Stumbling and Mumbling

Labour's antisemitism problem

Simon Wren-Lewis says that, faced with the prospect of a Johnson-led government, Jeremy Corbyn is the lesser of two evils and should therefore be supported. I tend to agree, but with two caveats.

One is that we cannot dismiss Labour’s problem with antisemitism. True, nothing Corbyn has ever said is as overtly obnoxious as Johnson’s talk of “picaninnies” or that Irishmen are all called Murphy. The evidence for his antisemitism consists in a deafness to anti-semitic tropes; a failure to call it out when he should; and a closeness to the sort of moralizing conspiracy theory that can spill over into antisemitism.

Mild as they are compared to Johnson’s racism, however, these are genuine failures. For obvious reasons, Jews are rightly awake to tail risk – the tiny chance of genuine hostility. If even one Jew is made to feel sincerely uncomfortable by the possibility that a Labour government even might be antisemitic, that is abominable. And it is an indictment of Corbyn.

My second caveat is that I don’t think Simon, or many leftists, are drawing the right inference from a wholly correct observation – that the media is horribly biased.

True, Labour’s antisemitism is being overplayed and Tory Islamophobia understated. True, some of those accusing Labour of antisemitism are gross hypocrites who were happy to acquiesce in subtle antisemitic slurs on Ed Miliband. True, there is no equivalence between the gibberings of a few twats in Labour and the overt and systematic racism of the Tories’ “hostile environment” policy.

True, true, true,

And irrelevant. Labour faces the same problem as football team when the referee is bent. Its mild infractions are penalized whilst its opponents can get away with serious fouls.

But what should a team do in such circumstances? Complaining would energize its supporters. But the ref will deny his bias and book players for dissent. Complaints won’t win the game.

Instead, what the team must do is to be cleaner than clean. Its only hope is to not make any risky tackles which give the ref an excuse to award penalties. As my old dad said, “never give a cunt a chance to be a cunt.”

And this is what Labour has failed to do. In failing to ruthlessly expel anyone even whiffing of the possibility of antisemitism, it has given its enemies something to exploit: the need for Labour to win an election trumps anybody’s right to be a member of it. This might be a moral failure, but it is certainly a horrible tactical blunder.

All of which raises the question. Is Simon right to say the only choice is between Johnson and Corbyn? But could we do better? Could we have a radical Labour party without Corbyn and his public school Stalinist entourage?

Many decent leftists are cleaving to Corbyn in the fear that throwing out the fetid bathwater of antisemitism would also mean abandoning the (so far half-formed but nevertheless inspiring) prospect of a genuine alternative to actually-existing capitalism and retreating back to managerialist defences of inequality. I honestly don’t know how justified this fear is, although it is troubling that too few of Corbyn’s critics are striving to allay it. And whilst this fear exists, Simon is right: Corbyn is the lesser of two evils.

Costs of recession

The Resolution Foundation’s James Smith has written a nice paper on the likelihood of recession and the fact that, with monetary less able to support the economy, we need to think about alternative ways of tackling recessions. I just want to amplify what he says in two ways.

First, there’s increasing evidence that recessions can do long-term damage, even if the economy appears to bounce back in the short-term. There are at least three mechanisms here:

 - Education. Bryan Stuart shows that the 1980-82 recession in the US “generated sizable long-run reductions in education and income.” Parents who suffer a drop in income spend less on children’s books and educational trips, and this makes them less likely to go to college a few years later. Such effects are magnified if bad macro policy causes restraints upon public spending on schools and libraries.

 - Productivity. Recessions increase uncertainty, which depresses investment in both capital and R&D, leading to lower productivity growth. The Bank of England’s Dario Bonciani and Joonseok Jason Oh say:

Shocks increasing macroeconomic uncertainty can lead to very persistent negative effects on economic activity that last well beyond the business cycle frequency. 

 - Scarring. A recent paper by Erin McGuire shows that people who grow up in hard times “invest less in risky assets throughout their lives, invest more in property, and are less likely to be self-employed.” This corroborates research (pdf) by Ulrike Malmendier and Stefan Nagel. Through this channel, recessions can reduce entrepreneurship and increase the cost of capital even decades later.

