How Labour makes fighting right wing populism harder

 

I must confess that this post will be very similar to one I wrote a fortnight ago. The big difference is that this is about this Labour government rather than the current Conservative party. Another difference is that while the trajectory of the Conservative party seems reasonably clear under its current leader, things are potentially more fluid with Labour. One commonality is that, up until now at least, the leadership of both parties have got their strategy seriously wrong.

You might think what right have I, a macroeconomist by trade who just dabbles in political economy, to make such a claim. [1] Well I could point out that many others who know much more about these things have been making broadly the same points as I have. I would also point out that over the past year or so what I and others predicted would happen has come to pass. Labour’s core socially liberal voter base has continued to either not vote Labour, or vote for the Green party, Liberal Democrats or nationalists. The argument that these voters will come back to Labour in a general election was flawed in part because it ignored what would happen before then. The events of the last two weeks alone have proved that criticism to be correct, with the architect of Labour’s strategy now out of his job. [2]

Another commonality with the Conservatives is the belief that if politicians sound, and in the case of this government act, like Nigel Farage on immigration and asylum seekers this will win them votes that are currently going to Reform. This is a colossal mistake. As I said two weeks ago, Farage owns these issues, and in Labour’s case there will always be enough asylum seekers crossing the Channel for Farage and the right wing press to suggest to social conservatives that the government isn’t doing enough. By sounding like Farage and acting as if what Farage says is true, all Labour is doing is giving Farage’s message additional airtime and credibility.

Furthermore there is an economic dimension that adds what Jonathan Portes describes as a doom loop. Restricting immigration has negative economic and fiscal consequences, which intensify not only dissatisfaction with the government but also adds to the anti-immigration views of many voters.

So Labour sounding and acting like Reform on immigration and asylum was likely to increase rather than decrease the Reform vote and reduce the Labour vote, which is what has happened. But it has been far worse for Labour, because sounding and acting like Farage is anathema to Labour’s core vote, which is socially liberal. This problem is particularly acute now because of the popularity of Reform.

The idea that Farage could become Prime Minister, and then start acting like his hero Donald Trump, is horrifying to Labour’s base. The elevated nature of the threat from socially conservative populism makes Labour’s base that much more sensitive to Labour behaving like Reform. In addition, Reform’s success means that ideas that were once seen as so inhumane as to be inconceivable are now on the agenda. In those circumstances, if instead of aggressively combating those policies the Labour government spends its time telling voters how problematic immigration is and asylum seekers are, and why cruelty is necessary to deal with these problems, then much of Labour’s base will not vote Labour. Continuing to supply some arms to a regime engaged in ethnic cleansing, and a failure to recognise that ethnic cleansing, does not help either.

Diagnosis of why Labour have lost their core base is crucial to understanding how to get it back. It is not just a matter of Labour ‘tilting left’, and sounding or acting more left wing on some economic issues (or bothering to promote the areas where they actually are left wing). The way to win their core base back is to start acting like a party that at least protects socially liberal ideals, even if it also recognises socially conservative concerns that are not imaginary. Another commonality with two weeks ago is that analysis that treats politics as one dimensional (left/right) misses this key point. Labour has lost much of its base not so much because it hasn’t been left wing enough in economic terms, but more because it has sounded and acted in an illiberal way.

Which brings us to Shabana Mahmood, Labour’s home secretary. Judging by both her rhetoric and actions, she is as committed as McSweeney was to the strategy that has been such a failure for Labour. Mahmood has recently asked for comments on proposed changes to settlement rules: how long immigrants have to live here, and under what conditions, before they would be granted indefinite leave to remain (ILR). A very good summary of the proposals is given by the Migration Observatory here. One noteworthy change is that refugees granted asylum in the UK would face a baseline waiting period of 20 years (!) before becoming eligible for settlement. Many have suggested that such measures, as well as being immensely cruel to those currently waiting for ILR, will also severely damage integration, which compared to some other countries has up until now been a UK success story.

