Wednesday 19 August 2015

Why the Hard Left should avoid Corbyn

*Full Disclosure: I am a member of the Labour party probably somewhere on the 'soft left'; right of Corbyn but left of Kendall. My preferred leadership candidates are either Cooper or Burnham, probably Cooper*



An end to austerity, nationalisation of railways and energy, scrapping trident. Corbyn's promised policies read, at first glance, like a left-winger's wish-list. My aim in this article is to challenge if they really are.

I am not here to argue that the hard left shouldn't vote for Corbyn because he is unelectable as Prime Minister; this argument has been recently repeated by many in politics and the media, yet its ineffectiveness is demonstrated by Corbyn's continued popularity.

What I am here to do is to put myself in the shoes of the hard left and ask whether the policies Corbyn proposes will help create a country closer to the values that such a person endorses. In other words, I will raise questions about some of Corbyn's policies from the perspective of his supporters.

These questions may still leave Corbyn their favoured candidate, but by a smaller margin, raising the question of whether a now only slightly preferable set of policies is worth either (a) the possibility of a split in the Labour party or (b) the possibility that a party led by him would be less popular than one led by one of the other leadership contenders.

The rest of this article discusses some of Corbyn's major policies and why they should concern even hardline leftists. The policies not discussed are either ones which I think the hard left should be unconcerned by (eg, slower deficit reduction) or, to be honest, ones which I simply am not aware of.

Rent Controls

Rent controls face two problems; unavoidable and avoidable. The avoidable problems would not be an issue in the unlikely scenario that rent control was perfectly implemented, whilst unavoidable problems exist even under perfect implementation. The unavoidable problems are of more interest and will be discussed here.

Rent control makes complete sense if the rental sector is monopolostic or oligopolistic; that is, if all the property in a given geographical area is owned by a small number of people who can collude to charge above-market prices. In such a situation, rent control can force them to charge the price that would exist under perfect competition and no adverse effects result.

Unfortunately, this simply is not the case in the UK rental sector. Each landlord owns an average of 7.7 properties and there are around 8.3 million rental properties in the UK. This means there are roughly 1.08 million landlords in the UK; hardly the characteristic of a monopolistic or oligopolistic market structure.

The consequence is that rent is currently at, or close to, the market level, and so the imposition of any meaningful rent control will drop it below that level. At this point some of you might be saying, "So what?" Well that "what" is that, as the rental sector is a competitive market, landlords currently do not make much profit on their properties. This means that any mandated reduction in rent will reduce their ability to make repairs and upgrades to the rented sector, which is primarily used by younger and/or poorer people; precisely the group that the hard left cares most about. Also, by reducing the return on investment in the sector, rent controls will reduce investment in new rental properties. In other words, the stock of rental housing will fall. This, among other reasons, is why over 90% of economists from across the political spectrum consider rent control to be a harmful policy

Rent controls distract from the real problem that the UK faces; a shortage of housing in expensive areas such as the South East and London. The solution is to build more houses, not impose rent controls. Anyone who cares about the living standards of those in rental property should bear this in mind.

Nationalisation of Railways

It is questionable whether nationalising railways will improve their performance. The railway companies currently average a 3% profit margin, higher than that of competitive sectors such as groceries (typically 1-2%), but not by much. This means that, even if the public sector was just as efficient as the private (i.e. had the same costs), fares would not fall by much.

Further, claiming that nationalisation will improve the efficiency or performance of UK railways on the basis of comparisons with countries such as France or the Netherlands, where the railways are nationalised, is a largely pointless exercise because important differences exist. In many European countries, trains are scheduled wait for several minutes at each station, meaning they will obviously be late less regularly, irrespective of who owns them. Further, the major commuting routes are more dispersed than in the UK, where huge numbers of people commute to one city - London - leaving routes in and out far more congested.

This is not to say that a left-winger should be strongly opposed to nationalising the railways; even the real me of the soft left is not outright opposed to it. However, both of us should be aware that the benefits it will provide are likely to be relatively small, and therefore not consider this a major selling point of Corbyn. It should be noted that what I said about the railways may not hold regarding the energy sector, where profit margins seem to be much higher, though this could be justified if they are used by those companies to invest (I do not know enough about the energy sector to comment).