Against all this, it is theoretically possible that recessions have a beneficial “cleansing” (pdf) effect: in driving inefficient firms out of business, they make it easier for more efficient ones to expand, and this raises productivity growth.

One Big Fact tells us that effect hasn’t operated recently: productivity has flatlined since 2008. One reason for this is that financial crises can hamper the expansion of even the best firms, in part by causing them to fear for the future availability of credit.

All this evidence makes me believe that recessions are more costly than I (and I suspect others) previously thought. Policy-makers should, therefore, do more to prevent or mitigate them.

Which brings me to my second amplification of James’ paper. “We can’t recession-proof the economy” he says. He’s right. We cannot prevent recessions by seeing them in advance and relaxing monetary or fiscal policy, simply because recessions are unpredictable. Back in 2000 Prakash Loungani wrote that “the record of failure to predict recessions is virtually unblemished”, a fact that remains true today. The Bank of England did not cut Bank rate to 0.5 per cent until March 2009, a full year after the recession began.

For me, this requires alternative policies. Some should aim at reducing the risk of recession, for example by ensuring that banks are so well capitalized that losses needn’t lead to cuts in lending. Others should aim at moderating recessions via strong automatic stabilizers, such as progressive taxation and a strong welfare state – and perhaps a job guarantee. 

Yes, such changes might reduce the benefits of the cleansing effects of recession. I suspect, though, that such  productivity-enhancing gains could be achieved at much lesser cost by policies to increase product market competition.  

Of course, recessions are an inevitable aspect of capitalism. With their costs now greater than previously thought, it is all the more important to mitigate them, which requires not just macro policy but also institutional change.

Don't abolish private schools

Should we abolish private schools, as some Labour activists are advocating? For me, this is a tricky issue.

The case for not doing so is simple – freedom. My instinct is that folk should be free to spend their money how they want. (I know nobody values freedom these days but I’m an old man, so indulge me.)

As with many other activities, however, this freedom imposes negative externalities onto others.

One is that it creates unequal opportunities. Fees at Oakham School – to take my neighbour – are more than three times as great as average spending (pdf) per pupil in the state sector. Such massive inequality in spending is bound to cause some inequality in results. It’s no surprise, therefore, that the privately-schooled are over-represented at Oxbridge and in top jobs.

The second is that the excessive influence of people from private schools in politics and the media causes systematic distortions. Our elite is arrogant, overconfident, out of touch and too heavily influenced by an Oxford Union conception of politics as a game of facile debates rather than of technocratic expertise.

But, but, but. There’s a question here. Do private schools instil overconfidence or do they merely reveal it? Would Cameron, Rees-Mogg, Farage and Johnson still be arrogant pricks if they had gone to a decent state school instead? Certainly, they would still have several advantages, such as a wealthy upbringing and family contacts.

It’s hard to say. Most parents who can afford to do so send their kids to private schools, and the ones who don’t are sufficiently different from the others that they hand down very different cultural capital to their offspring.

In fact, abolishing private schools might merely replace one set of arrogant dickheads with another. I say so because of something said by in 1957 by Michael Young (whose son is of course an advert for abolishing private schools):

If the rich and powerful were encouraged by the general culture to believe that they fully deserved all they had, how arrogant they could become and, if they were convinced it was all for the common good, how ruthless in pursuing their own advantage (The Rise of the Meritocracy).

Fred Goodwin, boss of RBS during its downfall, for example, went to state school. If private schools gave us Brexit, state schools gave us the financial crisis. 

So, what are the alternatives to abolishing them?

One possibility is to impose quotas on how many people universities and professions can draw from private schools – a more rigorous and widespread version of the Texas law which requires that universities offer places to the top 10% of pupils from any school (a measure passed into law by that notorious communist George W. Bush). The virtue of this is not so much to promote social mobility, which is a dubious aim. It is instead to ensure that elites are more cognitively diverse. If fewer BBC journalists were privately educated, we might see less deference to “Boris” and the promotion of a different conception of politics.

Secondly, we should have more progressive income tax. This would, in effect, be a way of pooling the risks of having gone to a good or bad school. And in reducing top incomes it would depress demand for private schooling.

