Return to growth has helped Labour more than the Conservatives

Blog for ShiftingGrounds on 30th Sept
--
Return to growth has helped Labour more than the Conservatives

Wandering around Labour conference last week, it was hard not to be struck as much by what wasn’t being discussed as what was. Among everything, there was one particularly notable absentee. It’s something which should give the Conservatives, who kicked off their get-together in Manchester yesterday, more pause for thought than they might initially grant it.

Flicking through the fringe guide in Brighton, I struggled to spot a single event dedicated to austerity. By comparison, last year’s conference fizzed with debate on double dip recessions, multiplier effects, what a fiscal stimulus might or might not look like. This year: barely anything. The trench warfare of ‘austerity vs growth’ that so dominated the first few years of this Parliament is dead, it seems. Largely it’s been killed off by a nominal return to growth, of sorts, and the Labour leadership’s recent decision to back Conservative 2015/2016 spending plans.

In many ways this is profoundly depressing. The intellectual case against the Government’s economic strategy was and remains overwhelming. While it continued to drag the country back into recession or flat lining growth, it was perfectly understandable that pointing this out consumed the large bulk of Labour’s emotional and political energy.

But the truth is the party have long been fighting an uphill battle with public opinion on this issue. Not least this is because, as widely noted, the Conservatives and their friends were very adroit at framing the problem as one of over-borrowing and over-spending; credit card metaphors and all. Whatever the empirical merits of its case, the left by comparison has failed to come up with a critique of austerity that resonates outside the pages of the London Review of Books.

Consequently, even as economic news worsened, while the deficit and economic crisis were the dominant concern in British politics, Labour were – and probably always will be – at a disadvantage.

Thus, as the agenda has moved on as growth filters back, it’s been to the party’s advantage. While I still think there were less painful ways of neutralising the issue, the pledge to match the Coalition’s 15/16 spending plans has also at least made it harder for the Conservatives to allege that Labour will ‘turn the taps back on’.

The resulting breathing space has allowed Labour to move on to broader, longer-term and more populist themes that go with the grain of public opinion: who benefits from growth, the cost of living and the fundamental structural problems in our economy. Ed Balls gave a much more rounded speech than in recent years, including on childcare among other issues. Chukka Umunna spoke encouragingly on economic democracy and employee representation within companies. And in the best speech of his leadership so far, Ed Miliband outlined the big strategic themes that would define his premiership: a global race to the top, not the bottom, and an economy that works for working people.

Though more will need to be done to flesh all of this out, already Labour are making head way, as the poll bounce off the back of Miliband’s pledge on energy prices has shown. They have set the agenda and started to forge a new centre-ground, tapping into what Miliband advisor Tim Horton has called ‘the angry middle’. It’s hard to imagine they would have the political oxygen to do so if the economy were still in the tank as the party gathered in Brighton.

The Conservatives, meanwhile, are left in a difficult position. Growth may be strong enough for Labour to see the need to broaden its pitch, but it isn’t strong – or felt – enough for the public to give the Conservatives any real credit in the polls, or for the party to credibly be triumphant. Labour’s new living standards agenda also plays to three key Tory blind spots. The first is that the key squeezes on people’s disposable incomes – energy, transport, housing and the like – along with stagnating wages, all represent failures in private markets. All ultimately require critiques of and interventions in those markets.

This is not something Cameron and co. feel instinctively at home with. Like most politicians who cut their teeth in the pre-crash era, they are much happier reforming the state than the market. When they do offer answers they tend towards the tentative or technical. You feel they will probably always struggle to tap into the public’s anger on these issues, or match Labour for zeal.

The second weakness is Osborne’s continued faith – repeated over the weekend – that rising growth will be enough to help increase living standards across the board. The Resolution Foundation have long shown that this is no longer the case, and has not been since 2003.

