Winner of the New Statesman SPERI Prize in Political Economy 2016

Tuesday, 15 June 2021

A government out of control


The commitment that the UK government gives 0.7% of its GDP as overseas aid is enshrined in law. Johnson’s government decided to cut this to 0.5%, but didn’t need to put this to parliament because the cut was supposed to be temporary. A large number of Conservative MPs were unhappy with this, and wanted to use parliament to reverse this cut. The parliament’s speaker ruled their attempt invalid, but requested the government to allow a vote on the issue. The government refused. The executive increasingly views parliament with contempt.

So much for the sovereignty of parliament. We knew this government thought little of parliamentary sovereignty when it closed it down, illegally, before the last election. The courts forced it to retract that measure, so now the government is intending to pass laws that would prevent the courts doing so again.

Of course it is open to MPs to pass a vote of no confidence in this government, just as it is possible for a majority of Tory MPs to bring down their leader. But that is never going to happen while Johnson looks like winning the next election. As a result, parliament has no effective control over what this government does.

The government, in the form of Michael Gove, has recently been found guilty of giving public money - our money - to friends in the form of a contract with no competition at all. That is breaking the law. This is corruption. He has no intention of resigning and Johnson will do nothing. In other words this government has been found to be corrupt, and no one can do anything about it.

Matt Hancock has recently been questioned by a select committee on his handling of the COVID pandemic that has killed around 130,000 people in the UK. One of the issues the committee raised was early shortages of PPE. He repeated that there has never been a national shortage of PPE. This statement could best be described as economical with the truth. He was asked about reports, from a whistleblower, that the department of health had pressured Public Health England to change its guidance on release of patients from hospitals to care homes to no longer include the need for a negative COVID test. He said he had no recollection of that - a clear non-denial denial. Mr. Hancock will remain in post.

The Education Secretary, Gavin Williamson, was quick to condemn 10 Oxford students who decided to take down a picture of the Queen from their common room. He knows what is important - it was going to be front page news in the Mail. What isn’t front page news in the Mail is that the new wave of the UK’s COVID pandemic, generated by the Delta (Indian) variant, is very strong among school children, and it is highly likely that these children are helping this variant to spread rapidly. Knowing all this, Gavin Williamson told schools they didn’t need to wear masks any more. Will Williamson resign or be sacked for helping this new wave spread rapidly? Silly question.

Then there was Priti Patel, Home Secretary, who was accused of bullying by, among others, her Permanent Secretary. Bullying is against the ministerial code, and an internal inquiry found her guilty. The Prime Minister refused to apply any sanction, and the only person to resign was the person in charge of upholding standards. The Permanent Secretary was sacked and received a large sum in settlement from the government after he took the case to an employment tribunal.

Then there was the Housing Secretary who unlawfully approved a housing scheme so that the developer could avoid paying £40 million odd to the council. Not even a rebuke from anyone in government. Corruption is particularly rife among building developers and this government. There is much more, but let me cut to the chase. Actions that would have led to pretty rapid resignation in past administrations have been ignored by this Prime Minister time and again.

It is not as if his predecessors in office have been shy of sacking ministers who transgressed in various ways, as this chart shows:

Why did Johnson keep Patel and the others? Why shouldn’t he? They are his people, and nothing bad is going to come from keeping the ministers he chose in the job. It is tempting to say that his own actions are too similar to these ministers (lying, breaking the ministerial code), but I don’t think that is the key here. The key is that this government is totally unaccountable, and does just what it likes.

It is unaccountable to parliament, because it has a large majority and Tory MPs are not prepared to bring the house down. It ignores the law when it can, and when the law does stop it doing something it then attempts to change the law so it won’t be stopped in the future. It gets away with this because it has effectively the one key check on its power - the media.

For a large part of the press, Johnson is their Prime Minister. They became propaganda outlets to persuade people to vote for Brexit, and they have remained propaganda outlets supporting the government ever since. It is tempting to say this has always been true, but the extent to which the right wing press has become the propaganda arm of the right in the Tory party has steadily increased over the last few decades. It is now fully signed up with the government’s culture war, which is why 10 students taking down a picture of the queen can become headline news. Talk of a free press in this context is laughable - these titles are now part of a Tory party run by one of their former journalists.

However the big change, begun by Thatcher and Cameron and completed by Johnson, is to tame the BBC. This is hardly surprising, when party donors are appointed to key positions and the government keeps attacking the BBC’s outputs, income and even its existence. The BBC does not push propaganda, but they do not take it on either, giving the press a largely open field for their propaganda to work. They avoid the truth if it embarrasses the government, and when its reporters do tell things straight, they are put down by the BBC’s leadership. (C4, Sky and sometimes ITV are better, but the BBC overwhelmingly dominates in terms of viewers.)

The only accountability that has any influence on this government is the electorate. But because of its natural advantage in the media, and unfortunately an opposition that seems pretty ineffective beyond PMQs, that influence on the government is partial and weak. Issues most voters will not notice, because their only sight of them is a news item towards the end of a bulletin (like the government breaking the law on contracts), can be safely ignored by the government.

Alas, because of the way the BBC fails in its reporting, even things that do have a large impact on voters, like tens of thousands of unnecessary deaths, will never be described in those terms. That lack of media accountability allows Johnson to ignore his scientists, and put personal ‘freedom’ above saving lives and the economy. This is what happens when the government becomes unaccountable. [1] It is allowed to make mistakes costing lives, and pays no price for these mistakes. 

None of this is a surprise. What I didn’t know then was that Johnson would choose ‘freedom’ over lives and the economy not once, not twice, not three times but now four times. Johnson prioritised getting a trade deal with India over protecting the UK from a new highly infectious variant. When Johnson went to stage 3 of removing the latest lockdown he knew SAGE was warning of hospital admissions on the scale of the previous wave, and he carried on regardless with little media comeback. He can only carry on ignoring scientific advice because the only institutions that could hold him to account in the eyes of most voters choose not to do so. This is why, for the first time in living memory, we have a government out of control.

