Who is Senator Elizabeth Warren and is she a serious US election contender?

Piece for New Statesman from 5th January.

Who is Senator Elizabeth Warren and is she a serious US election contender? 

Six years ago this month, in the bitter winter cold, 2m people crammed on to the mall of Washington DC to watch the inauguration of Barack Obama. The gritty reality of what followed – a good if not transformational presidency – make it easy to forget the spirit and energy of that day, and Obama's ascent generally. A palpable cry for change in the wake of the financial crisis then gripping the country, and for an outsider to shake up an ineffective DC establishment, swept him beyond McCain and Hilary Clinton before that.

But it's worth bringing it to the debate over his successor as Democratic nominee for 2016. There's a reason that, as the FT reports, "very few people in Washington have the clout that Senator Elizabeth Warren has right now". More than anything else, it's because she is tapping in to that same energy, and giving it greater form.

Warren has spent the last four years rallying against those on Wall Street and Capitol Hill who she blames for poisoning the American dream. Across a range of issues – the bank bailouts, credit card and mortgage regulation, student loans – she's channelled a still widespread anger at the financial crisis, giving voice to a economic anxiety held by huge swathes of America.

This anxiety if of course borne of the same forces shaping people's lives this side of the pond, despite an improving economy: stagnant wages, rising bills, a hollowing out of middle class jobs and growing inequality. Warren has argued that these are not facts of life akin to the weather, but in large part the product of rules "rigged" by an orthodoxy seizing the US political system, one kept in place through the influence of organised money. It's an orthodoxy that has sometimes thwarted Obama, but one he has also felt the need to indulge.

In short, she is the first mainstream, progressive populist to fully emerge out of post-crash politics in America.

All of which has sparked a MoveOn.org petition to draft her in to the 2016 race against Hilary Clinton, who is threatening to run again. 

As a result, much of the Democratic establishment are already on manoeuvres against Warren, sniffily dismissing her a East Coast liberal bound for the same fate as Howard Dean. At first glance it's easy to sympathise with this. But there is more to Warren demanding of further attention.

For a start, she is (and speaks like) an Okie; a Southerner, hardly Democratic heartlands these days.

Despite reaching the gilded halls of Harvard (where she taught bankruptcy law), Warren came from very little. Her father was a janitor and a maintenance man, her mother a phone operator. So when she speaks about threats facing the American dream, she speaks with an authenticity the likes of Gore and Kerry never could.

More importantly, her politics are more complicated and progress beyond the traditional 'tax and spend' of the Democratic left. She is largely concerned with economic reform: breaking up and remaking the banking system, consumer protection, infrastructure. In her own words, "effective counterweights" against the interests of organised money. Before being elected in 2012, Warren set up the Consumer Financial Protection Bureau, an agency which has put over $4bn back in the pockets of Americans swindled by financial institutions.

In the context of tight budgets, and after a generation of trying to ameliorate inequalities through the tax system, this is the most sensible territory for the centre-left to be on.

But in many respects, Warren's themes are far more in the conservative tradition than the Democratic one: aspiration, breaking up concentrations of power, making markets work better, opposing no-strings-attached bailouts. She also supports school vouchers in the public education system.

None of which is surprising given Warren's Republican background, but all of which makes for an interesting blend of left and right that is making her slightly untouchable on Capitol Hill at the moment ("It's like we're dealing with the most popular girl in school", one bank executive recently whinged). Most importantly, it gives her the potential to speak beyond the Democratic base if she gets it right.

She is also aided by the weaknesses of her potential opponents. The GOP have long since abandoned traditional conservative thought, in favour of an unhinged worship of the already wealthy (and a dependence on their largesse).

And then there's Clinton. It isn't obvious what agenda will particularly animate her bid for the White House, or her supporters – at the moment it's just a strange cult of personality. In any event, the rising tide of anger and insecurity potentially pose a significant problem for her. Many of the questions angering Americans, certainly Democrats, today are essentially ones of economic reform. On this theme, Clinton is a status quo politician. What she thinks about these questions i'm not sure, but one suspects she doesn't think about them very much at all. They involve upsetting vested interests that a generation of Third Way politicians cut their teeth making peace with. Moreover, as Warren herself found out, her more direct ties to Wall Street compromise her.

So if Warren does decide to run, she could easily wrongfoot the presumptive nominee. In many ways, Warren is already dictating the terms of the debate. Clinton recently felt the need to make a rather half-hearted and awkward pitch to define herself against Wall Street ("The least convincing populist on earth", as one newspaper put it). Meanwhile, there are rumours even Obama himself sees Warren as his true heir, and is urging her to get in the ring.

It may not happen, of course. For a start, it isn't clear Warren even wants it or feels herself up to it. After years of stalemate in Congress under Obama, Clinton's strongest card is as an arm-twister who knows how to get things done. Warren would have to work hard to build a broad coalition of support, and strengthen her hand on foreign policy. But the elements are certainly there to make things very interesting. If you're looking for a political earthquake, it is worth at least keeping an eye on the American left this year. 

In-work poverty is the greatest moral outrage of our generation - it deserves to be treated like it

Blog from January, originally here.
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The moral outrage of in-work poverty

All things considered, I thought some of the reaction on the left recently to George Osborne’s intervention on the minimum wage bordered on the churlish. Even if Osborne’s conversion does owe more to psephology than theology, that a Conservative Chancellor sees Government action on it as a vote winner can only be a positive thing in the long term.

That said, as the Westminster road show has quickly moved on to other matters, the issue of low pay certainly shouldn’t be allowed to be ticked off as covered or consigned to footnotes in next year’s election. Not least for the Conservatives because it will take more than one policy announcement to reach the type of voters that have felt long ignored by them

More importantly, the matter demands far more attention than that – and a great deal more anger among Westminster opinion formers than it’s currently granted.