Finally, and most pressingly, is that Cameron has long struggled to define himself or his Government beyond the ‘national emergency’ of tackling the budget deficit. Both in opposition and in government he has done little to map out what kind of country he would like Britain to be in twenty years time. There is little sense of mission beyond the bottom line. The ‘Big Society’ was his first and doomed attempt at redressing this. The ‘Global Race’ narrative is probably his best effort, but it remains clunky and lacks cut through with the public.

All of which represents a significant opportunity for Labour as the agenda moves beyond the narrow politics of the deficit, though none of which should be a cause for complacency for the party. Unfortunately, welfare in particular is still an issue in which the Conservatives are able to mine vast reservoirs of public enmity – and the Labour leadership still need to do a little more to grapple with the issue.

But the last few weeks have shown anything, it’s that the second half of this Parliament will be fought on much tougher ground for the Government than the first. The facts of British political life are no longer Conservative.

Croatia and the EU: more questions than answers

Post for ShiftingGrounds
-

As preparations gathered pace in Split for Sunday’s celebrations, marking Croatia’s membership of the EU, the city’s local radio stations provided a fitting soundtrack. ‘Go West’ by the Pet Shop Boys seemed to play almost on loop throughout the day, filtering out of nearly every restaurant or coffee shop you walked by.

The country’s newspapers had been counting down the days. Despite public scepticism, there is a sense at least that Croatia has taken up its rightful place. The journalist Jenine di Giovanni wrote in her 2004 book on the Balkans:

“…this colourful image [of the Balkans] was exactly the sort that the Croats did not want to promote. They were not really Balkan people; they often told you they were Southern Austrians. The Croat denial fostered a sense of mixed identity in Zagreb. The people dressed in Armani but lived in apartments without central heating. They carried the latest Nokia phones but had no money in their bank account…

Their biggest grievance was belonging to a Balkan group they did not want to be part of. They saw themselves as a Western democracy.”

Yet identity and pride aside, it’s hard not to wonder what question the country’s EU membership is the answer to – not least when considering the way its political class has prioritised it over the last ten years (hence much grievance from them, too, on the extensive vetting the European Commission subjected Croatia to).

True, it – or rather the prospect of it – has been good for the region’s fragile peace, helping to hold the Dayton settlement in place. The scale and horror of Serb atrocities in Bosnia and Herzegovina often obscure Croatia’s own crimes in the same country just two decades ago. It was the Zagreb government, after all, who connived with Bosnian-Croat forces to turn brutally on their Bosniak allies, aiming to tear off parts of Bosnia for their own, in pursuit of a lesser but still stark Croatian imitation of Milosovic’s expansionism.

Here Brussels has dangled EU membership effectively. It has used it to ensure Croatia properly complies with the International Criminal Court’s investigation into war crimes during the 90′s. The same incentive has also played a role in dissuading Zagreb from resuming support for still restless Bosnian-Croat secessionists.

But even still, in the long term it’s far from clear that the Bosnian question is totally settled. Leaders in Bosnia’s Republic Srpska – the Serb state within a state created at Daytan – have made obvious their own desire to secede. One of the main barriers to this at present is the lack of support they’re likely to enjoy from Belgrade, who are also on their best behaviour under promise of EU membership.

However, once this promise becomes a reality and the incentive disappears, that could easily change. In the ensuing melee, who knows how the Croats – now a member not a prospective one – would react. They may again see a opportunity to claim what isn’t theirs, especially given Bosnian-Croats have a (not insignificant) vote in Croatian elections. This is unlikely under the current SDP government, who don’t rely on those votes, but could be feasible if the centre-right HDZ returned. Certainly far right Croatian nationalism hasn’t totally gone away, as the uncomfortable amount of fascist graffiti scrawled across Split can attest to.

More immediately, however, there’s the prospects for the Croatian economy. Croatia’s bid for EU membership was kick started 12 years ago, when Western free-market capitalism – which post-Maastricht the EU has become the standard bearer for – was in its pomp. Entry to the EU represents in many ways the completion of long efforts by Croatia’s political elites to ‘harmonise’ the country’s economy with European orthodoxy.

