How China beat the Global Financial Crisis

If you were hoping for something on yesterday’s interest rate rise, I can only direct you to the leader in the FT today which says: “There is no compelling reason to increase the cost of borrowing in the UK, but there is definitely good cause to wait.” On why nine intelligent people could all make the same mistake, you have to question their mandate, and move to something that focuses on having the right environment for growth, as I do here.

I recently finished reading the latest book by Adam Tooze (of which much more in a subsequent post), and it reminded me of a story that was not told enough in the early days of austerity. Everyone knows about how quickly the Chinese economy has grown over the last few decades, and how strong exports have been an important part of that. In dollar terms the value of Chinese exports more than quadrupled between 2000 and 2007. By 2007 Chinese exports represented 35% of GDP.

An important characteristic of the Global Financial Crisis (GFC) was how quickly world trade collapsed. If we compare the beginnings of Great Recession after the GFC with the start of the Great Depression, while world industrial production moved in a similar fashion, world trade collapsed by much more in the Great Recession than the Great Depression. Here is a chart from Barry Eichengreen and Kevin O'Rourke’s ‘A Tale of Two Depressions Redux’ VoxEU article.

Trade collapsed in the winter of 2008 around the globe, without exception. This was very bad news for China. Whereas exports had been around 35% of GDP in 2007, they fell to around 25% of GDP in 2009. That is a big hole to fill, and if it wasn’t filled, there was a chance that Chinese growth would collapse completely with damaging knock on (multiplier) effects to the rest of the economy. Above all else, China feared the political consequences of the unrest widespread unemployment would bring.

As Tooze recounts, China’s reaction was swift and bold. In November 2008 it announced a stimulus package of public spending worth 12.5% of GDP. (The Obama stimulus package, by comparison, was around 5% of GDP.) “Over the days that followed [the announcement], across China, provincial party meetings were hurriedly convened …” Within a year 50% of the stimulus projects were underway. Some of this stimulus paid for what Tooze describes as “perhaps the most spectacular infrastructure project of the last generation anywhere in the world”, the Chinese high speed rail network. Monetary policy was also relaxed.

In 2008 as a whole, before the stimulus and hardly touched by the collapse in world trade, Chinese GDP grew by 9.6%. In 2009, when GDP in the advanced countries fell by 3.4%, Chinese growth was 9.1%. The stimulus package had filled the whole left by collapsing Chinese exports. (Source)

Basic macroeconomic theory says that a negative shock to GDP, caused for example by falling exports, can be completely offset by a monetary and fiscal stimulus. China is a good example of that idea in action. What about all the naysayers who predicted financial disaster if this was done? Well there was a mini-crisis in China half a dozen years later, but it is hard to connect it back to stimulus spending and it had little impact on Chinese growth. What about the huge burden on future generations that such stimulus spending would create? Thanks to that programme, China now has a high speed rail network and is a global leader in railway construction.

Now of course people will say that China is not like an advanced democracy, and it was not part of the global banking network that caused the GFC. But the US and UK stimulus programmes could and should have been larger. Those close to the action tell me that the UK was running out of things to spend more money on in 2008/9, but I cannot help think this amounts to a failure of imagination: it is not as if UK infrastructure is great, there are no flood defence projects left to do etc. Above all else China’s example tells you what a huge mistake 2010 austerity was.

How BBC balance and bad think tanks discourage evidence based policy

The Knowledge Transmission Mechanism (KTM) is how knowledge produced by academics and other researchers is translated into public policy. Evidence based policy is the result of this mechanism working. The media is, in theory, an important conduit for the KTM: media publicises research, policy maker sees/hears/reads media and gets their civil servants to investigate research. Or media communicates policy consensus on issue, and politician is questioned by the media on why they are not following this consensus.

The rigid application of political balance in the broadcast media is in danger of negating the KTM, and therefore evidence based policy. The moment an issue (call it issue X) is deemed ‘political’ by the media, balance dictates that any view expressed on issue X is an opinion rather than knowledge. As a result, when the media want to talk to non-politicians (‘experts’) about issue X, the imperative of balance remains.

