OPINION: A year that will stay long in the memory

No one likes a smart Alec, was a common reproach by my teachers. Obviously, I’m not using the actual four-letter word used at the time. But these castigations were in vain. They had little impact on my future behaviour.

I warn readers because ‘I told you so’ is so very tempting to say, particularly in a year-end type of review. It’s impossible to cram a year into a 1,000 words, so this month it’s a right ramble.

Unlike my fellow columnists, I’m not covering the tax review this month. I thought I’d do P&R the courtesy of reading the 200-plus page policy letter. So I’ve promised the editor I’d make it a January special. I do note, though, that P&R have finally provided some analysis to support the proposals. It’s a bit of a change from just a bit of shameless propaganda that’s populated the (when it’s up) ourfuture.gg website for much of the year.

So what of 2022? It’s one year that we can truthfully say things have changed. I started off the year smugly predicting that interest rates were on their way up. In January I wrote ‘acclimatising to permanently high inflation will be tough. Despite the impression the Bank of England is trying to give, things won’t sort themselves out any time soon. Interest rates are on their way up as the bank tries to put the inflation genie back in the bottle. It’ll be too little, too late.’

That’s a big tick in the Sloanie ‘Smart Alec’ box.

Though economically, Guernsey’s not had a bad year. I don’t think things have quite caught up yet. Further afield, the US managed to avoid a sudden economic contraction despite the Fed’s actions. Though consumer confidence remained high throughout 2022, the US wasn’t so impacted by the spike in gas prices, and it happens to be making rather a lot of money from the Ukraine War. A mild rolling recession is what’s being predicted for 2023.

Back in Blighty, a deeper rolling recession is more likely and imminent. Interest rates of 3.5% are hurting and double-digit inflation has catalysed a wave of strikes. It’s not the winter of discontent. It’s just not on that scale, but it’s probably signifying something worse.

In January’s column I immediately went on to say: ‘Millennials will have to learn how to “live with inflation” – and the rest of us remember quickly. In the process expect a lessening of popular support for higher levels of public spending that arose during the decade of free central bank money’. Frankly, I’ve just been so wrong about that. People aren’t. Not yet. There’s still a serious addiction to the nanny state out there.

The population just hasn’t got with the programme. There isn’t a ‘magic money tree’ out there or rather, the one that was being used (QE) has been exposed for the con that it was.

But the UK population is refusing to accept or understand that over the last five years it’s just gotten a lot poorer. The result is, train drivers aside, there’s a degree of support for the strikes that didn’t exist 40 years ago.

It’s another thing I’ve said before, but Guernsey seems to have caught a bit of the British disease. Increasing public spending, mainly welfare, and an acceptance of an upwards drift in the tax burden. This changing attitude both here and over there has occurred almost imperceptibly. We’ve not been immune to global propaganda, not least when we’ve not registered its presence.

The International Sustainability Institute published its paper on ‘Convenient Untruths’ at the beginning of the month. It exposes the narrative that offshore finance has widened UK inequality for what it is – false.

Broadly speaking, wealth distribution has been unchanged over the last quarter of a century, and offshore finance has in fact shrunk, in relative terms, over that period. QED. Deductive logic proves it cannot have contributed to widening wealth inequality.

But no matter, as I explained at the (well-attended, I’m pleased to say) seminar, the propaganda is overwhelming. It’s well-funded and professional. Watch the Netflix trailer for Capital In The 21st Century to see what I’m saying. Reading books is a bit old fashioned. Few do nowadays. Indeed, even a YouTube video is a bit too long for current attentions spans. Can’t get it on a tweet, TikTok or Instagram, then don’t bother.

In this Huxleyan present, the truth doesn’t stand much of a chance. Hence publishing the paper and hence the need to generate material to explain our global economic role in supporting growth. There’s been little attempt to do so for more than a decade. This is one of the principal objectives of the institute.

Though the growth objective is unfashionable. The Economist reported last week that long run growth rates had halved in the last 30 years. ‘For too long in this country, we have indulged in a fight over redistribution. Now we need to focus on growth, not just on how we tax and spend.’

Small wonder that I still hold a candle for Kwasi Kwarteng. History will look back and say he had a point. Indeed, no need to wait for history, people are saying it already.

Economic growth gets a bad press nowadays. Somehow the sustainability bandwagon has pigeon-holed growth as a bad thing. It’s not. It’s just that conceptually it doesn’t fit with the lobotomised present. Growth is what provides better-paid employment, raises living standards and improves life expectancy, and funds better public services.

Quick segue. Spending on infrastructure is good for growth. In my opinion, £70m. for the harbour development is value for money. I hope it goes through. Though if the States were to agree these proposals, could someone then explain the point of the Seafront Development Agency? Other than a few more board appointments to gift perhaps? The States has caught a dose of another British disease in the last decade. It’s developed a real taste for quangos.

It’s also developed an addiction to expensive consultants’ reports (read as reports from expensive consultants, not as expensive reports from consultants, some might argue a distinction without a difference). Personally, it was satisfying to see Alderney’s runway extension being approved last week.

Back in 2014, my report presenting the economic case in favour of an extension was buried. The States instead preferring to accept the premise against from a report from Frontier Economics, assumedly much more expensive, and in my opinion, selective. As an aside, I was intrigued to understand how they justified a price tag of £148,650 in 2020 for their economic analysis of Guernsey’s runway extension. It’s a useful skill clearly.

So has this been a year in review? Not really. But it has been a ramble.

I didn’t mention Russia. I got that a bit wrong in February. My column filed a few days before, on Russia’s strategy, was unfortunately published the day of the morning of the invasion. You can tell as one of the tenses referring to an invasion was incorrect. Implementing the sanction regime this year has been a right pain for many but it’s going to be some time before the deeper ramifications of being used as a tool of economic warfare really registers on us. One for another time.

No room for Covid, but a bit of balance and humility to end the year. Never hurts. And only a hint of Bank of England bashing. Shame.

To my takeaway for 22. It’s been a year of major change. But I think the implications of a lot of it – like we’re all so much poorer – has yet to really sink in. And it’ll be some time yet before it does. Just don’t rely on TikTok for any pointers.