How the reaction to a football ban showed how our politicians and media have become trapped in right wing Islamophobic narratives and detached from the majority of voters

 

In the weeks before the Maccabi Tel Aviv supporters ban was announced, Conservative party leader-in-waiting Robert Jenrick declared that "a lack of integration leads us into a very dark place as a country". He was commenting on leaked remarks he had made earlier about not seeing any white faces in the Handsworth area of Birmingham that was also the worst slum he had ever seen, and how this showed a failure to integrate immigrants. His remarks were defended by the actual leader of what was until very recently called the UK’s natural party of government.

The reality about Handsworth is very different, but nowadays reality doesn’t matter to our populist right. What matters is the competition to win the racist vote, and making racist statements is a good way of winning that competition. Handsworth in Birmingham is fair game because it is predominantly Muslim, and a key part of the right’s populist rhetoric is Islamophobic. This extends into foreign policy, so it is a factor behind support for Israel and denial of Israel’s Gaza genocide. This is all copied of course from Republicans in the US, and an increasingly islamophobic United States (including significant parts of the Democratic party), but it is probably an insult to both Reform and the Conservatives to suggest that they couldn’t have dreamt up this strategy all by themselves. Unfortunately Islamophobic views are held by around a fifth of the UK population according to Luke Tryl of More In Common (roughly double the number who hold antisemetic views), and both Reform and the Conservatives want to capture those votes.

When Aston Villa put out a statement at just after 5pm on 16th October confirming a police decision to ban Maccabi Tel Aviv fans from its Europa cup tie, by 10pm the leaders of the UK’s four main political parties had put out statements condemning the ban. In the minds of these political leaders and the mainstream media, this ban must have been put in place because of worries that Jewish Israeli fans would be attacked by British Muslims. “We will not tolerate antisemitism on our streets.” said the UK Prime Minister, calling it the wrong decision.

Now perhaps this very swift denunciation of the ban, and the assumption that the ban was made because of fears about attacks on rather than by Maccabi fans, was because politicians had the terrible antisemitic attack on a synagogue two weeks earlier in Manchester fresh in their memories. But such a rush to judgement on such a serious matter must also reflect the Islamophobic narratives described above that have become so pervasive among UK politicians and the UK media in recent years.

In contrast, those with any knowledge would remember recent violence in Amsterdam caused, at least in part, by a section of the Maccabi Tel Aviv fans who were looking for trouble, and that some of those fans had randomly attacked Muslims in that city. (There was also subsequent violence from Ajax fans.) Shortly after the UK ban was announced, a domestic game in Israel had to be postponed because of violence between Maccabi fans and those of another club. The police assessment that led to the ban concluded that Maccabi fans were likely to be the perpetrators of trouble. In other words the ban was issued primarily to protect UK citizens from violence coming from some overseas football fans with a history of violence.

The UK politicians who framed this ban as an example of antisemitism, and the UK media that followed this line, were therefore just wrong. Now that will not bother the populist right, because the populist right is not that interested in facts. That, unfortunately, includes the leadership of the Conservative party, which at the moment is trying to show that Enoch Powell was too much of a moderate on immigration. But it really should matter to Keir Starmer and Labour ministers (and to Ed. Davey). It should matter to Lisa Nandy when she said in the House that this kind of ban was unprecedented when it isn’t.

For a start, ministers cannot claim on the one hand that public safety is an absolute priority at sporting events and then suggest that maybe in some circumstances other factors are more important. The police statement said that following a thorough assessment “we have classified the upcoming Aston Villa vs Maccabi Tel-Aviv fixture as high risk.” and “While the Safety Certificate is issued by Birmingham City Council, West Midlands Police supports the decision to prohibit away supporters from attending.” Their statement also explicitly referred to the problems in Amsterdam. At the very least, this should have given the Prime Minister and his advisors pause for thought that maybe they needed to be a bit more thorough before concluding that the police and council had made the wrong decision. They might have looked up reports of what happened in Amsterdam, for example.

But the Prime Minister’s reaction was far worse than just claiming the police and local council had got it wrong. It framed the decision as involving antisemitism. This is problematic for two reasons. First, it presumed that all Maccabi supporters were the victims in this case, and that the only aggression would be from locals. As I have noted, just a few minutes on the internet would have shown that to be false.

More seriously, let’s take the government’s presumption and see what it implies. Just suppose the safety threat arose from demonstrations against Israeli actions in Gaza. The Prime Minister’s statement implies such demonstrations reflect antisemitism, rather than an understandable dislike of genocide and a view that the UK should not maintain sporting contacts with countries whose government’s are involved in genocide. You may disagree with calling Israel’s actions in Palestine genocide, or you may think that such things should not interfere with sport, but saying that such beliefs reflect antisemitism is equivalent to saying that those demonstrating during sporting events involving South Africa when it was an apartheid state reflected prejudice against white people. We should also note that all Russian clubs have been banned by Fifa and Uefa following the invasion of Ukraine.

Of course, labelling any criticisms of the actions of the Israeli government as reflecting antisemitism is a standard tactic of the current Israeli government and the political right in the United States. Unfortunately this shows, yet again, that Labour has become so embedded in the right wing misinformation machine that they have become an integral part of it. Needless to say, Badenoch’s reaction was much worse, talking about Jewish people not being allowed to watch football.