These changes will undoubtedly find support from many Reform voters, but with the Conservatives and Reform bound to offer ‘tougher’ proposals it seems unlikely this will attract many Reform voters to vote Labour. As I suggested above, by keeping immigration and asylum seekers in the news as ‘a problem’ it will gain Reform votes. In contrast these proposals are pretty unpopular among Labour, Liberal Democrat or Green voters. Add to this Mahmood’s apparent wish to cut immigration numbers whatever their level, the Farage type rhetoric coming out of the Home Office, and Mahmood’s determination to keep proscribing Palestinian Action and therefore locking up grannies for holding placards, and there is plenty here to keep former Labour voters voting for socially liberal parties at least until the General Election.

It is a good sign that this Labour government is at last actively opposing extreme reactionary statements like those from Jim Radcliffe. But given the damage that has already been done, the occasional socially liberal statement will not be sufficient if the government’s actions continue to be illiberal and in some cases simply inhumane.

Many on the left may think that a continuing drift of Labour’s core vote to other parties is a good thing, because Labour under Starmer or either of the two leading contenders to succeed him is probably beyond repair. In a system where all elections are based on a proportional voting system this argument has some force, because then power reflects voting numbers and social liberals make up a powerful voting block. Broadly the Greens would take economically left leaning socially liberal votes, the Liberal Democrats right leaning socially liberal and some centre votes, Labour would take some left leaning socially conservative and many centre votes, and the Conservatives and Reform would fight over the right leaning socially conservative vote. Even in this case, however, social liberal parties are unlikely to be in the majority, with at best Labour holding the balance of power

Unfortunately under a First Past The Post (FPTP) voting system such an outcome is a recipe for the next UK government to be a Trump tribute act. Under FPTP, it is highly unlikely that a combination of socially liberal parties (the Greens, Liberal Democrats and nationalists) can win a majority of seats in the House of Commons, even if these parties could form a perfect pact between them to divide up seats before a General Election. According to current polls their combined vote total is around 30%, similar to Reform. But the FPTP system is biased towards social conservatives, because the social liberal vote is heavily concentrated in cities (partly because it is relatively young). [4]

Even if the Labour vote stayed at around 20%, it would still attract some voters in the political middle, allowing right wing social conservatives to win critical marginal seats. In addition we have a media environment that is heavily tilted towards right wing social conservatism. As a result, in any General Election many socially liberal voters will need to vote Labour to prevent socially conservative populists winning an outright majority.

To prevent a right wing, socially conservative party coming to power in the UK, many social liberals will not vote Labour in by-elections or council elections before the General Election to put pressure on the government to sound less like Farage on key social issues, but then many of them will need to vote Labour tactically in the General Election. That they will manage to do so is of course why the Labour government is highly unlikely to change FPTP for General Elections.

The important point to stress for this post is that Labour gains nothing by delaying this move to a more humane and liberal stance on social issues, but has a lot to lose. The more modest any change is, and the longer it takes, means it becomes more difficult for social liberals to convince themselves to vote tactically in a General Election. It also makes deciding who to vote for tactically more confusing. Imagine the problem many voters have in the forthcoming by-election multiplied by hundreds of seats without much media coverage on those seats. And finally the longer a government remains very unpopular in the polls the more difficult it is for it to generate the positive media coverage it needs to win votes from low information voters.

Unfortunately all the signs are that the Labour government under any likely leader will be too slow to recognise the depth of the strategic error they have made and are continuing to make. While those on the political right have generally understood the need to protect their core vote, Labour has a tradition of doing the opposite that goes back to the factional wars that began in the 1980s. This makes the battle against socially conservative populism in the UK that much more difficult.

[1] Most political journalists are too absorbed in the moment to ask these strategic questions. All too often it is like trying to ask a market trader what they think the medium term impact of a particular macro policy will be. Even the ability of some of them to do short term political analysis seems questionable. It seemed to me pretty obvious that both of Starmer’s main challengers for the leadership would prefer to take over after the party’s drubbing in the May elections rather than before those elections. (A third was not even in play.) As a result, there would be no attempt to remove Starmer right now. But if your incentive is clicks rather than being right, then I guess the fever of the last two weeks makes some sense.

