Was Labour’s decision on EU immigration in 2004 a mistake?

The Labour government decided to let people from the A8 eastern and central European countries that had just joined the EU to have free access to the UK from 2004. Most other member countries delayed the point at which free movement from these countries was allowed. As a result, we had a large influx of migrants from Poland and other countries from 2004.

The received wisdom seems to be that this was a huge mistake. Jack Straw called it a spectacular mistake. Ed Miliband said the government had got it wrong. I’m reminded of this by Ian Jack, who recently in the Guardian gave us eight reasons that we ended up with Brexit. One was that decision by Labour. He writes

“immigration had begun to die as a political issue until, in 2004, Tony Blair’s government decided to open the UK labour market to the eight eastern and central European countries that had joined the EU.”

Here is data on UK immigration and Ipsos-Mori’s running poll on how many people think immigration is an important issue. (You can see data on all the issues here.)

It is certainly true that immigration has ceased to be viewed as an important issue (blue line) in the late 1990s. But immigration’s importance as an issue rose dramatically not from 2004, but well before 2004. From 2004 to 2008 it increased a little, but then declined as worries about the economy took centre stage.

This does not fit Jack’s story about a dead issue reignited by immigration from the EU in 2004, unless voters were anticipating the decision. It seems more likely that voters were responding the large increase in non-EU immigration that happened after Labour came to power, as the chart below shows.

But even that seems improbable: did it really take people a few years to notice. Here I show that there is a variable whose timing correlates with the increasing importance of immigration as an issue with only a slight lead: news stories about immigration. I give lots of evidence that suggests that the relationship is causal: press coverage about immigration, which in most papers is invariably negative, causes people to say immigration is an important issue.

Once you allow the press to have an important causal role on attitudes, and as I describe here there is good evidence that they do, the story that the 2004 decision was a big mistake can be seen in a different light. What we can say is that high immigration from the late 90s allowed the press to write about immigrants flooding the country, and the 2004 decision allowed them to say the same thing about EU immigrants after 2004. But then the 2004 decision is only a mistake because newspapers weaponised it.

To his credit Jack does list among his eight reasons for Brexit the UK press, and suggests as I have done that the difference between the vote in England and Scotland owes something to the press being “far more rabid” in England. Our rabid right wing press were always going to weaponize EU immigration whenever it happened. Labour could only have delayed A8 immigration until 2011. That would still have given newspapers plenty of time to write negative stories about EU immigrants before the referendum in 2016, as they of course did in spades. As immigration from the EU between 2004 and 2011 is likely to have provided economic benefits for natives, it is not obvious that the 2004 decision was a mistake at all.

Bad business

This post mainly uses examples from the UK, but I suspect much the same story could be told in many countries. The reaction to Obama's criticism of Wall Street was extraordinary, until perhaps you realise that in the US political support is sometimes a commodity that corporations and the wealthy can buy. I return to the US at the end of this post.

I am sure the employment regime that existed at 'Sports Direct' would horrify anyone. A system of discipline that penalised taking time off sick such that ambulances responding to emergency calls were regular visitors to the factory. Many of the staff were not paid the minimum wage. This is what can happen when the majority of workers are not represented by a union, and local jobs are scarce, or other employers are not much better. We know about it because of the work of investigative journalists, but there are few of them left so how many other cases do we not know about?

A long time ago the Conservative party represented business, and the Labour party represented employees through their links to trade unions. In the 1980s the power of the trade unions was significantly reduced, and Labour leaders even thought they could gain votes by attacking some union actions. Since then, Labour have avoided ever siding with workers in industrial disputes. This continues under the current leadership: Labour did not even endorse the junior doctors strike. As a result, we can ask who represents employees against exploitation by employers within the workplace, and who represents society against rent seeking by employers at the national level?

The Conservative party was and still is the party of business. As Aeron Davis notes, even in 1997 only 7% of the business community voted Labour and 69% voted Conservative, despite all of Blair's efforts to show Labour was business friendly. In the last election business leaders did all they could to support the Conservatives, both financially and with explicit support. When this tight link between a political party and business is combined with an ideological belief among many in the party that regulations such as those that support employees are 'red tape' that needs to be cast aside, we get a mix which is potentially dangerous for employees and society.