Thirdly, we need more egalitarian forms of decision-making in companies and in politics. Properly structured systems – those that reduce the risk of groupthink – might reduce the danger from overconfident leaders, be they privately or state educated*.

Such systems might achieve the twin benefits of preserving freedom whilst reducing the externalities of private education.

But only might. “Meritocrats” might resist progressive taxes and collective decision-making, believing them to be restrictions to their entitlements. And perhaps there really is causality from private schooling to overconfidence – if all that talk of instilling “leadership” isn’t just bull. My preference, though, is to try these methods first, If we don’t there’s a danger that abolishing private schooling would be like abolishing the monarchy; it attacks epiphenomena of privilege rather than their true causes and effects.

* Overconfidence can be a good thing, but more often in entrepreneurs than in established organizations. One case for quotas is to force the privately educated into professions where overconfidence is a virtue rather than vice. 

Disaster capitalism: some doubts

Could “disaster capitalism” actually work? This is the question posed by Grace Blakeley, who writes:

A no-deal Brexit is to Johnson and Hunt what the financial crisis was to Cameron and Osborne – an opportunity to rebalance power and wealth in society away from labour and towards capital.

Here, some distinctions are necessary.

One is between effects and intentions. A precedent for successful disaster capitalism was the 1981 recession. It greatly weakened workers’ bargaining power and caused capital scrapping, both of which helped to restore profitability. This, however, was not Thatcher’s stated intention: she did not expect her policies to cause a recession. And it might not have been her actual intention either.

Similarly, I don’t know whether Johnson really believes a no-deal Brexit will help increase capitalists’ wealth and power: I can’t read minds and in his case I don’t want to. But it doesn’t matter. No-deal might or might not have this effect, whether Johnson intends it or not.

A second distinction is between free market policies and pro-capitalist ones.

Grace claims that “Cameron and Osborne used the financial crisis as an opportunity to shrink the state.” I’m not sure about this. As Sam says, they “totally failed to make a broad-brush case for free markets” and failed to sufficiently improve public sector efficiency with the result that their cuts were unsustainable. As a result, the share of public spending in GDP this year, at 37.9%, is greater than it was in the early 60s or in the early years of New Labour.

But no matter. Healthy capitalism requires a biggish state not only to provide subsidies to banks, corporate welfare, infrastructure and automatic stabilizers, but also to provide good enough public services to diminish discontent. Shrinking the state and supporting capitalism are two different things. 

A third distinction is between capitalism’s material conditions and its ideological climate. For reasons I’ll come to, I’m not sure that no-deal Brexit would materially benefit capitalists. But it might create an ideological climate favourable for some. We know that tougher economic times breed pessimism, illiberalism and intolerance. This would be especially the case if the EU, Ireland and the “Remainer establishment” get the blame for the ill-effects of no-deal. This would hurt the left, not least by shifting the agenda towards reactionary nationalism. That would help some sections of capital.

A fourth distinction is between the interests of financial capital and industrial capital. There are ways in which a no-deal Brexit might help financial capitalists. But aside from Johnson’s promised cut in incomes tax, I’m not sure they are terribly powerful, for example:

 - A fall in sterling would give windfall profits to holders of overseas assets. There’s nothing especially Machiavellian about this, though. Anybody with a moderately well-managed Sipp can take some advantage of this.

 - A recession would devalue some companies sufficiently to make them cheap for vulture capitalists who have either the leverage or liquidity to snap them up. Doing so, however, is a very risky strategy with huge downsides as well as upsides. As John Campbell has pointed out, distress risk doesn’t pay off on average. Those who bought Carillion or Debenhams when they looked cheap would confirm this.

 - The policy response to a no-deal recession would involve cuts in interest rates and QE which would promote financialization and boost asset prices. Now we are near the zero bound, however, the scope for rate cuts is limited. And Johnson’s promises suggest that an (albeit half-arsed) fiscal easing might limit the extent of QE*.

Nor am I convinced that disaster capitalism would improve the prospects of industrial capital.

It could do so in theory in the way it did in 1981 – by causing widespread capital scrapping which would raise returns on capital partly by reducing competition and partly simply by cutting the denominator.

