Under The Radar – 1 April

Source: Pierre Borthiry via Unsplash

This week we discuss:

1. Biden’s ambitious tax plan to be torpedoed once again

2. Avocados fuel Mexican drug war

3. Bitcoin’s Green Opportunity

Biden’s ambitious tax plan to be torpedoed once again

What happened?

Joe Biden has unveiled plans to introduce a 20% tax on households worth more than $100 million. The new proposal will target ‘the top one-hundredth of the one percent’ and if passed, is estimated to bring $360 billion in revenue over the next decade.

What does it mean?

Biden’s plan to introduce the so-called ‘Billionaire Minimum Income Tax’ was revealed as part of his latest budget. Biden’s pitch to both his party and the public is to put an end to decades of tax avoidance by the wealthiest in America, claiming that it promoted ‘economic fairness’.

This is a populist move. Those at the top of the income ladder saw their wealth swell by $1 trillion during the pandemic and Biden’s proposal aims to correct this by taxing the value of assets – likes stocks and shares – before they are sold.

Biden’s pivot to the immense wealth inequalities that exist in the US may be with one eye on internal party politics ahead of 2024, as establishment Democrats begin to worry about a challenge from the left-wing of the party.

However, like his Build Back Better plan before Christmas, this legislation will likely be killed or seriously watered down by the right-wing in his party. Joe Manchin, the dissident senator for West Virginia, killed Build Back Better and has signalled that he will vote against the new tax too.

The failure to revive Biden’s domestic agenda may prove catastrophic for the Democrats at the upcoming midterm elections, which will no doubt lead to questions as to who the party’s nominee for President should be in 2024.

Avocados fuel Mexican drug war

What happened?

The popularity of avocados is adding fuel to the fire of Mexico’s cartel wars, sending the price of the fruit through the roof.

What does it mean?

The US government temporarily banned imports from the Mexican state of Michoacán, the largest source of avocados in Mexico, earlier this year due to threats made by gangs to an American safety inspector. Mexico produces 80% of the avocados consumed in the US, and while the UK imports from elsewhere, this contraction in supply will likely push prices up globally.

Sales of the fruit have boomed in recent years due to popularity among Western millennials, but this has had a knock-on effect in producer nations. In Mexico, drug cartels have a stranglehold on the nation’s economy at both a national and local level. The injection of money into Michoacán as its avocado exports have boomed has led to farmers taking up arms against violent attacks from gangsters.

The ban on imports from Michoacán into the US came just before the Superbowl, when sales tend to boom for the fruit due to its use in making guacamole. The ban has since been lifted but violence continues to escalate. Twenty people were killed in a gunfight earlier this week, marking one of the worst shootings in recent years.

The Mexican drug war has been ongoing for over fifteen years with estimates of 400,000 deaths because of gang violence. Unfortunately, its impact on the price of innocuous supermarket items like avocados is unlikely to lead to a rethink by the US and allies towards the war on drugs.

Bitcoin’s Green Opportunity

What happened?

A coordinated campaign, Change the Code Not the Climate, run by several environmental groups is calling for bitcoin to implement changes in the mining process that could dramatically reduce its energy consumption.

What does it mean?

Digital currencies, and Bitcoin particularly, have achieved levels of growth not thought imaginable just a few years ago. Over 106 million people use cryptocurrencies globally, and that number is only growing. In the UK, almost the same number of Brits own cryptocurrencies than the number that have a Stocks and Shares ISA.

However, the crypto craze has brought with it an awakening to the huge amount of energy that the mining of these coins require.

Currently, Bitcoin uses more energy than all of Sweden, and if the crypto currency becomes widely adopted, the mining process alone could produce enough carbon dioxide emissions to warm the planet more than two degrees celsius. Whilst the world has made much progress in cutting out fossil fuels, Bitcoin miners are seeking to buy oil and coal plants consigned to disuse in order to fuel their operations.

With the problem only set to increase, a campaign called Change the Code Not the Climate has set about trying to encourage the industry to find ways to reduce its carbon footprint.

And a rival crypto currency, Ethereum, may have found a solution. The digital currency is shifting to a different coding system that it believes will reduce its energy consumption by over 99%.

But the campaign is coming up against obstacles. Bitcoin stakeholders are incentivized to resist change because of the value of the existing infrastructure.

With the UK set to reveal new crypto regulations in the coming weeks, it is undoubtedly the start of a new era for digital currencies. It may not be long until environmental laws come into play.

