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Some years ago I had the enormous privilege, tinged with envy, of holding this beautiful golden disc in my hand. It was nearly 5 inches diameter, ornate and embossed… It was the Nobel Prize in Economics, awarded to Hayek in 1974. I had the honour of being friends with Hayek’s son, Larry, and daughter in law, Esca, who sadly passed away only a few years ago…

This year’s Nobel Prize in Economics is a  timely one, awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt, for their work on innovation and how technology can enable the forces of “creative destruction”, driving economic growth, lifting global living standards. The phrase was coined by Schumpeter, a famous Economist, now immortalized in a column in The Economist. A very simple yet powerful concept, that the new, better designed and more applicable, revolutionary and innovative technologies can replace the old. The loom replacing hand weaving. The car, superseding the horse… You know the story…

Mokyr, an Economic Historian (yay for my original discipline!!), eschewed our worries about AI taking over the world, and says it uses the data we feed it. He described it as currently “a magnificent research assistant”. On this I’m afraid I disagree; even recently, when pursuing a particularly intricate mathematical solution, the AI that was solving it, actually created new maths, the researchers said! And there are numerous instances, were programmers have attempted to limit remit of the life of a program, and the AI has successfully circumnavigated this – so, obviously more to say here.

Aghion and Howitt’s original model dates from a 1992 paper, illustrating how companies invest in both process and product in order to out compete antecedents… This has direct relevance for policy, as can help identify R&D opportunities, which can sometimes pull in different directions depending on which is the promoting source – either private sector or the government. In the first case, benefits are initially privatised (though no doubt will bring broader gains), whereas government seeks to benefit broader society. Different companies will compete for replacement status. With humility, I dare to differ from one of their conclusions: Aghion warns of the creation of “superstar” corporations, which can achieve monopoly dominance, and therefore stifle competition.

My own view is that this is not black and white, and that for instance, European competition policy focusing on the most level of level playing fields, has created a host of minnows – rather than any dominant operator. In this instance it could be argued that European competition policy has lead to an outcome where the sum of the parts is less than the whole… A consolidated and dominant player within a given technology, can often drive complementary technical and commercial advances, in ways that a swathe of disparate and unconnected technologies, cannot achieve…

#NobelPrize #CreativeDestruction #Aghion #Mokyr #Howitt #CompetitionPolicy

I’ve almost been inclined to stop writing about Economics, because it is just so astonishingly dispiriting. Rachel Reeves originally was Gordon Brown’s Economic Advisor, and of course she was not front-facing; so, what you saw was a serious looking, cerebral appearing, Advisor to arguably the most intellectual politician since Michael Foot’s misguided attempts to lead the Labour Party towards a socialist sub-utopia…

However, if a foot could be placed wrong, Rachel has managed to do it. I literally felt like I had been winded when one of her very first moves was the Employers NIC tax raise: if ever a wrong signal could be sent to our business community, that was it.

I don’t know if our country is in Intensive Care, but we are certainly in A & E, along with the hundreds of thousands of people each day, either underemployed or underproductive in their occupations. 

Some months ago, Government launched their Industrial Strategy. I’ve been involved in this area for a long time, and it was a complete damp squib. Little element of progression or momentum, in a “Strategy” that appeared to be more an ad hoc listing of aspirational ideas, that didn’t achieve a collective aim. 

An industrial strategy is precisely that: a coherent and strategic path, combining integrated elements of structured economic activity, that you have to go backwards in order to achieve this path. Backwards, in identification of the manual and technical trades’ that you wish to capitalize upon, and re-engineering their Trade courses. 

Financing, has to balance the contingency of measurable productivity gains, whilst simultaneously securing repayment, on a rolling schedule that allows necessary capital injections. 

Technology: nobody can ever future-proof anything, but you can start. I know that we have the software engineering skills to de-engineer “Deepseek”, and discover exactly why it needs a fraction of the energy input that Chat GPT does.

Private Finance Initiative (PFI), has always shocked external analysts, for being a three letter acronym that holds the Government to ransom in the scale of profit taking upon which it is built. Surely if we are to build assets, we don’t need to be gouged in doing so? 

