How business lost its influence on right wing parties

This covers ground which others may be more knowledgeable about, so please let me know of any references or sources that I really should read that cover issues central to the discussion below.

When Trump threatens governments that want to tax tech giants, most of which are based in the US, it seems like the familiar story of governments acting in the interest of business. But when Trump imposes tariffs on imports he may be favouring particular firms, but he is also acting against the interests of US trading firms in general.

Brexit is a much more potent example. Brexit is clearly not in the interests of firms that trade. Because Brexit makes the economy as a whole poorer there are not many firms who support it. Boris Johnson, when asked about concerns from business about a hard Brexit, is reported as saying “f*** business”, and following some comments by the new Chancellor, Chris Grey speculates whether “f*** business” is now government policy.

It wasn’t always like this. David Edgerton writes that

“After the second world war, such captains of industry avoided the Commons, but the Conservative party was without question the party of capital and property, one which stood against the party of organised labour.”

That changed after Thatcher, as she reduced the power of trade unions, and Labour began distancing itself from them. Another development that I think began with Thatcher, and is particularly evident in the UK, is a lack of concern about who owns large firms. The importance of this should not be overstated: the ONS estimated that in 2012 just 1% of non-financial firms were foreign-owned, but these firms were large so around a third of value-added was accounted for by foreign owner firms. I suspect the proportion is higher still in the traded sector. But that still leaves plenty of important UK owned firms.

Another important point, and a difference from the US, is that joining the EU meant the UK was no longer in charge of trade negotiations. This ended the extensive and direct contacts between the UK traded goods sector and government that you find in countries not part of the EU. However links between the financial sector and the UK government are strong and effective. In contrast as the financial sector expanded, its links with domestic businesses became less important.

Finally another important development that followed from the Thatcher period was the reduction in taxation of top incomes. This particularly benefited high earners in the financial sector, but it also spread to most CEOs of large companies. According to Piketty, Saez and Stantcheva, this encouraged in the UK and US an explosion in executive pay, distancing the 0.01% or 0.001% of extremely rich individuals from everyone else. This involves the managers of business extracting rent from the business itself. Although this explosion happened in the 1980/90s, the cash increase in remuneration (including bonuses etc) for the median FTSE 100 CEO between 2009 and 2017 increased by 76% to £3.9 million. There are no signs of it ending. 

This meant that CEOs spoke in the interests of both the companies they ran, but also in the interests of very rich individuals like themselves. Before the 2015 UK general election, one of the main concerns of business about a possible Labour government was a potential tax on expensive homes! This helps dilute the pressure business can exert on right wing governments, if those governments make it clear that they will always stand up for the very rich. In 2017 Labour’s campaign slogan was ‘for the many not the few’, so of course the few will always support the Tory party, even when it was making life much more difficult for business. Tax cuts for the wealthy are now a key part of any Republican programme.

In these senses neoliberalism (aka what happened during and after Thatcher and Reagan) created the conditions that helped diminish the direct influence of business on the dominant right wing party in the UK and US, and therefore for much of the time the UK and US state. This was my thinking when I wrote

“Rent extractors naturally seek political defences to preserve their wealth, and the mechanisms that sets in place may not embody any sense of morality, leading to the grotesque spectacle of Republican lawmakers depriving huge numbers of health insurance to be able to cut taxes for those at the top.”

It also means that the finance any party of the right needs can come from money and those that manage business (and extract rent from it), and that can be divorced from the interests of business. This was part of my thinking in talking of a governing plutocracy, and writing:

“It is also a mistake to see this plutocracy as designed to support capital. This should again be obvious from Brexit and Trump. It is in capital’s interest to have borders open to goods and people rather than creating barriers and erecting walls.”

Could a more vocal attack on Brexit by businesses have influenced the vote? It is not clear, because everything is mediated through a largely partisan press and an 'opinions differ' broadcast media. However I think the distinction between the interests of the wealthy and domestic business is important, and goes well beyond an opposition between financial and non-financial firms.

Evidence and the persistence of mistaken ideas: the case of house prices

Another paper, this time from the Bank of England written by former MPC member David Miles and Victoria Monro, shows that the rise in house prices we have experienced since 1985 is mainly the result of lower real interest rates. The other, less important, driver is household income. Those two effects together can account for all the increase in house prices relative to inflation. The increase in house prices is not the result of a shortage of new houses.

Those who remember two earlier posts of mine will know of my own conjecture along similar lines. More recently Ian Mulheirn has championed this theory: here he is commenting on an apparently contrary view from Paul Cheshire. The importance of real interest rates to house prices has been understood for a long time: the first time I came across it was when Steve Nickell wrote a paper when I think he was still on the MPC. Very recently, here is Paul Johnson making the same point.

Secular stagnation is used by most macroeconomists to describe the current era where real interest rates appear to be permanently lower than they were decades before. The uncomfortable conclusion would be that as long as this era lasts, house prices will remain at levels that are unaffordable for many young people. Building more houses on any reasonable scale is not going to change that very much.

The reasoning behind the theory is incredibly simple. Houses are an asset. Like any asset, its price depends on the return from holding them (in the case of housing rents) and the rate of interest. The demand and supply for housing services (i.e. a roof over your head) determines rents rather than house prices. Imagine choosing between investing in housing or in government debt (more specifically a perpetuity, so you never get the money back but the interest pays forever), Interest rates on government debt are 2%, so on every £100 K you invest in government debt, you get 2K a year in interest. Suppose the (net of costs) rent on every £100K of house was 2K a year. Then you are indifferent to whether you own either asset.

Now suppose interest rates fall to 1%, but rents stay the same. Everyone wants to become a landlord, and people with money to invest buy houses to rent, because before interest rates rose you are getting double the return you were getting on debt. With perfect arbitrage this will carry on happening until houses that used to be worth 100K are now worth 200K, so that the return to housing again equals the return to holding debt = 1%. House prices have doubled, but the demand and supply of housing services has remained unchanged. The suggestion is that this is the process behind rising house prices in the UK.

