.

Now it is unfair to say this is the exact problem that faces this government, not because it’s untrue, but because such a statement implies this is the only government that is forced to hide behind vapid statements, bluster and stage lights. Indeed, much of Labour’s high and mighty tone invokes such methods. But it is this government, distinguished with a nightmare (bureaucratically and logistically, if not actually) in the form of Brexit on the one hand and a failed yet crucial economic policy on the other that mean it seems to consist almost entirely of empty phrases spoken by interchangeable and frankly forgettable characters.

This is of course the sign of a dying government - one with an obvious lack of vision and too much time spent in office to suddenly decide to find a new one. The fact such a government remains in power demonstrates the priority is not serving, but sustaining.

Brexit remains its own animal, yet the rhetoric spouted by the government of full sail ahead whilst fires break out left right and centre shows they are, somehow, also drowning. A stronger government might be honest with the public that there are challenges in the process, some of which were unforeseen and some which stubbornly persist. Yet this government cannot for fear of upsetting the balance of power and collapsing into civil war.

On the economy, we see a similar story. Seven years into an austerity policy and government debt to GDP (this week’s favourite statistic for citation) will only soon begin to peak. Meanwhile, Andrew Neil of the BBC questioned whether the promise to eliminate the deficit has been abandoned, and Norman Smith (also of the BBC) asked whether Britain just needed to accept we are a poorer country? Yet Mrs. May and Mr. Hammond will continue to refer to Britain’s, “strong economy,” and their party’s economic credentials.

This is the equivalent of closing one’s eyes and putting fingers in one’s ears and shouting, “la la la!” into the aether. A strong government would, at the very least, address these concerns and debate the effectiveness of their choices. Yet for the Conservatives to abandon austerity, they would also have to abandon their legacy of the past seven years. They would have to accept they were consistently wrong, and would have to acknowledge the sense of stagnation (at best) that is gripping the country. They’d self-destruct, shooting themselves with their own silver bullet - economic credibility.

The Budget serves as a fine example of all of this. Immediately after, buoyed by the announcement on stamp duty abolition, the Chancellor may have believed he’d done what many thought was impossible - delivered a good Budget. Yet within hours the maths had been run, and the projection looks an awful lot grimmer and problematic. Mr. Hammond had to U-turn on his previous budget. This is also a sign of weak government, as the Conservatives should most certainly know. But it is much more concerning when a government is so fragile they cannot even risk changing their mind.

Leviathan

This week marked the closest Theresa May has been to being removed as prime minister since her disastrous general election result in June. A now infamously bad speech, cabinet infighting and a general perception of her being weak have made her departure, in the eyes of many, inevitable, even if for the time being not immediately forthcoming.

Depending on who you ask (or, depending on the interviewee’s political leaning) the problem facing Mrs. May and the Conservative party in general is either Brexit, or a lack of clear, coherent and compassionate domestic policy. The discrepancy in reasoning is caused merely by respective actors emphasising their strengths – the issue is the same regardless: there is a lack of direction in Theresa May’s government.

This, in the opinion of many, will be fatal, if for no other reason than cool-headed reliability to do a task they have been asked to do is proudly promoted by many Conservatives as the modus operandi of the Tory party. A lack of direction, and by extension an inability to effectively deal with the tasks at hand, all serve to damage the party doubly as they damage the Conservatives the government and the brand.

This is why Theresa May is most certainly a dead woman walking. The very fact she is still walking is because the crisis facing the Tory party is systemic, rather than a sickness held in the head. The most likely candidate to replace her is Boris Johnson, eluding again to the behemoth of Brexit that is crushing this government and, it must be said, most of Westminster. An election of Boris as leader of would almost certainly smother some of the Brexit fires, but would leave other flames to burn out of control. It would also reinforce the perception that the Tories are out of touch; according to YouGov, he has never been more unpopular.¹

In what is now becoming a list of problems, the Conservatives find themselves with another: Mrs. May can’t lead but must, whilst Mr. Johnson can lead be must not. If we were to muse as to how to solve this problem, one might take it as a joke when I refer to a snake, but it is not. A leviathan in the context of history is one that unites various warring tribes through its singular might. Politicians might be snakes, but are any leviathans?

