Tuesday, August 25, 2015

Why I'm not voting for Jeremy Corbyn

The quick answer is: because too many already have.

If Corbyn was likely to lose, I would almost certainly have put him first, because there is a very real danger that the party would overreact to the disappointing election result by ditching Ed Miliband's timid move to the left and signing up to most of what the Conservative government currently stands for, but with a little less brutality towards the poor and immigrants. An attractive proposition indeed. But if the polls are anything to go by (and I remain a bit unsure that they are, given the difficulties involved in sampling in this kind of election), it looks like he'll probably win. And I'm pretty sure that is not a good outcome, at least in the short term.

But there are many many good reasons for voting for Corbyn, as long as he doesn't actually win. For a start, I find myself agreeing with just about everything he says. Sure, he's been too close to extremist elements in the Middle East, but so has the British government. Yes, he is talking about quantitative easing without showing a clear grasp of how and when it should be used. And he has a beard. Nobody ever wins elections with a beard. Or at least, nobody since Disraeli. But basically, on the key questions of our time - austerity, inequality, the role of the state in the economy - he is actually the closest thing to the zeitgeist we have. Innovative and smart thinking about the economy - Piketty, Mazzucato, Summers, Haldane - is much closer to the kinds of things Corbyn is saying than to any other major political figure in the UK. That doesn't necessarily win you an election of course, but it does suggest that you are asking the right kinds of questions, and could even have some answers.

There is no point in my rehearsing the arguments against Corbyn, because we are being bombarded with them from all quarters. Most of the time, these arguments are boneheaded and facile: he can't win an election (polls show none of the others can either, for now)! He's old-fashioned! He has shared platforms with people who hate Israel! However, there is no denying that if a basically honest, decent and intelligent guy like Ed Miliband can be destroyed by the press, there is little doubt what they will do to Corbyn. Most of the likely propaganda will be a pack of lies and gross distortions, but it will be effective enough to stop him winning over the kind of essentially conservative middle income English voters that Labour has to win over if they are to get into government again.

But I very strongly believe that whoever does win the leadership election, or take over when Corbyn finds he cannot actually control the parliamentary party, needs to take on board a good part of what Corbyn is saying. Not only because I think he's right, but because strategically it's good politics.

First, if we think Conservative economic policy is wrong, because it is depressing living standards unnecessarily and penalising the poor, then you have to make that case, otherwise it is hard to see how you can do anything different when you are in power. In particular, Labour needs to be ready for when the results of the Tory economic experiment come in. I believe that the experiment will prove to be a failure, and that it would be much better for Labour to have been opposing it all along. Of course, you have to do this in a smart way, and not open yourself up to the charge that you just want to print money (even though that is an option under certain conditions). But you have to be ready for the economy to tank (it may even happen as soon as this autumn). After all, if the Tories are right and the economy does improve sustainably and grow living standards, Labour will lose anyway.

Second, the stock of older property-owning voters that have kept the Conservatives in power won't be around forever. In the next 5-10 years the generation of people shut out of the property market and penalised by austerity will start realising that things aren't going to get any better for them, and will demand change. The older voters will die. Immigrants will have children, claim citizenship, and start to vote. Demographics currently favour the Tories, but they won't forever. Labour needs to have a progressive agenda that can appeal to the changing electorate. I don't think they can make many inroads amongst the current over 65s, but they can mobilise the younger electorate, and at some point that may well produce a winning coalition.

Finally, of course it is true that to make change you need to win power, and that involves focusing on the possible rather than the desirable. I lived through the 18 years of Tory government before 1997, and can remember the desperate need for it to end. But I think we are currently operating with an out-dated and one-dimensional view of what the possible is. First, in the 1980s and 1990s free markets were an exciting new (if rather old) idea whose time had come. By now, the limitations of blind market worship are coming clear, and the distributional effects of Britain's particular brand of neoliberalism are damaging the living standards of the majority of people. The Third Way made sense in the 1990s, it makes little sense now. Second, the electorate has splintered, and winning is not just about occupying a central position and expecting SNP, Green, UKIP voters and abstainees to suddenly flock to your door. We no longer have a two-party system, so more than ever winning is about building a coalition. It is not at all clear to me how signing up to Tory economic policy and hostility to immigrants, the poor and the young helps you do this.

So, these are the reasons I'm not voting for Jeremy Corbyn, but wish there was someone more credible out there ready to take on board much of what he is saying. I'm holding out for Yvette Cooper, with Andy Burnham in second. And as for Liz Kendall, well, I think she's on the wrong side of history.

Thursday, June 18, 2015

What is Labour for?