[1] What has changed since Blair took us to war with Iraq? some on the left might ask. Blair went to war with parliament’s approval. Johnson takes key decisions with little or no reference to parliament. There was a huge demonstration against the war, which if this government gets its way a similar demonstration could be deemed illegal by this government.

Monday, 7 June 2021

How should we think about talk of an impending US inflationary spiral?


In 2013 I was presenting at a Bank of England conference. The UK recovery had stalled for three years. I cannot remember the details, but I was probably arguing that the economy desperately needed fiscal stimulus, not more austerity. A very well known academic and ex central banker started talking about inflation and the dangers of expectations becoming 'unhinged'. In my response I came quite close to losing my cool.

I wrote this post afterwards, which attempted to analyse why I had got so angry at that word ‘unhinged’. It is, after all, used a lot by central bankers and some economists. But its use makes no sense in today’s world. Here is a passage from that post:

“It is as if inflation expectations can be in one of two states: either low variance with mean reversion to the inflation target (or something close to it), or as highly volatile and could go anywhere. In this second imagined state, as expectations of inflation drive actual inflation, we could have ‘inflation bubbles’, which would become very costly for the central bank to prick. As we really do not want to go to that second state, we have to do everything we can to stay in the first state.

It is this view of the world that I find very difficult to believe - in fact I find it absurd.”

I still find it absurd. We cannot at the same time talk about how long term inflation expectations have become fairly anchored to the inflation targets as a result of central banks controlling interest rates to hit that target, and in the next breath talk about expectations becoming unhinged while the same central banker with the same or very similar inflation target is in place. That makes no sense, unless the aim is to permanently run the economy with a weak labour market as Kalecki suggested capitalism would.

All the evidence, direct or indirect, points to the story about fairly anchored long term inflation expectations due to inflation targets and independent central banks being correct. Most macroeconomists say they believe this story. That is why they prefer independent central banks (controlling inflation with inflation targets) setting interest rates instead of national governments controlling inflation by setting interest rates or fiscal policy. In that context, and when short term interest rates are at their lower bound, it seems bizarre in the extreme to start worrying about inflation expectations becoming unhinged.

The whole point about flexible inflation targets is that positive inflation shocks due to commodity prices increases, or temporary shortages (labour or goods), no longer kick off an inflationary spiral. If what was temporary becomes permanent, the central bank can raise rates to cure the problem. The clearest example of that was the oil price boom that started in 2004, which came nowhere near repeating the experience of the 1970s.

The whole point of the new state contingent policy regime that many macroeconomists now favour is that fiscal policy looks after recessions and interest rates stop inflationary spirals. If fiscal stimulus does not lead to inflationary pressure that requires interest rates to rise above their lower bound it is not a big enough stimulus.

The failure of the last decade in the US, UK and Eurozone has been the absence of that stimulus (and instead austerity), and unconventional monetary policy being insufficient to cope with severe recession. The failure is manifest in a largely unexplained shift down in the path of ‘trend’ output. As many of us explained before this happened, being conservative about policy risks a long term deterioration in output and prosperity. The upside risk was trivial in comparison because raising interest rates are very good at keeping inflation steady in the medium to long term.

This is the central argument about why it’s best to overshoot on fiscal stimulus rather than do exactly what you think you need to do to hit the level of output that stabilises inflation. It is the argument of asymmetric risks. If you are conservative or do exactly what you think you need to do, the risk that you get things wrong because the stimulus turns out to be insufficient (because your calculations were wrong or unexpected things happened) is much greater than the risk that you overshoot. If you overshoot you quickly get higher interest rates and a temporary blip in inflation. If you undershoot it will take you some time to realise what has happened, and you will have lost real resources for everyone in the economy forever.

As I noted here, the Eurozone and the UK seem to be intent on making the same mistake again, approaching a conservative view of the natural rate gradually from below. Only in the US do policymakers understand the mistakes they made before. After a failed coup against democracy and the opposition party in thrall to the coup maker that is hardly surprising.

Does the change in US monetary policy to a form of average inflation targeting change the logic of going bigger than you think you need to? In fact the opposite is true. It means that some excess inflation will be tolerated for a time, to make up for previous persistent undershooting of the target. That shouldn’t mean that long term inflation expectations rise above target, as long as the central bank is clear what it’s doing. It remains the case that in time interest rate rises will bring inflation down if necessary. As long as US monetary policy makers, who have high levels of credibility, make it clear that excess inflation will only be tolerated until a clearly defined state is achieved, they prevent long term inflation expectations rising.

When you add this to the argument of asymmetric risk, any fiscal stimulus needs to be targeting not just the higher inflation the Fed will tolerate, but higher than that. The Fed should have to raise interest rates in response, and if they didn’t need to you have a fiscal policy failure. (That failure is an all too likely outcome in the Eurozone and the UK.)

So those who say that Biden’s plans would raise inflation should be met with ‘I would hope so’. The same reply is appropriate if we replace ‘inflation’ with ‘interest rates’. Of course it is still possible that Biden’s plans (even after they are watered down?) are likely to raise inflation by far too much, requiring far too great an increase in interest rates, even allowing for the asymmetric risk outcomes argument. That I think is the view of, most notably, Summers and Blanchard.

I’m not going to add to the many different assessments of exactly what the first Biden stimulus will do. Instead I will point to why I think the Biden critics are wrong, which again goes back to the theory that macroeconomists teach today. The people who really need the stimulus cheques will spend a lot or all of it, but no one is arguing against supporting these people. The argument is that the cheques are also going to people who don't need them, and have saved a lot because of COVID. But being savers, these are people who will save most or all of the stimulus cheques (see Florin Bilbiie, Gauti Eggertsson and Giorgio Primiceri here). As a result, Summers’ assumption on the demand impact of the stimulus cheques seems too high. I have consistently argued that the end of pandemic will see an increase in pent-up consumption, but that is a very temporary affair.