[2] Of course the proximate cause was Mandleson, but Labour’s dire position in the polls colours everything. In addition, as the current and recent by-elections show, any general election will be all about keeping Reform out, and crucial to that assessment is which party is most likely to achieve that. If before a general election another party (e.g. Greens or nationalists) have had considerable success in local elections in many areas, those parties rather than Labour will have a strong claim to be the party that can keep Reform out. Many might consider that a good result, but as a strategy for the Labour party it is not clever.

[3] I don’t like the kind of voter grouping that seems popular among pollsters and which NatCen does here, but the latter does have some correspondence to these four categories of voters. Most of ‘Urban Progressives’ and ‘Soft-left Liberals’ will be left leaning social liberals, ‘Left-Behind Patriots’ are left wing social conservatives, ‘Well Off Traditionalists’ will be right wing social conservatives, with ‘Apolitical Centrists’ and ‘Middle Brittons’ forming a large group in the centre.

[4] This is one of the reasons why Johnson won a large majority in 2019 despite a majority voting for parties supporting a second referendum.

Fiscal watchdogs, pluralist democracy, technocracy and evidence based policy

 

When I write about fiscal watchdogs like the OBR in the UK, I generally get some comments along the lines that these watchdogs produce technocratic policy and limit the freedom of democratically elected governments and that they should therefore be abolished. Such comments come from both the left and right. This reflects public discourse in the UK at least, where many have called for the OBR’s reform or abolition over the last year. In this post I want to suggest that this argument is inherently populist, and would have the effect of suppressing the influence of knowledge on decision making.

People use the term ‘pluralist democracy’ in different ways, but the definition that fits what I want to talk about here is as follows. “Pluralist democracy is a political system where power is dispersed among various groups and organizations, allowing for multiple voices and interests to influence decision-making.” For example, on some issues local authorities have power, while on others the central government has power. Judges, not politicians, make decisions about interpreting the law or constitution, if one exists. Universities and the academics within them in as a collective, have power in terms of authority, because most of the public believe that they will have looked at and interpreted evidence in a reasonably unbiased way.[1]

Populists almost by definition oppose pluralist democracy. For the populist, the people should have all this power, and the populist is the expression of the people’s will. They appoint judges who they hope will side with them rather than with the law. They interfere with the governance of universities and cut funding in areas where academics have different views to those of the populist administration.

A fiscal watchdog, like the OBR in the UK, is part of a pluralist democracy. It gathers information on the state of the economy and public finances, and tries to assess their likely trajectory over the next few years. The OBR is like a university in the sense that it works in the open, publishing as much as it can, and draws conclusions (forecasts) from evidence (data) and theory (economics). It should be no surprise that one of Victor Orban’s first acts as the populist leader in Hungary was to abolish their fiscal watchdog.

Nigel Farage, populist leader of the Reform political party, is giving “serious thought” to abolishing the OBR. In typical populist fashion, he says that the OBR is “effectively dictating to elected politicians”. All the OBR does is a forecast. Would you rather the OBR or Nigel Farage produce the forecast on which fiscal policy is based? Farage would like to do away with the OBR because he would like to pretend he can deliver the impossible: lower taxes, more public spending and lower borrowing.[2]

One particular feature of the OBR’s set-up that critics seldom mention is that the government is not formally bound to follow the OBR’s forecast. It can either ignore it (as the Truss government did) or produce a budget based on a more optimistic forecast and give its reasons why it disagrees with the OBR’s forecast. In that formal sense, any power the OBR has can easily be overridden. That this option is never used or discussed is very revealing.

If a government can ignore the OBR’s forecast, why do some claim the OBR hinders the operation of a democratic government? It is because the OBR uses and publicises knowledge, in this case about what is likely to happen to the economy and public finances, in a way that is difficult for the government to dismiss. You might say I am being naive here. It would be politically very difficult for the government to ignore what the OBR forecast: just look at what happened to the Truss government. But that is my point. Why is it politically difficult? It is because the public and the markets are more likely to believe the OBR than the government. The markets in particular are in the business of using information like everyone else, and if they believed the government was right and the OBR was wrong they would react positively, not negatively.