One final comment to make is about the practicality of railway nationalisation. It can be done at no cost to the government if the government waits for current contracts to expire. However, given that many only do so after the end of a potential Corbyn first term, Jeremy would not be able to nationalise the railways without increasing government expenditure, and therefore taxation. As you will see throughout the rest of this article, this is the case with many of his policies. Even a hard leftist should be concerned about large rises in taxation, especially when implemented unilaterally (i.e. independently of similar rises in the EU). Corbyn himself has said that he would not want to raise the top rate of income tax much above 50%. The left-wing economist Emmanuel Saez reckons the optimal marginal rate of income tax (including national insurance and student loan repayments) on top earners should be somewhere between 50-80%. Raising it above the most generous level in that range, 80%, may well be required by Corbyn's reforms, and this would, among other things, reduce the total tax take of the government and consequently their ability to pass progressive reforms.

In other words, there is a limit to how much tax a government can raise, and Corbyn's plans may breach it. We may already be close to that limit as the IFS has shown that raising the top tax rate to 50% would raise little revenue. This could mean they are unfundable.

Non-interventionism and Leaving NATO

In contrast to what Corbyn seems to think, it is easy to both be a member of an alliance and not to engage in controversial wars. Iraq and Afghanistan, even Syria and Libya, were not requirements of NATO membership. All that withdrawing from NATO would do is eradicate potential allies if Britain faces military threat, and weaken the position of vulnerable states whose support Britain requires. Removal from NATO command structures would also loosen the UK's ability to respond to quickly and effectively to humanitarian crises, as would Corbyn's general disapproval of intervention.

Some of the problems faced by the post cold war world are the result of too little, not too much, intervention - such as the genocides in Rwanda and Kosovo, where the use of military force was forbidden, leaving 'peacekeepers' incapable of preventing genocide. If you believe the UK has an obligation to help people whose human rights are violated, you will want to maintain the possibility of effective intervention as part of an organisation with a powerful and well coordinated command structure. Of course, intervention can also be negative, as was the case with the 2003 invasion of Iraq, but the current political mood is one of opposition to such militaristic ventures and will continue to be so whether or not Corbyn is elected.

QE for the People

This is a very complicated policy to explain in a few sentences. However, it bears one (it actually bears many, but one particularly relevant) difference to QE (Quantitative Easing) as it currently stands. This is that, at the moment, when the bank creates reserves (prints money is an oversimplification but better than nothing if it helps you understand) to buy bonds, it eventually intends to buy them back; the money eventually leaves the system. Under 'QE for the People', where the Bank of England would print money in order to finance investment in housing, railways, or whatever, the money would not be taken out of the system. 

There is much economic debate about 'QE for the People', but one point is clear and uncontentious. QE where money is not taken out of the system only works while inflation is low, as it is currently, because raising it won't have a destabilising effect. However, if Corbyn intends this to become a permanent feature of Central Bank policy, then the Bank will have a mandate to do this even when the rate of inflation is at or above target. Here the policy becomes problematic as it allows for inflation to rise uncontrollably and for the very institution charged with controlling it to become incapable of doing so.

Free University Education

This, alongside the National Education Service (NES) and nationalisation would raise government expenditure to levels that could require the government to compromise on other spending commitments. In an age where over a third of 18 year olds go to university, and with that number set to rise over the next few decades, it is increasingly difficult for government to pay university fees without either raising taxes, including on those who didn't go (including the poor and middle income), or cutting expenditure elsewhere.

If you feel that the current system of paying back fees is unfair, here are two far better solutions to resolving it. Firstly, if you want students to pay back their loans, increase the income level at which they start paying and/or decrease the percentage they have to pay back. This amounts to taxing only richer graduates and lowering the tax rate respectively. Secondly, as this will reduce the total that government gets in return, raise income or wealth taxes on the richest in society, thus funding all or part of tuition fees from taxation of the wealthy.

However, given what I said about there not being an unlimited amount of tax that you can raise on people, you may have to choose between free university education and nationalising energy, or free education and the NES, or free education and any number of other policies that Corbyn may have in mind but hasn't announced.

In other words, it seems unlikely that a country can afford all of Corbyn's policies, especially if you also think, like he does, that the government should invest in apprenticeships and the like.

