*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.
