Winner of the New Statesman SPERI Prize in Political Economy 2016

Sunday, 24 June 2018

When two mass movements clash

Last week saw leading lights in one mass movement, the Labour party, attack elements of another mass movement, those who want to remain in the EU. What led to this attack seemed to be posters issued by an organisation called OFOC depicting John McDonnell in the pocket of arch Brexiter Jacob Rees-Mogg. My own view is that these poster were a waste of money and hardly worth bothering with. But leading lights in the Labour movement tried to suggest to grass roots Remain supporters that they are being used as a way to attack Corbyn, as here for example.

As it happens I have quite recently suggested that some Remain campaigners risk the danger that their message is sounding very similar to the numerous anti-Corbyn attacks you can find throughout the media. For example suggesting that the only thing in the way of stopping Brexit is Corbyn (ludicrous) and that therefore he has to go (won't happen). As the only chance of a vote on the final deal is if Labour supports it such a message is positively counterproductive.

However the attacks from Bastini, Mason and others took a different tack, listing in great detail how OFOC was connected to, and possibly funded by, certain Tory and LibDem figures. This was the basis of the ‘being used’ claim. There are two big problems here. First, Remain is a cross party movement. So what exactly is the big deal with establishing all these links? So what, you might say. Second, Remainers have every reason to be critical of Labour policy, which is now clearly not to stay in the EU. 

The days of triangulation are over. We now know that the Labour leadership wants a negotiated deal with the EU that has some safeguards on nationalisation etc, and for some MPs at least some limits to free movement. As the great majority of Labour members and voters support staying in the EU, this is a difficult position for the Labour leadership to take. Labour are therefore acutely vulnerable. Indeed as there is a chance that Labour might back a people's vote but May never will, it is sensible that Remainers now concentrate any pressure on the Labour leadership. 

Picking a fight with some Remainers by suggesting they are, knowingly or not, just an anti-Corbyn front because they attack Labour on Brexit seems to both miss the point and to be terrible politics. I guess it can be what happens when two mass movements with considerable overlap in terms of membership clash. Of course any Brexit negotiated by Corbyn would be less harmful than the Brexit May might be able to negotiate, and Labour still might vote against the final deal and support a referendum on it, but until Labour do start saying No Brexit is better than May’s Brexit Labour are vulnerable and have to accept that Remainers will try and put pressure on them.

All of which is of course a minor sideshow to what will be the main story of the next few months: will May be able to negotiate a deal with the EU? Labour are completely irrelevant in answering this question. The answer will depend on whether May will finally break with the Brexiters, and how much these Brexiters react to this rejection. The deal that will be done, which involves at a minimum being in the Customs Union and the Single Market for goods, is anathema to most of the Brexiters based on their past behaviour. That deal, as I have argued before, represents the almost complete failure of the Brexiter project.

The Brexiters have two choices. They can try and make it as hard as possible for May such that she fails to get a deal, and hope that the UK leaves with No Deal as a result. Although there is much you can criticise in May as a Prime Minister, her stubbornness probably means she will not allow her deal to be sabotaged in this way, but that will probably not stop the Brexiters trying. The second choice Brexiters have is to park their displeasure at the deal until we leave in 2019, and hope that they can achieve further breaks from Europe subsequently, perhaps by getting a Brexiter as Conservative party leader. The problem with this strategy is that time is not on their side: demographics, losing the Mail, and people seeing how the UK steadily falls behind the rest of the EU are just some of the reasons why.

There is no doubt that May will do what she can to get a deal, and I suspect the Brexiters will not have the support or the will to stop her once she stops appeasing them. Which leaves Labour in a dangerous position, where they may alienate Leavers by voting against the deal, and alienate Remainers for not supporting Remain. The days when they could keep both groups happy by triangulating, and almost win a general election, are over. They cannot be crazy enough to vote for or abstain on the final deal, because then they become complicit in all the economic harm that Brexit will do, as well as alienating the majority of its own members and voters. It would mean four years of Labour  losing Leave voters to the Conservatives (as the Brexit press would spin anything other than a vote for the deal as Labour opposing Brexit), and Remain voters to the LibDems or Greens.