This Week’s Must Reads

1. “The Times view on finding allies against Moscow: Taking Sides” in The Times

2. “Meet the ‘crypto caucus’: the US lawmakers defending digital coins” by Kiran Stacey for The Financial Times

3. “The Western mind no longer understands Putin” by John Gray for The New Statesman

4. “Europe will be safer if Belarus is free” Sviatlana Tsikhanouskaya for The Economist

Chart of the Week

Source: The Economist

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Red Wall Reporting Around Spring Statement Overshadowed by Martin Lewis

Thematic breakdown of ‘red wall’ media coverage related to spring statement and cost of living crisis since 21st March 2022.

As the dust settled from the Chancellors Spring Statement, the data team at Trafalgar Strategy took a closer look at how local media in the ‘red wall’ constituencies reacted to the news.

Over a three day period, we tracked and analyzed local media articles in this key electoral battleground, filtering out the background noise, and focusing on stories related to the cost of living crisis and the spring statement.

The government’s big announcement regarding a cut to income tax was eclipsed by two dominant themes to emerge around the spring statement – the first was a bit of a home goal as it related to the Chancellors cut to fuel duty. However, ultimately even this was overshadowed by the second key theme, Martin Lewis – the so-called money savings expert – who warned about the dire consequences of the cost of energy on Sunday. Before attacking the spring statement on Wednesday for not doing enough to reduce the energy burden on voters.

By hinting at the cut to fuel duty over the weekend, the Chancellor was clearly hoping to put drivers at ease, given spiraling fuel costs. Unfortunately for him and the conservative party, they didn’t get everything their own way, as comment from the RA fuel spokesman Simon Williams suggesting such a cut would not be enough to “make a real difference” was also circulated by local media. In further damning news, such articles received very little engagement when shared by their respective papers on social media.

More damaging from a Conseravtive party perspective was coverage related to energy bills. Despite the Chancellor’s best efforts to appease potential voters by abolishing the tax on energy saving materials, Martin Lewis’s interjection over weekend – specifically his interview with the BBC on Sunday – cast a negative light over much of the reporting in the run up to the spring statement. When shared on social media, such articles received significantly more engagement when compared to articles on any other theme.

Initially, local media either picked up his comments related to the cost of living being the “worst” in over twenty years or his calls on the Government to do more to specifically reduce the burden of rising energy costs.

To make matters worse, in the immediate aftermath of the spring statement, Martin Lewis appeared to dig the knife in with local papers claiming “Lewis slams Rishi Sunak’s spring budget” after he suggested the new energy measures would do nothing to help the majority of people.

Commenting on the report Giles Kenningham, Founder of Trafalgar Strategy said: “With so much uncertainty surrounding the economy given the war in Ukraine and increasing inflation the government fumbled a golden opportunity to use the spring statement to steady the ship and ease consumer fears. If they want to retain the red wall in a general election they need to start listening and should start by addressing some of the issues around energy prices raised by Martin Lewis.”

Any gains made by the Conservative party in the red wall in 2019 could easily be wiped out at the next general election. As the cost of living crisis gets worse, and its impact is felt more broadly, political parties across the board should start paying closer attention to how regional and local media report on key issues. Not only are such papers considered more trustworthy than their national counterparts – but they provide a unique snapshot into the local issues impacting important potential voters.

Under The Radar – 25 March

Source: American Public Power Association via Unsplash

This week we discuss:

1. An ESG Dilemma

2. Lab made meat: the beginning of the end for livestock farming? 

3. Taliban backtrack on opening schools for girls

An ESG Dilemma 

What happened?

Save the Children charity has turned down a $1m donation offered by Neptune Energy (a North Sea gas producer) to help with Ukrainian relief efforts, due to a conflict on climate change grounds. 

What Does It Mean?

In a highly contentious move, Save the Children has turned down a significant donation to help humanitarian efforts in Ukraine. The charity refused to take the million-dollar donation from oil and gas company, Neptune Energy, stating that they were conflicted due to their commitment to working on climate change issues.

Charities are usually applauded for holding firm on ethical grounds and turning down donations that conflict with these, however, Save the Children’s decision has prompted backlash. 

Whilst ESG issues have been ubiquitous for charities, businesses and the media alike in recent years, there has been more emphasis placed on the E – environmental, and considerably less on social and governance issues. 

