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June 01, 2016

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gastro george

Just to correct the usual myth. Blair did not, personally, "win" 3 elections. He was already discredited and losing the third when Brown was brought into the campaign with the message "vote Blair, get Brown".

Nicholas Gruen

Apropos of the failure of top down organization, you may find this reflection on our present ills of some interest.

http://clubtroppo.com.au/2014/11/19/complexity-reducability-integrity-and-bullshit-the-general-untheory/

brian t

I don't understand the treatment of immigration as a yes/no, black/white question. If I was an American and against all immigration, I would be a hypocrite, given the history of the country. Immigration is valuable and welcome in moderation ... but like any good thing, too much of it can make you sick. Countries such as the UK are so attractive to migrants, the very things that make them attractive are in danger of being swamped by excessive immigration. It's not the principle, it's the rate that's the problem.

Phil

The interesting thing about those three elections is the Labour/Lib Dem vote share - 43%/17%, 41%/18%, 35%/22%. The two together took over 55% of the vote each time - a level not seen since 1974, and (obviously) never seen again after 2005. When you take into account the Lib Dems' part in locking the Tories out, you can argue that Blair won those three elections as the head of a centre-left bloc - with the Lib Dems increasingly forming its left wing.

gastro george

@Phil - the interesting thing then being how the Lib Dems, having found a coherent and electorally profitable niche to the left of Blair, then subsequently committed suicide.

Deviation From The Mean

"A radical response to the crisis requires that “elites” be challenged. New Labour and its epigones are unable to do this."

It would be more accurate to say that New labour and its epigones (looking at all Liz Kendall supporters here) believe that elites are needed and that challenging elites would be damaging. So they are unable to challenge elites because elitism is at the core of their ideology.

Bob

"It’s austerity to blame for these, not (for the most part) immigration."

It is both.

All the studies including the one you link to get the null hypothesis wrong. They fail to separate out those who would get a Visa with those who wouldn’t. So they are simply wrong.
Leaving the EU is only about the latter category of worker.

So unless the remainers can provide a study on that category, then they are useless in evidence. Because the issue is not migrants *as an aggregate* as the whole EU debate is about migrants who wouldn’t get a Visa.

Unlimited immigration of *unskilled* workers may well suppress the wages, housing and public services available to equivalent skilled (and unskilled) workers in the UK.

The trick the Portes of the world use is to aggregate the skilled and unskilled immigrants together and *refuse to talk about that set of people that would be excluded outside the EU* – those who wouldn’t otherwise get a work visa.

A vote for Brexit says we don't need *unskilled* immigration, and we don't necessarily need the skills of the EU.

We need access to a world market for skills on an *equal basis*. The UK immigration system should work like most in the world - a skills based system.

Phil Perspective

gastro george:
The real point being that Labour won three elections in a row.

D

The paper you cite on the benefits of choice in education is utterly lamentable. It starts from the presumption that for most kids another, equally good school is just a short drive away.
I live in Northumberland. We have kids here who have to stay in a hall of residence during the week because the only school, for them,is a very long drive away. Choice is often not an option in rural communities - and the same goes in healthcare and a dozen other public services.
Leaving aside that difficult detail however, the underlying assumption is that choice will drive up performance,based on a presumption of rational actors making rational decisions in a climate of universal knowledge about the factors that make up a good school. Bluntly, if you believe that, you'll believe anything. Markets(and a choice based education system is a kind of market) function on asymmetries of information, with the profit going to the person who has the most useful stock of information.
Choice does not deliver improved performance; it delivers variation, but variation does not, on and of itself, imply improved performance.

Bob

"Tax credits, financed by taxes on land and inheritance are both egalitarian and efficient."

Linking two things that are unrelated. Giving business cheap labour is just as much stupid rent seeking as land rents and inheritance.

Tax credits are a stupid idea that subsidise jobs that should be automated away. Once you have sufficient jobs for all due to a Job Guarantee then private businesses have to compete for labour. That gets rid of the 'Parasite economy' that Nick Hanauer talks about here:

http://prospect.org/article/confronting-parasite-economy

I wonder why you are against competition in the labour market? Are you a Parasite?