Once upon a time, the answer to this question was pretty obvious: Labour was the party of the working class - 'labour'. It was the political arm of the trade union movement. But somewhere along the line this original rationale disappeared, to be replaced by a party that had to pitch its appeal beyond the manual working class to the emerging middle classes. So far so good, this is all well understood and reflected in the history of the party from Harold Wilson to Tony Blair. But since Tony Blair something has changed, if the tone of the current leadership debate is anything to go by. Even Tony Blair, for all the abuse hurled at him by people on the left, did have a broad plan of how he wanted society to look. And of course Ed Miliband was groping towards one too. But the current leadership contenders do not have any kind of vision at all. Indeed, to listen to Liz Kendall you get the impression that she is making a pitch to manage a village hall. There is no sense of social transformation - instead politics is about efficient management of the existing system, ironing out the most obvious and visible problems with obvious and inoffensive solutions.

Yet there was never a greater need for vision. Inequality is eating away at the fabric of our society, as the appalling tone of the debate about our already measly welfare budget shows. And the main reason for this is that the broad set of arrangements we currently live under allow holders of capital to do pretty much whatever they like with minimal responsibility to society as a whole. As a result, people feel uncertain and vulnerable, because they are. Yet Labour's answer is to deal with some of the symptoms of this malaise in ways which for the most part will make no difference.

It is easy to understand the current vogue for managerialism because it is the safest and least costly way of trying to make a political pitch these days. Yesterday I attended an interesting meeting of Policy Network about participatory democracy as a response to growing populism. The whole tone of the discussion was localist and focused on specific, discrete problems - managing council estates, giving local people the chance to offer feedback on health services, and so on. All very laudable and valuable. But none of this comes close to addressing the fundamental problems in people's lives: job insecurity, low incomes for many, unaffordable housing, expensive and polluting transport arrangements. These problems - as indeed with immigration, if you think that is a problem (I don't) - actually require Labour to take on the vested interests of a relatively small number of very rich people. But because taking on rich and powerful people is really hard and politically fraught with risk, we don't even try. Instead we leave things much as they are and tinker around the edges with 'citizens assemblies' which may be a good idea but will do almost nothing to address the basic inequalities of power and economic opportunity that wreck people's lives.

In short, Labour is now a cut-price, low quality, political party. An Argos party. It's cheap, and you will probably have to throw it out not long after you bought it. Can we really not do better than this?

PS. Sorry for the plaintive, depressing tone, but if you're on the left, how can you sound upbeat right now?

Monday, May 18, 2015

It Was the Welfare Wot Won it: Age and Aspiration in the 2015 General Election

One of the most interesting - and barely commented upon - aspects of the recent election is that a strong relationship has emerged between party choice and age. Ipsos-Mori released some interesting data estimating the social characteristics associated with voting for different parties. The age dimension of voter choice is summarized in the graph below:

c/o Ipsos-Mori: https://www.ipsos-mori.com/researchpublications/researcharchive/3575/How-Britain-voted-in-2015.aspx?view=wide

We can see clearly that younger voters are more likely to vote Labour or Green, and older voters Conservative or UKIP. The effects are particularly striking in the 65+ category, which is of course the largest voting group, both because of the sheer size of the older population, and because of their high turnout rate (the UK has the biggest turnout differential between young and old in Europe).

Alongside the clear trend towards richer voters supporting the Conservative more than poor voters, this data suggests that the key to the Tory success was to look after a group of older and better off citizens. How did they do this? And in particular, how come they actually grew their vote amongst this group by 3%?

The answer is two-fold in my view. The first is that older voters are the biggest beneficiaries of the UK's house price boom: a typical homeowner in the 65+ category will have bought their home in the 1970s, when a typical home cost around 2.5 times the average salary. In London this same ratio is now 9:1. This cohort not only enjoyed mortgage interest tax relief, they were also big winners in the inflation of the 1970s, which wiped out the value of their home loans (whilst also wiping out the savings of the cohort born in the early 1900s - a generation as unlucky is the current 65+ cohort is lucky). The Conservatives have always done well with property holders, and the Ipsos-Mori data confirms that housing tenure has a strong relationship to the vote:

c/o Ipsos-Mori: https://www.ipsos-mori.com/researchpublications/researcharchive/3575/How-Britain-voted-in-2015.aspx?view=wide

Labour's appeal to social and private renters, and their threat of a 'mansion tax' on multi-million pound properties, is reflected in their much weaker performance amongst owner occupiers. In an economy where many families, and especially most older voters, have won big by buying property, the Conservative appeal had a ready market.

