Dec
2024
1Mr Brightside: “This is Not a Love Song”
DIY Investor
31 December 2024
“Big business is very wise
I’m inside free enterprise”
…and where there is big business there is vested interest. Unfortunately, that vested interest resides some thousands of miles away in the US
“Vassal State: How America Runs Britain”, by Angus Hanton, lays bare just how true that statement is.
25% of our GDP is made up of sales of 1,256 US multinationals operating in Britain. This includes everyday sectors from breakfast cereals(Kellogg’s), soft drinks (Coca-Cola), car manufacture (Ford), taxis (Uber),to social media (X) entertainment, (Netflix). And, knowledge-intensive sectors ranging from data (Apple, Meta/Facebook, Google, Microsoft) to finance (Goldman Sachs, Morgan Stanley, BlackRock).
Once we used to boast about Hanson, “A company from here doing rather well over there”, more recently we boast of “being open for business”.
The past 20-years has seen a series of US acquisitions in our technology sector: the Deep Mind, the AI company DeepMind, is now owned by Google; Cyberspace pioneer Darktrace was recently bought by US private equity company Thomas Bravo and bio tech Abcam by Washington DC’s Danaher – part of a $12.7bn spending spree on Cambridge University companies in 2024 alone.
Oxford University’s newly established Ellison Institute, financed by Oracle founder Larry Ellison, is poised to launch a similar US assault on its intellectual property, spinouts and startups.
Whilst US businesses dominate our GDP, the same cannot be said for the contribution to the exchequer. Tax for many of these businesses is based on avoiding it; some sell into the UK from low-tax Ireland, routing profits through tax havens often under British control, artificially lowering profits in Britain through transfer pricing – so that on average tax represents only 5% of profits. If the effective tax rate were just 15% on only the profits we know about, Britain would be at least $10bn (£8bn) a year better off.
‘on average tax represents only 5% of profits’
When we did try a small correction with the proposed digital services tax of 2% in the 2018 budget, intense US government lobbying forced the idea to be dropped.
We like to fool ourselves that there is a special relationship, but there never has been. Whatever you wish to call it, it was based on us giving and the US taking. Trump’s “America First” is nothing new, he is just more open in his selfishness.
As has been gleefully highlighted by the Tories and their fawning media, GDP has fallen in the early months of Labour’s administration.
They were quick to point out that in H2 2024, the UK recording the fastest growth in the G7, partly influenced by the snapback from a shallow recession in the second half of 2023, at the peak of the cost of living crisis. Most economists and business leaders did not expect higher levels of growth to be sustained, and the BoE warned as far back as February that inflation would return above its 2% target in the second half of 2024.
Analysts at the consultancy Capital Economics highlight that the Q3 downgrade was mainly driven by international factors – including a drag from net trade – rather than the areas of the economy Labour is blamed for hitting. Consumer spending still grew by a decent 0.5%, while business investment was revised up from growth of 1.2% to 1.9%.
‘Clearly voters have forgotten that under the Tories we lurched from one existential crisis to the next’
Clearly voters have forgotten that under the Tories we lurched from one existential crisis to the next. Their desperate dogmatic tax cuts meant that our public services crumbled, putting the country on an unsustainable course.
Recent polls show that, whilst Labour has shed up to third of its support since June (currently C.26-29%) the beneficiaries have been Reform polling between 18-22%. The Tories level of support at between 23-27% is little better than when we Truss was PM
Source: https://www.markpack.org.uk/155623/voting-intention-opinion-poll-scorecard/
In addition, Reform reports that it now has more members than the Conservatives, surpassing 131,000 on Boxing Day.
To mark this milestone, Reform released a videos showing a message that appeared to be projected on to Conservative party HQ in the middle of the night, telling Badenoch that Nigel Farage’s party was the “real opposition” to Labour.
The Tory leader, Kemi Badenoch, responded saying the membership counter was a “fake” and accusing Reform of “manipulating British voters”.
As we have highlighted, Reform has been climbing in popularity since the general election, with opinion polls suggesting Farage has become one of the most popular politicians in the country since he was elected as an MP after many attempts.