The US is streets ahead in macroeconomic policy terms than both the Eurozone and the UK. Both the latter have not changed their monetary policy goal and still obsess about deficits. If the forecasts prove correct the US will come out of the COVID recession with no long term scarring, while across the Atlantic we will not. No doubt lots of what Krugman calls Very Serious People in the UK and EZ will find reasons for why that was inevitable and had nothing to do with an inadequate stimulus. The reality will be that the US learnt from past mistakes, but the same leaders who presided over the austerity disaster after the Global Financial Crisis haven’t fully understood what they did wrong.

Tuesday, 1 June 2021

Worried about another COVID wave? Here are some pictures of Johnson getting married again


When cases in another country start growing rapidly, you quarantine in hotels people coming from that country. If they have existing variants of concern, you do the same. You do not wait because the PM has a state visit planned hoping things will get better. Once a variant of concern enters the country, you direct all resources to isolating that variant and preventing spread. You do not persist with a failed test and trace system because it is politically embarrassing to overhaul it. You make payments to those asked to isolate automatically.

Our government made all these mistakes, and so now we are at the beginning of a new COVID wave. Yet rather than stop further relaxation of the lockdown (not doing stage 3), this government carried on regardless. It poured petrol on a fire, and crossed its fingers that it would be OK. Actually even that is too generous. It reduced lock down restrictions because the PM and the rest of the cabinet were prepared to see another wave of cases, hospitalisations and a fair number of deaths in the UK. The new variant is spreading rapidly in schools in areas where it is concentrated, so what did the government do - it told people in secondary schools they didn’t need to continue wearing masks.

All this will come as a big surprise to most people. They will not have watched the occasional interview with an expert warning that this will happen. They will certainly not have read the SAGE minutes predicting this will happen. The media seem to only do crises when they happen, rather than before they happen. Perhaps they are scared of being accused of spreading panic, but the media really should sound the warning bells when PHE, after pressure from the government, starts delaying publication of data on the spread of the Indian variant in schools. Not only does this media silence put no pressure on the government to prevent the crisis, it also creates the impression that this was an act of god that had nothing to do with the government’s actions.

We know the Indian variant spreads a lot more rapidly than anything we already have, and it has become the dominant form of COVID in the UK in mid-May. It is now the dominant form in most regions. We also have evidence that one dose of vaccine offers less protection against this variant than against other forms of COVID, but two doses does offer a similar amount of protection. Around half of the UK adult population has had two doses of vaccine, meaning the other half have one or none at all. That, according to SAGE projections available before the government went to stage 3, could cause a wave of hospitalisation similar to what happened in the New Year. [1]

The number of deaths should be less than past waves, but we are still talking about many people dying who didn’t need to die. But hospitals are only just beginning to reduce the backlog from other diseases like cancer created by previous COVID waves, and another wave of hospitalisations will reverse that process, leading to yet more deaths from non-COVID causes. Staff at hospitals are also exhausted from a year of this pandemic under a Prime Minister reluctant to lock down until the very last minute, and secretly (until Cummings) wanting to be the mayor in the Jaws film who kept the beaches open. (A long running theme from the PM: see here.)

Of course it is possible that this virus will suddenly start slowing down, and hospitalisations will be less than in the last wave. With the weather finally becoming more summer-like, more social mixing will take place outdoors, and this might limit the spread of this variant. COVID predictions can be wrong, it both directions. But for exactly that reason the Prime Minister cannot know that things will not be so bad in this new wave. He is following dates rather than the data, and yet again not following scientific advice, because he is more interested in giving people the freedom to spread the virus to others. 

A new wave is also highly likely to stop the UK economic recovery in its tracks. If the government does not lockdown when cases are rising, many people will choose to avoid pubs and restaurants. Vaccines, even with two doses, do not give you 100% protection in the middle of a growing pandemic. Plenty of those with a single dose will also avoid taking risks. The underlying myth of the anti-lockdown brigade is that without government lockdowns the economy will continue as normal. It won’t, because most people isolate themselves in a pandemic. The key difference is that voluntary lockdowns are just less effective at lowering cases than those led by the government.

There is also a fallacy in letting people make their own choices, as this government seems to want to do. You can travel to Amber list countries (if they will let you in), but you shouldn’t travel except for exceptional circumstances according to the PM. Many go anyway, partly because they mistake being allowed to for it being safe, but also because they are prepared to take the risk for themselves. It is a fallacy because if they have COVID as they return they can pass it on to others, who had no part in the choice of whether they went abroad.

The Prime Minister seems to think that as long as hospitals can (just) cope it will be OK. However a wave in cases with most people vaccinated is about the most irresponsible thing you could possibly do. It invites new variants to be created that are far better at bypassing the vaccines we have. The more cases you allow when most of the population is vaccinated the greater the chance that a variant will emerge that vaccines are far less effective against. Much of the gains of the vaccination programme could be lost, and we will have to start all over again.

Cummings’ message was that this Prime Minister is exactly the wrong person to be leading us in this pandemic, and most of the media chose to ignore his warnings. On the day the opposition leader effectively accused Johnson of causing thousands of unnecessary deaths in the second half of last year, and warned of the dangers we face today, newspapers had the Prime Minister’s ‘secret’ wedding on their front pages. Will the broadcast media start holding this government and its Prime Minister responsible for past and possible future deaths? Will voters finally realise that they are being lied to by this government all the time, and their lives and livelihoods are at risk as long as Johnson continues as Prime Minister?

[1] This risk is not unique to the UK, which is why some other countries are quarantining new arrivals from the UK. But some are not doing this, so UK travelers are likely to start waves of the Indian variant in enough other countries that its global spread is assured. Perhaps these countries will have vaccinated enough people in time, but the dangers are that others will not and we again have the perfect conditions for an even more dangerous variant to emerge. 