This is why our productivity continues to be poor. You can see the evidence in every hand car wash across the nation. People employed to wash cars by hand, subsidised by tax credits, when we have perfectly serviceable machines that do the same thing.

What you want is unskilled EU nationals entering the UK and taking low-paid jobs subsidised by tax credits. That does not create sufficient multiplier to increase the wages and standard of living of those currently resident.

And it is only unskilled EU nationals. The ones that wouldn't get a work visa that are in play in the election.

The question you have to answer is why shifting the population of one country to another is of any benefit to either remaining nation. Why not move the work to where the people actually live instead?

Bob

"Demanding higher capital requirements for banks, for example, isn’t especially radical. Nor are policies to ensure better funding of entrepreneurs, as Liam Byrne has advocated (pdf)."

Haha. You can't see the contradiction.

Wren Lewis and his pals don't have the right diagnosis - based as it is on price for lending rather than what can be lent, to whom and for what.

What is needed desperately instead is asset side regulation of banks. If a bank loan does not meet certain criteria it becomes a gift.

Personally I think the *only* reason we should pay bankers to do anything is if they can demonstrate the skill of underwriting capital projects against a prospective income stream.

In simple terms this means somebody going into a bank with a proposal that requires a certain amount of money. The bank staff considers whether the prospective income stream proposed to repay that money is adequate to repay the loan and pay the wages and costs of the bank - including a reasonable return to whatever risk capital underpins the bank. Note that there is no asset collateral involved in this process.

The way I would narrow banks is to offer them an incentive - an unlimited cost free overdraft at the Bank of England. 0% funding costs.

In return they must drop all the side businesses and just do capital development lending on an uncollateralised basis - probably in the form of simple overdrafts. In other words they become an agency businesses delivering state money to those that require it.

A capital buffer is possibly not required here. Losing your lending licence if your underwriting isn't that good should be sufficient incentive to run a tight ship. Backing off the entire thing to the central bank reduces the barriers to entry in lending - making self-employed, highly dispersed and, importantly, locally focussed underwriters a possibility.

Any lending businesses that doesn't want to take the oath, then has to fully fund their lending on a maturity matched basis Zopa style. No deposit insurance, no access to the Bank of England, and losses absorbed by those doing the lending. This then becomes the fate of the shadow banking system - the building societies and money funds.

Any thoughts?

Socialism In One bedroom

A skills based system will probably increase the immigration of skill based people because it is a system that tries to attract people, incidentally at the same time reducing the chances of native people getting skilled work, leaving the natives with only unskilled jobs! What an inspiring vision!

The reason Australia's skilled based system makes sense, whether we agree with it or not, is that given their geographical location you need incentives to get people to come. So the skilled based system basically says, please come here!!

Of course what a skill based system does is provide the professional Middle Classes with free movement while the vast majority are denied it. Another example of where everyone is free but some have more freedom than others!

Free movement for all!

Bob

"It starts from the presumption that for most kids another, equally good school is just a short drive away."

Yep. Because 'free markets' can only work where 'no deal' is an option for both private parties. In reality competition is wasteful because it generates massive duplication.

Can't you see the benefits of free markets? Look at what has already happened in America, where they have the cheapest and most cost-effective healthcare in the entire world :D

You really do have to be a true believer in the power of markets to think you can create a market in something where 'no deal' isn't really an option.

Bob

"Of course what a skill based system does is provide the professional Middle Classes with free movement while the vast majority are denied it"

Outside the EU, when we can control our borders, we can ensure that every resident has a living wage job - funded directly at zero cost by the 'Ways and Means Account' at the Bank of England.

Living wage jobs in people's communities across the country. Preventing them from having to wander the country and the continent to scratch a living - which is the vision of the EU treaty and what the euphemism 'freedom of movement' actually means on the ground to ordinary people.

George Kendall

In my opinion, Simon Wren-Lewis is part of the reason Labour lost in 2015.

Labour lost, above everything, because of a lack of economic credibility. That was because they abandoned the narrative of their 2010 election campaign.

In 2010, the narrative was: "we've had an enormous financial crisis, as a result we have an enormous deficit. A Labour government will take the tough decisions necessary to bring this deficit under control. However, it will do so in a careful, sober way, which doesn't shock the economy back into recession."