Direction. Who are we, and what do we want to do? We are world leaders in all aspects of the creative arts, yet we can also build and design the most sophisticated and desirable cars in the world… so why should the middle bit be missing? The bulk of the rest of our retail, service and industrial sector presents as a mediocre alternative to our continental competitors. Which is why I spoke at the start about the vital contribution of our Trades’ education.

If Merck has decided not to invest £1Bn in R &D, in the UK, in arguably one of our golden success stories, the pharmaceutical industry – that should be seen as a crisis.

Please, lackluster Labour Gov, take note..

#Budget #Taxbetter #Labour #Industrialstrategy

President Isaac Hertzog has just addressed journalists, Members and a broader audience, for a live stream Q and A, at Chatham House.

It was astonishing. Bronwen Maddox is a brilliant and formidable Chair, and maintained an element of journalistic integrity to be proud of. Sadly I cannot say the same for President Hertzog’s obfuscatory and dissembling replies. It wasn’t just that he was evasive, it’s also that his replies were so defensive as to be quite simply unbelievable. He spoke repeatedly about Israel following the international Laws of War. He misrepresented these very rules when he stated that how a Conflict is begun can determine how you execute your response. When that is precisely why they are the rules of engagement under the Geneva Conventions. How a war is started is completely irrelevant to how it is prosecuted. Bronwen put to him that the significant loss of life of civilians and the careless way in which residential areas have been targeted seemed to substantiate, at a policy level, that Israel views civilians as collaborators. Potentially and essentially all civilians. President Hertzog denied this, and that he had actually previously said he viewed civilians as collaborating with terrorists. Ms Maddox cited a speech from him saying precisely this, in 2009 – which the President felt had been misrepresented. It was put to him the willful and direct targeting of hospitals was indeed a war crime, and again his response was to say that these are known and intelligence driven hot beds of Hamas military operations. Numerous times, including by the attending journalists, it was put to the President that these concerns and perceived misrepresentation that Israel feels slighted by, could be righted by allowing in external observers – not least journalists, and the international humanitarian community. This question was sidestepped.

An astute attendee questioned the President on how he thought it might be possible to correct, and get back on track, relations with a broader swathe of Arab neighbors, as was progressing under the Abraham Accords. Of course this drew a neutral and diplomatic answer. Sadly there was not time to address Saudi Arabia’s particular point that Israel should now establish “irreversible steps” towards a two-state solution.

Finally, the President agreed that whilst militarily, Israel was winning this conflict, it was losing internationally, the war on public relations… This appearance certainly did nothing to alter this view.

#Gaza #PresidentHerzog #Palestine

President Trump has been shot and handled himself with aplomb. In my book, anybody who has been shot and immediately pumps a fist in the air in defiance, doesn’t have anything to prove to tinpot bullies on the international stage. We know Trump has a deferential psychology towards so-called strong men – yet he all too easily forgets, he is the strongest man on the planet.

There appears a consensus that peace between Russia and Ukraine must be gained, at almost any cost, yet I feel quite strongly that this entire episode has been entirely mishandled. You do not give red carpet treatment to an international war criminal, who actually could have been arrested the moment he stepped onto US soil (except the US doesn’t recognize the International Criminal Court’s jurisdiction). There can be no land for peace deal, there can only be a peace for security guarantees, in a context which recognises the innate sovereignty of Ukraine to exist as an independent state. Putin has repeatedly shown he doesn’t respect ceasefires, nor peace agreements, and his entire claim to territory is based on the deluded view that Ukraine shouldn’t exist, and it forms part of a greater Russian empire, he aims to rebuild. Russia is a military superpower; it is not a superpower beyond this. Sergei Lavrov attending the Alaska meeting last week, with a CCCP sweatshirt, parades this delusion. Poland was one of the greatest States in continental Europe; Turkey had an Empire; Britain had the greatest of all Empires.. and now we are a smaller economy than India, one of our former colonies. Things change.

