On the supposed gap in the centre of UK politics, or the alleged powerlessness of the UK median voter

A remarkable feature of the UK political landscape is how powerless what could be called the political centre currently feels it is. By the centre I don’t just mean individuals that call themselves moderates, but also UK business: capital if you like. How did this happen? It is a long story I’m afraid.

The first and most obvious factor is the UK’s first past the post (FPTP) voting system for MPs. In earlier decades this was thought to empower the centre. If any party drifted towards a less central position in the political spectrum (left/right, or in two dimensions with open/closed), the other would quickly capture that centre ground and would be triumphant in elections. The wishes of the median voter were very powerful. But this assumed that the desire for power would always triumph over a left or right political ideology in at least one party.

The theory seemed to work well in the decades before the turn of the century. When Labour drifted to the left in the early 80s, it ensured its defeat at the polls. Although the Conservatives under Thatcher were also moving to the political right by adopting neoliberalism, that was put down to the median voter wanting the power of the unions to be destroyed, wanting privatisation etc. Labour regained power by adopting many of the elements of neoliberalism, but moved back to the median voter by adding a human face to that neoliberalism.

The Conservatives regained power in 2010 by choosing Cameron as Prime Minister, someone who moved the Conservative party in a more liberal direction in one or two areas, and also was more receptive to the growing concern about immigration. So far you could just about believe in the power of the median voter, and the need for parties to capture the centre ground. I am sure anyone reading those last two paragraphs would have already realised that things were a lot more complicated. But this basic model has had a strong influence on how many interpreted and did politics over this period.

Following this theory Labour moved to the right under Miliband by, for example, gradually giving in to the rhetoric of austerity and immigration control. Given how close the result was in 2010 (the Conservatives could only govern as part of a coalition with the LibDems), you might expect Labour to at least do better than they did in 2010. It did not work. The Conservatives won having pursued in coalition a more right wing policy than under Thatcher. The unemployed, the poor and the disabled were denigrated to a far greater extent than under Thatcher, and so called debt crisis had been used to shrink the state in ways that the median voter did not want. Privatisation continued despite its unpopularity. The hostile environment started.

It is 2015, rather than 2010 or 2016, that is in many ways the critical point in the UK political timeline. Why did the median voter theory not work in 2015?

There is a line that Ed Miliband lost because he was not a ‘natural leader’, by which people generally mean he was unpopular in polls. Strangely enough, Kinnock and Brown also had the same problem, as does Corbyn today. The one exception is Blair. Now it is true that Blair did have qualities that these others did not, but he also had these qualities compared to Major or May or even Thatcher. The other key point about Blair is that he did a deal with the press that helped him win in 1997. One study suggests that this deal was not critical for the 1997 victory, but it was big enough to speculate that the withdrawal of support for Labour by Murdoch in 2010 may have been critical to Brown’s loss.

Labour’s response to the 2015 loss was to stick to the theory and reason that the median voter must have moved to the right. It is a good example of a theory influencing the behaviour it seeks to explain. There was talk by senior MPs of adopting Osborn’s position on austerity. Labour members were understandably having none of it, and elected the only credible anti-austerity candidate. Does the Corbyn election mean the median voter now has nowhere to go? Are we stuck in a new equilibrium, where both major parties were pursuing their ideology? This is the line promoted by many. If true under FPTP the best hope for the median voter is the very risky one of hoping the LibDems can gain enough MPs to hold the balance of power.

Most people in the media do not talk about the influence of the media, for obvious reasons. But the blind spot goes well beyond this. I once asked a political scientist why no regression studies have looked at the role of the media in influencing the 2016 Brexit vote, and their response was because it probably would work too well. This is not quite as bad as it sounds, because there is a real problem in distinguishing between a symptom (Brexit type voters like reading the type of papers that support Brexit) and a cause (Brexit readers are influenced by the paper they read). But just because that problem is difficult to solve should not mean the issue is swept under the carpet.

As I have noted many times, the studies that do try to solve that symptom/cause problem typically find a large causal influence. The most recent was a study discussed here which shows how the Sun boycott in Liverpool (because of its coverage of the Hillsborough disaster) increased the Remain vote there in 2016. Obviously the more united the media is on an issue, the more powerful its influence.

That is what happened in 2015. With few exceptions the broadcast and print media decided that the goal of economic policy was no longer economic growth (the slowest recovery for centuries) or personal prosperity (the biggest decline in real wages since WWII) but reducing the deficit. This created the view that Osborne had been more competent in handling the economy than Labour (whereas he had been the most incompetent Chancellor for decades), and this was the only strong card of the Coalition government. The other factor that may have swung it to Cameron in the last few days was the Conservative line that Miliband would be in the SNP’s pocket, and the broadcast media decided to lead on this rather than Labour’s favoured topic of the NHS. (The English nationalism that is such a strong part of Brexit was evident then, and earlier in Cameron announcing English votes for English issues immediately after Labour had prevented Scottish independence.)