One thing we have learnt in the last week is that most of the handful of Tory rebels will not have the courage to vote against any deal May makes. (No deal is another matter.) So Labour will lose the parliamentary vote on the final deal. Labour are not in government, and the deal is being done now, so what they would want to do in government is irrelevant. That means that they have little to lose by backing the popular people’s vote against May’s deal as well as voting against that deal. No Brexit is better than May’s Brexit. That way, they allow the two movements to march as one.

Thursday, 21 June 2018

A new mandate for monetary policy

John McDonnell wants to raise UK investment not by cutting corporation tax but by diverting funds from parts of the financial sector away from property to new investment by UK firms. That is a laudable aim. But giving the Bank of England that task with a 3% productivity target is not the best way to do that. However that is not because I think central banks cannot influence productivity.

The kind of toy model many people work with is that monetary policy is all about stabilising the business cycle, but that stabilisation has no impact on the medium term level of  output and productivity. That is because productivity is determined by the ‘supply side’ of the UK economy. And this toy model worked particularly well for the UK economy, which from the early 1950s until before the GFC seemed to always bounce back to an underlying trend rate of growth for GDP per capita of around two and a quarter per cent.

However over none of that period did we experience a recession where nominal interest rates hit their lower bound and fiscal policy turned from stimulus to austerity before the recovery had begun. In other words in none of these periods did we have a persistent period of deficient demand with growth never exceeding its long term average. I have argued that it is wrong to see the UK productivity puzzle as a period of uniform gloom since the recession, but rather there were periods of growth which were set back by uncertainty following two additional major policy shocks: austerity and the EU referendum.

Yet if you ask UK monetary policymakers whether they think they have done a good job over the last 10 years, they will say (in public at least) that they think they have. They do not say they have failed because of shocks they couldn’t control, which would be a reasonable position, but rather they have done reasonably well at controlling the economy. In the context of the slowest recovery for at least a century, with a consequent permanent hit to output (output is over 15% below previous trends), that degree of public self-satisfaction indicates a major problem. And if you ask them how they can possibly be satisfied they will talk to you about inflation.

This is a clear reason to question the inflation target. Although in toy models controlling inflation should also mean controlling output, the real world is much more confusing. By making the bottom line inflation, we are bound to make policymakers worry too much about inflation relative to output. The clearest case for me was 2011, when the ECB and almost the MPC raised rates when the recovery from recession was only just beginning.

For that reason I have long supported a more US style twin mandate. Yet although the US had a better recovery than the UK or Eurozone, the Fed still seems to be giving inflation much more weight than employment. But you cannot ignore inflation completely. The mandate I propose for monetary policy is this:

To maximise output growth subject to maintaining inflation within 1% of its target by the end of a (rolling) 5 year period.

Another thing we have learnt from the Great Recession is that policy has to change once nominal interest rates hit their lower bound. So I would, following Ben Bernanke, add to this mandate a ‘lower bound adaptation’ where the moment interest rates hit their lower bound the inflation target would be converted into an equivalent path for the price level. That would mean that if inflation undershot its target during the recession, it would have to overshoot it before rates could be lifted above their lower bound. I would also require central banks the moment they think rates will hit the lower bound to say publicly that fiscal stimulus is now required to meet its target.

This is a dual mandate, but one that puts the emphasis on output rather than inflation. [1] Why the 1% tolerance? Because it echos current UK arrangements (when the governor has to write letters) but in practice will raise average inflation. This is a feature rather than a bug: another lesson of the last recession is that there is a strong case for a higher inflation target, but in a situation where the Chancellor sets the target it is very difficult to formally raise the target because many people think higher inflation means lower real wages.

