A new party system?

August 21, 2016

Amid the speculation about whether Labour will split in the event of another Corbyn victory, Tim Montgomerie revived his suggestion that many politicians have more in common with some members of another party than with some in their own party – and so we should have a new set of parties.

It’s a good thought experiment, and one I’m probably as qualified to carry out as Tim is, given that it involves imagining one’s own ideal party and several parties with whom one cannot agree.

Here are the parties that would exist if England’s politicians created a new party system from a veil of ignorance.

Where I agree with Tim is that there would be a left wing party (Solidarity), whose platform would involve being pro-nationalisation and anti- things like fracking and all things nuclear. Jeremy Corbyn and Caroline Lucas would both be in it. Serious question: what do they disagree on?

Tim has a National Party which would unite eurosceptics and social conservatives. Their priorities include technical education and small business. This is clearly Tim’s preference, but I don’t see much to separate them from his Patriots party, which is defined by anti-immigration and authoritarianism. The main contentious area is how anti-big business they would be.

Another point: Tim is one of the Right’s biggest proponents of house building but as much as I’d like his colleagues to share his views I don’t think it likely that a National Party would have this as a priority. Many conservatives who’d be drawn to join this political alliance (though not necessarily the voters) would be keen to preserve their property wealth and pastoral views. Pro-housing policies are a much easier fit in other fictional parties. Anyway, within this alliance would be people like Theresa May, Nigel Farage and David Davis.

There are Labour and Conservative MPs who would need a new home, and that’s where the Progressives come in. It would be pro-EU, for a start, and its policy platform would be defined by “what works”. So it would recognise that the housing market is broken and needs significant state intervention, and would seek to empower workers without intervening too heavily in the market. It’d welcome migrant workers, and bring the private sector into the NHS where there was a good business case. It would support renewables but wouldn’t rule out fracking or nuclear. A less ideologically rigid New Labour, basically, but one where I could imagine Robert Halfon and Anna Soubry would be comfortable.

Finally, there are the socially liberal, economically neoliberal Tories who couldn’t stomach the Nationals or the Progressives. They’ll have the Freedom Party. Douglas Carswell will be there. George Osborne too, I reckon. They’ll also want more houses, but instead of investing in new council houses, they’ll tear up planning rules and have developers let rip. Aside from that, and their pro-immigration stance, they’d be terrible, eroding workers’ rights and starving public services of investment.

What’s missing in all of this is the Lib Dems. Could they join the Progressives if “what works” is snooping on people’s email records? Could they join the Freedom Party if there is a fundamental disagreement around the EU?

The truth is, there are good reasons for the party system to exist as it does. Conservatives’ raison d’etre is to govern the best way they can while conserving what the Haves have – and the Haves often disagree (hence the Brexit fiasco). Labour’s is to improve living standards for the Have Nots, but they disagree on the best path to this. The Lib Dems’ priority is individual rights. I think. And UKIP’s is sovereignty – either over immigration or as a end in itself. All politicians make compromises with their fellow party members in pursuit of their overarching goal.

Of course, it is also true that decades of baggage stops them making compromises with would-be allies in other parties.

I suspect that parties won’t stretch to breaking point over their purpose, but because of foreign policy – not just on the EU but, in the case of Labour, NATO and Trident. The cause of conflict is the position of Britain in the world, something even more fundamental.

Anyway, try to guess which fictional party I like best.

Whatever you’re about to do, Labour…

July 2, 2016

Here are some things I hope you’ll consider. Above all, stick to your values, have courage in your convictions and give the 48% an alternative to the Conservatives.

There’s no point in seeking a mulligan on the referendum. The people have spoken, but the mandate they gave is pretty weak. Labour needs to say the UK will leave, but pursue the strongest damage limitation exercise possible.

I realise that there’s a lot of anti-immigration feeling and it’s probably tempting to read into the referendum result the need to cut it. Please don’t. Although it sounds like most Leave voters want to limit immigration, there is clearly a sizeable minority who don’t (18% of Leavers, says Ipsos; around 15% says Ashcroft). We can assume that The 48% preferred the status quo too, so that leaves 55-57% who are not going to be won over if Labour starts talking about immigration controls. And are the rest really going to consider voting Labour?

Instead, Labour needs to make the case for immigration. Don’t say things you don’t believe, and don’t try and avoid the subject, because those are the two mistakes Labour has made in recent years. Immigration is essential to the economic health of the country. Without it, we won’t have nearly as much tax revenue to spend on the health service and pensions. Most Britons are pragmatic people – they’ll won’t buy into the cuddly cosmopolitan stuff, but they would accept a case for the benefits if made with enough conviction.