‘Farage has become one of the most popular politicians in the country’
Interestingly, whilst he scores highly on the proportion of people who have a favourable opinion of him, he also ranks highly on those with a negative opinion.
A recent Ipsos survey found that he has both a 29% in favour rating, he also had a 49% against rating. Overall, at -20 he was ahead of both Keir Starmer (-29) and Kemi Badenoch (-25).
Next-up for Reform is their target of expanding of its elected base at next May’s council elections, with the aim of supplanting the Conservatives in many places.
As Farage said: “This is a big, historic moment, the youngest political party in British politics has just overtaken the oldest political party in the world. Reform UK are now the real opposition.”
Given that the next general election could be as far way as June 2029, it will be interesting to see if Reform can continue and maintain their momentum.
‘the youngest political party in British politics has just overtaken the oldest political party in the world’
Perhaps a key to this is the party’s finances. In a recent article, “Reflections”, this column covered the appointment of Nick Candy as Reform’s treasurer. Candy has promised to build a £40m war chest, but that could be dwarfed by the possibility of Elon Musk donating up to $100m.
Whilst it might seem strange that a US tech mogul would donate such a sum to another country’s political party, it appears wholly in-keeping with his need to stick his nose into other countries politics.
Only a few weeks ago, Musk caused outrage in Berlin after appearing to endorse the far-right, anti-immigrant Alternative für Deutschland (“AfD”), writing on his social media platform X: “Only the AfD can save Germany.”
He also reposted a video by a German right-wing influencer, Naomi Seibt, who criticised Friedrich Merz, the leader of the conservative Christian Democrats who has the best chance of becoming the next German chancellor, and praised Javier Milei, the libertarian president of Argentina.
At a press conference in Berlin, Scholz responded indirectly to the post, saying: “We have freedom of speech here. That also applies to multimillionaires. Freedom of speech also means that you’re able to say things that aren’t right and do not contain good political advice.”
Readers might remember that in August, Musk clashed with PM Starmer on X, accusing the British leader of discriminatory “two-tiered” policing as authorities tried to clamp down on violent far-right riots against Muslims and immigrants that rocked the country for a week.
‘Musk, the world’s richest person, more and more resembles a rogue state, the real life version of Bloefeldt’
Musk, the world’s richest person, more and more resembles a rogue state, the real life version of Bloefeldt. Unfortunately, I cannot see any James Bonds to outwit him. His intentions are self-serving and nefarious, and his nation-state level resources allow him to flout the law as he wishes.
He, and his 14-contemporaries who are all worth more than $100bn, have become “a society-distorting threat to democracy in the same way that economics has always recognised monopolies to be dangerous to a functional market.”
Plutocracy might not be sufficient, as nothing seems to be enough for those who have everything. Musk’s new obsessions are attacking public servants, slashing social spending and going after the most vulnerable. “In most cases, the word ‘homeless’ is a lie,” Musk tweeted recently. “It’s usually a propaganda word for violent drug addicts with severe mental illness.”
With an actual rogue state, who might indulge in election interference, active disinformation campaigns, social media manipulation, other states call them out, or even impose sanctions. Musk has gone beyond being a private citizen with an opinion and a large following. His sheer wealth, his control of X, and his new position within the US government place him in a different category.
Richard Neville, the 16th Earl of Warwick, was known as the “Kingmaker” because of his role in the Wars of the Roses and his influence on the English monarchy. The question is, is Musk the kingmaker and Trump the king? Or, if recent reports are accurate, is the honeymoon period over?
Immigration was a key tenet of Trumps’ campaign, however his appointment of Sriram Krishnan, a Silicon Valley venture capitalist, as his adviser on AI, has been described by Musk as “deeply disturbing”.
‘is Musk the kingmaker and Trump the king?’
The row has pitted Musk and his fellow entrepreneur Vivek Ramaswamy against diehard supporters including the far-right activist Laura Loomer and Matt Gaetz, the former Congress member and abortive nominee for attorney general. The spat threatens to open up a chasm among Trump’s supporters over immigration, a key issue in his election victory.