The government overriding the OBR is problematic because the chances that the government knows better than the OBR are extremely small. When I asked above whether you would rather the OBR or Nigel Farage produce the forecast on which fiscal policy is based, I think you could substitute any politician for Farage and get the same answer. It is of course possible that a politician could get advice about the economy that had nothing to do with their wishful thinking or political advantage and only involved knowledge the OBR had erroneously ignored, but that possibility is pretty small. At best it could duplicate what the OBR does, but almost certainly with a lot less transparency.

The reality is that most governments do not ignore or dispute the forecast presented by the OBR because the public and markets would rightly suspect that it was doing so not because it knew better than the OBR’s economists, but because it was politically expedient to take a different view. Truss’s government ignored the OBR in part because they thought that tax cuts would spur non-inflationary growth sufficient to generate additional revenue that would pay for most of the tax cuts. That was wishful thinking, and the markets reacted accordingly.

Of course institutions like the OBR, or other elements of a pluralistic democracy, have to be accountable in a way that ensures they do what they are supposed to do without surrendering their independence to the government. That can be tricky but it is not impossible. In the case of the OBR, accountability is pretty strong. Past mistakes are examined and lessons learned. Of course economists like myself will sometimes disagree with their judgements, but the OBR is generally careful to ensure its judgements are not wide of the mark in terms of the academic consensus. The argument that the OBR is not fit for purpose because it gets its forecasts wrong simply reveals that the person making that argument knows little about macro forecasting. Another example of the OBR’s accountability is that the head of the OBR recently resigned because of a technical computer error.[3]

This is why, as an academic, I am naturally very supportive of institutions like the OBR, an independent central bank, or a body like NICE, because I see them as means to ensure policy decisions are based on evidence and knowledge. Of course such institutions can in theory be replicated by a government and a very efficient and open civil service, but in practice government based decision making is rarely as open and transparent as it is in these institutions.

It is of course important to ensure that such institutions are limited to obtaining and using evidence, and do not stray into making decisions which are rightly the province of elected representatives. There are inevitably grey areas. Again the OBR is a useful example because it is hard to think of any way the OBR currently oversteps this line. Independent institutions like the OBR, Bank of England or NICE are hardly examples of technocratic government. For example the Chancellor decides the inflation target, not the Bank, and it is in my view right that she does so. To say that too much policy is based on evidence rather than values is a confusion, because good policy uses both.

The rise of populism has made evidence based policy that much more unlikely. Populists want total power, and one of the many things that might frustrate that is people putting facts and evidence to the public that contradicts their preferred narrative. The best way for populists to avoid that happening is to control the media, but institutions that by their nature automatically have a voice remain a threat.

For this reason, while we still have a government that says it sees populism as a critical threat, I think we should be talking about strengthening bodies like the OBR, not abolishing them. One proposal that received some attention in the past but which is hardly mentioned nowadays is to follow the Netherlands and have the OBR cost opposition policy proposals before a General Election. (I discussed this here.) While this might make Farage even more antagonistic towards the OBR, it might help to stop him getting elected.

[1] Of course any individual academic has less authority, although still probably more than a typical politician in this sense.

[2] To their credit, the Conservatives have not followed Farage.

[3] Was his resignation accepted by the Chancellor because the OBR published facts about the budget process that contradicted the spin coming from the Treasury?

The Conservatives need to embrace the Centre Right

 

Chris talks about the death of the centre right, but I would argue the centre right in the UK and US died a long time ago, with the advent of neoliberalism. The centre right that I can still dimly remember in the UK was a Conservative party that accepted the need for a sizable state, strong trade unions, the nationalisation of essential utilities and high rates of taxation on top incomes. These were the governments of MacMillan and the the views of the Tory ‘Wets’ that were horrified by the unemployment Thatcher’s monetarism created.

Now you could argue that since those days what is thought of as the centre has shifted, so what is centre right now is different from what was centre right in the 1960s, 70s and early 80s. That is true to some extent. But I think the real misconception comes because what many currently mean by centre right is much better described as the socially liberal right. Things are much clearer if we think in two dimensions, separating (as far as possible) the economic and social.

