"A Case Study in Self Sabotage"
by Bill Bonner
London, England - "Every natural thing runs its course, in a pattern that no committee of planners has ever yet learned to repeal. England was a dump after WWII. After 40 years of prosperity, it looks like she is becoming a dump once more. Friends who grew up in the London of the 1950s tell us they were ten years old before they tasted their first orange, and that you had to wait half a year to have a telephone strung to the wall. The ‘kinetic’ war stopped in 1945, but the rationing soldiered grimly on until 1954 - and then, came the strikes.
Our own first pilgrimages, in the 1960s, were to a city plainly down at the heels yet still with a residual charm - a threadbare gentility. London was still inhabited by Englishmen. And the guest of modest means, your correspondent among them, still fed pound coins into the radiator to coax out a little heat, and trooped ‘down the hall’ to a bathroom held in common with strangers.
Then came the reckoning. In the bitter “Winter of Our Discontent” of 1978, the strikes rose up and the government came down. The Callaghan Labour ministry simply shattered. The voters, their stomachs turned, threw the rascals out and reached for Mrs. Thatcher - who soon enough faced a trial of her own, when Arthur Scargill marched his miners out again in 1984.
She was a tiny woman - we lunched with her after her retirement - but Ms. Thatcher had no more fear of a brawl than a terrier has of a rat. It was said that she was the only person in the whole government with any stones. She meant to unbind an arthritic economy, and the unions meant to see her broken first. But she did not bend. “The lady’s not for turning,” she said, and the phrase rang. And out of that collision a new pattern was struck: where there had stood a shabby nation run by half-baked central planners, there now rose a smart and prosperous one run, more or less, by free-market types.
But Success, when she calls, never unpacks her bags for a long stay. She is a flighty visitor - promiscuous, even. Britain enjoyed her favors from about 1980 to, say, 2020. Now she seems to have moved on. The Wall Street of London - “The City,” they call it - drew capital from the four corners of the earth. The rich of Russia, of the Levant, of Africa and the Orient looked to it to shelter and multiply their hoards. A copy of The Economist lay in every corporate anteroom. The financial industry hauled the whole economy up behind it, and the pound climbed into the clouds.
Few perceived it then - your correspondent no quicker than the rest - but it was not the cunning of fresh graduates from the London School of Economics that made this fortune. It was Alan Greenspan, who died on Monday. His counterfeit-money pumps inundated the planet with dollars.
The British met their sudden affluence in the most predictable and most unproductive manner. They fattened the welfare rolls and laid on layer after layer of regulations. The one squeezed the economy; the other drained it dry. Benefits were apparently too easy to get; they appear to have hatched a whole underclass of idlers. Sixty percent of the young between sixteen and twenty-four have never held a job - a new record. Many claim hard-to-verify mental health issues. There are, apparently, websites that show you how to get disability payments even if there is nothing wrong with you. .
There are also said to be some three hundred thousand households in which no living member has ever been employed. And the bill for maintaining those who will not work now devours a full quarter of what the government spends. And as the bucket sprang ever more leaks, the refilling of it grew ever harder. FoxBusiness: "High taxes, over-regulation and risk aversion are strangling the UK economy, experts say. When it built a high-speed train to Manchester, for example, it needed to make special provisions for a colony of bats along the way. It took 8,000 permits to do so, and an expense of more than 200 million pounds. The resulting train line was the most expensive in the world."
Our own civic pride stirs at all this talk of forlorn cities. We would back Baltimore against any ruin in the United Kingdom. But we will spare the reader the point-by-point match. It is widely advertised, in any case, that Britain has now slipped below Mississippi - The Atlantic calls it a “case study of self-sabotage:”
The country’s output per person is now only just above that of Mississippi, America’s poorest state - and that slight lead is only achieved thanks to London. Outside the capital, in places where tourists do not visit, living standards fall well below Mississippi’s. Brits visiting the United States find that their currency has depreciated to the point where the pound today buys only about $1.35. British wages have lagged well behind those in the U.S., and also those in Germany, France, the Netherlands, Denmark; once you account for inflation, they’ve barely grown at all. Within the next decade, the typical Pole will have a standard of living equal to the typical Brit, if current trends continue.
In July of 2020 the forty-year cycle of interest rates, for the pound as well as the dollar found its bottom. Since then, yields have crept upward - punishing borrowers the world over. Even so, the real return upon government paper in both pounds and dollars sits at a historic low; from here, most yields are likely to rise until they stand again at a historic high. If so, look for Britain and America to shuffle along together down the same road - stumbling, bumbling, and grumbling toward Yazoo City, on the edge of the Mississippi Delta, where half the inhabitants live in poverty."
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