Why an anti-Corbyn party is a terrible idea

Within a few months of Corbyn’s election, I wrote about what I called the anti-Corbynistas: a smallish group of Labour MPs and many in the media who were happy to attack Corbyn for the sole purpose of bringing him down. I wanted to make the simple point that their efforts were counterproductive. If, as they kept insisting, Corbyn’s chances of winning any election were zero, it was better that members find that out without their efforts. If they carried on, most members would put down any negative performance to the activities of the anti-Corbynistas.

In fact I understated my case. When Labour MPs voted no confidence in Corbyn after the 2016 referendum, most members read it as part of a plot not only to defeat Corbyn but also to take power away from themselves. And they didn’t want power for powers sake, but just to stop the steady drift to the right among their party leaders with no apparent electoral benefit. I tried as hard as I could to suggest that many MPs had voted no confidence out of frustration at Corbyn’s administrative incompetence and the failure of his pro-Remain campaign, but I have no doubt that that the activities of the anti-Corbynistas meant many members just didn’t get beyond the idea of a power grab by MPs. To put it bluntly, the anti-Corbynistas helped ensure Corbyn’s victory against Owen Smith.

After that the anti-Corbynistas went quiet. Labour fought a campaign where divisions within Labour were not the number one topic, and they produced a spectacular swing to Labour in the three weeks before the election. The argument that Corbyn would always be hopeless at the polls died in those three weeks.

A year later, and it seems that Labour’s real difficulties with antisemitic members has led to the return of the anti-Corbynistas. Here is Chuka Umunna in The Independent. The aim it seems is no longer to persuade Labour party members to give up on Corbyn because he cannot win. Instead the anti-Corbynistas have given up on Labour party members. In the short term that is surely right. Most of the membership do not care that much who he has been ‘linked to’ in the past: the MSM has cried wolf too many times. They know that Corbyn has always stood up for Palestinians and they respect him for it. The more he is attacked in the MSM the more it seems he provides a genuine challenge to the establishment, and that is exactly what members want.

However the leap the anti-Corbynistas then make is far more tenuous. Because they give up on Labour party members now, they may give up on the Labour party forever, and form a new political party. The best time to do that is now, so the argument might go, because Corbyn is under pressure over his Brexit stance and because of the antisemitism row. That logic is no better, and is probably far worse, than their logic after Corbyn was elected. It only makes sense if you think a Corbyn led government of centre left MPs is worse than a government that gave us austerity and Brexit.

Of course it is possible that a new centre party could sweep all before it. But our FPTP system makes it very difficult for new parties to break through in terms of winning seats. UKIP is an obvious example. The most successful new party of recent times is the SDP, and it ultimately failed. If a new party is to succeed, it has to win between 30% and 40% of the popular vote. Yet in our most recent general election in 2017 the third party vote was squeezed, and the two main parties won over 82% of the popular vote between them. Everyone points to Macron, but he won 24% of votes in the first round. That is not enough.

Where will the votes for a new centre party come from? Thinking in simple left right terms, the steady move to the right in the Conservative party, particularly over Brexit, has left a gap which a more right wing version of Miliband’s Labour could fill, although policies like a Mansion tax or higher corporation tax would probably have to go. Equally those voting for Miliband’s Labour who thought it was a tad left wing could be attracted to a new centre party, as could those Remainers who will not forgive Corbyn for accepting the referendum vote.

However if we think in two dimensional terms, with a social conservative/liberal axis, the position looks less favourable. Right wing social conservatives will stick to the Conservatives. Left wing liberals will mostly stick with Labour. So the new party needs to be in the centre on the second social conservative/liberal axis as well as the left/right axis. There are some basic problems with trying to capture both these groups. Most importantly, it is not very clear how being tough on immigration squares with arguing for the softest of Brexits.

So a new party will almost surely fail in breaking through, but I’m not sure that is the only objective. The other objective is to stop Labour winning the next election. There is a strange irony here. A group of people who were arguing with absolute conviction that Corbyn could not possibly win are now arguing that there is a real danger that he will win and therefore must be stopped, which means more Tory government Even if that is not an objective it could well be the effect.

