Will Labour’s new Brexit policy win back voters?

Labour has finally agreed to back a People’s Vote unequivocally on any Brexit deal. That includes any deal it might itself negotiate after winning a General Election. It will campaign for Remain against No Deal or any Tory deal. Whether it will try and negotiate its own deal after it wins a snap General Election will be decided quickly as soon as that General Election is called.

This differs slightly from the proposal put forward by five biggest affiliated trade unions, which proposed that Labour would negotiate its own Brexit deal after winning a General Election, but leaving open whether Labour would campaign for this new deal or instead campaign for Remain against the deal it had negotiated. That part of the proposal has yet to be agreed, and may not be agreed, depending on decisions still to be taken.

Will this change in policy be enough to win back 2017 Labour voters who now say they will vote LibDem or Green because they want to remain in the EU? The policy still looks ambiguous compared to the LibDem's policy of calling for a People’s vote whether they are in power or not. Any interview of a Labour politician will now take a predictable form, with “what would you do if you win a General Election” being the first question. Labour have not left ambiguity behind completely.

Postponing the decision on what to do before any General Election makes procedural sense and also some political sense. If the polls start moving back towards Labour from now on then Labour can think job done. If they don’t then it becomes clear Labour need to commit to Remain as part of its General Election manifesto. Of course this is a game with voters and not a game against nature, and voters may realise this and could keep saying they will vote LibDem or Green in order to keep the pressure on Labour.

Another important factor will be if this new policy allows senior figures to start aggressively campaigning for Remain, rather than simply explaining Labour’s Brexit policy. They need, at a minimum, to start appearing at People’s Vote events. The official opposition has a huge (and some would consider unfair) advantage over other opposition parties in getting more airtime, and if they can use that to make the case for a People’s Vote that may win some votes back.

The post-election policy put forward by the 5 unions does have one advantage over the LibDem policy. The question for those supporting a People’s Vote is what deal do you put up against Remain? No Deal is not an actual deal, and would also fail to learn the lesson of 2016: don’t give voters an option that parliament thinks is disastrous. However May’s deal now has few backers, and if it won against Remain it is a pretty hard form of Brexit. The Union’s proposal would, if negotiations were successful, put a softer form of Brexit up against Remain, so it would be less of a disaster if Remain lost a People’s Vote.

Whether voters will see it that way depends crucially on Labour’s position on their negotiated deal. Leaving it open is not a vote winning strategy, because the natural presumption is that a Labour government that spends a lot of time negotiating a deal will want to support it in any referendum. Remain supporters may also reason that Remain would easily beat May’s deal, but might find beating a softer Brexit with Labour support a more difficult task. There is no point arguing that this strategy reduces risk in case Remain loses if it also increases the chance of Remain losing.

If the party wants to retain the proposal of the 5 unions and also win votes, it has to commit to support Remain whatever the results of those negotiations. Only then will Labour’s policy on Remain be seen to be comparable to that of the LibDems. This proposal, together with a commitment to support Remain, has the disadvantage of prolonging Brexit but the advantage of reducing the risk if the referendum is lost.

If this is all beginning to sound a bit convoluted, it is and it doesn’t need to be. If Labour’s only concern was to increase the chances of winning the next General Election it would have adopted a Remain strategy full stop. In other words Remain in all circumstances including a Labour government. Labour could have even gone one better than the LibDems and agreed to put revoking A50 on the table if it won a General Election. The fact that it didn’t simply reflects the minority within the party who either prefer Lexit or are MPs in Leave areas who fear losing their seats.

This minority within Labour have already done enough damage to the Labour cause. They have revived the fortunes of the Liberal Democrats and Greens as an alternative to Labour. By keeping Labour’s policy after a General Election unclear, they further risk the solidification of the support for both these parties among former Labour voters..

None of this matters for the Remain cause, because as I have argued for some time there is very little chance of a Labour government ever achieving Brexit even if it wanted to. But voters, including Remain voters, have yet to be convinced of that. Why should they, when the pro-Brexit minority within Labour have not been convinced either and continue to resist Labour adopting a Remain strategy. Indulging this minority for too long could cost Labour crucial votes, and Labour does not have votes to spare.

Fake News UK style

So yesterday Jeremy Corbyn gave a speech which journalists had been given advance notice of. The Independent tweeted “Jeremy Corbyn to highlight economic 'benefit' of Brexit as he demands UK stop relying on 'cheap labour from abroad'” and referenced an article by their political correspondent Ben Kentish. As you might expect, the great and the good piled in to condemn the speech as anti-immigrant and pro-Brexit.