Tasking central banks to maximise output subject to an inflation constraint is certainly better than setting a probably unattainable target for productivity growth when we have no idea what the maximum productivity growth rate is. My suggestion is a dual mandate that puts the emphasis on output and makes clear inflation is a medium term concern, making it easier for central banks to see through temporary shocks to inflation like one-off depreciations. The nature of the target recognises that policy has to adapt when nominal interest rates hit their lower bound. Comments very welcome.

[1] What is the logic of giving inflation zero weight in the short run and total importance in the long run? The answer lies in asking what the costs of inflation are. Modern analysis looks at how when prices are sticky but set at different times, inflation distorts relative prices. But inflation due to changes in flexible prices is costless. Now it is not easy to distinguish between the two types of prices in price indices, but inflationary shocks that impact on flexible prices are likely to be short lived, while those that impact on sticky prices will be more prolonged. It therefore makes sense to ignore temporary changes in inflation (those that die out within five years), but because of the vertical long run Phillips curve have a medium term inflation target.     

Tuesday, 19 June 2018

How Broadcasters should handle the Prime Minister lying

This post is about the Brexit Dividend and how broadcasters should treat it. However I want to start with an extreme case: Donald Trump. He is the right place to start because he became POTUS in good part because of how the media treated him and his opponent. He gained publicity by saying outrageous things. That increased his poll rating, so he started getting favourable coverage because his poll ratings were going up. (I explain how this works in more detail here.) Once he was the republican candidate, the media’s obsession with balance meant they spent as much time talking about the trivial issue of Clinton’s emails as Trump’s lies, whether he pays any taxes, bribes officials and assaults women.

One of the most remarkable polls during that campaign was that more people trusted Trump than Hillary Clinton. How can someone who lies all the time, almost every time he says anything, be trusted more than Hillary Clinton, who has had countless Republican inspired investigations into her affairs and has never been convicted of anything. For some time cognitive linguist and philosopher George Lakoff has pioneered the idea that (among many other things - see for example a Guardian article with Gil Duran) lies that are repeated often enough become associations in people’s minds that they find it hard to combat. So the phrase ‘crooked Hillary’ that Trump repeats all the time has a purpose beyond firing up the base. Equally when Republican’s start investigations into her affairs that alone puts an association of guilt in people’s minds. That is a key reason why before the election they trusted Trump more than Clinton.

In the United States Trump played the media big time, and continues to do so. If the media is not careful the same thing could happen here. The phrase ‘Brexit dividend’ is the equivalent of ‘crooked Hillary’. If it is repeated enough, a sufficient number of people will begin to associate Brexit with a ‘dividend’, whether that dividend is real or not. And in case someone reading this does not know by now, the Brexit dividend is a complete fiction.

To see how May’s claim that there is a Brexit dividend should be handled, read this in the FT and this from Sky News. (HT Femi) The FT article does not have ‘Brexit dividend’ in its title, and this is important. As Lakoff argues, the more often people see those two words together the more likely they are to associate them, so do not put it in a headline as many people just read headlines. (Putting it in inverted commas does nothing.) He suggests what he calls the ‘truth sandwich’ approach: begin with a truthful statement, then report the dishonest spin, and then fact check the spin. Leaving out that first stage plays into the hands of whoever promoted the spin.

Who are the heroes and villains in this example of barefaced lying (see my definition of barefaced below). For villains we have to start with Theresa May herself: if this is a sop to the Brexiters in exchange for a soft Brexit that is no mitigation. Boris Johnson of course for suggesting the idea: the court might like to take a large number of previous offences into account. The right wing Brexit press for whom lying is just part of their game.

Heroes include Paul Johnson, who toured the broadcasters on Sunday to emphatically say there was no dividend, and Conservative MP Sarah Wollaston for saying it was complete nonsense, as well as the two references already given in the FT and from Sky News. I hope there were other examples that I did not happen to notice.

What about the BBC? It did have Paul Johnson on, and Laura Kuenssberg did at least ask the existential question, although she felt unable to answer it. (There are not ‘economic’ and ‘political’ truths: arithmetic is arithmetic, lies are lies.) But there are unfortunately other occasions when the Brexit dividend was treated as if it was real and put into headlines (e.g. here), missing out the first layer of the truth sandwich. And of course the Marr interview on Sunday, where he did not even question the concept. All too often (e.g. here) any questioning of the dividend was left to the end of the article and was presented in the standard ‘he said,she said’ format.