However the media also has very serious questions to answer. Why wasn’t the history of violence among some Maccabi fans not introduced immediately into any reporting or discussion in the media? Why did the media allow the uninformed opinion of the main political parties to obscure facts which any news organisation worth its salt should have known? In particular, why did Sky News initially suggest that the decision to ban Maccabi fans was only in order to protect those fans, and later had to apologise for their error? Not to mention their interview with a ‘Jewish’ Aston Villa fan.

The answer may be that our media and politicians are increasingly about perpetuating right wing opinion rather than reporting facts. This is not the media following majority public opinion, but rather the media attempting to change public opinion. Despite all the one-sided reporting of the Maccabi ban, 42% of voters polled by YouGov thought the police had made the right decision, with only 28% thinking it was the wrong decision. The media/political complex in the UK is extremely self-referential, and given that right wing propaganda outlets are a key part of that complex it can easily lose touch with what the majority of the public think and believe.

As for the government, the episode adds weight to my argument that Starmer’s conference speech was not the major change of course some had suggested. Starmer’s statements about the banning of Maccabi fans is perfectly in line with his awful speech on immigration that sought to use almost every piece of misinformation peddled by the right. Whoever advised him to label the ban wrong and describe it as an example of antisemitism should consider their position, and if they don’t then Starmer should consider it for them. I am sure Starmer is serious about wanting to stop the advance of Reform, but to do that he needs to start confronting rather than copying right wing populist narratives.

What the call for fiscal headroom reveals

 

Everyone, including the IFS, is agreed that the Chancellor should in the budget create more fiscal headroom than she did previously. Rather than match forecasts for taxes to expected current spending (plus or minus ten billion, say), she should aim for forecast taxes to be significantly more above expected current spending, to allow for headroom against unforeseen negative shocks. This seems very reasonable, doesn’t it? Well consider some analogies.

I have the thermostat set at 20 degrees centigrade, because I find that a comfortable temperature. But sometimes if there is a cold wind outside the temperature inside can dip below that before the boiler and the radiators can respond to put it back up to 20. I feel cold as a result. So I should set the thermostat to 22 degrees, to provide headroom in case a cold wind blows.

Hopefully you can see the fallacy in that strategy. Or take the Bank of England’s inflation target of 2%. Now, as we have seen, shocks to inflation like wars can happen that will take inflation well above that target. We cannot have that, can we. So the Bank should in practice aim for zero inflation, to provide headroom so that it doesn’t get caught out with above target inflation following inflationary shocks.

Now fortunately those who designed the UK’s inflation targeting regime were sensible enough to emphasise that the 2% target was not short for ‘2% or less’, and that inflation falling short of 2% was just as bad as inflation exceeding the target. So allowing headroom for the 2% target would make no sense. So why does it seem to make sense in achieving a fiscal rule but not an inflation target?

Why does everyone seem to be calling for greater fiscal headroom in the budget? I think it is because the taxes=current spending fiscal rule is not seen as a symmetrical target. If shocks turn out to be positive for the public finances so borrowing is less than expected that is not seen as a problem, but if negative shocks occur such that current spending exceeds taxes then that is seen as a problem that the government has to fix immediately. That is why we had the nonsense of welfare cuts in the Spring.

The analogy that comes straight from the term ‘headroom’ is making sure you design doors such that hardly any people hit their head on when they walk through them. If you make your door too small many people will hit their head, which is bad. If you make your doors too tall then there is no equivalent injury suffered. The costs and benefits are not remotely symmetric.

The financial analogy might be a bank current account. I keep a positive balance in my account because I cannot predict precisely every payment going in and out of the account, and I don’t want the balance to go below zero and incur overdraft charges. But is a bank account an appropriate analogy for a government? Who is going to slap an overdraft charge on the government?

One answer might be the markets, in the form of higher interest rates on government debt. But that should already be in the forecast. Borrowing moderately in excess of the fiscal rules might lead to a small increase in interest rates on government debt, not because of supply and demand for government debt but because it would signal higher aggregate demand and therefore higher interest rates set by the Bank of England. On the other hand higher borrowing caused by weaker aggregate demand (leading to lower tax receipts|) could have the opposite effect, leading to lower interest rates on government debt. All this is quite different from overdraft charges.

In my view fiscal rules should be like the inflation target. They are and should be symmetrical: it is just as bad to miss the rule by borrowing too little as it is by borrowing too much. If you borrow too little you are taxing people too much or not giving people enough public services, or the economy is in a downturn. Those are all bad things that should be rectified. If this is the case, then you don’t need any headroom at all, just as the Bank of England doesn’t allow headroom for its inflation target.

But this is not how the media and the current government see things, and for that we probably have the reaction to Liz Truss's fiscal event partly to thank. In the Spring the government did not take the “grown up” decision (to quote Charlie Bean, ex LSE, Bank of England and OBR) to allow the OBR’s forecast to show the fiscal rule not holding with a promise to fix it in November. Instead it decided it had to act immediately, cutting welfare spending to meet the rule. Presumably it thought being ‘grown up’ and not doing this would cause the markets to panic, or more likely the media would generate lots of bad publicity.

Given this view held by the Chancellor, then it does make sense to create lots of headroom against borrowing more than the fiscal rule allows. But that in turn inevitably means that fiscal policy is going to be tighter than the fiscal rule implies it should be. If in practice you always plan for forecast taxes to be £20 billion or more above expected current spending, then given forecasting errors can go both ways the government is enacting a tighter policy than the fiscal rule on paper suggests. Furthermore in practice how much tighter will depend on the whim of the Chancellor at the time in setting the amount of headroom, which in turn will depend on the circumstances they find themselves in.