A corollary to this is the need to address genuine social pressures in certain parts of the country (particularly where Labour is losing traditional voters). If people say immigration is a problem, I would guess (and I would welcome another view) that most of the time the real problem is low wages, health care, schools or housing. If Labour sets out an action plan to address all these things (and I read about one before the General Election, but it was at the end of an article in the Guardian) then makes that a central part of their manifesto, they ought to be able to win round the heartlands. And guess what, we won’t have a functional NHS or enough new homes without Italian doctors and Polish builders. There’ll obviously be a few Send ‘Em Backers who’ll reject even this, but any efforts to appease them will only alienate The 48%.

Labour still has to contemplate places like Hartlepool, where 70% of voters backed Leave. But 64% of Hartlepool’s voters didn’t vote Labour in 2015. A further swing against them would hand the seat to UKIP, but how likely is that? Is there not a case that the revolt against Labour there has peaked and a message more attuned to the town’s problems would bring them back? For fuck’s sake, non-UK born residents represent 2.3% of the local population, the lowest in the North East.

If Labour accepts the need for free movement, then it’s a hell of a lot easier to consequently retain the Single Market and protect the City – both things that the Conservatives seem set to gamble with. Labour can be the sensible grown-ups, speaking for the rational majority, and winning round business (especially if enough investment was made in infrastructure too). Under the circumstances, a plan to get a Norwayesque deal counts as a long-term economic plan. Nick that, and start banging on about it. (I’m half joking.)

Furthermore, the UK faces its biggest crisis since the war, and division within the progressive movement could really impair its chances. Labour should seriously consider a pact with the Lib Dems (who’d probably win Cornwall back), the Greens and even the SNP.

If we’re going to “take back control” then maybe it’s time the people started electing their upper house. A deal to reform the Lords and introduce an element of PR could be part of a pact.

You may therefore end up with the next General Election being effectively another referendum between complete divorce and Single Market, between closing the borders and supporting the economy, between tyranny of a minority and broad consensus.

 

Cutting off our nose to spite our face

June 22, 2016

The EU referendum has been fought by two tribes of idealists. There’s Leave, who see Britain as a plucky outsider who needs to shake off the bureaucratic shackles of Brussels. There’s Remain, who see Britain as a lynchpin of international affairs and whose leadership within the EU is essential to make the world a better place.

They’re both valid viewpoints, but only a minority cares that much to hold one of them. I mean, the latter is the reason I’m voting In, but then I’m a nerd. The fact is most voters who haven’t made up their mind yet either sympathise with both positions or don’t care either way. They’re going to vote on practical grounds –asking themselves, will I benefit by leaving?

My gut says the majority of the UK will have something to lose and won’t want to risk leaving the EU. They have a job that could disappear, a mortgage that could become more expensive, or a pension pot that could take a battering.

But my head, after looking at polls, media coverage, social media etc, says that there are enough people with either no chance of losing what they have – gold-plated pensions, more than one house – or nothing to lose in the first place, to feel at ease in taking a risk.

It’s that second group, living in safe seats, who have got angrier at politicians after decades of failure to benefit from wider growth with no way to change things. This referendum is the first real outlet for their anger – an opportunity to cast a protest vote that will actually do something. The politicians leading the Leave campaign have long invited these voters to blame immigrants for their problems and, now we have this referendum, offered them some cheap soundbites about taking back control.

They’re going to be disappointed.

Whether or not a Leave victory causes an immediate recession, no one will really know how our relationship with Europe will look for years. Businesses will just stop investing until we figure that out. That means no new private sector jobs for all those disenfranchised voters toying with Leave.

On immigration, we’ll either retain freedom of movement, which will piss off much of Leave’s constituency, or we shut the borders and starve the UK of workers.

This is the thing about immigration. It’s good. Immigrants pay taxes, which helps fund the NHS, pensions and schools that most Leave-leaning voters rely on. As more indigenous Britons retire, then subsequently live for another thirty years, immigrants will become even more essential.

The reason for the widespread resentment is the failure of the UK government to build enough homes and fund the NHS and schools properly. With the supply of workers cut off, we won’t be able to build all the homes we need or staff our hospitals adequately. We’ll have fewer taxpayers supporting our ageing population, creating greater pressure on the public purse and our communities.

As Osborne’s mate Danny Finkelstein points out in the Times today, a government shut off from the Single Market will slash regulation in order to entice investment. That means making it easier to exploit workers and sell shitty merchandise. That’s the Race to the Bottom that Remain tentatively used as their catchphrase for, like, one night.

Who will Leave voters blame for their problems once our divorce is complete? What will be the next outlet for their anger? The Johnsons, the Goves and the Farages? Or their neighbours? I’d rather not find out.

Instead, we should stay, keep the economy on track and elect a government who will actually do something to ease the pressure on public services and the housing market. Funnily enough, there isn’t a single EU Directive that is stopping this.