We have seen many examples of bad business behaviour since the 2015 election, such as the emission test scandals. In some cases governments, being ‘business friendly’, actively helped with that deceit. Other examples are here, or here, or here, or here, or here(FT)/here/here/here/here, and that is not even counting the financial sector. It is estimated that over 200,000 employees are paid less than the minimum wage they are entitled to (HT Jo Maugham).

The links between the party and business, and an instinctive dislike of regulations on business, does not of course necessarily mean a Conservative government will automatically create an environment where abuses of employees and customers can flourish. As George Osborne showed when he increased the minimum wage, politicians can act against type. But it would clearly help in avoiding business exploitation if the Conservatives faced an opposition that felt free to be critical of business.

That is what Ed Miliband tried to do when he was Labour leader. He put the issue of producers versus predators, or as an economist might put it wealth creating versus rent seeking, at centre stage. Labour also proposed some relatively mild measures to reduce inequality (e.g. the mansion tax). The latter in particular were unpopular with CEOs. Partly as a result, we saw near universal endorsement of the Conservatives from business leaders.

An interesting question is why this should be seen as a problem for Labour. The answer has to be that approval by business is seen by many voters as a mark of economic competence. Of course economists know that running a business is very different from running the economy. In addition, as I think Justin Wolfers said, when a businessman claims economic expertise, remember: business is about enriching yourself, economics is about making us all better off. But the media environment encourages a rather different view. Economic issues, unless they are of major importance, are typically discussed in business sections or segments.

I have personally never understood the prominence that business news has in all parts of the media. For example, are there really that many people who want to know the daily movement in stock markets around the world every hour on BBC 24 hour news? More worrying is how often business leaders and business representatives get media coverage compared to representatives of employees, particularly at the BBC. (Business leaders also seem to beat economists at the BBC, as Justin Lewis noted about the 2015 election. This has been repeated during the referendum campaign. This is despite the public trusting us more than business leaders. [1])

The result of all this may be that Labour wants to avoid appearing anti-business. The Blair/Brown regime went out of their way to cultivate business, and were famously relaxed about the large increase in inequality at the top that occurred before their time. It is not totally ludicrous to claim that the UK financial crisis, the biggest example of business mistakes adversely effecting society for many decades, might have been partly a result of this.

The current Labour leadership is unlikely to repeat that mistake. But the problem remains that the Conservatives will throw the anti-business charge the moment Labour adopts any measures that restrict business freedom or threatens the incomes of business executives, and business leaders – for reasons already explained – will back them up. If this leads to a significant number of voters concluding that Labour are not competent to run the economy, we are in danger of hard wiring bad business. As Luigi Zingales observes in this perceptive article, although there is a deep distrust of crony capitalism among many Republican supporters, they still elected a crony capitalist.

[1] In Justin Lewis's article, he notes that “newspaper partisanship directly influenced the broadcast news agenda”. Perhaps this is the most plausible explanation for many of the BBC's biases, together with – ironically – a fear of being too left wing, as Jack Seale reports with a great quote from Robert Peston.

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.

UK election: it was mediamacro wot won it

After the UK general election in 1992, which the Conservatives won to the surprise of many, the Murdoch owned tabloid newspaper the Sun splashed the headline “It's The Sun Wot Won It’. The headline is infamous enough to have its own Wikipedia entry. A few days ago I wrote what I hope was a calm, considered and rather academic post on the concept of mediamacro, following my posts on specific mediamacro myths, and I talked in abstract about the dangers it posed. Here I want to be more concrete.

Since the 2010 elections, YouGov has asked the following question: “Here is a list of problems facing the country. Could you say for each of them which political party you think would handle the problem best?” This is a simple table comparing the Labour lead in this poll just after the 2010 elections and today.

Issue	Lab lead 6/7 June 2010	26/27 April 2015	Difference
NHS	-1	14	+15
Immigration	-26	-6	+20
Law and Order	-21	-12	+9
Education	-4	6	+10
Taxation	-10	-8	+2
Unemployment	-7	-4	+3
Economy in General	-11	-18	-7

Source YouGov

Ignoring the normal academic caveats, the message is clear: the only topic on which the Conservatives are doing better today than shortly after they won the last election is their handling of the economy in general.