Now I admit neither of these problems (moderately tighter policy on an inconsistent basis) is that great in the overall scheme of things, but I think someone should at least recognise these issues. If you think government debt should fall faster than is implied by the golden rule, then it is better to get that rule to target a small surplus than mess around with headroom. But the headroom issue is a symptom of a bigger and more serious problem. 

As a result of a combination of mediamacro’s reading of the Truss debacle, and the constant stories in the press about bond vigilantes and impending doom from the imagined actions of these imaginary people, we are returning to a world where policymakers see deficits and debt as always a problem, rather than as something that allows better fiscal policy making. 

The government’s debt and deficits are meant to go up as well as down, because they allow smoother taxes and spending and can also allow both to support the economy when needed. Government borrowing is therefore a very useful tool, and not some problem that needs to be eliminated as much as possible. If, in contrast, the media and governments start seeing government borrowing as a problem rather than a useful tool, then this can interfere with good fiscal policy making. At its very worst, it can lead governments to start trying to reduce deficits during economic downturns or recessions, as it did from 2010 onwards. As I have noted elsewhere, that is a possibility that is more likely to happen as a result of recent change to fiscal rules.

Exaggerated claims about market reactions to debt and deficits infantilize fiscal policy, and that infantilisation can be very dangerous.  Talking about the UK as part of some impending advanced economy debt crisis is almost as silly as talk about a possible IMF bailout. Such talk is only magnified by a right wing press desperate to replace the memory of a recent crisis that was the result of a fiscal event they lavished ecstatic praise upon. The main reason we have a fiscal problem in the US is not because politicians are being irresponsible about debt but because a populist dictator is denying economic reality at every turn. One pretty foolproof way of encouraging right wing populism in the UK is to pretend the market requires public spending cuts when public spending levels are already weak. 

Populism and Economic Prosperity

 

Mainstream political parties normally claim that populist parties, if they ever got to power, would damage the economy. We have clear evidence that they are right, and right in a big way. A paper in the American Economic Review (one of the top economics journals) published nearly two years ago, looked at the macroeconomic consequences of populist regimes coming to power. The results can be summed up in the chart below (from this working paper version)

The black line is the average difference between GDP under a populist government compared to a counterfactual GDP without the populist government. If the populist government was in power for 15 years, GDP would be over 10% lower as a result of that government. I have used the analysis for right wing populists: for a similar chart for all populists see the paper, or this useful summary by Joel Suss in the FT.

There are obviously countless issues in any analysis of this type, like how a populist government is defined, how you do the counterfactual, how you ensure you are not getting reverse causality (i.e. bad economic times encourage the election of populists etc) and so on. For those interested in those issues the paper is very readable.

The UK is part of this data set, because it rightly labels the Johnson government as populist. We know that the Johnson government reduced UK GDP because of Brexit, by a total of 4% according to the OBR. But the UK’s response to the pandemic was also pretty bad in large part because of the Johnson government. So our own national experience is consistent with the chart above.

Besides GDP, the paper also finds that debt to GDP increases under a populist government, and there is weaker evidence that inflation also increases. The reasons why GDP falls under a populist government are only touched on in the paper, but they are pretty obvious. First, populist governments tend to restrict overseas trade: Brexit, and Trump’s tariffs, are clear examples. Putting barriers up that make overseas trade more difficult reduces GDP. The paper provides average effects for the impact of populism on trade, but it is more useful to look at the specific measures imposed by a particular populist government.

A second reason populist governments reduce GDP is that they make their countries less open to people from overseas, as well as goods from overseas. Populist governments tend to weaken an independent judicial system, and that among other things weakens the confidence of business to invest. Our current vintage of right wing populists appear very hostile to academia, and academia is where innovation starts, and where the expertise to implement innovation often comes from. Populists tend to devalue expertise, which allows them to make unrealistic promises on tax and spending, creating budgetary problems. I could go on with specifics, but more generally, societies where one part is ‘othered’ or declared the enemy within tend to work less well than those that are more unified. Societies where the governing elite is mainly concerned with making money at other people's expense work less well than societies where innovation is the key to becoming wealthy. [1]

One obvious question is why, if the macroeconomic impact of populist governments is so bad, they don’t get voted out of power quite quickly. Unfortunately they generally don’t. The paper estimates that on average populist governments tend to stay in power longer than other governments. There are two reasons for this depressing result. First, populists rig the democratic system to make their re-election more likely, either directly through gerrymandering for example or by restrictions on press freedom. Second, the social and economic reasons for the rise in populism tend to be persistent.

The topic of our time is why today we are seeing such a rise in right wing populism, populism that all too easily morphs into forms of fascism. It is of course important to understand why some groups of people are more receptive to populist messages than others. But in understanding why now is different from previous post-war decades, I don’t think that is where we should focus. In the UK, for example, the BNP has always had support, and racism used to be much more prevalent. What has changed over the last few decades is the attitude of the political and media elites.

When I started this blog, it was the early period of UK austerity and I was obsessed with how a UK government could disregard basic macroeconomics (don’t cut spending in a demand deficient recession where interest rates have hit their floor), but also why that policy was popular despite its disregard for what every first year economics student is taught. I talked a bit about the transmission mechanism between academic knowledge and policy, and how that mechanism can break down or be disrupted. Periods where expertise was ignored or contested could still then be considered undesirable departures from an accepted norm.