The media persuaded the median voter to elect in 2015 the most right wing government since 1945. Critical to the victory (and to some extent the 2010 victory as well) was the adoption of deficit phobia (a key part of what I call mediamacro) by the broadcast media, and particularly the BBC. After 2010 the BBC began to look more like state media, promoting the interests of the Conservative party, because of relentless pressure and threats from the right. The BBC had managed to remain roughly balanced towards the end of the Labour government (deficit phobia aside), but from 2010 onwards things began to change. What made the difference, or why did Labour’s attempts to intimidate the BBC not end their balance? Again the right wing press plays a crucial role, and in addition the Conservatives have a trump card of threatening to abolish the BBC.

Does this leave the centre nowhere to go? Remember the median voter's power in a two party system comes not from voting for a centre party, but in voting either Labour and Conservative, depending on whichever is nearer the centre. The theory only breaks down if both parties are miles from the centre in different directions but roughly equal distances, and that is not the case at present. Opposite a right wing party adopting authoritarian and undemocratic actions we have a Labour party pursuing fairly solid social democratic policies, as their 2017 manifesto made clear. To put it another way, while Labour are mainstream Europe, the Conservatives are now Trump’s USA.

The leaderships’ left wing baggage has had some effect. It made its leadership an easier target for the media, particularly as a result of Corbyn’s strong support for the Palestinian cause. It also created a group within Labour and beyond whose primary aim seems to be to bring Corbyn down. More importantly the leaderships’ historic Lexit position meant it failed to follow its membership on Brexit quickly enough, which in turn allowed the LibDems to return from obscurity. But in substantive terms such as monetary, fiscal and taxation policy Labour would be considered too right wing in the 1970s. Elsewhere, like a National Investment Bank, and support for public transport as part of a Green New Deal, few except the most ideological neoliberal would think this wasn’t essential. Their Brexit policy of unconditional support for a referendum means Brexit would end under a Labour government.

In contrast, the Conservative party has morphed into a Republican party led by our version of Trump. It was heading that way before Brexit, and Brexit has pushed it over the edge. It is as imperative to remove the Conservative party from power as it is to remove Trump, and ensure that it does not return in its current form. Just as the need to remove Trump is not conditional on whether they are opposed by Biden or Sanders or Warren, so the same is true for Johnson. That cannot be done by the Liberal Democrats in 2019 anymore than it could in 2010, and it cannot be done by forcing the Tories to be a minority government. Only a prolonged period in opposition will convince Tory members and MPs that Brexit, extreme neoliberalism and Trumpian authoritarianism have all become toxic. The median voter still has a natural place to go, and that is to Labour’s European social democracy rather than the Conservatives as Republicans and Johnson as Trump..

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Why have pundits got politics so wrong since 2015?

I have just read a paper called “Political science, punditry, and the Corbyn problem’ by Peter Allen, a Reader in comparative politics at Bath. It reflects on how most pundits, including some political scientists, got Corbyn’s initial success and then survival completely wrong. I will not attempt to summarise the paper here. It is well worth reading. I am going to take it as read that many pundits did get Corbyn completely wrong in 2015 and 2017. This has nothing to do with whether the left ascendency is a good or bad thing, but just the failure of pundits to see why it was happening.

Allen notes a kind of epistemic snobbery “‘whereby people who do not meet the above criteria of political inclusion are not seen as worthy participants or contributors in political discussions, or whereby their political opinions are devalued in some way”. It was a kind of “othering” that I felt personally when I joined Labour’s Economic Advisory Council. I was told, by people who I respect, that my academic standing would be harmed if I joined the group. It was if I had decided to give economic advice to the BNP rather than the Labour party.

Part of this represented a longstanding dislike by the centre and centre-left of the left in the UK that stems from the political battles within Labour in the 1980s. Andy Beckett tells some of the story here. There was a lot wrong with the Labour left at that time, and Labour leaders from Kinnock to Blair found they could gain a certain credibility by attacking both the left and the unions. Indeed some of those who attack the left today were part of the left back then, and now see the error of their ways. The Labour left came to be seen as generically toxic.

As Allen notes, another element in this failure to understand Corbyn was a belief in triangulation. In the world that takes triangulation as the theory rather than just a useful model with limitations, moving sharply to the left when a party of the right wins an election makes no sense. But why were the same pundits not already noting that the theory of triangulation had broken down, because the Conservative party from 2010 to 2015 had moved sharply to the right and yet had won a general election? This is what the rest of this post is about.

Allen does not mention austerity specifically, but I think misunderstanding austerity plays a large role in failing to see how far right the Conservatives were moving, and therefore Corbyn’s rise in 2015 and Labour’s gains during the 2017 campaign. If you look at what the Coalition did collectively there can be no doubt about what was going on. The hostile environment, privatisation of the NHS, demonisation of those on welfare and so on. Yet perhaps all of these things could be explained away individually if that is what you want to do: continuing Blairs policy on the NHS, responding to popular opinion on immigration and welfare. The dominant narrative, at least to begin with, was of Cameron the moderniser.

The clearest indicator of a rightward shift was austerity. It should have been clear by 2012 if not earlier that the recovery was stalling. Thatchers experiment with austerity had been brief and was quickly reversed, but Osborne was not for turning. We had for the first time since WWII a government attempting sustained austerity during a recovery phase of a recession. Perhaps too many placed their faith in City folk that told stories of imminent bond strikes, so they believed deficit reduction had to be done. But when interest rates on government debt started falling curious academic minds at least should have begun to smell a rat. Did pundits not notice that the majority of economists were against austerity? This is a genuine question rather than a rebuke, because you had to do a little research to find out they were.

