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”.

Obama must make poverty reduction a priority for his second term

Piece for New Statesman website
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As Barack Obama prepares for his second inauguration in front of the Capitol building on Monday, most politicos are by now familiar with the demographics which helped put him there. Election night saw 96 per cent of African-Americans vote for the President; 70 per cent of Hispanics and 73 per cent of Asian Americans. Less dependent on traditional independent voters, the Democrats 'expanded the electorate' by boosting turnout in these communities. 

That this causes a problem for the Republicans has quickly become conventional wisdom. It's been little noted, though, how the demographics of 6 November create a challenge for the Democrats too. An important component of the Obama campaign's "get-out-the-vote" (GOTV) effort was the President's personal appeal. There was a pronounced sense of a personal connection between many non-white voters and Obama, and of protectiveness (of which race was one but not the only factor).

The question for 2016 is, how do the Democrats maintain that level of support without Obama on the ticket? They are unlikely to find a candidate with the charisma, backstory and platform to match Obama, whose breakthrough was a truly once-in-a-generation event. 

The answer can only be that, from the White House to the Senate, Democrats need to go further in the next four years to deliver on substance for these communities. Here, immigration reform is often mentioned. But just as pressing is the indelible link between race and poverty in America, particularly in urban areas.

Far too many of the majority black neighbourhoods that helped deliver Obama's re-election in states like Virginia or Ohio continue to be blighted by hardship. A litany of grim statistics bears this out. More than 1 in 4 African-Americans and Hispanics grow up in extreme poverty - with millions struggling just above this threshold. Forty per cent of children in African-American communities grow up below the poverty line (the US is ranked 34 out of 35 of industrialised countries when it comes to child poverty). Poverty is not of course simply an ethnic minority issue – but they are clearly disproportionately affected.

None of this is new. The statistics are familiar, and wash over many American heads by now. But as Michael Harrington once wrote in his seminal book on the subject, The Other America, "you can rationalise statistics...but you cannot rationalise an indignity". Nearly fifty years after Martin Luther-King said that "I have the audacity to believe that peoples everywhere can have three meals a day for their bodies, education and culture of their minds, and dignity, equality, and freedom for their spirits", a significant chunk of the US is still held down by hunger, violence, illness, poor education and precariousness. And sadly, that number has increased since 2007.

Anyone going door-to-door in the election in some of the poorer parts of places like Franklin County in Ohio would have found many who benefited in some small way from the President's first term. Particularly so on healthcare. Stimulus spending and his general stewardship of the economy have also stopped a total collapse in living standards. It could have been a lot worse.

But, as the likes of Paul Tough have argued brilliantly, this is not the prospectus on poverty that Obama the candidate first emerged on. Then, he gave speeches – like the one in Anacostia which Tough details – arguing for a wide-ranging approach to poverty in America. Higher minimum wages and better union representation featured, but also specialised parenting, nutrition and early education programmes. 

If the campaign was anything to go by, the prospect of returning to this seems weak. In the parks and multi-purpose arenas in which Obama delivered his campaign stump speech, the mention of poverty was noticeably scant for a candidate largely relying on GOTV among poor neighbourhoods. If it was name checked it was in a more conventionally liberal way, usually about the need for more teachers – rather than at the heart of his moral vision as once before; his words had lost their transformative edge. As some observed, at times it was like listening to a John Kerry speech.

Prior to that, in office, Obama put up none of the fight for an increase in the minimum wage that he had pledged. He gave not one single speech on poverty itself. Many of the programs he once envisioned exist but remain under-funded and minuscule compared to his initial vision. The basis of union organisation remains weak, as legislation aimed at strengthening it fizzled out early on.

Little of this is Obama's fault alone, of course, but it speaks to a nation's priorities. It's part of a wider cultural blind spot in the US. As Harrington wrote all those years ago, a key dimension of poverty in America is its invisibility to many people. There are certain neighbourhoods most folks don't go into, certain parts of town many go their whole lives without seeing, especially in places like Washington. There's little space in the 'American dream' narrative for those who don't pull themselves up to greatness, or the middle class, but who quietly struggle for their whole lives. It's time the President carved one.

As in the UK, the problem is one not just of unemployment but perilously low wages and economic insecurity. The percentage of those working but still in poverty is at its highest in nearly two decades; average wages are in a thirty year slump. And more and more Americans are falling closer to the threshold. 

