Now is not the time to try to lessen the anger of Farage and Trump devotees

The EU Referendum is a strong sign that the so-called ‘culture wars’ of the US have arrived in Great Britain in earnest.

The big event for me personally this week is not Theresa May finally giving up or explicit Remain parties easily beating explicit No Deal parties in the European election. It was the belated launch of my book to nearly 500 people at Kings College London in an event superbly organised by the Progressive Economic Forum. But don’t worry. This article is not going to be an account of that meeting or a summary of my book, but an attempt to give a fuller answer to a question from that meeting.

The questioner had just witnessed at first hand the passion of a Brexit party meeting, also well described by John Harris, Sky’s Lewis Goodall, Owen Jones and other journalists. She asked what can be done to diffuse that anger? Thinking about the answer I gave afterwards helped me understand more clearly the overall strategy implicit in much of what I write. This does not focus on the people who attended first UKIP and now Brexit party meetings, but instead the less committed voter who voted for Brexit, the classic marginal voter if you like. Let me give you an example of something that is discussed in the book but using a new chart, from the Berkman Klein Center.

It shows the number of sentences in the US mass market media on different issues (source) during the 2016 election period. This is not just Fox News, but also reflects an odd obsession by publications like the New York Times or Washington Post about Clinton’s emails. (Some of the current administration also use their private email to conduct official business and it is hardly mentioned.)

A recent video in Vox by Carlos Maza explains brilliantly one reason why this happens. What Fox News does time and time again is create a story out of very little and obsess about it. The non-partisan media feel obliged to cover it to disabuse the right wing image of a liberal media. You can see exactly the same thing happen in the UK where the right wing partisan press often sets the agenda for our broadcasters. You can see it after the European elections, where the broadcasters focused on seat totals for the party that hopes seats will not be taken up rather than the 40% or more who voted for explicit Remain parties compared to less than 35% who voted for explict No Deal parties.

Trying to stop the non-partisan mainstream media from doing this might influence the marginal voter (as I note in my book, more voters trusted Trump rather than Clinton before the election), but it will not influence those who attend Trump or Brexit party rallies, who consume Fox news or believe the right wing UK press. You might persuade the non-partisan broadcast media that their practices lead to bias and should stop, but doing something about the partisan media and the economic and social issues that are their lifeblood requires political change.

You will only get that political change by changing the mind of the marginal voter, because it is much more difficult to change the mind of a Trump or Brexit party supporter by rational argument, or by trying to expose who Trump and Farage really are. Trump once boasted he could shoot someone in 5th Avenue and not lose his core support, and that is not far from the truth. Showing Farage’s background and income and associations will likewise do little to influence his core following.

This is why so many who voted for Brexit are prepared to Leave with No Deal. As Kirby Swales writes in a joint NatCen and UK in a Changing Europe report:

“The EU Referendum was highly divisive, highlighting a wide range of social, geographical and other differences in Great Britain. This was less a traditional left-right battle, and more about identity and values (liberalism vs authoritarianism). It is a strong sign that the so-called ‘culture wars’ of the US have arrived in Great Britain in earnest.”

The underlying causes that are the fuel behind Trump and Farage are not exclusively non-economic, but deindustrialisation due to globalisation is a small part of the economic story. I have talked elsewhere about the growing divergence between the towns and the large cities since the 1980s. In the US you have the same thing, but it is talked about as a rural urban divide. This is the result of a new source of economic dynamism in service and IT dominated industries that is actually assisted by the diversity that those in the towns and countryside find threatening.

To bring more of that wealth out of the cities requires abandoning neoliberal platitudes, and so requires radical political change. But a large part of the fuel behind the Leave vote and Farage and also Trump is not economic, but instead reflects a clash of values and culture. It has been noted many times that many Leave voters have a deep nostalgia for an imagined past, and this is coupled with a desire to bring back hanging, corporal punishment and reverse other aspects of what we call a liberal society.

Anti-liberal views may have deep psychological roots, roots that may also be linked to being attracted to authoritarian figures, which in turn goes with irritation with a pluralist democracy. If these people are calling the shots, a pluralist democracy is fragile. Here the partisan press can be important at legitimising these authoritarian and anti-liberal views, as is appeasement by centre and left politicians, but it would be a fantasy to believe they would go away in their absence.

The extent of social change in the UK and elsewhere over the last 60 or more years is perhaps unprecedented. Here the left and liberal ‘elite’, as their enemies refer to them, have been outstandingly successful. But as James Curran argues, liberals and the left in the UK have hit strong headwinds on the question of race, with he suggests a stubborn 25% of the population expressing racist views.