Now, if that doesn’t convince you to vote Remain, then here’s another reason: we won’t be talking about Brexit in a few weeks’ time. If we vote Leave, we’ll hear that fucking word every day for a decade.

Will the SNP spend the next parliament abstaining?

April 18, 2015

Last night on Radio 4’s Any Questions, the SNP’s Humza Yousaf spelled out what kind of Labour government his party would support in the likely event of a hung Parliament. Fiscal policy aside, which I think is pretty negotiable, he said the SNP could not support a government that renews Trident. The Nats want to ditch it and that’s non-negotiable. With the nuclear deterrent popular in the UK as a whole (according to a January YouGov poll), this is not something Labour should be contemplating.

The two parties are therefore at an impasse.

But the previous night, Nicola Sturgeon implored Ed Miliband to work with the SNP to keep the Tories out. Ed told her that whom the SNP supports is up to her – he won’t be dictated to. That leaves the question of what is most important to the Nats.

Do they stick to their principles and vote against Trident, even though they can’t win, or do they do everything to keep the Tories out even if that would improve the case for keeping the Union together?

By voting against a Labour government on the basis of Trident, the SNP would thereby usher in a Tory minority, who, with Labour, would renew Trident anyway. That Tory government might then further alienate Scotland and lay the groundwork for a second referendum.

The massive risk with this is that it will backfire and the Scots will start associating the SNP with another five years of Tories, and precipitate a loss of support that would wreck prospects for independence.

The safer route for the SNP is just to abstain on the budget and Queen’s Speech. Labour, with a confidence and supply arrangement with a Lib Dem rump, ought to have a workable number of votes (unless we see a late surprise surge in the Tory vote that takes them over the edge).

An SNP still enjoying a honeymoon period could still make a Tory government work for them, so Labour can still make the case that you can’t trust the SNP to deliver a progressive government. At the same time the Nats have a pretty strong pitch to voters: you could vote for a Labour MP in hock to the Westminster whips or you could vote for someone who actually cares about Scotland.

The SNP have huge political capital. The most responsible thing could be not to use it.

Scotland’s Manifest Destiny

September 6, 2014

Dear Scotland,

Look, I know it’s not my place, as someone living in London, to tell you how to vote on the 18th of September. But fuck it: I’m feeling pretty impotent right now, so humour me. I’m terrified that my country is going to be ripped apart in a couple of weeks’ time.

While I can’t say Scotland is my country, I can’t say England is either. I’ve lived in the latter my whole life, but my parents were both born in Scotland, half my extended family lives there and I’ve spent most of my holidays north of the border. Thank God for the Union because it gives me one single country that I feel 100% happy about calling my own. I feel British more than anything, and if you vote Yes, I won’t be able to say that. I’ll still have a state but I’ll no longer have a nation.

That’s enough dewy-eyed sentiment from me. When I’m completely objective about independence, I reckon Scotland could go it alone. There’ll be enough energy and excitement to sustain things until you find your feet. Alex Salmond’s mistake was to pledge to keep Sterling, immediately shackling an “independent” Scotland to a Semi-United Kingdom’s monetary policy. Even if he manages to land a currency union, Westminster will still surely dominate and impose fiscal conditions that make a mockery of Scottish autonomy.

True independence can only come with a separate currency. Establishing a new Pound Scots will have its risks, and Yes voters are clearly comfortable with risks already. If Scotland is going to sever ties, it ought to make sure those ties won’t just be reattached through the back door.

Ultimately, Scotland will do fine because Scotland is what makes Britain Great. And I’m annoyed that the Yes campaign wants to deprive the rest of the country of that. Scotland has been an indispensible outward-looking force for civilisation since we fused together 300 years ago. Following that union, Britain became the first country to industrialise, it democratised, and created the welfare state and the NHS. Scotland should be proud of being a cornerstone of progress in all of that.

Creating a country that treats people fairly has not been easy – there are many people in Britain who don’t have that social solidarity and open, compassionate outlook on the world that define Scotland. And this is one of the times in the country’s history where they are in the ascendancy and the rest of us need Scotland more than ever. The state support that will be a given in an independent Scotland is now under threat in England. Ideologically driven reforms are pulling the rug out from under people’s feet. But as long as Scotland remains in the union, we have a chance of turning the tide.  

Faced with a struggle like this, the easy thing for Scots to do is to retreat into the cocoon that independence offers, where they can insulate themselves from an intensified political turmoil south of the border. That would leave millions of like-minded people stranded in a Semi-United Kingdom where the heartless would now hold the balance of power. There is no doubt that the poor and disadvantaged growing up in a Scotland-less Britain would face a grimmer existence. Would Scots really want to see their nieces and nephews in England face decline towards a hostile state of nature, or would they rather accept their destiny as a partner in a mostly progressive union that is more than the sum of its parts?