Why does this all matter? In terms of Brexit, it is obvious. Another barefaced lie in the Brexit campaign was £350 per week for the NHS. Most Brexiters continue to believe that they will be better off after Brexit, and I suspect most are not aware why this is unlikely to be true. Talk of the Brexit dividend is designed to keep them in their ignorance.

But I think its importance goes well beyond Brexit. Why don’t politicians lie more often to enhance their cause? Some have integrity, but for the others the deterrent is being found out. But being found out depends critically on the media calling out lies when they happen. And when a large section of the media are very selective about how they treat lies depending on who said them or why they were said, or indeed are often the source of these lies, society has a serious problem.

That is the situation in the US with Fox and Trump and in the UK with the right wing press and Brexit or the Conservatives more generally. How the print media in the US and the broadcast media in the UK treats lies has therefore become critical. With lies ‘she said, he said’ type reporting is just not sufficient to defend democracy. Now often it is quite difficult to prove someone is lying, but if I could delineate a barefaced lie as one where it is very easy to establish the truth, then the Brexit dividend is a barefaced lie. OBR documents, accepted by the government as the basis for their tax and spend decisions, show quite clearly that the money has already been spent. You cannot spend the same money twice.

The right wing Brexit press have already supported this lie. As most of their readers also watch broadcasters, it is imperative that these broadcasters inflict some political damage on those who tell the lie. If they do not, the lesson certain politicians will draw is that they too can get away with barefaced lies, encouraging the kind of behaviour we see with Trump. For that reason broadcasters have to speak truth to power, otherwise the non-partisan media becomes complicit in propaganda or just a mouthpiece for politicians.

Saturday, 16 June 2018

The bankruptcy of the centre right: Brexit edition

If you want to see how the centre-right can lose out big time you just need to look at the US. Last week a Republican senator who had been critical of Trump lost to a Trump loyalist in a primary. Partisan voters prize loyalty, you may say, but this is loyalty to someone who lies all the time, and prefers the US’s traditional arch enemy Russia to its traditional allies. The US is just a few threads away from becoming yet another elected dictatorship. One of those threads is the Mueller investigation, and we will see if any Republican ‘rebels’ who want to impeach Trump are made of sterner stuff than the Brexit rebel Conservative MPs.

The story of neoliberal overreach is in part about how centre-right politicians set in place or promoted causes or institutions that would allow for the ascendency of the hard-right and then eventually their own demise. In the US this stretches from repealing the fairness doctrine, which led to hard-right talk radio and then Fox News, to increasing the role of money in elections and finally allowing Trump to win the presidency. In the UK it involved promoting austerity and an immigration target that was bound to fail, both of which directly led to Brexit.

Once these conditions have been set in place to win votes or shrink the state, there seem to be two stages in the process through which the centre-right concede power to the hard-right. The first stage is a belief that the centre-right are still in control when clearly they are not, or a blind optimism that the hard-right can be easily bought off. In the UK that is the stage where Cameron gave in to UKIP and newspaper pressure and agreed to a referendum on EU membrship. The centre-right make concessions to the hard-right to preserve party unity.

The second stage is where the hard-right have control, and play on this centre-right belief in party unity to prevent the centre-right from rocking the boat. [1] We saw this in the US under Obama when the Republicans scorned all the President’s overtures for bipartisanship. In the UK we are seeing it right now in how easily most Remain voting Conservative MPs are happy to go along with the current farce, and how easily the small band of rebels can be persuaded to cave.