Re-Opening the Mines

This is undoubtedly Corbyn's most ridiculous proposal. He wants to open an industry that will require an ever-increasing (as the UK continues to grow) government subsidy to operate. In return, he will provide people with dangerous, low income, low productivity jobs that are directly at odds with his much more praiseworthy, but seemingly vacuous, support for renewable energy sources. Yes, the hard left will agree that closing the mines destroyed communities in the 1980s, but that doesn't mean that opening them thirty years later is appropriate recompense for those who suffered.

The money he spends on this policy would be much better spent on re-training the unemployed to provide them with useful jobs in safe sectors where they could have opportunities for future advancement. The world's nascent green tech sector could be one such example. It is difficult to see how anyone on the hard left can get on board with this policy.

Friday 26 June 2015

The Leader Labour Needs

This September the Labour party will vote for who should become its new leader. Four contenders have presented themselves; Liz Kendall, Andy Burnham, Jeremy Corbyn and Yvette Cooper. Anyone who can should vote for Yvette, and here is why.

There are two criteria by which I judge the appropriateness of a leadership candidate; policy and long-term electability. More precisely, I look for the candidate with the best policies who can also be a realistic contender in a general election, and who can be elected without damaging the possibility of long-term success for the party.

Jeremy Corbyn fails on almost all of these fronts. Although I admire his support for policies such as the nationalisation of natural monopolies and ending austerity, I am concerned by the fact that he justifies the latter exclusively in terms of progressive social policy. Such justifications are inferior to the (both correct and persuasive to Tory voters) macroeconomic justification, which (bizarrely) Labour has failed to show follows the consensus view among economists.

More worryingly, his personal qualities show him to be aggressive (eg. towards the opposition debaters in this video) and dangerously flippant in his use of language (eg. when he described the UKIP vote as 'in part motivated by racism'). This casts doubt over his leadership credentials, an area that the 2015 election proved was significant. Miliband's perceived leadership qualities lagged behind both David Cameron and the rest of the Labour party, and is one explanation offered by Comres for why Labour won fewer votes than predicted. In other words, some people that would otherwise be willing to support Labour chose not to on the basis of leadership and, given that Corbyn, like Miliband, lacks crucial leadership qualities, he should be dismissed.

It is also concerning because, according to IPSOS MORI, the party that came closest to Labour in being trusted on immigration was UKIP, with this being a greater area of strength for UKIP than Europe. Despite the fact that I am someone who supports the free movement of people and the European project (except for currency union), the electoral reality of Labour, and not just the Tories, losing ground to UKIP needs to be addressed. I do not want a Labour candidate to support restrictions on immigration (indeed, some of those on start-up jobs should be loosened), but I also do not want one needlessly providing ammunition for UKIP by castigating 13% of UK voters. I am concerned that Corbyn's loose mouth could prove electorally disastrous, causing Gordon Brown's 'bigoted woman' moment to pale to insignificance beside it.

Liz Kendall is possibly an even more dangerous candidate for the Labour party to support. The media's description of her as the Blairite candidate paints a misleadingly progressive image of her political beliefs. Her support of Osborne's plan for a legally enforced cyclically adjusted budget surplus is both macroeconomic nonsense and dangerous for Labour's long-run electoral success. The reason for it being nonsense is that, in order to maintain debt at a low and stable proportion of GDP (probably somewhere between 20% and 60%), a growing economy can run a fiscal deficit (so long as the long-term real growth rate is higher than the long-term real interest rate, which in the UK it is). Further, in the same way as rational, utility-maximising humans should borrow when their annual income is below their lifetime expected value, and save when it is above it, the government (whose income is constantly growing because the economy grows), should borrow against the incomes of wealthier future generations in order to allow current generations to benefit from future affluence.

The reason her rejection of Labour's record is dangerous in the long-run is because it would prevent her party from successfully taking a centre-left position for an entire generation. This is because if, for whatever reason, she resigned as leader, a new leader that rejected her views would make the party look disorganised, as Labour would have performed U-turns on economic policy twice in the space of a few years. Inconsistency in the one area of policy consistently considered most important by voters, and in which you are already 18% behind the Conservatives, is not an attractive strategy. Voters are already confused about what Labour stands for, as Alan Milburn points out and Comres agree, so there is no need to confuse them further.

Her close alignment with the Tories on a number of other policies, such as cutting welfare and education and expenditure is also a strategic mistake (even if some aspects of what she is proposing, such as a commitment to more flexible labour markets, could be part of a sensible Labour platform). As Simon-Wren Lewis says, it is bizarre for Labour to compete against the Conservatives by becoming more Conservative; there is already a party that does that exceptionally well - the Conservatives.

