Winner of the New Statesman SPERI Prize in Political Economy 2016

Monday, 25 January 2021

The two sides of austerity.


I thought I’d use the FT’s mea culpa on austerity to make a point which is easily missed in public debate. Sustained austerity of the kind inflicted on the UK from 2010 until quite recently was terrible for two types of reason. The first, that most people focus on, are the cuts to government spending (shrinking the state) that went well beyond trimming any fat and caused real hardship. The second is macroeconomic. Cutting government spending in a recession is never a good idea, and when interest rates were stuck at zero it was a disaster.

To highlight that distinction, I’m going to claim (with a few provisos) that the current Chancellor in this recession has so far not made the second, macroeconomic mistake. In that sense we have not seen a second wave of austerity. However with very limited exceptions he has continued to maintain the cuts in government spending that were made during the earlier austerity period. In that sense austerity has never gone away.

Austerity in terms of shrinking the state has not gone away

There is so much misleading analysis based on public spending aggregates around. Here are figures for the main components of current public spending over the austerity period. They are as a percentage of GDP, as they always should be for this kind of analysis but hardly ever are (Source IFS).

You can see that all these components of public spending have fallen substantially as a share of GDP over the austerity period from 2010. I have started the chart from financial year 2004/5, because spending in 2009/10 may be unusually high because of the recession. As it is difficult to read from the chart, here is the percentage of spending as a share of GDP in 2017/8 compared to 2004/5 for each component (figures for 2017/8 compared to 2009/10 in brackets): Pensioners social security 87% (82%), other social security 82% (73%), Health 111% (93%), Education 86% (74%), Defence 85% (77%), Law and Order 74% (69%). The extent of the squeeze on public spending over the austerity period is crystal clear. As the per capita numbers from this chart from a different IFS source makes clear, recent increases in public spending hardly dent this picture.

The one apparent exception to the tale of devastating cuts in public spending is health. Yet the idea that the government proposed and the media accepted that health had been protected is an illusion, because historically health spending as a share of GDP has tended to increase, as this chart shows (source).

Health spending in the 1950s was around 3% of GDP, in the 1990s just under 5%, and in 2005/6 around 6.5%. The reasons are many. As we grow wealthier we like to spend more of our income on health, a gradually ageing population, innovations in what medicine can do and so on. That implies that keeping the share constant is actually a squeeze. That is why the health service was near collapse before the COVID crisis, which forced the government to relax the squeeze to some extent. The fact that health spending needs a growing share of total national spending has profound implications for taxes that I’ll come back to later.

All these numbers square with experience on the ground. Delays in the administration of justice are getting worse and worse, and it is not just because of COVID. The squeeze on welfare has helped lead to the widespread use of foodbanks:

If you want to know why foodbank use has gone up so much, it’s a combination of a cruel and arbitrary punishment regime for claimants and a dramatic fall in the relative incomes of the poorest households, part of which is a consequence of austerity. (Chart from The Resolution Foundation.)

We now have ample evidence that the attempt to squeeze the state since 2010 has caused widespread hardship and dislocation. The belief among many on the right was that there was substantial inefficiency within the public sector and starving resources would increase productivity. It might have done that, but it has clearly gone too far in many areas. This is one half of the fundamental problem for those who want to squeeze the state in order to reduce the tax burden (as Osborne did). The other is health spending.

As I noted earlier, the share of health spending in GDP has been steadily rising. That in turn reflects greater demand for health services. With a health service that is largely free to those who use it, that means a rising level of taxation to pay for it unless you can cut elsewhere. For decades you could cut elsewhere, because the end of empire and then the peace dividend allowed large cuts in defence spending. That option seems to be no longer available, which means taxes in some form have to rise to pay for the NHS. The Conservative party is still in denial about this. As the media and therefore parts of the public are also in denial, that forces Labour to match Tory promises not to raise certain taxes in order to win elections.

Austerity in terms of macroeconomics has largely gone away

In 2010 the idea that it was a good to cut government spending in the middle of a deep recession where interest rates were stuck at their lower bound went against macroeconomic theory (undergraduate and state of the art) and evidence, and as a result most academic macroeconomists did not support austerity. However macroeconomic institutions like the IMF and OECD did for a time, and this, along with governments in the UK, US and Eurozone, is the consensus that the Financial Times refers to in their mea culpa.

Why governments and international organisations supported austerity is a complex question that I have spent many posts analysing. Without doubt, a desire to reduce the size of the state was part of the story. The important point, which is not completely clear from the FT piece, is that most academic opinion thought it wrong at the time, so in that sense the facts have not changed. All the evidence in 2010 said austerity would reduce output, and it did.

The short term cost of austerity was a delayed and weaker recovery. That is standard macro, as I was at pains to point out when the FT declared in 2013 that Osborne had won the battle over austerity. My own estimates put the cost of that delayed and weaker recovery at around £10,000 in lost resources per average household. That is bad enough, particularly for those who became unemployed, but it may not be the worst macroeconomic outcome of austerity.

The productivity puzzle, about why UK productivity growth was so weak after 2010 compared to other countries, has many potential explanations, but I suspect one important part of the puzzle is austerity. Again I’ve tried to explain why in economic terms before, but we can make the point very simply as follows. The experience of firms since WWII has been that almost without exception governments support recoveries from recessions. They cannot stop recessions happening, but they can ensure through monetary and fiscal policy that they are short lived. 2010 broke that understanding, which is bound to have had a significant negative impact on firm’s willingness to invest and innovate. In other words austerity may have permanent effect in reducing GDP and real wages.