I was alerted to all being not what it seemed by this tweet from Financial Times Chief Political Correspondent Jim Pickard. He wrote: “Corbyn team is complaining that his words about "cheap labour" have been taken out of context and on this occasion they are absolutely right: he was talking about "imports" made abroad with cheap labour, not cheap labour coming here - here's the relevant passage. Please retweet.” My interest was aroused, but I could not find a copy of the speech online because it had not been given yet.

An example of the advantages of twitter follows. I asked in a tweet if anyone could provide me with the speech, and I received both the press briefing and the ‘check with delivery’ speech itself. You can now read the final speech in full yourself here, or watch an excerpt here. I then did something I do not think I have done before, and quickly composed a thread about the speech. The rest of the day saw lots of people using my own thread to correct others who had reacted to the original Independent tweet. If anyone wanted to notify me about anything else yesterday I’m afraid it has been lost in a mountain of what seems like thousands of notifications referencing my thread.

What we can say for certain is that the Independent’s tweet, which at the time of writing has not been withdrawn, is very misleading. Corbyn was not giving a speech about the benefit of Brexit, and the ‘cheap labour’ he referred to was that used to produce imported goods. Instead the speech was all about the active industrial policy that a Labour government would put in place to help manufacturing industry, which made sense as he was addressing a manufacturers organisation in Birmingham.

But surely he must of said something about the benefits of Brexit? The speech said this: “exporters should be able to take proper advantage of the one benefit to them that Brexit has already brought – a more competitive pound.” He suggested they had not because of the absence of any industrial policy. His statement about a benefit to exporters of the depreciation is innocuous.

To many Corbyn supporters this is just par for the course - it is happening all the time. I am no Corbynista, but I would agree. Much of the media, both Labour friends or foes, appears happy to distort things the Labour leadership says to an extent that I cannot remember happening to another Labour or Conservative leader in my lifetime. The macro evidence for this is the 2017 election, where Labour destroyed the accepted wisdom that election campaigns made little difference to the polls.

Labour’s extraordinary surge in the three weeks of the campaign is far too large to be due to just some mistakes by the Conservatives. The more plausible explanation is that both parties had direct access to the media, and for the first time voters were seeing the parties and their policies directly, rather than being filtered through media interpretation. This also helps explain why Labour’s position in the polls began to steadily deteriorate soon after their election bounce: the media filter came back on, with a constant stream of negative stories about Labour and its leadership. I have talked before about the contrast between coverage of Labour’s antisemitism problem and the Conservative’s islamophobia problem.

That is the context in which to see the events I described yesterday. A very small example of a much bigger and very serious problem. There is of course a lot you can say about the speech that is not misrepresentation. Is it right to be so focused on manufacturing when so much of our economy involves services, for example? Did it appear to promote an insular UK? For my own part I would be very critical to the reference to cheap labour. The reference occurs in the following sentence:

“We’ve been told that it’s good, even advanced, for our country to manufacture less and less and to rely instead on cheap labour abroad to produce imports while we focus on the City of London and the financial sector.”

This is a standard argument on the left against financialisation and City dominance, but the words ‘cheap labour abroad to produce’ are completely unnecessary, unless someone was trying their hand at dog whistling.

Can the misrepresentation of that tweet be forgiven in wanting to make this a story about Brexit? Well there is a Brexit story in the speech, and it is the opposite of the one suggested by the tweet. Corbyn is always accused of being a Lexiter: wanting to leave the Single Market so that he can use state aid to support domestic industry. Here is what he said on that:

“Too often, we have been told by Conservatives who are ideologically opposed to supporting our industries that EU rules prevent us from supporting our own economy. But if you go to Germany you’ll struggle to find a train that wasn’t built there, even though they’re currently governed by the same rules as us. When the steel crisis hit in 2016 Italy, Germany and France all intervened legally under existing state aid rules but our government sat back and did nothing. We have made clear we would seek exemptions or clarifications from EU state aid and procurement rules where necessary as part of the Brexit negotiations to take further steps to support cutting edge industries and local businesses.”

That, I would suggest, is not what a Lexiter would say.

How to spot fraudulent economic arguments: an example from Lexit

When I last talked about Lexit, I said Lexiter arguments had “many structural similarities to right wing arguments for Brexit.” In this post I want to go further and suggest ways you can spot when economic arguments are fraudulent, using an article by Thomas Fazi and William Mitchell advocating Lexit as an example. To show how generic the tactics are, I will demonstrate how exactly the same techniques were used by those who argued for austerity.

The first sign that the wool is being pulled over your eyes is wildly exaggerating your opponents case. It is so much easier to attack a straw man. This particular article talks about the “Left’s anti-Brexit hysteria” i.e anyone who disagrees with us is acting hysterically. They talk about those opposing Brexit predicting “Brexit Armageddon”. The tactic works particularly well if you can find an example of someone who did exaggerate their case, and focus on how their fears have not come to pass.