The apparent consensus is no, but that’s hardly creative thinking. Brexit has caused all of this mess, and perhaps it can fix it. Mrs. May faces an increasingly difficult task in leaving the European Union, whilst Brexiteers breathe down her throat, and the masses of young Remainers at home flock to Jeremy Corbyn. As a political move, calling a second referendum on Brexit may solve all three of these problems.

Assuming that, given the chance to vote again, a coalition of mobilised youth, terrified metropolitan elite and regretful middle-Englanders might reverse the result, Mrs. May may save her premiership. Talk of Brexit would be over, allowing her to focus on a strong domestic agenda and give her party an important sense of direction. Equally, it would cripple the hard Brexit wing of the party – including Mr. Johnson – through a shift to the centre ground. The result would be alienation for Boris and co.

Finally, Mr. Corbyn (whom I have spoken little about) would have his wind knocked out of his sails as his legions of supporters would, in a manner of speaking, side with the enemy. To put it another way, Mrs. May would be offering the young something only a prime minister could offer, and the young would be hard pressed to refuse.

As a solution, of course, it is not perfect. There would be accusations of old wounds opening (though, I would retort, that said wounds never closed) and it is certainly short-termist – the problem of Europe would continue to plague the Conservatives for years to come. But as I have written previously, this will be the case regardless.²

Though these are not the major flaw with this plan. The major flaw is the assumption that the result would be reversed. Just as Mr. Cameron did before her, losing the referendum would result in Mrs. May’s resignation. But so too will a ‘no deal,’ outcome, or simply a strategy of waiting it out. Mrs. May is on a collision course with failure, and only a risk might rectify that. If ever there was a time for bold and brave (if not necessarily strong and stable) leadership, let it be now. Call a second referendum.

¹ https://yougov.co.uk/opi/browse/Boris_Johnson

² http://stuartmmills.blogspot.co.uk/2017/07/how-do-you-solve-problem-like-brexit.html

Europe's Tug of War

The end of the European Union will not be on the back of Britain’s decision to leave it, regardless of what some members of the British political aristocracy might believe. But whether this nationalist arrogance is baseless or substantial is irrelevant. The illustrative point remains – nationalism will, eventually, kill the European Union.

Of course, it’s easy for a quite stereotypically British Remainer to say such a thing – it allows me to support my country by claiming the crumbling empire is not my country by their continent, whilst simultaneously bashing the abhorrent nationalistic overtones that consumed much of the Leave campaign’s media strategy (“take back control,” “Independence Day,” anybody?). However, the seeds of the European Union’s demise are not found in the dissent of little England, but instead within the textbooks of history.

Are we so far removed (or, perhaps, so democratically evolved?) to forget that 100 years ago Europe was embroiled in the (then) largest war in human history, only to then go and top that a couple of decades later? Or, choose more recent conflicts such as the Balkans in the 1990s, the Kosovo crisis and the return to genocide on European soil. These conflicts are borne out of national identity and the desire for self-determination – take back control could be applied to almost any European state at some point in that state’s history.

To believe, as many European technocrats and Remainers do, that the European Union is somehow a fundamental (and, by extension, permanent) entity is dubious at best. For what’s next for Europe but some sort of federalised state? The crisis in the Eurozone has shown the current model is tremendously fragile, and as reaction from Britain breaking away is it so mad as to think the European technocrats would call for closer integration between those that remain? And is the ultimate – perhaps extreme – outcome of this not something like the United States of Europe?

Such federalisation is unlikely because of nationalism, and the evidence is clear to see. A prime example is the calls for independence in Catalonia, which inevitably leads to a discussion of the Basque country. Or consider a 2015 Scotland, or even Kosovo should political forces move sufficiently. From the perspective of integration, take Turkey. The core part of what remains the sick man of Europe, those in Brussels seem to believe Turkey is sick, but certainly not European (Union, mind you). Lastly, take Switzerland – which is not even in the European Union – which consists of 26 federalised Cantons which operate quite independently.

History is expressed through our geography, which is itself expressed through colours on a map. Europe, for its size, is rather colourful. The question of why is because nationalistic beliefs dominate Europe, and have shaped the lay of the land (sometimes literally) when stressed. Though I think inaccurate, it is still a justifiable inquiry to say technocracy and loss of control in Europe stressed these tensions in Britain, resulting in Brexit. Further stresses – perhaps brought on by further integration – may lead to more Brexit scenarios popping up in the near future (a great example of this, in my opinion, is found in Emmanuel Macron, who is calling for a stronger European Union whilst his opponent in the election – Marine Le Pen – had a very Eurosceptic message. You could argue Macron is acting on a mandate, given he won. You could also argue Macron should be trying to convince those who didn’t vote for him, less they bite back next time).

