The politicisation of immigration

This is based on the UK experience, but I think some of this will also apply in the US.

Why do right wing politicians push an anti-immigration platform? The obvious answer is that immigration is an important concern to their voters, and that is certainly correct. However I think there is an additional factor, which is illustrated by this interesting graphic from a recent Financial Times piece by Sebastian Payne.

Look at the right hand panel, based I believe on British Election Study data. This is the two dimensional way of representing political views I have discussed before. What we call the vertical axis can vary (culture, identity): I prefer the labels ‘social conservatives’ and ‘social liberals’. *** Conservative voters tend to be right wing and socially conservative. But Labour voters, while clearly left wing, include an important segment that are also socially conservative. As a result, if right wing politicians can make elections about issues that are important to social conservatives (law and order, immigration, race and abortion in the US) they have a chance of picking off Labour voters that would otherwise vote for a left wing candidate.

Immigration is particularly attractive to right wing politicians for a reason I explored in a recent post. There is a common misperception that immigration brings economic bads like lower wages and reduced access to public services. Right wing politicians therefore have a chance of persuading Labour voters to substitute their economic concerns away from supporting a left wing candidate into supporting an anti-immigration candidate on economic grounds.

The standard story perpetuated by the broadcast media in the UK is that heightened concern among voters about immigration over the last decade is a response to high numbers. However it was more than that. The Shifting Ground study has an interesting chart shown below.

The blue line is the importance that voters attach to the issue of immigration. The grey line are the number of migrants coming into the UK. The black line are the number of news stories about immigration in the print media. (See here for the source.) The standard story suggests the blue line (importance) responds, in the first instance with a few years lag, to the grey line (immigration numbers), with the black line (news stories) reflecting people’s concerns with no lag at all. But it is obvious that you can tell a very different story: people’s perceptions about the importance of immigration reflect what they read in the press.

This different story, where the press leads opinion, makers much more sense. Why the long lag between the increase in immigration in the late 90s and public attitudes about the importance of immigration? As is well known, public concern about immigration tends to be greatest in areas where there are least migrants. In a poll commissioned by the Sun newspaper in 2007 only 15% said that migrants are causing problems in their own neighbourhood, while 69% said that migrants were not having a strong local impact, either good or bad. There is a nice story Nick Clegg tells on this:

“Years ago, before I became an MP, I was knocking on doors in Chesterfield, Derbyshire – this was at the height of the controversy about asylum seekers being dispersed around the country when Tony Blair was in power. The tabloid newspapers were going nuts about it every day. I remember speaking to a guy leaning on the fence outside his house and saying: “Any chance you’ll vote for the Liberal Democrats?” And he said: “No way.” And I said: “Why not?” And he said: “Because of all these asylum seekers.” And I knew for a fact that not a single asylum seeker had been dispersed to Chesterfield. So I said to him: “Oh, have you seen these asylum seekers in the supermarket or the GP’s surgery?” And he said something to me that has remained with me ever since. He said: “No, I haven’t seen any of them, but I know they’re everywhere.” You can’t dismiss the fear, but how on earth are you supposed to respond to that?”

Here is a more recent example.

The Shifting Ground report also looked, in 2004, at what best explained whether voters thought high immigration was important as a political issue. The best explanatory variables were readership of the Mail, Express and Sun, in that order. All three were better predictors of concern about immigration than whether people voted Conservative, which reinforces the point that immigration is a way for right wing politicians to gain votes from ‘natural’ Labour voters.

If you think about it, the idea implicit in the standard story that voters were observing greater immigration and as a result expressing concern, which the print media simply expressed, is slightly incredible. It seems unlikely during this period that voters were looking at official data: voters anyway tend to grossly overestimate the number of immigrants. A much more plausible story is that they were reading their papers. It is important to stress that these papers were not ‘brainwashing’ their readers, but instead playing on eternal fears about outsiders, particularly if these outsiders are seen as cheating the system.

Why would the print media start writing more stories about immigration? You could say they are just reflecting the numbers, again with a rather long lag. A more plausible explanation is political. In 2001 William Hague talked about Tony Blair wanting to turn the UK into a ‘foreign land’. In his 2005 General Election campaign, Michael Howard put immigration at the heart of the Conservative Party’s general election campaign. Tim Bale discusses these and later political responses here.