I am very familiar with this tactic from the UK in 2013. From 2010 to 2012 growth was very low, and the expected recovery from the Great Recession did not materialise. People like myself blamed austerity, and we were quite right to do so. But some in 2012 made the foolish claim that the economy will never start growing again unless austerity came to an end. So when growth returned to trend in 2013, proponents of austerity used those claims to announce the critics were wrong and austerity had been vindicated. The example that Lexiters and Brexiters alike use is of course the Treasury short term post Brexit forecast.

That forecast was not about the longer term impact of Brexit, but uncertainty about the prospect of Brexit. It overestimated the immediate impact of Brexit. But the real question is not whether forecasts were wrong, but whether the Brexit announcement and subsequent uncertainty has damaged the UK economy. The article says the economy is still growing, and quotes some other selected statistics, implying all is fine. They do not mention that we have gone from the top to the bottom of the international growth league. Of course they cannot avoid acknowledging that sterling fell sharply on announcement. However they say but this has not destroyed the British economy: another straw man (who ever seriously said the depreciation would destroy the economy?!), and no mention of what the depreciation did do, which is cut the real incomes of workers. The debate over whether Brexit uncertainty has harmed the economy is over, as no one seriously thinks it has not. 

A second sign of a fraudulent argument is to focus on a single study that supports what you want to say, and ignore all the rest. The Brexiters have Minford of course, but Lexit have the study by Coutts, Gudgin and Buchanan (CGB) published by the Centre for Business Research (CBR) at Cambridge. Those advocating austerity had two well known papers: one suggested there was empirical evidence that high government debt reduced growth, and the other that austerity was expansionary. In all these cases the studies are outliers, so you need some reason why the majority of academic work can be discredited.

This leads to a third tactic: tar academic work that goes against what you say with some broad assertions that have only a grain of truth. If your audience has a political bias, play to it. With austerity it was that those against austerity were old fashioned Keynesians who just wanted a larger state. (Some were, but most were just using a much more modern Keynesian framework and its macroeconomics implications.) The way this paper does the same with the many studies that have suggested Brexit will be harmful in the longer term is so laughable I have to quote it:

“The neoliberal biases built into these models include the assertion that markets are self-regulating and capable of delivering optimal outcomes so long as they are unhindered by government intervention; that “free trade” is unambiguously positive; that governments are financially constrained; that supply-side factors are much more important than demand-side ones; and that individuals base their decision on “rational expectations” about economic variables, among others. Many of the key assumptions used to construct these exercises bear no relation to reality.”

It will be news to most trade economists whose work is the basis of the long term case against Brexit that they are assuming things like governments being financially constrained and rational expectations. A key part of why Brexit is a bad idea is the gravity equation, which says trade is more likely to take place with neighbouring countries. It is a robust empirical relationship that makes no assumptions about governments or markets at all. [1] The article pours scorn on the ‘neoliberal’ idea that openness to trade is good for the economy, and again neglects to say that the relationship linking openness to productivity growth is also empirical, not theoretical.

Another tactic that if you see being employed you should start to worry is to impugn the motives of your opponents. That may be a common enough tactic in political discourse, but not if you are trying to make a serious economic argument. It is notable how academic economists who have criticised the Brexit work of Minford for example do not try and suggest he is ideologically motivated. Being good academics they instead question the model he uses (e.g. no gravity) and how he uses it. That is what should be done. But this article tries to discredit the current government’s analysis of the impact of Brexit by implying the results have been fiddled to produce large numbers for the long term costs of Brexit. They write:

“The models are notoriously unreliable and easily manipulated to achieve whatever outcome one desires. The British government has refused to release the technical aspects of their modeling, which suggests they do not want independent analysts examining their “black box” assumptions.”

Apparently the current UK government do not want us to see their workings because if we did we could see how they had fiddled results to make Brexit look bad. The attempt in this case is again laughable, because this government is pro-Brexit so any fiddling would go the other way.

All these four signs are easy to spot. The fifth is less obvious to the non-expert, which is to inconsistently use lots of broad brush statistics that do not get the heart of the issue, or which are problematic for other reasons. For example in arguing that Brexit has had as yet little impact on the economy they quote unemployment data, just as the government did from 2013 to argue that the economy was strong as a result of austerity. It is problematic because strong employment growth coupled with weak output growth means poor productivity. As I noted here, current productivity growth performance in the UK is worse than it has been for centuries.

In terms of broad brush statistics, they argue that GDP growth has been weaker rather than stronger than post-war trends as a result of EU membership, as if nothing else had been going on in all these years. The reality is that we joined the EU in part because our post-war growth and particularly productivity was worse than most other countries, and from the 1980s onwards it has if anything been better than other major countries. But why look at GDP rather than exports, where you would expect the impact of EU membership to be clearer. In fact the CGB study they quote from extensively does exactly this, and the following chart shows the results.

