Lipstick On A Pig: The Decade

The ten years since the first book rose from this bog blog have certainly demonstrated that bailing out the banks fails to change their behaviour and  'people power' is on the rise. Yet 'success' remains elusive, as does any clear sign of a winner in the war between 'intelligent practice' and 'uninformed, stupid practice'. 52% of Brits voted to leave the world's largest trade bloc, and nearly as many Americans just voted for a toxic Donald Trump as voted against him. Maybe we humans just love putting lipstick on pigs?

The successful 'facilitators' of 2011 have indeed become the 'institutions' of 2020, as the US Congress seeks to break their respective monopolies. And political parties have indeed proved to be more concerned with solving their own problems than those of their voters or society.

Individual narratives have begun to subvert the top-down institutional narrative - reality TV and the social media have catapulted lone footballers and 16 year old environmental activists to stardom, while enabling grifters to earn fortunes as social media 'influencers' and even to assume the highest office in their land.

Innovation has continued apace, and it's nice to see that the UK 'crowdfunding' market of 2020 has grown to a record £6.26bn, while the rest of the European has doubled in the same period to over €6.6bn. And this innovation did not 'kill' any other form of finance, as some feared (or hoped). The new and the old co-exist. Even cheques have not died out, while cryptocurrencies have boomed.

And our defences against disaster indeed weakened to the point where we were not ready for myriad floods, fires, global warming or the latest pandemic and its accompanying economic depression.

Financial regulation has flexed belatedly to address crowdfunding and more recently cryptoassets, but continues to lag too far behind ever more rapid developments and to protect regulated institutions at customers' expense.

On balance, greed and stupidity are still winning. Scepticism is applied just as often to hard facts as it is to political delusions or financial scams. Snake-oil vendors have done a roaring trade.

The working title of the next book evolved from "The Personal State" to "You: the war for control of your data and the money that flows from it." The abuse of personal data and artificial intelligence (not to mention encrypted messaging and distributed ledger technology) felt like the source of more bubble-and-crash. But that project stalled in 2015 due to workload and for some reason I lost all appetite for it in 2016... Most posts since then have examined developments in the Brexit farce, the bulk of which inspire nothing more than sarcastic dismissal on Twitter rather than anything approaching thoughtful examination. 

Sad.

It turns out that the direct action of 'people power' merely results in culture wars - including those of the armed variety. We humans just love putting lipstick on pigs...

A European View of Brexit: Three Sources of Opportunities

Ironically, I was asked to give a European view of Brexit for an online conference this morning. I say, ironically, because it was in my role as an Irish lawyer for an Irish law firm, yet speaking from London as someone who's also qualified as an English solicitor and who left Sydney in 1994 as a 29 year old barrister. I guess that makes me one of Theresa May’s ‘citizens of nowhere’. At any rate, here's a summary of my view - which I tried to couch in terms of opportunities from a European standpoint.

How to view Brexit

I see Brexit as a set of international sanctions self-imposed by voters for emotional reasons - whether perceived 'lack of sovereignty', feeling 'left behind by globalisation', xenophobia or nostalgia. The hard facts never mattered. Trading rights to fish in UK waters to EU countries may have 'sent a shudder' through the House of Commons from a symbolic, nationalistic standpoint but fishing is the UK's smallest industry, employing 24,000 people and exporting 80% of its catch to the EU to help feed 400m people, as opposed to the UK's 65m.

And the hard reality is that the UK helped build the EU trade bloc, including advocating its expansion to 28 members; and contributing significantly to many of its rules, like EU financial services regulation and, ironically, anti-money laundering regulation. So I have little sympathy with the idea that Britain could legitimately expect the EU suddenly to change how it does deals with third countries just because Britain used to be a member state.

Opportunities?

Brexit may be a mess of the UK's own making, but every mess provides an opportunity for someone to clean up.

Looking for opportunities in this context is a bit like the final scene in "The Life of Brian". A lot of terrible things happen in that scene, including mass-suicide out of 'solidarity' with the poor unfortunates being crucified. But it's important to remember that the scene ends with everyone singing “Always look on the bright side of life”.  

To continue the idea that Brexit is a set of self-imposed sanctions, the opportunities really boil down to 'sanction-busting' – finding workarounds for the many problems Brexit creates. Aside from the potential for speculators and other 'disaster capitalists' to make money, there are three sources for these opportunities:

Any form of Brexit means ‘no deal’ for services: 

The end of Brexit transition period in December means the end of free movement of services from the UK into the EU (and the free movement of the labour needed to deliver them), as well as the end of mutual recognition of professional qualifications, licences and various types of certificates (e.g. veterinary, eIDAS identity certificates and so on).

That's a significant problem because services account for 80% of the UK economy, 80% of UK jobs and a third of UK exports, 40% of which go to EEA countries. 

This means UK firms need to set up EEA hubs, which will bring know-how, jobs and tax revenues to their new home countries. Ireland has a great opportunity here, being the only principally English speaking, common law country left in the EEA with a visa-free Common Travel Area for British and Irish workers. That's why I got my own practising certificate in Ireland and added a consultancy with an Irish law firm, since my UK practising certificate and legal qualifications won't be recognised in the EU after Brexit transition ends.