Friday, 28 May 2021

Cummings, a puzzle about delayed lockdowns and more parallels between Johnson and Trump


Much (unfortunately for Hancock not all) of the material Cummings talked about in his morning testimony we already knew. Like the plans for Herd Immunity (all over by September) and how various people in and outside government realised those plans were time inconsistent (were bound to be changed as hospitals were overwhelmed). As I wrote at the end of April last year, our “Prime Minister and some in his cabinet, even in the face of predictions of hundreds of thousands of deaths, was too content to do nothing, take it on the chin, and too fearful of curtailing economic freedoms to interrogate the advice they were given.” Johnson didn’t invent Herd Immunity, but he was happy to go along with it until some of his advisors persuaded him otherwise, and even then he delayed for around 10 days before imposing a lockdown.

Given what Cummings said and what we already knew, can the government really persist with lying about the initial strategy? Can the BBC really two-side this if they do? At some point the BBC should start pointing viewers to the truth. Another thing reporters must stop doing is talking about a health/economy trade off. It was good to see Cummings setting out yesterday what I and others have been saying for over a year: there is no trade-off. If you delay lockdown because of the economy, you will have a longer lockdown later with greater economic damage, and people will start locking down themselves anyway.

What was new from Cummings, and by far the most concerning part of his testimony, is that by the summer Johnson had thought he had made a mistake. According to Cummings he felt that he had been bounced into imposing a lockdown. Johnson thought he should have been like the guy from Jaws who wanted to keep the beach open, much as he had in February. Which helps explain why policy shifted in the summer to restarting the economy, with little thought for the pandemic. It was why Johnson rejected the advice from his scientists to lockdown in September. (BBC again - please stop quoting without qualification the PM saying he always followed the science. It’s such an obvious lie.)

In my last post I talked about how you had to see this government as first and foremost populists (in the Jan-Werner Müller sense), in the same ilk as Trump, Orban and others. Yet as a result of Cummings testimony I realise I had in my discussion of the government’s failures in the second half of 2020 not done that enough myself. I just couldn’t understand why Johnson kept delaying lockdowns, at the cost of many tens of thousands of lives. It was a puzzle to me, which if I had fully examined Johnson as a populist I would have understood.

One of the persistent features of Trump’s period as president was his obsession with Fox News. He preferred to get his information from Fox News than internal government briefings. In time Fox News started to understand this, and some of its journalists started directly addressing him in their shows. Why did Trump do this? Because all populists are narcissists who want to be admired by their people. Most of the time, Fox News obliged.

Narcissists don’t want to be loved, they want to be admired. Trump watched Fox obsessively to check he was still being admired. That he was a winner and not a loser. What has this got to do with Johnson and the pandemic. For me it solves the puzzle as to why Johnson didn’t follow the science in the second half of 2020.

I have in the past dismissed the influence that the anti-lockdown right wing press had on the government, as well as the anti-lockdown Tory faction of MPs for that matter. I assumed that once the government had understood the reality of how pandemics worked and the lack of any health/economy trade-off, they wouldn’t be influenced by anti-lockdown nonsense. That was true for Cummings as much as it was for the government’s scientific advice.

I had also compared, like many others, Johnson and Trump and pointed out the many similarities. They were both populists after all, interested in power for its own sake rather than as a vehicle to achieve certain policies they believed in. Nick Clegg has described Johnson as like ‘Trump with a thesaurus’. But I didn’t carry this comparison through.

If we believe Cummings, Johnson too is obsessed by the media read by ‘his people’, and in particular his own paper The Telegraph. He looks to them to check he is being admired. So when this and other right wing papers started publishing anti-lockdown nonsense, it got to him. As the Prime Minister who had locked down the economy he was no longer admired by these newspapers. This overrode any ability to understand the reasons why lockdown was necessary (and quick and hard lockdowns particularly), so he became over the summer a lockdown skeptic.

Do I believe Cummings. On this I do, because it makes perfect sense and explains why he allowed so many unnecessary deaths by ‘going for growth’ in the summer, refusing to lockdown in September, and not locking down in December. This, rather than anything that happened in March, is why Johnson wants to put off an inquiry (and will not publish the internal inquiry that has already taken place). As Cummings said, lots of people died who didn’t need to die, and Johnson is the person who let that happen by ignoring his scientific advice.

I think too many people in their commentary on Cummings feel they have to blame the messenger. On issues like the role of Sunak I would take what he says with a large pinch of salt. I don’t think Cummings is looking for any favours from Sunak but Cummings admires people who are bright and get things done. The Treasury is full of such people and Sunak probably is too. So I would discount that. But Cummings’ discussion of the pandemic itself fits the facts. So when Cummings says that Johnson regretted locking down in March I can believe him, because it helps solve a puzzle about behaviour that I have seen no other satisfactory explanation for.

Johnson became a lockdown skeptic, and many tens of thousands of people died as a result, because he was obsessed with how he appeared in the anti-lockdown press and among his anti-lockdown MPs. Like Trump, he wanted to be admired by the media of his people, and like Trump that desire was sufficient to override all the good advice he received within government. When Cummings said Johnson cannot be trusted to run this country, he is merely confirming a view some of us have had for some time. What we couldn’t predict is that this wouldn’t just cost many livelihoods, it would also cost tens of thousands of lives.

Tuesday, 25 May 2021

Johnson leads a populist government which should not be normalised


Did Trump move Republican policy to the left? Before you think too hard about that, I want to suggest it misses the point. Trump was a populist. Populism is a much abused word, but I want to use it in the way set out by Jan-Werner Müller. For him populism is a form of anti-pluralism, a government that does not accept any constraints on its power beyond the electorate (at least as long as they win elections).

I want to look at two recent discussions of the Johnson government in this light. The first is by John Rentoul, who describes this as the most left wing Conservative government since Ted Heath and possibly forever. It describes a common idea (on the left and right) that this government cannot be right wing because it has ‘opened the fiscal floodgates’. The second is by Will Davies, who puts part of the success of this government down to ‘discretion rather than rules’, and in taming the Treasury. I want to suggest that both would follow naturally from the populist nature of this government, but so far the Treasury and Chancellor have not been tamed as much as these accounts suggest.

