March 2023

UK Economy: Signs of Hope or Doom?

Like many Western nations, the UK economy remained resilient through the worst of COVID when many workers were ill or otherwise sequestered in their homes, unable to work due to various lockdowns. The lockdowns seemed a wise precaution for the times — even though Britons disliked being forced to stay in their homes for weeks or months.

But just as COVID has relaxed it’s hold on our lives, it suddenly occurs that Western economies begin to underperform…

Some days you just can’t win.

New UK Prime Minister Liz Truss and New Chancellor Kwasi Kwarteng Ordered Tax Cuts for Wealthy Britons

Which, if you know British politics, is standard operating procedure for Conservative-led governments. No matter the economic ailment, it seems that the de rigueur prescription is tax cuts for the rich.

On balance, that prescription boasts a decent success rate. Over the past 122-years, various UK governments have imposed tax cuts to stimulate the economy and it’s worked more than not. However, there’ve been times when it hasn’t worked, and this is one of those times.

“Always worth a try?”

I guess. But when tax rates for the wealthy are already low, further tax cuts don’t impress the wealthy, nor increase government tax revenue, nor stimulate the UK economy.

And this is the problem… politicians don’t understand economics well (nor do they understand military matters, but that’s a story for another day) but by taking some sage advice to heart, new Prime Minister Liz Truss could still salvage an economic win out of a (forgivable) misstep early in her premiership.

It’s early days, and no doubt, they’re feeling the pressure to act. The PM and Chancellor tried to improve the economy and their first attempt failed.

No worries, there’s a window of time to get it right. But not too much time, or any remedy they apply will arrive too late to have a meaningful effect. And that could cost the Conservatives at the next election.

Their Second Attempt to Help the Economy: Printing More Money and Government Buy-back of UK Bonds

Better. But not perfect.

Which necessitates a larger government deficit, morphing into more government debt. Just what the UK economy doesn’t need is a larger deficit and even more debt. Neither helps the market, nor the government’s credit rating, nor the UK’s long-term economic picture.

It’s too soon to see if this plan will work. But it works in other countries, and it should work in the UK, with the caveat that the privilege isn’t abused by future Chancellors as a sort of ‘silver bullet’ that will solve every economic problem. It’s not a magic bullet.

Printing money and buying back bonds will have a small, but positive influence on the overall economy. Likely, both the PM and the Chancellor now realize that it should’ve been the first step in a 6-step programme to address problems and provide solutions to the UK’s present economic challenges.

Five More Ways to Lift the UK Economy and Prevent (or limit) a UK Recession

ONE: Working people pay more tax than unemployed people. It’s a fact. Ask any economist.

Therefore, the government should spend serious stimulus money (even though it’s borrowed money) on ‘shovel-ready’ infrastructure projects. But it shouldn’t spend on projects that can’t begin construction within the next 8-months, because that’s too far in the future to fix what’s broken now. ‘Shovel-ready’ means ready to begin digging within weeks. Not years.

TWO: Companies that export goods or services, bring ‘new’ money into the economy, thereby stimulating the overall UK economy.

The domestic economy in the UK is pretty sophisticated so there’s little room for improvement — but there’s plenty of room for improvement in regards to exports. The UK’s track record on facilitating an export-driven economy is dismal when measured against such exporting superstars as Germany and Japan. To correct this, the UK government must provide a tax advantage to companies or individuals that export goods or services. I politely suggest an 8% tax break on exported items. Five per cent won’t incentivize companies enough to make exporting a priority, and ten per cent would make it difficult for the government to recover the lost tax revenue over a number of years, no matter the increase in exports over the short-term. This 8% tax advantage could be raised or lowered annually, thereby providing the government with yet another lever with which to control (adjust) the UK economy as necessary. Priceless!

THREE: Citizens earning less than £25,000. per year contribute little to overall UK government revenue, so there’s little loss for the government to forego taxing them.

However, changing the income tax threshold so that workers who earn under £25,000. per year don’t pay any income tax whatsoever, can make a huge difference in the lives of those workers! It’s the difference between a presently unemployed person being able to afford to take the train to a job every day, or not. It’s the difference between a presently unemployed tradesperson being able to insure his work van, or not. It’s the difference between a presently unemployed worker being able to afford daycare for her children so she can apply for a job, or not. It’s the difference between a presently unemployed person moving to another city for a job, or not. In so many ways, this change represents a small change in government tax policy and revenue — which results in a large change in the employment situation for presently unemployed workers. The UK workforce needs to be firing on all eight cylinders, not the present five-out-of-eight cylinders.