As the FT notes, both the OECD and IMF now recognise that in a recession where interest rates are at their lower bound you need fiscal stimulus. Does this government? No, in the sense that it has never recognised its mistake in 2010. Yes, in the sense of how it has dealt with the pandemic. If you applied George Osborne’s logic to the pandemic, the priority should be to cut spending to reduce the deficit caused by fear of the virus and lockdowns. There would be no support for those furloughed. Policy would be like the US but with austerity rather than fiscal stimulus.

That Sunak has done the right thing, and not followed Osborne’s example, suggests he also recognises the folly of austerity. Indeed, his ill-fated (because far too early) Eat Out to Help Out scheme suggests he’s also prepared to actively help any recovery. Osborne’s measures in contrast hindered any recovery.

However we have to add a large number of caveats. The first is that his support has not been complete, and he has done little to cover gaps. His refusal to increase sick pay is both mystifying and dangerous. His successful attempt to delay a national lockdown to deal with a second wave was criminal, and that has had a terrible impact on the economy as well as health. He was too late to recognise that the second wave would need a furlough scheme like the first, and many lost their jobs as a result. I describe these as caveats because they could be motivated by attempting to gain favour among the ‘reckless right’ group of Tory MPs who don’t believe in lockdowns. However they could also be motivated by a worry about the public finances, which qualifies the extent to which he has thrown off austerity at a macroeconomic level.

To add to this is a forward looking caveat, clearly set out in Dodds recent impressive Mais lecture. There is a danger that Sunak will want to cut taxes just before the next election (if it is 2024), and to achieve that he may embark on fiscal consolidation before an economic recovery from the pandemic is complete. His public sector wage freeze may be part of that. This suggests that Sunak, like Osborne, is tempted to make macro policy fit the political cycle rather than fit the needs of the economy. We don’t know if he will do this, but that is something to look out for.

What is clear is that Sunak believes that he should follow a responsible fiscal policy once the recovery is over. The key here is not the word responsible, but how he defines it and how that is achieved. The danger is that he may, through his own wishes or those of his backbenchers, focus on spending cuts as well as tax increases. That is why the Universal Credit issue is a problem for him, but it is also a much more serious problem for those in poverty. Reversing the recent increase in Universal Credit, even if there is a one-off payment or some short delay, would substantially increase the unacceptable and growing level of child poverty in the UK, as the Resolution Foundation has shown (figure 20).

That Sunak is contemplating a cut rather than an increase in Universal Credit illustrates that, even if he has forsaked austerity in terms of macroeconomic strategy, he is unlikely to forsake austerity in terms of lower public spending and a reduced welfare state.

Monday, 18 January 2021

Who caused our current COVID crisis: an example of public deception by the media and government


Let me start with what the public thinks:

It is a straightforward question and the majority of the public give a clear answer. Unfortunately that majority are wrong. There is no doubt that the rise in COVID cases over the last month is a result of government failure. Let me set out what the government’s mistakes were.

  1. Having ended a lockdown that still left the level of cases pretty high, the government reverted to their Tier system. Much the same tier system that had led to the November lockdown in the first place. London was put in Tier 2.

  2. The warning signs were immediate. Cases started rising rapidly from the beginning of December. We now know why, but you didn’t need to know why (or be any kind of expert) to know that the existing tier system was not working.

  3. Johnson continued with the idea of giving everyone a 5 day Christmas break from anti-COVID restrictions. Even if case numbers had been low it was a reckless policy, but with cases high and rising as they were in early December it was positively criminal.

  4. It took until the middle of December for the government to move London into tier 3. Cases were now at levels that exceeded the peak that prompted the November lockdown. Schools that attempted to close early were ordered not to by the education minister.

  5. On the 19th December, Johnson partially abandoned his Christmas plans, with a new tier 4 covering London and some other areas starting on 21st December. With the new virus variant likely to be present in all parts of the country, it made sense to implement a national lockdown, but instead he clung to the tier system.

  6. On 22nd December SAGE recommended a national lockdown with schools closed, but like all of their suggestions since the beginning of the second wave their recommendations were ignored by the government. 

  7. On Monday 4th January schools went back,and Johnson repeated his mantra that schools were safe, even though hospitals were already overstretched. Yet later that same day Johnson finally announced a national lockdown that would start the following day, with schools closed except for the children of essential workers. It had taken two weeks for Johnson to finally follow SAGE advice. That two weeks delay may mean around 10,000 additional deaths. He knew from his mistakes in March what just a week of delay in imposing a lockdown could do in terms of new infections and deaths, yet this time he waited for two weeks. He even allowed kids a day to mix in school, perhaps infecting each other and later their parents, before he finally followed the science. He uses the new variant as a false excuse (the numbers tell the story), but as a member of SAGE said, “you make your own luck”.

In short, the government had stopped following the science since the start of the second wave, and as a result the second wave had been allowed to grow to equal the first wave in size. Variants emerge when cases are high. If the government had followed its own scientific advice (as Keir Starmer had urged) they could have avoided a major second wave that put the health service into crisis. 

When a government ignores its own expert advice, bad outcomes that result are their responsibility alone. The rise in COVID cases over the last month is the result of pointless government inaction, and not the fault of the public.