Yet when you look at any standard criteria of economic performance, the economy has done terribly during the coalition’s term of office. There is no doubt about this: numbers from GDP per head to real wages all tell a similar story. Average living standards have not increased, which means that they have fallen for many, a result which is almost unprecedented over a five year period. How much of this is the result of government policy is debatable, but that is not a debate that you see in the media. What you see in the media is an obsession with the government’s budget deficit, and on that criterion the coalition has left the economy in a better state than when it came in. So the only way to explain these poll results is that people have internalised the media’s obsession with the deficit.

Now normally you would ask how on earth something like the budget deficit could trump standards of living when judging economic performance. This is where the mediamacro myth of Labour profligacy is so important. One of the lasting images of this election was the man in the recent Leaders Question Time who accused Miliband of lying when he said that the global financial crisis rather than Labour profligacy had caused the deficit. (Second clip here.) He just knew that the last government had bankrupted the economy, and it appears many in the audience did too. And who could blame them: coalition politicians go unchallenged when they say it, and lots of newspapers repeat the line endlessly as fact.

It is a myth, pure and simple, but an important myth, because it places the blame for stagnant or falling living standards during the coalition government on their opponents. They created the mess the coalition had to clear up, and that was bound to be painful for a time. I’ve watched people who comment on this blog try to twist and turn figures in a desperate attempt to keep the myth alive. I’ve experienced being rubbished in the partisan media for trying to expose this myth. But in mediamacro this Question Time confrontation is described as an awkward moment for Miliband, rather than just the ranting of a bloke who had never looked at the numbers. I cannot recall any major coalition politician being seriously challenged for promulgating this myth.   

It is strange watching all this happen. I know that having written one of only 2 or 3 academic papers on Labour’s fiscal record does not guarantee what I say is correct, but it certainly gives me confidence that I am not talking rubbish. I write what I can, talk to any journalists who ask, trying to get the facts across. Facts like the deficit before the global financial crisis was only within a typical forecast error of its sustainable level. Facts like the debt to GDP ratio before the Great Recession was below the level Labour inherited.

Yet I know that this message will never be received, however indirectly, by the angry man in that debate, or by most of that audience. Perhaps some do not want to know the facts, but if they did, they are very unlikely to hear them. Instead they will get propaganda from most newspapers, and ‘views on the shape of the earth differ’ type comments from the TV, whose journalists are desperate not to appear to take sides. For that reason, if the coalition government remains in power after this election (or if the Conservatives win outright), then the title of this post will have rather more justification than the Sun’s original headline. [1]

[1] Although perhaps I should not be too rude about the Sun’s claim. Recent research suggests that readers of the Sun are considerably more trusting of the media than those who prefer other papers.

A campaign based on ignorance

If facts had anything to do with it, the economy should be the Conservatives’ weak point in the forthcoming UK election. Since 2010 we have seen the weakest recovery in at least the last 200 years. The government’s actions are partly responsible for that, and the only debate is how much. Real wages have been falling steadily, and only a fall in global oil prices might be finally bringing that to an end. Living standards have taken a big hit. Yet I keep reading how the economy is the Conservatives' strong card. How can this be?

What mediamacro generally fall back on are the polls, and it is true that people still believe the Conservatives are more likely to raise their living standards than Labour, even though they understand that they have become worse off over the last five years. There is no factual basis for the view that the Conservatives are better at managing the economy, and plenty to suggest the opposite. However this belief is not too hard to explain. The Labour government ended with the Great Recession which in turn produced a huge increase in the government’s budget deficit. With the help of mediamacro, that has become ‘a mess’ that Labour are responsible for and which the Conservatives have had to clean up.

The beauty of this story is that it pins the blame for the weak recovery on the previous government, in a way that every individual can understand. Spend too much, and you will have a hard time paying back the debt. Those that read stuff about economics vaguely remember Gordon Brown taking small liberties with his fiscal rules, and that half truth is enough to create a myth of past profligacy.

These myths and misunderstandings are easily dispelled with a few facts. The two charts at the end of this post can do most of the work. So it is an inevitable part of the Conservatives’ campaign to ensure that facts are kept out of it as much as possible. Sound bites are great. Endless discussion of so called ‘gaffes’ - perfect. Anything to keep the electorate away from useful information.