FOUR: The UK should harmonize it’s Corporate Tax Rates and policies with Canada, which has an attractive and simplified corporate tax structure.

And it works. Throughout the entire subprime market crisis and subsequent recession, Canada’s economy was the strongest of all G7 economies and Canadians only knew about the recession playing out in the United States and Europe by watching American news channels. The reason Canada sailed through the recession is precisely because of their low-ish and simplified corporate tax rate structure. Many Western companies moved to Canada in the 2008 to 2011 timeframe in order to take advantage of those low corporate tax rates — and in so doing — saved their companies from insolvency. Some returned to the United States following the economic recovery, while some remained in Canada. You can’t buy advertising like that! Recessions occur approximately every 25-years in the Western world, and the next one is almost upon us. Now is the time to make the UK’s corporate tax rate as favourable as Canada’s, and reap the benefits thereof. Doing it after the looming recession hits, means that the UK must wait for the next recession 25-years hence, in order to reap the benefits and bragging rights of lower and simpler corporate tax rates.

FIVE: The UK government should finance 10 Solar Panels on every UK rooftop (via loan guarantees to banks) to add capacity to the national grid, to provide significant energy cost savings to energy users, and to allow for increased energy exports to the continent.

Almost every UK rooftop could host 10 solar panels and thereby add plenty of electricity to the grid during the daylight hours — which, happily, is when the grid faces it’s peak demand. Because rooftops are everywhere in the country, it won’t matter if some northern panels are covered with snow, or if London happens to be covered with a layer of fog — because the rest of the country will still receive sunlight and contribute huge amounts of electricity to the grid. Ten panels per rooftop means that homeowners can (automatically) sell their surplus electricity to the grid via a net-metering connection. Whether private homes, farms with several outbuildings, schools, retail businesses or industrial buildings, placing 10 solar panels on each rooftop in the country could save energy consumers astonishing amounts of money annually, and add significant capacity and stability to the national grid, and allow MANY GIGAWATT HOURS worth of surplus energy to be exported to the continent.

So there’s the low-hanging fruit. There ARE WAYS to improve the UK economy, not by giving tax breaks to the wealthy — who, it turns out, don’t want them because they’ve all the tax breaks they need — but by strengthening the parts of the UK economy that are presently weak, and could be made robust via simple changes to existing policy.

I’m proud of the new Prime Minister and her Chancellor, because, facing a looming crisis, they decided to actually DO SOMETHING! as opposed to just hiding until the storm passes.

Full marks on that, Liz and Kwasi! It’s easy to see that you both care about the country and about how its citizens and businesses are faring.

If you continue to be responsive to the peoples’ needs, I’m confident they’ll respond favourably to you, and your poll numbers will prove that statement true as time rolls forward.

Wishing you every success as you craft policy appropriate to the times in which we live and seek to pass it in the UK House of Commons in a timely manner for best effect.

Written by John Brian Shannon

Iraq Once More at the Precipice

With the sudden resignation of Iraq’s preeminent cleric and political leader, Moqtada al-Sadr, Iraq is once more plunged into ruin.

We’ve seen this time and again. A country torn apart by conflict begins to get back on it’s feet — and somebody, somewhere, makes the brilliant decision to have the leading figure in that country step down in order to ‘create a more democratic body politic’ — as if creating a functioning democracy out of years of chaos can be done as easily as baking a cake. My God, people! That’s never worked and it never will.

But what did occur instantly and with utter predictability was thousands of Iraqis converging on the centre of Baghdad upset over the loss of the one politician who assiduously worked for them, with two-dozen protesters killed by Iraqi security forces on the first day, the Iraqi Army announcing a dusk-to-dawn curfew later in the day, and a milieu of opinions on both sides beginning to form inside a gaping power vacuum.

Almost every conflict in history began on account of the power vacuum created by the (sudden) assassination or (sudden) natural death of a country’s leader, or from the (sudden) resignation of a powerful, populist, moderate leader, like Moqtada al-Sadr.

