Brexit and The Economist’s Lack of Intelligence Unit

It is now pretty much established consensus that humbled pollsters are having great difficulty calling votes. The pundits – particularly those at the FT and The Economist – are still ever so keen to sound authoritative on Brexit when it is their house editorial line, rather than the objective study of all factors, that is so clearly what determines their analyses. The Economist has a research and analysis division which claims to be a world leader in global business intelligence – the grandly named Economist Intelligence Unit or the “EIU”. As well as offering subscribers research updates it also does consultancy for corporations who want to know what is going on in the world. The EIU says “our knowledge of economics, politics and socio-demographics is second to none. If you need to see into the future, we can help.” Using “bespoke modelling and scenario analysis” the EIU “can provide country, industry or market scenarios based on expert judgement, modelling” so, “if you need to understand how a country or industry will respond to an event… we can model that too.”  Corporations pay good money for the research and expect it to be reality-based rather than just journalists’ wishful thinking…

Guido has got hold of the EIU report for Britain dated June 28, 2016, five days after the referendum result. On politics it forecast:

  • Our baseline forecast is that Boris Johnson—the former mayor of London and one of the leaders of the “leave” campaign—will succeed David Cameron as the Conservative Party leader and prime minister… Theresa May won.
  • This process will commence with the triggering of Article 50 of the EU treaties to begin the exit process; we expect this to happen by the end of 2016. It was triggered in March 2017.
  • The Labour Party is mired in an acrimonious leadership crisis. We expect that the party’s hard-left leader, Jeremy Corbyn, will be ousted, and/or that there will be a formal split. Jezza’s not going anywhere. Labour isn’t splitting.
  • They also predict a second referendum will lead to a “jump in support for UKIP.” That remains to be seen.

On the economy EIU forecast:

  • They expected a contraction of 1% in 2017 (compared with 1.8% growth previously) as a slump in domestic demand pulls the economy into recession. UK GDP is on course to grow 1.9% in 2017. No contraction. No recession.
  • They forecast the number of those in work to fall by hundreds of thousands. More people are in work than ever…
  • They gloomily forecast a rapid deterioration in the fiscal position, falling tax revenues, increasing unemployment. None of which happened…
  • They predicted the US Federal Reserve would have to hold interest rates. The Fed raised rates.
  • The EIU predicted anxiety-driven declines in world stock markets, “When an event promises to strip 6% of GDP from the fifth-biggest economy in the world, it is harder for the rest of the global economy to grow as quickly.” Brexit “will ensure that the global economy continues to underperform its potential for at least another two years”World stock markets have rallied strongly post-Brexit.

The EIU predicted that by next year unemployment will rise by 380,000 and GDP will fall by 6% compared to the pre-June 23 baseline. The authors of these EIU reports are what the brilliant Nassim Nicholas Taleb calls “IYIs”, “Intellectual Yet Idiot” academic no-skin-in-the-game policymaking “clerks” and journalist-insiders. That class of paternalistic semi-intellectual experts with some Ivy League, Oxford-Cambridge education who enjoy telling us what to do. Academico-bureaucrats who are self-described members of the “intelligentsia” who can’t find a coconut on Coconut Island. A year after the Brexit vote the Economist Intelligence Unit has proven that it doesn’t know the right end of a stick.

Economist Endorses LibDems in Epic Brexit Whinge

The Economist prides itself it being “not read by millions” and true to form they have endorsed the party on 7% in the polls. Their backing for the LibDems is a hugely enjoyable Brexit whinge:

“No party passes with flying colours. But the closest is the Liberal Democrats. Brexit is the main task of the next government and they want membership of the single market and free movement. (Their second referendum would probably come to nothing, as most voters are reconciled to leaving the EU.) They are more honest than the Tories about the need to raise taxes for public services; and more sensible than Labour… against a backward-looking Labour Party and an inward-looking Tory party about to compound its historic mistake over Brexit, they get our vote.

Backing the open, free-market centre is not just directed towards this election. We know that this year the Lib Dems are going nowhere. But the whirlwind unleashed by Brexit is unpredictable. Labour has been on the brink of breaking up since Mr Corbyn took over. If Mrs May polls badly or messes up Brexit, the Tories may split, too. Many moderate Conservative and Labour MPs could join a new liberal centre party—just as parts of the left and right have recently in France. So consider a vote for the Lib Dems as a down-payment for the future. Our hope is that they become one element of a party of the radical centre, essential for a thriving, prosperous Britain.”