Now suppose that in the knowledge world there is in fact a consensus on issue X. That would be a problem for balance broadcasting, because it would be difficult to get an expert to argue against the consensus. The BBC overcame this problem valiantly during Brexit, using Patrick Minford (who is not known as a trade economist) time and again to balance the IMF, the OECD, more than 90% of academic opinion etc. But another way of solving this problem is to use certain think tanks.

There are two types of think tank. The good kind can be a vital part of the KTM. There is often a genuine need for think tanks to help translate academic research into policy. Sometimes these think tanks will be very like universities (like the IFS for example). Other times they will be think tanks that have a broad left or right orientation. These think tanks are an important part of the KTM, because they can establish what the academic consensus is, translate academic ideas into practical policy, and match policy problems to evidence based solutions. The IPPR is an obvious example of this type of think tank. They are part of evidence based policy making.

The bad kind are rather different. These produce ‘research’ that conforms to a particular line or ideology, rather than conforming to evidence or existing academic knowledge. Sometimes these think tanks can even become policy entrepreneurs, selling policies to politicians. This is often called policy based evidence making. It would be nice to be able to distinguish between good and bad think tanks in an easy way. The good type seeks to foster the KTM, and ensure policy is evidence based, and the bad type seek to negate the KTM by producing evidence or policies that fit preconceived ideas or the policymaker’s ideology.

I would argue that transparency about funding sources provides a strong indicator of which type a think tank is. Why is this? One obvious reason why you would not want, say, company Y listed as a funder is if you subsequently produced a report that was directly in the interests of Y. A clear example is the IEA’s arguments against plain packaging of cigarettes, and its funding from tobacco companies. To be clear I am not suggesting that the IEA (who have been in the news recently) is insincere about the arguments it makes, but if funding was transparent it would be very easy to suggest their arguments on plain packaging were contrived by just pointing out its funding sources. So that is an obvious reason to keep funding secret. In contrast, an IFS type think tank has no reason to hide its funders, because it is not in the business of producing policies that meet the specific wishes of these funders. [1]

It has been suggested to me that IEA type think tanks need to keep their funding secret because some personal donations would get individuals into trouble with their employers if they became public. It would be interesting to know from some IFS type think tanks how much funding they lose for this reason. Perhaps the answer is not much, and that in any case the principle of transparency is more important than a few extra donations.

Another good indicator of a bad think tank is their relationship to academia. I have told the story about how the IEA under Philip Booth tried to cultivate the idea that the 364 academics who famously objected to the Thatcher government's 1981 budget were embarrassingly wrong, when in fact they were proved right. The IEA’s media and political connections are sufficiently strong that even good BBC economics journalists were taken in by their line. To the extent that it emboldened Osborne to ignore the majority of academic economists over austerity it was a dangerous myth to cultivate.

In the case of global warming the BBC has been forced (I don’t think that is an inappropriate word, as it often breaches the guidance) to treat man made climate change as a fact rather than an opinion that always has to be balanced. That is not going to happen for some time over any economic issue, however strong the academic consensus (like Brexit). This is partly because the pressure from academia is much less, and partly there is still a prejudice against social science (as if evidence based policy making cannot occur for economic or social policy!). But the BBC does need to explain their attitude to the use of think tanks. Why do they use think tanks that do not declare their funding sources, and when they do why is this information not passed on to its audience?

[1] To understand why arguments like the IFS gets money from the government or the EU and therefore it is biased do not work, see here.

Should Eurozone central bankers keep quiet about fiscal policy?

The Governor of the Irish Central Bank, Philip Lane, has called for higher taxes on savings and investment (property taxes). Frances Coppola, in a very clearly argued and well informed article, says this “attempt to dictate to the Government is a serious threat to Irish democracy.” Is it?

