Nick Timothy is Director of the New Schools Network and a former Chief of Staff to Theresa May.
It is a bad habit of mine to shout at politicians being interviewed on the radio in the mornings, but last Tuesday – the day Tata Steel was due to decide the future of the Port Talbot steel plant – I read a column that enraged me. In his Financial Times column, Janan Ganesh argued that the people who lose out from globalisation, those who are forced out of work or find their wages undercut, should simply be ignored by the Government. “Rich democracies may have to live with a caucus of permanently aggrieved voters amounting to a quarter or a third of the whole,” he argued. “A seething minority is still a minority.”
Writing off a third of our entire population might seem extreme, but it is typical of the political and media classes who know little of life beyond the Circle Line, the Underground route that marks the boundaries of London’s wealthy centre. These elitists propound a philosophy of international liberalism that benefits the wealthy but often undermines the prosperity of many of their fellow citizens. They can be found in each of the major political parties, the top ranks of the civil service and, of course, in the comment pages of the Financial Times. Their agenda is often unpopular with the public, who feel increasingly insecure and resent the loss of control over their lives. But they do not care very much about popular support for their policies: the thing that distinguishes Ganesh from his fellow elitists is his honesty that the working classes – for that is what he means – should be ignored.
Their argument is simple: the world is getting smaller, people and capital are becoming more mobile, and trade is increasingly international. We can either throw ourselves head-first into this naturally-occurring process of globalisation, or we can wither and die. And put like that, their case sounds convincing. But the thing about unchallenged false dichotomies is while they might sound plausible, they are in the end still false. There are many ways for governments to encourage greater international trade and investment, but they do not have to be in the manner that the likes of Ganesh propose. We can, for example, have international trade without unsustainable levels of immigration, we can do business around the world without putting ourselves at the mercy of the Chinese state, and there is nothing stopping us taking a more long-term and strategic approach to economic and industrial policy. In other words, globalisation is a good thing, but we still have the freedom to pursue policies that give us more control and more security: it is just that the liberal political and media classes oppose them.
Immigration is a prime example. As the House of Lords Economic Affairs Committee concluded, there is “no evidence for the argument, made by the [then Labour] Government, business and many others, that net immigration generates significant economic benefits for the existing UK population.” The OECD says “the [fiscal] impact of the cumulative waves of migration that arrived over the past fifty years in OECD countries is on average close to zero.” The Bank of England found that immigration can reduce average British wages. And the independent Migration Advisory Committee says that high immigration can force British workers out of the labour market.
These facts are well known. Yet, against the wishes of the public, those who govern us continue to champion high immigration to Britain. A good example of their approach is an article in The Times written by Lord O’Donnell, the former Cabinet Secretary, and Jonathan Portes, the former chief economist at the Cabinet Office, after they left government. Immigration does not “have much negative impact on jobs or wages” they argued, and it is good because it forces “natives to acquire new skills”. The alternative for the “natives” – being forced into lower-paid jobs or thrown prematurely onto the scrapheap – was clear enough, but left unsaid. Titled “Immigration is like trade: it makes us rich”, the article’s headline was true in a sense other than O’Donnell and Portes probably intended: immigration might make people like them richer, but it does so at the expense of people in working-class jobs.
High immigration is not an inevitable consequence of globalisation, it is the consequence of policy decisions taken by government. And so too is the way in which international trade is governed. We do not have to accept “dumping” by the Chinese steel industry, in which state subsidies finance over-capacity and lead to prices lower than the real cost of production. And we do not have to accept the new 46 per cent Chinese tariffs on high-tech steel imports. The EU could impose retaliatory tariffs on Chinese steel products, as the United States has done and other member states would like to do, but it is the policy of the British Government to oppose these measures. This might be because of the Government’s determination to create a “golden decade” in Sino-British relations – which is not exactly working out well for the people of Port Talbot – or it might be because of the purity of the British belief in free trade.
Either way, our passivity in response to China’s trade policy is not the inevitable result of globalisation but a deliberate decision taken by the Government. And the same can be said about Britain’s lack of a long-term industrial strategy. Given that ministers say that steel is a “strategically important sector”, it is striking that there is no strategy in place to promote and protect it. Thanks to Government policy, big infrastructure projects use not British steel, but foreign imports. Thanks to the Climate Change Act – legislation not imposed on Britain by uncontrollable forces but introduced by Labour and supported by all political parties – wholesale electricity prices for British industry are twice those paid by their EU competitors.
One might argue that steel is not a strategically-important industry for Britain and it does not merit special support. But that is not what ministers say. And it does not explain the unilateral and monstrous act of self-harm – or rather, the act of harm inflicted upon industrial Britain by Parliament – that was the Climate Change Act. Neither does it explain why Britain has no industrial strategy other than on paper even for sectors as important to our economy as life sciences. It was only two years ago, remember, that the Government came close to allowing the sale of Britain’s second-biggest pharmaceutical company, AstraZeneca, to Pfizer, the US asset-stripping company that wanted the British firm mainly for tax avoidance purposes.
None of this is to pretend that there are simple solutions to the insecurity of the millions of people who are turning their backs on mainstream politicians. And as Ganesh wrote in his article, most people still seek moderate, sensible, pragmatic government of the kind offered by Cameron, not Corbyn, and Clinton, not Trump. But to write off a third of the population because of the complexity of the problems that cause their anxiety is as intellectually lazy and as fatuous as the populists Ganesh so despises. It is also callous in the extreme.
But worse than that, pretending that nothing can be done is dishonest. The forces of globalisation do not render governments powerless, and when it comes to many of the problems that are fuelling this popular insecurity – like immigration, international trade rules and the lack of industrial strategy – government inaction is the result of decisions taken consciously by policy makers. Our governing classes may not like it, but it is time they reacquainted themselves with the people they serve – and questioned the unthinking liberalism of the policies they support.