The FT managed to stay reality-based, the Economist not so much. Bit sad what they have become, really.

Corbyn’s Economist Jibe Backfires

After yesterday’s Economist front page attacking Theresa May, Jeremy Corbyn saw an open goal:

Provoking this response from the Economist’s Britain editor:

That went well.

Compare and Contrast: Economist on Cameron and May

On the left, The Economist on Dave a few months after he became PM, mocked up with a mohican with the headline “Radical Britain: the West’s most daring government”. On the right, The Economist on “Theresa Maybe” this week: “Britain’s indecisive premier”. The Economist might be Remainer whinge-fest at the moment but the new Number 10 has failed to kill this narrative in its first few months…

Economist’s Peerless Fact Checking

economist lords

The Economist are excitedly promoting their shock revelation that some peers have done bad things, with a mugshots of five criminal “current members of the House of Lords“.

Just one problem.

Charles Nall-Cain, the Third Baron Brocket is not a member of the House of Lords, he’s an excluded hereditary peer. Economical with subbing stories…

Economist Backs Tory-Led Coalition

“Mr Miliband believes that living standards are squeezed because markets are rigged—and that the government can step in to fix them. He would freeze prices while “reviewing” energy markets, clamp down on the most flexible “zero-hour” labour contracts and limit rent rises. Along with this suspicion of private markets is an aversion to competition in the public sector, leading to proposals for, say, a cap on profit margins when private companies contract to provide services for the NHS.

Mr Miliband is fond of comparing his progressivism to that of Teddy Roosevelt, America’s trustbusting president. But the comparison is false. Rather than using the state to boost competition, Mr Miliband wants a heavier state hand in markets—which betrays an ill-founded faith in the ingenuity and wisdom of government. Even a brief, limited intervention can cast a lasting pall over investment and enterprise—witness the 75% income-tax rate of France’s president, François Hollande. The danger is all the greater because a Labour government looks fated to depend on the SNP, which leans strongly to the left.

On May 7th voters must weigh the certainty of economic damage under Labour against the possibility of a costly EU exit under the Tories. With Labour, the likely partnership with the SNP increases the risk. For the Tories, a coalition with the Lib Dems would reduce it. On that calculus, the best hope for Britain is with a continuation of a Conservative-led coalition. That’s why our vote is for Mr Cameron.”

Paving the way for the FT?

New Bagehot, New Danger

JEREMY-CLIFFE-BAGEHOT

Guido fears the sad decline of The Economist will continue under the new editor – the new Bagehot columnist is Jeremy Cliffe, currently the UK politics correspondent. Undeniably a bright boy, he is after all a former Harvard Fellow, graduating from Oxford where he studied modern languages specialising in the Marxist literature of Spain and Germany. A spell in Brussels interning for the Party of European Socialists led to him working for Chuka Umunna and briefly on the “David Miliband for Leader” campaign. Guido reported some controversy a couple of years ago when it was suggested that Andrew Rawnsley was plagiarising Cliffe’s writing – something Rawnsley angrily denied. Last week Cliffe wrote that the Conservative Party was “a party simply not grown-up enough to deserve/win a majority.” We shall see in a few weeks if this is a great insight or just the hope of Chuka’s former intern….

economist

Jeremy Cliffe will, as is traditional, get to sign off his column as Bagehot. The real Walter Bagehot of course studied mathematics and moral philosophy, called to the Bar aged 26 he chose instead to work in banking and shipping. He then founded the National Review before becoming editor of The Economist for 17 years. During which time he famously wrote “The English Constitution” and “Lombard Street: A Description of the Money Market” from which we derive the “Bagehot Dictum”. A dictum which two centuries later still guided central bankers to provide liquidity to solvent banks in the 2008 credit crisis. Bagehot’s accomplishments were enviable.

To be fair to Jeremy he tweets a lot and presents occasional BBC Radio 4 documentaries, the latest of which suggested we should take Russell Brand seriously. No further questions m’lud.

