Winner of the New Statesman SPERI Prize in Political Economy 2016

Wednesday, 1 October 2014

How many UK elections can a nasty party win?

This last month I wrote my most widely read post in this blog’s nearly three years existence. Over 20,000 read this on Scottish independence. Yet I wrote that post with some regret, because I was acting as the typical economist killjoy. I had a lot of sympathy behind much of the support for the Yes campaign, which was to avoid being governed by a fairly extreme right wing party. I hope no one ever writes that the No vote was a victory for David Cameron’s Conservatives, because that would be a truly Orwellian distortion of reality. One of the most telling contrasts for me was Gordon Brown’s impassioned speech for the union compared to Cameron’s opportunistic attempt to appease his own MPs the morning after the result.

A post I have no regrets writing is this about Theresa May’s one time concern about the Conservative party being seen as the ‘nasty party’. Everything in the months since I wrote it, including the current party conference, confirms that this image no longer worries the leadership. The puzzle I raised in that post is why as late as 2010 Cameron was still keen to foster the idea of a more compassionate conservatism. What has changed so completely in just four years?

One answer is UKIP. Yet trying to prevent losses to another party of the right should not alter the traditional logic that a party needs to occupy the centre to win an election. Another answer is the recession, which has perhaps led to a hardening of attitudes among the electorate as a whole. The hypothesis is that in a recession people are more inclined to believe those on welfare are scroungers, and that immigrants steal their jobs. This hardening should reverse as the economy recovers, but we also know that real wages are still likely to be lower in 2015 compared to 2010.

That was where I ended that previous post. I wrote “although nastiness might accord with voter sentiments today, at some point in the future voters in more generous times will have no problem forgetting this, and just remembering the Conservatives as the nasty party.” But in writing this I might have been both unfair to the British electorate and to the strategy of the Conservative party.

To see why, take a temporary detour from welfare to macro. Chris Dillow rightly questioned the “groupthink bubble” that sees George Osborne’s stewardship of the economy as the Conservative’s strongest card. Yet those in the bubble could respond that they were simply reflecting what the public appear to be saying in the polls. The problem here is establishing cause and effect. What I call mediamacro believes that the last Labour government seriously mismanaged the public finances, when in reality its sins were relatively minor. Mediamacro thinks that the deficit somehow helped cause the recession, whereas in reality the causality goes the other way. Mediamacro thinks that the deficit is the most important problem of today, and largely ignores the stagnation of productivity. Mediamacro celebrates the 2013 recovery as vindicating austerity, which is an argument only the most politically committed academic economist would endorse.

So why do those answering polls think the Conservatives are more competent at managing the economy? It can hardly be because of their own experience, with real wages falling since 2010 compared to steady increases before then. While they might think that Labour allowed excessive leverage by UK banks which helped cause the recession, they are unlikely to also believe that the Conservatives were urging much greater caution at the time! Or could it be that their answers about competence are influenced by what mediamacro itself believes?

If there is this huge disconnect between reality and media portrayal for the macroeconomy, could the same thing be happening with attitudes to welfare? There is no doubt that the representation of disability in the print media has changed substantially over the last decade or so. Television has, after a lag, followed this trend. There is scant evidence that this reflects any significant change in the degree of benefit fraud. It could reflect a ‘hardening of attitudes’ as a result of the recession, but causality could also run the other way. Do people vastly overestimate the amount of benefit fraud because they want to do so, or because of the information they get through the media? Is this overestimation a reflection of a recession induced hardening of attitudes, or a cause of it?

This is crucial to answering the question posed in the title to this post. If squeezing the poor and disabled is a policy that reflects a recession induced change in public attitudes, then the party that follows this change may be vulnerable when the recession ends (although perhaps not before 2015). If it reflects misinformation provided by the media, then the relevant question is whether this misinformation might continue well beyond the economic recovery. If it does, the Conservative party may have a much more durable election strategy. 


15 comments:

  1. I wonder how this pressure against those without assets fits with Piketty's model of inequality growth. It could be a longer-term phenomena to squeeze those without assets as r remains continually > g.

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  2. There's a toxic political mix right now. Global capitalism managed to capture public opinion on the financial crisis, deflecting the blame from irrational exuberance and deregulation to government, immigrants and the "lazy" and/or "criminal" poor. It's happened in the Eurozone, in the UK and in the USA. Plus, the crisis was not deep enough to change the status quo, i.e. the entrenchment of the neo-classical synthesis and the mediamacro or "serious" people. Roosevelt could throw the bums out, Obama had to hire Timothy Geithner. Gordon Brown was the wrong man at the wrong time. That's why the "official opinion" is still reinforcing itself and voters, fed up with both Labour and the Tories, with Sarkozy as well as Hollande, with Bush Jr. as well as Obama, goes for extremes - the mainstream is currently unable or unwilling to correct itself. So voters choose UKIP over the Tories, Front Nationale instead of the Conservatives, Tea Party candidates over establishment republicans (while the radical wave has ebbed there, it still managed to defeat the House majority leader this year). The Financial Crisis initially saw official left-of-center parties come in office or already in office trying to fix the situation, but then something happened and people turned back to the discredited right, but not the same party, no, the more extreme party. It was a trend in many of the countries hit by the crisis, also in Greece, for example. These more extreme conservative parties drag the established conservative parties more to the right. The nastification of the Tories is going to continue. For global capitalism, this trend is much more acceptable than a shift to the left. Big Business could live with Hitler for a while, with Pinochet as well. Just today, I read an interview with dutch political scientist Cas Mudde on Viktor Orban's intentions. He said that Orban thinks the EU is too liberal and socialist, he wants a "conservative, capitalist régime".