The second, less intuitive feature of this age skew is that the Conservative emphasis on austerity, living within our means, and reducing public spending did not extend to the retired population, the biggest recipient by some distance of welfare spending. It is well established that the coalition government's programme of cuts was directed almost entirely at the working age population and children, whilst pensioners were protected, indeed, guaranteed, by the 'triple lock' which updated pensions by whichever index happens to be higher. This strategy proved less than effective at reducing the deficit, but was very effective at securing the pensioner vote.

British politics is starting to look like the US, where support for the Republicans grows with age. The irony is that right-wing parties with clear political agendas to cut redistributive public spending find their strongest support amongst the parts of the electorate who receive the most spending. This paradox has baleful consequences, since the need to make cuts to government budgets whilst sparing the least productive part of the population from these cuts is almost guaranteed to have negative effects. Cuts to productive public investment, such as infrastructure and education and training, have to be made in order to pay for a dependent aging population. The resulting frustration amongst working age voters, as they pay higher taxes whilst suffering stagnation in their incomes, can be expressed in a variety of ways, from voting for extremist parties to not voting at all.

It is the Labour party's job to mobilise the losers in this particular trade and encourage them to support a more equitable distribution of the costs and benefits of economic change. Ed Miliband had a sense of the need to do this, as reflected in his impressive first speech as ex-leader this week, but was lacking in the ability to define such a project, much less win support for it. But the task remains the same, and the data we have so far shows that success of the Conservative party has very little to due with its appeal to aspirational voters, and more to do with doling out public money to a group of voters which has already done very well out of the financialization of the British economy over the past quarter century. There are more losers than winners, and what is more the winners will not be around for ever. It is Labour's job to show that growing the economy and helping those who have less are part of the same challenge.

Friday, May 8, 2015

Fear and Loathing Update: It Worked!

The failure of the polling before yesterday's election has left many commentators with egg on their faces, and what I wrote the other day looks totally wide of the mark. But here's what I make of the results, benefiting from the fact that we now know what they are.

Scotland, as expected, has kicked Labour out and the Scottish Nationalists have swept the board, failing to take only three of 59 seats. This is a pretty clear mandate for further devolution, and potentially even another independence referendum, in Scotland. As it turned out, the supposed legitimacy of an SNP-backed government in Westminster will not be tested, for now at least. But unless something changes dramatically the UK political system now contains two territories - Northern Ireland being the other - where the main governing parties are to all intents and purposes not represented. The legitimacy question will, obviously enough, not be raised by the London-based media, but it is worth pointing out that the new government's 331-seat majority consists of 319 English seats, 11 in Wales and just one in Scotland. Labour's Scottish meltdown means there is no longer a party with significant representation throughout Great Britain. Scotland's days in the Union look numbered unless some significant constitutional change happens.

Whether or not Scotland can remain inside depends on the degree to which the Conservatives prioritise preserving the Union over short-term political gains, and the way in which Scotland's place in the UK interacts with our difficult relationship with the European Union. The temptation must be for the Conservatives to allow Scotland's relationship with England to break down, hastening independence, because this would consolidate the dominance of England, and of its most successful party, over the government of the UK. Certainly, Labour's losses in Scotland mitigate this a little, suggesting the Tories can continue winning even though they have few Scottish votes. But Scotland's predictable hostility to the idea of leaving the EU changes the calculations somewhat. Hardline Euroskeptic backbenchers could see the loss of Scotland as a price worth paying to achieve their main goal of Brexit. Cameron's aim would appear to be to keep the Union and remain inside the EU, but it is not clear whether he has the authority in his party, with its slim majority, to hold off the Euroskeptic challenge.

Although we have returned, just, to the customary single-party majority, British politics is still a long way from the two-party alternation that characterised it for so long. The Greens and UKIP between them took over five million votes, close to a sixth of the total vote, confirming, in case there were any doubt, that Britain no longer has a two-party system. Yet these five million votes produced just two parliamentary seats. Electoral reform would appear irresistible given such gross disproportionality, yet the British electorate, even those who supported the under-represented parties, show little enthusiasm for reform. Indeed, the referendum on adopting the Alternative Vote for Westminster elections, held in 2011 as part of the coalition agreement between the Liberal Democrats and the Conservatives, delivered an unambiguous rejection of change. But there is little doubt that voter fragmentation makes the UK's traditional First-Past-the Post arrangement dysfunctional, as the election of a government on not much that more than a third of the vote demonstrates.