I like to stress the importance of beliefs about whether immigration causes lower real wages and puts more pressure on public services (probably not and the opposite is true, respectively), but once again this is something that influences the marginal or changeable view on immigration. There will always be a core where hostility stems from racist attitudes. Again a two stage approach makes sense. You focus on changeable views by providing facts and an alternative narrative, so you can elect a left liberal government. Only then can racist views be stigmatised and income and spatial inequality reduced to help the ‘left behind’. We can also, as Maya Goodfellow pointed out at my book lauch, start telling a more accurate history that goes beyond WWII.

An interesting question is how much we should worry about those still spooked by the rapid pace of social change. We know that this is concentrated among those over 60, but is this a cohort effect of those brought up in the repressive 50s who were untouched by the 60s revolution happening in the cities, or is it some inevitable consequence of age? If it is the former, perhaps the best policy is containment until the problem goes away.

The upshot is that I don’t think liberals or the left, who are in opposition in the UK or US, need to worry too much about convincing those who go to Trump or Farage rallies. What we do need to worry about right now is that those same people have been given power with the help of appeasement and an unbalanced media. As we watch the sickening spectacle of Brexiters choosing our next Prime Minister what we want above all else is to take power away from these people. Changing minds, if it is possible, can come later.

Lecture on The Lies We Were Told

Too busy to write a post today, but I thought I’d take the opportunity to publicise my forthcoming lecture and discussion on my book. Its at Kings College, Bush House, 44-46 Aldwych, London at 7pm on 23rd May. I’m lucky to have Rachel Shabi, contributor at the Guardian and Professor Aeron Davis, Deputy Head of Media, Communications and Cultural Studies at Goldsmiths University of London to lead the discussion. The lecture is organised by The Progressive Economy Forum, and further details are here.

In the lecture I want to focus on three big lies told by politicians but also aided and abetted by the media. By big I mean lies that led to profound changes in most peoples lives or how we are governed. The first was austerity, where most of the media ignored mainstream economics and pushed the nonsensical idea that we should reduce the deficit in the middle of a recession. The second was the 2015 election, where the slowest recovery for centuries and unprecedented falling real wages were sold as a strong economy. The third was immigration, where scare stories in the right wing press fueled fears in parts of the country that had seen very little immigration. Together with similar disinformation about the EU, this culminated in Brexit, where one part of the media acted as propagandists and the other part balanced truth with lies.

These lies did not come out of nowhere. They were part of what I call neoliberal overreach, by which I mean using political deceit on a grand scale to pursue neoliberal ideas. William Hague when leader of the opposition talked about the UK becoming a ‘foreign land’. Neoliberals had no interest in curbing immigration beyond its ability to capture votes. Once in government you had austerity, which used deceit about the imperative of reducing the deficit to shrink the state. I discuss the extent to which even Brexit can be included as neoliberal overreach. Deceit requires lying to the public in a major way, which was only made possible by the support of the right wing press and the broadcast media turning a blind eye.

It is free (of course) but you do need to book your ticket here Hope to see you there, .

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Why the UK cannot see that Brexit is utterly, utterly stupid

If you talk to almost anyone overseas, except those at the right wing extreme (like Trump) or part of a tiny minority of the left, their reaction to Brexit is similar to the former Prime Minister of Finland. What the UK is doing is utterly, utterly stupid. An act of self harm with no point, no upside. Now sometimes outside opinion is based on incomplete or biased information and should be discounted, but on Brexit it is spot on. So why are so many people in the UK unable to see what outsiders can see quite clearly.

The days when Leavers were talking about the sunlit uplands are over. Liam Fox has not even managed to replicate the scores of trade deals the UK will lose when we leave the EU. As to independence, Leavers just cannot name any laws that the EU imposed on the UK they do not like. Since the referendum even public attitudes to immigration have become much more favourable.

Instead there has emerged one justification for reducing real wages, for allowing our economy to lose over 2% of its GDP, to allow firms to make plans and enact plans to leave the UK: the 2016 referendum. People voted for it so it has to be done. It is described as the will of the people. Yet few bother to note that almost half the people voted the other way, with those that would be most affected not even having a vote, and that this victory was won by illegal means. All that is brushed aside.

But what is really remarkable is the way what this vote was for has gradually mutated over time. Just before the vote, the Leave campaign talked of many ways of leaving, with Norway (which is in the EEA) as one option. They did this for a simple reason: every time Leavers came up with a feasible way of leaving other Leavers did not like it. Yet within little more than a year Leavers were declaring that the vote was obviously to leave both the Customs Union and Single Market. During the referendum campaign the Leave side talked about the great deal they would get from the EU, but within two years many of the same people were seriously pretending that voters really wanted No Deal. A vote for the ‘easiest’ deal in history has become a vote for no deal at all, apparently.