For this reason, it's particularly welcome that Obama prioritised, fought for and won protection of the Earned Income Tax Credit and Child Tax Credit in the recent fiscal cliff negotiations, which the Republicans had earmarked for abolition. Beyond that, though, he urgently needs to rediscover the spirit and ideas that animated his early words and interventions on poverty, like the one in Anacostia. African-American community leaders are gathering this week to pressure the President into making urban poverty a priority for his second term. 

There's no doubt that Obama remains a deeply intelligent and thoughtful man, of authentic social compassion. But his record on poverty is a case study in his journey from transformational candidate to good, solid but unspectacular liberal incumbent. He is said to worry about his place in history in this respect, and has asked historians how he can match up to likes of Lincoln. Bringing poverty out from the political fringes offers him this opportunity. For the Democrats, too, it can no longer be dismissed as a 'core vote' concern which turns off swing voters – if they are to replicate 2012's voting coalition in 2016, turnout among minority voters is the swing vote. They will need to act and deliver on a malaise still ubiquitous in far too many of those voters' lives. An electoral imperative has been given to an issue which should long ago have been a moral one.

Smarter HIV prevention in the UK

Piece for World AIDS Day 2012. Originally appeared here 
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Smarter HIV prevention in the UK

World AIDS Day. For many it will conjure image of young men in the 1980s dying helpless, horrible deaths in hospital wards. Many old enough to have been there will still be able to recall the raw panic that enveloped the early years of the epidemic.

In truth, though, while such imagery unquestionably helps us remember, and to raise money, they are not terribly useful for understanding the reality of HIV in 2012 – or for informing HIV prevention policy. Which is not to say HIV is longer an issue – last year saw the highest number of new HIV diagnoses among gay men in the UK on record. But rather that the epidemic here has moved on. And we desperately need to take heed of this if you’re going to bring down rates of HIV infection.

For one thing, thanks to treatment, if diagnosed early someone with HIV can expect to enjoy a near-normal life expectancy. Second, and most importantly, that treatment can reduce infectiousness by up to 96 per cent – making it extremely unlikely they will pass it on to others.

Quite obviously, though, this is only the case if the individual is diagnosed early. And it’s this which is the great challenge of HIV today. Late diagnosis explains the vast majority of people who die or develop AIDS. What’s more, crucially, it’s the undiagnosed who are now driving our epidemic. Fifty per cent of people with HIV in the UK are diagnosed late (CD4 count of under 350), 20 per cent very late (under 200). Twenty-five per cent of the 100,000 people with HIV don’t know they have it.

Earlier diagnosis through more regular testing thus becomes not only beneficial for personal health, but vital for public health and stopping the spread of the epidemic.

Clearly, conventional HIV prevention such as condom promotion and sex education remain crucial. But they must be coupled with a range of interventions aimed at increasing testing. Just throwing more money at community groups alone will not solve the problem. In short, we need a smarter approach to HIV prevention.

So what are the building blocks of this? Well-funded HIV services and a universal public healthcare system are pivotal. Sadly, both are being undermined by this government.

Beyond that, there are a range of steps the government need to take if they are serious about doing more to reduce rates of HIV. These include:

• Political commitment. The UK has no HIV strategy. The last one, introduced by Labour, expired in 2010, and has not been replaced by this government. This leaves us as one of the few countries in the world without a national HIV strategy.

• More proactive testing by health services. At the moment, testing is conducted on an ‘opt-in’ basis – it requires voluntary commitment by the patient. We need to move towards an ‘opt-out’ system – where your consent to be tested is implied unless you explicitly withdraw it. In high-prevalence areas, all GP surgeries should routinely test all new patients for HIV, while hospitals should do the same for every patient who walks through their doors. The last government commissioned a report which found that this was was feasible, cost-effective and highly successful in reducing rates of undiagnosed HIV. This government has made no real effort to back or implement this.

• In general, testing needs to move outside of just the GUM clinic into GP surgeries, hospitals, communities, saunas and clubs.

• Better HIV partner notification. Telling your recent hook-up when you’ve been diagnosed with HIV is a surefire way of getting them to go for a test. It’s really effective as a means of diagnosing people earlier. But it’s difficult. Services within GUM to support it are patchy at best, and need to be improved.