The conventional view is that there is an implicit quid pro quo between independent central banks (ICBs) and governments. Governments do not interfere with monetary policy and in exchange central banks do not suggest to governments what fiscal policy, or any other non-monetary policy, should be. It is important to note that this implicit quid pro quo has never seemed to extend to central bankers in the Eurozone, who have frequently pontificated on matters outside monetary policy, so in that context Lane’s comments are not out of the ordinary. But that does not make it right or wrong.

I have argued in the past that the situation where interest rates are at their lower bound requires ICBs to tell governments what to do, or at least say they can no longer do an effective job unless the government undertakes fiscal expansion. In that context I rather like the suggestion in a paper by Ed Balls and colleagues [1] that at the ‘Zero Lower Bound’ (ZLB) central banks should be mandated to write every three months to the government suggesting how much stimulus they think is required for the economy to get of the ZLB.

The situation for central banks in Eurozone countries is similar in the sense that cannot change interest rates (which are set by the ECB). They do, however, as Frances points out,  have responsibility for the health of the financial system in their own economies which requires macroeconomic expertise. So it seems reasonable to apply the quid pro quo to financial supervision by an ICB in a Eurozone country in much the same way it is applied to a ICB that is not in a currency union or fixed exchange rate regime.

But is the quid pro quo sensible in the first place? There is a real concern that an independent central bank might be intimidated by government politicians telling them what to do. That is understandable, as part of the whole rationale for ICBs in the first place is that their independence from politicians gives them additional credibility that they are not acting for political reasons.

The argument for a quid pro quo is that independent central banks should not abuse their authority to interfere with political decisions that have nothing to do with monetary or financial (macroprudential) policy. Let me put a counterargument that I sketched out in a different (UK) context here. While it is obvious no central banker should give advice on who should win the next General Election, that is not what we are talking about here. We are talking about issues were the central bank has some expertise.

Given that, it would be strange indeed if the central bank was prohibited from telling the government what its expertise suggested. You could see the outcry if the ICB guessed a recession was on its way, but kept that knowledge to itself and it subsequently turned out it was right. So in this case Lane would undoubtedly tell the government his views. What we are therefore talking about is secrecy. Is it best that this expertise is kept from the public so as not to embarass politicians when they ignore it? That does not sound so clever. More generally, the lesson of the last ten years is not one where governments would have made good macropolicy if only they hadn't been intimidated by central banks, but rather than in Europe central banks gave bad advice.  

I wanted to talk about this particular case because it perfectly illustrates this dilemma. Back in the early 2000s, while he was still a lowly academic, Philip Lane was one of the few public voices suggesting that the Irish Republic needed to use fiscal policy to cool down its economic boom. He was ignored, and the result was a financial and economic crash. He therefore not only has expertise but a reputation for being right on the very issue he is giving his advice about. Is it really better for Irish democracy that this advice is kept secret from the public?

[1] Balls, E, Howat, J and A Stansbury (2016) 'Central Bank Independence Revisited: After the financial crisis, what should a model central bank look like?' M-RCBG Associate Working Paper No. 67

Brexit Endgame: second stage (which is unlikely to end with no deal)

We have entered the stage where everyone seems to be worrying about a No Deal Brexit. It was inevitable that the EU would use this as a threat - that is the whole point of the A50 process. Rather less obvious is that the UK would do so as well: we have master tactician David Davis - this is going to hurt us more than you so you should be very afraid - to thank for that. But to be fair, appearing irrationally stupid enough to contemplate No Deal is about the only weapon the government has in its negotiations with the EU. So both sides talk up its chances, which naturally leads everyone to panic. If you want an antidote, this post is for you, although please bear in mind that what follows is about probabilities not certainties, and you can never rule out the possibility of this government doing something really stupid.

Stage one, recounted here, was the break with the Brexiter hardliners to re-engage with the EU after six months backtracking from the December agreement. I call the second stage as what Theresa May has to do to get over the March 2019 hurdle that sees the UK exit from the EU. [1] Unfortunately, given parliament’s failure to provide any guide to the executive, our only clue about what this entails is to think about what is in Theresa May’s interests. (For May, unlike the Brexiters, there is no Brexit ideology we need to worry about, so its interests rather than ideas that matter.)