Once you miss the rightward move of the Coalition government, and note that it would have been worse still but for the Liberal Democrats, then you also fail to see that Labour from 2010 to 2015 had been following a triangulation strategy and failed. Did pundits put everything down to Miliband’s unpopularity? Once you understood that Labour had moved to the right and lost, then Corbyn’s victory should have come as no surprise, as I argued here before the result.

Understanding the deep damage that the austerity policy did to the country means that it is hardly surprising that under a left leader opposed to austerity the Labour party should attract half a million members. Too many pundits talked about this in terms that applied to the Labour party in the 1970s and early 80s, but this was a danger for rather than a description of the mass movement that Labour were becoming.

There was one feature of received wisdom that seemed to be holding true, however, and that was that Labour led from the left would be defeated decisively in any general election. Poll after poll suggested this was true. I was told too many times that the left were only interested in controlling the party (how surprising) and not interested in winning elections. It was nonsense of course.

As soon as Labour's position in the polls started rising in the middle of the campaign I suggested that Corbyn’s unpopularity before the campaign told us more about the media than anything else, but I’m not sure this is accepted by most pundits. Many will blame the Tories bad campaign, but what that showed us was that May and her team were pretty bad at doing politics, which was something that should have been clear given the evidence if the media had been doing its job properly. But underestimating the role of austerity is important here too.

Austerity was, after a time if not initially, designed to shrink the UK state. And it succeeded. Attitude surveys tell us that is very unpopular, with less than 10% of the population wanting lower taxes and spending. So a party proposing the opposite, with a tax financed fiscal expansion that was at the heart of the Labour campaign, was bound to be popular on that account. Again the Labour surge was a consequence of a media that preferred talking about Labour divisions and personalities rather than policies, so Labour's policy stance came to voters as a surprise.

Thus in my view the failure to see austerity for what it really was is crucial in understanding why pundits got Corbyn so wrong. However I would be fascinated to know how some of those same pundits themselves account for this failure, and whether they see my account having some validity or not.

We need a political party that is tough on the causes of Brexit

I fully share the anguish of so many people over the madness of Brexit. All the evidence points to not leaving the EU, and the reasons given for leaving are generally vague or false. The vote on which this crasy policy is based was deeply flawed. As an economist I can clearly see the damage Brexit is doing and will do. While I could see the rationale for Labour’s triangulation strategy over Brexit before and immediately after the 2017 election, during 2018 as public opinion began to move it stopped making sense in electoral terms, and of course their policy often appeared unicorn-lite or, more realistically, close to a policy of Brexit in name only which only gives away control. The new party that will surely follow the formation of the Independent Group, if it continues to promote a People’s Vote, should be quite attractive to people like me.

But I’m in the more uncommon position of having been in the similar place twice before in the last decade. The reason is very simple. I have been all my life a macroeconomist, and for the last twenty odd years an academic. That gave me a perspective on 2010 austerity and the 2015 election which was largely absent from the popular debate. As a result, I can see that Brexit was not an isolated event, the result of one bad decision by Cameron, but part of a pattern suggesting deep problems with how UK politics works.

Understandably, most people are against austerity because of the impact it has had on those in need who depend on the NHS, local authority care and the welfare state. They are also now seeing its impact on schools, on our justice system and much more. But that still leaves open the idea that somehow austerity was necessary for the good of the economy as a whole. As Conservative politicians never tire of saying, they came into office in 2010 with the country on the edge of a crisis created by the previous Labour government. As an academic macroeconomist I know that is completely false.

Pretty well every first year undergraduate textbook tells students why in a recession you need an expansionary monetary and/or fiscal policy and you should ignore the deficit. When interest rates run out of road, as they had in the UK by 2009, then fiscal expansion was vital. One of my own specialist fields is fiscal policy, so I also know that state of the art models also suggest exactly the same thing as the textbooks. The insights of Keynes that have been accepted by most academics ever since remain valid today. It is this received wisdom that the UK followed in 2009 before the Coalition government came into power.

Just as many feel that Brexit makes no sense, I felt that austerity which started in 2010 went against all our knowledge and evidence. The one doubt I had was that an irrational financial market might suddenly stop buying UK government debt, but this was dispelled when I realised the Bank of England’s unconventional monetary policy of buying government debt to keep interest rates low (Quantitative Easing) would quickly kill any panic. That analysis begins my book based on the blog I started as a result of austerity.

Just as both main political parties now support some sort of Brexit, so both at the time supported austerity, with the argument being over how much, how quickly. Neither the Coalition nor the opposition argued for the right policy, which is to delay fiscal consolidation until the recovery was underway and the Bank started raising interest rates. Experts on trade or the EU Brexit negotiations are infrequently heard in the media, but they were almost never seen over austerity.

My point in making these parallels is that evidence based policy making on major issues didn’t end with Brexit, but six years earlier with austerity. In both cases these are policies that create great harm to all, and acute harm to many. I calculate austerity cost the average household £10,000, and NEF using similar methods get an even larger figure. No government since the war, including those of Thatcher, has embarked on prolonged austerity during an economic recovery, and so it is no surprise we had the weakest recovery for centuries.