That does not mean building more houses (increasing the supply of housing services) has no effect on house prices. Raising supply pushes down rents, other things being equal, and that reduces the return from owning a house, so it will reduce house prices. But the stock of houses is very large, so even with large house building programmes the impact on rents is small. Here Ian Mulheirn shows what the paper by Miles and Munro says about the small size of that effect.

You might say that any reduction in house prices is welcome, but you are using a great many resources (and a fair bit of land) to produce a modest effect. You might get a similar impact on house prices if the government undertook a serious fiscal stimulus, leading to a rise in short interest rates which would have a modest impact on long interest rates, but a noticeable impact in reducing house prices.

My question is why this point is almost never made in the popular discourse on the house price problem? One answer is that housebuilders have a vested interest in suggesting a dire need for more housebuilding, in part because it adds to pressure on governments to free up greenfield sites. This is exactly what has happened since 2010. There is nearly always a vested interest in perpetuating incorrect economic explanations.

In this case, as in others like the supposed need for austerity, there is something else, and that is an apparently simple piece of economics that perpetuates this misconception. With austerity it is that the government should be like a household, which most economists believed before Keynes showed it was false. With house prices it is that prices reflect demand and supply.

The difference between austerity and failing to distinguish between house prices and the price of housing services is that the former is more difficult to challenge than the latter. The reason is that everyone also talks about housing normally being a good investment. That is seeing housing as an asset, so all you need to do to break the misconception is a bit of asset pricing theory.

With issues like these, there are two spheres of understanding, with precious few links between them. There is what I will call the knowledge sphere, where academics (including academic think tanks) and economists in central banks and elsewhere regularly exchange ideas and evidence within that group. There is a second group comprising most of the print media, the broadcast media, some (mainly right wing) political think tanks and most politicians, where again communication within the group is pretty good. 

Communication between the two spheres is sparse. Most political journalists in the broadcast media spend more time watching each other and reading the print media than they do talking to people in the other sphere. Despite many who work hard to package knowledge in accessible ways, often the best those in the knowledge sphere can hope for is an article in the Guardian, FT or Times. If politicians don’t want to access expertise, there is therefore little requiring them to be knowledgeable. The examples I have highlighted are from economics, but I think it is true for all the social sciences.

As a result, politicians can continue to propagate and pursue bad ideas, like austerity is necessary or house building is the answer to high house prices, with little or no challenge in their own sphere. This is not about experts forcing politicians to do what they suggest, but about the public and even politicians being aware of what the evidence suggests. The fundamental problem is not that those in the knowledge sphere don't communicate well, but that too many politicians and much of the media do not want to be well informed. 

Monetary and fiscal cooperation: the case for a state dependent assignment

In December last year Mark Carney said

“In a global liquidity trap, central banks cannot be the only policy makers who do “whatever it takes.” There are clear gains from coordination, with other policies – particularly fiscal policy”

I of course agree, as would most academic macroeconomists. So would any sensible informed fiscal policy maker. But of course this didn’t happen in the Global Financial Crisis from 2010 onwards in some key major economies, including the UK.

Carney’s statement, which follows similar statements by the central bank governors of the Fed and ECB, goes against what I have called the ‘consensus assignment’. The consensus assignment has monetary policy looking after the stability of aggregate demand and inflation, while the fiscal authority looks after government debt. In the UK at least this consensus assignment is deeply embedded in the way the media thinks about policy.

In 2009 George Osborne gave a speech in which he said

“[New Keynesian] Models of this kind underpin our whole macroeconomic policy framework – in particular the idea that by using monetary policy to manage demand and control inflation you can keep unemployment low and stable. And they underpinned the argument David Cameron and I advanced last autumn – that monetary policy should bear the strain of stimulating demand….”

This is a statement of the consensus assignment. The irony of it was that shortly before the speech was given UK interest rates hit their lower bound.

Is the consensus assignment still the best way to run policy after short interest rates hit their lower bound? In 2010, in Europe and the UK at least, central banks acted as if it was. Indeed they went as far as to advise fiscal policymakers to embark on austerity. Carney’s statement is an implicit acknowledgement that central banks had been wrong to do that.

The trouble with unconventional monetary policy is not that it does not work, but it does not work reliably. The scandal in 2010 was that while the Bank of England was suggesting in public that unconventional monetary policy could replace conventional interest rate policy, in reality they had little clue how much effect any change in unconventional monetary policy would have. An unpredictable and unreliable instrument is not a good basis for a policy regime when a better instrument is available, and that better instrument is fiscal policy. I think negative interest rates fit into this category of unreliable instruments, simply because we cannot for obvious reasons assume linearity.

So how do we ensure as far as we can that fiscal policy makers will not repeat the mistakes of 2010 in the next recession? The first best would be to have better fiscal policy makers, but alas that is not always possible. There are three widely discussed possibilities.

1. The first is MMT. This in effect reverses the conventional assignment, with fiscal policy doing the demand and inflation stabilisation in all states of the world. If that happens debt looks after itself. I am not in favour of MMT, because I think independent central banks have been very successful at controlling inflation, and a government using fiscal policy would be less successful.
   
   
2. The second is Helicopter Money. If you are prepared to call Helicopter Money (HM) monetary policy, this preserves the consensus assignment by giving the central bank a new tool. HM is more reliable than unconventional monetary policy, because HM is just like a tax cut, and we have a lot of data on the impact of tax cuts on consumers. Like tax cuts, HM will not work if all consumers are Ricardian, but they are not.
   