The aggressive expansionist and supremacist mentality of the Russian leadership seems to not want to change, and therefore a land for peace deal will not work.. only a peace for security guarantee deal will work. If the US provides intelligence and the threat of airstrikes, this will be of substantial help. The UK has hinted at putting “boots on the ground” – however we also need to recognize that a likely maximum deployable contingent would barely be greater than 10,000 British troops… (50,000 international peacekeepers were deployed in Kosovo – tiny in comparison to Ukraine). 10,000 is roughly the number that are being killed or injured on the Russian side – every week. That means any security guarantee has to be geopolitically coherent amongst cooperating European States, with a feasible and sustainable logistics supply line. A security guarantee is worthless, unless it illustrates our readiness and preparedness to fight to uphold it.

Bullies only respect strength, and hold quiet contempt for those who would otherwise give them the red carpet treatment.

#Ukraine #peaceagreement #Putin #Trump

“When the facts change, I fire the fact finder.” Keynes would have been proud… Dismissing Erika McEntarfer, commissioner of the Bureau of Labor Statistics, is genuine a market making move. It is Politburo politics of the most blatant kind.

I’ve been trying to coalesce this version of truly bizarre political radicalism that Trump represents. A sort of “in your face” defiance that actually defies their own self-interests – and is shrinking any element of geopolitical presence that the US has. I understand the US wanted to just retrench and deal with its own affairs, but surely not at the expense of international goodwill and and the astonishing lack of trust and certainty that his very presence represents.

As reported on Reuters: “Mehill Marku, lead geopolitical analyst at PGIM Fixed Income, a New Jersey-headquartered investment firm with $837 billion in assets under management, said investors were also watching Trump’s expansive interpretation of his powers as President, a legal doctrine called the “unitary executive” theory.” How the US constitutional system is itself not rebelling at Trump’s excessive and repeated use of Executive Orders, I simply do not understand..

And again,  if you compare it to any of the political scandals that I can think of since the 60s, including Watergate, surely the net harm to the US is greater than any of these, and arguably should it have been a non-Presidential system, Trump should be indicted and commencement of a new democratic replacement begun. The defenestration of Liz Truss by comparison, looks positively super efficient – and she had done significantly less damage than Trump so far! What happens to inflation data when the stockpiled stocks have run out? Will the US Federal Reserve manage to make any sensible progress against this level of bluster?

#BureauLabourStatistics #ErikaMcEntarfer #Trump #Indictment

Who would have thought it in 2016? Brexit in our opinion has been the most effective act of economic and political self harm in a very long time indeed. Yet France, who only three years ago our then prime minister, Liz Truss, notably couldn’t decide whether or not President Macron was friend or foe, is moving towards the creation of a Pan European nuclear umbrella with the UK. 

France has an entirely independent nuclear deterrent. It has been said for a long time that the UK’s nuclear deterrent had “sovereign independence” – and yet there was always some element of operational uncertainty as to whether or not this directly equated into strategic and political independence – due to the co-sharing of the missiles carrying UK warheads, with the US. France didn’t suffer from this potential tactical sleight of hand… And today, Thursday the 10th of July, marks a profound day for UK / French cooperation.

President Putin in his historical revisionism, has entirely created his own worst outcome, one that he professed to fear most: the Eastern nuclear expansion of NATO. For some this is not a closed book, as they argue the accession of new members from within the remit of the former Soviet Union, into NATO, created this conflict. Yet what Putin has managed, due to the near 20-year hesitancy, on the part of the US, as they seek to exit themselves from role of world policeman – Putin has created the perfect conditions for President Trump to put Europe on notice, that it needs to sort out its own backyard. Today, the UK and France placed Putin on notice, that he will soon face a higher and better guarded fence, on which there are mounted surveillance towers. And those towers contain nuclear warheads. Catastrophic historical blunder by Putin. Rather than exercise dominance over a benign region, he has single-handedly caused the massive re-arming and extension into the operational nuclear realm, of his near neighbours. Way to go Vladimir!

At the outset of the Russia Ukraine conflict, Putin, as we have written before, had a very clear and implicit element of nuclear intimidation behind his every action. Including his earlier deliberations on whether or not he would actually utilise this capacity in Ukraine itself. Our position clearly stated at the time, was that Europe should militarily coalesce, acting collectively to call President Putin out on this nuclear hostility. Today’s UK/French statement of intent on nuclear collaboration, will reach straight into the heart of where Putin goes from here…and has almost certainly made the world a safer place…

#nuclearcapability #nuclear #rapprochement #nato