May’s primary interest is to get a deal. She does not want to go down in history (and down is where she would go if there was no deal) as the Prime Minister who led us to a disastrous No Deal Brexit. Her secondary interest is in perpetual Brexit, by which I mean negotiations that continue to keep Brexit in the news so that a majority of Conservative MPs dare not allow an election for leader and so she stays as PM. These interests tell us what May will try to do.

Perpetual Brexit requires leaving most of the negotiation of what the final relationship will be with the EU until the transition period. That might seem odd, given that this final relationship is what the Chequers document is all about, but see below. I think the EU will probably be broadly OK with that (although I do not think they should be [2]), as long as May agrees to the Irish backstop. As I argued here, May will do all she can to convince the EU that it is politically impossible for her to agree to this backstop. But the likely outcome is that she will fail, and her interests therefore require that she does accept the backstop to get a deal.

The reason why accepting a backstop is politically difficult for her is that any deal that includes it is likely to be opposed by both the DUP and Brexiters. If Labour vote against the final deal then she does not have the votes in parliament for the deal. A potential way around DUP opposition is to convince them that the UK during transition will negotiate a deal that makes the backstop redundant. (For some speculation on all this, see Peter Foster here.)That is a key reason for the Chequers document. But the DUP are as unlikely to accept her word as the EU, so they would require some form of words in any EU agreement that could be held as a commitment.

In passing, if you have a sense of deja vu about all this, you are not imagining anything. This is what happened at the final stages of the December agreement.

The problem with this approach is that anything that would make the DUP happy is likely to worry Brexiters. The more that May says the UK will stay close to Europe so the backstop will never happen, the more the ERG will talk about becoming a vassal state to the EU. It looks, at the moment, like an impossible position. But many things can happen between now and parliament’s vote on any deal with the EU, so I think it will be foolish to discount the possibility that she might just succeed. If she does, we have what I’ve called perpetual Brexit, which in reality means transition=BINO for some time if not forever. (The final deal will probably be BINO with face saving: perhaps I should call this BINOFACE.)

What threats could May invoke to get any deal through parliament. In the negotiations leading up to the deal both the UK and EU will use the threat of No Deal. However once the deal is made threatening No Deal if parliament fails to vote for it is counterproductive if she is trying to convince Brexiters, because No Deal is exactly what these idiots want. A threat of no Brexit however might inspire her Remain rebels. The same would be true of a threat of a second referendum. Perhaps the best threat for her is a general election, because neither the Brexiter nor Remain rebels would want to be responsible for a Corbyn government. The problem with any threats however is that this is not a repeated game, so there is no incentive for her to go through with her threat if it also conflicts with her interests, and people know that.

If she fails to win a vote on the final deal, I still cannot see leaving without any deal as a likely option. It just isn’t in anyone’s interests to let that happen, apart from the Brexiters. But it would be hard for the EU to agree to an extension of A50 on the hope that something turns up. This is where a referendum might become a reality (combined with an extension), as a way out of an impasse. If that happens, it will be the ultimate irony that Brexiter intransigence gives the Remainers what they want. However there is a caveat, and that is that May will propose a referendum with a two way choice between her deal and No Deal. There would be a final fight in parliament to get Remain on the ballot paper in some way.

I doubt, however, that May would want to fight a referendum where Remain is a possibility, because it is quite likely that Remain would win, particularly if Labour leads the campaign for Remain. That would make her position very difficult. As a result, she may prefer the option of a general election. A lot will depend on the polls at the time. But the bottom line is that either an election or a referendum (accompanied by an A50 extension) are more likely than crashing out with No Deal if parliament rejects the final deal. But don’t expect either side to tell you that.