   

HM is only possible with the agreement of the government, preferably well before it is actually needed. Two key things have to be agreed. The first is the distribution mechanism, where I suspect some governments would prefer something other than a reverse poll tax. The second is an agreement to back the central bank, by which I mean supply it with the assets it requires to claw back at least some of the HM when the economy recovers. The only difference between HM and a bond financed fiscal expansion is that probably some or all of the bond issuance is delayed until after the economy recovers.

Central banks worry that governments will renege on their commitment to back the central bank. My response is that any government that would not back their central bank so it can fight inflation is also a government that would be prepared to abolish its independent central bank, so the concern is of no interest. I suspect also central banks think HM looks like fiscal policy to most people, and they shouldn’t be doing fiscal policy.

I would add a further point on HM. It will not stop a government using what I call ‘deficit deceit’ in a recession: pretending the deficit is too high and requires spending cuts, because the government wants to scare people into accepting a smaller state than would be popular otherwise. HM would avoid this fiscal consolidation influencing output because its demand effects would be offset by the central bank. But a shrinking of the state beyond anything that is popular in normal times is also almost certainly sub-optimal, and can have devastating political as well as economic implications, like those we have seen in the UK, and you could argue HM encourages this.

3. The third, and most likely, is central bank advice. If the central bank thinks that a recession is coming where rates will hit the lower bound, it advises the fiscal authority that some fiscal expansion is required. This is fine if we are trying to combat a fiscal authority that is just ignorant on these matters. The central bank could also convince a fiscal authority that was worried about financing its debt, by for example agreeing to monetise the expansion needed by doing the corresponding amount of QE, or more simply to neutralise any failure by private agents to buy debt.
   
   

My concern here is with a government that said thanks for the advice, but we prefer to focus on reducing the deficit using spending cuts. Would the central bank be prepared to make its advice public? It might not do so if it was concerned that the government would reciprocate by starting to tell the central bank what do so. You could therefore argue that this strategy could be either ineffective, or may threaten central bank independence.

So how can you stop a government that is determined to use the rising deficit in a recession to shrink the state? Of course you cannot, but you can try and create the conditions that will put maximum political pressure on it not to. I suggest above that HM fails to do this, and central bank advice is unlikely to either.

What would be more effective is for macroeconomists and central banks to start being honest about the consensus assignment. As a near optimal policy regime that assignment is dead. Instead macroeconomics suggests what could be called a ‘state dependent assignment’. In most states of the world, central banks stabilise the macroeconomy just as they do now. However in an economic downturn of sufficient size (where ‘sufficient’ is to be defined) the assignment flips, and fiscal policy makers are in charge of stabilisation. In non-technical language, fighting recessions becomes the government’s job.

I think this is something that most academic macroeconomists and some central bankers have accepted implicitly but not explicitly. One reason is I think pedantic. Of course in the state dependent assignment the central bank does not stop trying to stimulate demand in a recession by at least keeping rates low, but there are compelling political economy reasons to highlight the responsibility of governments in this respect.

Those familiar with Jonathan and my paper on fiscal rules will recognise our knockout when rates hit their lower bound as one operationalisation of a state dependent consensus assignment. But it is not an ideal mechanism because switching the assignment should depend on forecast events. Others, like the IPPR and Resolution Foundation, have suggested alternative schemes that come under the umbrella of a state dependent assignment. There is a great deal of work required to figure out the best mechanisms, and also to think about who has control over when switches (both on and off) happen, and whether there is a role for the central bank and/or fiscal council in advising the government on effective stimulus packages.

To conclude, central banks are now recognising that fiscal stimulus is required in significant economic downturns. This is in contrast to the GFC, when many fiscal policy makers enacted austerity. One of the reasons they were able to enact austerity was the dominance of the traditional consensus assignment in the mind of the public. Our most effective way of preventing this happening again is to make a state dependent assignment the new consensus assignment.

Was the Remain campaign always doomed?

In hindsight it is tempting to say that Remainers should have set their sights on something close to a BINO type deal (UK remaining part of the Single Market (SM) and Customs Union (CU)) rather than campaigning for Remain, and some have already suggested that. Is that a reasonable conclusion in the light of Remain’s defeat in December 2019?

In mid May it all looked so different. I wrote

“It seems odd writing that Brexit is on its deathbed, in a coma but with no chance of recovery, when a year ago the Remain cause seemed hopeless. The thing everyone under estimated was the way Brexiters themselves would effectively kill Brexit.”

The essential problem was that a significant section of Conservative MPs (and Farage) wanted no shared sovereignty with the EU (no ties to common standards etc), while another part of the party didn’t like the implications of this hard Brexit for UK business. So how did Brexit move from its deathbed to become a certainty within just 7 months? What mistake did I make, and could it have been foreseen?

I was right about the prospects for Brexit under May. May was going nowhere because there was no way to avoid a hard border in Northern Ireland with any UK wide deal acceptable to the Brexiters, and both May, the DUP and many Conservative MPs seemed adamant that a border in the Irish Sea was not on. A lot of this was already apparent to me a year and a half earlier.

It is easy to say that a new Prime Minister made all the difference, but that isn’t enough. In May I did write “A Conservative party committed to No Deal is the only way the Tories have to neutralise Farage.” I could have added that many Tory MPs would be unhappy with that, which is why that path was not sufficient for Johnson.

What he did would have been hard to anticipate in May. I think Johnson got there through trial and error rather than having some master plan when he was elected. He had to convince both Farage and the Brexiters that he would go for no trade deal rather than anything that ties the UK to the EU, yet convince everyone else that he really was going for a deal. The way he achieved that was to agree to the EU’s original proposal for a border in the Irish Sea, but also by committing not to extend the transition period beyond a year.

The other key ingredient was the devastating Conservative result in the European elections. Not only did it ensure May’s departure, but it also became clear to Tory MPs that they risked disaster at a General Election if they didn’t get Brexit done. So they rejoiced when Johnson got the deal that Johnson had said earlier was something he couldn't possibly agree to. They didn’t ask questions when Johnson refused to extend the transition period, even though they knew full well no trade deal worth anything could be done with the EU within a year when the UK didn’t want a level playing field. 