The right wing tabloid press in particular covered immigration in a way designed to generate hostility. As Ian Dunt noted in 2013:

“new research from the Migration Observatory at Oxford University shows just how pervasive and systematic this hate campaign is. After studying 58,000 articles in every national newspaper in Britain – over 43 million words – researchers found the word most closely associated with 'immigrant' was, you guessed it, 'illegal'. … For tabloids, other words closely associated with 'immigrant' were 'coming', 'stop', 'influx', 'wave', 'housing' and 'sham'.”

A recent report from the same source finds ‘mass’ as the most common way of describing immigration. Claims made about immigration in the tabloids are frequently untrue. They are almost always negative, often extremely negative. This is not a coincidence, or as a means of boosting sales: it is a deliberate editorial policy.

In opposition the Conservatives could do little more than ramp up the salience of the issue among their base and among readers of right wing tabloids. Labour on the whole triangulated in public. Gordon Brown’s famous remark after being challenged over the economic impact of immigration in the 2010 election showed both how Labour viewed anti-immigration arguments and also the problems with their triangulation. Once the Conservatives gained power as part of the Coalition in 2010, immigration as a major problem became official.

Furthermore, arguments linking immigration to economic problems that had nothing to do with immigration also became official, as the Conservatives used immigration as a useful scapegoat both for falling real wages and the impact of austerity on access to public services. This in turn fed back into the print media as a whole: whereas in 2006 many articles defending immigration could be found outside the right wing tabloids, these diminished in number by 2013.

If the right wing tabloids created an anti-immigration atmosphere in parts of the UK, after the Conservative’s ‘less than 100,000 target’ for net immigration it became government policy. Yet, as I argued here, it was - like the tabloids - a policy born in deceit. Every time Theresa May tried to suggest significant economic measures to reduce immigration, a combination of George Osborne and Vince Cable knocked it down for the very good reason that it would damage the economy. Her only choice was to create, literally, a hostile environment for immigrants into the UK.

Although formally the policy is only designed for illegal immigrants, it inevitably turns the anti-immigrant rhetoric of the tabloids into official government policy. Landlords are reluctant to let accomodation to EU immigrants in case their papers are not in order. The same applies to healthcare. I wrote about the bureaucratic cruelty shown to foreign students, and most academics will have similar stories from their own experience. Colin Talbot describes the experiences of EU academics after the Brexit vote. The simple cruelty of this policy does not go unnoticed abroad (for example here and here from Heiner Flassbeck and well worth reading), and the contrast with Germany’s policy towards refugees is stark. [1]

Brexit was the apotheosis of this policy towards immigration. Although Remain gained a few liberal Conservatives, they lost more left wing social conservatives, as the left hand side of the first figure shows. The right wing tabloids were of course not innocent bystanders in this, but the key point is that they didn’t need to do anything new except ramp up their anti-immigration stories and make sure they always mentioned the EU. The key point of this post is that what happened in the Brexit vote was simply what right wing politicians and newspapers have been trying to do for nearly 20 years: use immigration as a way of preventing socially conservative left wing voters from going with Labour.

[1] Viewing from abroad you might be forgiven for thinking the British were now an insular, uncaring, rather bigoted nation. Yet when a photograph of the body of a three-year-old refugee washed up on a Turkish beach went viral, the Sun - always quick to see the limits to how far it can distort news - launched an appeal and within two days had raised £350,000 to help other refugees. It was a brief and short-lived moment when natural compassion proved stronger than years of conditioning.

*** Postscript (18/12/17) These are the same terms as John Curtice uses here

New Labour and neoliberalism

Anyone who talks about New Labour as being a “disciple of neoliberalism” really should define what they mean by neoliberal. One of the defining characteristics of neoliberalism as far as I am concerned is a dislike of ‘big government’. Neoliberals are not libertarians: they are happy to use the state and make it powerful in particular ways (e.g. defence). However neoliberals are in favour of the privatisation of many government activities, and cutting its welfare and redistributive roles. That is the only reason why austerity was a neoliberal policy.

There are lots of ways of measuring the size of the UK government, but here is one: government consumption as a share of GDP, using world bank data.