The struggle to keep Britain Great and fight the forces of inequality might be the harder option for you, but it would continue Scotland’s tradition of punching above its weight and civilising less enlightened parts of the world.

That’s my plea, then. If you do vote No, don’t do it for you. Do it for the kids.

And if you ignore me then I guess I’ll just try to resurrect the campaign for North East devolution. But look what happened to that last time.

Cheerie-bye,

Dan

 

Interview: Andrew Adonis

April 21, 2013

Lord Adonis, Progress AGM, London, England

London Euston and Virgin Trains make an annoying double act. Not only does it take longer than you think to get to your departure platform, but once you’re there, and assuming you could only afford a standard class ticket, you have to walk past at least four gleaming and unspoilt first class carriages before you reach a seat you have the right to sit in.

The reason rail travel is so expensive, despite the government’s generosity to the train operating companies, is because standard class ticket holders subsidise empty first class seats. If Virgin replaced just one of their first class carriages with standard class accommodation they could sell another 70-odd cheap tickets instead of nothing. If I have my sums right, that means more money for the train companies for negligible extra cost and cheaper travel for UK taxpayers.

I put this theory to Lord Andrew Adonis, the former Secretary of State for Transport, in his Parliamentary office. It sounds like he’s heard it before. “I agree,” he says, “and I think the government should do something about it, myself.” With my policy proposal accepted, my work here is done. Hang on though, why didn’t you do anything about it while you were in charge of the country’s transport network?

Adonis reminds me that he managed to achieve a fair amount in his 20-month tenure at the DfT in the final years of the Labour government, such as nationalising the East Coast Mainline. “Every day I was Transport Secretary I would come in in the morning with five or six specific things that I wanted done. There’s always more to be done,” he concedes.

The 2010 Election put Adonis’s transport policy checklist on hiatus. After leading Labour’s ultimately fruitless attempt to forge a coalition with the Liberal Democrats, he left the front bench and took up the post of director at the non-partisan Institute for Government. As of autumn last year he is back in the fold as Labour’s spokesman on infrastructure in the Lords, shadowing former Locog chief Lord Deighton.

His flagship cause at the IfG was the expansion of the London Mayor model to other cities. The London Mayoralty has been a “phenomenal success”, Adonis says, particularly in integrating public transport, and he believes elected mayors for metropolitan areas, with genuine powers over transport, regeneration, policing and skills, would bring sorely needed prosperity to regional economies that have been struggling compared with London.

The important aspect of this model is to preserve the powers of local authorities. The reason that seven of eight cities to hold referenda last year rejected elected mayors was because, Adonis says, “existing local councillors were opposed to it. To put it bluntly, they saw it as a threat to their own position and it was.”

Speaking of regional economies, what does Adonis think of the claims that his project for high speed rail will, instead of bringing growth to Birmingham and Manchester, merely turn them into glorified dormitory towns within easy reach of London, inflating only their property prices?

He is strenuous in his rebuttal. “Speak to the mayors of Lille, Lyon and Marseille and none of them are saying, ‘please, take our high speed trains away because all our business is being sucked into Paris!’ The people who are using these ludicrous arguments are by and large those who for other reasons, mainly Nimby reasons, are opposed to high speed rail.”

He argues that the cities waiting for HS2 are already rich in culture and there is no danger for investment to disappear to London. On the contrary, high speed rail will give the north greater capacity to grow; he cites a strong correlation between journey times to London and a town’s economic output, with Oxford and Reading’s gross value added outstripping that of Plymouth and Middlesbrough.

A line we heard the other week from Cheryl Gillan, Conservative MP for Amersham, was that “the first phase of construction should be between the Northern cities rather than between Birmingham and London”. Now, this may be just another Nimby excuse, but is there not a case to start in the north and build south? Perhaps, but the reason to start in the south “is simply because the most congested parts of the West Coast Main Line are in the south.”

If Labour were in power, “we would get on with it. This government is utterly useless at delivering anything. It’s three years now since I published the plan for HS2 – they haven’t even managed to complete a public consultation. We still do not have the legislation even for south of Birmingham. They’re talking now of it not even coming forward for another year.”

As a believer in “getting things done”, what does Adonis make of his biggest fan in the Conservative party, Michael Gove, who has since 2010 put the academies programme on a course of steroids?

He supports Gove’s replacement of underperforming comprehensive schools with academies, a policy Adonis first set up in the 10 Downing Street policy unit and implemented as Minister for Schools. He is less keen on other aspects of the Education Secretary’s programme – which took another twist the day before we meet when Gove binned plans for an English Baccalaureate Certificate. “He has developed a lot of right-wing claptrap including a lot of stuff he’s had to reverse, including his entire policy on curriculum and assessments. It was always mad to seek to replace the GCSE with a 1970s exam system.”

