Article
Change
Politics
Psychology
5 min read

How to be a wise diplomat about the election result

It’s not just American citizens weighing-up and trading-off.

Emerson writes on geopolitics. He is also a business executive and holds a doctorate in theology.

An ambassador presents credential to President Trump
President Trump accepts credentials from Indonesian ambassador M. Lutfi.
White House via Wikimedia Commons.

The American election result, whatever the case, is a landmark event in geopolitics. And here, it is unclear which result is better for the world in the long-term, given the ambiguous motives, interests and intentions of its main characters.  

Whereas the Biden Administration led by the Democrats has been fraught with war, the Trump Administration was comparatively peaceful, with breakthroughs such as the historic Abraham Accords. Yet, the rhetoric of President Trump is aggressive and divisive.  

Despite mainstream media assertions focused on the clear best choice in the election, a balanced perspective is necessary involving consideration of trade-offs between what the parties and their leaders each offer. This balance, however, is difficult to achieve as polarisation encourages retrenchment into simple views.  

As the American election approaches, it is worth considering what a diplomatic approach to an election transition might entail. Here we can look to the example of Henry Kissinger, whose diplomatic mindset is illustrated in Barry Gewen’s The Inevitability of Tragedy. Gewen eloquently illustrates the Kissingerian – even if often cold-hearted – approach to the consideration of trade-offs in diplomacy.  

Gewen traces the early-life experience of Kissinger, a German Jew forced to flee Nazi persecution, both serving in the US Army and attending Harvard. Unlike his American peers, Kissinger understood through personal experience that authoritarianism could rise through democratic means, Adolph Hitler the primary example.  

It is partly for this reason that Kissinger was willing as US Secretary of State to intervene in the affairs of foreign states to halt dictators emerging through democratic processes. The trade-off was here between respect of democratic process and the possibility of dictatorship, a trade-off which Americans without German-Nazi experience would never understand and which they saw as deeply unsettling.   

Kissinger is the archetypal diplomat. His example is worth reflecting on in the wake of the American elections. Kissinger approached geopolitics with little emotion, instead considering what course of action in a particular situation served as the least worst evil available.  

He engaged across a wide variety of networks, talking with individuals who would not speak with each other. And he maintained a considerable sense of calm throughout his career as both an actor and commentator, responding to events as they developed. 

An initial consideration in emerging from the American elections is that too much emotionality – amplified by political polarization – will expose politicians, diplomats and the public to risk. Emotion colours careful, strategic calculation of various scenarios and actions across potential scenarios.  

‘People constantly show you who they are; we are just too busy to notice,’ 

An effective diplomatic (or strategist) will carefully consider what might happen and think through potential steps in case these realities actually transpire, while recognising that too much anticipation risks cascading into fantasy. Too much emotion impedes this careful process of reflection and deliberation as part of the development of strategy.  

A second element of effective diplomacy and strategy is to consider people as they are, rather than rely on superficial descriptions in the media, biased second-hand accounts or who or what one hopes another person is. People’s motives, intentions and interests are not easily discernible at first glance, instead requiring careful probing and questioning.

At the same time, there are few more accurate sayings than ‘People constantly show you who they are; we are just too busy to notice,’ conveying that counterparts are always providing information as to who they are, few careful or disciplined enough to mask their real thinking.  

An effective diplomat might consider the early upbringing – much like that of Kissinger – that shapes a person’s character and behaviour, if not their worldview informing action.  

Consider Donald J. Trump, learning right from wrong on the streets of New York City via the mentorship of lawyer Roy Cohn, who served as Chief Counsel to Joseph McCarthy while McCarthy prosecuted potential American communist sympathisers.  

Cohn’s rules of life, work and play were as follows (these summarized by a friend well-acquainted with Cohn and his colleagues): ‘One, attack, attack, attack! Two, deny everything! Three, always claim victory!’ The logic of these three rules of life are readily understandable when considering the harsh New York realities within which Cohn and later Trump operated.  

These considerations are overlooked, however, amid the onslaught of media which fails to consider what really shapes the character of a man or woman.  