Andy Burnham would be a good leader, though not quite as good as Yvette. I subjectively consider him to have the qualities of a leader (though not in abundance), such as approachability and eloquence, and admire the fact that he does not want to reject the successes of the previous Labour government, particularly on managing the economy and health.

I consider him inferior to Yvette for the following reasons. Firstly, he is slightly more in favour of austerity than Yvette (this is according to Yvette herself, when I asked her about him today). Secondly, he is a man. Both times when Barack Obama has run for the Presidency, he has received a higher percentage of votes from the black community than any Presidential candidate since records began. Analogously, Yvette's position as only the second ever Prime Ministerial candidate of (an admittedly much less) marginalised social group (women, in case you're wondering), will likely give the Labour party several thousand more free votes than her male counterparts would be able to muster.

And so I conclude that Yvette Cooper should become the new leader of the Labour party. Her policies, such as taking a charitable approach towards asylum seekers (though not economic migrants) are progressive, without being unelectably and incorrectly left-wing like Corbyn's. She is eloquent, experienced and female; in sum the best chance that Labour has of getting back into power by 2020.

Tuesday 28 April 2015

The Pointlessness of moral non-realism

The moral non-realist argument, which claims there is no objective or mind-independent 'good' or 'bad' is powerful, albeit in a nihilistic manner.

Typically in philosophy, whenever something is debated, philosophers agree on a series of assumptions that frame the debate. In ethics, with which this post concerns itself, a crucial assumption is that of moral realism, i.e. that some things are objectively good and some things are objectively bad. In the utilitarian framework, for example, pleasure is good whilst pain is bad.

The use of such unprovable or unverifiable assumptions leaves moral realists open to a perfectly legitimate criticism of the arbitrariness of selecting an assumption. This objection has little to no practical impact as it has never and probably will never lead to humans abandoning pursuit of the definition of goodness, and the favouring of certain moral claims over others. To those interested in philosophy, however, it seems to be yet another instance of scepticism providing a frustratingly nihilistic yet legitimate counterargument that relegates all moral statements to opinion.

The counter-argument that I will now present aims not to conclusively prove that there is an objective morality but simply that, so long as there is a non-zero probability of there being an objective morality, all human beings and philosophers should behave as though there is one. This way, moral non-realism is relegated to being an amusing and irrelevant thought experiment.

Systems of logic imply that the probability of a particular state of affairs is a decreasing function of the number of unprovable/unverifiable assumptions (that also cannot be disproved) used to attempt to prove that state of affairs. This is why Descartes can say with absolute certainty 'cogito ero Sum'; his proof that consciousness exists is based on zero assumptions.

In order to understand this, imagine a theory based on 0 unprovable or unverifiable assumptions. Using only provable assumptions, an individual can deduce a conclusion A. 'A' is therefore true with 100% probability as it follows logically from assumptions that are true with 100% probability; there is no space for probability to be reduced.

Before I explain how this related to moral realism, I will quickly clarify what types of assumption are allowed. Under the conditions I have outlined so far, it may seem like a very specific statement such as 'an elephant exists' could be proved by using only one assumption, for example 'there is such a thing as an elephant and it exists'. The reason why this is not allowed is because without, for example, an assumption regarding the nature of matter and the inductive processes that all empirical research relies on, any physical facts regarding the elephant's existence would not exist. The elephant would be non-physical and therefore not what we understand an elephant to be.

Now onto how this applies to moral realism. Let's model the moral non-realist position as one where their view of the world (which is not the same as that of the absolute skeptic i.e. they believe that human beings exist, the world exists, and that various other facts are true - they differ simply by believing that there are no 'moral facts'; there is no objective definition of 'good' or 'bad') is based on x number of unprovable assumptions. There will be x-1 unprovable assumptions relating to various facts concerning the physical world, the human mind and so on, and then one unprovable assumption that states moral facts do not exist. By contrast, the moral realist argument has the same x-1 assumptions and then one assumption that moral facts do exist (by only differing in one assumption, we are controlling for all other assumptions, thus allowing us to isolate the differences in the moral realist and non-realist positions).