Croatia’s economy today is thus completely deindustrialised (albeit this was aided by war damage); it is in large part a service sector economy, dependent on tourism and retail – which struggles to provide adequately for a lot of the country. Most of its growth in the early 2000′s was driven by consumer credit.

Sadly, between Croatia’s application and accession, the flaws of that model have been horribly exposed across Europe. Its economy is consequently stuck in our recession; at 20%, Croatian unemployment is worse only in Greece and Spain in EU terms (youth unemployment is over 50%). Its banks, largely foreign owned and piled high with European debt, are vulnerable. Household debt has shot up, as has government debt.

The dichotomy that di Giovanni wrote about has seemingly continued – though new shopping complexes have continued popping up across Croatia’s cities, absolute poverty has almost doubled over the last decade.

Despite the vague hopes of Croatia’s President, Ivo Josipović, it is hard to see how formal acceptance into the European club helps all this. Indeed in at least one sense it’s made it worse: one of the ugliest components of Croatia’s EU ‘preparations’ was the sight of Brussels forcing the privatisation of the country’s shipyards, which still make up a sizeable chunk of Croatia’s exports. In Split alone – across town from the palm-treed, tourist friendly promenade that hosted Sunday’s celebrations – this has seen over 1,000 people lose their jobs. The jobs of the remaining 2,000 workers hang in the balance, but if the private company which now owns the yard do take them back on, many will be on a part time or temporary contracts.

All of which leaves you with the feeling that a great country has been rather led astray. Croatia stumbles into the EU mired in recession, with falling living standards, and in desperate need of a new model of economic growth. The Commission needn’t have worried; it will fit in all too well.

Post for ShiftingGrounds--

The rise of resentment in America

Three days on from the re-election of President Obama, the hangovers that followed a night of celebration for Democrats have receded. As a nice bonus, the Republicans, by contrast seem to be facing a four-year long headache. The inquisitions and post-mortems have already began. Demographic shifts have altered the political landscape to leave them with a challenge on par in scale with that faced by the UK left in the late 70s and early 80s.

As it turns out, the GOP didn’t understand (or even want to) the nature of the country they so often profess to love. But if the emphatic defeat of Mitt Romney is provoking head-scratching from the US right about America 2012, it should also cause pause for thought among their bedfellows in Britain who – judging from coverage before and in the run up to the election – don’t seem to have updated their view of the country in twenty-odd years.

As Dan Hodges noted of his Telegraph colleague Tim Stanley back in September, these days “the problem isn’t actually with Lefty idealists transposing their dreams on to Obama. It’s Right-wing idealists who transpose their ideological romanticism on to the United States in general.”

In particular, a cornerstone of this is the notion that Americans have no patience for ‘European-style’ attacks on wealth. The story goes that broadsides on those at the top, calls for them to pay more in tax or curb profit-seeking, are resented by ordinary Joe’s who one day think they could be that millionaire chief executive or investor. Money men are always respected, success never resented, we are told. If we “don’t do God”, the Americans don’t do class politics. For years the British right – aghast at their countrymen’s growing resentment of the top 1% – have gazed longingly over the pond and repeated these mantras.

The plutocrats in the US have long spun the same yarn: bashing a billionaire isn’t only just wrong, it’s un-American. One of the stories of this election campaign, though, has been the total unravelling of this narrative.

For those of you raising a sceptical eye-brow, consider this. Romney ran for President on the basis of being a rich man – a successful businessman – and he lost on that same basis. His entire pitch was that as someone who had made it in the private sector, he knew how to create jobs and get the economy going. In times gone by this would have gone largely unquestioned and unparsed.

