WELCOME TO THE SECOND WORLD

WELCOME TO THE SECOND WORLD

24 Nov 2020

The Oxford Languages word of the year is usually a horror show for anyone who has any affection for the English language. There is no single word or expression for 2020 because apparently 2020 was an “unprecedented” year. I had previously supposed that all years were unprecedented but it seems that at some point a repeat was sneaked past us. (Was 1975 the same as 1974? I’m trying to remember).

So for 2020 we have a projectile word-vomit of lockdowns, circuit-breakers, covidiots, furloughs, infodemics and many, many more. Including this:

“The word staycation is well-established in English – it is first recorded in 1944 in the OED – but its frequency has increased by almost 380% this year compared to last, and there is also growing evidence of its use as a verb.”

So let us staycation, you and I, when the smog of kettled cars is spread out against the sky. 

But we all know what a staycation is. It is a holiday spent in one’s own country or even at one’s home (see “furlough”). 

There is a point to this very interesting but slightly rambling introduction.

While we have been cowering in our lockups, the UK has become a foreign country in the space of just nine months. And it all happened while most of us travelled nowhere. Other, perhaps, than back in time.

WHAT IS A SECOND WORLD NATION?

It seems to me that the UK is changing from a first world to a second world nation. The second world was the post-war term used to describe countries that were affiliated to the Communist bloc. According to dear old Wikipedia, the term “second world” has become obsolete since the collapse of the Soviet Union. Not so fast, Wiki old chap, it’s surely time for a revival.

Here are four characteristics of second world nations.

CIVIL LIBERTY DEFICIENCY

Barring a revolution and a military coup, the removal of civil liberties must be executed in small increments. It starts by appealing to the people to make small and time-limited sacrifices in the cause of a much admired state institution. In this case it was “our NHS” because the enemy was a virus. 

Had the people at the start foreseen that they might be fined for not wearing a mask in public or for visiting their mother there would have been an outcry. But it’s always small steps. As more local restrictions on movement were introduced members of the public were explicitly encouraged to denounce each other to the authorities. 

Subtly but inexorably those who have been prevented from going about their business have been granted small concessions with the understanding that these were very much not rights but rather gifts from the government. And when they were subsequently withdrawn again it was stated that this was the fault of the wicked people and nothing to do with official incompetence. 

ECONOMIC DEPENDENCE ON THE STATE

For a second world country to get away with removing civil rights when its older citizens had literally once fought for their liberty, it is necessary to make as many of them as possible dependent on the largesse of the state. 

In the UK, around 60% of the population was already a customer of the Treasury coffers, if you included all the juniors and seniors as well as public employees. There were 27.5 million people in the private sector. Much of the private sector is dying a death of many cuts but for many the pain is being mitigated by furloughs, subsidies and rent or tax holidays. 

Like it or not, huge numbers of the population are effectively invested in the efficacy of the state. You could argue that millions of people did vote for just that in the 2019 election but when the results came in they must have thought they had lost.

Buying loyalty is not inexpensive. Every day you can turn on the radio and hear someone demanding more money for something. They do this with increasing confidence because the government always stumps up. You can call it the sunk cost fallacy or simply throwing good money after bad. 

MONEY PRINTING

In a previous life I visited some East German companies that were being taken over by West German companies a year or so after the fall of the Berlin wall in 1989. It was a source of some amusement that the ex GDR workers kept nicking the toilet seats from work but a source of wonder was that no one had any idea of the meaning of cash flow. When cash was needed to pay employees or suppliers someone just rang a government department and the required sum was sent over.

The ostmark was unsurprisingly of little value outside East Germany. Visitors from the West were forced to convert their deutsche marks on a 1 for 1 basis for spending money while they were there. But essentially the ostmark was a debased coupon. 

Sterling is not yet a debased coupon. I keep hearing serious financial commentators saying that everything is going to be okay because we can borrow “incredibly cheaply”. This is because the government buys its own debt. On 5th November another £150 billion was added to the firepower of the Bank of England’s Asset Purchase Facility which will boost its holdings to £895 billion (£706 billion now).

The Asset Purchase Facility rose from zero to £445 billion from 2009 to 2019. That was to facilitate QE which was supposed to rescue us from that scary financial crisis. The subsequent doubling has all been since March 2020. Ten past years of financial rescue have just been crushed into nine months. 

The new money (£450 billion) will mostly be used to buy up equivalent quantities of existing gilts to the new ones that the Treasury sells. The slang term for these operations is “printing money”. Since the emergency started in March, the Treasury has sold £402 billion of gilts and the Bank of England has purchased £304 billion (equivalent to 76% of the total). To be clear, both the Treasury and the Bank of England are agencies of the government. 

GRANDIOSE SCHEMES OF GLORIFICATION

The GDR was second in the summer Olympics table in 1976 (Montreal), 1980 (Moscow) and 1988 (Seoul). Had there been competitive doping games, they would have won those too. 

Venezuela wished to be the world’s reference socialist republic, after the fall of the USSR, and Cuba presented itself as the gold standard for healthcare.  

Britain is going to be “the Saudi Arabia of wind”. 

Supply your own punchline.

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