Likely civil rebellion in the UK in 2-3 years

There is a great deal of commentary recently about the poor health of the UK economy, with rapidly rising prices and taxes, falling disposable incomes, reducing access to credit and so on. People of middle incomes are feeling most of the pain, targeted as they are with most of the new tax burden, but not rich enough for it not to matter. In parallel, seemingly every newspaper carries daily gripes about the poor public service value-add for the increased taxes, with appalling health, education, policing, and transport systems. The relatively generous public sector pay, especially pension costs, which are far more generous than most private sector employees receive, will steadily become a bigger issue until it is tackled. Poorly targeted and imbalanced welfare is making too big a drain on middle earners, who see too little reward for working hard. And a wide range of poorly thought-through policies have resulted in a very degraded social fabric.

People have little choice over this system, with their politicians unwilling or unable (or both) to address the problems. Some of the more able and mobile just emigrate, and we are already seeing a serious brain drain again, but most people can't just leave, they have commitments here, or don't want to uproot and move to a strange new place. So the UK socio-economy is effectively a fairly well-sealed system, only slightly leaky (in fact, with the added pressures caused by immigration, it is worse than that, with an effective one-way valve). Pressure can build and build in a sealed container with little obvious activity until it reaches a certain level, and then a sudden release occurs.

I believe that we are not very far away from a backlash. This is not a party politics issue -many people don't like the existing government and think they are incompetent, but have little faith in the opposition either. They are very disillusioned with our supposed leaders, of all flavours. But while the British population is notoriously tolerant, and will put up with huge amounts of discomfort before saying or doing anything, there is a breaking point.

When people feel that they are being steadily squeezed from all directions, that their own needs are seemingly always ignored, that their government seems to treat them as an enemy, that their own quality of life has been eroded by legislation and taxation for too long, so that they feel abused, neglected, and that in spite of all their best efforts they can no longer sustain a reasonable quality of life, then they no longer feel any allegiance to the state, nor any civil duty to stay calm and respect the authorities.

The pressures are not just financial. People are certainly feeling much poorer, although they are working harder. But there is also an increasing perception of too much state-imposed cultural change. There is too much uncontrolled immigration. There is too much surveillance, too much erosion of privacy. There is too much serious crime, while the police and local authorities pay most of their attention on minor offences by the largely law-abiding majority, such as speeding offences, or leaving a bin lid open. In short, the state has become too big, too invasive, too controlling, too expensive, and coupled with serious and frequent incompetence, that is rapidly building resentment in middle class Britain. The state is becoming people's enemy instead of their friend.

We saw disorder during the poll tax mishandling in the 80s. There were many demonstrations and some violence. But technology has moved on more than a little, and it is a better educated class that is affected this time. The potential for organising rebellion via today's and future IT is vastly greater. My own perception is that we are now about 2 to 3 years away from a serious backlash, which will include widespread and well coordinated civil disobedience, demonstrations, and probably significant violence.

Such widespread and effective disruption will of course have enormous implications across the board. We should expect some major changes in government policy to be imposed by a new government, a wholesale redesign of taxation and welfare, reforms of the public services and the pay and conditions for public sector workers, and generally a great deal of legislation abolished or rewritten.

Garbage disposal unit manufacturers

Rubbish taxation is extremely likely in the next few years in the UK, and perhaps around Europe. If taxation is by weight, as many expect, then expect to see a lot of people buying garbage disposal units since a lot of the weight in rubish is from waste food and vegetable peelings. Many households won't want to bother separating everything into the appropriate recycling bin, so a lot of vegetable peelings and waste food will simply be washed down the drain.

Of course, this will increase water use dramatically so water companies will also benefit, and more treatment of water will be needed, increasing their costs and justifying price rises.

Plumbers will also pick up business in installation, as will kitchen manufacturers.

The net effect is that everyone will pay more for water, pollution will increase, and garbage disposal unit manufcaturers will flourish.

If waste taxation is partly by volume, or if loony councils refuse to empty bins where the lid is even slightly open, this will also create a need for rubbish compression devices.

It's an ill wind that blows nobody any good.

Fleet management

This is a very long term issue, but as government is increasingly tempted to crack down on the fun side of motoring there will be less incentive to own a car.

Firstly, speed cameras are making it harder to enjoy driving quickly, as does increasing congestion. Within ten years, you should expect that engine speed will be electronically limited as you enter speed-restricted zones. The justification will be safety and climate change, and it seems inevitable that government will enforce such a move.

Secondly, there will eventually be a move towards electronically driven cars on electronic highways, caused by the need to tackle congestion by taking driving out of the hands of people with poor driving skill, who cause most of it.

With these pressures, the personal emotional attachment of a driver to a car will reduce greatly. With all the ego and emotion taken away from car ownership, there will be much less need to buy a car, and much more susceptibility to fleet ownership.

In fact, fleet managed, electronically driven cars would be an ideal substtute for public transport, increasing social inclusivity, greatly helping the environment, reducing congestion and helping the economy. Win win win!

So, private car sales might well fall, with far less choice and variety of cars, simply because there will be far less personal involvement with cars. Good news for fleet managers in the 10 year plus time frame.

Ian

Risers and fallers - content industry

This blog will list reasons why various industries will go up or down in the future, so may be of assistance in long term investment thinking. However, this should only be one tiny input to your investment strategy. Although I will give my best opinion, it is only an opinion and I cannot accept any responsibility for any consequences. You should read my arguments and then make your own decisions.

Anyway, to start off with something obvious, I will consider The Music Industry.

The music industry is going to struggle even more than today. They have taken almost the exact opposite strategy to what they should have done. They have alienated almost their entire customer base by treating everyone as criminals, while still doing their best to fleece honest customers with ludicrously high prices and often selling padding in place of decent content. They have squandered their customer good will and few will miss the big players when they die.

The simple fact is that music no longer needs the big providers. Music is something that most people have some capability to create and in which very many people are extremely competent, and often want no more reward than a round of applause. Whereas aspiring bands and singers once had to go to the music producer companies to be heard, they can easily do so today on the net. Youtube is just one site, but is easily the place to publish new music for amateurs and small bands. Recording equipment is mostly just IT so is falling in cost exponentially.
Hiring a quiet room and decent equipment and getting a good recording on-line is now well within the means of most bands. Who needs the big players any more?

As for quality, the bands in the charts are not very different from many you have never heard of. If you hear a song you like, you can easily find others in similar style using music search engines. Why pay a fortune for a couple of decent tracks and a lot of padding on a CD in a plastic case, when you can download many hours of high quality free stuff that sounds similar?

And the music business model is evolving. Giving music away for free is a good way to get rich. The more people that hear it and like it, the more will buy tickets for the next concert, and T-shirt and whatever. The track download is becoming just an advert for the real thing. So what if most people never pay anything? If a few thousand buy concert tickets, there is still enough potential reward to justify production.

So, the music industry is fighting hard in the courts and trying to force regulators to protect it, but no-one needs it any more and even if they haven't noticed yet, they soon will. It can roar and even bite a few more heads off, but it is dying. Disinvest.