It’s also not just about economics, but the withering of a basic social contract, and something that goes to the heart of what’s gone wrong with work in this country.

No matter what popular mythology tells us, a great many people don’t actually like work; it’s supposed to perform a function. The bargain used to be that if people looked for work, got themselves out of bed and contributed, they would at least be afforded the dignity and self-sufficiency of being able to pay for a roof over their heads and food for them and their kids. Maybe over time there’d come the chance of a higher wage or home ownership.

It’s an understanding that has sustained support for capitalism, through all its flaws, for generations. Ultimately it survived in Britain because it could – when run in the right way – put food on the table for the vast majority.

Now all of that is unravelling. People are putting more in but getting less out. Growth up and wages flatlining. The jobs market hollowed out, making social mobility even harder. Affordable housing disappearing, rents ballooning. Increasingly, people are subjected to having to rely on help of the state or others to prop them up – not momentarily, but permanently.

A miserable litany of facts bears this out, so numerous they could fill the rest of this page. To spare you and give just a few: over 90% of new claims for housing support are from people in work, while the Trussell Trust say half of people who need to use their food banks have a job. For the first time, more living on the breadline are in work than not. Two out of three children growing up in poverty do so in working households.

This applies to people who come here looking for a better life, too. For some reason, the likes of McDonalds and Costa have started to get their employees to bear a tiny flag of their home nation on their name badge. Visit one and the panoply of nations represented is a reminder if needed that these are the sort of jobs migrants do when they arrive: low paid and insecure. Its useful context for when politicians go headline hunting on ‘benefit tourism’. The number of migrants claiming social security is infinitesimally small, of course. But given most work, it’s likely that the bulk of those who do claim are in employment. Figures are hard to come by, but take the Working Tax Credit – 14.5% of its claimants are non-UK national, compared to 6.4% of out-of-work support (just 2.7% of JSA is claimed by EU migrants).

Contrary, then, to those who look to play people of different nationalities off against each other, their plight is a tiny part of a much broader picture affecting millions of their British neighbours and friends.

The sense of contributing more and getting less is echoed higher up the income scale too – higher tuition fees for the same standard of education; house prices up, quality down – but it is most acutely felt by those on lower incomes. It’s hardly any wonder so much of the electorate are so angry. Nor that many, grimly, take it out on those they (wrongly) deem to be getting an easy ride while they struggle.

Somewhere along the line, something has gone badly wrong. And given that low wage, insecure jobs are about the only jobs we’re creating as a country at the moment, it’s a crisis which will only get worse without action.

Even putting aside issues of GDP and central government spending, restoring that basic social compact of work providing a decent life is fundamental to restoring the spiritual and moral health of a country that calls itself first world. Certainly no one in public life can ever again talk credibly about ‘work being the best route out of poverty’, of opportunity or aspiration, without acknowledging it.

Tackling the cost of living is a vital part of this, of course, but it’s only one half of the challenge. Many uncomfortable with asking more from the powerful push lower tax as the answer, but even abolishing all tax on people on the minimum wage, at great expense, would still leave them with less money than a Living Wage paid by their employer.

Even at £7 an hour, a full time worker in London takes home just over £1,000 a month. The average private rent in the city is £520 a month per person for a flatshare. A Zone 1-3 travelcard: £136. Then there’s council tax, utility bills, and so on.

Far stronger across the board action on the Living Wage (and London Living Wage) is simply non-negotiable, not least as it would have a positive upward pressure on the wages just above it too. Employee representation on company boards also desperately needs to be strengthened if the distribution of rewards are ever to be addressed properly, and sectoral collective bargaining strengthened. These last two are partly what has distinguished the ‘Coordinated Market Economies’ of northern Europe which Labour rightly admires.

Needless to say we have not arrived at this sorry state through the failure of any one individual, government or even party. But that someone in Britain can now work a 37 hour week and still not be able to provide the basics for themselves and their family is a national disgrace, and the starkest symptom of how far we’ve fallen as a country. If our politics can’t fix it, we’ve every right to wonder what it’s there for.

Croatia and the EU: more questions than answers

Post for ShiftingGrounds
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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.

François Hollande has achieved far more than his critics suggest

Piece for Shifting Grounds and New Statesman
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If you listen carefully, you can hear it coming. With next Monday marking one year since François Hollande was elected French President, a tidal wave of I told-you-so’s and smugness is about to be visited upon us by Westminster’s commentariat.

It’s fair to say that most of them have never much liked the French president. And we are sure to be gleefully informed that the first year of his Presidency has been a disaster. It will invariably be held up as a stark warning to Labour against carrying any challenge to the austerity consensus into the next election.

It won’t surprise you to learn that upon closer inspection, things turn out to be a bit more complicated than that.

Hollande has certainly had a difficult time of it, sliding recently to 25 per cent approval in the polls. Much of this can be laid at the door of his one unambiguous failure – his inability to overcome German opposition to redrawing the EU’s fiscal pact towards a greater focus on growth. As a result, unemployment is stuck at around 10%, and consumer confidence is low. The Eurozone remains largely frozen.

Some of it is also his own personal style. Hollande’s more low key, unfashioned image and patient approach – once a selling point – has bored a nation who became used to the glitz and hyperactivity of the Sarkozy years (in much the same way that ‘Not Flash, Just Gordon’ rebounded on Brown).

But if he has failed to offer much hope at a European level, the same cannot be said about his record at home. For starters, he has already made good on most of his key campaign promises, such as the hiring of 60,000 new teachers, raising the minimum wage and setting up a Public Investment Bank to lend where banks won’t (which given time could prove crucial to the country’s recovery).

