Winner of the New Statesman SPERI Prize in Political Economy 2016

Friday, 24 April 2015

Putting party before country

Philip Stephens in the FT says the idea that a Labour-SNP understanding would amount to Labour being held hostage by the SNP is nonsense. He is of course correct. In a vote on any particular issue, 50 odd SNP MPs could hardly impose their will on 600 MPs from other parties. More interesting is what this line tells us about the media, about the current Conservative Party, and about what the future might hold if they remain in power.

First the media. In my continuing series on mediamacro, I stress that myths are best based on half-truths. Half-truths are the grain of truth on which you can erect a huge lie. With the SNP and Labour, the half-truth is that SNP views on an issue could perhaps weigh a little more heavily on Labour than, say, the views of UKIP, because UKIP will always vote to bring down a minority Labour government, but the SNP will not. That fact will never make Labour go where it does not want to go, but at the margin it could nudge it a bit more in one direction. Conceivably, we might get a bit less austerity, we might treat welfare recipients a bit more humanely - that kind of thing. But would we get some policy that was against the interests of the rest of the union? Of course not. Colin Talbot makes it clear how limited the SNP’s power would in practice be here. [1]

With mediamacro, you generally need some expertise, or some knowledge of the data, to see that the half-truth is very far from the myth, knowledge political commentators may not have. In the case of ‘SNP blackmail’, political commentators have the required knowledge more than most. So for me the success of the scaremongering about a minority Labour government will be an interesting test: is lack of economic expertise or knowledge important in explaining mediamacro, or is control of the majority of the UK press sufficient. There are signs that the scaremongering is working.

As Lord Forsyth (former Scottish secretary in a Conservative government) said, his own party is putting electoral tactics above a historic commitment to the defence of the UK union. This can hardly come as a surprise. The Scottish independence referendum was a close run thing, so you might expect a party with the integrity of the nation at heart to tread carefully in the subsequent days and months to heal wounds. Instead, Cameron chose in the morning after the vote to attempt to wrong foot Labour on ‘English votes on English issues’, saying: "We have heard the voice of Scotland and now the millions of voices of England must be heard." It was a gift to the SNP.

What does all this tell us about the Conservative Party? Does it tell us that it secretly wants the SNP to get so strong that it could win a future referendum and break up the union? No, what it tells us is that this is a party that is prepared to take large long term risks for minor short term political advantage. As I have suggested on a number of occasions, that seems to be a common pattern in its macroeconomic policy (premature deficit reduction and Help to Buy being two obvious cases).

One of the clearest examples of this is our relationship with Europe. The decision to hold a referendum was taken to appease the right in his own party and potential UKIP voters, even though the uncertainty it creates will damage the economy and even though there is no chance that Cameron will be able to renegotiate to any significant extent. But large sections of what we might call the Establishment seem unperturbed as long as it helps return a Conservative led government. The assumption seems to be that Cameron will be able to sort things out when the time comes, and it will be business as usual. As Polly Toynbee puts it, the view is that “Cameron is “one of us” so he’ll somehow secure an “in” result for his 2017 referendum”

This ignores all the evidence about party before country. A Cameron recommendation to stay in the EU will split his party: after the election a majority of MPs may favour leaving, and a majority of party members already do. In two years time, all the senior figures in the party will be thinking about the elections for Cameron’s replacement. (This is why Cameron’s announcement that he would step down before 2020 was so significant.) In this situation, what are the chances that Cameron will either be equivocal or recommend exit (leaving his successor to negotiate what they can in the way of trade deals)? In that case, what are the chances of the electorate voting to stay in, when the right wing press that helped win the 2015 election for the Conservatives will be in full cry to leave? I would be foolish to say that exit was a probability, but I would be just as foolish to assume that the risk of leaving was small.

Voting for a political party that repeatedly puts itself before the national interest is not a good call in the best of times. When it could influence our position in Europe and even the Union itself, it becomes a huge mistake. Too many in the UK seem prepared to walk into that minefield, for the sake of avoiding what would be the mild inconvenience for them of a Labour led administration.


[1] I doubt very much that it will make any Labour government give additional preferential treatment to Scotland. The opposition will cry foul on this if that ever happened (and probably sometimes when it does not). As a result, Labour will go out of their way to avoid such an outcome. Would the SNP bring down a Labour government just because they failed to get some minor fiscal advantage? I think that is also highly unlikely. What the SNP will fear most is being seen as the party that brought down a Labour government and helped their opponents into power.
   


18 comments:

  1. In our Tory held Tory-Labour marginal, the grass has not yet been cut by the (Labour) council so far this year, which has produced an efflorescence of dandelions amongst its swelling verdant waves.

    I don't know if this is accidental or demonstrative of austerity until May 8th.