So why do only a proportion of Labour voters, and virtually no Tory voters, understand this? The obvious point that is always worth repeating is that most voters don’t follow events and their causes that much, and so gain information largely from the newspaper they read or the main news bulletins they watch. They probably will not know what SAGE advised. 

With that level of engagement, most people did not see or read much criticism of the government’s actions, and that they do see can be dismissed as normal political banter. However they do see plenty of discussion of whether the public are obeying the rules, and may observe individual instances of rule breaking themselves. The government and its press encourages this line of discussion. As a result, the majority of the public recall that discussion, rather than the role of the government, when asked which was more important.

How important is this? In a recent Observer poll 45% disapproved of Johnson’s handling of the pandemic, compared to 35% who approved. If you ask more specific questions about how the pandemic was handled, 72% said that the government had not acted fast enough, while 25% wanted a government that tried its hardest not to enter lockdowns (which is a pretty good summary of the government’s recent behaviour). So the government has hardly won many votes as a result of its failures in dealing with the pandemic.

However that is setting the bar too low. The reluctance of this government to deal in particular with the second wave is no ordinary government failure. It has cost tens of thousands of lives. Although most other European countries have not handled the pandemic well, that does not mean the politicians that allowed that should get a free pass! In addition, the UK has allowed more to die (COVID deaths per million) than most other western European countries: higher than France, Germany, Netherlands, and the Scandinavian countries. Current deaths per million are higher than any other western European country.

The scale of the disaster that the government has encouraged is incredible. We are near 100,000 excess deaths, which is at WWII levels. As I pointed out two weeks ago, unlike austerity this government enabled disaster has hit most the demographic where the majority voted Conservative in the last election. The last six months should have been a Suez moment for Johnson, showing his strategy for keeping his citizens safe to be the disaster it is.

Now just imagine if a Labour government had been in power over the last year and made the mistakes this government has made. (This is an unrealistic thought experiment, because any Labour government would have followed the science.) The newspaper front pages (including those that support the centre or left) would be all about the mistakes the government had made. We wouldn’t see many stories about people not obeying the rules, but instead stories about ‘loony left’ MPs who believe lockdowns don’t work. The issue of the day would be when the Prime Minister resigns, and there would be calls for an immediate election. Given the scale of the disaster we have seen, all that criticism would be entirely justified.

This thought experiment reveals the extent to which the media are hiding the enormity of the government’s failure. This deception is what happens when the right controls most of the press and has tamed the biggest broadcaster through intimidation and key appointments. With perhaps an end to the pandemic in sight, but when deaths are still high, it is time for Starmer and the entire opposition to this government to start being explicit about the harm the government has done.

They need to talk about how the government is responsible for tens of thousands of unnecessary deaths. The government had a duty to care for the elderly and vulnerable and they have failed in the worst way possible. As Ian Dunt writes, "This is, without hyperbole, the most severe and unforgivable example of government failure we have seen in our lifetime."

The opposition needs to make it clear that the ‘saving the economy’ excuse is short sighted and deadly, for both lives and the economy. The opposition needs to highlight the many Tory MPs, the reckless right, that have been telling Johnson to do even less than he has done.  While there was a case to tread carefully at first, now is the time to take the gloves off so that voters understand who was to blame at the next general election.

Monday, 11 January 2021

Trump tries to incite a putsch, and his UK cheerleaders reveal their own contempt for democracy

It appears as if the Facebook ban on referencing this blog has been lifted. Many thanks to all those who complained to Facebook. I doubt I will ever know who persuaded them to ban it. 

Would be democratic dictators, elected heads of state who want to ensure they can never lose an election, should know the first rule to staying in power. It is to control a sufficient amount of the media. Convincing your faithful that the mainstream media is fake news is not enough. What that sufficient amount is will depend on many factors, including the voting system for President. It may be, for example, that given the advantages a united right wing socially conservative party has in the UK, control of a majority of newspapers and a compliant BBC may be sufficient to ensure Johnson is PM for as long as he likes.

Trump also has the advantage of a biased system (the electoral college), but he did not have enough control of the media to win the 2020 election, or provide sufficient credence to his pretense that he really won. Fox News, his once biggest media supporter, called the election for Biden. But he came close, with nearly 48% of the vote and by small numbers in the key electoral college states. A large part of that 48% actually believe he won. We were not far away from a second Trump term.

When would be democratic dictators lose elections, they have a choice. They can either accept defeat, or attempt to overthrow democracy. Donald Trump, having exhausted every legal means to stay in power (and some illegal ones), took the ultimate step last week and organised a putsch against Congress as it was affirming his successor. What seemed fairly harmless outside the Capitol was anything but inside. The objective of at least some of those inside was to capture politicians who had incurred Trump’s ire. Five people are dead, including one of the policemen who were bravely defending politicians as they were evacuated.

Trump attempted to capture through his appointments the institutions that ensure the survival of democracy, much as Johnson is now doing in the UK. For Trump it turned out not to be enough. His appointments to the supreme court were not willing to overthrow a fair election. The Republican party has resisted and distorted democracy as far as it could since the Nixon years, and it supported Trump while he was in power, but now it needs to decide what to do. The horrific attack on Congress has solidified a three way divide among Republican politicians.