The share of UK government spending on this measure, as with others, rose steadily and significantly under the 1997-2010 Labour government. The contrast with the previous Conservative government could not be clearer. The positive benefit that brought to public services like the NHS was real and substantial.

There are other ways in which New Labour attempted to undo the impact of the market. One concerned child poverty. While they did not manage to reverse the increase in child poverty that occurred under Thatcher, it was not for want of trying. Relaxed about the inequality that came with neoliberalism for sure, but not relaxed about poverty. New Labour introduced the minimum wage.

New Labour could be described as neoliberal in some of the other things it did, or did not do. But true disciples do not usually pick and choose which of their leader’s teachings they follow. When it comes to the rather important issue of the size of the state, New Labour was not neoliberal.

Where Labour went wrong

When the New Statesman asked me to write something on Osborne’s budget surplus law, they also suggested I talk about what Labour’s attitude should be. Space constraints meant that I could not say much on the second question, so let me amplify here.

Let's start in 2009. The Labour government's policy at the time was absolutely right. They provided fiscal support for the economy in the midst of the recession even though it meant increasing the deficit. Given the belief at the time that the recession might be short lived their policy was also quite clever, using a temporary cut in VAT as a close proxy for looser monetary policy.

What line should they have taken in 2010? I remember reading some reports that Gordon Brown initially wanted to continue placing the recovery above the need to reduce the deficit. If true, he was right. However it was perhaps inevitable that Labour began to also focus on deficit reduction: the recovery looked like it had begun, the debt problems in the Eurozone were constantly in the news, and the Conservatives and much of the media were saying we could become like Greece. So they instead fell back on the idea that recovery could be achieved at the same time as implementing policies designed to reduce the deficit. We can call this the ‘too far, too fast’ period, from the mantra Ed Balls used to criticise George Osborne’s policy.

This was when they made their first big mistake. Both Coalition parties had developed their own mantra, which I can call the ‘clearing up the mess Labour left’ line: Labour profligacy had maxed out the credit card, and so difficult measures would be needed. This is what Bill Keegan calls the big lie. Apparently Alastair Campbell advised Ed Miliband to get an independent figure to do a report on Labour’s fiscal record in an effort to counter this lie, but this advice was rejected. (The paper I wrote came out in 2013, but still to my knowledge Labour has never used it.)

I have seen two reasons given for why Labour chose not to defend its record: Miliband wanted to establish his independence from a government that had lost an election (to ‘move on’), and it was thought that the Coalition strategy of blaming the last government would lose its potency after a year or two. The second argument proved horribly wrong. Instead the ‘clearing up the mess’ line was used to blame Labour for damage caused by 2010 austerity. It was complete nonsense, but it worked. 

In a way 2011 and 2012 were too easy for Labour: the economy was stagnant and Osborne looked vulnerable. But Labour should have anticipated that growth would return at some point before the election - if I could, surely they could. They will not have anticipated the stagnant productivity that allowed unemployment to fall so rapidly, but in political terms growth would have probably trumped high unemployment anyway, as I suggested back in 2012.

What should have happened in 2012 is that the ‘too far, too fast’ line should have changed to become a full blown attack on austerity: that was their second big mistake. By 2012 it was obvious that fears about a UK debt crisis had been completely overblown. The problem with ‘too far, too fast’ is that it sounded like austerity-lite: the need to focus on the deficit was conceded. Labour could have easily got away with changing its line at this point. They could have said that we thought there was a debt funding problem, but now we know there wasn’t. The argument that austerity should be postponed until the recovery is assured (i.e. when interest rates are well away from the Zero Lower Bound) was right in terms of the macroeconomics, but it would also have allowed Labour to combat the ‘clearing up the mess’ line, and profited from Osborne’s move to plan B.

Instead Labour seemed to be constantly triangulating between sensible macroeconomics and what the focus groups were telling them, and thereby producing a policy that failed to convince. Their fiscal policy proposals going into the 2015 election were much more sensible than George Osborne’s, but instead of attacking his renewed austerity they tried to pretend that they too were ‘tough on the deficit’. It was left to the SNP to argue against austerity.

