Reaction to “There is only one alternative to Prime Minister Boris Johnson”

I anticipated that my last post would not be popular in many circles. I want to respond to some of the common themes from the responses in this post, but there was one reaction I was not expecting. First some background. Since the beginning of the year I have had an arrangement with the online edition of the New Statesman (NS) that my Tuesday post should be simultaneously published on my blog and in the NS. The arrangement was working well.

My last post was published by the New Statesman as usual. And then sometime later it was unpublished. The line my post took was not one the NS wanted to carry. I do not know the details of what happened but I can guess. The post was hardly extolling the virtues of Corbyn as Labour leader, but it suggested any attempt to get rid of him was both futile and would increase the chances of Johnson winning the next election. I don’t think that message was welcome.

Of course any publication has a right to chose what it publishes, and I have no quarrel with that. What was unfortunate was the implicit confirmation of the main concern in the post, which was that the non-partisan and even left leaning media with the support of the Labour centre really believes they can depose Corbyn using the issue of antisemitism. I gave in the post the reasons why I think Corbyn is unlikely to depart as a result of this pressure and any challenge is unlikely to succeed, and none of the responses to my post questioned this logic.

Among comments on twitter, the most offensive was to suggest my post was itself a product of antisemitism, along the lines that I didn’t care about Jews. By implication anyone voting Labour in the future is also antisemetic. The most moderate remark I can make about this kind of comment is that it gives the drive to remove antisemitism a bad name. The implication that you are antisemitic if you support a party accused of badly handling internal cases of antisemitism is an extension of a far more frequent argument: the idea that it was not virtuous to vote for Labour.

A common response was that it was morally wrong to support a racist party or party leadership. Of course Labour is not a racist party and I doubt very much that its leadership are antisemitic, but lets put that to one side until later. The problem with this argument is that you can make lots of other similar arguments. Is it morally right for someone to support a party that was part of a government that caused untold misery through austerity, and where neither of the possible future leaders have apologised for supporting austerity? Is it morally right to support politicians that voted for the hostile environment policy?

Voting should be about weighing the pros and cons of each party’s stance on different issues, and in a FPTP system it means also thinking about whether voting for some parties in your constituency is a wasted vote. It is very hard to rationalise voting or not voting on the basis of I couldn't possibly vote for a party that showed any sign of racism. Would you really not vote if a party that failed to deal with antisemitism adequately even if it meant that another party whose leader actually uses racist speech and has voted for racist policies would stay in power? This is not a trolley problem: it is part of being a good citizen to make this choice.

Another comment I received is that there are no degrees of racism. I think this is nonsense. Once again it is useful to compare the two main parties. Both leaders are accused of being racist. With Corbyn the evidence amounts to things like not recognising antisemitic tropes in a painting, not mentioning someones antisemitism in an introduction to a book, or being associated with antisemitic people as part of his support for statehood for Palestine. With Johnson we have someone who has compared Muslim women in a certain dress to letterboxes (and those are not his only racist slurs), and who has supported a racist policy: a hostile environment that saw the deportation of members of the Windrush generation. Are these really equivalent?

Or let us look at the two parties. The Labour party has been accused at operating an inefficient disciplinary process for antisemitism or worse, of leadership interference in this process. The Conservative party routinely lets those exposed of making racist comments back in after a few months of ‘re-education’, and has just voted for a leader who makes racist remarks because most members show racist tendencies (to put it too mildly). Are these really equivalent?

Going beyond the UK, is telling non-white Congresswomen born in America to go back home to the crime infested countries they came from the same as anything Corbyn has done? The thing about the antisemitism in the Labour party is it involves no policy against Jewish people and it involves no language by members of the Labour leadership team against Jewish people. Some Labour party members are antisemitic, but there is no evidence that this number is unusually high compared to the population at large. When people try to equate antisemitism within the Labour party to racism in the Tory party they ignore these points.

The most depressing aspect in comments on my post was the number of people who just talked about antisemitism within Labour as if it was the same as racism within the Conservative party. This lacks the key ingredient that is also lacking in the media’s response, and that is a sense of perspective. One of the cheap remarks made in comments was that I was equating antisemitism within Labour to Clinton's email server. This was obvious nonsense, as I was clearly using the Clinton case to show how the media as a whole can lack a sense of perspective, and when it does that it can have terrible consequences.

Perhaps the most common response in comments was that a choice between Labour and the Tories could be avoided by voting Liberal Democratic. Despite the arguments in my post, I was told that the era of two party politics was over. Let me make one final point. The disastrous events that we have recently seen in the UK started in 2010, with in particular an austerity government during the worst recession since WWII. For more than half of the 9 years since 2010 the Liberal Democrats were in power, and the two candidates for leader were both ministers in the Coalition government. Their actions and voting records speak for themselves. As I have said in the past, I think the UK needs radical change to ensure nothing like the disaster of the last 9 years happens again. Only Labour at present provides that. Simply returning things to how they were before 2010 allows what happened from 2010 to happen all over again.