The first group are those Republicans who were prepared to vote against, and even campaign against, Trump in 2020. The best known of that group are the Lincoln project, who produced this ad for the election but only showed it after the attack on Congress. The second are those in the Senate and Congress who were happy to support Trump when he was in power, but don’t want to take part in the charade of pretending he really won in 2020. The size of that group was increased by the attempted putsch, either because they want to preserve democracy or they don't like failure. The third are those who are prepared to go along with throwing doubt on the election, and include 7 senators and 138 representatives (over 65% of the caucus). Incredibly these politicians continued this charade even after the putsch had failed.

Is this the end for Trump? There is nothing preventing Trump trying to run for President in 2024. His greatest asset is the large section of the population that he successfully radicalised while President, aided by the Republican party, Murdoch’s Fox news and others. He could be charged with a crime and still stand. It would be much more difficult to run for President if he was in jail, but my guess is that he can pay enough lawyers to keep him out for the necessary period. If he is charged with serious crimes he has an added incentive to stand. The big question is will those Republicans who don’t want to give him another term be able to stop him?

It will be very hard to do so. If he wishes, he can continue to energise his base and keep his flame alive. With many challengers against him in the primaries, none may be able to capture enough votes to stop him. You might think that encouraging a putsch against Congress and waiting far too long to call it off, half-heartedly, might do him some damage among Republican voters as well as politicians in Congress. But a poll taken shortly after the attack had 45% of Republicans supporting the attack. It will be interesting to see if that number diminishes as a result of the Twitter and Facebook bans.

If it does not, Trump's base could continue to be a formidable force in Republican politics, much like the Tea Party before it. That could easily be a winning majority in the primaries for 2024, but whether you are pro or anti Trump may dominate congressional elections before then. That is why so many in the House of Representatives kept up the charade that he won in 2020, despite knowing that it would fail. What will decide how much Trump influences Republican politics over the next four years will largely depend on what Trump wants to do, which in turn may depend on whether he thinks he can win and the state of his finances. Some Republicans may regret not impeaching him when they had the chance, and they may come to regret not impeaching him now. 

Even if he retreats from the political scene, the Republican party that supported him is still there, and the Murdoch outlet that created an alternative reality for his supporters is still there, just as they are still over here. While it is right that Democrats go after those involved in whatever way with the putsch right now, in the longer term they need to reintroduce a modern version of the Fairness Doctrine to curb Murdoch's power to distort reality.  

Those who had supported Trump in the UK were quick to try and rewrite the past. Some tried to portray the attack on the Capitol as just a scuffle that had nothing to do with Trump. Rather more suggested that the attack on the Capitol was proof that Johnson was not a UK version of Trump. Others in the UK said that those who tried to reverse the Brexit result were no better than those attacking Congress. Yet others acknowledged the threat from the far right and tried to equate it with some imagined threat from the left. That these arguments were even made tells you that the UK is in the same situation as the US was in during 2016, delusional about what was going down or pretending to be.

Let me deal with the ‘no better than Remainers’ argument first. This one betrayed the most about those who were making it. The idea that a campaign for a second referendum could be equated with an attempted putsch suggests a mindset that shows no respect for democracy. It shows people who have become so blinded by populist rhetoric that they cannot see the difference between having a second democratic referendum and storming the seat of government.

What about trying to ‘both sides’ this with an imagined threat from the left? It is equally ridiculous, but unfortunately may be more widely believed. No Conservative MP has been murdered by some far left nutter, and no plot to kill another Conservative MP by a member of the far left has been thwarted. No Labour Prime Minister has suspended parliament. Corbyn could not suspend parliament even if he wanted to. The myth of a threat from the left was deliberately stoked by our populist government and their friends, and it belongs in the same category of myth as Trump winning the 2020 election.

It was Trump himself who called Johnson ‘Britain’s Trump’. The Biden White House is said to regard Johnson as a physical & emotional clone of Donald Trump. Johnson's fascination with Trump, and the over the top praise for Trump that came from both Johnson and other ministers, went well beyond the normal tone adopted by UK heads of State towards the POTUS. Of course the two men are very different in many ways, but they are both right wing populists. They invoke the ‘will of the people’ when they mean half the country, at best. They are both inveterate liars. Johnson, like Trump, is totally lacking in empathy for the less well off in society.

To say, as some have done, that Johnson is at heart a liberal or libertarian whereas Trump is an authoritarian deliberately misunderstands Johnson. Was he being liberal or authoritarian when he sacked anyone competent in his cabinet and replaced them with spineless lackeys? Was he being liberal or authoritarian when he tried to break international law, or ordered water canons as Mayor of London? Is he being liberal or authoritarian as he tries to overcome any obstacles to the power of the executive? Neither are liberal on trade or immigration when it suits them not to be. Was Johnson being liberal when he appointed Pritti Patel? When Johnson dismissed the danger of using emotive language like "surrender bill" by saying the best way to stop death threats and honour Jo Cox was to support Brexit, you could imagine the same words being spoken by Trump. (HT @dasvee).  

Both failed to deal effectively with the pandemic, using the immediate damage any control measures would do to the economy as justification. As a result both let tens of thousands of the people they are elected to protect die unnecessarily. Johnson, like Trump, has no respect for a pluralistic democracy and wants to destroy all obstacles in his way. Johnson suspended parliament illegally and now wants to stop the judges stopping him doing it again. He may not have encouraged a crowd to attack parliament, he just closed it down instead.

Trump is half the story about what has happened to the United States over the last four years. The other half is a Republican party that has been happy to cheer Trump on, supported by a right wing propaganda machine financed by lots of billionaire money that is only interested in retaining Republican power. We now have our own version of that same party and that same machine, and their reactions to the attack on the Capitol reveal that they too put power above respecting a pluralist democracy.