It is important to note that the moral non-realist argument cannot be modelled by just using the x-1 assumptions. This is because the opposite of a statement is its negation, not its absence. In the absence of either the realist or non-realist assumptions, we would live in a universe where neither obtained, not  in one where moral non-realism obtained. For moral non-realism to 'exist', we need its assumption; without the assumption, nothing relating to morality exists.

So we now have one universe where moral realism exists and one where it does not exist. We do not know what the probabilities of these two universes are, but we do know that they are equal (they do not necessarily sum to 1 however - this is why we do not know their exact probability).

Ok, now let's bring the discussion back to the initial claim I promised I would make; to demonstrate that, regardless of whether moral realism is true or not, people and philosophers should always behave as though it is true.

This part is actually very simple. In the moral non-realist universe, no objective good or bad exists. The claim isn't that there is no social good or social bad, but that there is no good or bad of any kind. People might make decisions on the basis of things they find more fun, or things that they prefer, but this in no way correlates with what is morally superior. This means that, in such a world, imposing one set of actions, even one as [for us] absurd as killing all ginger people, would not lead to a morally worse situation. For it to do so, moral non-realists would have to assign a superior moral value to liberty, or autonomy, or the ability to have fun, or whatever. To do this would contradict the definition of moral non-realism. As such, one could not say that imposing a system of ethics upon this world 'ought' not to happen. 'Ought' statements carry no truth-value in a moral non-realist world, or at least no truth-value that corresponds to some objective, mind-independent conception of good or bad.

Now, any being alive on our everyday planet earth does not know whether the world is morally realist or non-realist; they do not know this because they cannot prove that either is true or untrue. However, as explained above, they can know what the probability of the world being morally realist versus being morally non-realist is.

So we now live in a universe where moral realism is true with probability p and moral non-realism is also true with probability p. In the universe where moral non-realism is true, the universe is no worse off imposing a system of ethics than it is not imposing one. In the moral-realist one, there is obviously a benefit or good in imposing a system of ethics.

Thus the moral non-realist argument is self-defeating. So long as there is a non-zero probability of moral realism being true, and there is no good reason to believe that human attempts to identify and enforce the objective good will be more bad than good, humans should always try to identify and enforce what is good.

Note; I am aware that there may be some possible problems with the probabilities that I assigned to moral realism and non-realism, but this does not detract from the key point which is that there is definitely a non-zero probability of moral realism being true.

Tuesday 21 April 2015

General Election 1: The SNP's Ability to Break up the Union

A lot has been said in recent weeks about the SNP breaking up the union. Nicola Sturgeon has said that if the UK leaves the EU, the important constitutional change this creates will legitimise another referendum. The Conservatives have been warning about the dangers of an SNP-Labour coalition. Labour have ruled out a coalition with the SNP (though not an informal agreement on a case-by-case basis). And even the Lib Dems have weighed in, with Nick Clegg urging Scotts to vote tactically (i.e. for the Lib Dems) to keep the SNP out of power.

In other words, the three main parties are all scared, or at least playing on the electorate's fear, that the SNP can capture enough seats to force a coalition partner to let them have another referendum, which they could plausibly win.

So the question I want to answer is, will this happen; is the union really under threat?

No, and here's why.

Firstly, Alex Salmond promised there would be no second referendum on Scottish independence for a generation. Now, you might say that because he is no longer the leader of the SNP, he carries less influence than before, or that Sturgeon can maneuver around his pledge because she was not the one who personally made it. This is unlikely to be true. Salmond will win the seat he is contesting in the Gordon constituency at the general election. Sturgeon, meanwhile, is not contesting a Westminster seat, meaning that Salmond will effectively be in charge of the SNP's Westminster delegation. When a party has only has two politicians that are known nationally, as the SNP does, it is inevitable that there will be tension between them (so Salmond will not capitulate to Sturgeon any more than Brown capitulated to Blair). Why else would Sturgeon have felt the need to say that she, and not Salmond, will lead coalition negotiations in the event of a hung parliament?

In other words, Salmond will be in charge of the Westminster delegation. He has also not ruled out (to my knowledge) becoming leader of the SNP in the future. What we could be seeing now is an SNP equivalent of when UKIP was led by Lord Pearson, but Nigel Farage was obviously still vocal in the wings, and returned to become the leader of the party.

