Winner of the New Statesman SPERI Prize in Political Economy 2016

Saturday, 29 October 2016

Brexit and neoliberalism

In a recent post I talked about the “neoliberal fantasists who voted Leave”. Here is Ryan Bourne from the influential Institute of Economic Affairs. He notes that “the mood music from the post-referendum Conservative party — with former Remain backers in No 10 and the Home Office overcompensating with a caricatured view of what voters want — is not a good sign for the short-term”. But he still believes that Brexit can be transformed into some kind of neoliberal wet dream, with a bonfire of regulations and a unilateral abolition of UK tariffs on trade.

The economics of this was always fantasy, as John Van Reenen and colleagues painstakingly demonstrate here, but it also seems politically naive. After all the Leave campaign was a success largely because it promised to control immigration as a result of leaving the EU, controls which are distinctly anti-neoliberal. Controlling immigration is not a caricature of what the majority of Leave voters wanted, but instead what most were voting for. It does seem naive to believe that a government after Brexit would try and quietly forget about this, particularly when led by someone who had spent the previous 6 years trying and failing to control immigration. It also seems naive to imagine that this turn against neoliberalism would not go beyond immigration.

And yet, the ‘southern strategy’ was highly successful for the Republican party in the US. This combined an economic policy that favoured finance and corporates, increased inequality and free markets with an identity politics that appealed to race, religion and cultural identity. (I could perhaps add geographical identity here as well: see this article by David Wong.) Perhaps the UK party of the right could follow a similar course, using immigration as a substitute (and for some a proxy) for race, whilst pursuing an otherwise neoliberal agenda?

Is this what the Conservative party tried to do under Cameron and Osborne? Actually I think that is the wrong question, for reasons I will come to shortly. In terms of what the Coalition government actually did, Jonathan Portes summarises it thus:
“The promise to cut net migration to the “tens of thousands” was generally regarded by immigration policy experts as unachievable, or achievable only at an economic cost no sensible government was willing to pay. In practice, the latter course was never tested: resistance from within government from the Department of Business, supported to a greater or lesser extent by the Treasury, meant that even non-EU migration was only reduced very substantially for non-HE students; for most other routes it has stabilised. Non-EU net migration is currently about 150,000 a year, slightly higher than EU net migration

This does not mean the policy changes had no impact: the increase in the regulatory burden on business and the education sector has been substantial, and has certainly resulted in some reduction in skilled and student migration. The most damaging single decision was probably the closing of the Post-Study Work Route. However, overall, any economic damage was considerably mitigated.”

Of course that resistance from the Department of Business came from a Liberal Democrat, Vince Cable, and not a Conservative. Which leaves open the possibility that the economic damage from attempts to hit the immigration target might have been greater if just the Conservatives had been in power. So it is not clear that the Conservative focus on immigration was just so they could win elections with zero cost to their more neoliberal objectives. It still remains the case that, just as Trump exposed the flaw in the Republican’s southern strategy, so Brexit was the critical flaw in Cameron’s emphasis on the problem of immigration and his failure to meet his own targets.

I said it was the wrong question, because I think in this case it was not a political party that was calling the shots but a section of the print media: the right wing tabloids. As Andy Beckett writes in this comprehensive history of this part of the UK media:
“[Brexit] was an outcome for which the tabloids had campaigned doggedly for decades, but never more intensely – or with less factual scrupulousness – than this spring and summer, when the front pages of the Sun, Mail and Express bellowed for Brexit, talking up Britain’s prospects afterwards, in deafening unison, day after day. Two days before the referendum, the Sun gave over its first 10 pages to pro-Brexit coverage.”

And the principle means the tabloids used to obtain this result was the “endless xenophobic nudges of its immigration coverage.” Of course these newspapers will say they were just expressing their readers fears, but when they are reduced to making up stories to encourage this fear any claim to innocence becomes very hollow. Fueling anti-immigration feeling was their version of a southern strategy, and Brexit saw its culmination.

Having achieved this objective, will the tabloids start ignoring the immigration issue, enabling the greater immigration and zero tariffs that Mr. Bourne desires? Or will the influence of these tabloids, perhaps now greater than it has ever been, start to fade away? To the extent that these seem silly questions reveals the political naivety of the neoliberal Leavers. It is highly unlikely that Theresa May will become squeamish about damaging business through immigration controls to enable her to meet her immigration target. The best hope of those who do not want to go down this path is that, as Jonathan Portes expects, the Brexit vote itself starts to reduce the immigration numbers.

Brexit will also put other pressures on May which are likely to move her away from neoliberal policies, as the assurances given to Nissan indicate. As Bourne writes in a recent blog: “if this is a commitment to permanent or semi-permanent support to almost ‘make up for’ changed trade arrangements then it is hugely misguided.” Misguided it may be, but that is the direction the politics will push a Prime Minister determined to be seen as making a success of Brexit. Just as Republican’s have agonised over how to deal with Donald Trump, so it will become clear to UK neoliberals the damage to their cause that Brexit will generate.




15 comments:

  1. If you dance with the Devil, you get burnt.

    Why is it that the IEA gets any airtime at all? They are essentially a lobbying firm, with extremely opaque funding. They dress themselves as a scholarly research outfit, thereby tarnishing anyone else who actually tries to do objective social scientific research.

    https://en.m.wikipedia.org/wiki/Institute_of_Economic_Affairs#Funding

    Why does the FT, perhaps the exemplar of the free press, repeatedly give these clowns a platform?

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  2. Funny how history sometimes does repeat.
    Here we have a Tory government propping up a soon to be defunct industry, just like the early 1970s. This time the car industry is staring down the barrel of the gun (see Simon Super in the FT 20 Oct).
    Instead of propping up, or at least as well as, the government should surely start spending our taxes on the industries that will provide prosperity in the past Brexit 2020s and 2030s.