Equally Brexiters and subsequently Farage were persuaded that Johnson would stick to his pledge for no extension of the transition period, because to question it was to put Brexit at risk. Both sides heard what they wanted to hear from someone they knew was the least trustworthy politician in the UK. Now we have seen all this happen it is easy to imagine it, but in the first half on 2019 you would have been almost clairvoyant to see all that detail. As a result, Remainers optimism at the time was not unjustified given the information we had, and so compromises were less likely.

What you could have done was be pessimistic at a more general level. Many hoped that after the vote public opinion would gradually lose faith in Brexit, but that happened only to a small degree. If you believe as I do that the Brexit vote was the product of Brexit press propaganda coupled with BBC disinterest in informing viewers about reality, then why would people change their mind? As a result of solid Brexit support, the fate of the Conservative party became linked to getting Brexit done, so the party had to find a way.

Of course Remain could have won the General Election, and a failure by the Conservatives to get an overall majority would have meant the end of Brexit. Ironically Corbyn both created the conditions that allowed Remain to be optimistic (Labour’s victorious defeat in 2017 and the consequent DUP veto) but they also helped create the conditions for a Conservative victory. Labour’s performance in 2017 changed the Brexit political dynamic, but the last people to understand that were the Labour leadership. I wrote in January that Labour’s refusal to oppose Brexit is becoming a historic error, and events in the first half of 2019 proved that was correct. [1]

Johnson’s victory did not just depend only on the Remain vote being split. During the election period Labour clawed back a lot of the votes they had lost to the LibDems, but the LibDem and Green vote was still 50% up on 2017 levels. Corbyn was very unpopular among many of the kind of traditional Labour voters who had voted Leave: the media gave us two more years of negative coverage of Labour, and Corbyn’s past was a gift in that respect. But a detailed assessment of why Labour lost is for another time.

There was another sense that fence sitting by Labour did not help Remain. I noted above that public opinions about Brexit did not change significantly after the referendum vote, but we will never know if that was inevitable. The way broadcast media work is to cover what the two main parties say, even on an issue like Brexit. Corbyn’s stance after the vote meant that Labour felt unable to attack Brexit rather than the government’s handling of it.

There is a counterfactual history where Labour MPs played things better (i.e waited until the beginning of 2017) to provoke a leadership election, Corbyn lost that vote and his successor campaigned against Brexit. This gave Labour a poll bounce that dissuaded May from holding an election, allowing Labour to campaign against Brexit for the next three years. It might have not worked out that way, but we know for certain Corbyn as leader did not work out.

To sum up, I don’t think I and other Remainers were being unrealistic in aiming for a Remain outcome. But I do think we have to be realistic about the next five years. It is just possible that Brexit will lead to the next five years being obviously terrible, and that public opinion will move against the whole project. If that is the case opposition parties, and particularly Labour, should not be afraid the join the dots and make that case. More likely, however, is that things continue as they have been over the last three years. Not good at all, but not bad enough for anyone to change their beliefs about Brexit.

If the lessons of austerity and the last three years carry over, the more some talk up impending disaster, the more poor performance will be portrayed as the vindication of Brexit. The reality is that powerful forces have imposed a policy on half the population that do not want it. It is rare that we see a government implement a policy that all experts say will do the UK serious economic and political harm, which is why those overseas who are not on the extreme right or left think we are utterly stupid. At least those that have fought this policy all the way can hold our heads up high and say we did all we could to stop it.

[1] There are some who still insist that Labour’s eventual adoption of a People Vote in all circumstances was a ‘suicide note’, but Labour’s policy before then would have been much more disastrous. You may discount the European elections, but polls both before and after that had Labour around 25% and the LibDems touching 20%. Labour’s 2017 result had created the political dynamic of strengthening Remain, creating a political vacuum that Labour didn’t fill so the LibDems did. Labour would always have clawed back some of the voters who chose LibDem during the election period, but in the absence of a commitment to a Public Vote their final percentage would have been well below the 32% they actually achieved. That is because Leavers would not have come flocking to them, because the lure of 'getting Brexit done' was too great.

Can we think about politics from Blair onwards in one chart? and what it means for Blue Labour

This is an experiment. You can judge how successful it is. I am trying it because with this election there has been a lot of talk about a revival in Blue Labour to recapture the Red Wall. The Conservatives have been playing to socially conservative voters since at least William (‘a foreign land’) Hague. So why has the strategy succeeded so well in 2019 when it has had at best modest success before now?

We can represent all this in a simple diagram that is now widely used

The precise positions of the party leaders could be the topic of endless discussion, but for this post I just need them to be roughly right, and for the directions of travel to be right. Blair was fairly liberal but moderately left wing. The Tories since Thatcher have always been pretty right wing in economic terms, and where we have seen movement has been mainly on how socially conservative they are.

If people are uniformly distributed around this map, then the centre is the place to be in a two party, FPTP system. Parties do not go there because their ideology/principles, maintained mainly by their members, stops them.

Blair won because in economic terms he was closer to the economic centre ground than the Tories. After 18 years of Tory rule voters wanted better public services. Yet after the Thatcher revolution in the Conservative party the Tories were stuck with taking a right wing stance, so they tried to shift the debate on to social issues where either side was some way from the centre. A focus on immigration was a way of doing that, with the added advantage of being perceived to be pro-worker and pro-public services (the lie that immigration significantly reduced wages and put pressure on public services).

This move had some effect, reducing Labour’s vote. Yet under good economic times (and economic times were good under Labour for ten years) the immigration issue was not enough to defeat Blair. Public services were getting better. As Theresa May put it, the Tories were still known as the nasty party. This is why Cameron tried to portray himself as a liberal conservative. In opposition he tried to move closer to the centre in both economic terms (accepting Labour’s levels of government spending) and social terms.