The benefits for UK exports of being in the single market are clear from this data. (To see how the CGB study erroneously avoids this conclusion, see here.)

There are of course plenty of Brexit specific points as well (the article does not even mention the Irish border), but this post is long enough already. I wrote it because it struck me when reading the Fazi and Mitchell article how similar its rhetorical devices were to those of many who tried to sell austerity. So if you read anything that wildly exaggerates the opposing position, focuses on a single academic study and ignores the rest, particularly if it suggests that there is some generic problem with these other studies which may include the motives of those who did them, and if it uses broad brush statistics when it could have used data that was more relevant, beware that you may be reading a piece of political persuasion rather than serious analysis.

[1] The confusion is compounded when they quote Paul Romer’s criticism of macroeconomics, and then drop the macro bit to pretend that Romer was talking about the whole of economics.

Lexit

I often find that arguments for Lexit have many structural similarities to right wing arguments for Brexit. Take Larry Elliott’s latest piece for example. This includes

1. Sweeping exaggerations that seem designed to trigger nationalist sentiments. We are told that “under Tony Blair, the feeling was that globalisation had made the nation state redundant.”
   
   
2. Confusing the EU with the Eurozone. Larry talks about the problems with the ECB, the SGP, and mass unemployment, but these are all valid criticisms of the Eurozone. There is no attempt to say why that has any impact on the UK as part of the EU.
   
   
3. Inferring that all the UK’s problems are somehow down to the EU, without providing any evidence that they are.
   
   
4. Asserting that the EU prevents the UK doing what it needs to do to tackle (c) in ways that are economical with the truth (see more below).
   
   

But I also have complaints that I think are unique to Lexit arguments. When some people mock the use of the term neoliberalism, they should use the Lexit debate as ammunition. When I use the term, it is to signal a project that in various ways subordinates the state to the market. Yet we are told that the EU had neoliberalism hardwired into it. The EU is fundamentally about trade liberalisation, not about the role of the state. It is trade liberalism that is hardwired into the EU, not neoliberalism. (The Lexit advocacy here is more honest about that.)

Is levying a huge fine on Google because its search engine gives preference to its own shopping comparison site an example of neoliberalism? Is a maximum working week? Are their environmental standards? [1] These are all examples of a collective of states interfering with firms and the market. One of the strong and left wing arguments for the EU is that only at this level can you avoid large multinational corporations blackmailing states that attempted to challenge them in similar ways. I am sure there are many examples where the EU could do this more effectively, but at least they are trying.

The argument for Lexit is therefore similar to the argument against globalisation. The problems that a combination of globalisation and technical change has created for many communities are real enough. But Lexit arguments typically ignore two key points. First, globalisation has brought huge gains for many poorer countries. That applies as much to the poorer states of the EU as it does to China and India. Of course what is being done to Greece is appalling (and I have not hesitated to say so on many occasions), but this once again is a result of a common currency, not trade liberalisation under the EU. Indeed, one of the reasons the Eurozone’s blackmail of Greece worked is that a majority of Greeks want to stay in the EU.

Second, the gains for the UK that have followed most trade liberalisation are real enough, which is why there are large costs to leaving the Single Market or customs union. Larry spins this by saying the “left needs to be very careful about running with the idea that business should be able to veto decisions made by the electorate.” This is a line that shows the left at its worst. The costs of Brexit do not necessarily fall on business (which is often mobile) but on ordinary UK citizens. What proponents of Lexit have to show is that the benefits of the policy freedom Brexit gives you outweigh these costs.

The most promising way to help the losers from trade liberalisation (and technical progress) is through an active industrial and regional policy. Proponents of Lexit argue that the EU would prevent such a strategy. If we are talking about giving aid to declining uncompetitive sectors, then many would argue that it is a good thing that the EU does stop that happening. But to suggest that the EU is opposed to any kind of regional aid seems to conflict with the existence of the EU’s Cohesion Policy, that has benefited many areas in the UK. For a more general discussion of the justifications the EU gives for intervening in the market, see William Davies here. The set of policies that the EU prevents but which any reasonable trade deal with the EU would allow are pretty small, with the key exception of controlling immigration.

Larry says that freedom of movement has not benefited workers. I think he would find plenty of EU workers in the UK who would disagree (at least before Brexit). Just as the movement of goods across borders benefits all, so can the movement of people. Most of the analysis I have seen has shown that recent immigration into the UK has been beneficial to UK workers once you take everything into account. Ignoring all that by talking about the ‘lived experience of ordinary people’ (from here) suggests an attitude to knowledge and evidence worthy of UKIP. Which brings me full circle.

[1] The first of these interventions could reflect an ordoliberal rather than neoliberal view, but the second two not so much.