But there is an important difference between the UK and US. The mainstream media in the US treated Trump's putsch as the criminal attack on democracy it was. When Johnson closed down parliament, our mainstream media treated it as just one more day in politics. 

Monday, 4 January 2021

Why the UK’s COVID crisis should be personal for so many Tory voters


There are around 16 million over 60s living in the UK, nearly a quarter of the UK population. They are the most at risk from COVID: catching the virus could be a matter of life or death. To them the government’s handling, or rather mishandling, of the pandemic should be a matter of acute personal concern. It certainly is for me. Around 60% of over 60s voted Conservative in the last election.

The NHS is currently at breaking point. Tired and demoralised after almost a year of COVID, doctors and nurses find their hospitals are full and we haven’t yet seen the impact of Christmas and New Year. Whereas Johnson acted in March to save the NHS, this winter he decided to save Christmas instead, until he was forced to backtrack at the last minute. You can blame people for not following the rules, but the government should plan for how people actually behave, not how they should behave.

There are so many errors that led us to this dreadful crisis. Let me list the main mistakes, ordered by time..

  1. March itself, while Johnson dithered about whether to follow SAGE advice. That is estimated to have cost around twenty thousand lives but it also was a factor in subsequent mistakes. By allowing cases to build up he made things much harder subsequently. The government’s policy seemed far too laid back at the time, but we now know there were crucial delays between the science changing and policy changes (see also here).

  2. Because cases were so high, it took some time to get them back down. The longer it takes, the more impatient populist politicians and small-picture Chancellors become. What should have happened in April was that the government promised to get cases right down to very low levels, so that subsequent flare-ups would be more manageable. An eradication strategy would have been better, but to be fair that only became a consensus policy among experts around late summer. What Johnson and Sunak did was relax the lockdown too soon, so we ended up with a significant caseload that was not falling in the summer. They also weakened compliance as a result of a well known episode.

  3. Another way you can deal with flare-ups in cases is to have a very good test and trace system. The government promised one, but ended up doing the opposite while spending far more than they needed. It reflected their ideological obsessions: a hatred of government and a conviction that the private sector could always do better. They couldn’t, and local government health teams were left to do the tracing the government’s centralised system failed to do, but by then it was all too late. What it should have been able to do is reduce cases over the summer, but it failed. Rather than accept their error, they kept on with their failing system wasting huge amounts of money. As Chris Giles has noted, the UK spent more and achieved less than other countries.

  4. When cases stabilised in the summer, the government should have started thinking about how it would deal with the return of schools and universities. Instead they seemed to act as if the pandemic was over! They told people to stop working from home, and Sunak even devised a scheme to get people back into restaurants which research suggests significantly increased cases.Once again they ignored what was happening in other countries.

  5. This and the return of schools and universities led to a significant increase in cases. It started to become difficult or impossible for people to get tests. SAGE recommended on 21st September a two week circuit break to try and reverse the upward trend. Sunak was against it and Johnson ignored the advice of his experts. Sunak in particular seems to be in denial, insisting that the furlough scheme will be brought to an end, causing many people to lose their job.

Cases continued to increase exponentially, because the government was doing nothing. Johnson said that people had become “complacent” and “a bit blassé” about transmission, perfectly describing himself. In reality if cases were stable in summer (R=1), you would expect cases to be rising as summer ends (people spend less time outdoors) and schools and universities return. There is nothing unpredictable about the second wave the government is allowing to develop, yet even when it becomes clear the government shows no interest in doing anything to stop it besides blaming the public.

  1. Finally in mid-October the government moves, but rather than a national lockdown it introduces different levels of local control: the tier system.  Which tier you are in seems largely based on how many cases there are, rather than the speed at which they are increasing. This system formalises what many have feared, that the government is content to see cases rise up to a certain point.

As a result, the tier system becomes a kind of escalator. The lower tiers don’t do enough to stop local cases rising (in part because people move between tiers), so they become just staging posts before the inevitable move to a higher tier. The tier system slows the pace of the national increase in cases, but national R remains above one. To state the obvious, that allows hundreds to continue to die, and makes a national lockdown all but inevitable.

  1. At the end of October, the Prime Minister bows to the inevitable and announces a national lockdown, although not as strict as in March. The lockdown begins to work, and cases start falling. Yet foolishly he states an end date for the lockdown, when any sensible lockdown should end when cases have been largely eliminated, and not by some arbitrary date.

  2. At the start of December the lockdown had brought cases down from an average of nearly 25,000 a day to something like 15,000 a day (based on specimen date data). The Prime Minister stuck to the beginning December end date for the lockdown, and the country moved back into much the same tier system that had previously failed, with London in Tier 2. As Johnson was intending to allow a Christmas break, this was an almost criminal decision.

  3. The warning signs were immediate. Cases started rising again the moment the lockdown ended, if not slightly before. We now know that this was partly due to a much more infectious strain of the virus. The more virus there is around, the more likely it is to mutate. The government, by allowing a high caseload to persist, and provided the environment that made mutation more likely.