Why populism should be no surprise

As well as watching and listening to my SPERI/New Statesman prize lecture, you can now read it in the form of a SPERI paper (slightly more coherent and comprehensive that the lecture I gave). I have also written an article that is now up at the New Statesman, which attacks the same issue a slightly different way. This post is aimed at encouraging you to read that article.

It suggests that we should not find either the Brexit vote or Trump’s election a surprise. Once we recognise that a large proportion of (most?) voters are not that interested and therefore not that informed about politics, and then ask what information these voters actually received from the media, then both Brexit and Trump were quite rational choices.

If that statement sounds shocking, I think it is because those of us who are interested in politics and are well informed find it difficult to imagine what it would be like not being so. We ask how can Trump be more trusted than Clinton, because we have read and indeed listened to all his lies, but if the only source of information you look at is the nightly news you will have mainly heard about Clinton’s emails. We ask how can half of those who voted in the EU referendum opt for evident self-harm, because we have read that economists think it will be self harm by a margin of 22 to 1. But if all you have seen is he said/she said reporting in the media, it just looks like economists are divided on the issue.

I’m not arguing that the impact of globalisation is not important. It helps people lose trust in mainstream politicians. Instead I’m asking why legitimate grievances should lead people to start believing in snake-oil salesmen. People will go for populist policies, if the knowledge that these policies will not work is denied them, or portrayed as just one more opinion rather than knowledge.

The power of the media to distort truth should never be underestimated. In 2015 voters elected a Conservative government because they thought they were more competent at running the economy. They blamed Labour for causing austerity. Pretty well all the evidence suggested the opposite was true. But all most people heard was the Conservative narrative about ‘clearing up the mess’. You should blame Labour for letting that happen, but if you do you also have to concede that the information people receive is critical in the decisions they make. The power of a simple but false narrative is immense: remember most workers had experienced an unprecedented fall their real earnings over this period, yet they still chose to blame Labour for this rather than the global financial crisis and austerity.

After everything that has happened over the last two years, these points should by now be self-evident, and to some they are. But a great deal of analysis just ignores the role of the media. I surveyed a great deal of work on the Brexit vote, trying to relate it to all kinds of variables, but I saw no analysis that looked at the media people were exposed to. In the UK there is not much we can do about the partisan press in the short term, but we can do something about the broadcast media. How many more Brexits and Trumps do we need before we do?

Some concrete proposals for economists and the media

You can now listen to my SPERI/New Statesman prize lecture in full here, or even watch it all here. The talk looks at recent UK history, involving austerity and Brexit, to argue that there are serious problems in how the broadcast media treats economics. [1] The two main problems I talk about are exclusion and balance. Exclusion, where academic economists are simply ignored because they are not part of the Westminster bubble, can lead journalists to assume statements made by politicians are true even though an economist knows they are false or at least highly questionable. I give a number of examples in the talk, including after the 2013/14 floods where Cameron said there had been no cuts in flood prevention when there clearly had been cuts. Balance is where a view that represents a consensus among academic economists is treated as just another opinion, to be balanced by the opposite view. This simply devalues knowledge. The costs of Brexit is a clear example.

Solutions to these problems must start with academic economists themselves. It is asking too much to expect journalists to know whether a view put forward by an economist represents a consensus among academics or an idiosyncratic view. An obvious way to remedy this is through regular, topical polls of as many academic economists as possible. (I prefer this approach to sampling selected academic ‘leaders’ for reasons I may discuss in a later post.) The example I have in mind was the poll of Royal Economic Society members undertaken by the Guardian during the Brexit campaign. What these establish is whether a consensus exists or not on key issues. They are much better at doing this than letters to newspapers.

The reason why this is far better than getting more academics on programmes like Newsnight (not that I have any problem with that) is that it can then prevent the problem of balance. I use in the talk the example of climate change to show how the broadcast media could treat a consensus view among economists (90% or more agreement) as knowledge, not as simply an opinion to be balanced against another. Getting the broadcasters to do that will not be easy, but academics first need to remove the objection that journalists cannot know what economic knowledge is. Our target audience should not be Newsnight but the 6pm or 10pm news programmes, which may be the only non-partisan news that readers of the right wing press ever see. We need political correspondents to routinely say what the economic consensus is, and use it to interrogate politicians when they deviate from it.

Economists could learn a great deal from the physical and medical sciences on how to use collective pressure to ensure media policy is changed. Climate change is the obvious example where the media began to treat knowledge as just contested opinion (because that is the media’s preferred format), but it was changed as a result of pressure from the scientific community, working through existing institutions that represent scientists. This can be effective not just with the big ticket issues like Brexit, but also where an individual piece of research is misrepresented in the media.

Only once this pressure is brought to bear on the media will we see the media begin to improve its own capability in the area of economics. As I note at the end of my talk, the BBC trust recently commissioned a report on the use of statistics, and most of its recommendations could equally well be applied to economics. To achieve that requires pressure and help from economists as a collective.