Have a look at the new Prosper group within the Conservative party. Under ‘what we believe’ we have “free markets give consumers choice and foster innovation”, “businesses create that growth, not government” and “too much regulation stifles growth”. So where does this group believe in things that might upset Kemi Badenoch? It is with things like “we should allow people with the skills our economy needs to come here” and “we should reduce barriers to trade, especially with our closest neighbours”. It is socially conservative populism, introduced into the Conservative party by Johnson and Farage, that Prosper along with one nation conservatives want to stand apart from.

It also seems clear from Badenoch that she doesn’t want a broad church Conservative Party that includes people that might be part of the Prosper group. On social issues like immigration she is in a race with Reform to see who can promise to deport the most. She wants to take the UK out of the ECHR, and she wants to repeal the Climate Change Act. In terms of policy it is getting very difficult to tell Reform and the Conservative party apart.

To many this seems crazy. Why abandon the centre ground if you want to win elections? But under one particular view of where voters currently are this positioning makes some sense. Suppose we believe that the electorate is increasingly split into two blocs, left liberal and the socially conservative right, and that nearly all the changes in party popularity come from movements within rather than between those blocs. There is a lot of evidence to support that idea. If this was absolutely true, with no voters crossing the divide between the two blocs, then Badenoch’s strategy makes some sense.

The reason why is nicely laid out in a recent post by Peter Kellner, where he reminds us of how two ice cream vans might position themselves on a long beach front. While it would be best for those on the beach if these two vans positioned themselves well apart from each other, competition will put them side by side in the middle of the beach. If one van takes pity on those at the their end of the beach and moves closer to them, they will lose some customers in the middle of the beach who are now closer to the other van, even if the other van doesn’t move. But the other van will move, to be right next to the van that first moved, capturing even more of the beach market. Using economics jargon, both vans next to each other in the middle of the beach is an equilibrium.

So if voters in the socially conservative bloc only ever vote for one of the two socially conservative parties, then it makes sense for Badenoch to put her party as close as she can to Reform. Like the two ice cream vans, they will be next to each other in policy terms. In particular because Reform is pretty socially conservative, so will the Conservative party. Any social liberals in the party should either keep quiet or leave.

Note, however, that exactly the same reasoning applies to those in the socially liberal left bloc. If we ignore the Liberal Democrats for just a moment, then Labour should be adopting policies very close to the ideas promoted by the Green’s Zack Polanski. Which they clearly are not doing.

The reason why Badenoch’s strategy is wrong is that not all electoral movements take place within both blocs. Most might have done in recent years, but even then not all. It used to be the case that we had two dominant parties, and elections were one or lost by voters moving between these two parties. Part of the reason for that is that many voters position themselves close to the centre in both economic and social terms, and these voters will switch between the socially conservative right wing bloc and the socially liberal left wing bloc at each election. [2]

Which is where we do need to talk about the Liberal Democrat party. Most of their seats, including those won at the last election, are where the Conservatives are their main challengers. The majority are in what used to be the Conservative’s southern heartlands. As a result, in economic policy terms the Liberal Democrats are much more right wing than the preferences of their membership. But in social policy terms they are liberal. They are filling the gap left by the Conservative party’s march towards social conservatism, just as the Green’s growing popularity is a result of Labour’s attempt to sound more like Reform than the socially liberal party most of its voters want it to be.

What about the argument that the Conservatives have lost far more votes to Reform than the Liberal Democrats or Labour, so their focus should be on Reform. While this is undoubtedly true, the analysis above was about policy positions. There is a big difference between ‘focusing on Reform voters' and copying their policies. Neither Labour or the Conservatives have learnt that the more they talk about socially conservative issues like immigration and asylum in a way that seems very similar to the way Reform talks about these issues, the more they boost Reform’s support rather than their own. Farage owns these issues, because the Conservatives are tainted by the ‘Boris wave’ of post-Covid immigration and because the boats will keep coming under Labour.