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    1. Similar to how reducing the number of public sector employees in the UK economy has allowed the employment rate to blossom as never before.

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    2. So you think the government is responsible for the lack of productivity growth during their period in office?

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  2. As usual, much weaker on politics than economics. Mainly because of a lack of history, and a blindspot for respect for democracy..

    In the 1980s and 90s the Labour party in Scotland argued that Conservative rule from Westminster was illegitimate. The Tories have not had a majority in Scotland for decades. This fueled Scottish separatism.

    It was the Labour party that argued for and enacted devolution, claiming that this would put an end to the calls for independence. It was also expected at the time that it would be Labour that would dominate the Parliament in Holyrood. As we now know, both of these expectations proved false. In large part this was because the Labour party ran Scotland in the kind of way the Democrats ran Tammany Hall, and sent only its second and third rate politicians to Holyrood, the stars preferring the bright lights of Westminster.

    The devolution we have is transparently lopsided and unfair. That the votes of Scottish MPs can be used to enact laws in the rest of the United Kingdom in relation to matters that are devolved to Scotland is ridiculous. That this is so was ignored at the time of devolution, and largely uncontentious in the following years because of the size of Labour's majority. The Scottish votes didn't make the difference.

    The only time when the votes of Scottish MPs was necessary in this way was in 2004 when tuition fees in England were increased dependent upon Scottish Labour MPs. Tuition fees are of course a devolved matter for Scotland. This was grotesque in democratic terms.

    This problem is about to get far more acute. First, it is one thing for English only laws to be passed using Scottish Labour MPs. At least they purport to want to represent the UK. Quite another for SNP MPs to do so. Second, we are going to have DevoMore, so that the number and scope of devolved issues becomes greater still.

    Given this history, to claim that it is Cameron's Conservatives who have put party interest ahead of the defence of the Union, as opposed to the party that gave us lopsided devolution and whose arrogance led to the rise of the SNP, is simply breathtaking.

    Cameron's Conservatives are, in terms of seats if not votes, largely a party of England. He would not be doing his job if he just accepted yet more devolution to Scotland, without any curtailing of Scottish MPs ability to vote on laws that impact only the rest of the United Kingdom.

    Martin Wolf reveals far sounder political judgement

    http://www.ft.com/cms/s/2/105f62f4-e1d0-11e4-bb7f-00144feab7de.html#axzz3Y7KxkKyp
    http://www.ft.com/cms/s/2/105f62f4-e1d0-11e4-bb7f-00144feab7de.html#ixzz3YEpGvwao

    "A situation in which the balance of power in Westminster is held by a party interested mainly in having its cake and eating it does not seem to me a price worth paying for the union."

    Quite so.

    The constitutional settlement cannot be held where it is.

    As for the European Union, as usual this reflects your distaste for democracy. Yes, I agree, in economic terms it is better for the UK to remain. Yes, I agree, all elections create uncertainty, and that is bad news for economic planning.

    Does that mean we shouldn't have an referendum on this issue?

    No. It does not. Indeed, it is seems to be to willfully ignore the point of one.

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    1. If the only evidence that I am "much weaker on politics than economics" was your own comments, then I'm reassured.

      1) If the Conservatives had no interest in preserving the Union, some of your points would be relevant. The issues you raise about imbalances within the Unions are also real. But they are beside the point as far as this post is concerned. Here I was talking about attempts to gain short term political advantage with long term costs. Talking about English votes for English voters on the morning after the referendum was crass, talking about how the SNP cannot be part of any UK government is crass, if you are serious about preserving the Union. In that sense Lord Forsyth was absolutely right, but I guess you think he needs some lessons in politics too.

      2) Saying that opposing a referendum is being anti-democratic is just stupid. Our democracy, unlike say the Swiss, is representative. We vote every five years for people to make decisions on our behalf. In very unusual circumstances we may add a referendum, but those circumstances just do not apply at present.

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    2. 1. I too was talking about short term advantage with long term costs.

      It would be hard to point to a more spectacular example of that in British politics than the Labour approach to Scotland over the last 18 years.

      If you think that the SNP surge has anything whatsover to do with Cameron's speech on the morning after the referendum result you are naive in the extreme. It wasn't Cameron's Tories that lost Scotland: they didn't have it in the first place.

      2. I have much more sympathy with this argument. It is a much better than your original one. Trying to meet arguments about the need for some democratic sanction to be given for the change in the UK's constitutional position by arguing that doing so would be economically disruptive is just daft.

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    3. I think Martin Wolf is correct and he is definitely not a big supporter of the current PM.
      Watch https://www.youtube.com/watch?v=FPTK3Nk5cLQ at 48:00.