But it is on budgetary matters – tax and spend – where Hollande has offered something most markedly different. Contrary to received wisdom in parts of the British press, the French President never campaigned against the principle of deficit reduction; simply against the notion that this is best achieved through deep spending cuts and huge tax hikes on ordinary people (this is after all what austerity has come to mean). And it is here that his actions in government bear far greater scrutiny than the widely held, lazy caricature that he has bowed to 'inevitable' cuts.

In 2013, only a third of Hollande’s deficit reduction measures comes from reducing spending. And all of this is coming from departmental spending freezes, not deep cuts.

The rest comes from increased taxes, largely on big businesses, banks and wealthy individuals. This includes increased wealth taxes, alongside hikes on taxes on assets and dividends. A new 45 per cent top rate has been brought in for incomes over €150,000, while companies will have to pay 75 per cent tax on any salaries over €1 million (replacing the 75 per cent income tax rate struck down by France’s constitutional court). Big banks and oil companies have also been hit with special levies. Tax exemptions have been scrapped.

While weak growth across Europe has made things harder than expected, these measures will still see France’s deficit fall to 3.7 per cent in 2013, from 4.8 per cent in 2012. Hollande has also shown admirable flexibility, resisting pressure to bring in any further deficit reduction measures to meet draconian EU targets while the economy is still weak (he has instead delayed them).

The ratio between taxes and spending reductions will level up a little in 2014, and some entitlements may be means tested. But freezes are likely to continue to take precedence to significant cuts on the spending side.

Whatever one’s view of Hollande, to equate this with the medicine meted out by other Governments in Europe is fatuous. Compare it, for instance, to George Osborne’s approach, whose ratio of cuts to taxes is 80:20, with that 20 per cent borne by people on average incomes while millionaires pay less. It’s also a world away from the broad-based slash and burn policies being implemented in Italy or Greece. Low and middle income households in France have been protected, as have public services.

Here Labour can still draw positive lessons, as beyond the need for short-term stimulus now, they face up to longer-term decisions over whether to accept the enormous cuts currently pencilled in by the Tories for 2015 and beyond. The deficit faced by any incoming Labour government is likely to be of a similar order to that faced by the French President.

Drawing inspiration from Hollande, but outside the fiscal straight jack imposed on Eurozone countries, Labour could set a longer more flexible timetable for elimination of the deficit. Assuming they inherit low growth, they could then pledge a freeze on overall departmental spending. This would be tough but would cancel planned Tory cuts and shut down accusations of profligacy or ‘turning the taps back on’ in a relatively painless way, providing them space to talk more about growth and living standards. Beyond that, levies on the well off and big businesses (e.g Financial Transactions Tax, Land Value Tax, restoring the main rate of corporation tax etc) should go towards paying for the rest of deficit reduction.

Within this overall spending envelope, further tax rises on the top (a 50p rate, mansion tax etc) could pay for tax cuts for those on low and middle incomes, aiding demand. Growth measures requiring capital spend would then be funded by taking money from budgets with the least impact on domestic demand (cuts in defence and international development to pay for a large house building programme, for instance).

There are many areas, of course, where Miliband will want and need to do the exact opposite of Hollande. He will have to be careful to not be seen to over-promise, given the public’s already brittle faith in politics. But a closer reading of François Hollande than we will be afforded in our newspapers reveals an important truth; one that can be rescued from the carnage of an otherwise difficult first year for the Socialist President. When it comes to how, when and on whose backs the national books are balanced, there are still choices.

Piece for ShiftingGrounds on Ken Loach's new film

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Can we revive the spirit of 45?

Of the twentieth century it’s often remarked that “the left won the culture war, the right won the economic war”. If nothing else, Ken Loach’s Spirit of 45, out in cinemas last week, is a useful reminder that this did not always seem like being a foregone conclusion.

A great deal has changed since then, of course, as the film expends little subtlety in telling us. And indeed many have wasted no time in dismissing Loach as nostalgic or simplistic, something he probably leaves himself open to with his use of sepia tone and eventual descent into agitprop (Ms Thatcher emerges from nowhere to shatter the reverie, encouraging the audience in my showing to audibly hiss!).

But past its casual bursts of pantomime, The Spirit of 45 is a beautiful and inspiring movie. It leaves you, as I suppose it intends to, with the question of what we can revive of that time – of, as the late Tony Judt might put it, “what is living and what is dead?” What can be resuscitated and how?

The first – and the most striking thing about that era – was the sheer scale of ambition of the Labour government. They faced circumstance which make today’s problems seem meagre by comparison: a country decimated by war, fiscal deficits of 21.5%, national debt at nearly 250% of GDP. And yet they embarked on a programme of wholesale transformation of the British economy and society – not because it was romantic, but because it was the right way to solve those problems.

In many ways an experiment, this boldness is a salutary reminder to those of us on the left who at times have had our horizons narrowed by the last thirty years of free-market triumphalism, or even the austerity of the past few. Too often we content ourselves to talk big but fiddle at the edges; a tweak and a nudge here, a tax incentive there. Ownership and control matter, as do institutions; public and private interest are not synonymous – the former should always be a buffer to the latter, not a mere facilitator.

Simple truths but ones too often forgotten. And relevant when we look at our country today. What really is the case, for example, for continuing with the absurd public subsidy to train companies to run our railways, instead of just taking what is a natural monopoly back into public ownership? In energy and banking industries, we should at least be looking at national or regional ‘public options’ which could undercut profiteering from the cartels that dominate those industries.

What these institutions might look like brings us to what Loach pinpoints as the failure of the left in the late twentieth century. While the collectivism of the post-war years expressed itself through politics, that spirit largely stopped at the ballot box. Nationalised institutions eventually became sclerotic and bureaucratic; run in the interests of people but with little of their input.

The only way by which the left of today can take up the spirit of 1945, while not repeating its failures, is through a relentless focus on economic democracy.  Where institutions are state backed, they should be run equally by management and employees, ideally with third party input too. The plans for a ‘Peoples Port of Dover’ – controlled equally by employees, local residents and businesses – provides a good model.