• An ‘annual testing’ message for Africans living in Britain. It exists for gay men – why shouldn’t it for Africans too? After all, they make up nearly half of the UK’s new HIV diagnoses.

Such steps are not as sexy as high-profile national prevention campaigns. But they would be as effective, if not more so, in stopping the spread of HIV in this country today. So let’s use this World AIDS Day to give money and remember those lost, but also to renew and update our public conversation about HIV and the steps we take to stop what is still, after all this time, a profoundly preventable condition.

The myth of the millionaires' exodus over the 50p tax rate

Blog for HuffPost
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The myth of the millionaires' exodus 

This week the Treasury spin machine went into overdrive in response to Labour's push to highlight the cut in the 50p top rate of tax.

The centrepiece of their case was that the 50p tax had reduced the number of millionaires paying tax in the UK by 10,000 from 16,000 to just 6,000. The Telegraph faithfully reported their argument, informing us that "two thirds of millionaires left the UK to avoid 50p tax". The Mail did likewise, publishing unquestioningly Harriet Baldwin's extrapolation that this cost the UK "£7 billion in lost tax revenue".

This narrative has been accepted by the right - of proof of the age-old maxim that taxing the rich proves counter-productive - and even by the left, as a cause for despair. It's also reached the other side of the Atlantic, giving succour to the Republican blogosphere in their argument against Obama's case on the 'fiscal cliff'.

The trouble is, it isn't true. Or at least there is no credible proof that it is.

The figures used have been worked up on the same basis as the HMRC's report on the 50p tax back in the Spring - and they're disingenuous for that same reason.

As I argued in a piece for LibCon back in March, this report was fatally - and probably intentionally - flawed, seemingly fixed to reach the conclusion George Osborne wanted it to. Primarily, this was done by isolating the top rate tax yield for tax year 2010/2011 - the year the 50p tax was introduced. The report showed a significant drop in top rate revenue for 2010/2011 from 2009/2010, and this was the main basis of the argument that the 50p tax 'raised no money' which justified it's abolition.

A gaping hole in this argument is that by the HMRC's own admission, a great deal of this drop was accounted for by (the non-PAYE paying) super-rich bringing bringing forward their income ('forestalling') and declaring it in 2009/2010 tax year instead, ahead of the pre-announced 50p tax rise. The key point is, by its nature forestalling can only happen once - those who did so could not have kept doing it in the years after; they would have had to have paid up. The 2010/2011 yield was thus artificially deflated; totally anomalous, and unreliable as a baseline. There may have been other more permanent forms of evasion in the mix, but the only way of knowing this - and the true effectiveness of the 50p tax - for sure would have been to wait for 2011/2012 returns. Which is presumably by Osborne avoided doing just that (given there was good evidence it raised a significant sum of money).

And so to yesterday's numbers. They too take 2010 figures, on the number of people declaring an income above £ 1 million, compare it to 2009 and note a drop - leaving the Telegraph and Mail to argue without evidence that they have all moved abroad. But just as with the tax yield, these figures are highly distorted and unreliable, given we know many top rate payers moved their income for 2010 forward to 2009 (this is especially likely to be the case with millionaires, as few would be on PAYE).

Treasury sources go on to state that the number of millionaires is now 10,000 - and shamelessly attribute this to Osborne's announcement of his intention to cut the 50p tax. In reality, it's much more likely that this increase is simply those who forestalled in 2010 returning, as they inevitably have to (a large part of the remaining gap between this figure and the mid-to-late 2000s numbers is likely explained by the financial crisis).

There remains little to no evidence that high earners have, or are planning to, move abroad in response to high tax regimes. For people on the right and left to take such blatantly skewed figures at face value does a real disservice to the level of debate an area as totemic as tax policy should demand. Sadly, I doubt the sleight of hand will stop here. My guess is the next trick will likely come a year before the election. Given the cut in the 50p tax has been pre-announced, it's possible that some income will be delayed being declared until after the cut - some chartered accountants are already advising the super-rich on just that. This will artificially inflate the 45p rate 2013/2014 revenue, allowing Osborne to compare it to 2010/2011 and announce the top rate cut a great success in getting the rich to pay more. If the debate on this issue so far is anything to go by, it's likely he will go unchallenged.

There are evidently parts of the Government intent on fighting a war on behalf of the richest 1% in our society. The first casualty of that war looks to be the truth about the 50p tax.

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.

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.