Obviously politicians do occasionally go back on their word. However, this does not happen very often as they typically obfuscate and caveat their initial commitments to such an extent that any 'U-turn' is not an outright overturning of earlier pledges. And when they do overturn earlier pledges, they are typically not ones related to the entire purpose of the party. For example, the Conservatives may have failed to deliver on cutting immigration, but they never went back on their commitment to austerity, which they fought the 2010 election on. And fiscal policy is far less central to the Conservative party than independence is to the SNP.

Secondly, even in the event of Sturgeon being able to dominate Salmond, she will not pass an independence referendum. An independence referendum will only occur if the UK agrees to leave the EU. In January this year, a YouGov poll found that 43% of the UK public want to stay in the EU and 36% want to leave. Assuming, as is typically reasonable, that the undecided 21% are more likely to be conservative in their choice (and therefore chose the status quo), we can safely assume that the UK would not choose to leave the EU.

And this assumes that an EU referendum would even occur. Sure the Conservatives have promised one, but they will not get a majority. UKIP will not get enough seats to prop up a Conservative majority either. On top of that, many in the Tory party are against leaving the EU, including David Cameron. So if he has any excuse for dropping his commitment to an EU referendum (such as being forced into a coalition with another party, which he will be), then he will. And this all assumes that the Conservatives will be the largest party at the next general election, which is far from clear as many polls have found Labour to be leading, and they actively oppose holding an EU referendum.

To summarise; the conditions that Sturgeon has outlined for holding a referendum will not be met, and Salmond has said that another referendum will not happen 'for a generation'.

In other words, even if the SNP win lots of seats, Scotland will definitely, unequivocally, not leave the union.


Tuesday 24 March 2015

The German Problem

The Greko-German dispute over bailout terms has worsened in recent days, with the Greek Justice Minister threatening to seize German property in Athens to pay for alleged unpaid WW2 reparations.

To many in the UK, and certainly in Germany, this may sound like the posturing of a spoilt and ungrateful child. The reality is that, whilst bringing up Nazi crimes is irrelevant and an exaggeration of current Greek turmoil, Germany's demands of austerity have imposed colossal welfare costs upon the Greek people.

The conditions attached to extending Greece the EU's loan facility have largely been driven by Germany. France, the second-greatest power in the Eurozone, has taken a more liberal view of the requirements that ought to be placed on Greece, saying that Greece's primary budget surplus is open to discussion.

The requirements that Germany has placed on Greek are unprecedented. The UK's fiscal austerity, criticised as it is by economists for being too draconian, has amounted to 3.5% of GDP between 2009 and 2014, whilst the Greeks' has shrunk by 19.7% of GDP, more than five times as much! In 2010, meanwhile, Merkel called her plans to implement a mere 1.5% fiscal turnaround by 2014 an "unprecedented feat". I wonder what the Merkel of 2010 would have said about a fiscal turnaround of 19.7% of GDP...

The double-standards, however, are probably not a major concern for most Greeks, as most of them are too busy trying to earn a living. 44% of Greeks now live below the poverty line, up from 2% in 2009, and 26.9% are unemployed, more than during the Great Depression in the USA.



The German hypocrisy is even greater when you take into account the fact that Greek membership of the Eurozone has been instrumental in facilitating German economic growth since 1999. By running a trade deficit Greece, along with other countries like Spain, applied depreciating pressure to Euro. The trade surplus Germany was running would have caused the Euro to appreciate had it been in a monetary union without Greece. In other words, Germany's trading competitiveness came at the expense of Greek uncompetitiveness.

The blame for this does not necessarily lie with Angela Merkel, Wolfgang Schauble, or any other German politician. The cultural transition which now allows Germany to see itself as a victim has come at an inopportune moment for Greece, as the German public apply pressure on its political leaders. In the 20th century, Germany was far more shy and apologetic, keen to throw off its Nazi past. In the 1990s, when former Communist countries like Poland applied for NATO membership, Germany was vocal in expressing its support. This was partially the result of war guilt.

The Germany of the 21st century is a very different country. It now has both the means and the will to persuade and force change. Unfortunately for Greece, the double-standards Germany has enforced upon it has been devastating for its people. If kinder terms are not agreed, Germany will be responsible for a generation of Greek sorrow.

Wednesday 18 March 2015

Breaking: Democracy Makes Budget Less Bad than Otherwise

Today George Osbourne announced the final budget of the 2010-2015 parliamentary cycle. Let's make no mistake, the coalition government's economic plan for the country is still wrong. However, it seems to be less wrong than before. Below I have highlighted some of my thoughts about the pros and cons of this budget.