The latter is due in part to our equivalent of Fox News conducting a hate campaign against these rebels. There is nothing subtle about this: try to vote against the government to prevent a national disaster and those big four right wing newspapers will headline on saying you are going against the will of the people and even imply you are a traitor. Whipping up this kind of hatred is no joke when followers of the ultra-right have already murdered one MP and tried to murder another. Yet before you start feeling some sympathy for the rebels subject to these newspapers attacks, remember these same centre-right Conservative MPs were quite happy to indulge the same papers by voting down Leveson 2.

It is also a result of the BBC increasingly shying away from anything that could be construed as critical of the government, and dumbing down political discussion. The rabid right wing press pretend that any form of dissent from the government’s chosen path of implementing Brexit is betraying the will of the people, confusing the government with the people just as authoritarian governments have always done, yet the BBC panders to the idea that these rebels are really trying to stop Brexit by constantly labelling the rebel MPs as Remainers.

As a result, Conservative MPs duly voted through substantial increases in executive power at the expense of parliament. There is now a grave danger that they will get played by the Brexiters. The Brexiters should by now know that any deal that can be done will be some form of soft Brexit, remaining in the Customs Union and Single Market for goods for sure. That is not the kind of divorce they wanted. They keep saying that the possibility of No Deal must be kept in play to increase our negotiating power, having conceded all our negotiating power by invoking Article 50 with no discussion and little plan. Perhaps the real reason is that they would not be at all unhappy that through their belligerence time for a deal disappears, and we get No Deal by default. Chris Grey calculates there are only 62 working days left to do a deal, and May is not even near the range of possible deals yet. If the Brexiters plan is to talk out a deal so we exit without one, it seems to be going very well.

For months I have been saying that No Deal would not happen because parliament would not let it happen. I still think it is unlikely, but as a result of the votes last week and the UK side in the Brexit negotiations going backwards since December I am much less confident than I was. The slide from a pluralist democracy to an elected dictatorship or a right wing plutocracy [2] is full of moments when sensible people say this could not possibly happen here.

[1] Contrast Conservatives voting on block to sweep aside the Lord’s amendments to the Labour rebellion over the EEA. Often the fact that Labour MPs have views for which they are quite prepared to vote against their leadership is seen as a political weakness, but what we are seeing right now is the Conservative desire for party unity as a colossal political weakness.
[2] Before anyone objects, of course this only applies to the UK on the single decision of Brexit, for now. But Brexit is perhaps the most important change in UK politics since the election of Margaret Thatcher, and the way this change has come about does show structural similarities to the transformation of the US Republican party that led to the election of Donald Trump.

Thursday, 14 June 2018

How UK deficit hysteria began

Laura Basu has a good book just out on UK media coverage of events from the Global Financial Crisis (GFC) until 2015, which I have reviewed for Open Democracy. Among other things, it tells the story of how what Mark Blyth calls the ‘biggest bait and switch in history’ happened in the UK. Laura argues that it can be dated almost exactly to the Budget of April 2009.

That the right wing press would start talking about the horrors of the rising UK deficit is no surprise. Osborne had decided in the previous year to oppose the Labour government’s stimulus measures because he saw in the rising deficit a way to beat Labour. The puzzle is why a broadcast media, ever conscious of balance, pushed the same line, even though it was clearly advantageous to one side politically.

The following story is mine, not Laura’s. Before the GFC, the way that the broadcast media covered budgets had become quite formulaic. Each budget would present estimates of the deficit over the next five years, and with the help of the IFS commentators broadcasters would discuss not only what tax changes had been announced, but also what might be implicit in the projections. No doubt this framework suited journalists well, because it allowed easy analogies with households. If the IFS felt that the projections were over optimistic and therefore fiscal rules might be broken, they said so and that became one of the budget talking points. The state of the economy was hardly ever discussed, because the Bank of England seemed to be doing a pretty good job of keeping things stable.

That all changed with the GFC, when monetary policy ran out of reliable levers to manage the economy. However journalists wouldn’t know that from the Bank of England, who tended to talk as if Quantitative Easing was a close substitute to interest rates as a monetary policy instrument. They would know it from academic macroeconomists, but journalists were generally too busy to make the effort to talk to them. For whatever reason, they did not fully appreciate how much the world had changed as a result of the GFC.

