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Eight is not enough

While it is important not to overstate the implications of short-term politics, nor understate the implications of government policy and the social rhetoric on longer term prosperity, it is hard not to get caught up in the sometimes-absurd soap opera of global politics.

The most staggering example is the once great parliament of the United Kingdom, who epitomise the out of touch with reality syndrome where Politian’s debate ideological positions without any sense of what is actually possible and working towards a reasonable compromise.

Teressa May must think she is in the Twilight Zone. This accomplished lady has been given one of the worst hospital passes in political history. We said when Britain decided to leave that it was highly unlikely that Europe would want to assist the UK. With the Euro on shaky ground, it would suit the long-term strength of the union if the UK had a very bad post Brexit period.

Recently, May has given the full range of “possible” options, as in options that she actually has some ability to offer to the UK parliament and they voted against every single one. From another referendum on one extreme, to a hard Brexit on the other, the parliament voted them all down. They want some option that no one has suggested and is not on offer anyway. It is the behaviour of a child having a tantrum. They lead their citizens down a path and one could certainly argue mislead them down that path and now they have no idea what they are doing.

While many people think in ideological terms about economics, in reality economics is not a political or ideological subject. That is not to suggest that our policies should be based primarily on economics.

Economics is our best attempt to describe how things actually work, from how businesses work and people are incentivised (micro economics) to economic growth and inflation (macro economics). If you make economic policy based on the way you would like everyone to behave and interact in some idyllic, utopian sense, it simply will not work. Economics seeks to describe reality, not bend reality to the way you want it to be. That is why even seemingly nice sounding policies can be very dangerous. Economics should be based on what works and unfortunately what really makes a difference takes time and does not work in line with the political cycle.

Still, the world keeps on moving and if you actually look at it, mainly forward. Despite the horrible things that do exist, if you look at how far humans have come in many areas in our own lifetimes, there is always reason to be optimistic.

For further information or to discuss how we can help you, please speak to your adviser.

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