Brexit is therefore not the exception in a period of otherwise normal government. If you ask why Brexit happened, it was not that David Cameron made one mistake in an otherwise capable period as Prime Minister. There is evidence that austerity encouraged the growth of UKIP and by implication the Brexit vote. I remember often hearing people in areas that are described as ‘left behind’ dismissing the economic impact of Brexit by saying things could not possibly get worse than they are now. But austerity was not the main cause of why Brexit happened.

To see what was we need to look at the second period where I felt similar to how I feel today about Brexit, and that was the run up to the 2015 general election. Political commentators had decided from polling that the economy was the Conservative’s strong point, indeed perhaps their only strong point going into that election. To a macroeconomist that made no sense. Not only had we had the worst recovery for centuries but real wages had suffered their worst fall since records began. The government extolled record employment growth, but given the slow recovery they were in reality just celebrating the flatlining of UK productivity that was a key factor behind falling real wages.

Economists like David Blanchflower, John Van Reenen and myself set out just how bad UK economic performance had been over the previous 5 years, but once again expertise was ignored. As far as the media were concerned reducing the deficit had become the most important priority for the economy, and that was how they judged politicians. You will not find that in any textbook either, but the media had either sold or been sold a narrative and they didn’t want to know any different.

That narrative said that the Coalition had brought down the deficit that the previous government had allowed to grow out of control. Of course in reality the worst recession since the Great Depression of the 1930s caused by a Global Financial Crisis had pushed up the deficit, but the media had pushed, or accepted, the idea that the Coalition was clearing up the mess that a profligate Labour government had left. I had written a paper on fiscal policy under the Labour government and there was no way they were profligate, but because Labour didn’t challenge the accusation the media accepted something as true that was obviously false.

To the media the fact that the Conservatives were thought to be strong on the economy only confirmed their narrative. In reality the causality was the other way. There is a growing literature identifying the power the media has to influence elections and shape popular narratives. The 2015 election was a precursor for Brexit in three important ways. First, and most obviously, the media helped elect a Conservative government that was committed to an EU referendum. Second it showed that politicians could tell huge lies and get away with it. Finally it showed the power the media had to influence a popular vote.

Brexit would not have been possible without the UK media. A large part of the press pushed anti-EU propaganda, and the broadcast media balanced the view of the overwhelming majority of experts against the lies of a few. Viewers desperately wanted information, and the broadcast media gave them politicians rather than experts and balance rather than facts. Fear of immigration was important in deciding how many people voted, and it was the right wing press that had since the beginning of the century pushed countless negative stories about immigrants. Although austerity may have played a role, it was the media that played the major part in giving us Bexit.

Although the Independent Group (IG) may have a more attractive policy on Brexit, and they will talk the talk on a broken politics, the group is made up of politicians who either believe their government did the right thing over austerity, or who in opposition urged accepting Osborne’s policy. Deficit obsession is damaging to the economy, but it also shuts the gate to so much else that needs to be done. It means the IG will be unable to undertake the far reaching and radical industrial policy that is needed to tackle the huge regional inequalities within the UK, and help those left behind that voted for Brexit. It means no Green New Deal. Although so far policy light, they have pledged to keep our current ‘free media’, which will mean they would do nothing to mend much of our dysfunctional press that acts as a propaganda vehicle for their owners, or a broadcast media that balances truth with lies and is largely expert free.

Brexit was not an aberration in an otherwise well functioning UK democracy, any more than Trump was in the US. They are symptoms of a deeper malaise. I cannot put it better than Anthony Barnett when he says if all you want to do is stop Brexit and Trump and go back to what you regard as normal, you miss that what was normal led to Brexit and Trump. Unless we have politicians in power who understand the need for radical change, the snake oil sellers who sold us Brexit and US voters Trump will happily carry on plying their wares.

Labour lost

As Corbyn’s win is all over the news, it is difficult to think about other issues. So while watching the result I read ‘Can Labour Win?’ by Patrick Diamond and Giles Radice. It sifts through a lot of polling information and conversations with candidates, and comes up with a large number of recommendations. There is a lot of good and sensible stuff here, but I cannot help feel that it - and much similar comment since the election - misses the key point.

Perhaps part of the problem is that a great deal of this analysis comes from Labour party people who are, quite rightly, really interested in policy. So all the analysis is about which policies were wrong and which way policy should move as a result. We get into territory that these people are comfortable with: what policy should be.

The point all this misses is that the Conservatives won. It used to be said that governments, not oppositions, win or lose elections. Yet all of the comment is about Labour’s policies. A much better place to start is why voters voted for a Conservative government. That quickly leads you to the fact that voters saw the Conservatives as competent in economic terms. And that is where you should stop.

You should stop because, as I have argued many times, the raw data on the economy was terrible. If you had asked any pollster or political scientist whether a government could win on economic competence having presided over a huge fall in real wages they would have said no. True things began to look less gloomy as the election approached, but the position of the Conservatives in the polls well before that time was not nearly as bad as the economic position suggested it should be.