But everything changed after the Global Financial Crisis. Regrettably, social conservatism has more appeal when times are bad, at least in part because the (incorrect) real wage/public service argument gains traction. Yet at first sight that should have been counteracted by Osborne moving sharply right with anti-Keynesian austerity (spending cuts in a recession). So although Cameron had tried to move nearer the centre on social issues, in economic terms by 2010 he moved further away.

Here is where we have to make an important modification to this apparatus. In a country where one party has a media that is very sympathetic to the right, it can change how its policies are perceived. Cameron dressed austerity in socially conservative terms (the government is like a household). For various reasons that I and others have documented at length, a policy that was sharply contrary to basic economic theory was adopted by most of the media as a necessity, and the media therefore turned it into a sign of good government.

So austerity was not perceived by most people as a right wing shrinking of the state at great social cost (higher unemployment and lower real wages), but as a neutral policy signifying economic competence. Once we allow for this it is clear that for many Cameron was now closer to the centre is perceived economic terms, and so became the government in 2010.

Austerity was so successful that Labour eventually concluded they would have to accept it to some extent. Miliband not only moved nearer the centre in economic terms by accomodating austerity, he also did so by trying to appear more hawkish on immigration (remember the mugs). But Labour do not have a means of influencing perceptions, so their perceived position was their actual position. In addition Miliband was tainted with the perceived incompetence of the Labour government and was not closer to the centre compared to Cameron’s perceived position, so he lost.

Ed Miliband’s defeat in 2015 was narrow but hard for Labour to take. Most of the political commentators (as they always do) said Labour should move to the right, and after the 2015 defeat they began to before the leadership elections. Recall that parties find it hard to move to the centre because their members will not allow it. That post 2015 rightward drift and the apparent acceptance of austerity was too much for the membership, and they voted for Corbyn.

There are more than two parties in the UK. So far we have been able to do the analysis without mentioning them but now they become crucial. Cameron by becoming more socially liberal allowed UKIP to gain votes. His response was to offer a referendum on the EU. Brexit, particularly a hard Brexit, should be an easy fail according to this diagram. It is socially conservative and right wing: trade restrictions are created so that labour and environmental regulations can be scrapped and not to preserve workers jobs. Its true position is close to Johnson’s in this diagram, while staying in the EU is a pretty centrist idea.

Brexit shows more than anything how we have to think about perceptions. What made Brexit a narrow winner when its true position suggested an easy loss? In short a brilliant if totally dishonest campaign that painted it as something it is not. Project Fear, with the help of the media, completely nullified the right wing economic dimension of Brexit, and turned it into a plus by talking about more money for the NHS. Staying in the EU was successfully painted as ultra liberal (letting the whole of Turkey come to the UK). As with austerity, the perceived position of parties and policies is what matters when it comes to winning elections and a referendum.

Now you could say that by allowing perceptions I can put party’s positions wherever I need to get the result I need. But just as we have good empirical evidence that austerity was perceived as economically neutral by much of the population, we also have good evidence that those who voted for Brexit thought it would have no negative impact on the economy or their personal incomes.

That Corbyn came close to defeating May was not a surprise if you look at his position on this diagram, once we recognise that what Corbyn managed to do in 2017 was neutralise Brexit as an issue. Because he remained as close to the centre as May, he gained votes once his policies became clear as a result of his manifesto. Without his portrayal in the right wing press he might have won.

So what changed by 2019? He was not able to neutralise Brexit, because parliament had agreed a deal. He had to choose, and whatever choice he made would lose votes. For that (not good) reason he delayed choosing, which allowed the resurgence of the Liberal Democrats (and Greens) who portrayed themselves as the true Remain party.

Yet Corbyn is still closer to the centre than Johnson. He lost badly partly because Brexit is perceived as neutral in economic terms by many, so Johnson’s perceived economic position has become synonymous with Brexit. However crucially he also lost because the UK is not a two party system. The Liberal Democrats, the SNP and the Greens are all perceived to be in liberal/left space, and together with Labour they won more votes than Johnson and the Brexit party put together.

The lesson of all this is twofold. First, this two-dimensional diagram can explain a lot, once you replace the parties’ actual position against their perceived position generated with a right wing media. Of course it leaves out a lot (the popularity of leaders, which is related to their charisma, the effectiveness of campaigns etc), but it seems like a good place to start. Second, as long as the Conservative party has the monopoly of the right wing/socially conservative vote, left social liberals cannot afford to split their vote among several parties. If Labour ever made a significant move in a socially conservative position, as Blue Labour wants, it would be defeated by yet more votes going to the other left/liberal parties.

Who to blame for Johnson winning?

When I wrote this in July I desperately wanted to be wrong. (Of course I was wrong about a lot of the details but alas not the main point.) But it soon became clear that, compared to 2017, the press had had two more years to paint Corbyn as marxist, unpatriotic and racist, and for enough people that would be a reason not to vote Labour. Among others who supported Brexit, they really did believe that Johnson was the man to get Brexit done.

Many will say that Labour lost badly because they had a left wing manifesto. They always do after each election defeat. I doubt that has much to do with this defeat, although the large amount of giveaways to the wrong people was probably a factor. The problem was Corbyn, not Labour’s manifesto. And while many voted against the media image of Corbyn more than anything else, it has to be said that Corbyn’s past and his failures over the last three years made the media’s job very easy.

We should of course blame the media. The right wing press became part of the Tories propaganda war. The Tories lied like never before, just as some of them did in 2016. The BBC was even more careful not to do anything that might upset the government, and it has a real problem when ‘accidents’ keep advantaging one side. But the moment the BBC played a key role in electing Boris Johnson was very specific, and it goes back to the day Johnson got his deal with the EU.