The perceived mishandling of Covid19 by the UK government compared to others (not to mention a trend toward xenophobic policy measures and right wing culture) might also feed into people’s sense of where is best to live, as could a trend toward remote-working as opposed to treating cities like London as essential hubs.

Britain is a consultant/client state:

Successive British governments have been relaxed about the sale of British businesses to foreign buyers, to the point where there aren’t really many major British-owned businesses anymore, and there seem likely be even fewer in future. 

In fact, Britain has evolved not only into an 80% service economy but also a consultant state - a sort of UK Consulting PLC. It majors in financial services, international dispute resolution, artificial intelligence, computing, construction, engineering and lots of other services (not to mention tax avoidance and money laundering) without actually owning the factories, output, buildings or in many cases even the land on which they're built. 

At the same time the British government apparently sees the job of serving its own citizens as something to be outsourced to private service providers. So the government operates like a procurement platform, paying service providers vast sums of tax money to deliver public services in remarkably autonomous fashion, while extracting taxes from the service providers' public sector income (as a kind of referral commission), as well as the taxes on the revenue from UK Consulting PLC. 

Needless to say, there are all sorts of opportunities for EU/UK service providers to import and export services using local UK/EU entities and locally qualified personnel, subject to dual qualifications and nationality/visas for those who need to move between.

Friction at the borders

There will be problems and delays at the UK borders, regardless of any deal or no deal. So Ireland, for example, is busy figuring out how to get its goods in and out by increased ferry services to and from the EU, and is planning how to open up markets beyond the UK. 

On both sides of the borders, customers who import from the EU into the UK or vice versa want to avoid 'customs risk'. That means the exporting suppliers must have a local entity/office in the EU/UK that takes on the responsibility and the liability for ensuring goods are delivered to importers. 

In each case, both European and British businesses can assist each other in embracing these challenges as opportunities, even if the ultimate result is a transfer of British business activity to the EU and a British economy that is smaller and produces less than if Britain had remained a member of the trade bloc.

You see, I told you there'd be opportunities!

 

One Chart The Brexidiots Never Show Leave Voters

These are not asylum seekers or refugees. This is Tory-approved immigration. 

Source: Office of National Statistics

Brexit Threat to Consumer Protection For EU Purchases

After years of Brexit delay, suddenly every day brings news of another important detail missed. This one hits consumers just as directly as delays to goods at the border, and depends on the British government understanding the problem and agreeing a solution within the next 119 days...

Currently, if you have a problem with something you bought in EU country, Iceland or Norway you can get free advice from the UK European Consumer Centre. They'll explain your rights as a consumer, help you settle the dispute or put you in touch with someone else who can help.

In May 2020, for example, the centre saw a surge in consumer queries over Ryanair's mass cancellation of flights, and it received 7,067 queries during the COVID-19 lockdown from 23 March to mid-August. Hundreds of thousands of UK residents have been helped during the past 13 years.

The centre is the only service of its type available to UK consumers. It employs 11 specialist staff based at the Chartered Trading Standards Institute in Basildon, Essex, and is jointly funded by the UK and EU as part of a wider ECC network in the countries it covers.

Andy Allen, Service Director at the UK ECC, says that if an agreement is not reached "...this is not a tap that can be turned back on again at a moment's notice – these are specialist jobs. The UK ECC could face closure, the 11 staff could lose their livelihoods and thousands of UK consumers would have no-one to help them in their disputes with traders in the EU."

Let's hope negotiators can find a way to maintain this critical service...

COVID19 Reveals A Naked British Government

Cartoon by Peter Brookes

You only learn when things go wrong, as my first boss used to say, and COVID19 is giving the British a masterclass. The pandemic has revealed not only that their government failed them in very practical ways through incompetence, but that it has also unwittingly abandoned many of its core capabilities. A government with an 80 seat majority in Parliament is actually powerless. The British Prime Minister has no clothes.

This is not about small or big government, centralised planning versus devolved powers or libertarianism versus socialism. All models of government must deliver at the basic level that a pandemic requires. Yet since 2015, three Tory governments have failed to ensure that Britain maintained stockpiles of necessary equipment and adequate hospital capacity or was capable of delivering food and necessary equipment to where it's needed. It's not as if the "Opposition" were any more capable of stepping into the breach. Military planners had to be called upon to co-ordinate the response, and their troops to deliver it while ministers remained unable to communicate about the impact and response in a way that built trust in the government's ability to handle this crisis - or the next...  Brexit transition will end without a deal in December, amid far lower investment than in other 'G7' nations; foodbanks abound while crops rot in the fields, and both unemployment and borrowing are beginning to rocket.

Who's managing Britain's state of readiness?