Political Opportunism

This was a slight pro. The predictions of huge pre-election giveaways turn out not to have been true. Sure, there's the promise of raising the 40p tax rate at a rate slightly higher than inflation, and the tax breaks on savings will primarily help the old and affluent who actually have savings (9m people have little or none), but there was nothing on the scale of the pensioner bonds that were given away a few months ago. I'm going out on a limb here, but it's entirely possible that this is the result of the public and media pressure applied to George Osbourne, which resulted in him promising no additional giveaways three days before the budget. The cynical view is to say that he had already given away all that he needed to. Either way, however, there was a noticeable lack of clear pre-election giveaways.

Planning for Future Giveaways

However, as I suggested may be the case in my previous blog, the trend towards planning future giveaways seems to be in full swing. The announcement that austerity will end one year early was encouraging (but it still didn't loosen fiscal policy anywhere near enough, and cuts to public spending will still be far greater than what Labour propose), though it is now timed so that public expenditure can start rising from 2019, laying the groundwork for a pre-election boom for 2020.

Helping the wealthy
No Tory budget would be complete without helping the best off. The giveaways are small and, by lowering the the amount that people can accumulate in their pensions tax-free, not all the policies help the wealthy. However, 'helping the savers' is equivalent to helping people who have savings, who tend to be middle-aged or older, and relatively affluent. As Piketty has highlighted in his recent book, this is the exact opposite of the types of measures which would lead to lower inequality (I will blog at some point about why that is important). Likewise, raising the threshold on the 40p tax rate above the rate of inflation has not happened for a few years; the Tories are clearly trying to tie in their core support before what will be an incredibly tight election.

Shafting Labour
No politically sensible budget would be complete without something to stick it to the opposition. The bank levy makes the Tories look progressive. Also, Labour previously announced that they would lower the lifetime allowance of accumulated pensions in order to pay for a tuition fees decrease. Now that the Tories are implementing this, they can ask Labour their favourite question during the campaign; "Where will the money come from".

Helping the 'Northern Powerhouse'

Some moves were made towards increasing the role of the north as a tech hub to compete with London and Cambridge, though the amount of funding offered was still fairly small. Most of the infrastructure commitments were the same as those promised before, including a reaffirming of the promise of HS3. One promising move includes money for the creation of incubators in Sheffield and Manchester, which should help to stimulate the innovation and productivity that the UK sorely needs.

Maintaining the Status Quo

The general takeaway from the budget should, however, be that not much has change. Osbourne has lifted his foot a millimeter off the austerity accelerator pedal but cuts in the next parliament will still be unprecedented at around £30bn. The changes in income tax thresholds and tax breaks on savings are fairly small in magnitude, as is the bank levy and lifetime allowance for pensions savings that can be accumulated free of charge.

In other words, Osbourne has produced a cleverly uncontroversial budget which provides him with a few points of evidence that will allow him to say "Hey, look, the Tories aren't so bad". Expect to hear the Tories droning on about how socially responsible the bank levy is. Also expect them to talk about how Labour are offering nothing new, after nicking their policy of lowering the tax free pension accumulation allowance. In short, a politically savvy budget.

Sunday 22 February 2015

The Futility of Ideology in an age of Atomism

The Obsession with Ideology

Almost every year, the Oxford University Finals exam in British Politics and Government since 1900 asks questions about the ideology of different British governments. This represents a fundamental misunderstanding of, at the very least, how modern politics has worked in the last 20-30 years, and perhaps even a misunderstanding of politics before that.

Political Scientists and journalists are obsessed with assigning governments ideological labels.

In his assessment of New Labour's time in office, Anthony Giddens argues that, though inconsistently applied, the party broadly stuck to the principles of 'third way' politics. Rubinstein argues that New Labour was in many ways similar to Old Labour, whilst Driver and Martell reaffirm the view that New Labour marked a break from Old Labour.

With Thatcherism, the approach is slightly different. In some ways, the debate is similar; focusing on whether the conservative party genuinely changed from 'old' or 'traditional' Conservatism into either a 'Thatcherite' or 'neoliberal' party. In this space Adonis, for example, argues that Thatcher did not fundamentally alter the principles of the Conservative party  and simply 'reaffirmed traditional Tory values'. The debate takes a slightly different turn when academics argue about the relevance of Thatcher's personal choices (i.e. is Thatcherism just whatever Thatcher thought was a good policy at any particular point in time - this is not a debate focused quite as much on ideology).