In much the same way, as Alex Andreou notes, what was once described as Project Fear transforms in time into ‘the people knew they were voting for that’. Claims there will be no short term hit to living standards made before the referendum has now become people knew there would be a short term cost. (Remember Rees-Mogg told us that short term means 50 years.)

Meanwhile warnings from important UK businesses become an excuse to talk about WWII, yet again. What people from outside the UK can see that too many inside cannot is how the case for Leaving has become little more than xenophobia and nationalism. What people overseas can also see but we seem unable to is that there is a world of difference between a vote to Leave the EU in an unspecified way and a real, practical plan. Which means that the first referendum, particularly as it was narrowly won, needs to be followed by a second referendum over an actual, realistic way of leaving. In other words a People’s Vote. When Jonathan Freedland says “the notion that a 52% vote for a hypothetical, pain-free Brexit translates into an unbreakable mandate for an actually existing Brexit is shaky at best” he is wrong: the notion is simply wrong.

Some of the arguments against this are so dumb, yet are allowed to pass as serious. ‘Why not the best of three’: there is no reason for a third referendum. ‘The first referendum was an unconditional vote to leave’: of course it could never be. [1] Suppose we found out that everyone would lose half their income under any specific way of leaving - would you still argue that in 2016 voters voted for that? Or that a second referendum means that ‘politicians have failed the people’. Most politicians voted to Remain because they knew that any realistic way of leaving would be bad for people. They have been proved right and a majority of the electorate might well agree.

But by far the worst excuse not to hold a People’s Vote is that a second referendum would be undemocratic. Orwell must be turning in his grave when he hears politicians say in all seriousness that a second referendum would undermine faith in democracy. This is the language of dictators and fascists, but few seem to mind. Given the difference between the final deal and the promises of the Leave campaign the case for a second referendum is overwhelming, but you would not know that from the UK public debate. There is only one way to make sense of the ‘People’s Vote = undemocratic’ equation, or the ‘will of the people’, and that is that the first referendum effectively disenfranchised Remain voters. [2]

That is exactly what happened after the 2016 vote. Those wanting to Remain to all intents and purposes ceased to exist. If we are just talking about Leave voters, then of course most will be disappointed by a second vote. Is this why Labour MPs just worry about Leave voters in their constituencies, because Remain voters no longer matter? It is why we get endless Vox pops from Leave constituencies, and no mention from EU citizens who have lived here for years who are worried sick because the computer might say you have to leave.

How did Remain voters get effectively disenfranchised? Why is the lunacy of what this country is doing only apparent to foreigners? Answering this question is not hard for anyone who has read my book ‘The Lies We Were Told’. What we have that foreigners do not is a public discourse shaped by a handful of newspaper proprietors who just happen [3] to be intensely hostile to the EU. Partly through intimidation by that same press and their political allies, the BBC follows this discourse. This is where the ‘will of the people’ came from. It was this press that puts rebel Conservative MPs on their front pages, and that uses language like saboteurs and traitors. It is intimidating MPs in order to influence the democratic process, but of course few in the media call it that. 

As I discuss in my book, I have seen this before in a milder form at least twice in recent times. In the first the UK convinced itself that austerity was the only way forward, despite most academic economists saying otherwise. It was the media that promoted claims that governments were just like households, even though first years economics students are taught why this is not true. And then it was the media that pushed (or left unchallenged) the idea that austerity was the result of Labour profligacy: it was a straight lie but it played a critical part in the 2015 election.

If people have doubts about my argument that the media played a central role is misdirecting the public then (and many do), well Brexit should be a test case. And so far Brexit has gone exactly as these newspaper proprietors would have wished. Three coincidences is a row? The reason why those overseas can see that Brexit is utterly, utterly stupid while the UK stockpiles food and medicine, and the Prime Minister tries to blackmail MPs into supporting her deal, is because those overseas are not influenced by the UK media.

[1] As this one seems very popular, it is worth spelling out why it is rubbish. The 2016 referendum was not some kind of contract, where all those voting to leave committed to support any vote to leave for all time. It is highly likely that some people voted for a particular kind of Brexit and would prefer Remain to other types of Brexit, which is crucial given the narrow victory. (Which is also why claims that Remain cannot be on any second referendum ballot are also nonsense.) Some may have voted Leave to give more money to the NHS and to stop Turkish immigrants, in which case they may have changed their minds. It does not say "we should leave whatever the form of leave at whatever cost" on the ballot or the small print, because there is no small print.  

[2] There is a serious and quite compelling argument that referendums in a representative democracy are a bad idea, but this equation is about a referendum that has been necessitated by an ambiguous first referendum.

[3] Well maybe not ‘just happen’: see here

Governments of fools?