    By 12th December the number of cases had surpassed the pre-November lockdown peak, yet the government did nothing except move London into tier 3. The government continued with its plans for a five day Christmas break, in what was obviously now a second wave to rival the first in size. It was madness, just based on the numbers alone, without any knowledge of new variants. Yet we had to wait until the 19th of December before the Prime Minister changed his Christmas plans. We were seeing a repeat of March, but this time the government’s failure to adjust its actions to the data looks like overwhelming the NHS.

  4. Tiers are pointless when you have a new highly infectious strain gradually spreading across the country. We should be in national lockdown, with the start of school postponed, because of the new virus strain, as SAGE advised on 22nd December. Yet once again the government has done too little, too late, because it ignores the science. You don’t avoid lockdowns by delaying them, you just ensure they go on for longer. All the controversy about when to get the second vaccine is only happening because the government has lost control of the virus and refuses to do what is needed to regain control.

You might say it is all very well making these criticisms in hindsight, but that is not true. I, together with many better qualified experts, made these criticisms at the time. In May in the Mirror I said that the first lockdown should aim at getting “daily number of new infections down to single figures” to save lives and the economy. In June I wrote in the Guardian that there was no health/economy trade-off beyond the very short-term. Under many of the points above you will find links to my own blogs making much the same arguments at the time mistakes were being made.

How can a government that lived through March 2020 not just repeat the same mistakes again, but make worse mistakes? There are obvious people to blame. Tory MPs with their head in the sand, following a Death Cult that says all we should do is protect the vulnerable. Much of the right wing press pushing articles advocating the same, by journalists who keep getting things wrong but carry on regardless, like all the people who said there wouldn’t be a second wave based on obvious nonsense. A broadcast media that indulges such nonsense rather than ignoring it or putting it down. But when a Prime Minister, supported by his ministers, ignores medical advice again and again, the responsibility rests entirely with him.

The evidence for other countries is now clear. As New Zealand and Australia have shown, you first drive cases down to as close to zero as you can, and then act quick and hard whenever there is a flare-up. That allows you long periods where everyone can behave normally, and the economy can return to normal. The cost of that policy is to have a quarantine system for people coming into the country, not of the ineffective kind enacted in the UK but proper quarantine as done in the countries that have successfully dealt with COVID. Devi Shridhar estimates that following this kind of policy could have saved over 80% of lives lost to COVID in the UK.

The people most at risk from this pandemic are those who predominantly voted this government in. Their lives are at risk mainly because of government failure. In contrast the Labour opposition has acted more responsibly, following the science. They should be switching their votes from Tory to Labour in their millions. But the newspapers they read are doing their best to hide the truth from them, the broadcast media with a few honorable exceptions chooses not to enlighten them, and recently it appears the government has resorted to trying to hide what is happening in hospitals. So those over 60 will continue to vote for a government that through its failures is literally killing them.

Tuesday, 29 December 2020

It is inevitable that Labour in opposition will not be a champion of social liberalism


Trump has been defeated, but only just. Trump, that most ludicrous and destructive of US presidents, still won 46.8% of the vote. More importantly, the number of votes between Biden and Trump in the Electoral College was very small. Voters still turned out for a Repubican party that backed Trump all the way. Perhaps worst of all, the aftermath of the election showed that the Republican party backed Trump’s attempts to overturn democracy. What Republicans do on a smaller scale with gerrymandering they are happy to do at a national level. The future of the US is still very uncertain when one of the two main parties does not respect democracy.

The Conservative party in the UK is only beginning down that particular route, with its plans for voter ID. Yet do they need to rig elections, having ruled for more than twice as many years as Labour since 1979? (To put it very simply, while in the UK the opposition to the right had just one election winner in Blair, in the US they had Clinton and Obama and now Biden.) More particularly, UK Conservatives by following the US strategy of right wing populism based on social conservatism seem to have a winning formula under the FPTP system.

Labour has two structural disadvantages in General Elections. First, it is one of three socially liberal UK wide parties and two socially liberal parties in Wales and Scotland. Second, social conservatives benefit significantly from the FPTP system, because social liberals are concentrated in the cities. The 2019 election was a clear demonstration of that structural disadvantage: when an election is fought on social issues Labour loses badly.

Many on the left dismiss this social conservatism, reflected particularly in dislike of immigration, as reflecting racism or xenophobia. However social conservatism is more general than that. It is in large part a reaction to the tremendous success social liberalism has enjoyed since the 1960s. I discussed this at length in this post from a year ago, and a recent tweet from @cakeylaura gives a personal illustration of what I mean. But my post had a title that was weakly justified by its contents. Is it really true that in all cases Labour should argue for social liberalism?

Socially conservative views reflect the left behind in the sense that they are out of tune with both the law and the broadcast media. Conservative MPs are far more socially liberal than their supporters, which is why we have socially liberal laws. The media is populated by younger university educated people who reflect today’s social liberal attitudes. This combination, over the last 60 years or so, has meant that social conservatives have been overwhelmed. As that earlier post pointed out aggregate attitudes have become more liberal. (Demographics help as well, of course.)

If that was the end of the story, then the resistance to socially liberal views expressed at the ballot box would be weak. However most of our newspapers reflect a different world, geared to the more socially conservative views of most of their readership. This socially conservative media both reinforces and organises social conservatives. Brexit is the exemplar of this, and is why views on Brexit were impervious to economic realities.

The left talked a lot about the left behind after the Brexit vote, but typically they meant the economically left behind. While undoubtedly there was an element of that, research suggests the left behind were more those who hadn’t kept pace with society’s social liberalism. Outside the cities, the south voted for Brexit as much as the North.