However, the Obama campaign (in a move straight out of the Rove playbook) turned this supposed strength into a weakness. Those in the Obama camp arguing for an attack on Romney’s record at Bain Capital won out over those preferring to hit the Governor on the safer ground of being a ‘flip flopper’. From early on the campaign sought relentlessly to define Romney in terms of what he actually did to make his money: outsourcing, asset stripping, firing at will, tax dodging. In doing so, they peeled Romney’s supposed ‘experience’ away from ideas of enterprise or wealth creation. And it worked. His reputation never fully recovered. In the home of free-market fundamentalism, Obama’s team were able to pick and win a fight about predatory verses productive capitalism.

This approach was replicated in the furthest reaches of the campaign. Again and again the Obama campaign counter-posed their candidate’s platform “For All”, as the campaign sticker blared, with that of Romney’s. Over and over, the phrase “millionaires and billionaires” tripped from the tongue of Democrats with scorn any time GOP plans were discussed (so much so it upset those poor dears on Wall Street). Tax rises on the very wealthiest also formed a key policy plank for Obama, as he separated the top 1% out from the broader ‘middle class’ in his tax plans.

All this is no small feat, and took some degree of courage when you consider Fox News has spent the past half-a-decade screaming that the President is some sort of Bolshevik. But the space for it was only made possible by a growing anger among swathes of American society at the country’s wealthiest business and financial elites. This comes not just from the financial crisis, but years of declining wages and living standards, as well as Wall Street excess and the saturation – ratcheted up since Citizens United – of US public life with money, SuperPACs and special interests. Romney’s categorical defeat at a time when all the economic indicators suggested he should have won will be remembered as the time that the groundswell of anger at the super-rich that has built up in Europe over recent years reached American shores, and swept the Republican candidate away.

Quite obviously, the US has not suddenly become a socialist nirvana. American society is still beset by huge disparities in wealth and power, and little basis for its transformation exists in a politics where the most progressive US president in forty years has governed as a pretty conventional liberal by UK standards. If taxes on the wealthy do go up as planned, it will only be to where they were under Clinton – far from levels as recent as the 1970s.

But the way in which Romney was defeated is nevertheless important. Fundamentally, it chips away at a notion that has proven vital to the maintenance of the status quo: that the behaviour of the wealthiest is somehow inexorably linked to the public good, and that anyone who is good at money-making must automatically be good at governing or economics, and afforded special status.

It also means that insufferable sirens of the Thatcherite right have one fewer place to point to in the world where their brand of rapacious economic sadism enjoys broad public support. That once-vaunted bond between free-market capitalism and liberal democracy just got weaker still.

On social mobility, we can't ignore the flaws of the tuition fee system

Latest piece for Shifting Grounds
---

On social mobility, we can't ignore the flaws of the tuition fee system

Ed Miliband and Nick Clegg have both used this week to fire the starting gun on a debate over social mobility. Both, for different reasons, want to push past a focus on tuition fees. But as universities prepare nervously for the era of 9k fees to begin in September, the summer will inevitably reignite debate on the impact on the aspirations of kids from low income backgrounds. It remains vital that the left do not turn their backs on this debate – and the intellectual failures of the tuition fee system more broadly.

Higher education leaders have taken refuge lately in the fact that applications from disadvantaged groups are ‘only’ slightly down, rather than in total collapse. But this merely massages a deeper, structural problem – which is that far too few kids from working class and poor backgrounds go to university in the first place. Fifteen-year-olds on free school meals are around twice as less likely to pass on to higher education. As pressingly, woefully few attend our top universities.

For this the buck is often passed to schools and lower levels of attainment. But even BIS confess that “young people from disadvantaged backgrounds who achieve qualifications that would allow them to attend a selective university are [still] less likely to apply than their peers.” Research consistently shows that tuition fees influence this decision, with pupils from low income backgrounds far more debt averse and likely to have their aspirations suppressed as a result. Fees can also have some knock-on effect on attainment – if certain kids feel they have less to aim for, why study that bit harder?