Dominic Raab was widely mocked for his remarks about only recently understanding the importance of the Dover-Calais crossing (I defy anyone not to laugh at this from Artist Taxi Driver). The derision may be a little over the top, as it was when Gove was misquoted as having had enough of experts, but they and more serious admissions of ignorance are ridiculed because they reveal a deeper truth. As in the US, those ruling us in the UK do not really know what they are doing to a much greater extent than in previous years (see George Eaton here).

That last sentence perhaps requires clarification. They are not fools without any purpose. Brexit is a triumph of the heart over the head. They know what they want, and just do not care too much about the damage it will do. But the ‘misunderstanding’ by Brexiters over what they signed up to in December 2017 that persisted for weeks shows how dangerous not paying much attention to facts (in this case the words of an agreement) can be. Theresa May wasted at least a year completely misunderstanding the EU, and firing those in government that did. Perhaps her biggest act of ignoring the obvious was embarking on the Article 50 process without any prior discussion of what was possible and what was not, which as many people noted at the time was a sure way of ensuring the EU got pretty well what it wanted. If you do not believe all this, read Chris Grey here.

If you are tempted to put this all down to the unique stupidity of Brexit, or the uniqueness of Donald Trump, you really need to read my new book (short summary here). These traits were there with austerity, or the ‘hostile environment’, if you did the research. Economic historians of the future will discuss at length which did more needless economic harm to the UK economy, austerity or Brexit (assuming Brexit goes ahead). The only real debate about George Osborne, who committed the UK to pro-cyclical fiscal policy in the middle of the Global Financial Crisis, was whether this reflected deliberate deception or unforgivable economic ignorance (chapter 1.13 of my book), and if the former whether it was all about shrinking the state or a more superficial search for political advantage. In later years it became simple deficit deceit for neoliberal ends. In the US the priority of the Republican party for years has been tax cuts for the rich paid for by reducing state services for the poor, and a selective concern for the deficit combined with imagining tax cuts pay for themselves have been useful devices (lies) to achieve that. .

If politicians on the right display wilful ignorance to achieve their goals, they have knowledge of a kind that exceeds their opponents on the left by miles. They are extremely well versed in the arts of political spin, or more generally of getting votes by disguising the true objectives of their policies. Part of this works through think tanks, and part through the right wing press. In turn both these groups, plus politicians themselves, put huge pressure on the media (in the UK the BBC in particular), and that pressure works. The table below comes from this study and shows how often the BBC used political sources in 2007 and 2012:

Whereas the bias towards Labour was small in 2007, and was perhaps expected as they were also the government, by 2012 Conservative sources were almost double Labour sources. (Ironically LibDem sources declined in 2012, despite being in government.) Something similar happened to think tanks, according to this study comparing 2009 and 2015. For example in 2015 the IEA was referenced about 3 times more often than the IPPR. The detail in the paper of where the right wing bias was most prevalent is noteworthy although not that surprising.

Even when the BBC does manage to maintain balance, as it did in the 2016 referendum, this is often at the expense of facts and expertise. (Much the same occurred in the US before Trump was elected, as I recount in Chapter 7.8 of my book.) This leads to an obvious danger which we can see the political right exploiting more and more in both the US and UK. Whereas spin used to involve distorting the truth by selective use of facts or inventing clever but misleading slogans, it can now involve simple lying, as I experienced with my own work recently. Has this really got worse over time? I cannot cite any hard evidence for the UK, but there does seem to be that impression (see the first few tweets of this thread and this article by Stephen Bush). In the US there can be no doubt things have changed: not just Trump but with much of the Republican party over issues like health care or climate change.

This emphasis on the right of getting people to vote for you at the expense of examining the impact of your policies is reflected in the careers of many of the Brexiters, as William Davies points out. Trump was a TV star before he became President. Reagan was a movie star, although he at least was a Governor before becoming President. It is hard not to see these trends in right wing politics as starting with Reagan and Thatcher, and that much abused term neoliberalism. It was Thatcher that really began the politicisation of and disdain of the civil service, when being ‘one of us’ was valued over expertise.

You do not need experts, or you are only interested in experts who are one of us, because you have an ideology to guide you to the truth, or you are suspicious of any expertise that does not share your ideology. One of us is one who shares an ideology, in this case the ideology of neoliberalism. Neoliberalism wants as much as possible to be organised as a market. If that includes democracy itself (democracy is just a market for votes) then there is nothing preventing you employing all the tricks of advertising, preferably not encumbered by any regulators. Politics becomes the art of selling, rather than the assessment of policy. [1]

Why do I call the period after 2010 in the US and UK neoliberal overreach, as opposed to straight neoliberalism in the 1980s? After all there are some similarities in the UK between the two periods. Both Osborne and Thatcher started their terms in government with economic experiments that went against received economic wisdom. Both tried austerity (a fiscal contraction in a recession). I don’t want to minimise the harm Thatcher did to parts of the country, but her austerity was temporary [2] and the monetarist experiment was quickly abandoned, with the result that the recovery was only delayed by a year or two and the economy in aggregate eventually recovered in the true sense of the term. In contrast the slow recovery in the UK, US and Europe since 2010 seems to have had permanent and large negative effects. An interesting question is how much this difference between the two periods in the UK reflects different degrees of control over the media.