So when in the budget of April 2009 the Treasury showed the full extent of the deficits that the recession (and to a smaller extent the government’s stimulus measures) had created, journalists behaved exactly as they would have done before the GFC. Compared to deficits seen before the financial crisis, the numbers were indeed large. But crucially, because the Treasury estimated that the GFC had reduced the trend level of GDP, fiscal savings were necessary as a result. When these took the form of efficiency savings, the IFS were rightly skeptical.

So the coverage was all about higher taxes and lower spending, and whether they would be enough to close the record deficit. At no point in the subsequent discussion does anyone ask whether the current deficits are large enough to create a strong recovery. The growth forecasts are taken as given, and only their fiscal consequences are discussed, as if the former had nothing to do with the latter: an assumption that is only appropriate if monetary policy is in complete control of the economy. The government’s line that these deficits were necessary to ‘support’ the economy was almost entirely ignored.

Furthermore, the issue of whether the markets would purchase all this extra debt was already being raised. This is City speak, seeing a recession as involving more government debt and therefore perhaps higher rates, rather than understanding that the recession was caused by more saving and less borrowing so there would be plenty of new savings to buy the additional debt.

In other words the broadcasters had a framework for commenting on the budget which was appropriate before the financial crisis, but totally inappropriate after it. What they should have been asking is whether the Chancellor had done enough to ensure the recovery that was forecast, or whether perhaps larger deficits might be needed. In retrospect, that was exactly the right question to ask.

At the time, the reason for these deficits was clearly spelt out by the IFS as well as the Treasury. "The Treasury's assessment of the fiscal damage wrought by the current economic and financial crisis is breathtaking," said IFS director Robert Chote. "It will require two full parliaments of mounting austerity to repair." But in a telling indicator of things to come, the headline paragraph loses the bit about the GFC. As Laura’s book shows, it became so easy for a media prone to amnesia to forget about the financial crisis and blame everything on Labour profligacy, as after a time most voters began to believe. But the fundamental mistake was focusing on the deficit as a problem rather than as an instrument designed to produce a strong economy. The mistake came from the media’s inability to see how the GFC had changed the macroeconomic rules of the game.

Monday, 11 June 2018

Parliament has to start directing the Brexit negotiations

The moment it became clear that the EU would give full backing to Ireland’s wish for no hard border, and on the assumption that the UK side would not allow a sea border between Northern Ireland and the rest of the UK, it was clear what the range of possible deals between the UK and EU would be. The maximum possible change that would prevent the need for a hard border is that the UK stay in the Customs Union (CU) and Single Market (SM) for goods, while not accepting Freedom of Movement (FoM): the Jersey option. The minimum possible change is that the ‘transition’ became the final deal, with the UK staying in the CU and complete SM including FoM: the BINO (Brexit in name only) option. The final deal between the EU and UK has to lie somewhere between this minimum and maximum.

It is also where any final deal should have been anyway, given how close the referendum was. All the evidence we have suggests that those who voted Leave do not want a deal that will make them significantly poorer, which means that the final deal should be one that does the UK little economic harm. The negotiations should have focused from the start on what limits to FoM were possible at what cost in terms of (partial) membership of the SM. These negotiations should have taken place informally before Article 50 was invoked to give the UK some bargaining power.

Instead Theresa May allowed the whole process to be hijacked by the Brexiters, who treated the referendum like an election win with no manifesto. They believed they owned the referendum victory, and so acted as if they had the right to decide what Brexit means. As a result, we have wasted time talking about impossible deals, rather than negotiate within the space that a deal can be done. It is in fact worse than that. May and the Brexiters, by refusing to let go of their fantasies (about a technological solution to the border problem or about the EU caving into their wishes to be part of the club without signing up to the rules) have split the negotiations into two parts: the preferred deal and the backstop.