Adonis warns Labour against allowing the Conservatives to claim the academies policy as their own; he describes it as a mission to demolish social inequality. “I’d love to make private schools obsolete. What I want them to do is become academies – a number of independent schools have already gone down that route.”

We can see the fee-paying, selective Westminster School from Adonis’s window. It could be a different situation after a generation of the academies programme. “If you could get outstanding education at Pimlico Academy, why would you pay £35,000 to go to Westminster?”

“It’s not respectable in this country to say that you’re buying social privilege but it is respectable to say you’re buying a better education. So if we can remove the better education imperative behind people going private, then I think we can deal with the social exclusivity quite quickly.”

He highlights the impact that Teach First has had in getting highly qualified graduates into the teaching profession. He views the two-year contract as essential because the traditional career path is too daunting for many graduates; but a majority of participants have kept teaching beyond the initial period. “Almost all those people would not have applied in the first place if it wasn’t for Teach First.”

He is now championing the same approach in social care, with Frontline (previously trailed as “Care First”) to be launched in the summer. The scheme will focus on vulnerable young people and address the fact that the profession has been “too amorphous”, without the definition needed to attract enough talented young people.

Lord Adonis’s interests appear eclectic, but – from the growth unlocked by infrastructure to increasing opportunity for disadvantaged young people – they all come together to address “the single biggest challenge facing the country”: eradicating youth unemployment.

This will be the key to Labour’s election strategy but as well as “economic credibility” and “hope” – which are givens – he stresses, “It’s almost always true that the party that has the most credible reform programme is the one that wins elections. It is essential that we don’t allow the Conservatives to paint themselves as the party of change and us as the party of the status quo.”

To date Ed Miliband has defined his leadership of the Labour party by talking of a different approach to capitalism. As one of the highest-profile Blairites still active in Labour how does he view capitalism since the 2008 crash? How will Miliband’s concepts such as predistribution – the idea that we can no longer rely on public spending to increase living standards – and the need to stifle predatory capitalism translate into policies?

Predistribution – “an ugly phrase”, he reckons – “is about jobs with prospects… in terms of pay, training and career development.” Labour paid “too little attention” to median wages when in government, Adonis admits; they didn’t recognise “a problem in the number of jobs the economy was generating”, and assumed “economic growth would take care of pay levels”.

The answer to this is “a work and train route between schools and jobs”. “For every three higher education places there are for 19-year-olds there’s only one decent apprenticeship – we need there to be the same number of each and that’s a huge social and industrial challenge, but it goes to the heart of the mission of the next Labour government.”

He stresses the importance of the public sector setting an example by taking on apprentices – something the coalition have been “terrible” on – but I still get the sense that while Labour may have a narrative that resonates with the electorate, headline policies that a future government can go out and get done are still thin on the ground.

That said, Andrew Adonis is both a thinker and a doer – an unquestionable asset to any political party, and therefore one Labour is lucky to have.

This article appeared in the April 2013 issue of the Young Fabians’ magazine, Anticipations. The interview took place in February.

Fair Workfare?

February 18, 2012

This week several objections to the government’s Work Programme have been bandied about. This wheeze gives job seekers an unpaid work experience placement. If they drop out then they lose their benefits.

I don’t want to get into the philosophical arguments about whether the principle behind losing benefits is right or wrong; the way the Coalition sees it is that if you get Job Seekers Allowance (JSA), you don’t get it for free so you’re expected to take work that is given to you. I should imagine Labour would broadly agree.

Instead I want to look at the relative merits of these objections to the Work Programme and suggest that it could be resolved by actually paying people.

Here are the objections outlined in this article:

  1. There are “complaints that jobseekers are being used as taxpayer-subsidised labour”. I’m not sure whose complaints the Guardian are referring to here, but I don’t think it’s the same majority of public opinion who support welfare reform and oppose taxpayer-subsidised indolence. If we’re going to have subsidies, it’s probably better that they support labour.
  2. Private sector employers get to profit from the unemployed. Surprisingly (to me), until recently only public sector and charity organisations took people on under the programme. Having the private sector involved is surely essential: if you want the private sector to deliver economic growth you have to prepare the unemployed to fill private sector jobs – whenever they actually get created. However, it does look a bit shabby if corporations are using free labour as a way to enrich themselves. You might call it predatory capitalism.
  3. It’s not actually voluntary if people lose their benefits. Tesco feels uncomfortable with the work experience being compulsory and sold as voluntary (Work Minister Chris Grayling: “Our work experience scheme is voluntary”) and suggests removing the threat of benefit withdrawal. Without wishing to get into a discussion of whether there should be unconditional social security, my interpretation of JSA is that when you sign on you accept its conditions, and you are therefore compelled to take work experience.
  4. It’s slave labour. If you help out an organisation for free because you enjoy doing so and you agree with its objectives and it was entirely your decision to do so, then it’s voluntary. If the activity is anything else – and especially if it was arranged by the JobCentre or whichever contractor is doing it in your area – then it’s work, and you should expect to be paid at least the National Minimum Wage for it. If an unscrupulous retailer finds that they’re able to get a kid on JSA to perform a menial job that requires no training for free rather than actually employ someone then that does nothing for the unemployment rate and undermines the concept of the minimum wage.