But the main reason I call what happened after 2010 overreach is that the neoliberalism of both Reagan and Thatcher was in many ways popular, and so there was less need to dress policies up as something they were not. In 2010 there was no popular demand for a reduction in the size of the state, so it required a form of subterfuge: what I call deficit deceit. Tight targets for immigration made no sense for neoliberals who wanted to reduce red tape for firms, but it was useful as a way to deflect anger over austerity and win votes.

A better way to describe Brexit than heart over head is the triumph of ideology over knowledge. Neoliberalism isn’t the only ideology behind Brexit. There are elements of English nationalism that William Davies discusses in his piece noted above and Anthony Barnett discusses so well in the Lure of Greatness. But the disinterest in facts or experts  and the absence of shame in telling whatever lie is required to get what they want is very much part of what I call neoliberal overreach. To those to whom evidence based policy is natural they appear fools, but they know exactly what they are doing and in terms of deception they are rather good at it.

[1] In this particular sense Labour from the 1990s to 2015 were not at all neoliberal. For example contrast Labour's 2003 Five Test analysis with the current government's lack of interest in the analysis of different types of Brexit. The glaring exception was Iraq, and that reflects what happens when you erroneously believe the national interest is to follow neoliberals in the US.

[2] Fiscal policy was tightened from 1980 to 1982, but this was almost completely reversed by 1984. In contrast fiscal policy was tightened in 2010 and it continued to be tightened until the present day.

The Lies We Were Told

Many of the key events of the last eight years have a common thread to them. In the case of austerity, the Eurozone crisis, the 2015 UK election, the Brexit vote in the UK and Trump’s election, the media played a critical role in making them happen. This involved ignoring expertise, ignoring facts that didn’t fit the chosen narrative of one side, or simple lies. None of these events are mistakes only in hindsight, but rather errors that were predicted at the time. Documenting that is an important part of this book.

It was for that reason that I tell the story through my blog posts at the time, with additional postscripts, preambles and introductions that enable each chapter to tell a complete story. There seemed no better way of showing how all of these policy or electoral errors were understood at the time and therefore could easily have been avoided.

I began writing my blog mainlymacro because of my anger at austerity, and the fact that the view of the majority of macroeconomists that it was a bad idea was largely ignored by the media. When the media did talk to economists, they tended to be from the financial sector. Financial sector economists are biased in two directions: they tend to be right wing and they tend to talk up the importance of a capricious financial market and their own ability to know its ‘needs’. I used the term ‘mediamacro’ to describe how most of the media seemed happy to tell the story of the deficit as if the government was a household, which any first year undergraduate textbook explains is not true.

Many used the Eurozone crisis as an excuse for austerity, but I quickly discovered that the line most journalists took was missing the key reason for that crisis. Eurozone countries cannot create their own currency, and the institution that could act as an unlimited lender of last resort to individual governments, the European Central Bank, was refusing to do so. The crisis ended when the Eurozone changed this policy and became a lender of last resort to most countries. The exception was Greece, and I tell their more complex but shocking story in a few posts.

Before the UK’s 2015 election the Conservatives talked about a strong economy, and talked up rising employment levels. The media went along with this narrative. In reality the recovery from the recession had been the weakest for centuries, in good part because of the policy mistake of immediate austerity. Strong employment growth combined with weak output growth meant productivity was stagnant, which in turn helped create falling real wages. Yet for mediamacro the government’s deficit was a more important goal of policy than economic growth or real wage growth, and as a result the economy was the Conservatives strong card that led them to victory at the election. Adapting an old Sun headline, I argued it was mediamacro wot won it, although luck also played its part.

Defeat in 2015 led to Jeremy Corbyn being elected as leader of the Labour party. Although this took the commentariat by surprise, I argued it was the logical result of Labour’s weak or non-existent stand against austerity and a lot of what austerity required. When John McDonnell became shadow Chancellor, he invited me to be part of an Economic Advisory Council, and I explain how this led me to help create Labour’s fiscal rule, which is the first such rule that prevents austerity. I also explain why the Council came to an end.

A consequence of the Conservatives winning in 2015 was a referendum on Brexit. A few months before I wrote a post reproduced in the book which fairly accurately set out how the campaign would play out. Remain’s case was that leaving the EU would have serious economic consequences, and it was a very strong case, but I suggested the media would balance this case against nonsense from Leavers, and the electorate could convince themselves that the economics was not clear cut. The fact that free movement prevented controlling immigration from the EU was by contrast clear cut, but as the government had played up the negative aspects of immigration they could not credibly change course.