As has now become clear, the idea of a backstop is predicated on there being a customs border between Northern Ireland and the rest of the UK. The EU should never had allowed this device because they should have understood that such a border would be politically impossible. Instead they took far too seriously May’s red lines, which they interpreted as the UK wanting a FTA which would in turn require a border in the Irish Sea to avoid a hard land border. They made the mistake of thinking that because this was obvious to any objective observer the UK side acknowledged this fact. May encouraged this belief by appearing to agree in December to a sea border, only to be pulled up at the last minute by the DUP. In short, the EU made the mistake of thinking it was negotiating with a rational counterpart, rather than one that was at war with itself.

This is the context of the parliamentary votes on the Lord’s amendments on 12/13th June. Parliament is, in effect, trying to manage the negotiating process because those conducting the negotiations so far are getting nowhere. Some of these amendments attempt to direct the government towards negotiating in the relevant range (the CU amendment proposed by Lord Kerr), and to give them the space in which to do so (by removing the date of exit which was inserted into the bill by May as a way of appeasing her Brexiter colleagues or Paul Dacre). I suspect May would privately welcome both amendments if she has any understanding of what is going on.

The EEA amendment appears to suggest a specific point in the range of possible deals, which is why the Labour leadership and some of their MPs dislike it. I think their attitude is a mistake. The way to think about the EEA amendment, which is only expressed as a negotiating aim, is to steer the government towards the possible range of final deals, which has to include staying in the Single Market for goods. If this is not passed we will just waste more time as May fiddles around trying to inch closer to the possible range without the Brexiters throwing their toys out of the pram. [1]

There is also a purely short term political reason for the opposition supporting the EEA amendment. As I noted above, May will probably find it a relief to be directed to stay in the CU. She is already at the stage of realising that the UK staying in the CU is essential for a deal. The Brexiters will huff and puff, and Fox may even resign, but their anger will be directed at parliament more than May. The EEA amendment in contrast is likely to cause far greater discomfort in government: it is difficult to see how any Brexiter cabinet ministers will suffer this. So in terms of damage to the government, EEA inflicts much more than the CU.

May will also not welcome what is perhaps the most important amendment, proposed by Hailsham, which gives parliament the ability to direct the Prime Minister if the negotiations fail or the deal is voted down by parliament. However she has only herself to blame if this is passed, in particular for threatening no deal if parliament rejected her deal. By allowing the Brexiters to hijack the negotiations process, it is not surprising that parliament should decide that they need to start calling the shots. As Labour seem quite likely to reject a deal if she manages to achieve one, this amendment is crucial to minimise the subsequent chaos. The amendment is not quite parliament taking back control of the negotiation, but it does mean that May will have to start taking directions from parliament rather than the Brexiters. That has to be good for democracy in the UK.

[1] Nor should the EEA be seen as something that is inflexible. It already contains a brake on immigration, where countries can take "appropriate measures" if serious economic, societal or environmental difficulties of a sectoral or regional nature arise and are liable to persist. There are lots of other issues that would have to be addressed if the UK signed up to the EEA outside the EU, which means there will be the opportunity to negotiate around issues to do with immigration or state aid.

Postscript (13/06/18) The government did not lose a single vote yesterday, and it will be surprising if they do today. Rebel Conservative MPs did get some concessions which will hopefully allow them to have some influence over a situation where MPs vote against the final deal or there is no deal, and the rebel numbers were increased by the resignation of Justice minister Phillip Lee. But they completely failed to start directing how May conducts the negotiating process, which leaves the Brexiters as a constant drag on May's efforts to start negotiating something that the EU might accept.

At the end of the day, Conservative MPs have put party before country. Brexiters have hijacked the negotiation process, and Conservative MPs are content to let that continue, even though time for a deal is running out. The bill they voted on yesterday and today involves a substantial transfer of powers from parliament to the executive, and Conservative MPs do nothing about it. A rabid right wing press encourages far right nutters to murder one MP, attempt to murder another, with one Conservative rebel requiring armed guards because of threats, and the same Conservative MPs do nothing about it because that press helps their party. Just as in the United States, nowadays a pluralistic democracy is unsafe when the main right wing party is in power. Based on this record, I cannot see Conservative MPs voting against any final Brexit deal, which in turn means the chances of a second referendum - always slim - have all but vanished.  