Economist Needs New Free Trade Friendly Editor

economist-editor

John Micklethwait is leaving the Economist for Bloomberg. Generally perceived to have succeeded in meeting the digital challenge under his editorship, the highly profitable publication throws off cash by playing on the insecurities of the business class in the same way that Cosmopolitan plays on the insecurities of women. The magazine prides itself on being for homme sérieux. In a dumbed down globalised world it remains the premier business magazine. 

economist

Business affairs editor Zanny Minton Beddoes, US editor Robert Guest and foreign editor Ed Carr are said to be frontrunners for the top job, MediaGuido has no idea as to their respective merits. In the 80s the newspaper – it styles itself thus despite being a magazine – was on the cutting edge of the Thatcher-Reagan revolution. Which was as it should be for a publication founded to support free markets and repeal the corn laws.

Nowadays it is editorially in thrall to the fashionable guilty billionaire class that throngs to Davos, adding to global warming with all the hot air they release. This international elite wants to conserve the stable managed form of globalisation that has served them more profitably than a dynamic free trading world order would. Hardly surprising given that Micklethwait has been intimately involved with the organisation of the Bilderberg conferences for years. One example of how the magazine has politically lost its way, it endorsed Obama in ’08 and again in ’12 despite Mitt Romney being of their ilk and right on Russia being the primary geo-political foe. Obama ran on an explicitly anti-free trade ticket.

The next editor should perhaps come from outside, someone enthusiastic for more free trade rather than blocs of managed trade arrangements. The Economist is, like sister-paper the FT, weak on the deficiencies of the EU. An editor with a more realistic view of the EU could help change the mindset of the business class towards a more realistic appraisal of the EU. That would be true to the free trade roots of the Economist’s founding…

Rawnsley's Rehashed 'Research' Rumbled

Catching up with Andrew Rawnsley’s “award winning” column yesterday, Guido could not help think he had read the same points being made, with all the same examples and the same anecdotes, somewhere before. Rawnsley tackles the great North/South divide debate with a remarkable similarity to Jeremy Cliffe, the Economist’s UK politics correspondent, who wrote extensively on the issue in April. Cliffe’s two pieces are online here and here.

Guido first smelt a rat at the mention of Alastair Campbell, who Rawnsley writes “secured his two, even more whopping landslides in 1997 and 2001 by winning for Labour in places that had been previously thought unreachable. On the night of his first victory, he thought his staff were pulling his leg when they reported that Labour had won St Albans.” Something Economist readers would know from April, minus the insider anecdote.

“Alastair Campbell, Mr Blair’s spin doctor, recalls the party’s astonishment at the results: “seats were falling that we would never have imagined standing a hope in hell of winning.” The greatest swing was in the south-east and eastern regions, where Labour won 44 constituencies, including such leafy, middle-class suburbs as St Albans (now comfortably Tory once more).”

A coincidence, surely? So Guido started compare the rest of Rawnsley’s column to the Economist pieces, and it does not look good. See if you can spot the differences here:

Economist:

“Of the 158 seats that make up the three northern English regions, only 43 are Conservative […] Of the 197 MPs representing the English south beyond the capital, just ten are now Labour. The Tories hold only two seats in the north-east and one in Scotland.”

Rawnsley:

“Of the 158 seats in the three northern English regions, only 43 have a Conservative MP. The Tories hold just two seats in the north-east and have only one MP in the whole of Scotland. […] Under a line drawn from the Wash to the Bristol Channel, there are 197 seats outside London. Just 10 of those seats are represented by a Labour MP.”

Lifting statistics from the Economist is one thing, but what about whole chunks of analysis?

Economist:

“well-off people in the north are more likely to vote Labour than the poor are in the south […] northerners from the highest social class are more likely to vote Labour than are southerners from the lowest social class.”

Rawnsley:

“Well-heeled parts of the north are these days much more likely to vote Labour than their counterparts in the south. […] Affluent northerners (the As and Bs of pollsters’ jargon) are more likely to vote Labour than poorer southerners (the Ds and the Es).”

Economist:

““LET’S all do the conga, Maggie is no longer,” sang fans of Liverpool Football Club during their trip to Reading, in southern England, on April 13th. It was as revealing as any opinion poll. […] Polls following Lady Thatcher’s death revealed a country similarly divided over the merits of her grand funeral. […] Mrs Thatcher did indeed oversee a collapse of northern manufacturing (though that process neither began nor ended with her), as well as a financial-services boom that was mostly felt in the south-east.”