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    4. SH

      A consistent problem you have in your comments on this blog is that you presume a naivety which is misplaced (as well as being insulting). So, for example, you presume that I am anti-democratic because I think the decision to hold a referendum was a mistake, and have to backtrack when I point out we live in a representative democracy. And no, my post did not give you license to do that - I was talking about short term political gains versus longer term costs, and that is why I mentioned the economic disruption.

      On Labour in Scotland, I lived there for 5 years and have many friends and contacts there, and I have heard worse about Labour from natural Labour supporters than what you say. But that does not excuse other parties (not Labour) saying that the MPs the Scottish people may vote for can have no place in a UK government. To suggest people in Scotland do not mind that kind of thing insults them. It is also silly to suggest that being ruled by this Conservatives led government was not an important motivation for many who voted for independence. It takes quite a lot for a former Conservative Scottish minister to speak against his party just before an election - you think he is daft too?

      While I'm on the subject of your comments (which often raise interesting issues, which is why I bother to respond despite your tone), you should up your level of discussion about central bank independence. It is not, as you frequently suggest, about wanting Philosopher Kings to rule. Politicians frequently delegate advice, and sometimes decisions, to others, although nearly always with a democratic override. The UK government could rescind independence very easily, and if the MPC had been making bad and unpopular decisions it would not lose political capital in doing so.

      Before 1997 I also opposed central bank independence. However Ed Ball's MPC, and also the Fed under Bernanke, convinced me it could work well without compromising democracy. Where I think there is a real problem is the ECB, because there is no real democratic override there. Whether one can be put in place in a monetary union is a question that I think is well worth discussing.

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    5. 1. On the EU referendum, I am happy to clarify. Bad arguments take the form "it would all be terribly disruptive, and the result taken by the voters might be the wrong one' (which were the forms of argument you adopted above).

      You can't meet a claim that the change in the UK's constitutional arrangements that have taken place since 1975 requires sanctioning in a vote by saying either

      a. Voting has economic costs because of the uncertainty generated.

      Well yes of course. That is true of all elections (including the one we are currently going through). If we thought this a good argument we would do away with elections.

      or

      b. the result might be the wrong one.

      Well yes, but again, that is just an argument against elections. Of course they may give the wrong answer.

      So, that is why I said that you have a blindspot for democracy (disclosed elsewhere). These are just arguments against democracy.I don't backtrack from that point (ie about what you originally said) at all.


      The argument you made below the line is much more satisfactory because it seeks to meet the argument in favour of a referendum on its own terms. I don't think it wholly works (because the constitutional position has changed since 1975 and it is debatable whether Parliament on its own has the political legitimacy to sanction the change in its own status) but at least it is an argument of the correct form.

      2. The SNP MPs will have precisely the same status as any other MPs. They can vote and act as they like (which is unfair, they should have no vote on matters that are devolved to Holyrood).

      That doesn't mean that any other party has to accept them as a party of government, nor that they cannot criticise other parties doing deals with them. (This doesn't arise as a problem in any event as the SNP has made it quite clear it won't be serving in any government with any other party).

      If Cameron thinks that the SNP are a separatist party whose influence would be terrible for the UK (as Martin Wolf does, I do, and I think you do) then it is perfectly legitimate for him to say that. Similarly legitimate for Miliband to say that Ukip are a bunch of nutcases whose influence would be terrible for the UK (as I also would) who no reasonable party should deal with.

      For Cameron to say that is no more an insult to Scotland than Miliband (or me) saying the same thing about Ukip is an insult to the people of South Thanet.

      3. On Central Banks, the degree to which we hand this power over to unelected people to make is a question of degree. So, we could

      - have an advisory panel
      -have an advisory panel whose decisions are presumptively followed
      -have a panel to whom the decision is delegated, its membership determined by elected representative, whose decisions could be overridden
      -have a panel to whom the decision is delegated, its membership determined by members of the profession, whose decisions could be overridden
      -have a panel whose decisions could not be overridden, but which could be replaced
      -have a panel whose decisions could not be overridden, and which could not be replaced, who could only be removed by changing the constitutional order (eg the ECB).

      We can think up many such variations, with the degree of democratic control greater or less as we chose.

      But the principled objection remains the same, regardless of whether the loss of democratic control is small or absolute.

      You are giving the power to make the decision to people like Blanchflower and Sentance who have no democratic legitimacy. That isn't ok, however beneficial the economic upsides of doing so.

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    6. On (1), you have ignored my point about the subject of the post (it was not about the legitimacy of the referendum).

      On (2), do you think Lord Forsyth's views about how this tactic threatens the Union are nonsense? Do you think Cameron played this card because he has a principled objection to having any discussion with SNP MPs in parliament, or because he thought it might gain him English votes?