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  3. I remain to be convinced that the power of the tabloids is strengthening.

    Their attack on the EU dates from the time Thatcher started to take against the organisation with her Bruges speech and particularly when she had left office.

    Circulation for those tabloids has fallen off a cliff (The Sun 1,787,096, Daily Mail 1,589,471, Daily Express 408,700) and I expect it was the residue of past copies no longer bought which played a greater role in the vote than current readership - I don't see these papers on the internet as an effective substitute for their pulpy propaganda.

    I think that change in readership habit helps to explain why the result got worse for Remain the higher up the age profile you go and that 45-50 was the turning point for Leave/Remain majority to switch.

    In 1990, when anti-EU propaganda started the Sun was selling 3.9 million, the Express 2.6 million and the Daily Mail 1.7 million.

    It appears to me that iphones in 2011-12 have really started the steep decline in Sun and Daily Mail circulations, and the battle to misrepresent the EU was born of the competitive desperation to save journalists' jobs in a tabloid industry which is going the way of SOGAT.

    Which I suppose you could call neoliberalism?

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  4. What kind of bankrupt economic system do we live in where you're continually told by experts that you must increase the population indefinitely every year by adding a city bigger than Ireland's second city? Maybe experts are giving the right answers to the wrong questions.

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  5. "To the extent that these seem silly questions reveals the political naivety of the neoliberal Leavers."

    Useful fools :-)

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  6. I absolutely agree about the practical and intellectual mess that the right and even the parts of the Government that are nor wedded to the right but are going along with them are in. Two points.

    To rescue us all we need effective opposition to stop the damage and then a party that looks like a Governemnet in waiting to replace the Tories. That seems pretty far off at the moment.

    Do we have to call the right wing economics of Thatcher and Reagan and their successors "neo-liberal" ? Liberalism is a noble cause recognizing the individuality of human beings ,their inherent equality and the need for all to work together in common cause. It has nothing to do with the elite economics of privatisation , reducing taxes on the wealthy and weakening workers' protection. This sort of stuff is not even market economics , preferring instead a market rigged in favour of the already powerful.

    Much as Liam Fox , say , would like to see himself as following in the intellectual tradition of John Stuart Mill or Gladstone , it is in fact complete nonsense. Time to call a spade a spade - these people are in no sense liberals , they are the lackeys of an elite of the fortunate , the ruthless and the criminal.

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  7. "Just as Republican’s have agonised over how to deal with Donald Trump, so it will become clear to UK neoliberals the damage to their cause that Brexit will generate."

    Yeah now your getting it.

    It'll be so great to elect Hillary so we can get control of gerrymandering in 2020. Right Simon. Screw the Labour movement and Democrats. Right wing in power forever!

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  8. Napoleon would have destroyed Britain if he had turned us all into shopkeepers!
    Ryan Bourne is no different,but now his ilk have no hiding place either the economy upturns & actually lifts people out of poverty or he loses what little credibility he & his ilk have!
    It is these very paradox's that made voting Brexit worth while,the question now that should be the call of all is neoliberalism got us into this mess,get us out sharpish or go & hide in shame!
    there is no place for you,your the problem not the solution & the EU can't be blamed,he & his ilk will sink the economy double quick
    leaving the field open for a more 21st century economy to be created!or people will be better off a win win situation & yes i realise that it will create great suffering & i'm very sorry for that but there is no other way other than revolution & for once i would like humanity to not take that route although we are already some way down that road

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  9. This is exactly right. The neoliberals, like others before them, have been swallowed up by the tribalists whose votes they've exploited

    http://johnquiggin.com/2016/06/27/reaping-the-whirlwind/

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  10. Not quite fair to Mr Bourne -- in response to the FT's invitation he is describing the kind of Brexit he would prefer. He may be quite aware that he's not going to get it. Nor are we going to stay in the EU, but I don't think you'd call someone who advocated this a wet-dreaming fantasist.


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    1. Bourne was one of the 8 economists for Brexit, and therefore played a key part in the Leave campaign. So why is this unfair?

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    2. because in this piece you're not criticising him for wanting to leave but for wanting a version of leave that isn't going to happen. Neither is Remain going to happen.

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  11. Talking of fantasists Daniel Hannan was on R4 today. "Interests rates are too low hitting lowest paid" was his message du jour. Since lowest paid don't have assets and younger people with bigger mortgages than savings, who are these poor people. Of course they are as Paul Krugman pointed out older middle class with savings. Like claiming Brexit was a celebration of internationalism and open trade, equating people with large savings as lowest paid clearly demonstrates Hannan's facility to either lie through his teeth or more likely but equally important in politics he has succumbed to Feynman dictum that the easiest person to fool is yourself. One must not forget that having an income that depends the ability to say these things often helps believe them.

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  12. Ann Pettifor's analysis is, I think, the most prescient account I've yet to read:

    http://www.tandfonline.com/doi/full/10.1080/14747731.2016.1229953

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  13. I do believe that this illustrates the differences between the political systems in the UK and UK. Both the nature of a parliamentary government and the laws regarding the length of political campaigns and methods of fundraising protect the UK from an otherwise natural inclination for a political party to align perfectly with big business against the will of other voting blocs. There may be similar influences, but not of the same strength and vector, and the counter-balancing influences may hold relatively more power. Also remember that the Southern Strategy relied up on the parties being in a specific place ideologically with regards to the evolving beliefs of voters, and although we are at a similar point today, it is SIMILAR, not THE SAME. This time around the anti-neoliberal force is more equal to the anti-liberal (global trade) force. Back then it was purely a anti-liberalism vote, and there was less written on the wall about what the economic consequences would be over time.

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