This ethic also needs to be extended right across the economy, including to businesses. For example, Peter Tatchell and others have long argued for medium and large companies to be required to be run in this way, with shareholders and employees represented equally on boards, alongside an agreed (smaller) third group. This reflects the recommendations of the 1977 Bullock Report, never enacted in time before the tide of Thatcherism swept all such considerations away.

The dream of abolishing the profit motive has evaporated, and it is very unlikely to come back. Over a century social democracy (and even democratic socialism) has indeed sadly gone, as Dylan Riley puts it,“from a strategy for achieving socialism to a policy package for managing capitalism”. But if that’s to be the case, lets at least do it comprehensively.

Undoubtedly though, there are a some elements of the era Loach venerates which are dead – and to which it is less easy to reconcile. The working class still exists, but it is far more fractured, far less homogeneous than it was; the very nature of our cities have also changed. This all creates significant barriers to the important work of political and trade union organisation, particularly in the private sector.

As does the most pressing change of all: the way globalisation has transformed capital, making it more fluid and global, and far harder to regulate or tax. These problems are not insurmountable. But as Paul Mason has said, they do pose a dilemma for the left. Namely, this is whether we pursue a   programme of ‘deglobalisation’ (capital controls, anti-outsourcing measures etc.) or enter the far more untested and ambitious terrain of global governance. This debate has yet to even really get under way in mainstream left circles, nevermind reach a conclusion.

Nevertheless, we have enough to be getting on with. As Eric Hobsbawm told Juncture shortly before his death:

“Politics is the only aspect of the 21^st century world which globalisation [has] weakened but not transformed. It remains the only effective mechanism for social redistribution…It has its problems and abuses, but it remains the last bastion against the free market. And it needs politics – politics by collective action to move it.”

It is this which we can take forward as the true essence of the spirit 1945, linking that which can be rescued from that time to what we can bring to new challenges; the centrality of politics and collective action. This has never been more urgent than now, as we look back at the unquestioned inequity, inequality and unsustainability of the pre-crash years. Just as those post-war generations did, we too should vow never to go back to “that sort of peace”.

Cameron strikes some nice notes, but plays the wrong tune

Post for Shifting Grounds

Cameron strikes some nice notes, but plays the wrong tune

There’s no doubt that David Cameron’s speech to Tory party conference yesterday was one of his better ones since becoming Prime Minister. In some ways it was his most Presidential, not just in the personal touches woven in throughout, but in his attempts to transcend national politics and sketch out a vision of a new frontier – in this case, the new global economy – and place Britain at the heart of it  (sometimes called a ‘moon shot’ in US politics). We are, he said, in a “global race” with new countries on the rise, “sink or swim. Do or decline”.

Cameron also had strong dividing lines on welfare and schools – two issues Labour has no settled position on, but will clearly need to have in the next few years.

But the speech had a fatal weakness. At its core was a diagnosis of a country full of budding businessmen and women and ‘can do’ creatives, being held back by a bloated state and unreformed public services. The solutions that flowed from this were predictable enough – hack back the state, reform welfare, get the deficit down, liberalise school provision. Growth will naturally follow.

But this fundamentally misreads British politics today. Most people won’t become ‘entrepreneurs’, and most don’t want to. They just want to get on, get a good job, earn decent money, provide for their family, and lead happy and fulfilling social lives. The biggest impediment to this in 2012 is not the welfare system or planning laws, but an enormous squeeze in living standards and an economy that only works for those at the top. Wages are stagnating, jobs hollowed out, yet utility bills, rents, train fares, tuition fees and mortgage deposits are all rising (this is the true face of ‘Britain on the rise’ under the Tories). And so are bankers’ bonuses and executive pay, all the while SMEs – a real engine of jobs – can’t get access to finance, and young couples can’t get on the property ladder.

Even those traditionally upwardly mobile parts of the population – at whom the speech was clearly aimed – are suffering from this squeeze. Polling for Southern Discomfort Again showed that between 41%-47% of floating voters in key middle class marginals say they are now not confident they have enough money to make ends meet. As Lord Ashcroft’s polling shows, a key feature of the ‘suspicious strivers’ group he identified is economic insecurity and precariousness.  The squeeze is also having obvious effects on demand and consumer confidence – without which all the “diplomatic showrooms” and ankle flashed to multinationals matters not one jot. Economically and electorally, post-crash Britain is defined more by strugglers than it is by strivers.

To this backdrop, a speech about the ‘global race’ in the new world economy, or unleashing a nation of Steve Jobs style entrepreneurs, is a little arid and far off. It’s not irrelevant, it’s just remote; a bit mid-1990s. On the real day-to-day challenges and anxiety facing people already in work, Cameron had little to say. Bank reform did not feature once in his speech, nor energy companies, or even the words ‘bills’ or ’wages’. The Prime Minister may have struck some nice notes along the way, but he played the wrong tune.

The truth is, most of the obstacles holding back prosperity in the UK and our place in the world come not from an unreformed public sector, but an unreformed private sector. That a Conservative Prime Minister, who came to political maturity in the age of neoliberalism, feels uncomfortable talking to that challenge is not surprising. But it ultimately leaves him unable to connect with the lives of people he needs to reach to win.

It is this divide that Labour needs to put the Tories on the other side of. The party needs to find a consistent line on welfare and schools, but it can’t allow the election be fought on this ground. They need to make 2015 an election about living standards and the squeezed middle; who wants an economy which puts money in the pockets of ordinary people, and who only looks out for the top 1%. Making banks and energy companies work for people, an active industrial strategy, even tax cuts at the bottom or middle paid in part by rises at the top – all, among others, have a role to play. On this divide, the Tories are extremely vulnerable – because they simply don’t grasp Britain’s living standards crisis to begin with. However eloquently delivered, David Cameron’s speech yesterday proved that.