The populism, or anti-pluralism, of this government is as clear as it could be in its latest Queen’s Speech, which sets out what the government intends to do over the next session of parliament. It contains a bill that will restrict the ability of the courts to hold the government to account. No longer will the courts be able to stop the government closing down parliament. It contains a bill to make photo-ID compulsory in elections, which is a form of gerrymandering. The voting system in Mayoral and PCCs elections will be changed to FPTP, because it favours the Conservatives. It also contains a bill that will allow the police (and therefore the Home Secretary) to ban any demonstration they do not like.

This government just does not do accountability. No minister has resigned since the cabinet was formed just after the general election, despite many scandals that would have led to resignation in the past. The institutions of government that guard against ministerial wrongdoing, like the ministerial code, are now effectively meaningless as Johnson can and has overridden them. Parliament, that was once the ultimate source of power, is no longer, as the government increasingly ignores its existence. Johnson treats any opposition as an annoyance, constantly questioning why it is opposing rather than supporting his policies.

Like all populists of the Trump, Orban type, Johnson aims through media dominance and habitual lying to create an alternative reality where the government are heroes rather than villains. There was never ever any plan by the government to achieve herd immunity, we were told (and continue to be told) in all seriousness after the government ditched its plan for herd immunity. Of course all governments spin, but gross lying like this is rare in normal governments, but it becomes the habitual first resort of populists.

Most government’s arrive with an extensive policy agenda, and spend the first few years of their administration putting that agenda into law. This government had one policy, Brexit. Brexit as implemented by this government is a classic populist (in the Müller sense) policy. Not only was the policy promoted as the will of the people, where ‘the people’ excluded the 48% who voted against it, but it was enacted in a very populist (but unpopular) way, where any potential restraints on the government’s power from the EU (restraints we would normally call intergovernmental cooperation) were eliminated as being anti-Brexit.

There is only one constraint that this government does not intend to eliminate, and that is having to be elected whenever it chooses to hold an election or after 5 years. As a result, much of what it does is designed to make that more likely. Brexit was won by getting the votes of socially conservative voters, which is why the government is obsessed by being as nasty as it can be to asylum seekers and other immigrants, and why it talks so much about an anti-WOKE agenda. (Whether ‘the people’ are as obsessed by either is an interesting question.) Because it now has many more seats in the North it has a ‘leveling up’ agenda. If you look at many of the elements of that agenda we have seen so far, it amounts to channeling money to Tory parliamentary constituencies rather than areas of deprivation.

What the government will do, at any opportunity, is to help its friends and financial backers. It saw the COVID pandemic as a means of turning a crisis into opportunity, by farming out large elements of test and trace to the private sector and PPE procurement to its friends. It will override planning laws, and therefore the objections of its often traditional Tory voters, to allow its friends in the building industry to build more houses and make more profit.

If you're tempted to think that all this is not so very different from what all governments do, let me finally note another characteristic of populists: their governments are all about those at its head, who are generally narcissistic individuals who really don’t care about anyone except themselves. Johnson fits that bill, appointing a cabinet that was not the best of all talents but just those that would follow his lead. Crucially populists produce governments that don’t care about other people very much, except when they vote for them. Only a populist could dream of dealing with COVID with a policy of herd immunity, which means the government does nothing while hundreds of thousands die, just so that they could have a stronger economy than other countries subsequently. [1]

Does the furlough scheme, and the massive spend on test and trace, indicate that all fiscal restraint has gone? Of course not. The furlough scheme is just a natural counterpart to government imposed lockdown. That is why European governments adopted similar schemes. It has avoided substantial unemployment, and the last thing this government wants is large numbers of people who vote for it to experience Universal Credit (and see their savings disappear). As for test and trace, the government saw that as a good opportunity to sustain certain companies in the private sector.

As to fiscal rules and the power of the Treasury, the Treasury and Chancellor Rushi Sunak still have a kind of fiscal rule, which is that government debt should be falling in the medium term. This is why large areas of public spending face further tightening [2] and taxes are planned to rise. The fiscal stimulus during the recovery amounts to a single measure to bring investment forward, and looks feeble compared to what Biden is doing in the US. This is because Sunak still believes in fiscal restraint, and he has sold that to Johnson as being an essential part of the Conservative brand.

The term I would use for the government’s fiscal response to the pandemic and its subsequent recovery spending is not that it is left wing for a Conservative government, but that it is ironically rather European. The UK’s approach to recovery, like that adopted in the Eurozone, remains obsessed with stabilising the level of government debt. To argue in either case that their response to the pandemic shows that the fiscal floodgates are now permanently open would simply be wrong.

In looking at how left wing a government is, I think it is at least as important to look at what the government is or isn’t trying to do about inequality as it is to look at fiscal policy. Child poverty has risen over recent years under a Conservative government and is expected to rise further under this government. The pandemic has hit poorer households badly, whereas most other households have increased their savings, further increasing poverty and inequality. This government shows no signs of doing anything about any of this, and prefers to just lie about it when challenged. As poverty gets almost no attention in the media, this is likely to continue.

Of course populists prefer discretion rather than rules, as long as it is their discretion. [3] So why does Johnson, who has little time for fiscal rules, allow Sunak and the Treasury to plan as if one was still there? Here we need to talk about another possible constraint on populists, and that is their party. If Johnson goes too far in the eyes of enough Tory MPs he could be deposed. While a vocal number of Tory MPs (vocal in part because they had the support of the Tory press) were complaining about lockdowns last year, another large part were worried that Johnson was just not up to the job of managing a pandemic. His position in 2020 was insecure, which is partly why he was happy for Sunak to plan to raise taxes in areas that most voters would never experience directly. Whether Johnson remains happy now that his position is stronger will depend on whether he believes fiscal restraint is essential in winning elections. .

Once you see Johnson as a populist, it becomes obvious that he will hate any constraints on his power, whether they come from rules or directly from the Treasury. He will spend money on his friends (whether donors to the party or donors to himself), and will spend money in any way that secures his position with the voters, as long perhaps as he can claim to be fiscally responsible. The danger of describing such spending as left wing, or as reducing the power of the Treasury, is that it normalises a populist government: a populist government that will be defined by history for its authoritarianism, lack of accountability, habitual lying, inhumanity, corruption and anti-pluralism.