What the media should have asked at that moment is why Johnson had accepted a deal that was essentially the first the EU had proposed, but which he and other ERG members had said at the time was unacceptable. Why had he capitulated? Was it all just a ruse so he could become Prime Minister?

Nobody thought a deal was possible, gushed Laura Kuenssberg, repeating one of CCHQ’s lines to take. No sense from her of what had actually happened. As I noted here, the BBC’s Brussels correspondent got it about right, but the tone of the reporting was set by Kuenssberg. Whether this misrepresentation of Johnson’s deal was deliberate or the result of ignorance I don’t know, but it was critical.

Of course the Tory and Brexit press also took CCHQ’s lines to take. The BBC is the only chance most voters have to get a check on what their newspapers say. It did not provide any such check on this occasion. And it is critical because it allows Johnson to say, as he has, that it was his unique abilities that helped him achieve a deal that everyone said was impossible. No doubt he will say the same when he refuses an extension in July next year because the EU have refused to give him the deal he wants.

Voters who still believe in leaving the EU were left with the impression, thanks to the BBC (and of course the Brexit press), that Johnson was the person who could deal with the EU and get Brexit done. They were not told the truth that he was the person who had helped waste almost a year in squabbling in part so he could get to be Prime Minister. So Leavers are left with an image of competence rather than the reality, which is that Johnson is quite prepared to damage the economy and the workings of democracy just for his own personal gain.

But there is little that Labour or the Liberal Democrats can do about media bias while they are out of power. Undoubtedly a key reason Johnson won was because the Remain/anti-Johnson vote was split. It is depressing and very worrying how many people voted for Johnson, our own Donald Trump, but while the Electoral College gifted Trump his victory despite losing the popular vote, so First Past The Post (FPTP) gave Johnson his victory. A lot of people voted tactically, but not enough.

Both Labour and Liberal Democrats are to blame for not cooperating. While Labour’s failure was not a surprise, I had hoped the Liberal Democrats would take the opportunity to seize the moral high ground and not put up candidates in Labour marginals like Canterbury. It didn’t, and instead it spent too much of its time attacking Labour in the futile belief that this would win over some Tory voters. I suspect they would have been much more successful if they had been honest that the best way to stop Brexit was through a minority Labour government dependent on LibDem votes.

The ultimate responsibility for the split vote must nevertheless rest with Jeremy Corbyn.

The big surge in the Liberal Democrat vote from below 10% to over 20% at its peak began in the Spring of this year, and it coincided with a collapse in Labour’s vote. This quite remarkable change in fortunes cannot be put down to a biased media, but is obviously a Brexit effect.

Throughout 2018 Labour had managed to stay the obvious choice for Remainers, as it had been in the 2017 election. But as soon as May finalised her Withdrawal Agreement it was clear triangulating would no longer work, and Labour would have to take a position. The polls suggested Labour would lose votes by not supporting Remain, but as I noted in December last year too many within Labour were in denial.

Labour entering into talks with May to get Brexit done was I suspect the final straw for many Remainers. They didn’t go to the new and short lived Remain party but the Liberal Democrats and the Greens. The European election was a disaster, but shifting Labour’s policy seemed like trying to get blood out of a stone. I really think if they had moved at the beginning of 2019 to where they ended up things would have been rather different. Instead the Labour leadership single-handedly created the revival of the Liberal Democrats. That, as well as his failure to deal with antisemitism and some of his intolerant supporters, are major factors behind this defeat.

Easy to say in hindsight? Not really. I said these things in 2016 in the second Labour leadership election that Corbyn won. I said it throughout late 2018 and early 2019 was the Remain vote became disenchanted with Corbyn. But the behaviour of Labour MPs made an alternative to Corbyn impossible in 2016 then, as it had been in 2015, and after the 2017 general election result he was never going to be removed.

Could we have stopped Johnson if Labour had not allowed the Remain vote to split. To be honest I don’t know. That is how negative the media’s image of Corbyn has been. Some Lexiters will say it is all Remainers’ fault, but that is a nonsense position. As a result of this defeat we have reached the end of the line for the Remain cause. It has been three years of experts and people who made themselves experts trying to explain why Brexit was such a bad idea, but nothing we could do was able to counteract the propaganda of the Brexit press and the knowledge as opinion attitude of the broadcast media, and particularly the BBC. The really striking finding after three years when the truth about Brexit became crystal clear to anyone wanting or able to see it is that the number of people wanting Brexit changed only a little, and that is what gave Johnson his majority.

Now that we have elected our own Donald Trump, I’m reminded of a talk Paul Krugman gave after Trump won. At the time I wrote a post about it, and I ended it like this:

“We can, and should, continue to rage against the dying of the light. What is difficult, in this time of crazy, is being able to put that rage aside, and engage in a form of quietism, a retreat from the here and now of political discourse. Not a retreat into any kind of acceptance of where we now are, but instead into asking what and why, and from the answers to those questions to planning for the time when facts get back into fashion. But more than that. Using the answers to the what and why to prevent us lapsing back into our current post-truth world.”

I will continue to rage, but not quite as often as I have done since the blog began almost exactly eight years ago. It is time for deeper thought about how we get back to the light and ensure that we never again lapse into a post-truth world.

Why you should vote tactically, and how to do it.

In this election we have a choice. We can choose a party led by an inveterate liar, which is happy to appeal to the racist or xenophobic vote, happy to take us out of the EU with no deal with all the consequences for public services that entails, happy to see ever longer waiting times for GPs and A&E, happy to see more homeless people on the streets and more food banks.*** Instead we can choose a hung parliament with a Labour minority government that may not even be led by Corbyn, with their power curtailed by the smaller parties, including the Liberal Democrats, that can actually do something about the problems we face. But we can only make that choice by voting tactically.