Alas the media’s failed to present near unanimous expert opinion in economics and elsewhere as knowledge, and instead it became just Remain’s opinion to be balanced by the other side. As a result the electorate, who craved information about the EU, did not get it from the broadcast media. In addition, those that read most of the daily papers by readership got propaganda pure and simple, and had been getting it for a year at least. I present strong evidence at how influential the media can be, and therefore argue that Brexit represented the triumph of the right wing press. I showed that the media were failing in similar ways in the US, and that therefore confidence that Trump would not get elected could be misplaced,

The book also has a chapter on the role of economists in influencing policy. Did the global financial crisis or the failures of macroeconomic forecasting discredit economics, and is macroeconomics influenced by ideology? I explain why the delegation of economic decisions can be partly about transparency, and why economics is most like medicine among the sciences.

While the media played an important role in Trump becoming President and Brexit it does not explain why those things are happening now rather than ten or twenty years ago. The final chapter in the book looks at what neoliberalism is, and why both austerity and using fear of immigration to gain votes despite austerity can be seen as neoliberal overreach, by which I mean taking deception of the electorate in order to pursue ideological goals to a dangerous extreme. Both austerity and anti-immigration feeling helped the cause of Brexit and helped elect Trump.

The Global Financial Crisis required a strong and quick recovery to avoid the dangers of populism. Austerity prevented a strong recovery, and it was undertaken as a cynical attempt to reduce the size of the state. The subsequent populist mood was directed towards the right by politicians and the media playing on racism and xenophobic fears. This was fertile ground for disasters like Brexit and Trump to happen. This suggests that even if we could go back to the world as it was before Brexit and Trump that is not enough to stop similar disasters happening again.

Crashed by Adam Tooze

My review of Crash: How a Decade of Financial Crisis Changed the World is finally out at the London Review of Books (subscribers only I’m afraid). From what I’ve read it has received glowing reviews elsewhere, and mine is no exception. Reflecting its ambition it is no quick read (the main text is 600 pages). There is an introduction which does summarise some of the key ideas, but the triumph of the book is that it combines a detailed account of the events of the last ten years with an analytical overview which makes sense of the detail and which makes good sense. It has the additional advantage from my point of view that it is broadly consistent with many of the arguments made on this blog, although I don’t think I ever managed to match the quality of his prose.

The argument that binds the whole book together is that the crisis was not the result of the specific shocks of Subprime debt or the housing markets of Ireland and Spain, but an inevitable consequence of a global banking system that became chronically short of buffers to cushion against any kind of significant systemic shock. To use the technical term the system became over leveraged: lending too much in relation to the capital it had to cover loans going bad. This is the same theme as the book by Tam Bayoumi I discussed here, but in fact the two compliment each other: Bayoumi focuses on the regulatory changes that created global megabanks, while Tooze deals with the consequences of when these banks crashed.

Key to how the crisis played out was how different governments reacted to the crisis, and this is the central part of the book. After the mistake of Lehman, the US government took comprehensive action on a huge scale. To quote Tooze:

“It was a class logic, admittedly – ‘Protect Wall Street first, worry about Main Street later – but at least it had a rationale and one operating on a grand scale.”

The UK did the same, but because there were no widespread defaults in the UK there was no failure to help borrowers.

The contrast with the Eurozone is emphasised by Tooze. First Eurozone countries tried to suggest this was an anglo-saxon crisis, despite their own banks being deeply embedded in this global network, and was particularly rich as the Fed was (as Tooze shows) providing billions of dollars to European banks to keep them afloat. Germany with the help of the ECB refused to participate in a joint Eurozone response, and then later attempted the ‘bait and switch’ of blaming the Eurozone crisis on excessive government debt: bait and switch is the title of my review, and was originally used by Mark Blyth who in his book Austerity: the History of a Dangerous Idea saw earlier than most that the crisis was all about banks. Again to quote Tooze on the Eurozone response:

“‘It is a spectacle that ought to inspire outrage. Millions have suffered for no good reason.”

I have to add for those reading in the UK that this was about how individual Eurozone governments behaved within the Eurozone system, and has nothing to do with the trade relationships and regulation pooling that is the EU.

There is a lot more in my review (LRB gives you the luxury of over 3,000 words), and many important things in the book that I did not have space to comment on. For those into international relations as well as economists and historians this book is a goldmine.

On the subject of books, my own more modest effort is out shortly: it can be ordered at a 20% discount here, rising to 35% if you join the publisher’s mailing list.)