The 'modernisers' of British politics are in retreat

Post for Shifting Grounds. Hopi Sen wrote an interesting response on his blog here.

The 'modernisers' of British politics are in retreat

Since the summer reshuffle, a lot of discussion has been devoted to the right-ward shift of the Conservative party. As Stewart Wood writes, the Tories detoxification strategy seems like a “distant memory”.

But arguably the fading of the Cameron project is just one piece of a broader picture, which is the fall from grace of a sub-sect within the political class which once reigned supreme in all parties: the so-called ‘moderniser’.

It is rarely noted that inside the three three main parties sit a relatively small group of people – advisors, MPs, lobbyists mostly – who have far more in common with one another than their own respective party faithful. Their views are distinguished by a metropolitanism and social liberalism. They are intensely relaxed over gay marriage and women’s rights, but also the filthy rich and the City; supportive of public services but besotted with ‘reform’ defined by marketisation; mildly redistributionist but sharers of a faith that increased tax on higher incomes hits aspiration, that the British middle class starts at sixty-grand a year and the working class has been replaced by an underclass. An unswerving commitment to flexible labour markets is likely to make them uncomfortable with anxiety over immigration, while crime is usually addressed through depoliticized phrases like ‘social exclusion’ or ‘problem families’.

As Julian Astle perceptively notes, in one of the few articles written on them, this group will tend to give different emphasis to these views depending on their respective party’s historical weaknesses. Most importantly of all, though, they position and define themselves by a battle with their own more provincial party base.

And for years they won out. This is what came to capture the essence of ‘Blairism’ and many Blairites within the Labour party by the late 1990s. Success at the polls meant their agenda framed British political debate practically unchallenged. Despite ousting Blair himself, ultimately Brown and the people around him couldn’t carve out an alternative to a zeitgeist still going strong within the party and in media circles.

That Cameron came to pick up the Blairite playbook is well known by now; the huskies, the pledges on public spending and overseas aid, the commitment to gay rights and a more open approach to Europe – all key components of the Cameroon project. What is less appreciated is that in retrospect the ascendency of Clegg and co. at the top of the Liberal Democrats was just another variation on a theme, as he moved his party away from the ‘soft leftism’ of Charles Kennedy towards this more fashionable centre. Out went taxing income to better fund public services and opposition to marketisation, in came greater focus on taxing property and pollution, on free schools and on aridly defined ‘fairness’ within existing budgets. Both Cameron and Clegg kept red meat for their base, but their direction of travel became clear enough.

Now, though, it’s a very different story. The Cameron set are well and truly in retreat, ‘in office but not in power’ as the old saying goes. The resignation of Louise Mensch (a politician quietly liked by trendy triangulating types within the other two parties) and emigration of Steve Hilton comes as the Tories prioritise brutal spending cuts and slash tax for millionaires, all the while stalling on gay marriage and trashing any green credentials they once had. Clegg is more secure – the Lib Dems are less factional than commonly thought – but even he has had to tack back towards proposing higher taxes on the rich, and speculation persists that he’ll be ditched for the more leftish Tim Farron.

Meanwhile, the defeat of David Miliband, the departure of Alan Johnson for Ed Balls and the dominance of the likes of Tom Watson has drastically reduced the influence of Blairites or ‘Third Wayers’ over the direction of Labour. This is the real stupidity of the recent GMB motion to ban Progress. Their formal power within the party has never been weaker. The soft-left totally dominate strategy, policy and often selections. And if we can’t make the most of that ascendency, then we have only ourselves to blame, not nonsense conspiracies about plots or coups.

Indeed, there is an opportunity to forge a new consensus amid the rubble of the old one. The old modernising consensus has fallen from favour in all three parties mostly because its playbook was forged at a time when the basic questions of political economy were settled. In this respect, it was broadly in tune with public opinion. But the financial crash and the decline in living standards has incinerated most of those assumptions, and meant the old agenda satisfies neither party rank and file nor voters. Public opinion is much more volatile and harder to capture than before (increased anger at bankers, the rich and inequality but also – sadly – recipients of welfare). It is this which explains what Rafael Behr laments as “the hollow centre of British politics”.

As both Behr and Wood argue, the Tory right has sensed this gap too. They are pushing on with increasingly bold and frightening agenda to plug it. Unlike Brown, Ed Miliband has proved he can operate effectively outside the old ‘modernising’ formula – he has not pointlessly picked fights with his base nor felt the need to match Tory policy or indulge in huskie style stunts.

But there is still a sense of caution to him at times – he recognises the moment British politics finds itself in, but seems reticent to fully follow through on its implications. For the first time as leader, he and the people around him head into conference this week without any real threat, as a chunk of his critics find themselves in the wilderness or fighting their own internal battles. That space needs to be used to match bold critique with bold policy. There may never be a better chance.

Success for Hollande could change the terms of the debate

Piece for Shifting Grounds blog



It’s fair to say that the fallout from the 2008 financial crisis has not been kind to the left. A favourite talking point of those writing obituaries for social democracy is that right-of-centre governments have come to dominate the continent, holding power in 22 of 27 EU countries. So as the French presidential election reaches its crescendo this week, the prospect of an Hollande presidency could prove a decisive moment in recent history.

For one thing, if Hollande makes it to the Elysee he will have been propelled there by a revival of the far left. The Left Front, led by Jean-Luc Melenchon, has assumed a place and importance in this election that must seem a distant dream to their UK counterparts. Working as a coherent counter-veiling force to Sarkozy and Le Pen, they have dragged the debate leftwards and re-connected with working class voters long since thought lost to apathy or worse, the Front National. Here we should at least allow ourselves optimism at what the broad left can achieve with a few charismatic or competent leaders, and with Pythonesque splits and sectarianism left in the past. (Not losing sight of the shared enemy, Melenchon has long urged his voters to transfer to Hollande in the second round.)