What I don’t understand is why people on the Work Programme do not get their benefit topped up to the minimum wage by the employer for the work they do. I think this solution would address all the objections we’ve heard:

  1. Taxpayer’s money is still used to subsidise work not indolence
  2. Employers still get benefits but not at the benefit recipient’s expense
  3. With the minimum wage carrot now complementing the stick of losing benefits, the scheme would still be compulsory, but the DWP would not lose any more friends by saying so – to suggest that the current system is otherwise is disingenuous
  4. While it may still be forced, it isn’t slave labour

There is an issue in that economic theory suggests that you won’t get as many placements as you do under the scheme to date, but at least participating companies won’t be embarrassed into withdrawing completely, thus reducing the number of placements anyway.

I humbly offer Obama my strategy for winning in 2012

January 10, 2012

An extract from Thomas Frank’s book Pity The Billionaire in the Guardian on Saturday explained how the Republican Party has managed to wrest a post-crash populist agenda away from the Democrats since Barack Obama starting trying to lift the USA out of the economic mess George Bush had left him with.

The Tea Party that drove the GOP’s congressional successes in 2010 and now the Republican presidential candidates seem to be getting away with ludicrous claims that what the economy needs is a smaller state and less regulation to return to health. Frank’s article contains many terrifying examples of their views. Rather than the lack of financial regulation, Republicans believe it was housing policy that led to the economic meltdown in 2008. Somehow they appear to be winning the argument with the people, with polls showing more Americans blaming big government than big business for economic woes.

Obama has struggled to make an impact in political debate over the past few years, ever since the wrangles over the healthcare reforms. Apparently this is due to his love of being correct, rather than playing to the crowd and appealing to their emotions, which the Republicans have mastered. Put simply, it’s the triumph of heart over head, and it’s been going on for ages. Drew Westen wrote a book about it. And Obama still seems to get it wrong.

According to Republicans, Obama is some hideous hybrid of a socialist, a fascist, and a communist, which is funny, given that he’s so nice and cares about poor people getting healthcare. But while you can demolish their case from now until Super Tuesday, the GOP have a narrative that gets traction with the public.

Obama needs a narrative of his own, and while he made a decent stab at it in Kansas last month, it needed more fear. So why doesn’t he try something like this:

  • Republicans want unfettered capitalism, but as we all know, among the many corporations that make a positive difference to the nation, there are irresponsible and unethical businessmen and companies who fire productive workers, asset-strip profitable businesses, and decimate communities, all for short-term gain that does nothing to sustain economic growth.
  • The United States has only got to the level of prosperity it enjoyed into the early twenty-first century thanks to the intervention of the Federal Government after the Depression to ensure that corporations act in the national interest and that all Americans who strive can succeed and prosper.
  • Without the New Deal, the human cost of the Depression could have been even higher. Communism was on the march across the world and without the federal government America was at risk of falling prey to it.
  • From 1932 to 1990, what defeated the Soviet Union was not a weak United States government who didn’t care about their people – it was an active and bold government that supported the rise in living standards that became the envy of the Eastern bloc, inspired its people to demand more, and led to the crumbling of the biggest existential threat to the USA we have ever known. FDR knew what effective government could do, Truman knew this, Eisenhower knew this, JFK knew this, Ronald Reagan knew this.
  • It was only when politicians started dismantling the framework that had supported long term economic growth did the markets spiral out of control and the country fall to earth with a bump.
  • If my Republican opponent becomes President and starts dismantling everything we’ve done to prevent a repeat of the financial crisis and support the American People in these difficult times, then in a decade’s time we’ll see another crisis. Next time, however, there will be no safety net.
  • The communists believed that capitalism would sow the seeds of its own downfall and clear the way for communism – this is the downfall that another banking collapse will create. For 70 years the United States kept communism at bay through a system of responsible capitalism which protects the less fortunate and restrains the worst excesses of business. We are now in danger of tearing this down.
  • My opponents have long said I’m a communist. If I were really a communist, then you’d think I would be fully behind the efforts to create unfettered capitalism, given that it would be the best way to bring about a communist society. I invite you to look at me, and look at my opponents and ask yourself: who is the real communist in this race?

Obama, you might want to find some evidence to back up the points I’ve given you here, but, judging by your opponents, you might not actually need it.

Having said all that, Mitt Romney’s challengers to the title have, much like the Tories of late, started attacking irresponsible big business as part of their populist campaign. Should Romney end up with the nomination, Obama will have Newt and Ricky P to thank for the groundwork.