The key role played by the Brexit press in reinforcing and organising social conservatism makes it very hard for Labour to change minds. Perhaps for this reason the strategy that Labour has followed since Blair has involved appeasement rather than persuasion. The way to win elections, so this argument goes, is to make any election about economic (or more recently competence) issues, rather than social issues. The best thing Labour can therefore do is dodge alienating the Red Wall voter, and that seems to be Starmer’s strategy. On its own that is not enough, as Miliband’s defeat showed, so you need something positive to put to the electorate. Corbyn did that in 2017, but still lost. Can Starmer do better?

The alternative suggested by the title of my earlier post is for Labour to argue for social liberalism. The point I made in that post is that attitudes have changed over time, so it is possible to persuade on social liberal issues, particularly where they intersect with economics. More favourable public attitudes to immigration in the last few years is a clear example. Obviously social liberals would like to believe the main social liberal party can stand up for their beliefs, but how much of that is wishful thinking?

Again the role of the right wing press is crucial. The recent trend to more positive views on immigration will reflect in part the absence since 2016 of negative stories about immigrants in the press. The power of the right wing press to mobilise on particular issues when their government is in power should never be underestimated. Compared to articles in newspapers that are read every day, how can Labour politicians persuade on social issues when they get at best a soundbite on the main news?

I think it is important to distinguish between Labour in government and Labour in opposition. Governments get considerable exposure in the broadcast media, and so it is possible to believe that they can provide a counter-argument to the right wing press on social issues. In opposition it is much harder. While Labour should argue for social liberalism while in government, to do so in opposition would seem to be a recipe for worthy failure.

There is a third argument, in between persuasion and appeasement, which has been recently put by Timothy Garton Ash in a recent Prospect article. He writes

“What follows from this analysis is that, where possible, we need to slow down the rate of change to one that most human natures can bear, while preserving the overall liberal direction of travel…..This means, for example, limiting immigration, securing frontiers, and strengthening a sense of community, trust and reciprocity inside them.”

I have strong doubts about this. It might make sense with immigration, but is it tolerable when it comes to enforcing rights and tackling discrimination? Even with immigration, I continue to argue it was newspaper coverage of immigration rather than its scale that raised concerns about immigration.

So it seems inevitable that without a progressive alliance and with a FPTP system biased towards social conservatism, it is bound to be the case that Labour will be forced to appease the Red Wall voter. That is why the leadership will vote for the Brexit deal, and why it will dodge all the socially conservative traps that the Conservative government puts in its path. When the marginal voter is socially conservative, that is what you have to do.

While this strategy avoids an almost certain loss at the next election, it is fraught with danger. If Labour seems to be adopting Blue Labour ideas, that risks alienating its own supporters sufficiently for them to abstain or vote for other social liberal parties. Even if the leadership manages this difficult balancing act, the right wing press can still suggest that at its heart Labour is now the party of social liberals, which of course is true. Labour’s positive message on competence or the economy may fail to attract voters sufficiently to counteract voters socially conservative inclinations.

Just because the path is fraught with danger does not mean a better one exists. It may be the case that, with FPTP biased towards social conservative voters and competition for the social liberal vote, it is just highly unlikely that over the next decade or more that the Conservatives can be defeated. In the long run demographics are on Labour’s side, but that is not going to ride to the rescue anytime soon.

Tuesday, 15 December 2020

Brexit may be pointless, but it will be with us for some time


You have probably read a lot of stuff asking what, precisely, are the benefits of Brexit. I’m going to make some points that try and look at this from the point of view of those who supported Brexit, whether we get a trade deal or not. For those who voted for Brexit the main concrete preoccupation was immigration. Here is the latest version of a chart I have shown before (source):

Those voting for Brexit because they wanted low migration will have been disappointed (although I’m not sure how many realise this), because the fall in EU immigration has been matched by an increase in non-EU immigration. Net immigration is slightly higher than it was when the referendum took place. Seems to confirm that immigration really is dominated by firms demanding the best labour (wages unaffected) rather than an increase in labour supply requiring employment (wages fall).

What about sovereignty? For many voters it is about wanting more control over their lives because of things that had nothing to do with being in the EU. For others it is about memories of stories in newspapers which were largely lies. There is no gain in sovereignty for voters as a result of Brexit. Increasingly sovereignty has morphed into crude nationalism.

I have consistently argued that Brexit is much more about the political players who pushed it rather than the voters who adopted it. So what have they gained as a result of Brexit actually happening? The short answer is political power, but that makes Brexit nothing more than a pretext. Those leading Brexiters who were nostalgic for the glory days of ‘global Britain’ have got political isolation, with the UK becoming a country that the outside world increasingly sees as governed by people who don’t know what they are doing and cannot be trusted.

Those who desired a close relationship with the US rather than Europe are finding that the USA in Democrat hands is far more interested in European countries than us. Those who wanted a country that would be dynamised by a bonfire of red tape, labour and environmental regulations are discovering that instead they have landed exporting firms with many extra forms to fill in and that the EU is still able to exert considerable power on these issues even though we are no longer part of the club. Those who, following late-Thatcher, see the EU as threatening attempts to minimise the role of the state realise that they have replaced the EU with the Red Wall voters to whom they promised so much that can only be delivered by state action.