      On (3), I do not understand the following. Our democracy is representative: we elect people to take decisions for us. If those people decide that it is best to delegate some of those decisions to others (with a democratic override), why is that so anti-democratic. The government runs the NHS, but delegates most decisions to others. It has delegated the running of some prisons to private companies. What is so different about changing interest rates?

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    7. (1) No. the arguments I criticised appear in the text above.

      (2) I think there is something in it, not much. I don't think there is very much the Tories can do about Scotland (other than fail to win an election ever again). Just as with the referendum, it is a Labour v SNP fight. The Tories only get 17% of the vote in good years now.

      I fear that where we are now is that the SNP will sweep almost all Scottish seat, and that it will not be possible for Labour to reverse that (see also Martin Wolf).

      Cameron is trying to win an election, and not worrying about things he has no control over. Seems rational to me.

      (3) The setting of monetary policy for the UK is not like delegating the running of a prison, This is not a low level administrative decision. Fiscal and monetary policy are joined at the hip, and depend on one another, If like me, you think fiscal policy is a matter for democratic governments, it is difficult to then say that monetary policy should not be.

      The entire thrust of your oeuvre is that all governments have screwed up fiscal policy, and you despair of even governments of the left doing anything other than give into the political imperative to 'balance the books'. Of course some governments are worse than others, but you have despaired of all democratic governments. Unfair?

      As a result, your recent proposals have all been about setting up institutions to make democratic governments do what they aren't doing. So we have had

      1) Fiscal Councils

      http://www.economics.ox.ac.uk/materials/papers/13342/paper704.pdf

      or

      2) Helicopter money drops, when and the amount settled by Central Banks independent of the government

      http://mainlymacro.blogspot.co.uk/2015/02/can-helicopter-money-be-democratic.html

      The whole point of these proposals.is to stop democratically elected governments from making the decisions you disapprove of.

      Now, on the economics I largely agree. I have no choice, I am not in your league in this regard.

      Nor do I maintain that democratic legitimacy is the only value that matters. Democracies that torture people are bad and evil things, regardless of how democratically pure they are.

      Clearly, not every person in power now has democratic legitimacy (eg judges), and so democratic absolutism is practically impossible.

      Where I disagree is with your attempts to argue that the structures you would like to see don't involve any democratic trade offs. They just do. I am also much less sanguine about the wisdom of the technocrats who would be making these decisions than you are. I am, I confess, influenced in this by my opinion of recent members of the MPC, and by the conduct of the ECB.

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  3. I think it's getting slightly suspicious that all your posts on myths just happen to exonerate labour, one might accuse you of being partisan.

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    1. Then you missed the posts where I have been critical of Labour and the left more generally. I have been critical of macro policy under Brown, but the myth of profligacy just goes way over the top. On two key elements of their macro programme - the OBR and the form of the fiscal rule - I have praised the Conservatives. If your suspicion is a serious one, read this post where I talked about all this

      http://mainlymacro.blogspot.co.uk/2015/02/on-not-being-politically-partisan.html

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  4. The acceleration in government spending in 2002 in absolute terms and as a % of GDP, in the "good times", is pretty evident in chart 2.1(a).
    http://www.ifs.org.uk/bns/bn43.pdf

    A good illustration of Labour "profligacy", aka Gordon Brown's master plan to win an election he expected to call in late 07/early 08 or so. Bad luck for him it was subsequently postponed/derailed by other events. Illustrates, too, the danger of trying to put party before country. It's amazing what partisan politicising can do to your memory.
    http://www.theguardian.com/politics/2008/jun/26/gordonbrown.labour

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    1. Running surpluses during those years would have meant even more private debt.
      The surpluses of late 90s squeezed the private sector.

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  6. I'm not a great fan of Jonathan Freedland, but I think this is pretty good in terms of how we got here:

    http://www.theguardian.com/commentisfree/2015/apr/24/scotland-britain-separatists-paradox-unionist-parties-snp-union-dead

    A combination of both major parties neglecting the regions, Cameron's about face the day after the referendum and Labour's role in the no vote.

    What is missing is the Tories' second line of defence in the election. To accuse any possible Labour government of being "illegitimate" if they have less seats than the Tories. So the support, explicit or implicit, that the Tories give to the SNP automatically increases their seats and makes Labour more "illegitimate" - this is utterly cynical.

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  7. "Conceivably, we might get a bit less austerity, we might treat welfare recipients a bit more humanely - that kind of thing."

    Slight aside in the context of the post, but it's worth pointing out that according to the IFS the SNP's plans would involve less spending in the next parliament than Labour's plans. The "anti-austerity" campaign from Sturgeon has always had more to do with political opportunism than principles. Indeed in some ways it's Labour that are pulling the SNP to the left (e.g. Salmond resisted the 50p tax rate and wanted to cut corporation tax - two policies Labour opposed and which the SNP have, under Sturgeon, abandoned).

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