The possibility of parliament voting down any deal and even the possibility of no deal, with the government stockpiling medicines etc, should focus open minds on how ridiculous our position has become. Brexit may get voted down because no one is happy with the form of Brexit we will get. Yet neither the government or parliament is able to say this is ridiculous and we should stop in now. Ostensibly this is because they feel they have to implement the ‘will of the people’. But this is so short sighted, because even the people who voted Leave will be unhappy with the Brexit they get when they see what it is. They voted, it should always be noted, for the “easiest trade deal in history” (Fox) where “we hold all the cards” (Gove). We now know better, but it seems our representative democracy is paralyzed by a vote for a fantasy.    

[1] I’m not going to stick my neck out even further than I am in this post by saying how many stages there will be, beyond saying that it is at least three. The point about calling it an endgame is that the result is clear with best play from the winning side.

[2] Some Remainers do not like me saying so, but the willingness of the EU to keep the terms on which we leave vague when it is voted on in parliament is a bit of an insult to democracy. None of their business, you may say, but they are as much part of theis negotiation as the UK. The majority of UK voters, and probably MPs, would not vote for a BINO type deal where we pay, obey but have no say, and the EU side must know that is where we are heading if a border in the Irish Sea is ruled out.

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.

Trump and Corporatism

For many years some have seen the US as a form of corporatism* - as a country run in the interests of the corporations and those who lead them. There is considerable evidence that in many senses they are correct. However to see Trump as the epitome of this ‘rule by corporations’ I think misses something important. Trump is different from what went before in important respects.

The way business influenced politicians in the past was straightforward. Campaigns cost a lot of money (unlike the UK there are no tight limits on how much can be spent), and business can provide that money, but of course corporate political donations are not pure altruism. The strings attached helped influence both Republican and Democratic politicians. It was influence that followed the money, and that meant to an extent it was representative of the corporate sector as a whole. The same point can be made about political lobbying. 

The government of Donald Trump is different. It is a selective plutocracy, and with one important exception that plutocracy is selected by Trump. In that way it can also be seen as a democratic dictatorship, where the complexity of government requires some delegation of power to other individuals. Like many dictatorships, some of those individuals are the dictator’s family members.

A dictatorship of this form would not be possible if Congress had strongly opposed it. That it has not is partly because the Republican party chooses not to oppose, but also because Trump wields a power over Congress that can override the influence of corporate money. That power comes from an alliance between Trump and the media that has a big influence on how Republican voters view the world: Fox News in particular but others as well. The irony is that under these conditions democracy in the form of primaries gives Trump and the media considerable power over Congress.

The distinction between traditional corporate power ‘from below’ and the current Trumpian plutocracy can be seen most clearly in Trump’s trade policy. It would be a mistake to see past US trade policy as an uninterrupted promotion of liberalisation, but I think it is fair to say that trade restrictions have never been imposed in such a haphazard way, based on such an obviously false pretext (US surpluses good, deficits bad). Trump’s policy is a threat to the international trading system that has in the past been lead by the US, and therefore it is a threat to most of corporate USA. Yet up till now Congress has done very little to stop Trump’s ruinous policy.

The photo above is taken from an extraordinary recent event (watch here) where Trump walks down a line of senior executives, who in turn stand up and say what they are doing for the US and pledge to do more. Each statement is applauded with a positive statement by Trump, as his daughter trails behind. These are top companies: IBM, Microsoft, General Motors etc. It is all a show, of course, but of a kind the US has never seen before. It seems indicative that this is not just a continuation of past corporatism but something quite different. These are corporate executives doing the President’s bidding for fear or favour.

All this matters because it creates a tension that could at some stage drive events. So far the Republican party has been prepared to allow Trump to do what he wishes as long as didn’t require their explicit approval (i.e their votes in Congress), but it has not as yet bent its collective agenda to his. (Arguments that it already has tend to look at past Republican rhetoric rather than actions.) This uneasy peace may no longer become tenable because of developments on trade, or Russia, or the mid-term election results. If enough Republicans think their future is safer by opposing Trump rather than indulging him, they still have the power to bring Trump to heel. But the longer the peace lasts, Trump’s influence on the Republican party will only grow.