The Conservatives won because they reframed the economic debate. Competence became reducing the deficit, not increasing prosperity. Labour’s failure was a failure to challenge that reframing. Forget the details of Labour policy - it is of little importance compared to this crucial mistake. And that crucial mistake was a symptom of a more general problem.

There is one telling result from the Diamond and Radice study. To quote

“despite never using the language of ‘equality’, voters believe the Conservatives are just as likely to achieve equality as Labour in southern England”

This was despite Miliband putting the problem of inequality at the centre of his message. I heard it, but most voters did not. Labour just failed to get its message, any message, across. As I wrote just after the election, Labour's political spin appeared to be consistently amateur compared to their opponents.

Corbyn will have some advantages. He will not let Osborne’s deficit fetishism go unchallenged. But that challenge will only work if the alternative policy is solid and simple: I agree with the authors that this must involve balance on the current deficit (although within the context of a flexible rule). What he must not do is provide material for his opponents, which I’m afraid is exactly what Corbyn’s QE did. Focusing on the current balance will allow for a large increase in public investment, which again can be spun very simply: Labour, unlike the Conservatives, invests in our future. (It is not afraid to borrow to do so, just like every successful firm.) Corbyn, and the team he selects, may not want to call it spin, but if they do not match their opponent’s ability in this area they will lose.

Media myths

At first sight the research reported here is something that only political science researchers should worry about. In trying to explain election results, it is better to use ‘real time’ data rather than ‘revised, final or vintage’ data. But as the authors point out, it has wider implications. Voters do not seem to respond to how the economy actually is (which is best measured by the final revised data), but how it is reported to be. (This does not just matter for elections: here is a discussion of some other research which suggests how the way recessions are reported can influence economic decisions.)

Just one more indication that the media really matters. I would not bother to report such things, if this point was generally accepted as an obvious truth. That it is not, in the UK at least, reflects various different tendencies. Those on the right know that the print media is heavily biased their way, and that this has a big impact on television, so they have an interest in denying that this matters (while funding think tanks whose job is in part to harass the BBC about its alleged left wing bias). Those on the centre left often react negatively to a few of those further left who discount all awkward facts by blaming the media. And the media itself is very reluctant to concede its own power.

As an example, here is Rafael Behr in the Guardian talking disapprovingly about Labour supporters:

“I heard constant complaints about failure to “challenge myths” about the economy, benefits, immigration and other areas where Labour is deemed unfit to govern by the people who choose governments. The voters are wrong, and what is required is a louder exposition of their wrongness.”

What is really revealing about this paragraph is what is not there. We go straight from myths to voters, as if no one else is involved. I doubt very much that many who voice the ‘constant complaints’ Behr is talking about think that voters created and sustained these myths all by themselves.

The discussion of issues involving the economy, the welfare system and immigration among most of the ‘political class’ is often so removed from reality that it deserves the label myth. In the case of the economy, I provided chapter and verse in my ‘mediamacro myth’ series before the election. It was not just the myth that Labour profligacy was responsible for austerity, but also the myth about the ‘strong recovery’ when the recovery was the weakest for at least a century, and that this recovery had 'vindicated' austerity. Given the importance that voters attach to economic credibility, I do not believe I was exaggerating in suggesting that the mediamacro myth was in good part responsible for the Conservatives winning the election.

The media is vital in allowing myths to be sustained or dispelled. That does not mean that the media itself creates myths out of thin air. These myths on the economy were created by the Conservative party and their supporters, and sustained by the media’s reliance on City economists. They get support from half truths: pre-crisis deficits were a little too large, GDP growth rates for the UK did sometimes exceed all other major economies.

Myths on welfare do come from real concerns: there is benefit fraud, and it is deeply resented by most voters. But who can deny that much of the media (including the makers of certain television programmes) have stoked that resentment? When the public think that £24 out of every £100 spent on benefits is claimed fraudulently, compared with official estimates of £0.70 per £100, that means that the public is wrong, and we have a myth. (An excellent source for an objective view of the UK’s welfare system is John Hills’ book, which has myth in its subtitle) As I noted in that post, when people are asked questions where they have much more direct experience, they tend to give (on average of course) much more accurate answers. Its when they source the media that things can go wrong. It is well known that fears about immigration tend to be greatest where there is least immigration.

Of course reluctance to acknowledge myths may not be denial but fatalism. Fatalism in believing that voters will always believe that migrants want to come to the UK because of our generous benefit system because it suits their prejudices. Encouraging those beliefs will be in the interests of what will always be a right wing dominated press. Some argue that myths can only be changed from a position of power. But myths are not the preserve of governments to initiate. According to this, over 60% of Trump supporters think their president is a Muslim who was born overseas. [1]

Myths need to be confronted, not tolerated. The initial UK media coverage of the European migrant crisis played to a mythical narrative that migrants were a threat to our standard of living and social infrastructure (to quote the UK’s Foreign Secretary!). This reporting was not grounded in facts, as Patrick Kingsley shows. That changed when reporters saw who migrants really were and why they had made the perilous journey north. It changed when Germany started welcoming them rather than trying to build bigger fences. These facts did not fit the mythical narrative.