Of course since then we have had Brexit, which was another case where this breakdown occurred with devastating consequences for the UK economy. Unfortunately today political parties ignoring academic expertise has become routine. In the US we now have an administration that actively contests expertise not just in economics, but in climate science and medicine. I and many others have written extensively on how the media, owned by self-interested members of the plutocracy or run by their lackies, can not just ignore academic expertise but through propaganda counteract any influence it might have. [2]

For those who still doubt the critical role the media can play in all this just look at what has happened and is happening in the US. The biggest social media company bought up by someone who thinks Farage isn’t right wing enough for the UK, and who has changed that company so that it promotes the far right. US media that isn’t already owned by plutocrats who support Trump is being bought up by them. A media that once could be described as manufacturing consent is being turned into a propaganda machine for the Republicans and Trump. You can see the same processes starting in the UK. As Professor Emily Bell puts it in this fascinating discussion, “the patterns are almost exactly the same” in the UK and US.

The information and knowledge that populism severely damages the economy is there and is in the public domain, but the media increasingly acts to hide that from the public or distort that information so that much of the public never gets to understand it. Reality tends to win out in the end because it’s hard to disguise what is happening to people’s incomes, which is why Brexit is now much less popular than it was, but societies are increasingly losing their ability to avoid these pitfalls in advance. The reason this is happening is because a significant number of the ridiculously rich have decided their interests are served by promoting populism, and by investing in the means to promote populism.

[1] More speculatively, as right wing populists often appeal to a rose coloured view of the past as something to return to, it is not surprising that they enact policies that take society backwards. There also seems to be an aversion against current sacrifice for future gain.

[2] It is sometimes claimed that those voting for populists don’t care about negative economic effects. I think this may be true for a minority, but is not true for most. Those who voted for Brexit were significantly more optimistic about the economy because they believed the lies about ‘project fear’ and more money for the NHS.

The uphill struggle to stop Reform

 

Making political predictions is foolish, but I can only see two political parties that can stop a Reform government in the UK: Labour and Reform themselves. The mistake I made writing a similar post five years ago was to neglect the possibility of populist parties and leaders imploding, as Johnson’s Conservatives did. But we cannot assume that will happen to Reform.

One reason is that Reform and Farage are treated with kid gloves by the mainstream broadcast media. Corruption that might sink other politicians is often ignored for Reform politicians because too many think that is how a populist opposition would be expected to behave, so is it really news? But probably more important is that the broadcast media often takes its lead from the far right press, which is largely pro-Reform.

Could a revival in Conservative party fortunes damage Reform? Undoubtedly yes, but that looks increasingly unlikely to happen. Their policy of trying to ape Reform on Immigration, the ECHR or climate change just loses them votes to other more socially liberal parties, in particular the LibDems. Unless Reform implodes, few Reform voters are likely to be attracted back to the Conservatives because everyone remembers what a mess the Tories made while in power.

One way the Conservatives may become increasingly irrelevant is if more Conservative MPs defect to Reform. There is a danger here, in that Reform begins to look like the old Conservative government under a new name. But Farage is such a prominent figure that risk may be small, compared to the gains to Reform in capturing yet more Conservative voters.

Could an insurgent left stop Reform? While we could get to a French situation where centre parties are squeezed and the main battle is between the left and far right, in the UK it is much more difficult seeing that as any more than one route to Reform taking power. For the left to defeat Reform the Labour vote would have to completely collapse (far more than it has at present), and the remaining parties (LibDems, Greens, Welsh and Scottish Nationalists and maybe a new left party) would have to divide up the winnable seats between them, withdrawing from the others. Both conditions seem pretty unlikely on their own, and together even more unlikely, although not completely impossible.

For those who think a period of Reform in power would not be too bad, and might lay the groundwork for something much better afterwards, I ask you to just look at what is happening in the US. While Farage himself may try to distance himself from Trump before an election, it is pretty clear listening to someone like Tice that Reform are just copying the Republican party. [1]

It is the combination of a hard right populist media and Trump in the US that makes the threat of a Reform government so real, and that makes that prospect so terrifying. As we are currently seeing in the US, the transition to a fascism in which the leader is a virtual dictator, independent media is steadily eliminated, elections are rigged, minorities and any people that resist can be terrorised by a police force that goes around wearing masks and which has almost no accountability, and in which a judicial system is routinely overruled by a captured supreme court, can be frighteningly quick. While Reform may never capture more than 30+% of the vote in the UK, they can still capture power because of our bizarre first past the post system.

This is why it is worth looking at what happened at the Labour party conference, and see where that puts us in terms of Labour either helping or stopping Reform. For political journalists there have been two ways of spinning that conference: signs of hope or evidence of deep weakness. Both are true, because Labour are starting from such a poor position in electoral terms.

The first positive sign was to attack Reform on immigration on grounds other than the nebulous charges of impracticality or seriousness. If you wanted to put a really positive spin on what happened you could argue that because Labour had moved towards Reform’s rhetoric on immigration and asylum, this helped encourage Reform to go further by scrapping Indefinite Leave to Remain (ILR). The idea of ILR is popular, so Farage’s policy does allow Labour to draw a clear dividing line between the two parties on this issue without worrying that it is giving them votes. But that spin is far too generous to Labour.