But I have an ethical problem with voting tactically

There is one serious argument against tactical voting. It is the idea that if you have a choice between voting for a good party, a not so good party and a terrible party you should always vote for the good party. (The ranking is what matters here, not my description.) The argument is that if you vote for the not so good party, you are in some senses endorsing the bad things that party or its leaders have done in the past.

That argument applies to those who prefer to vote Liberal Democrat because of Labour’s antisemitism problem, or those who think they cannot vote Liberal Democrat because they were part of the austerity Coalition. Both arguments are wrong, because they simply do not apply in a FPTP system when the only two possible winners in the constituency you live in are the not so good party and the terrible party.

In a FPTP system your vote for the good party will simply have token value. However you could have done something towards preventing the terrible party coming to power, but you chose not to. In that way you become responsible, in a small way, for what happens when the terrible party comes to power. By your inaction, you will have contributed to the terrible party coming to power.

If you vote for the not so good party, will you be responsible for the not so good things happening if that party wins? No, because all you could have done differently is let the terrible party win. There is no way your voting for the good party will influence anything. It is a wasted vote because you will have wasted an opportunity to make the world a better place. The Kantian ‘do no evil’ idea does not apply because doing no evil actually means allowing more bad things to happen.

You may say this is a consequentialist argument, and your philosophy is different. You might think about the fact that your philosophy would allow tyranny to come to power, just because you had some problems with the opposition to tyranny. If you think that is far fetched, you need to note that part of their manifesto gives the Conservatives a mandate to change our constitution so that the executive has complete control over parliament.

There is a weaker argument for voting for the good party, and that is thinking about your vote as part of a repeated game. The argument suggests that by voting for the not so good party, you are encouraging it to remain not so good. But this fails for the obvious reason that if you do not do everything you can to stop the terrible party coming to power, you are encouraging the terrible party.

And if all that doesn't convince you, use https://www.swapmyvote.uk/ where you can actually help the party you prefer win something. 

But who should I vote for. It’s so confusing.

For most people its not. Have a look at this website, for example: https://tactical.vote/compare or https://dontsplittheremainvote.com/. You will see in most cases there is total agreement about who to vote for tactically. Of course some constituencies are such safe Tory or Labour seats that your vote is highly unlikely to achieve anything. But my rough list of constituencies were tactical voting matters (England and Wales only I’m afraid) is as follows (with the party to vote for in brackets). It is a long list because I have been deliberately pessimistic about what the two parties could lose and optimistic about what they could gain, because there are always surprises in any General Election.

Why did I bother doing this you might ask. It is just a by-product of some work I did out of my own curiosity looking at marginals, and I thought I might as well share it. I have waited until now to make these suggestions because I think a lot of confusion has been caused by sites that have made calls earlier on in the campaign and then had to revise them. Many a LibDem bar chart has been based on that misleading information. Fine if the polls don’t move, but they were always going to move to the two main parties in this election.

Aberconwy (Lab)

Alyn and Deeside (Lab)

Ashfield (Labour)

Barrow and Furness (Labour)

Bassetlaw (Lab)

Bath (LibDem)

Battersea (Labour)

Beaconsfield (Independent - Dominic Grieve)

Bedford (Lab)

Bermondsey and Old Southwark (Lab)

Birmingham Edgbaston (Lab)

Birmingham Northfields (Lab)

Bishops Auckland (Lab)

Blackpool North (Lab)

Blackpool South (Lab)

Blyth Valley (Lab)

Bolsover (Lab)

Bolton North East (Lab)

Bolton West (Lab)

Bradford South (Lab)

Brecon and Radnorshire (LibDem)

Brentford and Isleworth (Lab)

Bristol North West (Lab)

Burnley (Lab)

Bury North (Lab)

Bury South (Lab)

Calder Valley (Lab)

Camborne and Redruth (Lab)

Canterbury (Lab)

Cardiff North (Lab)

Carlisle (Lab)

Carmarthen West and South (Lab)

Carshalton and Wallington (LibDem)

Cheadle (LibDem)

Chelsea and Fulham (LibDem)

Cheltenham (LibDem)

Chingford and Wood Green (Lab)

Chipping Barnet (Lab)

City of Chester (Lab)

Clwyd West (Lab)

Colne Valley (Lab)

Copeland (Lab)

Corby (Lab)

Crawley (Lab)

Crewe and Nantwich (Lab)

Croydon Central (Lab)

Dagenham and Rainham (Lab)

Darlington (Lab)

Delyn (Lab)

Derby North (Lab)

Dewsbury (Lab)

Don Valley (Lab)

Dudley North (Lab)

East Devon (Independent)

East Worthing and Shoreham (Lab)

Eastbourne (LibDem)

Eastleigh (LibDem)

Enfield Southgate (Lab)

Esher and Walton (LibDem)

Filton and Bradley Stoke (Lab)

Gedling (Lab)

Gower (Lab)

Great Grimsby (Lab)

Guildford (LibDem)

Halifax (Lab)

Harrow East (Lab)

Hastings and Rye (Lab)

Hazel Grove (LibDem)

Hendon (Lab)

High Peak (Lab)

Hyndburn (Lab)

Ipswich (Lab)

Keighley (Lab)

Kingston and Surbiton (LibDem)

Lewes (LibDem)

Lincoln (Lab)

Loughborough (Lab)

Mansfield (Lab)

Middlesbrough South (Lab)

Milton Keynes North (Lab)

Milton Keynes South (Lab)

Montgomeryshire (LibDem)

Morecambe and Lunesdale (Lab)

Moreley and Outwood (Lab)

Newcastle under Lyne (Lab)

North Cornwall (LibDem)

North Devon (LibDem)

North East Derbyshire (Lab)

North Norfolk (LibDem)

Northampton North (Lab)

Northampton South (Lab)