The mise en scène in Iraq today is every bad thing put together. The removal of Moqtada al-Sadr from political power in Iraq is as big as anything that’s happened there since Adam and Eve left ancient Mesopotamia, and there’s no one, not one person in the country, big enough to fill al-Sadr’s shoes.

It’s a catastrophe in the making. 

Day Two: (Now, Private Citizen) Moqtada al-Sadr, Calls on Protesters to Quit

And as soon as al-Sadr asked, the protesters left, and within a few hours the Iraq Army rescinded their hastily-enacted curfew.

How many Iraqi private citizens can claim that kind of power? For that matter, how many Iraqi clerics or politicians can claim that kind of power? The answer is: None.

There’s no one else in the country who could’ve saved the day and thereby prevent hundreds, or thousands, of needless deaths.

If there were such people, they would’ve used their legitimate political or religious reins of power and caused the protesters to disperse. Listen to the silence.

Day Three: al-Sadr Still Out of Power, Curfew Gone, Protesters Gone, but Widespread Sense of Unease in Iraq

All that won’t last for long. By about Tuesday of next week, the Iraqis will have talked themselves into (fill in the blank) and it won’t be good, because that’s human nature. Desperate people do desperate things.

But when they have a trusted leader, it’s simply a case of the protesters and non-protesters formulating their complaints and delivering them to that leader for his/her consideration. They know that he/she will care about their issues and that leader has about 60-days to show positive result on their issues.

Which is why, for the last year, we haven’t heard much from Iraq. Lots of issues being brought to Moqtada al-Sadr, lots of issues being dealt with.

What more can citizens ask of their politicians than that?

How Can the West be Part of the Solution for Today’s Iraq?

The Western media is an amazing powerhouse for good (or potentially, evil) depending how it’s used by Western governments.

There was a time (the interwar period between 1918 and 1939) that ‘the media’ couldn’t heap enough praise on communism (especially in the UK) and was the prime cheerleader for the trade union movement of the ’60’s and ’70’s, and popularized the idea of legalization for LSD and other powerful opioids.

Since then, the media has become more responsible, and it looks for every opportunity to be part of the solution instead of part of the problem in today’s world.

Let’s not forget that the media did many good things in the postwar era, such as extremely courageous reporting during the Vietnam War, the Gulf War, countless tiny Cold War conflicts, they broke the Watergate Scandal, they helped America fight the War on Drugs, the War on Terror, and later, the War on Crime, and now the global effort to reduce CO2 emissions which is sometimes combined with informing us about the progress towards social equality leading to social equity. (Let’s hope)

Although policymakers are elected to set policy, they can’t control public opinion. Neither can the media.

But how the media reports a story can inform the public in a way that helps to create an informed narrative, one that policymakers can’t easily detour around while they try to install their particular ideology (on a foreign country, for example).

Oh, Western Media; Please Help Prevent a Catastrophe in Iraq!

We need a major recap of recent Iraq history on our TV screens over the next days and weeks — and it should begin with George H. W. Bush’s ‘Coalition of the Willing’ which set the Iraqi dictator Saddam Hussein on his ear in 1990.

They weren’t able to remove him from power, but they did remove his power to destroy the Middle East, which seemed to be his plan. Not that the Middle East at the time was free of problems, far from it. But it was a work-in-progress, and seemed to be getting better with each passing year.

For the record, all countries are a ‘work-in-progress’ let’s not flatter ourselves, overly much.

Then on to the 2003 American-led invasion of Iraq, the apparent end of Saddam Hussein, Iraq torn apart by war, and millions of Iraqi refugees fleeing the country, many still haven’t returned to Iraq.

Interestingly, the United States and Sweden took in the largest number of Iraqi citizens when measured on a per capita basis. Hundreds of thousands of Iraqis still live in Sweden to this day. Very generous and honourable of both countries to do so, IMHO.

And more reporting is due on the departure of coalition forces from Iraq exactly one year ago, along with subsequent developments in Iraq, complete with every salient statistic and infographic from 1990 through to the present, including: annual GDP progression/regression, conflict deaths, other casualty counts, refugees, refugees who haven’t returned, birth rate, life expectancy, the economic cost of corruption, the economic cost of the war inside Iraq, the economic cost of the war to the countries surrounding Iraq, the economic cost to the global economy, the environmental cost of all that oily smoke billowing up into the sky, and fewer anecdotal (tearful, one person, or one family) stories, we’ve seen enough of that kind of reporting. It’s just too difficult to bear, and consequently, people turn off their televisions for a few months. (True, that).