This fills me with anger and dread. Anger that people can convince themselves that what would be in legislative terms a centre-left government can be worse that a party that had inflicted more damage on the UK in the last eight years than any since WWII. And dread at a Conservative victory in 2022 because a new party takes away crucial Labour votes. Nothing suggests the Conservative party has stopped moving in a rightward direction. Alleged Brexit betrayal and a resurgence of UKIP will help ensure that it continues in that direction. If current betting is right, the next Tory party leaders will either be someone whose inspiration is Ayn Rand, or someone who wants to take us back to the 18th century, or a clown who is happy to encourage Islamophobia..

I understand why some within Labour dislike Corbyn, and why they write lists of all the inexcusable (in their mind) things he had done in the past. I know some imagine that he alone is keeping Brexit going. I can see why, because of the rhetoric of some on the left, they can imagine that most of the 500,000 members have become cult followers who will never listen to reason. But is there evidence for that last assumption? Many Corbyn supporters and Momentum members are trying to get the party to change its policy in favour of a referendum on the final deal. This is not a party that will support Corbyn whatever he does: Labour has never been like that and never will be.

To me the anti-Corbynistas look much like those on the left in US general elections who didn’t vote, or voted for a third party, because they thought both candidates were equally bad. They focus so much on why the Democratic candidate is not ideal, they fail to see that they are much closer to their own position that the Republican. Corbyn may well do some things as PM that you do not like, but he will not stoke immigrant antagonism which fuels racism of all kinds. He will not talk about looking up at the closed blinds of their next-door neighbour sleeping off a life on benefits. He will not be content to see foodbank use explode after people get sanctioned because, for example, they have a heart attack. If you are content for those things to continue to happen, then creating a new party is a good way of ensuring they do.

A completely pointless amendment

There was a lot of indignation yesterday from committed Remainers about Corbyn sacking those who supported the Chuka Umunna amendment on the Single Market. I’m a committed Remainer, but I couldn’t see what the point of the amendment was. That is because we are almost certain to leave the EU still in the Single Market.

In March I wrote that the outline of the Brexit deal was fairly clear. Crucially, there would be a longish (many years) transitional arrangement to enable a bespoke trade deal to be negotiated. During this period we would preserve our position in the customs union and Single Market (and pay money to the EU to do so). The UK side may dress this up as something a little different, if they have the wit and energy to do so and if the EU lets them, but to all intents and purposes that means nothing changes on the trade side for some time. That conclusion didn’t require any great powers of foresight at the time, but simply followed from the length of time it takes to negotiate bespoke trade deals (see, for example, Alasdair Smith here).

My only uncertainty back in March was whether May would choose (or be forced to choose) No Deal. With the election giving more power to soft Brexit elements among the Conservatives (e.g. Hammond), I think No Deal is now very unlikely because parliament will vote it down. As a result, towards the end of 2018 we will know how much we have to pay in order to formally leave the EU, but things will otherwise stay pretty much as they are now.

What about a change in Prime Minister and an election? Unless something turns up (a big if), I suspect we will see neither before the end of 2018. The least important reason for this is May would rather be known as the PM who took us out of the EU than the PM who threw away certain victory in GE2017. One reason she is unlikely to be challenged over the next year and a half is that delaying the negotiations once again (this time for a leadership contest) just looks awful. Both ex Tory Remainers and Brexiteers are nervous of how a leadership election might evolve. If May is prepared to sacrifice her two lieutenants, she will also sacrifice the foolish red lines she created for the EU negotiations.

No Conservative contest of course means no election. Once again, unless something turns up, the Conservatives will want to leave an election for as long as possible in the hope that their popularity improves. Labour will be hoping that it wins that election, so it will be in charge of the trade negotiations designed to create a bespoke trade deal, but whoever is in charge it is difficult to see any enthusiasm for replacing the Single Market.

On the Conservative side the idea that we should leave the customs union because it will enable us to negotiate lots of trade deals of our own will be increasingly recognised as the nonsense that it is. It will also be obvious that any bespoke trade deal will require the same pooling of sovereignty as the Single Market. Brexiteers never had any real interest in ending freedom of movement: that was a ploy to get a Brexit vote. If Labour were in charge they would quickly find out that the Single Market did not prevent them doing most of what they want to do, and that there were easier ways of managing free movement. The priority would be repairing the public services, a task not helped by reducing immigration and weakening our trade position, so the bespoke trade deal will get kicked into the long grass.