Finally, the election has huge implications for the British political economy. The Conservative-Liberal Democrat coalition chose to adopt a strict and demanding timetable for deficit reduction, with major cuts in important areas of the welfare state in a bid to bring the UK's public debt under control as quickly as possible. In fact, as many predicted, this effort failed, with the deficit remaining stubbornly high even though the economy began to grow again by the second half of the parliament. Yet despite this failure and the total lack of productivity growth over the past five years, the Conservatives campaigned, and won, on a message of economic competence. Labour, in contrast, with its clear albeit timid critique of austerity and rising poverty, suffered a major defeat, gaining little compared with its historically weak performance of 2010. This suggests that austerity, for all its obvious limitations as an economic strategy, is not necessarily an impediment to ruling parties retaining power. However the growth in the vote for parties which in one way or another set themselves up as alternatives to mainstream parties - the Greens, UKIP and the SNP most notably - enjoyed major success. So we can conclude that austerity may be more sustainable politically than suspected, but it does not comes without costs in political stability. The effects of the financial crisis of the late 2000s continue to be felt, and politics seems to have entered a new and quite different era.

Wednesday, May 6, 2015

Fear and Loathing: Thoughts on the UK Elections

I've spent a lot of time this year teaching and writing about the veto power of capital in democracy. Wealth-holders can exercise disproportionate power in democracies in two main ways. First, they can individually use their money to buy policy influence by lobbying and funding the political campaigns of friendly candidates (or owning newspapers). Second, they can, as a group, go on 'capital strike' if the 'wrong' government gets elected, sinking the economy and making everyone worse off. Put together, these two channels of political power allow a small number of wealthy people to counteract the numerical advantage in democracy of the poor and middle income majority.

The UK election we're about to hold has brought these mechanisms together in quite spectacular fashion. We are told by newspapers owned by wealthy magnates that a vote for Labour will result in economic meltdown, due to Labour's 'incompetence'. This is nonsense. There is no reason to suppose that Ed Balls, a PPE graduate, Financial Times leader writer, former Chief Secretary of the Treasury and so on, is less qualified to actually run the economy than, say George Osborne. Yes, there is the small matter of the global financial crisis that Labour presided over in 2007-8, but despite the propaganda, nobody was warning of that at the time, and Brown's government actually did a pretty good job of dealing with the crisis once it had happened. Nor is there any evidence the economy systematically performs better under the Conservatives: growth rates under Labour and Tory governments are indistinguishable averaging around the trend rate.

(Andrew Sentence: pic.twitter.com/IzBhJs7ncN)

So Labour's supposed incompetence compared to the Conservatives, is a fiction.

What is not a fiction is the blackmail power enjoyed by capital, but it is probably a bluff. If growth rates are historically roughly the same under Labour and the Conservatives, then it can't be the case that capitalists really do withdraw their money when Labour get elected. But despite the facts, the threat of Labour 'incompetence' and capital flight appears to be believed by a significant number of voters. British Election Studies have shown time and time again that a majority of British voters favour the broad principles of redistribution from rich to poor, are more concerned about unemployment than inflation, value public services and trust Labour more to run the health service and the education system. Despite the supposed popularity of the coalition's austerity policies, the number of British voters that actually prefer a smaller state is vanishingly small:

Courtesy of @flipchartrick: https://flipchartfairytales.files.wordpress.com/2014/10/key_findings_figure_0-3_499x317-jpg.png

So Labour's dilemma is that although voters are mostly more sympathetic to their broad social aims than those of the Conservatives (and not surprisingly, since most voters benefit from redistribution and public provision), the fear that progressive politics will come at an economic cost is a powerful constraint on voting behaviour. It's Labour's misfortune that the global financial crisis, for which the party was no more to blame than any other, has added a recent brutal experience of economic crisis on its watch. Wealthy right-wingers use the print media to stoke fears that a vote for Labour will wreck the timid recovery, although what they are really worried about is the Mansion Tax and Labour's plans to abolish Non-Dom status.

The more positive news about this election is that whatever the outcome the Conservatives, the party of reference for the wealthy, is likely to poll way below its historical average. Even optimistic forecasts put the party on 35% of the vote, which could be enough to make it the largest party, but is a good 10% or so below the levels achieved by Margaret Thatcher and John Major. All of the rest of the electorate, with the exception of a portion of the Liberal Democrats (expected to get below 10% of the vote), is likely to support parties that in one way or another reject the Conservative message. Even UKIP, despite its neoliberal leanings, is not a truly plutocratic party, and its curbs on immigration and resentment of Europe's common market are in conflict with the interests of most of the UK capitalist class.