But we kid ourselves if we think what we are seeing in itself represents a ‘uniform swing’ to the left acrossEurope. The French system is distinct, and the left there work on far more fertile territory than in other states: France’s political discourse (if not electoral history) traditionally leans their way. What is of more importance is if Hollande both wins and is able to implement his policy platform in the face of vested interests.

The austerity economics of the past few years has brought into focus a phenomenon that’s defined the past three decades – that is, economic policy (and debate) largely framed by the prevailing wisdom among financial elites. The most potent embodiment of this in recent times has been the almighty position assumed by the international bond markets. Although treated as neutral, these have demanded a highly prescriptive form of right-wing economics in exchange for low interest rates – with particular focus on deep spending cuts and tax rises (on all but the rich) as the best means to reduce debt, deficits and increase growth. Any alternative is deemed ‘unworkable’ or ‘unrealistic’ at best, and haunted by the threat of punishment. This trumping of sovereign governments of whatever stripe, mostly derived from unchecked de-regulation and globalisation, forms part of what Zygmunt Bauman has called a ‘disconnect between power and politics’.

Hollande at least poses a challenge to this order. His manifesto proposes deficit reduction via stimulus and growth, and represents the first coherent alternative to austerity inEuropesince the collapse of Lehmans. It promises to boost state spending by €20 billion over 5 years, create 60,000 new teaching posts, fund new jobs for the young unemployed and invest in social housing. Alongside this is a new 75% tax on incomes over €1 million, taxes on banks and financial transactions, a ban on stock options and the promise of significant banking reform. Significantly, Hollande has also pledged to re-negotiate the EU fiscal treaty to give greater emphasis to growth over cuts, and to push for a more active role for the ECB.

While this is by no means revolutionary, it is far outside what is deemed acceptable in the pages of the Wall Street Journal. Sensing the threat, Hollande’s opponents at home and abroad have begun the scaremongering that will be familiar to anyone who’s followed the economic debate in the UK. Openly inviting speculation, Sarkozy has said the Hollande’s plan will turn France into a ‘new Greece’, while transnational financial ‘leaders’ have been summoned to warn of a ‘bloodbath’ in the markets – a ‘new wave of instability’ – should voters vote the wrong way, or Hollande have the cheek to act on his mandate. Echoing this, The Economist – which has long viewed the belligerence of France’s social model as a sort of childish impudence defying ‘inevitable’ liberalisation – has spent much time fretting that candidates ‘may actually mean what they say’! Deep spending cuts are presented as unavoidable, and a country whose underlying economic position is sound has suddenly been talked up to be on the brink of collapse.

Whether Hollande, if victorious, can face down such threats and intimidation and push ahead with his programme will tell us a great deal about politics in 2012. It will give us a clear picture of where the balance of power really lies between markets and democracy, and the real scope for change. If he avoids Mitterrand’s fate, and France emerges unscathed, he may help break the hoodoo that market reprisal has thus far held over Europe’s centre-left parties and their electorate, particularly in the UK. If no ‘bloodbath’ is forthcoming, and austerity’s ‘leading lights’ are exposed to have cried wolf over the French Socialists, then centre-left parties will have the beacon of a bold, workable alternative at the heart of Europe.

Of course, there is no guarantee that Hollande will stay the course – he is, ultimately, a pragmatist – nor that he will successfully pursue his argument at an EU level. So far, though, he has shown no signs of back-tracking. No doubt the resurgence of the far left, whose presence at least partially accounts for the scale of Hollande’s manifesto, helps to explain this – and should they remain united, they may yet have a key role to play in holding his feet to the fire.

Either way, the stakes are huge. Mark Fisher has defined the ‘No Alternative’ fatalism that has underpinned the neo-liberal era as ‘capitalist realism’. In his seminal book on the subject, he writes:

"The long, dark night of the end of history has to be grasped as an enormous opportunity. The very oppressive pervasiveness of capitalist realism means that even glimmers of alternative political and economic possibilities can have a disproportionately great effect. The tiniest event can tear a hole in the grey curtain of reaction which has marked the horizons of possibility."

Francois Hollande is no messiah, and his platform is no panacea, but it may yet prove to be that tear in the curtain that social democracy has so long been waiting for.

In praise of ‘anti-business snobbery’

Post for LabourList
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This afternoon, David Cameron gave a speech condemning what he called “anti-business snobbery”. This comes after months of self-pity in the business community over rescinded bonuses and the ‘responsible capitalism’ agenda.

This is likely to find a receptive audience in parts of the Labour right, many of whom have spent much of the past 18 months trudging around assorted conferences and events wearily rolling their eyes and waving uninspiring documents that urge the Labour party to match George Osborne every step of the away in his quest to be “relentlessly pro-business”.

The trouble with all this, and with the Prime Minister’s speech, is that in modern day parlance ‘pro-business’ is more often than not a proxy for the total abdication of critical faculties in the face of anyone with a bit of money.

Running through Cameron’s speech is the familiar premise that what is good for business elites and profits is always and inherently good for social progress and the economy at large. This logic has run through the approach politics has taken to economics over the past 30 years, as successive governments went weak at the knees at the sight of anyone calling themselves a ‘business leader’. The corollary is that all the state can do is remove countervailing forces to the ‘creative destruction’ of capital and just shadow it in awe – skill workers up appropriately, provide a basic safety net, and so on.

But all this is just not true. Three different phenomena that have emerged in the past ten years prove it so. Firstly, the unchecked growth and detachment of the financial sector from the real economy, leading directly to the financial crisis, deficit and drying up of credit for small businesses. Secondly, the separation between ‘wealth creation’ and wage growth, and the resulting explosion in inequality and damage to domestic demand. Thirdly, the slow polarisation of the labour market whereby middle income jobs are increasingly outsourced or replaced, leaving a bulk of low-paid, un-unionised jobs at the bottom and a tiny professional-managerial elite at the top; in short, a ‘social mobility’ ladder with the middle rungs knocked out of it. On top of all this, energy and train companies have turned their respective markets into effective cartels.