While it’s good that Labour have at last found something to make their immigration and asylum policy distinct from Reform and the Conservatives, overall their stance remains much too illiberal for many. Even with ILR, Labour’s position still leaves a lot to be desired. Every time they bring in some tweak on immigration or asylum that introduces another cruelty that migrants must face, they give credibility to the illusion the populist right has created that these issues are of utmost national importance. [2] To quote Chris Grey

“Yet Labour politicians still don’t seem to grasp that by constantly accepting that there are ‘legitimate concerns’ about “uncontrolled immigration” and “open borders” (when the reality is that immigration is not, and has never been, ‘uncontrolled’ any more than borders have been ‘open’) in general, or, in this case, about existing ILR rules (which, as the polls linked to earlier show, are supported by the overwhelming majority), they cede ground to Farage and invite his inevitable denunciation of their reforms as inadequate.”

In addition the new Home Secretary seems happy to take ever more authoritarian positions on other matters like policing. It is hard to imagine that any liberal voter will take the combination of Labour’s position on ILR and their attempt to ban repeat marches and think that makes them more likely to vote Labour.

Chris Grey also welcomes that Starmer is finally linking the problem of small boats to Brexit, and Brexit to Farage, calling them Farage boats. But for that to work it needs every Labour politician to use the phrase at every opportunity, and take those opportunities to explain why Brexit is a major probable cause of the increase in small boats. I see no signs of that happening yet.

More generally, Starmer’s speech illustrates another problem Labour have, and that is a hopeless communications strategy. For example, calling Reform’s policy racist may be accurate, but is it good politics? The Daily Mail took no time to distort what Starmer had said. This distortion might not matter if Labour had a good communications team that could fight back against this kind of misinformation, but at present they don’t.

Labour should take a leaf out of the right wing playbook, which is to find the most extreme examples on the right and demand that Farage and Jenrich disassociate themselves from them. To quote from Ian Dunt in a very good discussion

“Right now, for instance, several mainstream right-wing commentators are claiming that black people cannot be English. Matthew Goodwin has said it. Isabel Oakshott has said it. This is absolute poison, obviously, but it is also contrary to public opinion. It is unpopular. I would like to see a Labour communication strategy which punches that bruise. Make it the chief issue, focus remorselessly on it. Force everyone on the right to either disassociate themselves from it or be branded a racist for holding it.”

This suggests to me that Labour still have two basic impediments to improving their electoral position that have yet to be removed. The first is to develop a far better communications strategy. It is hard to combat the power of the right wing press and right wing social media, particularly when the BBC shows every sign of being captured by that media. However the one institution that could present a counterweight to that power is a Labour government. Yet the government seems remarkably reluctant to take any steps to combat this media. It still just uses X rather than alternative social media, for example.

The second is to stop thinking Labour has to fight Reform by stealing its clothes, and instead start thinking about preserving its core vote, which is not some bygone working class but is the socially liberal middle class. Pursuing a Blue Labour strategy might work against a fatally unpopular Conservative government, but it does not work when in government. The last year proves that. The longer that party factionalism and ideology blind those running Labour to this basic truth the bigger the crash will be when electoral disaster forces change upon them, and the greater the possibility becomes of a Trump like government in the UK.

[1] Tice even talked about the link between Tylenol and autism on UK TV, even though Tylenol is called Paracetamol in the UK.

{2] Voters might think immigration is very important nationally, but few think it is important in their own area. Which means its perceived importance depends on what voters hear in the media, and we know the media is full of myths that are miles from the truth. In the UK immigration is the ultimate vibe issue.

Misunderstandings on the left (and elsewhere) about the OBR, independence and the bond market

 

I often see pieces from those on the left criticising the OBR. Here is Louise Haigh, for example, talking about the “rigid orthodoxy of the OBR”. Such criticisms are typically based on a misunderstanding about what the OBR does, or deflect more valid criticisms of other aspects of fiscal policy onto the OBR’s shoulders where they do not belong. This is generally linked to more general criticisms of the OBR and Bank of England, suggesting that both institutions create a ‘democratic deficit’. While some independent central banks do create democratic deficits, ironically this is much less the case for the Bank of England and is certainly not the case for the OBR.

With both institutions, what the government has done is delegate to experts a task that requires a high degree of technical skill, in an area where that skill could easily be overridden by short term, party political or personal advantage. The example I generally quote, which I was told about on good authority, is a Chancellor before the Bank became independent who said that they knew interest rates had to increase, but there was no way he was going to do that until after the party conference. In this case a politician was exploiting the fact that advice was secret to enhance party or personal popularity. That is hardly democratic.

The Bank of England is tasked with meeting an inflation target set by the Chancellor, over a period that is roughly set by the Chancellor/Treasury. The interest rate required to achieve this target is largely a technical macroeconomic question, and as such does not create any significant democratic deficit. [1]

The macroeconomic consensus is overwhelming that independent central banks produce better outcomes, and I agree with that consensus. Just look at the United States right now. Trump says the economy is booming, and therefore interest rates should be lower. If he could set interest rates, they would be far lower right now, and that would probably increase inflation further above target, requiring interest rates to rise again later. From any objective point of view an independent central bank produces a better outcome than with Trump setting rates.

Now thankfully not all governments are like the current US administration. But a lot of commentary on the left implicitly assumes a government that is benevolent, by which I mean one that always takes decisions to maximise social welfare. (The politics comes in how you define social welfare.) Even if we were to assume that governments on the left were like this, the whole point of democracy is that such governments can lose power, often to administrations that are not benevolent.