The UK government was clearly rattled when it realised that many people were not happy with their narrative and policies. Myths can be challenged, but it is not easy. Policy has been changed somewhat, but attempts are also being made to repair the narrative: to take some of those who have made it to the EU will only encourage more (a variant of the previous European policy of reducing the number of rescue boats), and a long term solution is to drop more bombs. Such idiotic claims need to be treated with contempt, before they become a new myth that the opposition feels it is too dangerous to challenge. Challenging these myths does not imply pretending real voter anxieties about migration do not exist, but grounding discussion and policy around the causes of those anxieties rather than the myths they have spawned.

Yes, the non-partisan media needs to recognise the responsibility they have, and use objective measures and academic analysis to judge whether they are meeting that responsibility. But more generally myths are real and have to be confronted. The biggest myth of all is that there are no myths.

[1] The probability pedants among you who read the link will know that I’m actually making an assumption in writing this!

Recognising the success of macroeconomic myths

The Conservative led government of 2010 to 2015 had a terrible macroeconomic record. Partly through their own actions they had presided over the worst recovery from a recession for hundreds of years, and an unprecedented fall in real wages. Employment had increased, but only because productivity had stagnated. Yet the Conservatives were seen by voters as the more competent political party when it came to running the economy, and this probably had a decisive role in winning them the election.

This paradox is easily explained. Voters were sold a lie: that Labour through its profligacy had run up budget deficits that had required painful measures to correct, but that recent growth rates showed that these measures had been a success. And the lie worked.

I think at least two groups have yet to understand the huge significance of this. The first is the Labour party itself. The reaction of some in the party to this situation is to want to ‘admit’ that they borrowed too much, and try and move on. Yet this seems just like the strategic error they made from 2010 in not trying to challenge the Conservative narrative. Back then they seem to have judged that it was pointless to continue to fight the issues that had dominated the 2010 election, and instead they should ‘move on’. What this strategy did was concede the writing of history to their opponents.

Perhaps those that want to fall into the trap of saying that they borrowed too much before the Great Recession think this is no big deal, because if they had known in 2005, say, that a recession was going to come in 2009, they might well have been more fiscally prudent. It should be blindingly obvious that this will not be how any admission is read. Instead the lie that Labour governments are always fiscally profligate will be cemented in stone: their opponents will say that even the party itself now admits it, after years of trying to deny it: how irresponsible is that!

The second group that has yet to comprehend the significance of the success of Conservative myth making are the media. Not of course the large part of the media that helped manufacture and promulgate the lie: they fully understand how successful their propaganda has been. The media I am talking about is the part which, to use the BBC’s mission statement, aims to “enrich people's lives with programmes and services that inform, educate and entertain.” When it came to analysing the myth of Labour profligacy and success of austerity, the ‘educate and inform’ part of that mission seems to have failed miserably.

Of course this media failure was not just during the few weeks of the election. In the years before, political commentators who have the potential to hold politicians to account allowed coalition ministers to repeat their ‘clearing up the mess’ metaphor without serious challenge. Indeed, to the extent that they continued to challenge Labour on their borrowing record, they became part of the deception.

This failure reveals two conceptual flaws in the media’s approach to macroeconomic issues: one with much wider implications, and one specific to fiscal policy. The first is to assume that there are no objective facts, but simply the claims of political parties. So if Labour chose not to challenge the ‘clearing up the mess’ narrative, it was not the media’s job to do so. Conversely, it was not the media’s business to assess the Labour profligacy myth: if the government put the myth forward, it was the media’s job to continue to challenge Labour on it. This is the ‘views differ on whether Earth is flat’ approach.

The second relates to how fiscal policy issues are reported. The government continually drew analogies between government budgets and household budgets: the UK had maxed out its credit card. To the extent that this analogy is used to imply that government deficits have to be reduced immediately come what may, economists know such analogies are false. A media that took its duty to educate and inform seriously would recognise this. What the media appeared to do instead was to accept the line that the deficit had to be reduced as quickly as possible, and obsess about the deficit numbers as if they were as important as data on inflation or unemployment.

Let me give examples that illustrate both of these problems. On the day that the Telegraph published a letter from 100 business leaders, the CFM published a survey of macroeconomists which asked a question about whether the austerity policies of the coalition government have had a positive effect on aggregate economic activity. Initially on BBC TV and radio both were covered - they made an obvious pair, as the majority of economists were saying something rather different from these particular business leaders. However by the time it came to the evening news, only the Telegraph’s letter seemed to feature. I would love to hear a justification for that strange decision. Was it because the Conservatives used the letter throughout the day, but Labour failed to use the survey? By any objective criteria the Telegraph letter was less informative: it was from a self-selected group, while the CFM results came from a survey of leading economists. But if the media sees its job not to inform but to simply report what politicians say, the decision made sense.

A key difference between the Labour and Conservative plans was the degree of fiscal consolidation over the next few years. The implications for welfare programmes and other government spending were addressed by the media. But that is not macroeconomics. The macroeconomics is that a large fiscal consolidation when interest rates are very low is risky. I cannot remember seeing that argument appearing at all in the media, which given its potential importance is extraordinary.

As a result of both failures, people believed that the coalition were more competent at running the economy than Labour would be, and remained largely ignorant of the major risk that electing a Conservative government would involve. That is likely to have been one of the critical factors in deciding the election result. On this issue, therefore, the media failed to educate and inform, and this had a significant - perhaps decisive - impact on the outcome of the election. A more serious failure of the media to fulfil its mission is hard to imagine. Yet I suspect those in the relevant media organisations are not even concerned about this, but even if some of them were they would probably be too timid to raise these issues.