Some of this is the result of technological change it would have been hard to prevent. But much of it is a result of decades of deference to ‘business leaders’, an unshakeable faith that what is good for them is eventually good for the rest of us, and the hands-off approach to the private sector and globalisation which flows from it.

But none of the resulting damage should even come as a surprise to any progressive. It is in capitalism’s DNA to maximise profit and short-term ‘shareholder value’ by pushing down labour costs and wages. While there remains no coherent alternative to capitalism, this profit motive is regrettably necessary – but it should not be allowed to go unchecked or unquestioned. The business community is an interest group like all the rest. If we let their leading lights dictate economic policy, we’d be reducing the top rate of tax and abolishing the minimum wage. Does anyone outside of top two tax brackets think this is really the route back to prosperity?

It is the job of the CBI and their ilk to scaremonger and threaten – on the rare occasion the left has the confidence to persevere we find it is a rouse, as it was with the minimum wage in the 1990s. It’s only an outburst of ‘anti-business snobbery’ which forced Tesco to pay a wage and offer a job to the unemployed – I haven’t noticed their business model collapsing overnight. Similarly, the austerity agenda (complete with cuts in corporation tax) endorsed by our business establishment has proven a total failure.

A fair and functioning economy needs entrepreneurs, yes, but it also needs workers on decent wages with decent security and job prospects. This is a caveat we too often neglect when we fetishise ‘wealth creators’. Real wealth creation should be a collaboration. If someone wants to found the next Apple or Dyson, fine – good for them – but it is the role of the state and organised communities to ensure they pay tax, good wages and don’t try to monopolise the meaning of public good. If that makes me a snob, then sign me up.

Review: The Purple Book and Tangled Up in Blue

Shorter version of this is on the Fabian's Next Left blog

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Any willing provider? Labour's new anti-state chic. A review of the Purple Book andTangled Up In Blue

The Purple Book: A Progressive Future for Labour, Robert Philpot (ed), Biteback, 2011.
Tangled Up In Blue: Blue Labour and the Battle of Labour's soul, Rowena Davis, Ruskin, 2011.

Perhaps the most striking thing about the years following the economic collapse of 2008 was the absence of new ideas on the democratic left. Labour's election defeat confirmed for most that something had gone awry with modern social democracy. Most agreed that approaches to state and market had been ill struck, and that the economy had become too dependent on the City. But these axioms never gave birth to much in the way of renewal. All the while the Tories were stitching together their own story, re-casting the crisis as one of overspending and inefficiency, co-opting Britain's other allegedly centre-left party along the way.

It's amid this impasse in 2011 that Labour's multi-coloured insurgencies have emerged, offering their own readings of the past, present and future. Chief among them have been the Purple Book, organised by Progress, and Blue Labour, lead by Maurice Glasman but resuscitated from his misdemeanours here by Rowena Davis. Although many Progress members may now balk at the suggestion, the two actually started life closer than is often recognised. A number of the Purple Book's contributors and cheerleaders (e.g Caroline Flint, Tessa Jowell, Philip Collins) were involved in the first wave of seminars and publicity that gave rise to Blue Labour. They've since sensibly gone their own separate ways, but retain their shared starting point that the root of Labour's woes lay in becoming too centralist and remote; “administrative, elitist and technocratic”, as Davis puts it. Both claim to be interested in returning to Labour's decentralising tradition, and both eschew 'big state' Fabianism, top-down universalism and public spending as the solution to all of societies' ills.

As befits its organisers, The Purple Book approaches this argument in a considerably more slick, metropolitan way. At its best, it is far more thoughtful, practical and self-aware than many of its critics have given it credit for. It hangs together in a way few anthologies do, and is more astutely conscious of itself as an electoral strategy than its rivals. There are plenty of interesting ideas on the value of co-operatives as a means of spreading social control over public services (Caroline Flint, Steve Reed and Paul Brant's sections on housing are surprisingly engaging) and on revenue-raising at a local level.

The trouble with it is, at times, it feels like a new language is being adopted to advance a familiar agenda, which is essentially one of marketisation. The passage on public services that Paul Richards approvingly quotes from Blair's memoirs is interesting in this respect:

“...we have fashioned a template for reform: changing the monolithic nature of the service; introducing competition; blurring the distinctions between public and private....and in general trying to free the system up, letting it innovate, differentiate, breathe and stretch its limbs.”

Richards adds the only problem with this approach is it didn't consider social ownership in the mix. But he never really explores whether Co-ops should be prioritised above private providers, for instance, just that services should be removed from monolithic central state control. This ambivalence is made explicit by Alan Milburn who, on education, says:

“There need be no single model. There could be academies or trusts, parent-owned or community controlled, run by social enterprises formed by teachers or by chains run by voluntary, or for that matter, private sector bodies.”

The impression gained through the book is not of a central state endowing local communities, but of diversification and the state “letting go” as an end in itself. All this is fine if one believes in it, but it's difficult to know how it differs from the current government's 'any willing provider' approach to healthcare. Co-ops are in the mix and are to be encouraged, sure, but what of the potential for conflict between different providers? Surely a Co-Op couldn't hope to compete with private providers in terms of outcomes; does the state inherently privilege Co-Ops in the contracting process to balance this out? What are the rules applied when opening services to tender? What if no local group – or demand for co-operative control - emerges? None of these questions are ever really explored satisfactory, apparently lost to the contributors' reforming zeal.

