The Times They Are A-Changin’: Turn to the Left 

 

 

“There’s a brand new talk but it’s not very clear” 

 

Last week, NYC, the wealthiest city in the world, voted for democratic socialism. Five days earlier Washington DC did the same in a mayoral primary election. LA could soon follow suit. Left-wing candidates also triumphed in Illinois, Michigan, New Jersey, Pennsylvania, Washington state and Wisconsin. 

 

Sacred tenets, including unyielding support for Israel, unquestioning faith in capitalism are under threat with voters frustrated and left behind. 

The standard bearer for this change is Zorhan Mamdani, the first Muslim mayor of NYC, who backed the three insurgent candidates in Democratic primary elections for the House of Representatives, and their promise to “abolish ICE [Immigration and Customs Enforcement]”, condemnation of Israel’s “genocide” in Gaza, and vowed to “tax the rich.” 

This success was echoed in state legislative races, where he successfully backed five other candidates. The mayor said he hopes to “write a new chapter in our party’s history, where working people are back at the heart of that struggle”. 

There are clear signs, perhaps bought on by voters realisation that Trump isn’t helping the majority, but, instead, he is helping himself and his financial backers, that people are turning to socialism. A survey by Gallup last year found that Democrats favour socialism over capitalism by 66% to 42%. The gap was widest among voters under 30: the driving force of the Mamdani coalition. 

‘Democrats favour socialism over capitalism by 66% to 42%’

 

Economic populism and affordability are key; taking on Big Tech, property developers and corporate price gouging. Voters want free childcare, low-cost municipal supermarkets and rent freezes. High rents and gentrification are no longer regarded as inevitable trends, but as the result of government officials serving powerful oligarchs. 

US support for Israel’s war in Gaza has alienated voters. Pew Research found that C.60% of Americans now view Israel unfavourably, including 80% of Democrats and 57% of Republicans under 50. 

In the UK, we have our own vested interests, such as the royal family. Readers will know I am anti-monarchy, primarily because they continue to be an unnecessary luxury. 

Last week’s newfound openness which revealed that William paid £7.76m in tax last year, including a series of opaque deductions, whilst the King paid £12.9m, haven’t changed my opinion. 

The strikes me as being from the bullshit baffles brains school of PR. Putting out the big number and leaving the percentage unsaid; primarily because it is lower than the majority pay. 

Alongside this opaque openness their core funding is doubling, up to £100m. Buckingham Palace’s refurbishment is currently slatted at £369m, despite the fact that the King and Queen don’t want to live there afterwards. 

 

‘The strikes me as being from the bullshit baffles brains school of PR’

 

On the work front, neither William nor Charles were putting in a shift; research by former MP Norman Baker found that William has undertaken 57 royal engagements year-to-date, the King 77. The leader was Anne on 100. 

They are funded by taking a cut of crown estate profits – public money that would otherwise go to the Treasury. 

This year, the sovereign grant gives the king 12% of crown estate profits: £132m now, rising to £138m next year. From 2027-28, the rate jumps to 20.5%, supposedly because the windfall from leasing the seabed for offshore green energy will have faded.  

Which brings me neatly to renewable energy, and our PM in-waiting. 

In 2024, Andy Burham, together with Steve Rotheram, the Liverpool mayor, published a book entitled “Head North”, included 10-points, one of which was “Net zero to reindustrialise the north.” 

Last week, Unite and GMB trade unions argued that energy minister E Miliband’s net zero agenda will result in major job losses for the workers they represent in the oil, gas and utilities sectors, after his continued refusal not to grant any new licences for North Sea oil extraction. 

Meanwhile, investors fear Miliband’s record of pushing for funds to support a green transition will lead to higher borrowing, worsening our public finances. 

 

‘investors fear Miliband’s record of pushing for funds to support a green transition will lead to higher borrowing’

 

Were he to become chancellor, Miliband would have a level of that would enable him to ensure workers and communities are not left behind in the transition. The problem, as ever, is the Treasury reluctance to provide support to the affected workers and regions, which was highlighted when they blocked his initial £28bn p.a. green prosperity plan. The plan would have led to the creation of 650,000 jobs by 2030 in targeted industrial regions, together with commitments on skills, training and apprenticeships in green sectors. 

Two weeks ago, in  “They Think It’s All Over….”, I quoted a recent report by the Confederation of British Industry which showed that net zero is one of the largest drivers of industrial job creation in the UK economy, and generates output worth £105bn, C.3.5% of UK GDP and supports more than a million jobs, many in the NE. Average wages and productivity in the sector are significantly above the national average.  

In the UK context, the Climate Change Committee has found that for every £1 of public money spent on net zero, the benefits outweigh this by 2.2 to 4.1 times. 

Turning to the bond markets this isn’t Truss-style unfunded tax cuts for the wealthy, it is real, creating assets and jobs which stimulate growth.  

 

‘investing in cheap domestic renewable energy, electricity networks, home insulation and industrial decarbonisation reduces exposure to volatile global gas prices’

 

Net zero also has a positive impact on inflation, the big enemy of fixed income investors. 

The inflation shock of 2022-23, and possibly 2026, were driven by supply-side energy shocks, directly related to a global dependence on imported fossil fuels, mainly gas. Statistically, since WW2, energy price spikes have coincided with eight of the 10 episodes in which inflation was near or above 5%. 

It is simple logic; investing in cheap domestic renewable energy, electricity networks, home insulation and industrial decarbonisation reduces exposure to volatile global gas prices.  

This only leaves the “Trump factor”.  

 

‘how long can King Donald survive?’

 

His latest curveball is the threat of 100% import tariffs on any European country imposing a tax on digital services from US companies. This would be imposed immediately and supersede any other prior trade deals. 

France, Spain and Italy impose a digital services tax of 3%, and several other EU countries have either implemented or proposed similar policies. 

The UK has a 2% digital services tax that applies to social media platforms, large search engines and online marketplaces which have global revenues from digital services exceeding £500m, total UK revenues of over £25m and “derive value” from UK users. 

The only question is, how long can King Donald survive?  

 

“Because I’m so clever
But clever ain’t wise”  

 

 

No doubt inspired by Mamdani’s success in NYC, Democrats seem to be looking left. Maybe there is hope for Bernie Sanders, yet!

Currently, this seems to be an urban phenomenon. But, it will be interesting to see if Trump’s MAGA base finally realises that they have been taken for fools.

This side of the Atlantic, we could, hopefully, see something similar with Reform and Restore.

Much will depend on Burnham’s first 100-days; hit the ground running and be optimistic. Create a feel good factor. England winning the World Cup would help, but that isn’t likely.

There will be more on Burnham later this week after the sun sets on today’s speech.

The royals, of course continue to flourish. They run rings around the rules, publishing opaque, misleading figures designed to obfuscate and shock.

Somehow, it’s reassuring that some things stay the same. Apparently, it’s called tradition!

Musically, we start with “Fashion “ by David Bowie, and end with “F*** Forever” by Babyshambles. Perhaps, Reform might prefer “Frack forever!”

We’re all fracked, anyway!

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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