Rawnsley:

“It is still suffering from the shadow of Mrs Thatcher, which none of her successors has dispelled. As we saw in some of the responses to her death, in much of the north she stands for savage deindustrialisation, impoverishment and southern disdain. She triggered a boom in the City and another in the services sector, the fruits of which were mostly enjoyed by the south.”

Economist:

“Under the 1997-2010 Labour government the economy grew more slowly in the north—and, partly as a result, the state accounted, directly and indirectly, for a larger share of jobs created there. […] When Labour increased public spending in the north it strengthened its position there. When the Conservative-led coalition began to cut public-sector jobs they strengthened Labour’s position there, too. (The same may yet prove true of cuts in benefits, which are a larger part of incomes in the region.)”

Rawnsley:

“Under Tony Blair and Gordon Brown, the economy still grew more slowly in the north, but it received proportionately more of the increases in public spending. Now austerity has fallen most harshly on the north, where more jobs are reliant on the public sector and a higher proportion of the population is drawing benefits.”

Oh look, if you change the county, nobody will notice:

Economist:

“And regional success and failure are self-reinforcing. A bright young thing in Kent who wants to go into politics has two good options: join the Conservative Party, or leave Kent.”

Rawnsley:

“The divide has become self-fuelling. […] A Labourite in Surrey has a similar problem: forget about being an MP or head north.”

Rawnsley was clearly concious of being accused of lifting his column or he would not have bothered to make such a minor change.

He didn’t stop there though:

Economist:

“Most obviously, it is much harder for one party to secure a strong political mandate. […] some way to surmount the problem has to be found if either party is to get a respectable absolute majority. […] The country needs national political parties. At the moment, it does not have them.”

Rawnsley:

“For as long as the two parties are entrenched in their strongholds but incapable of reaching very far beyond them, it increases the likelihood of there being more hung parliaments. Even if one or other of them can scrape together some sort of parliamentary majority at the next election, it is unlikely to be an impressive one, meaning whoever is prime minister will struggle to claim to have a national mandate.”

Economist:

“The Conservative Party now has scant direct knowledge of the northern cities. Labour is similarly clueless about people living in southern towns.”

Rawnsley:

“When speaking about the south, some Labour people talk as if they were describing hostile territory rather than part of their own country. When on the subject of the north, some Tories can sound as if they are talking about a part of the map captioned: “Here be dragons”.”

Economist:

“Both main parties will concentrate on the Midlands, where loyalties are less entrenched, and on picking off Liberal Democrat seats; but the Tories need to win some northern seats to get a majority.”

Rawnsley:

“They will concentrate on the Midlands and trying to bag some Lib Dem seats, but the Conservatives need to gain some northern seats to have any hope of constructing a reasonable majority.”

Economist:

“The ideal economic solution would be to build a bigger private sector in Britain’s north (and in Northern Ireland and Wales), demolishing what Tories angrily refer to as Labour’s client state. This is the work of many years.”

Rawnsley:

“Politicians of all parties talk about “rebalancing” the economy, but that is the work of many years”

And as if that was not enough, for good measure Rawnsley even nicks Cliffe’s “two nations” sentence:

Economist:

“The diverging politics of the Labour north and Conservative south make England look ever more like two nations.”

Rawnsley:

“We are not so much a country divided as two nations.”

Struggling with Labour out of power and a complete lack of access, the Observer’s “award-winning chief political commentator” has taken to stealing the work of someone twenty years his junior and attempting to pass it off as his own by tweaking a few words. Quite tragic really.

Economist Say No

20130322-084434.jpg Another day, another publication says no to Hacked Off. The Economist’s leader calls the Royal Charter “A Rotten Deal”. They are bang on the money:

“Society has a choice. If it values freedom from intrusion more than freedom of expression, it needs state regulation. If it regards the Press as so important that freedom of expression must be protected at all costs, then it must avoid state regulation like the plague. We believe society gains more from a free Press than it loses from the tabloids’ occasional abuse of defenceless people … now a late-night deal between politicians could give politicians power over it. Fortunately, their proposal is such a mess that it looks as though it may fall apart.”

Hear, hear…



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Shadow Education Secretary Angela Rayner:

“We have no plans to write off existing student debt.”

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