Curiosity, a critical mindset and self-restraint in the face of the human temptation to reach rapid and satisfying answers are here necessary, as part of figuring out what exactly is driving action.

A wise diplomat would pay particular attention to these pivotal factors – such as the influence of a long-standing mentor or advisor – as they might manifest in the present. This requires an intellectually honest and serious consideration of the worldview that shapes a counterpart, rather than considering superficial media commentary.  

Third, a wise diplomat will maintain relations across a wide variety of networks, understanding that it is fine to talk with two or multiple individuals whose own relations are fractured (in fact, these strains in relations can be beneficial within diplomacy, the diplomat in this case able to play broker as he or she needs or wishes).  

The maintenance of broad networks is vital, because this enables action under a wide array of potential circumstances, understanding that anything can happen (we are here reminded of Harold MacMillan’s saying “Events, dear boy, events!”) And a key lesson in diplomacy and in the cultivation of strategy is that, once crises unfold, it is the preparatory work in developing networks and alliances that counts; little new network-formation is possible afterwards.  

The previous two points suggest that a wise diplomat will not pay too much attention to what is in the media, but will instead consider their own learning gleaned through in-person interactions with others, as well as the perspective of their most trusted contacts. Curiosity, a critical mindset and self-restraint in the face of the human temptation to reach rapid and satisfying answers are here necessary, as part of figuring out what exactly is driving action, and what can in turn be done to shape action in accordance with interests.  

Finally, an effective diplomat will not try to play God, serving as the arbiter of right or wrong, adopting instead a more considered approach anticipating and responding to circumstances as they gradually or quickly evolve. Effective strategy requires an aloof approach (caring – but not caring too much), removing the self from a given situation so as not to allow natural human vices such as presumptiveness, arrogance or short-term self-interest to affect judgment.  

And the American election bring with them a number of trade-offs, these to be weighed carefully by American citizens, as well as by diplomats and strategists in other countries. These trade-offs will be considered most effectively if approached with calmness – the aloof, even if cold-hearted, approach personified by Henry Kissinger. 

In an age of catastrophising, emphasing emotion, it is easy to descend rapidly into despair, rather than consider action from a long-term perspective. Diplomacy and strategy require the latter, which will be a key to success for those who emerge effective in advancing their interests in the wake of the American elections. 

Article
Economics
Politics
1 min read

How can taxes build a better society?

As we await Rachel Reeve's budget announcement, Laurence Fletcher wonders what positive tweaks can be made to our economic system.
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Few doubt that Chancellor, Rachel Reeves, will be putting up taxes when she presents her first Budget on October 30. The political narrative of recent months has very much been of an alleged fiscal “black hole” of £22bn - or is it £40bn? - that somehow needs to be filled.

While the size of the shortfall and the identity of those responsible are both hotly disputed, and despite a lack of detail from the Treasury about what it actually consists of, the questions now being asked are not whether taxes will rise but which ones and by how much. 

Months of speculation have focused on employer National Insurance, capital gains tax and freezing income tax thresholds as areas that Reeves could look to for the additional revenue. But beyond the immediate issue of raising enough revenue to make good any shortfall, lies a deeper, trickier question about the way in which taxes should be levied for the good of society. If a government is to force people and companies to hand over their money, then what is the most ethical way to do this? Who should pay and who shouldn’t? How can tax be used to reduce inequality and build a better society?

Answering such questions is, of course, far from straightforward, because there are plenty of other factors in play.

For instance, some taxes are surely levied because they are simpler to collect. Take income tax - an unpopular measure introduced in 1799, then abolished before being reintroduced as a supposed temporary measure. It could certainly be argued that taxing people’s income - their attempt to get on in life and improve their lot in life - is less “fair” than taxing wealth that has been accumulated by someone’s ancestors years ago. Working hard and earning income is often surely a way of breaking down class divisions. But income tax - contributing 28 per cent of UK government tax take in 2023-24, according to The Institute for Fiscal Studies - has the advantage that it is relatively difficult for the average worker at a UK company to avoid it. Ease of levying it is surely a driver. 