[1] The herd immunity policy only ended when it became clear it would lead to NHS chaos, which would look very bad and would threaten the government’s popularity. Ever since in Johnson’s mind overwhelming the NHS, rather than deaths or illness per se, has been the constraint on doing nothing. It is why he intends to ignore the Indian variant because he is hoping a large spike in cases will not lead to an overwhelmed NHS. It is nevertheless a foolish policy in its own terms, because a large rise in cases will severely limit the recovery.

[2] I can find only one area of public spending that will see an improvement in the funding they need over the next few years: education. NHS spending grows rapidly but that needs to happen to maintain the same level of service, and some of that increase may be eaten up by recovery from the pandemic. If any of the other areas of public spending are to improve over the next few years, either the cuts to other areas will be greater or the government’s spending plans will have to be revised.

[3] The Davies article is more interesting than this sentence might suggest. He is absolutely right that the most fiscally responsible government under Blair/Brown is believed otherwise only because of subsequent unchallenged (by Labour) Tory spin. However I think the ‘second government’ that operated under Brown, where the Treasury had more control over the details of departmental spending than it ever had before, was unique to the Granita accord. Neither Osborne or Hammond had the same degree of interest in what other departments did, although legacies of the brown era might have remained. (A major criticism of Osborne is that his cuts were largely arbitrary, with little interest in their economic consequences.) Fiscal rules, on the other hand, always make sense if they are good rules. Problems arise when they are not, and are used as cover to implement other objectives.

Monday, 17 May 2021

Is the spread of the Indian variant in the UK an inevitable result of living with COVID?


Acting fast

The Indian variant (B.1.671.2) of COVID-19 is now fairly well entrenched in parts of the UK and is increasing rapidly. Cases in the North West are rising, sharply among the young. For detailed analysis of what we know about this variant and how quickly it is spreading (once we exclude carriers who came from India) it is best to follow Christina Pagel (@chrischirp) e.g. here. She and other experts think that it is of sufficient concern that we should have stopped today's relaxation of the lockdown.

If there is one thing we should have learnt in dealing with COVID (and some of those dealing with pandemics already knew, like Mike Ryan here) is to act fast. If you wait until you know you are right you will lose, because the virus would have already won. Moving fast is an example of the precautionary principle: you plan for the worst outcome even if you are not sure you need to act at all.

At the moment we have rather poor information on how effective our vaccines will be in stopping this new variant. But if we wait for clear evidence on that question, it will be too late because by then the variant will have spread too much, such that only a lockdown can stop the spread. This is because the Indian variant is more infectious than the other variants of concern.

Living with COVID

Some of those who read this post about how well the elimination strategy had done compared to the approach in most of the West before vaccines rollout asked how does it apply to a world that is vaccinated? In a post in February I talked about two paths to dealing with COVID once vaccines have been rolled out: elimination and living with COVID. While elimination is clearly superior when we have no vaccine, the issue is more balanced after everyone is vaccinated.

I didn’t get the arguments quite right in the February post, so let me give an amended version. The big negative of the elimination strategy is that it makes it much harder for international travel from or to other countries that follow a living with COVID strategy. That is not a problem if enough other countries follow an elimination strategy, but no Western countries seem likely to do that now that vaccines are here. Turning to the living with COVID strategy that we in the UK are now following, the big negative is the country becomes susceptible to COVID variants.

A question I didn’t address in February, but should have, is whether a compromise between the two strategies would be both possible and desirable. The compromise abandons quarantine for all travellers, but is much stricter in when it does impose quarantine. It does not wait for weeks until it is sure a new variant is a serious concern before putting visitors in hotel quarantine (in the UK the red list). If the UK had followed this compromise solution involving a precautionary approach to variants, the Indian variant would be much less of a threat than it is now. The extent of UK incidence of the Indian variant isn't a consequence of living with COVID, its a consequence of ignoring the precautionary principle in pandemics.

Not controlling our borders

The Indian variant was first identified in October. Cases in India started rising rapidly in March, and the Indian authorities expressed concern about the variant on 24th March. Yet it wasn’t until 23rd April that India was put on the red list.

This delay was particularly odd given that both Pakistan and Bangladesh were put on the red list on 9th April, despite having less COVID cases per head on that date. The criteria for being put on the red list is long and vague, so it seems highly likely that there were political elements to the delay in putting India on that list. Is it really a coincidence that India was put on the red list within hours after Johnson cancelled his trip? The reason the Prime Minister gave for the delay in putting India on the red list is that the Indian variant had not yet been identified as a variant of concern. However there is plenty of the South African variant in India as well as Bangladesh, and Pakistan has not identified that variant. 

It is also unclear why there were days between that announcement (April 19th) and the implementation of that decision (April 23rd). The quarantine system needs to have inbuilt spare capacity to handle passengers who started travelling before the country was put on the red list. At the very least the travellers between those two dates could have been tested at the airport, before they used public transport. We know that the red list decision without implementation led to a surge in travel from India.

Why do you need to stop these variants coming into the country sooner than later? Because when numbers are small, the test, trace and isolate (TTI) infrastructure will have more time to deal with them. That assumes, of course, that you have a TTI system that is efficient. That means a system based around those that are trained to do this job (in contrast to this government’s system based on private sector firms with no local knowledge), and incentives to isolate properly (unlike the current UK system).

There are three choices for a country where everyone is vaccinated. If a country does not choose elimination for understandable reasons, then they can quarantine visitors in hotels when they are sure that is necessary (as the UK is doing) or they can quarantine visitors in hotels when that might be necessary. The first is making sure you are right before imposing restrictions, and the second is acting fast. If you do the first you will at some point get it wrong and the virus will beat you.

The UK government is waiting to see

At his press conference last Friday the Prime Minister declined to stop the relaxation of lockdown due today. [1] It was absolutely clear at that conference that this was a government waiting to make sure it was doing the right thing, rather than a government taking precautionary action. [2] Indeed the Prime Minister talked about only acting if it looked like the NHS was going to be overwhelmed. Such a high bar for action together with a government that waits until it is sure it needs to act is a recipe for disaster during a pandemic, as it was throughout 2020.