The broadcast media should be a defense against populism, not the means by which populism takes hold. If you treat knowledge as just an opinion, of course people will vote for whatever sounds good to their ears. Let’s cut government spending: we should all tighten our belts. Let’s keep immigrants out so there will be more jobs for natives and better access to the NHS. As I explained in my lecture, this was not just a problem involving the EU referendum: because the broadcast media accepted the Conservative narrative on austerity by excluding the views of the majority of academic macroeconomists they helped them win an election. [2]

The referendum story is far from over: key decisions on issues like the Single Market have still to be made. We cannot expect people to make sensible decisions about these issues if expertise on these issues (not just economic, but legal, constitutional etc) is kept locked away in specialist programmes they will never see, or ignored altogether. We must stop allowing politicians to dictate what is knowledge and what is just an opinion.

[1] The lecture and this post are about the UK. Although the general points I make about expertise are universal, my specific recommendations only apply to a broadcast media that is not under government control and is regulated to prevent partisan broadcasting. Although my knowledge of the US is far less, it seems to me the problems there are deeper still, particularly now we have a POTUS and Congress who show no respect for truth.

[2] Someone asked me recently what had gone wrong with the media, but as I say in my talk this problem has been there for decades (see this post on Jay/Birt in the 1970s). What has happened is that, because of underlying social and economic trends, and simply because politicians have learnt how to play the media, media rules that kind of worked when politicians played by the rules and respected truth fall apart when they do not.

The big story behind Port Talbot

In today’s print edition of the New Statesman I have a brief review of Yanis Varoufakis’s new book. (The review also looks at Piketty’s newly published collection and translation of newspaper articles. I’ll talk more about each when the review appears online, but for now you can read a similar (in parts) double review by Paul Mason.) The organising macroeconomic theme in his book is the need to find systems capable of successfully dealing with current account surpluses. In my review I say I’m not sure whether this framework is really capable of holding up everything that the author wants it to support, but there is no doubt of the importance of the issue. For example, it seems to me this is the framework, albeit at a more industry specific level, with which to see the current crisis over the threatened closure of the UK’s steel plant at Port Talbot.

The surplus in question here is the surplus Chinese capacity to produce steel. Ambrose Evans-Pritchard in the Telegraph, who has a similar perspective, reports an OECD estimate that China's excess capacity is over twice the size of total European Steel production. Because China is able to subsidise production in various ways, this means this steel can beat UK production on price. The US department of commerce is reported as thinking that the subsidy on some types of steel justifies a tariff of 236%!

If this is correct, then this story is not about neoliberalism or the free market, but a story of a rigged market. To put it another way, it is a market where one set of producers have the ability to eliminate their competitors by flooding the market at a loss because they have the ‘deep pockets’ of a state behind them.

The EU have been trying to raise tariffs against Chinese steel producers for three years, but have been blocked by a coalition of countries led by the UK. The UK Business minister Sajid Javid has been quite explicit about this: he prefers cheap steel because it helps other parts of UK industry. It may also have something to do with wanting to curry favour with China because of other matters (which was the point of John McDonnell’s Little Red Book stunt, if only he hadn’t started reading from it!). This is not Javid upholding the principles of a free market, but instead allowing a large state to rig a market. The irony in this case is that the state in question is not the one he works for. 

Postscript (11/4/16) For more detail, see this from Ben Chu        

Bernanke on austerity and the fiscal charter

When I and others say that the intellectual debate on the wisdom of embarking on fiscal austerity as we recovered from the Great Depression is over, some think I am indulging in exaggerated bluster. I'm not. Central bankers are notorious for their conservatism and their aversion to budget deficits, so you would expect the man who until recently ran probably the most important central bank in the world to be at best equivocal on this subject.

Here is an extract from an interview with Ben Bernanke by George Eaton in the New Statesman:

Though a depression was averted in 2008, the recovery in the US and the UK has been slow. Bernanke partly blames the imposition of fiscal austerity (spending cuts and tax rises), which limited the effectiveness of monetary stimulus. “All the major industrial countries – US, UK, eurozone – ran too quickly to budget-cutting, given the severity of the recession and the level of unemployment.”

Partly thanks to Bernanke’s leadership (and knowledge), the Great Recession was not as bad as the Great Depression of the 1930s. Monetary policy reacted much more quickly, and financial institutions were (nearly all) bailed out. In 2009 we also enacted fiscal stimulus, but in 2010 we reverted to the policies of the early 1930s with fiscal austerity. That mistake was partly the result of panic following events in the Eurozone (see the IMF analysis discussed here), but it also reflected political opportunism on the right.

In the UK that opportunism continues with the new fiscal charter. Here is more from the Bernanke interview:

He criticises George Osborne’s new budget surplus law, which prohibits government borrowing when the economy is growing by more than 1 per cent. “I would be very cautious about putting in rules that would prevent a timely fiscal response to a slowing economy, particularly in a world of very low interest rates.” He adds that “a period of excess labour supply and low interest rates is not only a good time to invest, from the perspective of the recovery, it also makes sense from a long-term productivity perspective”.

Bernanke is again reflecting the consensus among economists: I have not found a single one who supports this charter. Alas winning the intellectual argument does not mean immediately winning the political argument. But even though I am scathing about what I call mediamacro, surely our political commentariat must notice at some stage that the rationale George Osborne gives for cutting tax credits and yet more departmental spending is built on sand.

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.