Equally, some taxes that might seem “fairer” have deliberately not been levied because of the difficulty in collecting them, and/or because to try to do so could be counterproductive. A wealth tax, for instance, would be “economically damaging”, according to one of the UK’s highest profile tax experts, Dan Neidle. Or take the politically contentious issue of non-doms, a colonial era tax break allowing rich foreigners to avoid UK tax on overseas income. It would be fairer, the argument goes, to tax them on the whole of their income. If they are going to be resident in the UK, then surely they should be taxed like a UK resident whose home is here?

Former Chancellor Jeremy Hunt abolished this regime earlier this year but left a number of concessions that the incoming Labour government pledged to abolish. But non-doms are tax-sensitive and highly mobile, and a number of jurisdictions compete to attract them. Many are entrepreneurs and wealth creators that many countries need. Reports have suggested a clampdown could raise no money or even cost money and could drive people away.

So what can be done to use tax in an ethical way? Paul Williams, research professor of marketplace theology and leadership at Regent College, Vancouver and chief executive of the Bible Society, takes a perspective that he believes offers some solutions.

He takes as his starting point a story in the gospels, where Jesus is asked whether people should pay taxes to Caesar. The question is a trap - either Jesus gives his backing to taxation that is highly unpopular with the Jewish people, or he rejects the tax in an act of rebellion against the Romans.

Jesus replies that they should “pay to the Emperor what belongs to the Emperor, and pay to God what belongs to God.” We are to pay our taxes to those in authority, but we are also to honour God.

While Williams believes that too much emphasis is placed on the Budget and political parties’ promises to be able to fix everything, and that a more radical rethink of our economy is required, he also sees room for positive tweaks to the current system.

One key area is the property market, the manifestation of so much inequality in society, with some people owning multiple houses while others cannot afford to buy one. Williams argues that the ready availability of debt finance has allowed those who already hold assets to easily acquire properties, turning real estate into an investable asset class to the detriment of many of the poorer in society.

“The reason there’s so many homeless people and empty houses is due to debt finance. It makes it easy for a relatively small proportion of the population to acquire a large percentage of the assets.

“The system has allowed a structure in which a small advantage in the beginning can lead to big, big differences over time.”

Williams highlights parts of Devon and Cornwall that have been “completely ruined” by wealthy people from elsewhere buying second homes that used to belong to locals, leaving property out of reach of anyone who lives and works there.

Nevertheless, he believes taxation can be used in this area to help level the playing field.

He proposes a “pretty punitive” marginal rate of tax on ownership of more than one home. (Stamp duty only partly does the job and is a blunt instrument also affecting people moving homes, thereby makes mobility expensive).

“You want to disincentivise the way the housing market is used for speculation,” he says.

“Housing is being treated as a commodity. The problem is, it’s not; it’s not just an asset. It has utility value and a communal and quasi-spiritual value, enabling people to feel rooted.”

Buy-to-lets, meanwhile, are better than having empty second or third homes, but “wouldn’t it be better if occupiers could buy that house?” he adds.

Meanwhile, research by the Financial Times recently found a huge wealth gap between the average millennial and the top 10 per cent of millennials, who are benefiting from family wealth to accumulate substantial housing assets. 

So would increasing the rate of inheritance tax - one of the most hated of taxes - and/or lowering the threshold also help reduce some of this inequality? After all, how is it fair that one child in the UK is born to inherit large property wealth while another is born to inherit little or nothing? Or, even worse, that second child will only ever be able to afford to be the tenant of the first, paying them rent for the rest of their lives? Williams is not a fan of inheritance tax per se, arguing that it is “not part of the package” in a Biblical image of a flourishing economy. But he adds an important caveat: “the playing field is not level".

“There might be circumstances to impose a one-off tax on the very wealthy… if you want a transition to a more equitable society.”

Such steps are not easy to take. It is, he admits, probably “career suicide” for a politician to adopt such views. But if we are to take steps towards a fairer way of life, and avoid a two-tier society in decades to come, then maybe the conversation needs to shift this way. Perhaps the Budget could be the time to start.