In contrast, as Owen Winter outlines here, the Conservatives are ideally placed to take Reform voters who are on the economic centre or right, as well as centre or right wing voters on economic issues who are in the centre on social issues, because of rising concerns over higher taxes. On economic issues they have (surprisingly given their period in government) a relatively positive image among voters. (Liberal Democrats policy positions outside elections are less well known.) So Badenoch should be embracing the Prosper group, not giving them a cold shoulder. They could even paint recent defections in a positive light. [1]

You can make the same point by looking at attitudes to Trump. Badenoch has largely followed Reform in supporting Trump, and Trump-like policies like deportation. Yet Trump is disliked by Conservative voters even more than Labour voters dislike Trump. Many Reform voters have a negative attitude towards Trump. (Even among Conservative party members, more dislike than like Trump.) Badenoch could gain votes by using Trump and Farage’s attachment to him to attack Reform, but she doesn’t.

The same point can be made another way. As I have noted before, the main political parties in the UK are neatly lining up with the four segments of economic and social policy space. The Greens are socially liberal and left wing, the LibDems are socially liberal and (mildly) right wing, Labour are socially conservative and (mildly) left wing. The anomaly is that we have two major political parties in the socially conservative, right wing space. Both want to eliminate the other. Farage’s comparative advantage is on socially conservative issues, and Conservatives are stronger on economic issues. The Conservatives should play to their strengths, not their weaknesses, and set policy on social issues with one eye to voters in the centre.

For these reasons, Badenoch should be embracing politicians like those in the Prosper Group, not giving them a cold shoulder. If she continues to pursue her current course the more socially liberal but economically right wing Conservative voters the politicians of Prosper represent will not disappear, but instead they will move in even greater numbers to the Liberal Democrats. [3]

Does any of this matter to voters in the other bloc: left wing socially liberal voters? A more broad church Conservative party will be a tougher opposition to both the Liberal Democrats and Labour, and will therefore mean a government from the left liberal bloc is less likely to be elected. For that reason Labour and the LibDems will be happy with Badenoch's cold shoulder for Prosper. But there is a counter argument.  As I have said many times, the biggest threat the UK faces is a socially conservative populist government in Trump’s image. That will happen if Reform wins, or if the Conservatives win at the cost of turning themselves into a socially conservative populist party in Trump’s image. One danger is that a Conservative leadership that does their best to ostracise more socially liberal Conservatives will mean one of these two outcomes will occur. 

[1] Many many years ago when I was working in H.M.Treasury I left my CV in a photocopier. Luckily a friend found it. On these grounds I might feel some sympathy for someone whose mislaid documents were used against him, but I cannot feel any sympathy for someone like Robert Jenrick.

[2] Labour and the Conservatives are making the opposite mistake right now, although it means they end up going in the same direction. Labour are too preoccupied with voters switching blocs (Labour to Reform or the Tories), which means they are haemorrhaging votes to the Greens and LibDems. In contrast the Conservatives are trying to match policies with those in the same bloc, and therefore are losing votes in the centre (and particularly in key seats to the LibDems).

Postscript: Why are the Conservatives focusing on voters in their bloc, but Labour are trying to attract voters outside their bloc? One obvious answer is the media environment. A right wing media can make it seem as if your voting bloc is either the world, or irrelevant. 

[3] Why is Badenoch making this mistake? I think part of the answer is Brexit. Brexit was a policy largely supported by social conservatives and opposed by social liberals. As long as the Conservatives continue to support Brexit despite all the evidence that it was a disaster, and oppose Labour’s attempts to soften its negative impact on UK prosperity and international influence, then they tie themselves to Reform and against the liberal right of Prosper. Given what Johnson did when he took over the Conservative party, it will probably require more than one election defeat to change the Conservative party’s position on Brexit. Another reason is the defection of Conservative MPs and former MPs to Reform. When your constant worry as leader is yet another Tory defection to Reform, it is very difficult not to think that any attempt to distance your party’s policies from Reform’s will only encourage further defections. But of course yet another reason may simply be that Badenoch, knowingly or not, is putting her own policy preferences ahead of party popularity.