How the media helped turn the worst recovery in 100 years into a strong economy in stable hands before the 2015 election

Are you exhausted and exasperated by Brexit? Do you despair when our foreign secretary compares the EU to the Soviet Union just because the EU will not change their rules to give us what we want? Do you wish that we could go back to how it was before Brexit? If so, I wrote my forthcoming book “The lies we were told” just for you. (It can be ordered at a 20% discount here, rising to 35% if you join the publisher’s mailing list.)

One of the posts in the book, written at the beginning of March 2016, anticipated a lot about the forthcoming campaign and how it would play out. I wrote

“The EU referendum is therefore another test of how much economic expertise can influence public opinion. As regular readers will know, we have been here before, and not just on austerity.”

One of those examples was the 2015 general election, which forms one of the nine chapters in the book.

As background, here is I think the best illustration of how poor the UK recovery from the 2009 recession was (from The Resolution Foundation).

As we can clearly see, the post-2009 recovery was slower than anything we have seen in the last 100 years. Now sometimes governments can be unlucky, as the economy follows events that they cannot control, but the recovery after the Global Financial Crisis was not like that.

In this chart, using OBR data, I compare the cyclically adjusted primary balance during the last three recessions.

Take the ‘ERM recession’ first. Fiscal policy did very little until 1992, when both fiscal and monetary policy became expansionary, leading to a strong subsequent recovery. (Fiscal policy moving in a downward direction is expansionary and vice versa.) This is a classic expansion, with both fiscal and monetary policy providing a stimulus together.

The ‘monetarist recession’ is more complex. During 1982 interest rates were reduced steadily from nearly 15% to 10%, but famously the April 1981 budget led to a sharp fiscal tightening (leading to the famous 364 economists’ letter). Contrary to right wing and media myth, the economy’s response to this contradictory mix was to grow at around the trend growth rate, so not a true recovery (by which I mean growth above trend, so we catch up with that trend). We only got a true recovery from 1983, when fiscal policy relaxed alongside monetary policy.

This is textbook stuff (hence the 364 letter). In early 2009 UK interest rates hit their lower bound, so fiscal expansion was needed more than ever, and that is what happened under Labour. But the Conservatives bought the myth about 1981, carefully cultivated by the Institute of Economic Affairs and swallowed by the media, that the 364 economists had been wrong, so in opposition they opposed the 2008/9 and 2009/10 expansion and in government started a fiscal contraction, a contraction that only came to an end in 2017.

The inevitable consequence was the weakest recovery for a 100 years. Combining a weak recovery with a large 2008 depreciation of sterling meant incomes literally stagnated for 7 years, as another chart from the Resolution Foundation shows. The Conservatives did not admit their mistake and pledge not to do it again, but preferred to create a false narrative instead.

The lie was the story of a profligate Labour government and how the Coalition government had been forced to clear up the mess. Voters bought it. Coming into the 2015 general election, polls suggested the economy was the Conservatives' strong point. They did so in part because the media never challenged the story, which was obviously false from just a brief inspection of the data. Rather than look at the data they preferred to talk to City economists (and not academics), and most City economists have an interest in backing a Conservative line and talking up the power and threat from the market. In that sense the media played a key role in winning the 2015 election for Cameron, which of course was the only way a referendum could happen. Evidence to back up all this is in the book. 

The Conservative party has never acknowledged their austerity error, and so we have every reason to think they would do the same again if another recession came along. Much of the media still prefer to let politicians make any nonsense economic claim they wish, and they rely on other politicians to challenge them rather than confront them with the facts or expert consensus.  

Having leading politicians spin a disastrous economic policy with lies and without challenge from the media did not start in 2016, but in 2010. Elsewhere in the book I try and explain why politicians on the right went off the rails in 2010, and also why the media facilitated a majority of the country going with them

Jeremy Corbyn and Balance

I’ve just completed my book to be published in November by Bristol University Press called ‘The Lies We Were Told’. It is the story of UK austerity, the Eurozone crisis, how mediamacro swung the 2015 election, the Corbyn phenomenon, Brexit and more besides. These things are described as they happened in selected blog posts with new introductions, postscripts etc. (It can be ordered at a 20% discount here, rising to 35% if you join the publisher’s mailing list.)

During the process of selecting the blogs I needed to tell these stories, I came across one I had forgotten completely. It was called “Do we get the leaders our media deserves?”, and it asked why many of the successful (in terms of popularity) leaders of today are of the likes of Johnson, Farage and Berlusconi, while leaders with far more integrity and honesty like Ed Miliband appear unpopular. The post was written at the end of 2014, and a postscript for the book notes that Trump versus Clinton was in part a devastating example of this trend.