Of course that means ending up with a situation where nothing has changed except that the UK will have paid the EU to no longer have any influence on the rules of the Single Market it is still part of. All that time and effort for a truly epic fail. The best hope for Remainers is that this realisation will dawn on enough Conservative MPs to embolden them to demand a second referendum. (This has always been the best strategy for Remainers: to work the Condorcet paradox that was at the heart of the referendum result.) In these circumstances it would be an extraordinary act of self harm if Labour did not join them in voting for a referendum. They would instantly be on the wrong side of the triangulation which served them so well in GE2017, which would put their popularity at serious risk.

Given all this, what was the point in the amendment to the Queen’s speech saying we should stay in the Single Market, given that the occasion meant that no Tory MPs could vote for it, and we will probably be staying in the Single Market anyway? (Jonn Elledge comes to similar conclusions by a different route.) When you are a leader of the opposition who has surprised himself by completely wrong footing the pundits through a combination of a manifesto that increases the size of the state and triangulation on Brexit, wouldn’t you be annoyed by such pointless and potentially harmful distractions? 

Labour and the deficit

A constant refrain from those who help make Labour party policy goes like this. I know what you economists say makes sense, but we tried that policy at the last election, and failed horribly. We have to listen to what the people are telling us.

So, for example, we cannot oppose George Osborne’s deficit plans, because we tried that at the last election and lost. We cannot talk about the problem of rent seeking by the 1%, because we tried that and it was seen by voters as anti-aspiration. We cannot argue for a higher minimum wage because that will be seen as anti-market and anti-business - oh wait.

I would draw exactly the opposite conclusion from the election result. On the deficit Labour tried to avoid discussion, and let the Conservatives spin the idea that austerity was the last Labour government’s fault. By failing to challenge both this nonsense [1], and the austerity policy enacted in 2010 and 2011, and the austerity policy proposed after 2015, in terms of perception it adopted the Conservative policy on the deficit. [2] That was why it lost heavily.

Some will say that come the next election the government will be running a budget surplus anyway, so why oppose the process of getting there? The answer to that is aptly illustrated by Labour’s decision not to oppose Budget plans to limit child tax credits to the first two children, or plans to reduce the benefit cap. Both are terrible policies, and it is incredulous that Labour is not opposing them. But once you concede the need for austerity, it becomes much more difficult to oppose the measures that come with it.  

Another argument is that Labour has to accept Osborne’s surplus target, because nothing else will stop Labour being accused of being fiscally spendthrift. (See Hopi Sen for example - HT Simon Cox ‏@s1moncox) This just sounds politically naive. George Osborne (as Chancellor or PM) will not suddenly drop the spendthrift argument just because Labour adopts his plans. Instead the argument will change to focus on credibility. He will say: Labour now admits that it was spendthrift in government, and in opposition it has changed its mind so often, you just cannot believe what they say – so any future Labour government will be as spendthrift as the last.

Others will respond to the above by saying how can you argue Labour lost because it was not left wing enough! But challenging austerity is not ‘left wing’, it is just good macroeconomics. The idea that opposing austerity, or advocating less inequality, is akin to what Labour did between 1979 and 1983 is absurd.

If there are examples to draw from, it is to see how your opponents succeeded where you failed. The Conservatives did not regain power in 2010 by moving their policies to the left. They did it by changing their image. Until a couple of years before 2010 they had promised to match Labour on spending. But when circumstances changed, they seized their chance to change policy and focus on the deficit. It was a smart move not because of the economics, but because of how it could be spun.

In 2015, the SNP saw that times had changed compared to 2010. The idea that we might become like Greece was no longer credible, and voter attitudes on the deficit were much more divided. So they campaigned against austerity, and partly as a result wiped Labour out. (Their actual policy proposals were not very different from Labour, but unfortunately few voters look at the numbers: it is perception that matters.)

The lesson is that when the external environment changes, you try to exploit this change in a way that enhances the principles you stand for and gains you votes. As the deficit falls, putting this at the centre of policy will seem less and less relevant. In contrast, the costs of austerity and rising poverty that are the result of ‘going for surplus’ will become more and more evident. Osborne, by going for an unnecessarily rapid reduction in debt by means of increasing poverty, has thrown a potential lifeline to Labour. Unfortunately, Labour appear to be swimming away from it.