Admittedly, the 2010 election was a bad result for Labour. But considering they'd led the country into the worst economic crisis in generations, it could have been far worse.

But, considering the pain to come as the deficit was cut, Labour should have won in 2015.

Their strategy should have been strraightforward:

1) Argue that the Darling plan for cuts was correct
1a) a steady reduction, but not the premature cuts Osborne was proposing)
1b) a fair programme of reductions, which made sure the very rich paid their share
2) argue that the Osborne plan was too fast
3) every time Osborne slowed his plan down (as was entirely predictable), treat that as an endorsement of the Darling plan, but say, not quite slow enough
4) once Osborne had slowed to the Darling plan say: "at last you're about at the right pace, but your over-severe cuts earlier damaged the recovery, and you've let the super rich get off without sharing the burden."

I'm pretty sure the above is what David Miliband would have done.

Instead, Labour listened to leftwing economists who argued Labour should be more radical in its opposition to austerity. They listened too much to economists like Paul Krugman and Simon Wren-Lewis, as can be seen in Ed Balls' Bloomberg speech.

There's a lot of debate among economists about whether Paul Krugman and Simon Wren-Lewis were right on the economics. But, in my opinion, their political presentation was suicidal. And Labour adopted it.

Keith

I think G Kendall is wrong. Being austerity lite is exactly what Labour was under its former leader and shadow chancellor; they tried to do what he advocated and it failed. Partly as it is hard to live down being in power when a recession hits. And as most voters know fuck all about economics.

As for the "centre left" and its ability to win by being radical etc I think there is a problem of definition. The leaders of a Parliamentary Party aim to win elections by appealing to a large group of people many of whom are not radical at all, while some are very radical but in a far left revolutionary way or a Libertarian way. The part of the electorate that is far left or libertarian give their votes to Labour or another party on sufferance, always being willing to leave or abstain if they get the hump. While the rest base their voting on perceived economic performance which may or may not have anything to do with the Labour party being in power, or who its leader happens to be at any time. Trying to appeal to both the two groups is quite hard and needs good luck and good PR. But trying to straddle the two groups is likely to be possible for a limited period only. As you cannot give them all what they want. The groups tend to fall out eventually and that follows from the method of pragmatically trying to appeal to large demographic constituencies with a reformist programme. All reformism ends in failure.

The traditional approach of the Labour Party to the problem of power is to say the Labour Party is part of a wider movement at home and abroad including Trade Unions, co-ops and think tanks. Power is achieved by all groups working to educate the public in the desirability of socialism. And socialism is defined as policy that all three will find in their interest to support and which they can sell. Which means simple ideas for the less educated and appropriate slogans and PR combined with a more complex set of ideas for the more sophisticated. Winning is not a goal in itself, and it requires a permanent educational process. This process is what should be improved and made effective. On the understanding that it will not always produce election victory but is an essential foundation. Also in defeat a strong Movement limits the harm a Tory administration can inflict.

Nanikore

Careful of this pronouncements by the neo-liberal elite that migration does not affect workers wages. Usually all these pronouncements come back to the same person - Jonathan Portes - who with Dustman said that there would be minimal inflow of workers into the UK following EU expansion eastwards.

Neo-liberals have been playing down the effects of economic globalisation (trade, capital, labour flows) for decades. As someone who purports to be a Marxist you should be particularly sceptical. We have had a long term unemployment problem in this country for a period that has long preceded austerity policies. To his credit Boris Johnson has pointed out that an infinite supply of low paid labour since EU expansion discourages the entry of native workers - it makes minimal wages difficult, it discourages training of native labour by private firms, and the raising of wages in high cost areas like London. If you think these models can properly catch these effects, you are kidding yourself. Varoufakis pointed out simiarly that "forecasts of economic armageddon by Treasury and others following Brexit are not worth the paper they are written on. Just because there is a consensus among the orthodoxy does not mean what they say is fact.