Ruling out a leadership debate with Miliband is part of this pattern. As Peter Oborne has observed, Miliband’s record as an opposition leader has included some impressive accomplishments. But his opinion poll ratings are low, because most people just see unglamorous pictures of him and note that he does not have that Blair appeal. That could be changed if they saw him in a one on one debate with Cameron, so there was never any chance that the Conservatives would let this happen. The debates last time had huge audiences, so no one can dispute that democracy has been dealt a huge blow as a result of what the FT rightly calls Cameron’s cowardice.

Some people say I go on about the media too much, but in an election like this you can see how critical a role they will play. If they see their job as getting as much information as possible to the electorate, the Conservatives will be in big trouble. If instead they go with stories based on fake indignation over who said what when (like weaponising the NHS) the Conservatives will be safe. If they do nothing but give politicians sound bites that is also fine for the Conservatives. As Janan Ganesh – always a useful barometer of the government's thinking - observed, the Conservatives can bore their way to victory.

Cameron’s refusal to debate one on one with Miliband is a key test for the media. Will they ‘play safe’ and let one side's spin doctors dictate what people are allowed to see? That is what Cameron is counting on. Or will they decide that it is their duty to allow the British people to see some sort of intensive debate involving their potential future Prime Minister, and that the ruling party is not able to decide how much democracy people are allowed?

Tuition fees: a last throw as the election slips away

Mainly for those interested in the forthcoming UK general election

I do not remember much from my university days, but I remember one meeting where the subject was student finance. This was a time of student grants rather than loans, and the proposal being debated was to replace grants with some kind of loan or tax. Speaker after speaker went through how student grants amounted to a payment from those not attending university to those that did, while those that did benefited from the return on the ‘human capital’ a university education gave them. The logic on equity grounds for switching to loans seemed compelling. Then someone stood up, and talked of his background from a mining family in Wales, how he was the first of his family ever to go to university, and how this would never have happened if they had not had access to a grant. Those arguing for loans fell silent, and their proposal was lost.

Can the same logic be applied to Ed Miliband’s proposal to reduce the maximum tuition fee from £9,000 to £6,000? It is a very different starting point, as most UK students now pay this fee from a loan rather than a grant, but the distributional consequences are essentially the same. In the UK graduates only have to start repaying their loans once their income exceeds a threshold, and many will not pay some or all of it back as a result. Reducing the loan therefore mainly benefits those students towards the top of the income distribution. Labour’s proposal has mitigated that effect slightly by increasing the interest rate that high earners pay, but the IFS say that “mid-to-high-income graduates are the primary beneficiaries of this reform, with the very highest earners benefiting the most, despite the rise in interest rates that they would face.” The fact that the policy is being funded by cuts in pension relief which will hit similar groups is not really relevant, because that money could have been used for something else.

So why are Labour proposing to increase inequality in this way? Is it because they hope that lower fees will encourage those from poor backgrounds to go to university? One of the remarkable features of the Coalition’s decision to increase fees is that it does not seem to have reduced the numbers becoming full time students coming from such backgrounds, although the numbers are still very low. Of course we cannot be certain what might have happened to these numbers without the fee increase. It is also important to note that applications for part-time enrolment have fallen back as a result of higher fees.

However I doubt very much if encouraging the poor to go to university is what lies behind this policy announcement. Labour are slowly but steadily losing this election. Every time I look at the predictions for the number of seats, it seems as if Labour has dropped one or two at the expense of the Conservatives. Putting luck to one side, there seem no obvious events between now and May that will change this trend, while George Osborne has a budget that will be sure to include plenty of pre-election bribes to carefully selected groups, to add to the many already announced.

Perhaps Labour’s only hope is that they can galvanise those who traditionally do not vote: the young. The old are much more likely to vote than the young. In 2010 just over 50% of the 18-24 age group voted, but nearly 75% of those 65 or over voted. And the young vote left.