Independent institutions can protect society from the consequences of non-benevolant behaviour by politicians. We have a justice system where juries decide on guilt or innocence, and judges make decisions about prison sentences, because to give politicians that power would be dangerous, yet neither juries nor judges are democratically elected. A pluralistic democracy is all about giving other institutions besides parliament or the executive a limited degree of authority to make decisions. The populist right hates this, which is why they tend to try and end this independence. It is a shame that some on the left sometimes seem to side with the populists on this. [2]

The OBR does not take any decisions. All they do is forecast. Forecasts involve an assessment of how society will behave in macroeconomic terms over the next few years. When I was a lot younger I did a good deal of macro forecasting, and at no point can I recall politics coming into it. A parallel I often draw is with assessments by NICE about the effectiveness of new drugs. Sure, politicians often prefer some forecasts to others, just as they might prefer some NICE assessments to others, but if you think about why that is, it only strengthens rather than weakens the case for keeping politicians out of the process. I don’t think I have read much talk about how NICE creates a democratic deficit in health policy.

Haigh gives some examples of why the OBR represents a case where “opaque watchdogs outrank democratic choice”: underestimating the impact of public investment, or the macro benefits of public spending like ‘Sure Start’. But independent institutions tend to be far more open about their assessments than government departments, and governments and the public alike are free to challenge those assessments. The OBR attempts to provide analysis that represents a consensus view among experts. I would much rather that than wishful thinking by politicians who generally think their policies will have a greater impact than they actually do. Calling this consensus ‘orthodoxy’ is just name calling.

It is not the case, as NEF suggest here, that the government is obliged to make fiscal decisions based on the OBR’s judgements. Legally any government could say that it is not meeting its fiscal rule in the OBR’s forecast because it believes the OBR is wrong. It could claim, for example, the OBR is underestimating the impact of public investment. That this never happens is generally because the OBR’s judgements are following the consensus, and as a result politicians are not prepared to take a public bet on their own optimism.

Some wonder why fiscal decisions should be based on forecasts at all, because judgements made in those forecasts can have a big influence on policy. But when Chris Giles says that “this is no way to conduct public finances in a mature democracy” he is completely wrong. The only alternative to basing fiscal policy on forecasts is to base it on current data, and that would make fiscal decisions far more erratic. The Bank bases interest rate setting on forecasts, and the reasons to look ahead when making fiscal decisions are stronger still.

It would be perfectly possible for the Treasury rather than the OBR to do the forecasts on which policy is based, and as NEF suggests let the OBR provide an alternative forecast that focuses on areas of disagreement. That is transforming the OBR into more of a fiscal watchdog, which is making it closer to independent fiscal institutions in some other countries. My own view is that this would make policy worse rather than better, particularly when you remember that a right wing populist government could well be in power. Macro forecasting is difficult, and rarely gets things right, but I would much rather policy was based on experts making those forecasts than politicians engaged in wishful thinking.

An example of misdirected criticism comes from the cuts in welfare spending last Spring. It wasn’t the OBR that chose to forecast twice a year, it was parliament that mandated the OBR to do so. It wasn’t the OBR that required a fiscal correction following that forecast rather than wait until the autumn, but the government. Equally the Bank’s sales of its government debt is something that the government should take a greater interest in, and the Bank should and would adjust its policy to accommodate government wishes.

What about Andy Burnham’s statement that the government should not be in hock to the bond markets? That statement doesn’t make much sense [3], but equally neither does much mainstream comment on the bond market, which talks as if this market had a veto on fiscal policy. The problem the UK government faces now is not an inability to borrow, but rather hat it is expensive to borrow. It is relatively expensive for the UK government to borrow not because of the size of the deficit or the amount of UK government debt, but because UK short term interest rates are relatively high because UK inflation is relatively high.

There is quite understandable frustration at the moment on the left and elsewhere about the continuing fiscal squeeze on many if not all parts of government spending. I share that frustration. But for once the source of the problem is pretty clear. It is not the fault of the OBR, who are just trying to forecast as best they can the likely level of tax receipts and government spending over the next few years. It is not the fault of the fiscal rule that currently binds, which requires current government spending to match taxation in a few years time. No one to my knowledge has suggested why that rule is not appropriate in the current macroeconomic conjuncture. Nor is it the fault of the bond markets.

The current problem with fiscal policy in the UK is quite simple. The government is not raising enough in tax. Most people, understandably, want a level of public services comparable to our neighbours in Western Europe. The amount of taxes we collectively pay, however, is significantly below most countries in Western Europe. This was not the case in 2010, but is a consequence of 14 years of Conservative government. As the last Labour government showed, if you want better public services than a Conservative government typically provides you need to raise taxes.

[1] The set of interest rates necessary to achieve the goals set by the Chancellor is not unique, however, and any choice may involve issues which different politicians might have different views about. That is why the Bank’s job is not completely technocratic. This problem is well understood, and is dealt with by many central banks by defining secondary objectives like employment. In the UK it is easy for the government to provide the Bank with additional direction in general terms about how it views such trade-offs.

[2] Adam Tooze asks here whether MAGA attacks on central banks might spur those on the left “to define what a democratic politics of central banking might look like”. In this post I’m kind of asking the same question, but with rather different motivations. If you are prepared to condemn independent central banks as undemocratic and technocratic, then are Trump and MAGA in this instance doing what you have always wanted?

[3] We don’t say we have a cost of living crisis because UK consumers are in hock to the goods market.

Farage and the BBC

 

On Monday 22nd September I watched a party political broadcast on behalf of Nigel Farage’s Reform Party. It was on the BBC, and it was entitled ‘News at Ten’. Unfortunately that news bulletin is no longer available on the BBC's website, so all I can do is give you a flavour of what it was like.