Why you should be unimpressed by the deficit debate

December 9, 2011

Since 2009, Labour has not explained what it would cut if it were in government right now. Now the latest budget forecasts suggest that if Labour wins the next election, it would have to continue making cuts. They have a dilemma: they need to restore their economic credibility by having a plan for reducing the UK’s debt, but if they announce the sort of things they would cut, it may reduce their core support. As a Labour party member, Politics graduate and someone who has an A-level grasp of economics, I’ve been unsatisfied with the debate around this. So I’m going to explore this area of policy as a lay person and see if I can either come up with any answers, or conclude that we really are screwed. In this piece I’ll start with regurgitating what I understand. (Disclaimer: this is pretty stream-of-consciousness, so no references I’m afraid.)

Labour’s main problem

Except when you have a war, a strong economy is what normally wins incumbent parties elections, and a weak economy is what lets opposition parties in. To be more precise, it is a perception of economic competence that will secure a party’s place in government. The past two changes of government can be explained this way: Labour won in 1997 because even though the economy had been growing for the previous 3-4 years, the Conservatives’ ignominious exit from the European Exchange Rate Mechanism had destroyed their reputation as economic managers. In 2010, Labour was given the heave-ho because of the perception that, notwithstanding Gordon Brown’s heroic efforts to rescue the economy from total collapse, the party was at least partially responsible for the biggest recession in living memory, and this was compounded by an irresponsible fiscal policy.

The Conservatives used a couple of lines to convince the electorate that Labour had wrecked the economy. Comparing the country’s books to a household budget doesn’t hold water, unless your house has its own internal market economy. The analogy that Labour finds it more difficult to shake off is that it “failed to fix the roof when the sun was shining”. Objectively, this is a pretty handy summary of the structural deficit problem.

Fiscal policy – the basics

The core argument of Keynesian economics is that, through a multiplier effect, tax cuts and public spending increases help economic growth by putting more money in people’s pockets. A fiscal policy of balancing the books is unhelpful because when there is a recession, raising taxes to maintain the level of revenue while more people are out of work and cutting discretionary spending to maintain the level of spending while more people are claiming benefits will take money out of people’s pockets and lead to a downward economic spiral.

Allowing deficits to happen in recession – at a bare minimum, through the “automatic stabilisers” of lower tax receipts and higher benefit payments – means that more money is flowing to the economy from the government and the multiplier effect will help lift the economy out of recession. Discretionary stimuli, like tax cuts or capital spending projects, will help boost a flagging economy even more. Therefore fiscal deficits aren’t necessarily bad.

The corollary to this is that in a period of economic growth, the government should seek to balance the long-term books by seeking fiscal surpluses. Once again the automatic stabilisers play a part – in a boom, people who were on the dole in the recession are now earning money and paying taxes. The general prosperity of the nation gives the government a bit of leeway to raise taxes or cut spending without damaging their electoral prospects too much.

Labour’s approach

Labour, famously, played around with those rules. After sticking by the Tories’ spending plans for the first few years of government, they started running deficits, even though the economy was growing. Brown invoked the golden rule, whereby deficits are okay if the money borrowed is spent only on investment (or, to put it in economic terms, capital spending). This investment, in hospitals, schools and infrastructure, is a one-off payment and is expected to pay for itself through a healthier, better-educated workforce and an economy with greater capacity, reflected in higher tax receipts.

What doesn’t happen under the golden rule is increases in current spending that aren’t paid for by taxes. To use a simple example, increasing the number of policemen – who will, naturally, expect to be paid every year once recruited – needs to be paid for by either finding savings in the rest of the police’s budget, cutting other public spending, or raising taxes. If you do none of these things, you have to borrow to pay their wages and you will need to borrow the same amount every year. This is basically what the structural deficit is. And this is what the government have been trying to eliminate by 2015.

When the economy returns to pre-2008 levels of activity – which is apparently years away – the “cyclical” part of the budget will be balanced, but there will still be a structural deficit. Only when the structural deficit is out of the way can Britain’s debt then start being paid off.

The structural deficit

This is where my understanding starts running out of steam. I presume that you have the public spending that is paid for by taxes, the capital spending that is paid for by borrowing (and can be paid for in the long term) and then the current spending that is paid for by borrowing. It is the latter that we ought to be worried about. What I don’t understand is how it originated; between the last surplus in 2002 to the recession, there must have been some unfunded current spending increases. Assuming that these increases were on “nice to haves”, and using the principle of “first in first out”, would these not be the first areas to target spending cuts on? What we seem to have instead is a free-for-all where our cherished public services are being cut to the bone. Maybe I haven’t delved as deeply as I could, but I haven’t seen any explanation of this by our leaders.