Norwich North (Lab)

Oxford and West Abingdon (LibDem)

Pendle (Lab)

Penistone and Stocksbridge (Lab)

Peterborough (Lab)

Plymouth Moor View (Lab)

Portsmouth South (Lab)

Preseli Pembrokeshire (Lab)

Pudsey (Lab)

Putney (Lab)

Reading East (Lab)

Reading West (Lab)

Richmond Park (LibDem)

Rossendale and Darwen (Lab)

Rother Valley (Lab)

Rushcliffe (Lab)

Scarborough and Whitby (Lab)

Scunthorpe (Lab)

Shipley (Lab)

Shrewsbury and Atcham (Lab)

South Swindon (Lab)

Southampton Itchen (Lab)
Southport (Lab)

St Albans (LibDem)

St Ives (LibDem)

Stevenage (Lab)

Stockton South (Lab)

Stoke-on-Trent North (Lab)

Stoke-on-Trent South (Lab)

Stroud (Lab)

Sutton and Cheam (LibDem)

Telford (Lab)

Thurrock (Lab)

Totnes (LibDem)

Truro and Falmouth (Lab)

Uxbridge and South Ruislip (Lab)

Vale of Clwyd (Lab)

Vale of Glamorgan (Lab)

Wakefield (Lab)

Walsall North (Lab)

Warrington South (Lab)

Warwick and Leamington (Lab)

Watford (Lab)

Weaver Vale (Lab)

Wells (LibDem)

Welwyn Hatfield (Lab)

Westmorland and Lonsdale (LibDem)

Winchester (LibDem)

Wirral West (Lab)

Wolverhampton North East (Lab)

Wolverhampton South West (Lab)

Worcester (Lab)

Workington (Lab)

Wrexham (Lab)

Wycombe (Lab)

York Outer (Lab)

If I have made any mistakes or bad judgements in this list, do let me know.

There are a few marginal seats which are so safe that you get a choice. In Arfon, or Carmarthen East and Dinefwr, you can vote Plaid or Labour without any fear of letting the Tories win. In Ceredigion the same applies between Plaid and the LibDems. In Bermondsey and Old Southwark, or Cambridge, or Leeds North West, or Sheffield Hallam you could vote for Labour or the LibDems.

Then we have eleven difficult seats, all in England, where both Labour and the LibDems have a claim to be the party to vote tactically. It is important to remember here that over the last months the national polls have been moving from LibDems to Labour, so polls or recommendations made in early or even mid November should be treated with caution. However the latest poll of polls suggest Labour are still below their 2017 total, and the LibDems are significantly above, with little movement over the last few days.

One issue I found it hard to assess was the finding in some local polls that Labour voters are more open to tactical voting than Liberal Democrats. I would hope this does not apply to any Liberal Democrat voters who might take any notice of what I say, because if it does they have not been reading my other posts. An argument that should have equal weight is that, if Johnson is not to romp home, the polls need to be a little biased against Labour because they underestimate the youth vote.   

Berwick-upon-Tweed A poll at the end of November had LibDems slightly ahead of Labour (which makes sense given 2017 result and subsequent national movement) but the Tories winning easily. More recent B4B MRP poll puts Labour ahead. TV sites split. So Recommendation Labour

Broxtowe (Lab) Anna Soubry was the Tory candidate, now running as an Independent with the Liberals not standing. But this is a Tory/Lab marginal, so Recommendation Labour

Cities of London and Westminster TV sites are split. A poll on 23 November had Chuka Umunna ahead of Labour. However although B4B are suggesting voting for the LibDems, their polling shows Labour ahead. Jon Worth suggests LibDems. So close to call. Recommendation Labour but watch out for any new information. Postscript - new poll has LibDems slightly ahead, so my Recommendation is now LibDem.

Colchester All the TV sites are recommending Labour, So Recommendation Labour.

Finchley and Golders Green I think the large Jewish vote here makes this impossible for Labour, and the TV sites and local polls agree. So Recommendation LibDem

Kensington Narrowly won by Labour last time. A poll in mid November had LibDems a bit ahead of Labour, but the national polls have moved since then. TV sites split, and B4B are on the fence. Too close to call, so I would go for sitting MP. Recommendation Labour but watch out for any new information. Postscript - new local poll has Labour in the lead. 

St Austell and Newquay Both Labour and LibDems have a strong presence here. B4B’s MRP poll puts Labour ahead here in a Leave voting constituency. Recommendation Labour

These two Cambridgeshire seats are similar.

South Cambridgeshire

South East Cambridgeshire

They are Tory seats where Labour were second, but LibDems had a significant vote as well. B4B’s MRP puts LibDems in front, and the only positive recommendations from TV sites are LibDem. Recommendation LibDem

Wimbledon

Polls for Wimbledon show LibDems ahead, but there has been a movement away from LibDems towards Labour nationally since then. TV sites split. B4B MRP poll has LibDems ahead. Recommendation LibDem

Wokingham

Polls for Wokingham show LibDems ahead, but there has been a movement away from LibDems towards Labour nationally since then. TV sites that make a positive call all say LibDem. B4B MRP poll has LibDems ahead. Recommendation LibDems.

Again happy to be corrected on any factual errors. If you want to swap your vote use https://www.swapmyvote.uk/

Other useful sites

https://tactical.vote/compare
https://dontsplittheremainvote.com/

Jon Worth at https://jonworth.eu/2019-uk-general-election-tactical-voting-guide/

https://tacticalvote.getvoting.org/

https://public.tableau.com/profile/christabel.cooper#!/vizhome/GE2019Constituencydata/START

Guardian https://www.theguardian.com/politics/2019/dec/08/tactical-voting-guide-2019-keep-tories-out-remain-voter-general-election

***Postscript: Not a complete list. I should have added "that is happy to see climate change increase unchecked".