We mustn’t forget how Moqtada al-Sadr became a household name in the West.

Remember when the coalition forces began to depart Baghdad? It occurred that they had forgotten to leave a security force around the American coalition control centre (called the Baghdad Green Zone) and Paul Bremner and his small contingent of diplomats and advisors were left inside, completely unguarded!

When an unruly mob (is there any other kind?) formed just outside of the Green Zone Headquarters with no good intent in their minds, it was the unarmed Moqtada al-Sadr who walked right through the middle of the mob, leading his armed escorts who then took up defensive positions in and around the compound in a valiant effort to protect Bremner and his staff. And it’s a good thing they were successful or history would’ve taken a horrible course change.

It was only one week in Iraq’s history, but it prevented an unfathomable catastrophe for Iraq — and America’s reputation as the leader of the free world and leader of the coalition still operating in, but preparing to leave Iraq at the time, was preserved.

“We’re Here to Protect You”

When Mr. al-Sadr first entered the Green Zone Headquarters office, the diplomats thought that he could be there to kill them or take them hostage. In the inner compound offices, they had no idea that their US Army guards had left and hadn’t yet been replaced by a fresh contingent of US soldiers — and that they were sitting ducks for anyone who wanted to enter the compound and do them harm.

Such was the cachet of the unarmed cleric, Moqtada al-Sadr, that the mob parted for him and allowed him to pass unmolested into the Green Zone, and he walked unescorted right into Paul Bremner’s office and spoke politely to him, assuring Bremner that al-Sadr’s own security force would protect everyone inside the Green Zone compound!

However, the scene at the entrance to the compound did later turn ugly and Moqtada’s small protection force did suffer several deaths (including close relatives of al-Sadr) due to attack from the outside mob.

From that day forward, al-Sadr’s reputation as a stabilizing force in Iraq became known in the West because the Western media did a good job on reporting this heroic deed by the cleric and his men.

These are the kinds of stories the Western media needs to refresh our memories with — and with other stories about the horrors of war — which (wars) are always caused by power vacuums of one kind or another.

Therefore, the opposite of peace is *political power vacuum* which is merely another term for eventual war.

How Can We Support the Voices of Moderation in Iraq?

That’s what we want to do, because any other course will take us backwards to conflict, and ultimately, drag the coalition back into Iraq to re-stabilize the situation there, or so the conventional thinking goes.

It didn’t work the first time, why would it work now…

As Moqtada al-Sadr is the most powerful moderate voice in Iraq, it behooves us to support him, and if it makes some policymakers nervous because al-Sadr wants to have decent diplomatic relations with surrounding countries, they need to get over it.

It’s not al-Sadr’s fault that Iran is a powerful country that borders Iraq’s entire eastern boundary. It’s not al-Sadr’s fault that Iran’s army could take on and defeat THREE Iraq armies at it’s present state of capability. It’s not al-Sadr’s fault that the coalition didn’t meet all it’s goals in Iraq. Far from it! Moqtada al-Sadr risked his own life, lost family members protecting Green Zone diplomats, powerfully worked to quell viral rumour mills, unrest, provocations, and protests large and small throughout Iraq during and after the war.

Let us also be part of the solution, instead of part of the problem in Iraq — not by dropping bombs — but by constantly rewarding those who do ‘good’ and by ‘withholding’ money, assets, and political power from those whose goals in Iraq are anarchy or war. We need to be on this every day of the year.

The Western media is powerful in this regard. Although they don’t have the capability to make policy, they’re the ones who care to, and want to, inform us about the state of affairs inside today’s Iraq.

Which, along with a quick Iraq history refresher course on TV, can help everyone, including politicians to understand the today situation there… instead of everyone remaining ‘behind the curve’ and ‘drifting into war’ as has occurred many times over the past 110-years on planet Earth.


Written by John Brian Shannon

Geopolitics: Are We Ready for Globalization v2.0?