However the power of the Red Wall voter cuts both ways. Those Labour members who despair that every decision that Starmer makes seems to be governed by what Red Wall voters might think have not understood the arithmetic that now determines how elections are won. The distribution of voters by seats means that any party that commands the socially conservative voter always wins. As a result, Labour cannot afford to give the media any issue that might allow Labour to be painted as social liberals. 

This also has profound implications for Brexit. Although I have argued that it has ended up doing little for those who either voted for it or championed it, and although it will do extensive damage to the economy, it will be very difficult for any government to begin to reverse it for some time. Fairly obviously no Conservative government will admit that what they have dragged the country through for four years was just pain with no gain. But equally any Labour government will not dare to reignite the Brexit identity that saw them lose so decisively in 2019. There may by now be a majority of voters who think Brexit was a mistake, but that would probably not be enough to win an election even if the anti-Brexit parties were united, and they are not. If Scotland becomes independent the situation only gets worse.

I suspect some Remainers think the economic hit from Brexit will be so obvious that Brexit will lose its current popularity. There are two problems with that view. The first is that, beyond a few big firms in some sectors that initially downsize or close, the economic impact of Brexit is too gradual for our media to pick up. GDP is already estimated to be at least 2% lower as a result of Brexit, and how often have you heard that in the main BBC news bulletins? Remember the media talked about a strong economy in 2015 after the disaster of austerity. Memories of goods shortages and lorry parks will fad as the government and its media puts a COVID recovery down to our new found 'freedom' (HT - RB). The second problem is that, just as the Conservative party will not admit its folly for a long time, neither will the right wing media which played a major part in giving us Brexit. It may take a decade or more before the Brexit identity becomes politically unimportant, unless we adopt a more proportional voting system for General Elections. 

This is why I get annoyed by the idea that Remainers should have pushed for a soft Brexit. Remainers were not only right about Brexit, the Remain movement grew in part because the power of the hard line Brexiters became clear. Just suppose May had enacted a softer Brexit (basically staying in the Customs Union) with Labour help. That would just be unfinished business for the Brexiters. The threat from UKIP at the elections, demanding a true Brexit, would still frighten enough Tory MPs and members into choosing Johnson at PM, and we would be back to where we are. Just as UKIP and UKIP-minded Tory MPs forced Cameron to hold a referendum, so they would push the Conservative party to a hard Brexit which could not be defeated at the polls. 

Maybe I’m wrong about all this, jaded from four years of Brexit madness, and I hope I am. With that thought, have a good COVID-free Christmas.

Friday, 11 December 2020

If the UK government fails to do a deal over unfair competition it is not because of UK sovereignty. It’s because of crazy stupidity.


Why do people keep saying the impasse over a trade deal with the EU has to do with UK sovereignty? I know the government says this, but the government says a lot of things that are just untrue. They are standard lines the go down well in focus groups. For those who are not paid to follow the government line, to repeat the government's line seems odd. The current impasse seems to me to be about EU sovereignty, not UK sovereignty.

As present (see date of post) the main stumbling block in agreeing a deal is the EU’s insistence that it should be able to increase tariffs if it feels that UK goods have a competitive advantage because of future UK government subsidies or rule divergence. Avoiding these retaliatory tariffs requires keeping a level playing field for EU firms, or LPF for short. Understandably the UK does not like that idea. But the sovereignty here is the EU’s right to raise tariffs. UK sovereignty is not involved.

The mistake I think comes from the idea that to avoid this outcome, the UK would have to follow EU standards (using standards in a wide sense to include any government action that influences competition). But to say that is about UK sovereignty seems to me to be a perversion of the concept. National sovereignty is about a nation being able to make decisions itself. The EU is not stopping us making decisions, it is just saying there will be consequences. If you want to avoid those consequences, you need to avoid making those decisions.

I am sure that if the EU were likely to cut employment or environmental standards in such a way as to disadvantage UK firms, any government interested in the health of UK firms would wish to keep the option of responding in the most obvious way, which is to raise tariffs on the relevant EU goods. If the EU tried to prevent the UK doing that in some way the UK would be absolutely right to say its sovereign right to raise tariffs was threatened. So the reverse must also be true.

But this is only half the reason that not doing a deal because of the LPF is crazy. What happens if there is no deal? The EU raises tariffs on all UK goods for sure, as if we are a third country. What happens if the UK breaches the LPF after a deal? The EU raises tariffs on some goods. The first is a certainty and wide ranging, the second is a possibility and limited. If we don’t do a deal because of the possibility of limited action, we get for certain the same result for a wide range of UK firms.

In other words the outcome of no deal is far worse than the outcome of a deal where the UK accepts the LPF, just in the very limited sense of EU tariffs imposed on the UK. You might say what is new and that it is all about UK sovereignty, but as I explained above it is not. By not agreeing to a deal, the UK would literally be subjecting everyone in the UK to EU third country tariffs for the sake of not being able to limit EU sovereignty. That is crazily stupid.

If the government does end up doing a deal this is why.

But no deal would be no surprise for this government. We have a government that didn’t follow expert advice on the second wave for the sake of the economy, only to have to impose a subsequent lockdown that did more damage to the economy. I expect this government to make crazy stupid decisions. Maybe Johnson wants no deal for some reason. But in this case the craziness should be obvious, and it is being excused by too many people (not all[1]) erroneously thinking this has something to do with UK sovereignty.

[1] Examples of people who get it that I have seen include trade experts of course (like @samuelMarcLowe for some time), and @faisalislam in this excellent piece, and @stephenkb here.