So both the Labour party, and the independent media, are failing to address the issues raised by the success of the Conservative’s macroeconomic myths. There is perhaps a third group that also needs to think hard about what this all means. Often when scientists complain about how scientific issues are portrayed (or ignored) in the media and by politicians, we get a lot of stuff about how scientists should be more helpful. But in this election a number of major efforts by academic economists were made to get information out there, in ways that were deliberately designed to be accessible. A number covered macroeconomics, and directly addressed issues about the coalition’s record, competence and future plans (as here or here or here, for example). The information was there, but both the Labour party and the media hardly used it. Economists need to reflect about whether this means what they did was a waste of time. Political scientists need to reflect on what this means for their models of how elections are won and lost.

Do politicians need to pander to myths?

About UK politics, but raising some general issues about politicians and popular prejudices

Paul Bernal has a powerful post (HT Chris Dillow) where he says Labour lost the election long before 2015, by pandering towards three big myths: the myth that Labour created a huge deficit which required austerity in the midst of a recession, the myth of the ‘scrounger’, and the myth that Labour made a mistake in allowing excessive immigration. I obviously agree about deficits, I’m appalled at the hostility to welfare recipients stoked by the right wing tabloids and the harm done by inept reform, and I’m dismayed that politicians shy away from putting the positive case for immigration. For that reason I should agree that in England at least one of the three major parties should be standing up against all these myths. The Conservatives and Liberal Democrats helped manufacture the first myth, and the Conservatives contributed to the second and pander to the third (although some of their supporters would not favour costly immigration controls). Labour failed to combat all three.

The media have, predictably, reached a consensus about why Labour lost: it was too left wing, it was anti-business, it failed to be aspirational (it wanted to raise some taxes on the rich) blah blah blah. But as Peter Kellner and others have pointed out, there is no clear evidence for these assertions. Instead, they just happen to represent the things that much of the media dislike about Labour’s policies. Watching at least some of Labour’s potential future leaders, who the media as a whole describe as ‘modernisers’, fall in line with the media’s diagnosis makes the Parliamentary Labour Party look pathetic. Perhaps it is?

And yet, Peter Kellner also points out that being tough on scroungers and immigration is very popular. And these issues mattered for many voters. In a tweet about Bernal’s post, I asked was it better to lose telling the truth than lose being complicit in a lie? But it would be better still if a political party could tell the truth and win! Yet that seems a hopeless task. Jonathan Portes has championed the evidence on immigration, but as the BBC’s Nick Robinson put it, he would not get elected in any constituency as a result.

It is tempting at this point to blame the media for this state of affairs. In one sense I agree: I think newspapers should have a responsibility to tell the truth, rather than pander to prejudice when it suits their owners to do so. But in terms of practical politics this does not get you very far. One of the depressing conclusions that will be drawn from the election result is that it is fatal to stand up to Rupert Murdoch. [1]

Is it also true that cutting the deficit is widely popular? Here I think the evidence is less clear. I agree with John McDermott that perceived competence is vitally important, and not only in relation to self-interest. That is why Labour made a strategic mistake in not challenging with more force the coalition’s blatant myth making on the deficit issue. As Jonathan Hopkin and Mark Blyth point out, it is incredible how the blame for our current problems has so easily been transferred from the finance sector to fiscal profligacy, and not just in the UK. (But not so incredible if you follow the money, and take media power seriously.) 

Perhaps I can also make a very personal point here. As one of only a few academics who have written an academic paper on the Labour government’s fiscal record, which concluded that Labour profligacy was a myth, you might have expected Labour at some stage to have used some of the many words I have written on this to support their case. As far as I know they did not. Perhaps they were put off by some of the my criticism of other aspects of Labour’s programme. But this didn’t put off Alex Salmond, who was happy to quote my support of the SNP’s line on austerity, suggesting it had all the more force because I was not an SNP supporter.

Talking of which, I think there is one more piece of received wisdom that needs exposing, and that is Scottish exceptionalism. As I hinted at the beginning, there was one major UK party that did campaign against austerity, was pro-immigration and supportive of welfare. No doubt other factors also led to the huge success of the Scottish national party, but their position on these three issues didn’t seem to do them any harm, and in some cases probably helped a lot. This example suggests the answer to the question posed in the title is a clear no. 

It is generally presumed by the media, both sides of the border, that this is all because Scots are inherently more left wing than the English. But the evidence suggests differences in social attitudes between Scotland and England is not that great. The question Labour (or at least somebody) should be asking is why the SNP can avoid pandering to these three myths and win decisively, when the consensus is that doing the same in England would be electoral suicide.   

[1] Some people who comment on this blog say that when I voice concerns like this I’m being a bit passé, but on other occasions I’m accused of being anti-democratic! Somehow a politician choosing to delegate macro policy to experts reduces democracy, but allowing rich media barons to control the information that much of the electorate receives, and as a result have a considerable influence on politicians, is just fine.