“If humanity proves unequal to the moment, it will inaugurate an era of irreversible and potentially uncontrollable global crises.” — Joschka Fischer, The End of Contemporary History, writing in Project Syndicate

Geopolitics on planet Earth are at a crossroads — and some recognize that fact for what it is, some don’t recognize that’s where we’re at, while others who should know better won’t admit that we’re at the crossroads and that the time is past where we should’ve chosen a new path.

Realistically, there’s only one path!

(There is another path, the path of status quo leading to nuclear Armageddon, which path is too stupid to contemplate. So let’s not waste time discussing that path)

And the realistic way forward is to learn from history, where we went from feudal city-states, to nation-building, to empire-building, and onward to multilateralism on the governance side and globalization on the economic side.

The Next Logical Step is to keep multilateralism (that part is working) and replace globalization with interdependence — a process already occurring in diverse places and at an uneven rate of change.

Globalization is the (mostly) unrestricted pursuit of a country’s economic goals, expressed through their domestic corporate environment, and it’s been a (mostly) fine thing.

The leaders of countries that saw this period for what it was in the early 1970’s took advantage of the moment to dramatically improve their economic standing: Japan (following the Arab Oil Embargo of 1974) Germany (since everyone began loving Mercedes Benz and BMW cars in earnest) and to Taiwan (since PC computers arrived because that’s where the majority of computer chips were made and continue to be made) and China (since every consumer loves the lower price of goods made in China) and all of it has been massively good for the global economy, ushering in an era of unparalleled economic growth across the world.

Other countries played their cards smartly — like Sweden which added a thriving defense export component to its economy, Norway which moved to simultaneously exploit its undersea resources / legislate high taxes on resource extraction / improve every social progress marker in the country / and thereby became the Happiest Country on Earth according to the UN Happiness Index (and also ranks very highly on the Social Progress Index, socialprogress.org) the OPEC countries, and the fascinatingly successful South Korean economy.

A hearty “WELL DONE!” to the leaders of all those countries — who took stock of the global situation as it then existed, researched the potential opportunities for their countries based on their available resources, and then worked very hard to maximize opportunities for their country’s industries.

An historic leap forward for those countries whose leaders were smart enough to seize the (then-present) moment.

Alas, the moment is gone, or at least, receding.

But something will replace it. Something always has, and always will. Because if it doesn’t, it’s human nature that our default mode is regression — and waiting at the end of that process will be nuclear annihilation and the ‘grey goo’ aftermath.

The Next Logical Step, “Interdependence” is on the horizon — and the best example also happens to be the least likely example — that of Russia and Ukraine combining forces to ship corn (this week) and wheat (next week) and probably sunflower seeds (the following week) and on and on, until the end of time. Let’s hope!

Interdependence means that instead of reckless competition that works to destroy each other, allowing their mutual competitors to utilize a ‘divide and conquer’ strategy to injure or destroy both — arrangements are made that when Russia ‘wins’, Ukraine ‘wins’ also. And vice-versa.

When a Turkish bulk carrier ship arrives in Odesa, Ukraine at the request of Russia, Ukraine and Turkey, to load corn that is sourced from Russia AND Ukraine — and both Russian and (hopefully, one day) Ukrainian naval ships ‘shadow’ that Turkish ship to ensure its safe passage across the Black Sea onto Turkey and then Lebanon — then we know it’s in each party’s best interest for that shipment to arrive safely in Beirut’s port.

Arranging things carefully means it becomes important to Russia that the shipment arrives in Beirut, it becomes important to Ukraine that the shipment arrives in Beirut, and because Turkey facilitated and supported this agreement it’s important to Turkey that the shipment arrives safely — then we have true Globalization v.2.0 — which I call “Interdependence”.

I can’t stress it enough: The countries that move quickly to Interdependence will outperform countries that don’t.

Remember the lesson of countries that enthusiastically embraced globalization in the early days — which advanced their economies by orders of magnitude — Japan, Germany, Taiwan, China, Sweden, Norway, the OPEC countries and South Korea have never regretted making globalization a priority.

So too, will be the countries that embrace Interdependence, carefully arranging every single thing they do, to the point that every operation becomes a ‘Win-Win’ operation for as many sides as are foresighted enough to participate.

The way to prove ourselves ‘equal to this moment in history’ is to embrace Interdependence and to utilize ‘Win-Win’ thinking as the vehicle to get us to our respective economic and social progress index goals.

Written by: John Brian Shannon

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