Friday, 8 June 2018

Amendment wars and Corbyn wars

In the real world, UK business is tearing its hair out not knowing what on earth Brexit is going to look like. The EU warns its manufacturers about the dangers of sourcing parts from UK firms if the UK leaves the Customs Union, as Theresa May intends. Meanwhile the UK cabinet continues its arguments about which plan to choose out of two the EU has already rejected. And Remain twitter talked about Corbyn betrayal. While May is definitely in fantasy land, Remain twitter was also a little behind reality.

The Lord’s EEA amendment presented a great opportunity. But this opportunity died at a meeting of the PLP shortly after it was passed by the Lords. There are a significant number of Labour MPs who voted to Remain but who subsequently feel that some notice should be taken of those who voted to Leave. What this means specifically is that in the Brexit negotiations some attempt should be made to end or modify Freedom of Movement (FoM). Those MPs combined with a few Lexiters - Polly Toynbee thinks there are 60 odd - would have voted against the EEA amendment even if the leadership had backed it.

That, as they say, changed everything. There was no point in pro-EU Labour MPs putting a huge effort into changing Corbyn’s mind on the EEA amendment if it was going to fail anyway. All that Corbyn would have achieved if he had supported the amendment is to allow a distraction of Labour divisions on what hopefully will be a night of setbacks for May and Brexit. I think the Labour MPs who want to focus on immigration control are quite wrong to do so, but they cannot be ignored.

Voting down the EEA amendment alone would have sent a purely negative message to Labour’s overwhelmingly Remain supporting members and voters. So an additional amendment was put forward by Labour. Now this may have no chance of passing because ‘it comes from Corbyn’, but that tells us that the Tory rebels are also capable of putting party before country. It is vague, but it has to be so to keep the pro-immigration control Labour MPs on board. And I agree with Ian Dunt it is better to have than not.

As Ian says, it makes it more likely that Labour will vote against the final deal and that this vote is the crucial one if a referendum on the final deal is to become possible. I think some Remainers sometimes forget that the only way a referendum will happen is if parliament votes for it, and the only way that will happen is if Labour supports it because May will not. Finally the only way Corbyn will not be Labour leader when that decision comes is if he falls under a bus. So gradual pressure and persuasion is the name of the game. The more the Remain campaign resembles a get rid of Corbyn campaign, the more difficult it is for people within Labour to apply that pressure.

Unfortunately, press comment on anything to do with Labour increasingly resembles a pro or anti Corbyn debate. The fact that it was not common knowledge that there were a significant group of Labour members not attached to Corbyn who opposed EEA is quite understandable if you read the press comment at the time. Although that was the news at the PLP meeting, most reports just made it another Corbyn versus MPs story. That was what press coverage was like before the 2017 election, which helps explain Labour's dramatic increase in popularity during the election as voters saw for the first time what their policies were, and the media has now reverted back to this narrative. 

In my experience these MPs that want to try to end FoM for the UK or at least modify it tend to come from strongly leave voting areas. It is easy to say that they are being unrealistic in their wish, because the four freedoms are indivisible for the EU, but they are after all only reflecting the views of their constituents that the UK should try. Although we may strongly suspect the EU will say FoM has to go with being in the Single Market, this is a question that Theresa May has yet to ask because ironically the Conservative Brexiters are not very interested in controlling immigration.

Let me stress that I am in no way supporting these MPs refusal to back the EEA amendment - I support FoM - just as I think the leadership's reluctance to do so for different reasons is misguided. But to overcome objections to EEA you first have to understand where they come from. The idea that if it wasn’t for Corbyn Labour would be solidly behind joining the EEA is not only wrong, but it risks associating the Remain cause with the constant stream of attacks on Corbyn that can be found in the media on an almost daily basis, which in turn dilutes the pressure from Remain on the leadership and anti-FoM MPs.