It starts 16 minutes into the bulletin, with Chris Mason, Political Editor of BBC News, interviewing the leader of the Liberal Democrat party, Ed Davey. The Liberal Democrats are having their party conference, so this is a chance for its leader to make a relatively rare appearance (see below) on the news, and perhaps explain what the Liberal Democrat’s policies are, or what their political aims are. But Chris Mason had other ideas.

“Do you feel a moral duty to keep Nigel Farage out of power” is his second question. His third is “You say that Nigel Farage gets too much attention, but ...” He holds up a little figurine of Farage that he bought at the conference.”... You are obsessed with him, aren’t you? Frightened even.” And so it continues, with pretty well every question from Mason being about Reform. Finally he takes on Davey’s claim that the BBC is giving too much uncritical airtime to Farage, and accuses Davey of behaving like Donald Trump! Mason’s summing up at the end is about Nigel Farage. 

This segment was then followed by the man himself, with Farage announcing a new policy to remove settled status from immigrants who have been in the UK for a number of years. Despite apparently discussing the Farage policy, the BBC failed to say clearly that there was no basis to his claim that this would save public money.

Did I catch this BBC News Bulletin on a bad night. We do have data, thanks to a study from Cardiff University led by Professor Stephen Cushion and Dr Matt Walsh. This found that on both the BBC’s and ITV’s News at Ten, Reform featured far more often than the Liberal Democrats, despite the latter having far more MPs. It is clear that impartiality is being defined by broadcasters as reflecting the position of the two parties in recent polls, rather than in their relative number of MPs. There is nothing wrong about using this as a criteria, as long as it is applied consistently, and the study does not find any clear fault with this coverage. However Stephen Cushion did say

“While there are no rules on reporting party leaders, our study did find Nigel Farage was more prominently covered than the Liberal Democrats’ leader, Ed Davey – and often leading the news agenda. Broadcasters might want to consider the level of airtime granted to party leaders and the degree of scrutiny they receive.”

As the example above illustrates, interviewing Ed Davey and just asking him questions about Nigel Farage hardly corrects an imbalance in favour of Farage!

 

More worrying I believe is that the BBC is actively trying to alter story selection to regain the trust of Reform voters. It is certainly true that right wing voters, including those voting Reform, tend to say they have little trust in the BBC, in part because their politicians and their press are constantly telling them the BBC has a left wing bias. The BBC’s typical response to that criticism is to become defensive, and that response can often amount to appeasement. In contrast, as the Mason interview discussed above shows, when a party from the center or left makes similar criticisms the BBC’s response is much more aggressive. The BBC applies its impartiality rules in a biased way.

There are two simple reasons for the asymmetry. The first is that BBC News coverage is far too influenced by the UK press, and the UK press is heavily biased towards the populist right. The second is that the BBC is run by people who support the Conservative party. Its Director General, Tim Davie, is a former Conservative party county councillor. Robbie Gibb, former director of communications for Theresa May, is on the BBC Board and takes a keen interest in ensuring BBC impartiality. Is this why BBC coverage of the genocide in Gaza seems to be heavily influenced by a fear of being perceived as critical of the Israeli government?

The BBC Board is in part appointed by the government, and the Board appoints the Director General. So if Labour remains in power over a long period, if it wishes it can correct this right wing bias in the BBC’s management. But that looks at the moment like a very big if. Far better, in my view, would be a more immediate attempt to reorganise BBC governance so that the political party in power cannot so easily influence what the BBC broadcasts.

The particular BBC News at Ten that I watched illustrated two other problems that I think are more general. The first is the poor quality of much political journalism. Comparing Ed Davey’s complaints about BBC coverage to what Trump has been doing is just ridiculous. In one case we have a political party in opposition with no influence whatsoever, and in the other we have a fascist dictator with considerable power to influence what the media does. If a political journalist cannot see the difference then that is really worrying.

The second is that both the media and politicians have not really come to terms with how to deal with right wing populists like Farage or Trump. They keep treating them as normal politicians when they work by quite different rules. For example right wing populists lie far more often than other politicians, and if this isn’t called out then this favours those populists. When populists say reducing immigration or stopping immigrants becoming citizens will save the taxpayer money, they are lying in the same way that they lied about Brexit and the NHS. If the BBC fails to treat these claims in the same way as they treat Trump’s claims about health (as in the news bulletin above), then they are doing the populist’s job for them. Part of the problem is that when Trump tells lies about health, the BBC will typically get their health correspondent to comment, who knows their subject and talks to experts. If Farage did the same, this would typically be covered by a political correspondent without that knowledge or focus. 

As with Trump, we know that Farage habitually lies. There was a revealing question in that Davey interview. Mason asked wasn’t there a danger that established parties were making the same mistake with Reform as with Brexit, and millions of voters would again respond that established parties just don’t get it. (It is a question Farage would hav loved, because he wants to paint himself as the insurgent against the establishment.) Davey didn’t give the obvious answer, which is that we now know that Brexit has been a disaster, and the person leading Reform is the same person who lied to us about Brexit.

A great danger that faces both mainstream politicians and the media is to create double standards that favour right wing populists. When a mainstream politician is caught misleading the public, or makes some political gaffe, or there is a hint of financial misconduct, the media or opposing politicians will make a big deal of this. However because right wing populists like Trump or Farage do this all the time, it is considered normal and so goes unremarked. We suffered the disaster of Brexit because the constant lying of Leavers was not sufficiently exposed and called out. It would be tragic if this happened so soon again, because politicians and journalists were not prepared to ask Farage one simple question. You lied to us once before, and we are all suffering as a result, so why should we believe you again?