Maintaining a state of readiness for a pandemic or epidemic is obviously critical to fighting it. But that's a process that has to be managed. Stockpiles of food and equipment pass their use-by dates and must be replaced and replenished. Contracts for services and personnel must be renewed to support logistics and distribution. Households need their own stockpiles and workers must be ready to work from home or remotely at short notice. Emergency cash subsidies have to reach bank accounts promptly.

Repeated assurances by the British government that the UK health and social care system was "well-equipped" and "well-prepared" for a pandemic were clearly wrong, just as they have been concerning preparations for Brexit and for recent floods.  Channel 4 News uncovered evidence of systemic failure to monitor and maintain stockpiles of PPE and respirators. Almost 80% of respirators in the national pandemic stockpile were out of date when coronavirus hit the UK, and 45% of PPE boxes held out of date equipment. There were no protective gowns, despite recommendations to buy them last year.  Emergency funding has been slow to arrive, and largely involves loans through banks for which government guarantees had to be extended to 100% as they are unlikely to be repaid, suggesting little planning for such an event.

But who, if not the government, manages the process of remaining ready for a pandemic, even if the actual work is outsourced to the private sector?

Responsiblity for the pandemic stockpile and distribution process may have been delegated to Public Health England and a public sector management company, Supply Chain Coordination Limited, but accountability lies with the British government, just as the banks have insisted on its financial backing over the distribution of funding.

Managing the Response

The British government actually wound down its dedicated pandemic response management capabilities over the past four years. In its defence, it might say that it had merely 'streamlined' its ability to deal with all types of catastrophe, and that reflects a trend:

"Without that overbearing [nuclear] threat, much of the planning and preparedness that was set up by 20th Century governments has either fallen away or been subsumed into other crisis management plans. Schemes for how to deal with severe flooding, terrorist attacks or other events that may displace large numbers of people have likely drawn on the old Cold War planning..." How Prepared Are We For A Nuclear War? BBC Future 22. 07.2017

Terrorist attacks have luckily been very localised, enabling prompt containment. Yet, time and again the British government has responded poorly to larger scale floods. Similarly, the supply and distribution of intensive care machines, PPE and testing/tracing capability are large scale challenges this government has failed to meet, even declining involvement in international procurement exercises and offers from local producers, only to later 'beg' for ventilators and protective equipment. Panorama revealed hidden mistakes in actually delivering PPE to health and social care workers, not to mention delays in testing.

As a result, what should be reliable delivery forecasts have become merely arbitrary, aspirational 'challenges' with no certainty as to whether they can be met, let alone sustained.

Increasingly, Johnson's government has fallen back on the British Army's command and control structure to directly manage situations that the government itself should be managing. He has had to rely on the British Army to deliver PPE and testing logistics (as well as construction of makeshift hospitals to cope with anticipated demand for intensive care beds). This reliance, together with the vast number of excess deaths, illuminates the gaps between assurances and reality.

It cannot be acceptable for any government to have lost effective oversight of the process for delivering essential items in a crisis.

Trusted Communications?

There is a huge amount of literature on the importance of trustworthy leadership in a crisis. After all, it is only human to look for guidance on what's happening, what to do and what to expect amidst a major disaster. Without it, humans simply do as they please, with disastrous effects - as the 1918 influenza pandemic showed, even in small rural communities.

Trust is a function of credibilty, which itself is built on honesty and transparency.

Boris Johnson has never been on even terms with the truth and he and his various substitutes at the daily British government press briefings have continually demonstrated a lack of honesty and transparency over every element of COVID19 preparedness and response.

This has provoked both anger at the false assurances, and many media investigations into the true position, including those mentioned earlier. Yet Johnson's government continues its boycott of certain media outlets and ministers have even resorted to muting journalists who ask probing questions during the controlled coronavirus media briefings.

Johnson's latest target for tests was dismissed out of hand, and his confused messaging over whether lockdown measures might be eased produced directly conflicting headlines from two national newspapers in the same stable within a day of each other. There have been U-turns over so-called "plans" to re-open schools as well as car-sharing and likely the belated insistence that those arriving in the UK must self-isolate for 14 days. A major financial stimulus package has been deferred to the autumn. The abominal failure to discipline, let alone sack, Johnson's political adviser over his lockdown adventures is now the stuff of legend.

In these circumstances it is no surprise that Johnson and his health minister score low on trust over COVID19, and the majority of people tend to rely on others for the facts:

Fewer than two in five (36%) said they trusted what the prime minister, Boris Johnson, said on the subject, while just 37% trusted the information given by the health secretary, Matt Hancock.

However, 59% said they placed their faith in the chief medical adviser to the UK government, Chris Whitty, and 55% said they would trust the director general of the World Health Organization, Dr Tedros Adhanom Ghebreyesus.

It remains to be seen how generalised this lack of trust might become, but Johnson's own approval rating has plummeted.

This is encouraging. Any society must consider both the systemic errors and their concealment to be unacceptable if it wishes to protect itself against disaster as well as it can. Whether Starmer is any more likely to get a grip on the situation remains to be seen.

In the meantime, Johnson's Brexidiot government must put some clothes on, even if only to spare us the sight of them...