The problem was that instead of presenting a clear alternative vision, Labour looked like it was always playing catch-up with Osborne. As John Curtice writes: “the Achilles’ heel of Labour’s campaign appears to have been a failure to convince those who were sceptical about the Conservatives’ economic record that Labour offered an attractive alternative.” As Lord Ashcroft’s polls show, and as I noted sometime before the election, by 2015 around half the public were against the continuation of austerity, yet Labour’s message on this was confused.

Today Labour continues to think that triangulating on the deficit, or worse just copying Osborne, is the answer. I think this tells us a great deal about the Labour party. That it is light on good macroeconomic advice and expertise, of course. But also that it spends too much time listening to people in the Westminster bubble and fails to spend time thinking about basic electoral strategy.

What Labour needs to ask now is what will prevent the Conservatives convincing the electorate in 2020 that Labour just cannot be trusted on the economy? Admitting their past fiscal mistakes when in government now, however much that is partial and hedged, will just give ammunition to their opponents in five years time. (Just read this, and extract the quotes.) More serious still, by allowing the focus to remain on the deficit, it lets Osborne get away with the damage he inflicted in 2010-2012, and the continuing social costs of austerity. What is the point in talking about the record on growth or productivity, when you appear to have conceded that reducing the deficit is all important, and Osborne is doing plenty of it?

In my New Statesman piece I say it is still not too late to change tack, stop triangulating and try something new - to start telling the truth. But I think there is a danger that this sentence frames the discussion in the wrong way, so it appears to be a contest between pursuing the right policy and winning elections. This post is all about the best way of regaining economic credibility, which means taking a strategic view rather than looking at what sounds good to today’s focus group. Put simply, if around half the electorate already think austerity should not continue, why on earth are Labour giving in to deficit fetishism? In electoral terms, the fact that attacking austerity is also good macroeconomics is just a bonus.

Facts and Spin about Fiscal Policy under Gordon Brown

Below is a chart of UK net debt to GDP from the mid 1970s until the onset of the Great Depression. This post is about the right hand third of this chart, from 1998 to 2007, which was the period during which Gordon Brown was Chancellor. 

UK Net Debt as a Percentage of GDP (financial years) – Source OBR

In general looking at figures for debt can give you a rather misleading impression of what fiscal policy is doing, particularly over short intervals. However, having finished trawling through budget reports and other data for a paper I am writing, I can safely say that this chart tells a pretty accurate story. (For those who cannot wait for the detail that will be in my paper, there is an excellent account by Alan Budd here.) In the first two years of his Chancellorship, Brown continued his predecessor’s policy of tightening fiscal policy. The budget moved into small surplus, so that the debt to GDP ratio fell to near 30% of GDP. Policy then shifted in the opposite direction, with a peak deficit of over 3% of GDP, a period which included substantial additional funding to the NHS. The remaining five budgets were either broadly neutral or mildly contractionary in the way they moved policy, but as this was starting from a significant deficit, the net result was a continuing (if moderating) rise in debt.

Why was fiscal policy insufficiently tight over most of this period? Despite what Gordon Brown said at the end of his term, I do not think this had anything to do with the business cycle. In one sense there is nothing unusual to explain: we are used to politicians being reluctant to raise taxes by enough to cover their spending, which leads to just this kind of deficit bias. However this should not have happened this time because policy was being constrained by two fiscal rules designed to prevent this. So what went wrong with the rules?

The first answer is in one sense rather mundane. The rules, as all sensible fiscal rules should, tried to correct for the economic cycle. However, rather than use cyclically adjusted deficit figures, Gordon Brown’s rules looked at average deficits over the course of an economic cycle. That allowed Brown to trade off excessively tight policy in the early years against too loose policy towards the end, and still (just) meet his rule. As we can roughly see from the chart, debt ends up about where it started under his stewardship, which also roughly coincided with a full cycle.

Was this intended? The answer is to some extent not, which brings us to the second reason policy was too loose, and that is forecast error. One of the striking things about reading through the budget reports is how persistent these errors were. Outturns seemed always more favourable than expected over the first part of this period, until they became persistently unfavourable in the second. The former encouraged forecasters to believe higher than expected tax receipts represented a structural shift, and they were reluctant to give up that view in the second period. Unlucky or an aspect of wishful thinking that is often part of deficit bias?