   

[1] Chuka Umunna writes: “Some economists reject this [supporting going for surplus] approach as it would, in their view, necessarily entail simply capitulating at the feet of George Osborne. In their view all we need to do is – in ever more strident and louder terms – shout back at the electorate that it was not profligacy on the part of the last Labour government that caused the crash, but a banking crisis. And, in respect of borrowing, far from acknowledging that we understand the need to reduce national debt, we need to enthusiastically go about making complex arguments for different types of borrowing. Do this and the public will see the light.”

I guess I am one of those economists. I would respond that Labour in 2015 made no attempt to seriously debate this issue, let alone shout about it. The only people challenging the myth that Osborne and much of the media were telling were ‘some economists’. I do not think it is ‘complex’ to argue that you should borrow to investment when interest rates are low, and I think this argument can be effective - which is why Cameron called the people making it dangerous voices.

[2] The SNP saw that Labour were endorsing the importance of deficit reduction, and exploited this by arguing against austerity.

Labour’s growing macroeconomic illiteracy

I’ve devoted many blogs to criticising George Osborne’s macroeconomics, so for the sake of variety this post turns to a senior member of the current Labour party. Chuka Umunna is Labour’s spokesman on business, innovation and skills, and in this article for The Independent he discusses what Labour did wrong on the economy. Here is just one paragraph.

“In 2007, before the crisis hit, the UK government was running a deficit. By historical standards, it was small and uncontroversial – it averaged 1.3 per cent from 1997 to 2007, compared with 3.2 per cent beforehand under 18 years of Tory rule. And yet to be running a deficit in 2007, after 15 years of economic growth, was still a mistake. My party’s failure to acknowledge that mistake compromised our ability to rebuild trust in 2010 and in 2015. If a government can’t run a surplus in the 15th year of an economic expansion, when can it run one?”

The first two sentences say that Labour was actually more fiscally conservative than the Conservatives, and that the deficit in 2007 was small. No problem with that, although to imply that the small deficit in 2007 was uncontroversial is not right: many suggested at the time that it should have been smaller, with good reason. The next sentence and the last say that it would have been even better to have run a surplus, because the economy had been growing for 15 years. To which a macroeconomist can only respond - what?

Of course economies normally grow, in real and nominal terms. That means that if you want to keep the ratio of government debt to GDP stable (Labour’s target for this ratio was effectively 40%), you need to run budget deficits, not surpluses. A surplus, or even a balanced budget, will gradually reduce the debt to GDP ratio, because debt will not be growing but GDP will be.

What Umunna is saying here is much the same as George Osborne’s proposed rule: in normal times when the economy is growing run surpluses. But Osborne is saying that in the context of the current debt to GDP ratio of 80% of GDP. Umunna is implying that policy still made sense back in 2007 when the debt to GDP ratio was below 40%, the output gap was thought to be small and no one was expecting a global financial crisis. I cannot remember anyone before 2008 suggesting Labour's debt limit should fall over time. Yet Umunna says the mistake was so serious it helped lose Labour two elections.

I would love to know who the economists are that gave Umunna the advice that led to this article. Certainly not any of the 79 that signed this letter, or advice from the Economist or FT. You would think that the advice would have to be pretty convincing, given how this line plays into the Conservative narrative about how Labour profligacy was the cause of 2010 austerity, and that therefore it is Labour rather than Osborne and Cameron who are responsible for the slowest UK recovery from recession since almost forever.

If you think I’m being too hard, perhaps over-interpreting a couple of sentences, here is another extract:

“reducing the deficit is a progressive endeavour – we seek to balance the books because it is the right thing to do. We will not stand by while the state spends more paying interest every year to City speculators and investors holding government debt, than we do on people’s housing, skills or transport. It will be far too late to leave this to the 2020 general election campaign.”

Would he give the same advice to UK businesses: refrain from borrowing and focus on paying back your debt? Somehow I think not. The Conservatives have a kind of excuse for deficit fetishism - it is a useful device for shrinking the state. That excuse should not apply to senior Labour figures.