It is tempting to respond by saying this is just what voters want: politicians that make them feel good. There may be an element of that, but what has nothing to do with voters is how the Johnson type politicians get a easy ride from the media. When he deliberately stokes islamophobia, the criticism is disarmed with a cup of tea for waiting reporters. I have yet to see an interview with Farage where he is questioned about his support for far right parties in Europe and his Russian links. This interview with Johnson by Eddie Mair stands out in talking about past sins because it is so unusual. Most of the time the media seems content to reflect his easy charm.

While people like Farage or Johnson are normally treated with kid gloves, others get a much harder ride. The left tried it with Cameron and Osborne: posh Eton and Bullingdon club boys who were clearly out of touch with ordinary voters. Sometimes these attacks work, and sometimes they do not. No doubt the reasons why are complex, but it seems to me that two things matter a lot. The first is whether or not the person being attacked has the personality to deflect such criticism, and the second reflects the extent that attacks become part of the non-partisan media’s agenda.

Here is a time series of how Corbyn’s leader ratings have been getting steadily worse over the last year, and by far more than those of his party. This could be for many reasons. It could reflect disillusionment by Remain inclined Labour voters as events have shown Labour’s pro-Brexit position is not just opportunistic triangulation. It could reflect a lack of initiatives coming from the leadership (although it does not help that when he does make speeches they are blatantly misinterpreted). It could be that Labour’s problems with antisemitism are constantly in the news: although these stories do not have high impact among voters, for those that do notice they are seen as a negative for Corbyn.

I have argued before that the Labour surge before the 2017 election and the subsequent decline are part of the same phenomenon: the ability of the media rather than the politician to control the agenda outside of election periods. The MSM is clearly much more hostile to Corbyn than any other major political figure today, and the row over antisemitism shows that clearly.

Because this debate has become so partisan, I have to say the following. First, I am no Corbynite (read my posts during the Corbyn vs Smith campaign). I also think antisemitism within the Labour party is a real problem, and that large parts of the membership seem to be in denial about this. Not adopting all the IHRA examples (but with accompanying text to clarify meaning drafted in consultation with Jewish groups where possible) was a big political mistake. It created concerns in the Jewish community that the media was right to reflect. The idea that the non-partisan media’s reporting of this is just a smear campaign is nonsense.

All those things can be true, but it can also be true that the broadcast media has given the issue excessive prominence. How do I know this? The obvious comparison is with Islamophobia in the Conservative party. This has been given much less coverage, but I would argue that problem is at least as bad. As far as I know, Labour has never run a clearly antisemitic campaign for a major political post, but the Tory party have run an Islamophobic  campaign in which the Tory leader played a major part. Some say the difference is because Corbyn himself has been described as antisemitic, but the betting odds for next Prime Minister for Johnson and Corbyn are similar. To say that broadcasters cannot help reporting what is going on is very naive about how the media selects what is newsworthy and what is not.  

Many would argue this bias is because Corbyn has few friends in the media, and that may be a part of it [1], but I prefer more structural explanations. For the broadcast media balance seems to involve MPs in Westminster rather than their own viewers. Labour MPs are prepared to criticise the leadership in public while Tory MPs are not, and this means one story gets much more airtime than the other. [2] We can see this clearly with Brexit: because the two main parties went with the 52%, the point of view of the 48% (now more) who oppose Brexit was largely ignored by the media. Exactly the same can now be said about the Muslim community.

A good test of all this is to reverse roles. Suppose Jeremy Corbyn had written an article in which he had made fun of how orthodox Jews dress, and all the party had asked him to do is apologise but he had refused. Suppose the Labour party had no code at all covering antisemitism. Would the broadcast media have been happy to show pictures of him offering vegetables from his allotment to reporters and then forgotten about the whole thing? I’m sure natural charm has something to do with why some political leaders are treated differently than others, but I think that is only a small part of the story.

[1] It may explain, for example, the lack critical reporting. Most of the time it is presumed that Labour did not adopt all the IHRA examples because of antisemitism. Until recently the Israel/Palestine conflict was hardly mentioned, and neither was the fact that a select committee had suggested the IHRA examples were unsatisfactory on their own. Ludicrous statements about existential threats or rivers of blood go unchallenged. In some quarters it is deemed insensitive to question motives (Stephen Pollard, Jewish Chronicle editor, has said: “The left, in any recognisable form, is now the enemy”). In contrast a Conservative minister is happy to dismiss claims of Islamophobia by attacking a group that made the claim as unrepresentative, and no one in the media notes the Conservative Muslim Forum has made similar complaints.

[2] Whatever else this is, it is not good for democracy. Because Conservative MPs keep quiet about Islamophobia in their party, the issue only appears occasionally in the media. As a result, nothing is done about the problem. In contrast Labour are trying to do something about antisemitism, and their reward is constant attack.