The chart below shows the ‘age gap’ by party, where the age gap is the percentage of the 18-24 age group who voted for a party, less the same percentage for the 65+ age group. The data for ‘now’ is taken from this Populus poll (Table 3). The age gap for the Conservatives has been steadily increasing over time. The LibDems benefited hugely from young voters in 2005 and 2010, but perhaps partly as a result of their change in policy on tuition fees that gap has completely disappeared. The youth vote has gone back to Labour as never before, but it is vulnerable on two counts. First there are the Greens. In this Populus poll 16% of the 18-24 group said they would vote Green (compared to just 2% of the 65+ group), but in this YouGov poll they were on level pegging with Labour. This volatility suggests there is all to play for. (Only 5% of the 18-24 group intended to vote for UKIP, compared to 17% for the over 65s.) Second, there is the question of how much this group will vote. 

UK voting age gap between young and old. Source (actual elections): IPSOS Mori

Labour therefore need to galvanise the youth vote, and to do this it needs a cause. The collapse in the LibDem vote among the young suggests tuition fees could be a potent force, whatever the actual distributional consequences of the policy are. This against a background where young people are finding it more and more difficult to buy a house, and the distribution of income and wealth is moving in favour of the old. This is an election more than ever before about a clash of interests between the old and the young. The Conservatives have already given their fair quota of bribes to the old, so it really was a no brainer that Labour would do the same to the group that could just save this election for them. 

Inequality, business leaders and more delusions on the left

Those who think current levels of inequality are not a problem can skip this one

The Blair governments did a lot to fight poverty, but were famously relaxed about inequality, or more specifically the earnings of the 1%. For many in those governments this reflected their own views, but it also reflected a political calculation. The calculation went as follows. To win, Labour needed to be seen as competent to run the economy. The media all too often look to business leaders to answer that question. So Labour needed to be business friendly. Now being business friendly should mean creating an environment that business can thrive in. However to get the approval of business leaders you also need to create an environment where business leaders can thrive personally, and they are very much part of the 1%. QED.

Labour today is not following this strategy. First, Miliband has said quite clearly that he sees tackling inequality as a major issue: "Now I have heard some people say they don’t know what we stand for. So let me take the opportunity today to spell it out in the simplest of terms. It is what I stood for when I won the leadership of this party. And it is what I stand for today. This country is too unequal. And we need to change it." Second, it has two policies that directly impinge on the 1%: the mansion tax and restoring the 50p income tax band.

There are some on the left who dismiss these measures as marginal. One of the comments on my earlier post said that “When it comes to the broad trend of ever greater inequality there really is no meaningful difference between the main parties.” This seems to me a colossal tactical error. To see why, you only have to note what has happened over the last week in the UK. Various business leaders have proclaimed that a Labour government would be a disaster. Stefano Pessina, who among other things runs the Boots chain, declined to elaborate on why exactly Labour would be a disaster. In contrast, he was quite clear that the UK leaving the EU would be a big mistake, which of course is much more likely to happen under a Conservative government!

There is an obvious inference. Labour would not so much be bad for business, but bad for business leaders personally. [1] They, unlike some on the left, recognise that Miliband is not Blair, and that there has been a key shift in the direction of Labour policy. So they will do what they can to stop Labour winning. Labour in turn has responded by attacking the tax avoidance practiced by many of these companies. This is the beginnings of a major battle.

There are at least two important implications. First, the non-partisan media need to understand what is going on. Getting business leaders to comment on the relative merits of the two main parties programmes is no longer a neutral decision - it is giving additional airtime to one side. Second, everyone who cares about inequality needs to realise the importance of this election. Inequality is a key election issue, and there is a very meaningful difference between the two main sides. Certain business leaders clearly understand that.

[1] Another possibility is that they think Labour would be much tougher on business tax avoidance than the Conservatives, but saying this in public would be embarrassing.  

Do we get the leaders our media deserves?

One of the many things I enjoyed about the Resolution Foundation meeting I talked about here was meeting for the first time people who I have long enjoyed reading, including fellow bloggers Frances Coppola and Steven Toft (Flip Chart Rick), recent blogger Giles Wilkes and Guardian journalist Polly Toynbee. On the day of the meeting Polly Toynbee wrote a nice column on the attempts by the right wing press to portray Labour as elitist and/or too intellectual and therefore ‘out of touch’ with the concerns of ordinary people. That column has a sentence that is so apt I’ll save it for the end of this post.