SAGE in their latest analysis says “If this variant were to have a 40-50% transmission advantage nationally compared to B.1.1.7, sensitivity analyses in the modelling of the roadmap in England (SAGE 88) indicate that it is likely that progressing with step 3 alone (with no other local, regional, or national changes to measures) would lead to a substantial resurgence of hospitalisations (similar to, or larger than, previous peaks).” It describes that extra transmissibility as a “realistic possibility”. I would be very surprised if SAGE would have done nothing but wait and see if they had been in charge. Once again the UK is not following the science.

Perhaps the Indian variant will turn out to be quite weak against vaccination, and as more people are vaccinated it will die out. I really hope that happens. But the Indian variant will not be the last overseas variant to enter the UK. In putting countries on the red list, if we continue to wait until we are sure they should go on that list we will be open to these variants spreading in the UK. If this variant doesn’t get us, another might.

In addition, a further danger of ‘living with COVID’ is that you produce your own variant which is capable of bypassing the vaccines defences. COVID cases in the UK are still high: according to the testing they have settled down to just over 2,000 a day, although the ONS survey suggests a modest decline. For that reason, it is not clear whether R is above or below 1. It would be much wiser to not relax the lockdown further and try and bring that number down, because the lower the number of cases the lower the chance of producing a home grown variant.

In short, if a country chooses to ‘live with COVID’ because it has vaccinated most people, it has to adopt a precautionary approach. This means putting countries on the red list if there is a small chance of a new dangerous variant, ensuring you have a TTI system that works, getting case numbers as low as you can and keeping them there. Only by doing that can you avoid constant scares about new overseas or home grown variants. If you wait until you know you are right to act you will lose.

The unfortunate truth is that we have a government incapable of applying a precautionary approach. If you have any doubt about this, please read “Failures of State” by two Sunday Times journalists. Johnson has caused tens of thousands of unnecessary deaths by failing to act on scientific advice not once, not twice but three times. It is unfortunately true that most of the UK deaths in this pandemic could have been avoided. [3]

After my last post on what Labour needs to do, I got some comments along the lines that Johnson’s lying is priced in, and exposing his and his government’s lies will achieve little. This government’s inactions have directly killed tens of thousands of its citizens. The biggest lie of all is that the government did everything they could and followed the science in this pandemic. I refuse to believe that if voters understood the truth of what this government actually did during this pandemic, and is continuing to do, it would still look set to win the next election. This government’s popularity relies on suppressing the truth.

[1] I thought he might continue to relax the lockdown in most places but have a stricter regime in areas where the Indian variant is concentrated. The lessons from the emergence of the British variant last year show that this doesn’t work. First, many people just don’t know what rules apply to them. Second, people move around whatever the rules say. It is like getting in the fire brigade to fight a fire in one building and covering the neighbouring buildings with petrol. But he didn’t even do that. Instead he just suggested people acted cautiously in travelling to the Bolton area. He is advising caution for individuals but ignoring caution in government.

[2] The same applies to removing masks in schools.

[3] Johnson continues to lie to the public, talking about it’s ‘very tough’ quarantine regime for travellers not from red list countries. Calling a scheme where a virus is easily transmitted to other members of a household very tough is a sick joke. Why does he think the Indian variant has so easily spread to UK residents if his quarantine regime is very tough?!

Monday, 10 May 2021

Some lessons in how to combat the Tory propaganda machine


The initial results of voting last Thursday are very easily explained. First, voters had a terrible year in 2020 and government help in getting the vaccine out means 2021 is looking much better, so naturally voters will reward the government. That means the Tories in England, Labour in Wales and the SNP in Scotland (modified by tactical voting against a second independence referendum). It’s like Brown’s poll bounce as he saved the banks, and therefore large parts of the economy, from the effects of the Global Financial Crisis.

Second, on top of that, Conservatives have recreated their Brexit success, because to many who voted Brexit, the vaccine rollout doesn’t just reflect well on the current UK government, it validates their choice to vote Leave and the party that got Brexit done. While many Brexit voters were beginning to doubt the wisdom of their choice in the second half of 2020, those doubts have disappeared. As a result to a first approximation in England the polls last Thursday were a repeat of the 2019 election, with the Conservative party becoming the Brexit party.

In hindsight, do you think Britain was right or wrong to vote to leave the European Union?

As the results further south came in, the picture was reversed. The Tories lost Oxfordshire and Cambridgeshire, lost the Cotswold's Chipping Norton to Labour, lost Tumbridge Wells and elsewhere, and Labour lost many contests in Bristol to the Greens. 

The odd thing about these elections was Starmer’s reaction to them. As he hasn’t given left wing social conservatives something left wing to vote for, how did he expect anything different from 2019 in red wall seats? Sacking Rayner is, to quote Stephen Bush, just “mystifyingly stupid, self-discrediting and self-destructive”. Johnson is a populist and to his target voters he promises whatever they want to hear. Starmer needs to start demonstrating that those promises are empty and he can do better, and not keep making the story about Labour’s internal wars. .

In terms of political deception, this idea that the UK’s vaccine rollout vindicates Brexit is the best kind of myth because it’s based on a half-truth. It is true that the UK’s vaccine rollout has been faster than the EU’s, and the EU had a joint vaccine procurement programme. That is easily enough for Boris Johnson, and it is enough for pretty well all Brexit voters. In terms of public perception it just doesn’t matter that what is stated as a truth is at best a conjecture (if the UK had stayed in the EU would it have joined the joint programme?). What makes this myth particularly powerful is that many Brexit voters want to believe they made the right choice, so they want to believe it is true.