It really comes down to context, but in the US now David Card has argued that immigration has been positive in some areas, not in others. As with trade and capital flows, it will take a while for the orthodoxy to catch up. The important thing the heterodoxy and Marxists can do is stay ahead of the debate and question this orthodoxy.

john

It would seem "electability" then could be thought of as a diversion to push through a redefinition of the scope of potential electorate intention. It reins in the urge for substantial change and substitutes strategic voting, the lessor of evils, gradualism, the art of the possible, etc.

Socialism in One Bedroom

"what the euphemism 'freedom of movement' actually means on the ground to ordinary people."

What freedom of movement means in Bob's world is that the rich get freedom of movement and everyone else is denied it! Simple as that. No one ever leaves the village! I presume while Bob will prevent us from wandering anywhere he will allow marriage outside the family?

Bob

"What freedom of movement means in Bob's world is that the rich get freedom of movement and everyone else is denied it!"

Correct. You stay in the village. I don't have any problems with open borders when limited to countries with the same social standards however (full employment at the same wage (£10/hour), universal healthcare so the USA is out etc) - so that we can maintain the British tradition of treating everybody resident within our borders the same, whether native or invited here on Visa or by a passport in the new, initially empty open border area.

Outside the EU we can do something about the race to the bottom and create a positive differential to the rest of the world via controlled borders. With open borders you just can't do it.

So it's really whether you want to stick with the EU lowest common denominator, or raise the UK above that for the betterment of ordinary people in the UK. By limiting open borders to my conditions we can encourage the EU to move towards Utopia.

Unfortunately for lefties like Corbyn and yourself if you don't believe in countries it is very difficult to be elected leader of one.

Either engage with us social conservatives on immigration and work, or keep losing elections. Of course eventually the collectivist right will gain power anyhow as seen in the rise of nationalist parties across Europe.

ad

Leaving aside that difficult detail however, the underlying assumption is that choice will drive up performance,based on a presumption of rational actors making rational decisions in a climate of universal knowledge about the factors that make up a good school

D, when choosing between two schools they could toss a coin and get it right half the time. If they can beat a tossed coin, they will go for the better school more often than not.

Unlike the education establishment, with its generations-long enthusiasm for one disaster after another. But why should they care, when they are the ones with a monopoly?

gastro george

The problem with SWL's piece is that it ignores the fact that the, rather misnamed, centre-left exists precisely *not* to offer radical responses, but to manage neo-liberalism.

Ralph Musgrave

One reason why lefties failed to produce a solution to the financial crisis is that they tend to be more interested in parading their moral superiority to the rest of the human race than actually THINKING about quite difficult problems. Plus another favorite activity of theirs is screaming insults at anyone who disagrees with them ("racist", "fascist", "xenophobe", "bigot", etc). That's emotionally satisfying, but it doesn't solve problems.

Blissex

«Admittedly, the 2010 election was a bad result for Labour. But considering they'd led the country into the worst economic crisis in generations, it could have been far worse. But, considering the pain to come as the deficit was cut, Labour should have won in 2015.»

Perhaps Labour lost the 2015 election mostly because they lost Scotland because of FPTP.

But a more overall realistic assessment is that elections are won and lost on southern house price increases:

* When southern house prices go up, incumbent governments get returned.

* When southern house prices go down, the opposition gets to government.

* When an incumbent government has let southern house prices fall, it takes 10-15 years for voters to forget that party's guilt.

Labour votes 1995-2010 steadily fell; T Blair IIRC never had as many votes as J Smith had, and never increased the labour percentage.

It just happened that the Tories let southern house prices fall in the early 1990s, and voters kept them out of power for 15 years, also because New Labour kept pushing those prices up, until New Labour let southern house prices fall in the late 2000s, and the Tories were returned to power for 10 years.

The spending budgets of so many southern voters are so dependent on house price capital gains directly (remortgaging) or indirectly (by allowing saving to be zero) that they simply cannot afford to vote on anything other than their property interests.

Blissex

«Careful of this pronouncements by the neo-liberal elite that migration does not affect workers wages.»

Those studies show something different from «migration does not affect workers wages», that's quite the wrong summary.

What they show is that *average* wages, those of *all workers*, including the majority that are not in direct competition with immigrants from low-pay countries, *do not fall* significantly during periods of very expansionary policy and high immigration.