Given the workings of the electoral system, a progressive majority around Labour, the SNP, Plaid Cymru and the Greens (and maybe some progressive Liberal Democrats?) appears possible. The end of the two-party system in Britain is a big threat to the blackmail power of the wealthy: PR systems in continental Europe don't generally produce the kind of hysterical propaganda and stark choices between order and chaos that we see here. A reform of our antiquated electoral system could open up a different kind of politics (although not without risks: UKIP would win a substantial number of seats). PR and federalism make sense for a diverse and politically fragmented state like ours, and would undermine the narrative of 'vote for me or it will be chaos'.

Conservative political strategy appears to be implacably hostile to these kinds of changes, even though the Alternative Vote electoral reform they opposed in 2011 would, it seems, have placed them in a much better position in this election, as the second choice of many UKIP voters. Moreover, federalism would likely reduce the influence of Scotland, Wales and Northern Ireland, where the Conservatives have few seats, over policy in England, where the Tories usually dominate. Yet the Conservatives struggle to cope with the idea of power-sharing, preferring to run the risk of opposition for the chance to govern unencumbered. Labour and the Liberal Democrats, as well as the Nationalists, are far more amenable to reform and the likely experience of a minority government could well force constitutional change back on to the agenda. But the loud voice of big money can be counted on to oppose it.

Tuesday, February 10, 2015

Be careful what you wish for: or how Germany's blame game has backfired

The election of a Syriza-led government in Greece and its subsequent stand-off with Greece's creditors has disrupted Europe's preferred approach of kicking the can down the road. My colleague David Woodruff is not optimistic about Greece's bargaining position. Germany clearly has every incentive not to cave in to Greece's requests, not only because they prefer not to admit that Greece is insolvent, but also for fear of the ramifications a Greek win could have elsewhere.

Spain will vote in 2015, and current opinion polls gave Podemos, a party just past its first birthday, the lead over Spain's traditional governing parties, the Partito Popular and the Socialists, who together barely muster half of voter preferences in a recent poll. The failure of austerity has created a fertile terrain for alternative political forces, especially in the Southern periphery.

The Grasshopper and the Ants.png
"The Grasshopper and the Ants" by Source. Licensed under Fair use via Wikipedia.

But there is a further reason for the success of new political forces such as Syriza, Podemos and Italy's Five Stars Movement. The dominant narrative of the Euro crisis is that of the Ant and the Grasshopper: unlike the virtuous North, who saved for the winter by running balanced budgets and reforming their economies to make themselves more competitive, the South overspent, overborrowed and failed to reform, leaving their economies vulnerable to downturns. Their politicians wasted money on pointless airports (although, see also Berlin's new hub), protected rent-seeking groups and often lined their own pockets. In a more sophisticated version of this story, Jesús Fernández-Villaverde and colleagues argue that credit booms have an effect analogous to expansionary monetary policy, masking political incompetence in the eyes of voters and allowing corrupt politicians to claim credit for illusory economic growth.

Southern European politicians probably are exceptionally venal: Transparency International certainly thinks so. But blaming poor governance in the debtor nations handily shifts the focus away from the structural flaws in European Monetary Union that made such a crisis likely however well Southern European countries had been governed. German surpluses, in a monetary union, had to roll up somewhere, and they rolled up in the Eurozone's weakest economies, because that is where opportunities for investment appeared greatest.

The 'blame the victim' narrative has been effective up to now in distracting attention from the structural failure of EMU. So effective in fact, that it is widely believed in Southern Europe too: support for established political elites, the (mostly) men responsible for presiding over the disaster, has collapsed. Now that the credit taps have been turned off, Southern European voters have, albeit a little late in the day, reacted to the corruption and incompetence shown by the likes of Papandreou, Samaras and Berlusconi by turfing the rascals out. So now they will see sense and elect politicians that embody the austere virtues of Angela Merkel. Right?

Wrong. The elites that governed the South in the first decade of the euro may have been corrupt and incompetent, but they were committed to euro membership and (formally anyway) its rules. When the Troika came knocking, its recommendations - despite there being good reasons for thinking they would make matters worse - were accepted and largely implemented. Just as they escaped the blame for their own errors in the pre-crisis period, they are now crucified by their voters for policies decided elsewhere. And rather than turning to incorruptible experts to implement the austerity regime, Southern European voters now turn to politicians who would rather ditch that regime altogether. As Silvio Berlusconi's star waned, Italy voted not for the sober, Davos-attending former Eurocrat Mario Monti, but for rabble-rousing anti-euro comedian Beppe Grillo. And the Papandreou dynasty has been replaced by the tie-less Tsipras and Varoufakis.

The ant and the grasshopper indeed. Perhaps another fable is more appropriate here: the Tortoise and the Eagle. Or be careful what you wish for: you might get it.