Normally, this section of Point of Return closes the newsletter. Not today. If there was ever a great survivor, it was Elizabeth II, who has passed away after seven decades as Queen of England. The economy and markets transformed beyond recognition during her reign, and so did the role her nation played in the world. Instinctively, much of the English-speaking world is voluntarily coming to a halt. For the overwhelming majority of Britons who have known only her reign, there is a sense of unreality.
Survival wasn’t a given. The British love tradition, but a hereditary monarchy is quite an anachronism. And on at least two occasions during the last 70 years, it looked as though the monarchy was endangered: in 1992, when the public revolted at the idea that the repairs Windsor Castle needed after a fire should be paid by the public purse, and the royal family soon had to consent to pay tax for the first time; and again in 1997, when grief at the death of Princess Diana and the Queen’s long delay before addressing the people about it led to fierce criticism.
Yet somehow she recovered, as did the institution. How did the Queen survive, and how did she enable the monarchy to survive?
Perhaps there are two key intuitions. The first was to move with the times and adapt to the changing culture around her. Ten years ago, this reached its peak when the Queen agreed to take part in a skit for the opening of the London Olympics. James Bond, played by Daniel Craig, arrived at Buckingham Palace to escort her to the stadium, which they entered on parachute from a helicopter. (Well, stunt doubles did it for them.) This was symbolic of the new Britain that those Olympics were meant to showcase to the world—an open and inclusive society, at peace with the loss of its global hegemonic status, and happy to rejoice in its outsized contribution to global culture. Where Britain was once about its navy and control of far-flung colonies, the national identity came to focus on the likes of Shakespeare, the Beatles, and James Bond. By taking part, the Queen showed that she had a sense of humor, and gave some validation for a new notion of a self-confident Britain happy in its own skin and prepared to laugh at itself.
The second was to stay deliberately above the political fray. This might seem to be mere passivity, in an environment where the exercise of royal power would plainly lead to resistance. But in many ways it enabled Britain’s unwritten constitution, built on trust in evolving institutions but without any formal rules, to survive. The monarch was still there, and the ultimate British institution remained as a validator for others that were changing fast. There was no constitutional rule that required the monarch to practice this self-denying ordinance. But by taking the line that she did, she allowed Britain’s set of rules to endure.
That approach helped to ease the most serious constitutional crisis of recent years, when Boris Johnson started his premiership by asking the sovereign to prorogue parliament for a month, a move that would have effectively made it impossible for MPs to thwart Brexit. This power still rests with the monarch, and a deputation of ministers headed to Balmoral to ask for approval. Johnson’s plan soon fell apart as MPs mustered in opposition. The sense that he had disrespected the Queen, as a person, helped turn the public against the idea. She agreed to the prorogation, but her role helped democratically elected politicians to thwart what would have been a profoundly anti-democratic step.
The Queen became a touchstone of emerging culture, even among those who disliked the monarchy. One of the biggest rock bands of her reign took her name in vain: Queen. The Sex Pistols launched the entire punk revolution (and another wave of British domination) by playing God Save the Queen (she ain’t no human bein’)—later covered by another great British institution, Lemmy and Motorhead. And the great 1980s band The Smiths released a seminal album called The Queen Is Dead. Their song Nowhere Fast includes the immortal lyrics: “I'd like to drop my trousers to the queen/Every sensible child will know what this means.” But even if she was a sounding board for discontent, she never became a figure of ridicule like others in her family.
What tips might she have had for future survival? The potential problems are legion. Barbados’ decision to become a republic may yet set a precedent for other former colonies to rid themselves of the anachronism of keeping the Queen of England as their head of state. The United Kingdom is threatening to tear itself apart, as the contradictions of devolution to Wales and Scotland, and the ructions Brexit caused for the status of Northern Ireland, all put the unwritten constitution under extreme pressure. The personal authority and the sense of loyalty to her as a person will be hard to replace.
The constitutional issues grow thornier for King Charles, who lacks her accumulated goodwill. The outcome of the prorogation episode was, arguably, that the monarch would have been entitled to say no to the request to close parliament. But it might be difficult for Charles or his successors to do such a thing when they lack her personal authority. And the intensity with which politicians are currently testing Britain’s institutions suggests that there are more constitutional dilemmas ahead.
A final issue for Charles concerns democratic legitimacy. A hereditary monarchy is indefensible, but under his 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 if democratically elected, Elizabeth plainly enjoyed the consent of the governed. That might not hold true in the future. But the mere idea of trying to work out an alternative to the monarchy suggests a much bigger mess even than the one caused by Brexit.
The Queen doubtless gave her eldest son plenty of survival tips before she passed. The most useful might have been on the virtues of consistency, patience, and a preparedness to let the country around her change. If there is any question over how important her role became, look only at the reaction to her passing—those old-fashioned virtues made her much loved.
Regal Investment
Meanwhile, to return to the usual subject of Points of Return, those virtues would also have helped in investment. The main stock market index quoted in the U.K. at her accession, the FT-30, is no longer regularly calculated and published—but using the widely respected indexes kept by Elroy Dimson, Paul Marsh and Mike Staunton, the British stock market multiplied more than 2,500-fold during her reign. This wasn’t as good as in other stock markets such as the U.S., but it was still well ahead of inflation, with price levels multiplying only about 20-fold over the same period. British stocks did fine during her seven decades, and there’s no need to worry about the fact that others did even better.