Can we trust Jeremy Corbyn over Europe?

I originally wrote this as a companion piece to a post on how Smith could win, but put it to one side as I thought I was writing too much on Labour’s election. However as similar points are now emerging elsewhere, perhaps publishing this will help convince some that this is not just another MSM smear.

When the vote of no confidence happened immediately after Brexit, I suspect the thoughts of most Labour Party members were similar to those of MP Liz McInnes: what a stupid and inappropriate time to have another election (as indeed it was). It seemed to fit into the narrative about a PLP obsessed with removing the membership’s democratic choice of leader. Surely we should give ‘the project’ some more time, and allow Jeremy Corbyn more time to see if he could grow into his role. And who was Owen Smith anyway? Journalists saw the support Corbyn has, and started assuming this was no contest.

On the face of it Owen Smith appears on many issues to be quite close to Jeremy Corbyn. A big difference is Trident, which many Labour party members think is a waste of money (and I agree). In addition there is the issue of trust. Owen Smith talks the talk now, but can members trust him not to backslide as Blairite MPs and a hostile media tell him he has to modify his radical programme? Jeremy Corbyn, on the other hand, seems to be integrity through and through.

But there is another key difference between Smith and Corbyn beside Trident, and that is over Europe. On the face of it the difference is about something that may never be allowed to happen anyway: a second referendum. Smith wants one, Corbyn does not. But for those party members who feel strongly about retaining as strong a link with Europe as we can, not just because of the economics but because Europe represents opportunity and is part of their identity, this difference may be the way they begin to unpick the issue of trust.

The vote of no confidence was the result of Brexit. You can tell yourself that was because the ‘plotters’ thought it would be to their advantage, but why would that be? Forget issues about effort and holidays. The crucial question is whether Corbyn’s heart was ever in the Remain campaign, and whether (perhaps as a result) his campaign was flawed, or perhaps even counterproductive. I do not know the answer to the heart question, except to say that a lot of the points Corbyn supporters make about Smith’s past could be used to suggest Corbyn was in truth more ambivalent than he says he was.

Of course if you are a true Corbyn believer you have to take him at his word. But the flawed campaign I have said something concrete about (quoting from here):

I have written right from the early stages of the Brexit campaign that I saw this as about the benefits that many people saw in being able to control EU migration, and weighing this against the economic cost in doing so by losing access to the single market. It was vital therefore to take seriously the warnings of economists that these costs could well be large. Jeremy Corbyn however seemed to suggest that when these warnings were repeated by the Chancellor they should not be believed because he could not be trusted. I doubt that was critical to the result, but it was nevertheless a serious economic, tactical and political error.

To put it bluntly: Corbyn appeared to be undermining the central part of the Remain campaign.

The context in which this was written is also important. I have recently said that I think John McDonnell’s Economic Advisory Council was an important innovation that he should be congratulated for both introducing and utilising it in formulating policy. Just because I think Owen Smith should win does not mean I do not give credit where it is due. But in our last meeting Brexit was discussed, and I think it was fairly clear what the general feeling was, reflecting the overall consensus among economists. I was not alone in being unhappy that this advice appeared to have been ignored, as the carefully worded statement from all five of us makes clear.

Of course this mistake could conceivably just reflect a speechwriter getting carried away at wanting to have a go at Cameron or Osborne. Speeches on economics should normally be checked by someone from the shadow Chancellor’s team, but then we know about the competence thing. But perhaps we should take Corbyn at his word, and that he did not agree with the almost unanimous view of economists. And then there was this unfortunate howler about triggering Article 50 straight away - again an obvious mistake quickly retracted.

But I know if roles were reversed, and Owen Smith had done these things, Corbyn supporters would be declaring that they just KNEW that Corbyn really wanted us to Leave. Which suggests to me that if we are skeptical about Smith’s radicalism, we should also be at least as skeptical about Corbyn’s attitude to the future Brexit negotiations.

In fact it goes further than this. The 48% of people who voted to Remain, plus any more who voted Leave but are now beginning to wonder that maybe all those economists were not exaggerating about its impact, plus the majority of companies that want to Remain, plus all the overseas governments that want the UK to remain, will be looking to someone or some party to be their political representative over the next few years. Labour under Owen Smith could play that role for sure, but Labour under Jeremy Corbyn? A leader whose heart may not be in it and who has said the costs of Brexit are exaggerated and who only has 20% of MPs who have confidence in him and who isn’t very good at doing the parliamentary thing or the details about Brexit policy thing is hardly a good choice to champion this cause. And if Labour members feel that way, voters will feel the same, and can UK politics persist with the two major parties accepting Brexit and leaving the 48%+ unrepresented?

Just as the coup itself followed Brexit, it may be that members (like Alex Andreou) begin to realise that this event has changed the political landscape in a crucial way. 2016 is not like 2015. Yes there are plotters, but there are also MPs desperate for Labour to become an effective opposition again for whom Brexit was the last straw. For some members the project is everything, even if the project does not include Europe or winning elections anytime soon. I have debated with plenty of party members like that. But if there are others who do care about both winning elections and minimising the harm done by Brexit, we may see support for Smith growing. He will get his own momentum.

Is UKIP the UK's Tea Party?

The UK Independence Party (UKIP) received a quarter of the vote in the recent council elections. UKIP has been described as the UK equivalent of the Tea Party movement in the US. Its policies are certainly very much to the right. Large tax cuts (possibly one flat rate) financed by huge reductions in public spending, except for defense spending which would increase, a five year freeze in immigration, a return to coal based power stations and no more wind farms, more prison places, and so on. Unlike the Tea Party, UKIP currently fights against the Conservative Party rather than working within it, but too much should not be made of this difference. UKIP’s leader says that he could cooperate with the Conservatives if they ditched Cameron as their leader, and there is some sympathy for UKIP’s aims within the Conservative Party.