A similar frustration stalks you as you read the books' sections on political economy. Tristram Hunt's contribution is fantastic, by far and away the best of the bunch. It wisely focuses on 'pre-distribution' and the need for the state - in smart, considered ways - to get 'up stream' and shape a more equitable distribution of the benefits of growth, as opposed to simply redistributing through the tax system. But this more bold, hands-on approach with the market is never matched or built on elsewhere. The living wage, pay multiples, greater democratic organisation in the workplace, regional or national investment banks - all are examples of small, fairly inexpensive things that can be done to achieve the more balanced economy the book talks of, but nothing like it is ever touched on. Instead we get a few nods to more “strategic” industrial activism from Peter Mandelson, but what this means is left fairly vague. Would it mean, for instance, protecting local communities from predatory takeovers of local industries such as Kraft's of Cadbury's?

Throughout there is often simply an unwillingness to leave well-worn comfort zones and suggest anything that might appear 'anti-business' or 'old Labour'. Instead the book frequently retreats into public service reform, or constitutional issues, as if the past 5 years hasn't happened. At the end of the book, editor Robert Philpot lists its recommendations – there are around 10 pages on reforming the state, and just 1 on reforming the market. But what the UK has seen is surely not a failure of the big state, but the market – or at least, the state's relationship with it. How else to understand the financial crisis, or the de-coupling of growth from wages?

In short, it's not that 'leaving the big state behind' (the books' promotional strapline) feels like the wrong prescription for the UK's problems – it's that it's the wrong diagnosis. When Patrick Diamond argues that “social democrats need to acknowledge that state intervention has left a multitude of social and economic ills untouched”, he writes as if we've just experienced 30 years of post-war Keynsianism. Nor did Labour lose because it was too statist. Philpot triumphantly reveals 1 in 4 of Labour's lost voters saw 'government as part of the problem not the solution' – but what of the other 4 in 5? Nobodies arguing there's a thirst for a Soviet-style command economy, but there is room for a positive case to be made for the state in the market, actively shaping it not least so that it puts money in the pockets of ordinary, hard-working people. A brash anti-statism simply neglects the challenges of our time.

A similar misreading pops up through the Blue Labour story, as documented in intimate and intelligent – if at times slightly breathless – fashion by Rowena Davis. It holds at its heart the mantra that “relationships are transformative”; that organising local communities is the best means by which to achieve social change. But instead, to Glasman, Davis writes, “the modern Labour party...seemed obsessed with expanding the state”. This would be fine were it just a piece of posturing, but it leads Glasman to sweeping statements (“the model that we had in 1945 of universal state based [provision]... lead to massive erosion of solidarity”) which can in turn beget frustratingly rigid policy conclusions.

Take Sure Start centres. Blue Labour, says Davis, wouldn't open more of them, because it believes they've become “a means of...free childcare” while both parents are at work, not of promoting relationships. Instead, Glasman wants the state to facilitate neighbours taking turns to look after each others kids. But Sure Start centres more often serve as a space where parents interact with and help other parents, picking up tips or sharing support as well as receiving it from staff. They foster exactly the sort of relationships that Blue Labour values in a more effective manner than ad hoc approaches. The idea that universal state services are always an anathema to social solidarity is simply false – as the public support the BBC or the NHS further shows.

This belligerence denies a more important, complicated conversation about when, where and how state services get it right in promoting relationship, and how they can change to get it right more often, rather than just cease. Here Davis tellingly notes that traditional social democrats were the only under-represented sections of the Labour party during Blue Labour's formative seminars - Sunder Katwala couldn't make it, and no Brownites were involved. It's difficult not to conclude that greater dialogue with the schools of thought Blue Labour sets up such antagonism to (particularly Fabianism) could give more nuance, and less divisiveness, to its conflict with 1945.

Yet there remains much to engage with about Blue Labour, and Davis convincingly argues that it has been received rather lazily by parts of the media (the reaction to Glasman's recent intervention serves as a case in point). Unlike both the Purple Book, and Philip Blond's Red Toryism, Blue Labour is rooted in a powerful critique of free markets, seeking to organise communities “against the dominance of capital”, on their high street and their workplace. This lends itself to plenty of thought provoking policy prescriptions. It has cogent ideas, for instance, on shifting the UK towards a more skills based economy, and its ‘a third, a third, a third’ model of public services (wherein, for example, a school would be run equally by the state, parents and staff) avoids a lot of the ambivalences of the Purple Book.

It’s also no surprise to learn from Tangled Up In Blue that Glasman wrote probably the two most rich and evocative Labour speeches of recent years - Gordon Brown at Citizens UK and David Miliband’s Keir Hardie lecture, both among the best either have given. There’s a certain magic and humanity to the Blue Labour language, of organising and action, that transcends the Think Tank generated jargon of our time. So much so in fact that its advocates occasionally slip by you a slight (and sad) exaggeration of the appetite among the public for getting involved in local decision making, something common to the Purple Book too. Oscar Wilde, afterall, famously said “the trouble with socialism is it takes too many evenings”, and Davis does in turn seem to over-state the influence of both Cameron’s ‘Big Society’ and Brown’s Citizens UK speech had on the electorate.

Nevertheless, it's imperative that Fabians engage with the strength and weaknesses of these two books. Social democrats shouldn’t allow ourselves to be boxed in as reflexive defenders of the state. Not even the most ardent among us can deny that occasionally government ends up feeling top-down and transactive, or that services need to be shaped by those running and receiving them. Neither should we dismiss the power and energy of community activism as only to be harnessed for winning election campaigns; sometimes you need to govern in poetry, too. But there is an urgent need to push back against the bogeyman-esque depiction of the state that at times animates Purple Book and Blue Labour thinking. We need to articulate a vision of the state that's not in opposition to organised communities, but in constant partnership with them, providing a bulwark against the dominance of capital and the dysfunction and alienation which accompanies free market capitalism. How’s that for a New Years resolution?