Johnson is not the first Tory Prime Minister to create a powerful myth out of a half-truth. Perhaps the most successful in recent times was the Coalition government’s claim that austerity was necessary because of the previous Labour government’s profligacy. This was a myth that could be easily shown to be false by looking at just one chart, but that was too much for the media to do. They just recalled Labour being criticised over insufficient consolidation, which was a half-truth because any lack of consolidation was tiny compared to the impact of the GFC. Labour’s failure to challenge the myth ensured it became ‘common knowledge’, and it ended up forming the basis of Cameron’s 2015 election win.

That episode points to the first lesson in how to begin combatting the Tory propaganda machine: counter myths quickly and hard. Combating Tory spin and propaganda does not mean the odd fact check or statement by a minor minister - it means a senior opposition minister of better still the Labour leader doing the rounds of the broadcast media studios, because that is Labour’s only hope of communicating with most people. In addition only by doing this do you have any chance of preventing the political journalists from the broadcast media accepting the myth as truth, and this matters because the broadcast media is the only route to countering the Tory propaganda machine.

The Tory propaganda machine is formidable because it has most of the daily press on its side. The broadcast media tends to follow the press. It is one reason why people seem to have forgiven Johnson allowing the second wave to grow but credited him for the vaccine rollout. The only thing Labour has going for it is rules about balance that apply to the broadcast media. It will be hard for the broadcast media to ignore senior opposition ministers or their leader. It will also be hard for this media to accept as true something the opposition party fiercely contests.

This leads to a second lesson for Labour. Commission research on the airtime each party gets on each broadcast platform, and use it if (as I suspect) it shows Tory politicians appearing many times more often than Labour. (Comparable figures from the past are available.) Use that as a lever to get senior Labour politicians appearing on the broadcast media to counter important Tory misinformation.

The third lesson is to choose which myths Labour tries to counter wisely. As I have already noted, attacking the idea that Brexit allowed the UK’s superior vaccine rollout is hard to contest, partly because so many Brexit voters want to believe it but mainly because it might have been true. In contrast, the idea that the government’s policy of Freeports is only possible because of Brexit is easy to refute because some EU countries have freeports and parts of the UK used to have them while we were in the EU. Contest those lies that are important and easy to refute.

The advantage of this strategy is that it will begin to create the idea that Johnson is not trustworthy. Starmer’s approach to PMQs does not do that for most voters. Yes Johnson avoids his questions, but all most people see are the soundbites that may appear on TV. In that context Johnson’s avoidance of the question is not obvious but he gets to rattle off various uncontested and often false claims. When one of these claims is false Labour has to contest them, otherwise many voters who see the claim unchallenged on TV and in the papers will unsurprisingly assume it is true.

That is about correcting misinformation. But Labour also needs to counteract Tory spin. This government is very good at spin, partly because they are happy to depart from facts, and if you take this spin at face value you would believe it is championing a Green revolution (it is not), leveling up economic activity northwards (it is not) and spending large amounts of public money on public services (it is not). So the fourth lesson for Labour is to do far more to counteract this spin. If Labour is to have any chance of winning back any of the Brexit seats they lost in 2019 they have not just to make a strong economic offer before the election but also convince the voters that the government is not doing the same. The former means nothing without the latter.

For those rightly saying Labour needs to say what it stands for, challenging Tory spin will go a long way to fixing that, because a standard line of most journalists confronted with an opposition pointing out obvious government lies or spin is ‘what would you do then?’ Even if it isn’t asked Labour can say where their policy differs from the government. (What you do not do is this.)

Highlighting things that are not said is as important as attacking misinformation. For example Labour really should be making more noise about NHS privatisation. Rather than a general attack I would focus on one aspect almost exclusively: the takeover of 58 GP practices by Operose Health, a UK subsidiary of the US company Centene, and the likelihood that others will follow. This is a result of the 2012 reforms, and Labour can point out that a CEO of Operose has become a No10 advisor. Labour can hammer home that a GP services run for profit is not compatible with the ethos of the NHS. The NHS may remain free at the point of use, but GPs service run for profit do not guarantee quality of service, and almost certainly will reduce quality. [1]

Labour has had some success attacking sleaze and corruption, and there is enough material there to take us to the next election. This is important to do, not only because it will influence voters at some point, but also because corruption is so close to what this government is. I think trying to equate it to sleaze under Major (‘same old’) is a mistake, because the scale of it today is well beyond that. Instead two points need to be hammered home. First, how its scale is unprecedented. Second, why it matters to ordinary people, such as here.

I’m sure there are other areas like this where Labour just are not making enough noise. Above it all is the economy, but it will be hard to make much headway in the near future when the media will be banging on about record growth (which is just the consequence of the record recession caused by the pandemic). Over the next year Labour need to relentlessly point that out, by making comparisons to 2019. What it does after the recovery is over can wait for another post.

Why have I not talked about policies? Good policies are important, but there is no point having good policies if you are not getting them across. A populist government aims to dominate the media, which is why Labour must get better at being a counterpoint to the government's propaganda machine. A populist government will only be defeated when enough voters, with the help of the opposition, realise there is little substance behind the spin and lies.

Even if Labour did all this, I still think it has almost no chance of winning the next election without cooperation with the LibDems and Greens over which party stands in marginals. The reason is structural and simple. Labour do need to appeal to left wing social conservative voters, and that is bound to alienate many social liberals who feel Labour is failing to champion enough social liberal causes. (This is not helped by making those on the left in Labour feel unwelcome [2]). The Green party did well on Thursday, and will continue to pick up votes as a result of Labour’s strategy from those unwilling to vote tactically. Without cooperation with other opposition parties Labour’s strategy is highly likely to be self-defeating. This seems like a basic problem with Labour’s strategy that Labour have failed to address.[3]

[1] To any Tory apologist that talks about private sector efficiency gains, just compare the vaccine rollout under the NHS to the government’s test and trace infrastructure that had substantial private sector involvement, cost billions and kept failing its targets.

[2] Those on Labour’s right who think they have to replay the 1980s to win again should look at the US, which is a far more relevant parallel when fighting a populist.

[3] I know Labour’s constitution prevents this kind of cooperation, so change the constitution! I suspect the main hurdle to this is not Labour members but the Labour leadership.