Readers from the US will be all too familiar with this tactic, from the Gore-Bush campaign for example. A closely related ploy is to argue that politicians who are not poor who advocate policies to help the poor are somehow hypocrites (which of course tells us a great deal about the ethics of those making that accusation). Of course attempts to use background, income or character as evidence against a politician are not unique to the right. Arguments that because Cameron and much of his circle went to Eton and therefore cannot represent ordinary people are no better.

Indeed, as this article by New Statesman editor Jason Cowley illustrates all too well, the left can easily tar their own leaders with a similar brush. Here is a quote:

“Miliband is very much an old-style Hampstead socialist. He doesn’t really understand the lower middle class or material aspiration. He doesn’t understand Essex Man or Woman. Politics for him must seem at times like an extended PPE seminar: elevated talk about political economy and the good society.”

No evidence is presented that Miliband does not “really understand the lower middle class or material aspiration”. That can only make sense if it follows from him being “an old-style Hampstead socialist”. There is no real difference between this and the articles in the right wing press about which Polly Toynbee rightly complains.

Of course left and right are not symmetrical in one important sense: power. The right control the media spotlight, and it is focused on Miliband, such that every misfortune - self inflicted (HT Tim Harford) or otherwise - becomes a reflection on Miliband’s character. So the SNP’s popularity, and the likely loss of Labour seats there, is all down to Labour's Westminster elitism, and nothing to do with a resurgence of Scottish nationalism which in turn is a reaction against the current UK government. Voter defections from Labour to UKIP are put down to an alleged Hampstead/Islington intellectual tone: never mind that we have a governing party actually falling apart over an issue crucial to the future of the country. A tweet of a house festooned with English flags is further evidence of an alleged contempt for the working class, while employing someone at the centre of government who was subsequently jailed for being part of routine phone hacking is apparently not a reflection of anything. In this situation, is it any wonder Miliband has bad personal poll ratings. [1] It has ever been thus. Neil Kinnock, an eloquent and passionate speaker with eminent working class credentials became at the hands of the media a “Welsh windbag” who did not have the gravitas of a prime minister. The only recent Labour leader not savaged by the press was Tony Blair, but only because Blair deliberately cultivated Murdoch, and had policies that were (designed to be?) not threatening to the establishment of which the press are a part, and who was famously relaxed about inequality and the growing wealth of the 1%. But I digress.

In an FT article about a week ago, Bill Emmott - former Economist editor - raised important issues about the role of the media in portraying political leaders. It has a fantastic opening paragraph:

“Look carefully at the photos from Thursday’s by-election victory of the UK Independence party in Rochester, or those of last month’s Ukip victory in Clacton. Can you see that disembodied smile? No, this is not Lewis Carroll’s Cheshire Cat; it is a Milanese mog. That feline grin represents a dangerous trend in British politics, one that goes beyond our arguments about immigration, the EU or globalisation, important though those are. It is the smile of Silvio Berlusconi.” 

According to polls, our two most popular political leaders at the moment are Boris Johnson and Nigel Farage. Emmott argues that their popularity comes from the same source as with Berlusconi: they raise a smile, and no one looks too deeply at their mistakes, flip flops or even lies. What Emmott does not explore explicitly is why they are able to get away with things that would sink other politicians. With Berlusconi the answer appeared straightforward - he owned a large part of the media. But what Emmott is suggesting is that maybe ownership is not crucial: if the media are prepared to give a leader as easy ride because they are amusing and charming, we may end up with the same result.

You might think this could not happen here - the moment that either Johnson or Farage get close to power the attitude of the media would become more critical. That seems naive - how close do they need to get? The focus of some parts of the media on background and individual character seems to me part of the same trend, and it is not going to change before the election. We already have a media environment where something like a tweet of a house gets more media coverage than the impact of welfare reforms in driving many to rely on food banks to survive, or worse. It is an environment where on the day that Scotland is devolved substantial new powers, Channel 4 news chooses to lead on what an ex-cabinet minister might have said to a policeman in the heat of the moment. Those in the parts of the media that do not have to follow a political line, but who make decisions about what is newsworthy and what is not, need to reflect on what the impact of these decisions might be.

In truth what a political leader is seen drinking, the quality of their jokes, or even their actions in responding or not to the media, tell us virtually nothing about what they will do if they gain power, and in whose interest they will act. But we are not clueless. The sentence from Polly Toynbee’s article that I wanted to leave until last was this: “By their policies we know whose sides our politicians are on – whose interests they champion.”  

