Normally this section of Point of Return closes the newsletter. Not today. If there was ever a great survivor, it was Elizabeth II, who deceased after seven decades as Queen of England. The economy and markets transformed beyond recognition during his reign, as did the role his nation played in the world. Instinctively, much of the English-speaking world shuts down voluntarily. For the overwhelming majority of Britons who have known only his reign, there is a sense of unreality.
Survival was not guaranteed. The British love tradition, but a hereditary monarchy is quite an anachronism. And on at least two occasions in the past 70 years, it has looked like the monarchy was in danger: in 1992, when the public revolted at the idea that repairs needed at Windsor Castle after a fire had to be paid from the public purse, and that the royal family soon had to consent to pay the tax for the first time; and again in 1997, when the grief over Princess Diana’s death and the Queen’s long delay in speaking to the people about it drew heavy criticism.
Yet somehow she recovered, and so did the institution. How did the queen survive and how did she allow the monarchy to survive?
There are perhaps two key intuitions. The first was to move with the times and adapt to the changing culture around her. Ten years ago, this came to a head when the Queen agreed to take part in a sketch for the opening of the London Olympics. James Bond, played by Daniel Craig, arrived at Buckingham Palace to escort him to the stadium, where they parachuted in from a helicopter. (Good, stunt doubles did it for them.) It was the symbol of the new Britain that these Olympics were meant to present to the world – an open and inclusive society, at peace with the loss of its global hegemonic status and happy to rejoice of its outsized contribution to world culture. Where Britain once dealt with its navy and control of distant colonies, national identity centered on figures like Shakespeare, the Beatles, and James Bond. By taking part, the Queen showed she had a sense of humor and validated a new notion of a Britain that was confident, happy in its own skin and ready to laugh at itself.
The second was to deliberately stay above the political fray. This might seem like sheer passivity, in an environment where the exercise of royal power would obviously lead to resistance. But in many ways it allowed Britain unwritten constitution, based on trust in evolving institutions but without formal rules, in order to survive. The monarch was still there, and Britain’s ultimate institution remained a validator for others that were moving fast. No constitutional rule obliged the monarch to practice this ordinance of abnegation. But by adopting the line she followed, she allowed the British rule set to endure.
This approach helped to ease the most serious constitutional crisis in recent years, when Boris Johnson began his term as Prime Minister by asking the sovereign to prorogued parliament for a month, a decision that would have effectively prevented MPs from thwarting Brexit. This power still rests with the monarch, and a delegation of ministers directed to Balmoral to request approval. Johnson’s plan quickly fell apart when MPs rallied in opposition. The feeling that he had disrespected the Queen, as a person, helped steer the public away from the idea. She agreed to prorogation, but her role helped democratically elected politicians thwart what would have been a deeply undemocratic step.
The queen became a touchstone of emerging culture, even among those who disliked the monarchy. One of the greatest rock bands of his reign took his name in vain: Queen. The Sex Pistols started the entire punk revolution (and another wave of British rule) by playing God Save the Queen (she is not a human) – later covered by another major UK institution, Lemmy and Motorhead. And the great group of the 1980s, The Smiths, released a landmark album titled The queen is dead. their song nowhere fast includes the immortal lyrics: “I’d like to drop my pants to the queen/Any sane kid will know what that means.” But even though she was a sounding board for discontent, she never became a figure of ridicule like the other members of her family.
What advice could she have had for her future survival? The potential problems are legion. Barbados’ decision to become a republic may yet set a precedent for other former colonies to get rid of the anachronism of keeping the Queen of England as head of state. The United Kingdom threatens to tear itself apart, as the contradictions of devolution to Wales and Scotland, and the turmoil caused by Brexit for the status of North Ireland, all of which put the unwritten constitution under extreme pressure. Personal authority and a sense of loyalty to her as a person will be hard to replace.
Constitutional issues become more thorny for King Charles, which does not have its accumulated goodwill. The result of the prorogation episode was, arguably, that the monarch would have had the right to say no to the request to close parliament. But it might be hard for Charles or his successors to do such a thing when they don’t have his personal authority. And the intensity with which politicians are now testing Britain’s institutions suggests there are more constitutional dilemmas ahead.
A final question for Charles concerns democratic legitimacy. A hereditary monarchy is indefensible, but under her mother it was always clear that if the question had ever been put to the people in a referendum, the status quo would have won in a landslide. Even democratically elected, Elizabeth clearly benefited from the consent of the governed. This might not be true in the future. But the mere thought of trying to find an alternative to the monarchy suggests a far bigger mess than that caused by Brexit.
The Queen no doubt gave her eldest son plenty of survival advice before he passed away. Most helpful might have been about the virtues of consistency, patience, and a readiness to let the country around her change. If there is any question about the importance of his role, look only at the reaction until her death, these old-fashioned virtues made her much loved.
Meanwhile, to return to the usual topic of return points, these virtues would also have helped with investment. The main stock market index listed in the UK upon accession, the FT-30, is no longer regularly calculated and published – but using the widely respected indices maintained by Elroy Dimson, Paul Marsh and Mike Staunton, the UK stock market multiplied more than 2,500 times during his reign. It wasn’t as good as other stock markets such as the US, but it was still well ahead of inflation, with price levels only increasing about 20x over the same period. UK stocks have done well over its seven decades, and there is no need to worry that others have done even better.