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.