However, even in this approach, academics still speak about Thatcher's personal influence in the context, or against the backdrop, of 'doctrine' - something assumed to be consistent and holistic; the assumption of the relevance of ideology is still present. For example, Peter Clarke argues that the governments of 1979-1990 should best be understood in terms of a mixture of (predominantly) Thatcher's personal choices, but also some consistent neo-liberal doctrine that combined monetarism, privatisation, nationalism and Victorian values.

The Challenge of Atomism to Ideology

All of the above fundamentally misunderstands the way governments make policy in the UK. In order to 'ideology' to be a useful concept for understanding policy-making it has to meet the following condition or, as I shall call it, 'golden rule'.

  1. The policies advanced by a government have to be internally consistent almost all of the time. A few instances of inconsistency can be allowed as a result of political opportunism, human error, and so on, but if too many of these arise then there's no point in using ideology as an explanatory tool.
I believe that the golden rule has not been met for at least the past 20 years, possibly more. Way in the past, British Political parties were far more homogenous than they are now. The early years of the Labour movement saw a party committed to the representation of the working man in Parliament. They were born out of a monolithic trade union movement. Similarly, the Tory party of the early 20th century and before represents the interested of landed elites - another monolithic social force.

These structures started to break down as early as the 1910s. The Liberal party was split between those who advocated New Libaralism and those who supported the old Liberal principles of laissez faire economic policy, limited government and the rule of law. The Labour party split in the 1950s between the Gaitskellite and Bevanite faction. A similar, though more radical, split occurred in the 1980s between Kinnock's moderates and Benn's radical socialists. In the 1990s, the policy preferences of Brown and Blair were often very different. The Conservatives have also been split at various points between the 'wets' and the 'Thatcherites', the 'Eurosceptics' and the 'Europhiles', the supporters of the ERM and its opponents...

The relevance of ideology is, however, still of some use in describing the policies of the parties right up to the mid 20th century. The left of the Labour party was committed to socialism, the right to social democracy; these two ideologies interacted and competed to produce policy. Likewise, the split in the Liberal Party (I am talking of the policy split post-1906 rather than the organisational split in 1916) was a conflict of different ideologies.

However, with respect to more recent internal differences, the partition of political parties into two, three or four competing groups, is an oversimplification of the complexity of the policy-making process. 

The 'atomisation' of society since the 1980s, famously described by Putnam, is vital for understanding why even an interpretation of party on the basis of two or three warring ideologies is woefully inadequate.

Unlike in the past, people do not identify with movements; Trade Union and Party membership has declined substantially even as the population has grown.


Putnam's 'atomisation' has led to increase in individual concerns for themselves i.e. for people to care more about satisfaction of their preferences than the advancement of the collective interests of a class or group. Politically, this has manifested itself in an increase in membership of single-issue groups. People can now choose, like in a shop, from a menu of causes they care about.


Parties have to compete for the votes of a highly disparate group of individuals with increasingly diversifying preferences. 

We also forget that politicians in parties are people too. They, like the electorate, also have a growing diversification of preferences. David Cameron is a relatively 'soft' Tory, George Osbourne wants to decrease the size of the state, David Davis is Libertarian, Nicola Blackwood is socially conservative. All are Tories. 

The proliferation of pressure groups, think tanks, industry associations, lobbying departments in corporates, and so on, has increased the centrifugal nature of policy-making. Having worked in policy research and public affairs, I have seen the extent to which politicians rely on these organisations for the particulars of policy (they don't get persuaded of big principles, but they do seek out advice on how to implement big principles that they agree with already).

There is a reason why Oppenheimer says that rational choice theory has, in the 21st century, 'become the paradigmatic way of analyzing behavior'. It is because emotional or psychological adherence to ideology is well and truly dead. 

Political Science has move on to analyse policy-making in a far more decentralised way. This is certainly the case with models of US political institutions, from the Supreme Court to Congress to the President. Academics across the pond analyse decisions on an individualistic basis, where political institutions are composed of individuals with preferences constrained by other individuals with different preferences, belonging to either the same or different institutions.

The age of ideology is dead. It is time for its place in Oxford University exams to die alongside it.