Parallels between what to do about Trump and what to do about Farage

 

Much as Starmer’s government has attempted to deal with Farage and domestic right wing populism by bending towards it (some might say falling over towards it), Starmer has tried to deal with Trump in a similar manner. One obvious example is inviting him for a state visit. Another was probably the appointment of Peter Mandleson as US Ambassador.

The reasons for trying to keep on the good side of Donald Trump are obvious. He is effectively the all powerful monarch of one of the two most powerful countries in the world, and getting on the wrong side of him is likely to have significant costs for any smaller nation that does so. Trump’s main weapon for imposing these costs is tariffs. For example, he has imposed 50% tariffs on Brazil because they have dared prosecute a former right wing President who attempted to overturn by force an election he lost.

One problem that is common with both strategies, either appealing to voters attracted to Reform and appealing to or flattering Donald Trump, is that this alienates the majority of your voters who dislike right wing populism. Mandelson’s close friendship with Jeffrey Epstein, and his support for him even after he had been convicted, was unacceptable to UK public opinion, but it meant he had a lot in common with Donald Trump, who also was a close friend of Epstein. This fact also probably meant that Mandelson and Trump had personality traits in common, which again would make the task of flattering and persuading Trump easier. It was almost certainly one of the reasons Mandelson was appointed in the first place. It is probably no coincidence that McSweeney, who is one of the architects of Labour’s attempts to copy Farage on immigration and asylum policy, is said to have been keen in appointing Mandelson.

Mandelson’s support for Epstein was not acceptable to the UK public, anymore than Prince Andrew’s friendship was. I personally have had little time for Mandelson ever since I briefly met him when I was a student. I can also see why much of the media would like to treat Mandelson’s departure in isolation, rather than as anything to do with Donald Trump. But this seems quite wrong, and potentially hypocritical, to me. Mandelson was appointed in good part because Donald Trump had been elected as POTUS. If Kamala Harris had become POTUS, it seems unlikely Mandelson would have got that job.

If you think Starmer’s judgement was bad in appointing Mandelson, then surely you need to address the fact that his appointment was part of a strategy to deal with Donald Trump. You might need to explain why you think Mandelson’s appointment was a mistake, but yet giving Trump a state visit is OK. After all, Trump has not only had a close relationship with Epstein but, unlike Mandelson, seems to have had similar sexual predilections. There is also the small matter of Trump encouraging a coup to overturn the election of the previous POTUS, and generally turning the US into a fascist state.

Are there risks beyond alienating domestic public opinion in the strategy of trying to flatter and appease Donald Trump? I can think of two major additional problems, which again link to problems with following right wing populists on immigration and asylum. The first is that the more the UK government treats Trump as just another POTUS, rather than the dangerous fascist that he is, the more difficult it is to criticise Reform when they copy Trump’s policies. One of Reform’s major weaknesses is that its members, who are getting elected in increasing numbers, actually like and often try to copy what Trump is doing. Most UK voters, by contrast, do not. Explicitly branding Reform as Trump surrogates is a powerful weapon to use against them, but one the UK government has not used because I suspect they worry about Trump’s reaction. The parallel here is how the government, by constantly talking up the issue of asylum or immigration, plays into Farage’s hands.

The second reason is that it normalises Trump in the minds of decision makers and the media as well as voters. An event of far greater importance to the UK than Mandelson’s departure happened this week, and that was Russia firing a large number of drones at Poland. Most were unarmed, so it is highly unlikely that they all wandered into Poland by mistake when their intended target was Ukraine. Poland certainly doesn’t think it was an accident. Instead this looks like a deliberate act by Putin to test the water. The muted reaction from Poland’s NATO allies (as Phillips O’Brien notes NATO could not even call it an attack) together with the remark that it could be a mistake from Trump himself, might suggest to Putin that the water is rather inviting from his point of view.

If Putin did in the next few years try and invade one of the Baltic states, for example, it seems likely that the United States would do what it could to stop NATO responding. The more other NATO country leaders have a mindset that involves trying to placate Trump, the more vulnerable they become to Trump acting as Putin’s inside man. The parallel here is that the more government ministers say that dealing with asylum seekers is one of the most important issues facing this country, the more they as well as voters will believe it. It leads ministers to take actions that do harm to individuals and also to the other goals of government, like increasing living standards.

At the end of the day this is an issue of getting the balance right at any moment of time rather than a binary flip to a policy that does the complete opposite. Europe cannot afford to completely antagonise Trump right now if only because Ukraine needs the modest support the US still provides. Similarly Labour needs a distinctive policy on asylum and immigration rather than one that is completely laissez faire. But as with domestic policy, UK foreign policy towards Trump does seem to have got that balance a bit wrong. The appointment of Mandelson and Trump’s state visit suggest current UK foreign policy is too unbalanced in favour of appeasing Trump.

We desperately need Starmer and other ministers to say that while we need to work with Trump, his values are not the values of the great majority of the British people. This is the same as the need for Starmer and other ministers to fight back against the rising tide of domestic racism and intolerance. If Starmer has advisers who counsel against such a fight back because it might offend Trump or lose a few votes those advisers need to go, because in our current situation they are dangerous. If Starmer and any ministers themselves believe it is best to stay quiet for risk of offending Trump or some voters then I’m afraid they are in the wrong place at a critical time, and should go. And for god sake do something about overseas funding, X and Musk.