The unprovoked war in Ukraine, and the humanitarian disaster that has followed, undoubtedly showcase major social and governance crises on a scale not often seen, provoking questions as to whether a charity meant to deliver humanitarian assistance was right to turn down a donation on environmental grounds.

Criticism of the charity has predominantly centred around the fact that the Ukrainian humanitarian crisis is ravaging the country right now and turning down offers to help is putting people in direct danger. However, across the world we have seen humanitarian disasters – from floods to forest fires – that have climate change at their root cause, and the number of these disasters is only set to increase.

In an era of intense reputational scrutiny, perhaps the charity was wise to air on the side of caution in the long-term, but it continues to be a rather difficult sell in the face of the harrowing images pouring out of Ukraine.

Lab made meat: the beginning of the end for livestock farming? 

What happened?

The Good Dog Food company, a collaboration between Agronomics and Roslin Technologies, has created ‘cultivated pet food’ in an attempt to increase sustainability in the industry. pet food. The lab grown meat is set to land on British supermarket shelves in the next 18 months.

What does it mean?

In recent years we have witnessed heightened attention on the impact of livestock and meat consumption on the environment. In 2020, double the amount of people gave up meat compared with the previous year, with roughly one fifth of Gen Z following a meat-free diet. What might be surprising to some is that pets consume roughly 20% of all the meat produced on the planet, significantly contributing to greenhouse gas emissions.

With sustainability and ESG at the forefront of many minds across sectors, the food industry has undeniably come under greater scrutiny to innovate in more sustainable ways. It was seemingly only a matter of time until lab-grown food alternatives entered the mainstream market. 

Cultivated meats are certainly one way of moving to more sustainable food production.  It provides high-quality meat alternatives by taking a biopsy from an animal and replicating the cells – a process which can produce 3,000kg of meat in 40 days, the equivalent of about eight cows, as opposed to the 28 months it takes to rear a singular cow for slaughter. 

If successful, The Good Dog Food company’s entry to the market could spark a transformation in wider meat production and provide a sustainable alternative to our favourite meats without the drawbacks currently associated with a carnivorous diet. While the planet may thank companies like Agronomics and Roslin Technologies for such developments, cattle farmers and the like, whose livelihoods depend on being able to sell the meat from their livestock, will not be so welcoming of the news. 

Taliban backtrack on opening schools for girls

What happened? 

Widely condemned by the international community, the Taliban have made a last-minute U-turn and reversed their earlier decision to reopen secondary schools for girls in Afghanistan. Girls have been barred from going to school since the Taliban takeover in the country in August last year. 

What does it mean?

The Taliban’s decision to keep secondary schools shut has shocked the country and the wider international community alike. Since their forced takeover in August, the new government has asked for multiple criteria to be fulfilled for girls to be able to go back to school. These demands included a strict observance of a modest, ‘Islamic’ dress code, as well as a ban on gender mixing in schools. Up until now, the government has stated that if all the criteria are met, schools for girls will reopen. It has now become clear that this was an empty promise.

During the Taliban’s previous rule in the country, between 1996 and 2001, education for girls was completely banned. During the US occupation, education resumed, and girls were able to go to school as they pleased.

Immediately after the US’s withdrawal from Afghanistan, the Taliban shut down secondary level education with assurances that they would reopen institutions later on. Women and girls in the country are now saying they have lost all remaining trust in the current government. An 18-year-old student from Kabul told the Telegraph that she “thought that the Taliban had changed but they are unchangeable.”

Education for girls has long been an issue in the region with certain fundamentalist groups believing that it opposes Islamic law. The assassination attempt on Malala Yousafzai by the Pakistani Taliban for campaigning for girls’ right to schooling was a gunshot heard all around the world. The depressing news of schools remaining shut is a stark reminder of life in Afghanistan under Taliban rule as well as highlighting how women around the world continue to suffer oppression, with fundamental human rights like education ripped away at will.

This Week’s Must Reads

1. “Turkey’s dilemma: whose side is Erdogan on?” by Owen Matthews for the Spectator

2. “How Big Tech lost the antitrust battle with Europe” by Javier Espinoza for the Financial Times

3. “Oligarchs, power and profits: the history of BP in Russia” by Tom Wilson for the Financial Times

4. “I tried to give Britain a different narrative”: Tony Blair and Michael Sheen in conversation” by Michael Sheen and Tony Blair for The New Statesman

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