To their credit, the current Conservative led government learnt from both these mistakes. Most notably, they set up the independent Office for Budget Responsibility with the task of producing forecasts without any wishful thinking. In addition their fiscal mandate is also defined in terms of a cyclically adjusted deficit figure, which does not have the backward looking bias inherent in averaging over the past cycle. Their mistake is in trying to meet that mandate when the recovery had only just begun.

What this chart does not show are the actions of a spendthrift Chancellor who left the economy in a dire state just before the Great Recession. He stopped being Chancellor with debt roughly where it was when he started, and a deficit only moderately above the level required to keep it there. The spin that our current woes are the result of the awful mess Gordon Brown left the UK economy in is a distortion based on a half-truth. The half truth is that it would have been better if fiscal policy had been tighter, leaving debt at 30% rather than 37% when the recession hit. The distortion is that the high deficit and debt when labour left office in 2010 were a consequence of the recession, and commendable attempts to limit its impact on output and employment.

Is it all Gordon Brown’s fault?

                Someone reading my recent post on major UK macro policy errors asked whether my blog was becoming more political. I hope not, in the sense of being party political for its own sake. However, when the issue involves macroeconomic policy, then I do my best to say what I think is right rather than what is politically expedient. This is in part because I have very negative views about the role of ideology (left or right) in influencing economics. (Incidentally, I do react badly to those who say ‘ah, but all theory is ideological, it’s just that you pretend what you do is ideology free’. I guess this makes me one of those old fashioned fogeys who believe in the possibility of evidence based social science.)

                Perhaps this is why I have not so far explicitly commented on the oft repeated refrain by the current government that austerity is necessary to ‘clear up the mess’ left by excessive deficits under Gordon Brown? It is nonsense of course, but like all the best slogans it contains a half-truth. I think it is certainly true in hindsight, and almost certainly true ex ante, that spending in the later Brown years was underfunded (or excessive, depending on your viewpoint). By exactly how much I plan to explore in more detail for a paper over the next few months. The untruth, of course, is that this problem had to be corrected immediately and quickly during a recession.

                This issue arose from my recent post where I listed what I considered to be the three major UK macroeconomic policy errors over the last 30 years. I said that underfunded spending by Brown was an error, but that I did not consider it a major one because it did not lead to the same scale of welfare losses that occurred when unemployment became unnecessarily high (like now). Chris Brown commented that “The loss in social welfare [caused by excessive deficits in a boom] is never felt at the time of the increase in government spending (the reverse is true) but after the party is over (i.e. today)”.

                I think this comment is right in two ways, but nevertheless it does not imply that Brown’s underfunding was a major error. Let’s start with where I agree. First, additional spending paid for by debt which is then paid off at some future date by cutting spending clearly raises welfare today but reduces it tomorrow. If the additional debt is paid for by raising future taxes (i.e. we are permanently increasing the size of the state) then the situation is more complicated. If consumers are completely Ricardian then the timing of the tax increase does not matter for welfare, but let’s leave that complication to one side. Second, I agree that pro-cyclicality in spending decisions is a common vice, and that because it tends to be asymmetric (it happens more often in booms than recessions) it can lead to deficit bias. This is certainly bad policy.

                But are the welfare costs of this that high? Not, in my view, if the subsequent correction is done at the appropriate time. To take a simple case, suppose monetary policy is able to completely offset the demand impact of both the excessive spending, and the subsequent cut in spending designed to pay off the additional debt. The only welfare cost then is an intertemporal misallocation of public goods. It is my judgement that these costs are of an order smaller than the costs created by raising unemployment by a few hundred thousand for a few years when unemployment is already high. (I have to say judgement here, because most formal analysis of measuring the welfare costs of business cycles takes place in representative agent models where ‘unemployment’ just means everyone working a few less hours. This does not begin to capture the true impact of unemployment on well being.)

                Now if it was true that the additional unemployment caused by austerity today was an inevitable consequence of underfunding in the Brown years, then the comment would be exactly right. But it is not. Paying off the debt created by the underfunding should be done during the next boom, and not now. As a result, Gordon Brown’s error gets relegated to minor status when compared to what is happening now.