The reverse – more decentralisation – is almost an admission of defeat. For those of us who want the European Union to survive, of which I am one, we must find another cure for the beast. That cure is not immediately forthcoming, but it should include the European Union rethinking its role within Europe the continent. If it continues to act as a self-actualising behemoth, it will fail to see the minute cracks until they become caverns.

How do you solve a problem like Brexit?

It is a natural British phenomenon to be simultaneously tremendously cynical and baselessly optimistic, particularly in matters of patriotism. This phenomenon is perhaps best illustrated with the Brexit negotiations David Davis started the end of June.

Though the left is wanton to brand Mr. Davis’s initial negotiations as wrought with concessions to his opposite, Michel Barnier, and the right keen to use words such as bilateral, professional and mutual, one should not ignore the fact that many do not believe these talks will result in a good result for the United Kingdom, regardless of political leaning.

In a week where Theresa May called for consensus, this is what I offer. Observe Mr. Farage’s comments after the general election result in early June, where he expressed concern that Brexit would not be done right. He even threatened to re-join front line politics, which is perhaps a more terrifying prospect than the often discussed cliff edge. Or, take Mr. Farage’s polar opposite, someone such as Vince Cable, who said on Andrew Marr that he felt Brexit might not even happen, given the challenges it presents.

In this landscape, I suggest it’s irrelevant whether Mr. Davis made concessions to the Europeans or not. The result of these negotiations is already determined, regardless of which side one is on. The deal will be bad. This is consensus, albeit to Mrs. May’s horror.

And make no mistake, there will be a deal. Whoever is prime minister in March 2019 (something that, at this time, seems extremely uncertain) must ensure there is a deal with the EU, or else their reign will be tarnished with what would be seen as a great failure of cooperation and diplomacy. When Mrs. May says, “no deal is better than a bad deal,” she is not technically wrong – there are worse, hypothetical, deals that could be offered to us – but she is being deceptive in her stance. There must be a deal, less her position be untenable.

And thus we have a problem. On the one hand, we have a political landscape where right and left will be unhappy with whatever deal is eventually reached, and at the same time we have requirement to strike a deal, or get a new prime minister. Indeed, if after June’s election result Mrs. May did not see her position as untenable, there is little chance she will voluntarily walk to the hangman’s noose in 2019.

One might simply put it as, ‘how do you solve a problem like Brexit?’ Well, for many Leave campaigners Brexit was never a problem, but a solution to a great many problems. Sovereignty, the NHS, immigration. These were all sicknesses for which Brexit was the panacea. But the reality, at least from a Remain perspective, is Brexit is not a panacea, and this will be evidenced when, post-2019, these problems still exist.

If Mrs. May secures a deal that Brexiteers applaud, they may have to eat their words when these problems persist. Though they will not, for Mrs. May will not secure a deal that satisfies Brexiteers. Perhaps we will have a transitional arrangement, or retain membership of the Customs Union, or pay a large divorce bill. It does not matter. What matters is that Brexit must remain an issue for those on the right, less they admit their errors in calling for the UK’s exit of the EU. From a Brexiteers’s perspective, they cannot afford be satisfied.

2019 will not see the emergence of a post-Euroscepticism era in the UK; rather, we will bear witness to the rise of the Releaver. In the general election, the term Re-Leaver was used to describe a Remain voter who was planning on voting Conservative. But I suggest a Releaver is actually something quite different, and quite literal: someone who will demand we renegotiate our terms of leaving the European Union.

I imagine a phrase such as, ‘leaving the EU was right, but the way we left was wrong,’ to be quite a common phrase is 2019, when the problems that face this country persist and the EU, now no longer a viable scapegoat, must be recast in that role again.

For Brexit is a tremendously complicated issue, but the politics, at least in a pragmatic sense, is remarkably simple. As a country, we must now all be cautiously optimistic for the future, for what else can we be? But make no mistake, the infamous British cynicism will return, if indeed it ever left, and the whole Brexit furore will rumble on beyond our eventual departure. Mrs. May might believe no deal is better than a bad deal, but perhaps it is time we all come to accept there might only be bad deals going around?