Loomer, a renowned anti-immigration provocateur widely credited for persuading Trump to highlight false rumors about Haitian immigrants eating pets in last September’s presidential debate with Kamala Harris, criticised Krishnan on social media for supporting the extension of visas and green cards for skilled workers. She said it was in “direct opposition” to Trump’s agenda.
In respone, Musk posted on X; “There is a permanent shortage of excellent engineering talent. It is the fundamental limiting factor in Silicon Valley”.
In a later post, he wrote: “It comes down to this: do you want America to WIN or do you want America to LOSE. If you force the world’s best talent to play for the other side, America will LOSE. End of story.”
Musk’s stance was supported by Ramaswamy, his partner in the fledgling “department of government efficiency” (Doge), an informal agency Trump claims he will create, under which the two men will be charged with the task of cutting government spending.
‘A culture that celebrates the prom queen over the math olympiad champ, or the jock over the valedictorian, will not produce the best engineers’
In a lengthy social media post, Ramaswamy – the son of immigrants from India – argued that the US was doomed to decline without high-skilled foreign workers and suggested American culture had become geared towards “mediocrity”. He went on saying:
“The reason top tech companies often hire foreign-born & first-generation engineers over ‘native’ Americans isn’t because of an innate American IQ deficit. A key part of it comes down to the c-word: culture. Our American culture has venerated mediocrity over excellence for way too long. That doesn’t start in college, it starts YOUNG. A culture that celebrates the prom queen over the math olympiad champ, or the jock over the valedictorian, will not produce the best engineers. ‘Normalcy’ doesn’t cut it in a hyper-competitive global market for technical talent. And if we pretend like it does, we’ll have our asses handed to us by China.”
Samuel Hammond, a senior economist at the Foundation for American Innovation, said the row flagged up the likelihood of future conflict within Trump’s administration. “It’s a sign of future conflicts. This is like the pregame.”
It would appear that, even before he is sworn in, Trump has trouble in paradise.
Along with Trumps ascend there is the unanswered question of trade between our countries and tariffs. Lord Mendelson will be our ambassador to the US and much will depend on him. Ever keen to get in the public eye, Farage is offering his services and special relationship with Trump to smooth the way. A path, that I suspect, will lead only to more subservience to the US.
“Nigel Farage portrays himself as a kind of national saviour, instead of being called out as a de facto US quisling backed by a largely fifth-column media intent on intensifying our vassalage”.
Perhaps, now is the time to right some wrongs and for us to become the tech powerhouse of Europe with a dynamic economy and growing tax base. The required assets, such as great universities and huge pools of risk capital are there. This time we shouldn’t be there just to fuel US growth.
It is time we stopped the selloffs. We need to distinguish between US direct investment that is beneficial (starting businesses here) and that which is destructive (acquiring so many of our hi-tech companies and intellectual property and exporting them to the US). We need to match the US in terms of research and development and innovation, and start building hi-tech growth companies of our own. Like the Americans, we must invest in, rather than neglect, university education.
And, finally, there needs to be recognition that an effective fightback means making common cause with Europe.
My best wishes to all of you and your families for the new year.
I shall leave you with the great man (David Bowie) and Bing Crosby ………
“Peace on Earth can it be?
Years from now, perhaps we’ll see?”
‘Unintentionally, this reads like the nominations for person of the year.
There is Starmer, the first Labour PM for 14-yrs and with a thumping victory.
Farage is no longer the elephant in the room, and has a realistic shot at being PM in the coming years.
Musk, the world’s richest person, is chasing the politics of self-interest, and is becoming an irritation and influencer on a global scale.
Lastly, there is Trump, the convict who is to be president of the US.
Instead this year winner is Sir Alan Bates, who tireless campaign against the Post Office is equally lauded by all and ignored by those who could so something
The same applies to the contaminated blood scandal that continues to be just that; a scandal. Only 10 out of 4000 claims have been settled.
I would wish for a fairer, more tolerant world, but, what is the point? We have a Labour government in name only, who could do so much, but they won’t.
Lyrically, we start with Public Image Ltd and “This is Not a Love Song”, we finish with the most unlikely duet; Bing Crosby and David Bowie.
Enjoy!
Philip.’
@coldwarsteve
Philip Gilbert is a city-based corporate financier, and former investment banker.
Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s
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