One common reading of UKIP’s rise is that it represents the disaffected right wing of conservatism, generated by Cameron’s attempt to move the Conservative Party to the centre ground. However there is one problem with this interpretation - the Conservative Party has not moved to the centre ground. Apart from the odd token issue like gay marriage, the supposed move to the centre was just spin. Under the cloak of the need to reduce debt, the government has embarked on a programme to shrink the size of the state that goes well beyond anything attempted by Margaret Thatcher. Reforms to the National Health Service and education involve the large scale private provision of services or governance.

In terms of the distribution of income, the Conservative Party seem happy with increasing inequality and poverty. The 50% tax band on top incomes was reduced to 45%, while welfare spending is cut. The impact on child poverty will emulate what Margaret Thatcher achieved, according to the latest analysis from the Institute of Fiscal Studies (IFS) released today. Updating figures that I reported recently to take account of the latest welfare cuts, the IFS estimate that the percentage of children in poverty (in families with incomes 60% below the median) will rise from 17.5% in 2010 to 23.5% by 2020. Crucially, according to the IFS the rise in this measure of relative child poverty is entirely the result of the tax and benefit reforms introduced by this government. This is, quite literally, a government created increase in child poverty.

So if we have a government where major economic and social policies are very much to the right of the political spectrum, how do we account for the rise of UKIP? One possible story is that the Conservatives are a victim of their own spin. In trying to ditch the image of the ‘nasty’ party that came to be associated with the Thatcher era, they have alienated those that rather liked her openly right wing style. The parallels with the US may be quite close. Where the Tea Party is associated with, and definitely encouraged by, Fox News and talk radio, so the values of UKIP are also the values of the UK tabloid press, by which we essentially mean Murdoch’s Sun and the Daily Mail.

Yet there is one key feature of UKIP which has no US parallel, and that is in its name - independence from the European Union (EU). Since Thatcher’s time the Conservative Party has been seriously split in its attitude to the EU. The leadership knows that a decision to exit the EU will almost certainly have serious negative consequences for the economy, which is why most business leaders would be horrified by the prospect of leaving. However the tabloid press have run a relentless campaign to highlight any negative aspects of EU membership. It has to be said that Eurozone governance in particular gives them plenty to work with, but when that is not enough, then in true tabloid style stories are made up. While the Conservative leadership seems in its element in going along with the tabloid attack on the welfare state, when it comes to the EU, the game becomes appeasement.  

How all this turns out may depend on how the economy performs over the next two years, and how effective the Labour Party are at shifting the public debate. If the recovery is strong, and we see more of this kind of political naivety from Labour (yes, Ed did not read my post on the B word), then the tabloids will push Cameron as far as they can on Europe, but then rally round to support the Conservatives at the election. On the other hand if the recovery is weak, and if Labour is more effective (like here) and looks like winning, then the tabloids may continue to encourage UKIP, in the hope of engineering a reconciliation of the right under a new Conservative opposition leader hostile to the EU.

But these are dangerous games. Much of UKIP’s popularity comes from straightforward dissatisfaction with falling living standards and a lack of good jobs. It is expressed as hostility to immigration and welfare recipients, in part because the tabloid press suggest this is the cause of these problems, rather than it being the result of government economic policy [1]. Even if the recovery is strong and Labour opposition weak, this may not produce enough to enable the tabloids to put this genie back in its bottle. They may find it as difficult to control those who recently voted UKIP as the Republican Party has found it impossible to control the Tea Party.

[1] Some good posts on these tabloid myths: NEF here, the Guardian here, Ian Mulheirn here, and much more detail from Alex Marsh here.   

Time for Europe to enter the Econ blogosphere

                The new Bruegel blog has a provocative post entitled ‘Europeans can’t blog’. What they mean is that there is no equivalent in Europe to the US economics blogosphere. To quote: “It is striking to note that the online debate about European economic issues mostly takes place on American blogs.” European blogs exist, but Bruegel suggest that they tend not to link to each other, so debate is not encouraged. This is partly a language issue of course, with many blogs directed at a national audience written in their own language. But the language of economics is English, and there are already some good European blogs written partly or totally in English.

                Bruegel thinks it would be good if there was a more interactive European economics blogosphere, and I very much agree.  I know I’m not the only person who wants to understand more about the economic debate in other European economies, particularly at the moment. Discussion through blogs might even improve the quality of national economic debate. But what I really wanted to say is that it need not take long to achieve this. At the end of their post Bruegel kindly say that the “UK already has an impressive blogosphere that is tightly integrated with the American one”. The Palgrave Econolog ranks economics blogs mainly by the number of incoming links from other indexed economics blogs i.e. a bit like Google. Of their current top 20, 15 are US based, one is Canadian, one is the IMF, and 3 are from the UK. But of these three UK blogs, only Chris Dillow’s Stumbling and Mumbling was around six months ago. When I and Jonathan started blogging, Chris linked to some of our posts, which meant Mark Thoma read them etc. 

                Bruegel shows one way a new and interesting blog can be created, based around an internationally orientated economics think tank, research center or academic department. Alternatively, I’m sure I’m not the only economics professor who would find they had things to say. There are some really good US blogs by current or recent grad students, like Noahpinion for example. Once the critical mass is there, Bruegel's post and my own experience emphasise the importance of interacting with other blogs.