That is, immigration from low-pay countries is probably affecting low end wages significantly, by preventing them from rising during a long boom, by canceling out the effect of the long boom on wages.

After all, one of the rationales used by the UK political class for pressuring the EU to expand to include very low-pay countries like Romania and Bulgaria was that immigration from low-pay countries was deflationary, and indeed the UK was the only country that did not ask for a waiting period for immigration from the new members.

Various political figures pointed out how an influx of low-pay immigrants would push or keep down labor costs in the NHS and old age homes and in retail, to the benefit of the native middle classes.

Metatone

As an aside, can we stop uncritically referencing Carol Propper's work? There are serious issues with the context and methodology used. There are valuable nuggets in there, but just uncritically linking to her pieces and suggesting they make a case for her favoured reforms is not informative.

Shoreview45

But how about the idea that the migration of people within the center-left has resulted in an activist political base of really very economically conservative upper-middle-class types who simply want the race-bating and the homophobia to stop?

Go to the US and look how the blog DailyKos has changed over the years; ten years ago the mantra was "more and better Democrats", with "better" meaning "more left wing", and most posters were demanding Bernie Sanders-type solutions. Now the majority on that site regards him as loonie because they fear their taxes will go up. And why? Because DailyKos has become predominantly male, white, middle-aged and upper-middle-class. And US Democrats adjust their message accordingly because DKos is a huge source of campaign donations.

There isn't really a corresponding concentration in the UK, but a similar residual effect from New Labour is still very noticeable. And so Labour is split between a "professional left" of upper-middle-class liberals who basically accept neoliberal orthodox economics, and a hoi polloi of traditionally left people who are politically active but excluded from the core of the party.

So, no wonder Labour's dysfunctional. It has to sort out whether it's liberal or social-democratic, in a situation where a liberal slant might weaken the LibDems and even attract a few One Nation Tories but will also kill any chance of stopping UKIP and concede votes among the more progressively-minded parts of the middle and working class to the Greens, while a social-democratic slant might at least stop further working class leakage and squeeze UKIP in a good way but alienate the tax-averse upper-middle class.

Blissex

«And so Labour is split between a "professional left" of upper-middle-class liberals who basically accept neoliberal orthodox economics, and a hoi polloi of traditionally left people who are politically active but excluded from the core of the party.»

My usual quotes from the horse traders' mouths appended. But they will be ignored by most delusional lefties, who still chant "el pueblo unido james sera vencido", and think that most voters still want better jobs and wages.

«alienate the tax-averse upper-middle class»

The upper-middle (by income) class are not that tax-averse in the UK, they are however very, very obsessed with house prices.

L Price, 1999:
«Philip Gould analysed our problem very clearly. We don’t know what we are. Gordon wants us to be a radical progressive, movement, but wants us to keep our heads down on Europe. Peter [Mandelson] thinks that we are a quasi-Conservative Party but that we should stick our necks out on Europe. Philip didn’t say this, but I think TB either can’t make up his mind or wants to be both at the same time.»

T Blair, 1987:
«Only about a third of the population now regard themselves as ‘working-class’. Of course it is possible still to analyse Britain in terms of a strict Marxist definition of class: but it is not very helpful to our understanding of how the country thinks and votes. In fact, of that third, many are likely not to be ‘working’ at all: these are the unemployed, pensioners, single parents – in other words, the poor.
A party that restricts its appeal to the traditional working class will not win an election.»

So to get to government to pursue the interests of the working class minority a centre-left party has to ally with the middle classes, just like a far right party like the present-day Tories needs to do the same to get to government to pursue primarily the interests of the upper class.

But New Labour ended up using an alliance between the middle class and the working class not to pursue primarily the interests of the working class, but to pursue primarily the interests of the middle class.

That is blairista New Labour was mostly a mandelsonian centre-right party, not a brownista centre-left one. A blairista critique of G Brown's position that illustrates the centre-right nature of blairism:

«Although Mr Brown talks a lot about aspiration, he means it in the sense that people at the bottom of the pile should be able to get to the middle, rather than that those in the middle should aspire to get a little bit further towards the top.»

With the clear understanding that here "aspiration" for the middle of the pile means "bigger house prices".

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