Archive | May, 2015

The Conservative Victory was built on a Lie

14 May

The wealthy used to be scared of democracy. Inequality is now at such obscene levels that it ought not to be possible for anything other than a party of radical redistribution to get elected. But the wealthy have discovered a way around this. If you give people the wrong information, then you can persuade them to vote against their interests. If you can persuade someone that there’s treasure to their right and a cliff edge to their left – when in fact the converse is the case – then you may be able to get them to freely walk off a cliff.

In the 1980s Thatcher and Reagan managed to get the poor to vote against their interests by persuading them that cutting taxes at the top would make all of society wealthier: the wealth would ‘trickle down’ from rich to poor. To be fair, the radical free market agenda had never been tried, and so it was not completely obvious that ‘trickle down’ economics would fail. Thirty five years later we know that it doesn’t work. A low tax/low regulation economy has not only led to great inequality, but to lower levels of growth than those we achieved in the higher-tax/higher-regulation economy of 1945-1975. It has also produced great financial instability, culminating in the global meltdown of 2008.

Post-crash the ‘trickle down’ myth is no longer believable: it’s too optimistic in its hope that we will all be wealthier. There’s a new myth aimed at persuading not only the poor but the 99% who no longer benefit from the Thatcherite model to vote against their interests. This time it’s a blatant lie: that too much public spending caused the crash of 2008. A failure of markets is rewritten as a failure of progressive government.

I would never have guessed that it would be possible to make a huge number of people believe something that it takes only a little basic research to find out is false. But it turns out that if you say something often enough, with homely but wildly inappropriate analogies between national economies and household budgets, and you get two thirds of the newspapers to repeat it every day, you can get intelligent people to believe it, no matter how absurd it is.

Lots of people on the left are angry at how so many people could have voted for a party that has caused such terrible suffering in the country, and has promised more of the same. My fellow philosopher Rebecca Roach blogged that she has defriended all her Tory-supporting Facebook friends, on the grounds that their support for the party as morally objectionable as racism, sexism or homophobia. But I suspect a lot of decent people voted Conservative at the last minute because they were genuinely convinced that an incoming Labour government would ‘again’ destroy the economy and cause untold misery to everyone. The ‘too much spending’ myth is a total fiction, but it’s a very scary story.

The Labour party is currently regrouping and learning lessons. Many are arguing that it must, like Blair, swallow the Thatcherite economic orthodoxy if it wants to win elections. I fear it’s almost inevitable that Miliband’s modest attempts to move away from Thatcherite economics, which caused him to be so despised by the establishment, will not be attempted by another Labour leader for a generation. But Labour lost the election not because of its policies, which were hugely popular, but because of its inability to counter Tory lies.

Whilst Labour are introspecting, the Tories are moving in on Labour turf, forming a narrative that they are compassionate ‘blue collar’ Conservatives, the true party of working people. An absurd proposition, but then so too was the claim that spending caused the crash. It was in 2010 whilst Labour was distracted trying to find a leader that the Tories made most headway embedding the ‘too much spending’ fiction in the public mind. The signs are that the Tories hope to spend this Labour leadership contest trying to embed the idea that they are kind as well as competent.

Instead of rethinking its politics, Labour should be putting serious thought into how to make themselves a great deal more effective at persuading voters of the truth. Depressing as it is to admit, a more charismatic leader is probably an essential first step.

Three negative and one positive reason to vote Labour

7 May

Three negative and a positive reason to vote Labour:

1. The Tories have not specified 10 billion of proposed welfare cuts because they are going to be nasty (one proposal they’ve looked at is removing all carers’ allowances). There’s a good chance there will not be much a of welfare state left in five years’ time.

2. If Tories win the NHS will continue to be privatised. Competition and choice make no sense in health care, and only lead to a fragmented health service without a sense of public service.

3. Osborne slowed down austerity 3 years ago in order to get growth back in time for the election. If returned as chancellor he will turn it on again and it will again slow the economy. There will be riots.

4. Miliband is taking a modest first step away from the Thatcher-Reagan free market model (followed by New Labour) of the past 35 years which has produced (i) great inequality, (ii) lower growth rates than those enjoyed in the more regulated period of 1945-1975, (iii) great financial instability, culminated in the global meltdown of 2008.

It’s not a big step, but it’s fairly radical in breaking from the orthodoxy of the last 35 years. That’s why the Daily Mail/Telegraph/Murdoch hate him.

Being serious about the economy isn’t the same thing as giving treats to business

6 May

In a political context being serious about education isn’t assumed to be the same thing as giving teachers a pay rise. Being serious about health isn’t taken to be the same thing as making doctors’ lives easier. And yet in Britain and the US ‘being serious about the economy’ has become synonymous with doing things that will be in the most straightforward way nice for the business community, i.e. cutting taxes and regulation. No doubt life will be easier for big businesses in the UK if we end up with another Conservative led government after the election tomorrow. But, as any parent knows, getting what you want isn’t the same as getting what’s good for you.

There are two striking facts about the UK economy in recent times:

  1. Unemployment fell during the recession, against all expectations
  2. Productivity has stagnated even as the economy has begun to grow (Output per hour worked is 30% lower than in the US or Germany and 15% below where it would have been had we had continued on pre-crisis trend)

There is an obvious way of explaining both of these facts: a greater number of people are doing the same amount of work. There is an argument that increasing flexibility in the labour market has made our most recent recession less painful than previous recessions. But as the economy begins to grow it is essential that we tighten things up again, not only for the wellbeing of workers but also for the sake of a sustainable economic growth. GDP growth without productivity growth is impossible in the long term. There is zero chance you’ll get this from the Conservatives.

Thinking more broadly, the thirty five year Thatcher-Reagan free market experiment has not proved to be good for the economy. Cutting taxes and regulation has not lead to higher growth levels than those enjoyed in the thirty years after the war. Instead it has dramatically increased not only inequality but also economic instability, culminating in the global meltdown of 2008. It is time to rethink this failed economic model. There is zero chance you’ll get this from the Conservatives.

I will give George Osborne credit for one crucial bit of economic insight. After severe cuts in the first two years of this parliament choked off economic growth, he realised that he would have to rein in austerity in order to allow growth to return in time for the election. But if given the chance to be chancellor again, front-loaded cuts will again slow the economy. There will be riots.

I am writing this because I have spoken to a number of friends in the last few weeks who are reluctant to vote either for the ‘nasty’ Tory party and for the ‘anti-business’ Labour party. And yet already the Conservative’s ‘long term economic plan’ is beginning to unravel. There has been no rebalancing of the economy towards manufacturing, with the result that since the Bank of England has taken action to deflate the government-stoked housing bubble growth has begun to slow.

I am voting Labour this election not just because I want there to be a welfare state and an NHS in five years’ time, but because another Tory-led government would be very bad indeed for the British economy.