* Readers outside the US may be confused by my use of the term corporatism: it is one of those terms with many meanings. I'm using it in the fourth and final sense described here.

Did a partial framing of Brexit encourage Labour’s acceptance of its inevitability?

After the Brexit vote, the left (unusually) managed to define the way many people saw that vote by talking about those ‘left behind’. It was a ‘cry of pain’ from communities who lost out because of globalisation. Theresa May was happy to pick up this theme in her desire to proclaim the Conservatives as the party of the working class and of those ‘just managing’, without actually doing anything for these groups (in fact making their lives worse).

There are two positive things to say about this framing. First, it was partly true. Second, it brought the eye of the normally London focused media to communities it had largely ignored. But as an explanation of the Brexit vote it was seriously incomplete. Although around two thirds of those living in council houses or social housing voted Leave, so did a majority of those who owned their house outright. In geographic terms the areas with a majority of Leave voters were the towns and rural areas of England and Wales. While 70% of Sun readers voted Leave, so did 66% of Mail readers and 55% of Telegraph readers. Scotland contains many areas left behind by globalisation, yet in all of Scotland a majority voted Remain.

In addition, describing the Leave vote as a vote of those left behind by globalisation omits the rather crucial point that leaving the EU will do nothing to help those communities, and almost certainly it will make their lives considerably worse. They were sold snake oil. We have polling evidence that most Leave voters still think they will be better off after Brexit, despite all the advice and evidence otherwise. Many Leavers would support us leaving without any deal, which would be disastrous for the UK.

In contrast in 2015, Labour ran a campaign that was all about the need to raise real wages (‘the cost of living crisis’) and spend more on public services. That was not snake oil, but voters responded by giving the Conservatives more power. So why no cry of pain then? If your answer is that these voters did not see Labour as on their side in 2015 whereas they saw Brexit as something for them in 2016, then there is a very simple reason why. 

The simple explanation for Brexit is to focus on the media. To say that 80% of weekday papers read were pro-Brexit is an understatement: readers faced relentless propaganda against the EU and Freedom of Movement. People, however alienated or desperate, do not choose snake oil by themselves. It requires a salesman with a large attentive audience. As Chris Dillow reports, snake oil sellers put great efforts into marketing.

Does it matter that many on the left focused on the left behind story rather than looking at the role of the Brexit press? Perhaps it can help explain Labour’s stance on Brexit. If you have convinced yourself that the leadership always wanted Brexit, think about the large number of Labour MPs who also think some form of Brexit should go ahead (and I am not talking about Kate Hoey or Frank Field).

If you see the Brexit voters in traditional Labour constituencies as being motivated by decades of deprivation, you know that cannot be changed overnight and therefore you may choose to shape your policy to the wishes of these groups, and instead try to limit the damage of Brexit itself. If you had instead seen Brexit as snake-oil promoted by the hard right who wanted to align regulations with the US rather than the UK in order to weaken environmental and worker protections, you might instead focus on highlighting the lies of the snake-oil sellers.

It could be argued that something very similar happened to Labour over immigration. If you convince yourself that anti-immigration views among Labour voters reflect xenophobia or even racism, then there is little to do but placate them. This will undoubtedly be true for some, but we have increasing evidence that attitudes have been shifting and can be shifted when people make the argument that immigration is beneficial. What is clear is that the right used immigration as a political weapon, and the right wing press obliged with a steady stream of negative coverage.

If Labour MPs had any doubt about how power concerted campaigning, the 2017 general election should have put those doubts to rest. If such a large change in public opinion about a set of policies and politicians can be achieved in three weeks, imagine what a party with considerable media access campaigning against Brexit and for the virtues of immigration could achieve over a year, particularly when events and preferences are going their way. The suggestion of this post is that the framing of Brexit as a protest by the left behind was partly why we can only imagine what impact that might have had.