Ferguson tries again

Perhaps stung by the widespread criticism of the way he treated data in his original FT op-ed piece, Professor Niall Ferguson has had another go. This new piece is distinctly better than the original. For example, he now acknowledges that “From 2010 to 2015, average inflation-adjusted weekly earnings fell more than under any postwar government.” Let me focus here on his central claim, which is that the economy did far better than Keynesians had predicted, and that Keynesians have refused to acknowledge this. (There are some other problematic points in the piece, but they are largely distractions from the main idea.)

Rather than get into the pointless business of comparing quotes, let us do this the academic way, which is to see what the Keynesian model says. Recall this is the model that pretty well all central banks use to regulate the economy. Everyone agrees that UK austerity was at its most intense in the first two years of Osborne’s Chancellorship. The UK Office of Budget Responsibility, which does the number crunching for Osborne, calculates using standard (although conservative in the current context) Keynesian multipliers that austerity in those first two years reduced GDP growth by 1% in each year. That is the basis for my calculation that austerity cost the average UK household at least the equivalent of £4,000. The OBR also calculate that overall UK austerity had no significant impact on growth in subsequent years.

Does the data show that Keynesian assessment is clearly wrong? Ferguson includes an IMF chart in his article, and I commend the fact that it uses GDP per head. Unfortunately it also includes a forecast, which is as reliable as most macro forecasts, so just focus on the part that is data. In 2011 and 2012 the UK flat lined, and only started recovering when the drag imposed by austerity came to an end. This is entirely consistent with my and the OBR’s analysis. (For the record, I also said three years ago that we would see a recovery in subsequent years.) Anti-Keynesians like to point to UK growth from 2013 onwards being healthy compared to other countries, but this is also entirely consistent with Keynesian analysis, because if you look at underlying primary balances UK fiscal austerity was much weaker in those years than in the US or the Eurozone.

General government underlying primary balances: source OECD Economic Outlook

In a way Ferguson acknowledges all this, because he lists other potential reasons why UK growth might have been weak in those early years. Fair enough, except that his central claim is that the numbers show the Keynesian analysis of austerity is wrong. But his chart shows that the numbers are in fact completely consistent with the Keynesian story. That does not prove the Keynesian story is right, but it sure does not show it is wrong!

Macroeconomics is a messy subject, because there are always so many things going on. For this reason the impact of policy is often not immediately apparent in the data, and some econometrics is required to sort things out. The unusual feature of the last few years across the UK and Eurozone is that events have largely followed the Keynesian script - no econometrics required. An election result does not change this fact.

Blaming Keynes

A few people have asked me to respond to this FT piece from Niall Ferguson. I was reluctant to, because it is really just a bit of triumphalist Tory tosh. That such things get published in the Financial Times is unfortunate but I’m afraid not surprising in this case. However I want to write later about something else that made reference to it, so saying a few things here first might be useful.

The most important point concerns style. This is not the kind of thing an academic should want to write. It makes no attempt to be true to evidence, and just cherry picks numbers to support its argument. I know a small number of academics think they can drop their normal standards when it comes to writing political propaganda, but I think they are wrong to do so. Take this paragraph, designed to show how good UK macro performance has been compared to the dire warnings of those Keynesians.

“The UK had the best performing of the G7 economies last year, with a real gross domestic product growth rate of 2.6 per cent. In 2009, the last full year of Labour government, the figure was minus 4.3 per cent. Moreover, far from being in depression, the UK economy has generated more than 1.9m jobs since May 2010. UK unemployment is now 5.6 per cent, roughly half the rates in Italy and France. Weekly earnings are up by more than 8 per cent; in the private sector, the figure is above 10 per cent. Inflation is below 2 per cent and falling.”

The first sentence is correct. But why compare that to 2009, which apart from being the ‘last full year of Labour government’ also happened to be the year of the recession that followed the global financial crisis. As I have mentioned before, growth in GDP per head under Labour averaged 1.5% even though it included this recession, but average growth from 2010 to 2014 was only 1% when we should have been seeing a rapid recovery. The jobs figures are mentioned, but the awful productivity performance that they imply is not. Earnings growth over the whole period is quoted (but without saying it is nominal growth), but only inflation over the last year! Presumably this is done to create the impression of real wage growth, when in reality this period has seen unprecedented falls in real wages.

A paragraph like that might earn Ferguson a job as a speechwriter for a Conservative politician, but if a first year undergraduate wrote it as part of an essay it would have red ink scrawled all over it, no matter whether the marker was an economist or historian. As for the general idea that the election result represented a disaster for the Keynesian model, I wonder whether Ferguson realises that most/all central banks base monetary policy on Keynesian economics? If the idea is that taking an anti-austerity line is a vote loser, why not note that the Scottish National Party adopted a clear anti-austerity rhetoric? (This letter in response to Ferguson’s article from Sam Wills makes much more sense on the election result. My own take is here.)

It is possible for someone to try and make a serious academic case in defence of the coalition government’s macroeconomic record, but this is not it. This kind of nonsense polemic is of course not just the preserve of the anti-Keynesian right. But what this kind of thing does illustrate is how problematic public debate on macroeconomic policy is. It is difficult to think about many other academic subjects where people who seem to have little idea of what they are talking about can write such obvious rubbish in a quality newspaper.