[1] When those who voted Labour in 2010 were asked by YouGov whether Miliband would be up to the job of Prime Minister, 54% said yes in early October, but only 34% said so in early November. Did that one month reveal some serious flaw in his abilities as a future Prime Minister, or did his poll ratings fall because the media were incessantly talking about his poor ratings! These ratings are a convenient (because they are endogenous) device to keep the spotlight focused on him. The same YouGov poll suggests voters would be no more likely to vote Labour if Yvette Cooper or Ed Balls were leader, so the idea that Miliband is a huge impediment holding Labour back seems fanciful.

More mediamacro

What was the most important point about Ed Miliband’s speech to the last Labour party conference before the election? The UK media had no doubt. It was that he forgot to mention the deficit. No matter that Ed Balls had spent much of his previous day’s speech laying out their policy on the deficit, which has been intelligently discussed by the IFS and others. Miliband had in his speech forgotten the paragraph where he says how important the deficit is, and he was going to be taken to the cleaners for it.

I’m not just talking about the right wing press here. Channel 4 news likes to think of itself as being a little more highbrow than other news programmes, and I’ve no doubt that conservatives would describe it as left wing. So here is a link to John Snow’s interview with Miliband yesterday (skip intro and question on middle east to about 3 minutes in). He asks Miliband what the greatest issue facing the next British government is. Miliband responds that it is getting the country to work for most working people rather than be stuck with a more unequal country. Interesting answer, but inequality is not an issue mediamacro recognises. It was a trick question. Now that is twice that you have forgotten to mention the deficit, responds Snow. How could you not mention paying off this appalling deficit? Snow continues. Surely it is the most important issue of all. It is the essence of our economic crisis. And so on.

Now my point here is not about bias, and how this interview could have been scripted by George Osborne. It is about the banality of it all. If you are going to talk about the deficit, ask some real questions about the differences between Labour and Conservative plans. Ask why Labour thinks that debt should not come down more rapidly. There are lots of meaningful questions you could ask. But trying to make a great issue out of a forgotten part of a speech is just silly. It is gotcha journalism for those who get their economics from listening to political commentators. The implication that the deficit is all important, and linking it in a causal way to the recession, is mediamacro at its worst.

What is the really important thing that has happened in the UK economy over the last six years? It is not that the deficit went up and then has started coming down. It is that UK productivity has stalled, and as a result real wages are lower than when the recession began. That is what really matters. That is not a ‘political judgement’; it is what most economists and most ‘ordinary people’ will tell you. But not in mediamacro land. So when Cameron gives his speech to the Conservative party conference, and does not mention this terrible productivity performance, I doubt if one single journalist will even bother to ask why that was not in his speech. This is journalism at its most pathetic.

Labour's austerity problem

One of the political/economic soap operas over the last year has been the UK Labour Party’s agonising over the perception of its economic competence. The story always starts with current polling data: either Miliband’s personal ratings or Labour’s rating for economic competence. It then often seeks to find the answer to these problems in the past: either the last years of the Labour government, or the first year of opposition when Labour was preoccupied with electing a new leader.

The latest example can be found in an article today by the Guardian’s chief political correspondent, Nicholas Watt. Here Gordon Brown’s call to invest rather than cut in 2009 is blamed, and this is contrasted with an alternative that would acknowledge the need to cut, but focus on the idea that cuts would have been fairer under Labour.

I know nothing about internal Labour politics, but it seems to me that what is going on here is confusion over what the right policy should have been, rather than how to frame it. I also suspect that what really puts the electorate off is when a political party appears confused or divided about a key aspect of policy. The taboo in Labour circles over mentioning the word borrowing is a case in point, which I made fun of before Ed Miliband fell into the same trap.

So what should Labour’s line have been? As it does not have a hidden agenda to reduce the size of the state, its line should have been based on sensible macroeconomics. As my paper with Jonathan Portes suggests, the policy should have been to avoid cuts and to invest while interest rates were stuck at ‘zero’. In other words, the recovery takes priority, and the deficit should be dealt with after the recovery has been assured. Sometimes translating good macroeconomics into simple messages can be difficult, but not in this case.