These arguments are generally met with short shrift by Government or leading universities, who eagerly believe more time simply needs to be spent “explaining the system” to young people (the NUS or such like tend to cop the blame for ‘scaremongering’ at this point, too). Millions of pounds are poured into outreach schemes for this exact purpose. Huge efforts are made in an attempt to ensure students won’t ‘see the fee’ when weighing up the decision to apply. The argument goes that the headline tuition fee is irrelevant since the debt accrued isn’t normal debt: it’s only paid in small slices each month after people graduate and earn over a minimum amount; repayment is linked to income; it’s written off after 30 years, and so on. In addition, they point out that a range of generous – if complex – bursaries are available for the least well off.

All this is true enough. And most university management is populated by good people who genuinely care about social mobility. But, with the tuition fees system, they are simply pushing a very large boulder up a very steep hill.

This is ultimately because it relies on a vision of prospective students acting as perfectly informed rational consumers in a marketplace. This is improbable enough when dealing with something as ingrained as debt aversion. But it’s made even more difficult by the very discourse and architecture of reform that the tuition fees system rode in on.

Introduced by New Labour but really stepped up by the Coalition, this has seen a shift in the ideal of higher education away from one based on the common good – with publicly funded universities built largely on the shared pursuit of learning and knowledge – towards one orientated to what Stefan Collini calls a “purely economistic calculation of value, and wholly individualistic conception of ‘consumer satisfaction’”. In short, the relationship between student and institution has basically become transactional.

Leaving aside the resulting flaws and contradictions in terms of learning and teaching (which Collini brilliantly takes apart here andhere), this shift intrinsically creates huge problems for those claiming that fees need not deter low income students. Under this system, universities explain fees to students in terms of an ‘investment’. They market their different prices (which from 2012 generally vary from £7,500 to £9,000 a year) on their prospectus – the individual fee linked directly to the individual institution – and fix their entire message on encouraging students to weigh up the costs and benefits as consumers; ‘getting bang for your buck’ and so on (most of which travels under the rubric of the ‘student experience’).

This is marketised language for a marketised system. Fine. But is it surprising, then, that many students continue to ‘see the fee’, tot it up (which can be over £40,000 in all) and factor it into their decision making? And that as a result the more debt averse – many of whom live in households where the assumption is they won’t go to university – are put off by it? The whole organisation of HE pushes them to do so. You cannot set up a system which treats people like consumers engaging in a conventional transaction, as if popping into your local supermarket, while at the same time asking them not to think of the fee as a conventional transaction at all.

That’s why, when it comes to social mobility, all the good intentions, efforts exerted, money spent and (unambitious) targets set will only amount to running to stand still under the present system. If we totted up what the average person is likely to pay for the NHS or the police, presented it to them when they were 17 and required them to take out a loan to fund it or opt-out all together, what would the results be – no matter our exhortations on the progressive nature of the repayment?

The only socially just solution is to take the headline fee/debt out of the calculation all together, and to claim back higher education as a public service. As Miliband rightly says, if young people want to pursue a different route than university, they should have the option to do so. But money must be taken out of the decision. A limited graduate tax – partnered with proper public investment – is the only realistic way to achieve this.

It’s disappointing that despite flirting with this idea, Miliband’s has since turned away from it. But it was Jon Cruddas, his new policy chief, who argued recently that it was the debate around university fees, not Iraq, that marked the real change in the character of the last Government:

“The language was [now] of a rational economic exchange, of a derived utility, discounting for the future and of calculus. No discussion at all of the virtue of creating wiser more knowledgeable citizens; what intermediary institutions- such as universities- are there to achieve.”

It’s vital that as Cruddas puts his feet under the desk, this issue is not filed away or ignored. The flaws of the tuition fee system are a difficult subject for Labour, for obvious reasons. But, along with the Coalition and the whole HE establishment, they must face up to them.