A lot of the blame for the crisis has been put at the door of the PFI projects, which do involve current spending commitments that cannot be got out of easily. But that – and the perennial problem of “public sector waste” – surely cannot be the whole obstacle we face. Elsewhere you hear the charge that Labour built too many schools, for example. Here there may be a distinction between schools replacing old ones (which will, presumably pay for themselves down the line) and brand new schools requiring brand new teachers, which involve expenditure on an annual basis. Can there be many of these that weren’t adequately funded?

The Coalition’s priorities

Assuming that the cuts to spending that the government wants to eliminate will be unsustainable even by the time the economy has recovered, I can appreciate why the bond markets have been frightened and why the government believes that pursuing austerity in a time of economic fragility trumps an extended stimulus (though I’m not qualified enough to condone it or not).

But I can’t help thinking the government are going above and beyond this, by using austerity to compensate for the high levels of investment and the rescue package under Labour, which are one-offs and can be paid off once the budget is in surplus again (i.e. once the economy is on a firm footing again and unsustainable current spending has been eliminated).

George Osborne made a great deal of his “expansionary fiscal contraction” which aimed to stimulate the private sector by scaling back the public sector to free up credit and labour. This approach is said to have worked for Canada in the mid-1990s. What has become clear since Osborne’s espousal of this is that the conditions Canada enjoyed – a booming US export market – are absent for the UK as the Eurozone suffers the current crippling crisis.

Rather than encouraging the private sector to take up the slack, withdrawal of public sector spending has depressed aggregate demand for goods and services, thus weakening rather than strengthening the private sector. The Chancellor has now pledged more support for capital projects, but who knows if this is going to be enough to balance the books in six years.

This is what I want to find out:

  1. What current spending increases were made by Labour without a corresponding rise in tax receipts (or, vice versa, what tax cuts were not matched by spending cuts)?
  2. How much of the structural deficit the government wants to eliminate consists of this type of spending?
  3. Of these items of spending, what is being cut and how painful will such cuts be compared with the others?
  4. Given the amount of investment the economy needs, is it really the structural deficit we’re worried about, or unsustainable current spending? Can the markets not be kept happy with reductions in the latter as long as a longer term structural deficit only consists of capital spending which will deliver future growth?

Any useful pointers welcome.

What’s in a lack of name?

November 7, 2011

There were a few things I didn’t like in Drive, the recent Ryan Gosling, um, vehicle. They largely revolve around the fact that the baddies are defeated not by an uplifting feat of driving in the big stock car race that never materialises, but by a series of stomach-churning killings.

But I can forgive the makers that. It had an 18 certificate after all and neither Carey Mulligan nor Christina Hendricks are at that stage of their careers that a sex scene was on the cards, making a bit of the old ultraviolence inevitable.

When shattered heads weren’t making me wince it was the lengths the script went to avoid naming the protagonist.

Not that having an anonymous lead character is new. There are some valid reasons for doing this:

  1. Hey, this guy is such an outsider, and so mysterious, that his name has been lost somewhere in his dark, dark past
  2. Hey, this story is basically an allegory about today’s society and the protagonist represents the viewer
  3. Hey, the film is based on a novel that’s written in the first person and she manages never to refer to her own name

Of course, a screenwriter can cite any of the above reasons when actually he’s simply a lazy SOB.

It can be done well. A good test of this is when you don’t realise until the credits roll that the plucky young chancer you’ve been cheering on for the last 90 minutes has never revealed who they actually are.

The clue is in the title of Withnail & I but Bruce Robinson manages to get away with it. Arguably he was on safe ground as “I” is actually named Marwood in the script. There are only really two characters with whom Marwood interacts, and both Monty and Withnail are so self-obsessed it’s no wonder they never address him properly.

It works in Fight Club, because Ed Norton’s character narrates the whole damn thing (though even so, his name is probably – SPOILER ALERT – Tyler Durden anyway). And they get around it in the Sergio Leone Dollars Trilogy, starring Clint Eastwood as “The Man With No Name Except When It’s Blondie Or Joe Or Manco”.

When it doesn’t work it jars. In Layer Cake, “XXXX” is having a chat with Michael Gambon who keeps addressing him as “young man” and “dear boy” long past the point when any sane person would have said “I’m sorry – you must forgive me – I’m hopeless with names!”

And in Drive, “Driver” and Irene’s son Benicio are checking out a car or something while garage owner Bernie tells Irene what a great kid “Kid” is and then beckons him over by calling him Kid or Buddy or Champ or something. If I was [rolls eyes] “Driver”, I’d have told Benicio that Bernie meant him, and stayed by the car in a passive-aggressive message to Bernie to call me Dave, goddamnit.

So may I request, Hollywood, that the next time you withhold a name from your hero, at least do something fun with it. Like have all the other characters get his name wrong. Or have the character’s name as “Dave” in the credits.

 


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