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  3. Progressive parties across the world naively believed that the financial crisis, the taxpayer funded bail-outs of the wealthy, and the economic aftermath would turn popular opinion against Thatcherite/Reaganite free-market ideology. They forgot that nasty right-wing parties are nasty for a reason. To conceal the 'socialism for the rich', they have built up support across the electorate with populist rants against the 'undeserving' poor (aka 'scroungers') and foreigners. It's worked brilliantly, especially in the UK. I'm afraid it tells us quite a lot about our political class and the electorate they serve.

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  4. “The life of nations no less than that of men is lived largely in the imagination”, Enoch Powell, 1946 speech at Trinity College, Dublin.

    This is where the BBC should have entered, on the side of university peer-reviewed macro, rather than mediamacro.

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    1. What I meant about the BBC is that most people in the UK cross-reference what the BBC says to what their newspaper says and then reach some form of conclusion.

      So when the BBC accords with false economic information coming from their newspaper, it leaves only that small percentage who tap into university research in books, periodicals, and blogs to have a better understanding of current problems .

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  5. Now that Britain has a large number of immigrants, it is a lot easier for people to look at the poor and disabled as them and not us. So, there is no reason not to cut off assistance; we have a similar world view in the United States now that our country is no longer as homongenous.

    I wonder what will happen to Scandanavia once there are enough immigrants; how will that impact their welfare states.

    Also, allowing the liberal party to show benefits for all citizens through proper macro policies makes conservative approaches more suspect. Better to let things remain bad than allow the other side to get credit for improving the general well-being.

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    1. Sweden already has record levels of immigration and a surprisingly high share of non-native inhabitants.

      http://en.wikipedia.org/wiki/Immigration_to_Sweden

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    2. Being a Scandinavian(Swede) myself, I feel that I have to point out that this is a common misunderstanding. For quite a while now, Sweden has had a larger share of immigrants than the UK. See this link from the world bank, for example:
      http://data.worldbank.org/indicator/SM.POP.TOTL.ZS?order=wbapi_data_value_2010+wbapi_data_value+wbapi_data_value-first&sort=asc

      About 14% of the Swedish population but only 10.3% of the British, is foreign born. Keep in mind also that due to the nature of our immigration system, most of the people arriving in Sweden are asylum seekers fleeing countries that are in a state of civil war and the like. These people tend to have less education and skills than the ones who arrive in the UK. For this reason they put more of a strain on the welfare system.

      So we know what happens - the Sweden Democrats get 13% of the votes in parliament!

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    3. This comment has been removed by the author.

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    4. "About 14% of the Swedish population but only 10.3% of the British, is foreign born. Keep in mind also that due to the nature of our immigration system, most of the people arriving in Sweden are asylum seekers fleeing countries that are in a state of civil war and the like. "

      Despite the desperate situation in Syria and Iraq, Britain admits very few refugees, especially given the size of the country.

      The problems in Britain, however, relate to EU immigration, and started since the expansion of the EU eastwards which saw a sudden and then sustained influx. Public services (education, health) were in no position to cope. These immigrants do not go on benefit. However with the problems of very high housing costs in London, low wages and zero contracts and a long term unemployment problem, they have been seen as exacerbating the pressures on the unemployed and low-skilled, low wage labour. Moving to where the jobs are, ie London, for this group now really just doesn't pay.

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  6. “This is crucial to answering the question posed in the title to this post. If squeezing the poor and disabled is a policy that reflects a recession induced change in public attitudes”

    I don't think it is (entirely) recession induced. I recall reading in a BSA survey that “the view that unemployment benefits are too high has risen in popularity among all subgroups since 1987” (http://discussion.theguardian.com/comment-permalink/27632581).

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  7. I suppose it is translating the domestic to national mind set that appeals to the voter. Many houses don't want to live beyond their means so they budget within it missing out on things that they could have by not taking on more debt for one thing. This mind set is then presented at a national government level as prudence and strikes a chord with such a domestic mind set. It is this mind set that Labour cannot break and Labour's policies seem spendthrift to. It is how a large number of voters, hardly in the elite, have been brought up and nothing much will change it.

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  8. The role of the UK media in promoting a particular world-view to the exclusion of others is of increasing importance. It is clear that the Conservatives - thanks in part to UKIP - are increasingly confident of riding this wave. The creation of a fair, informed and unbiased but free press goes beyond Leveson.

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  9. The standard of reporting really is atrocious and getting worse. I was listening to (BBC) Radio 4 in the early evening yesterday, and there were 5 or 6 references to "balancing the books" in as many minutes. Then switched over to Radio 5 to hear somebody "explaining" the deficit and national debt in the terms of a household credit card. [bangs head on table]

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  10. Is it not the case that the reason the Conservatives, and the BBC, can move to the right, is because the narrative, the framing, the Overton window has moved to the right? And that in turn is due to the Labour Party itself moving to the right and accepting austerity, and the workers-and-shirkers narrative. If the Labour Party challenged this narrative rather than endorsing, it would be harder for the BBC and the media to disappear into their bubble. It might also mean that the two sides would have to compete on evidence and logic, rather than rhetoric. What we need is a political opposition.

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