A striking feature of recent years, however, has been that this mechanism has not operated. Even at the height of the crisis there were fewer corporate liquidations than there were (pdf) in the 80s and early 90s. Low interest rates and banks’ forbearance have limited capital scrapping. It’s not obvious why this should dramatically change in the next recession.

What’s more, the restoration of real profitability requires more than capital scrapping. It also requires an expansion of profit opportunities. No-deal, however, would have the opposite effect. Increased (pdf) trade barriers and greater policy uncertainty would actually restrict such opportunities and deter investment.

I don’t, therefore, see how a no-deal Brexit would reinvigorate capitalism. To claim that it is part of a cunning plan by Johnson is to give the man too much credit. Sometimes, people are as stupid as they look.

* Given the inflation target, more fiscal easing means less monetary easing.

Simplicity: smart & stupid

David Gauke has been rightly praised for this:

Rather than recognising the challenges of a fast-changing society require sometimes complex responses, that we live in a world of trade-offs, that easy answers are usually false answers, we have seen the rise of the simplifiers.

This echoes a fine piece by Ian Leslie who says:

The disease of politics today is not populism, so much, as simplism: the oversimplification of complex problems.

I want to quibble, though. There are – to simplify! – two different types of simplicity, the stupid and the smart.

Stupid simplicity is the sort that Gauke and Leslie are rightly decrying – the sort that denies the reality of complexity. This is the sort of simplicity that thinks there is a simple cause of our problems – be it immigrants, Joos or greedy bankers – or that there is a simple answer such as Brexit or higher taxes. Conspiracy theorists are often guilty of this simplicity.  So too are those who fail to see trade-offs, such as between democracy and prosperity: both sides of the Brexit debate are guilty of this.  

There is, however, a smart form of simplicity. It acknowledges that the world is complex and our cognition bounded, and so it looks for simple but empirically-based cognitive short cuts. Gerd Gigerenzer, for example, has shown (pdf) that simple rules of thumb can work well. And Robyn Dawes (pdf) and Paul Meehl (pdf) have both shown that simple statistical models often do better than professional judgments which try to explicitly acknowledge complexity. Sometimes, hedgehogs are better than foxes.

We see this in finance. If you want to know the chances of recession, it’s better to look at a simple indicator such as the yield curve than (pdf) at economists’ forecasts, which almost always fail to see recessions coming. And simple indicators such as the dividend yield, a moving average, foreign buying of US equities or the ratio (pdf) of consumer spending to wealth do a better job or predicting stock market returns than do the professionals.

Sometimes, even, simple policies do better than tricksy ones. Simply buying an index-tracker fund (pdf) means you will often do better than most fund managers who try to incorporate complexity into their stock-picking.

Which poses the question: can the same be said in politics? For me, one of the great virtues of a (high) universal basic income is that it recognizes that people often switch between unemployment, insufficient hours and low-wage work, and that there are huge deadweight costs in trying to assess needs. It’s a simple solution to complexity. In the same vein, simple institutions such as Robert Shiller’s macro markets might do a better job of insuring us against recessions than the impossibly complex job of forecasting them in advance. And part of the case for worker democracy is that dispersed wisdom can cope with complexity better than can top-down management.

My point here is that there are no general rules. Sometimes simple answers work moderately well: in a complex world, the best we can do is satisfice. But sometimes they don’t. All that matters is the evidence. It’s not good enough to pretend that there are simple answers, but equally, telling us that “it’s more complex than that” can be a false sophistication.

How not to be an arrogant prat

Dan Davies has said that financial regulators should have been active spread-betttors, because only this gives them hard knowledge of how nasty margin calls can be. The same should apply to everybody who expresses a political opinion.

The thing you learn from financial markets is that even your best ideas, your most diligently-research trades, often go wrong – and expensively so. Equity fund managers typically have only a few good stock ideas and most of what they do is either risk management or value-subtraction. And private equity managers expect many of their holdings to lose.

What you learn from spread-betting or (in my case) having to stand on a trading floor after one of your calls has gone wrong is that the only thing that matters is the facts. However much smoke your friends and colleagues blow up your jacksy, if prices rise after you’ve shorted or fall after you’ve bought, you’ve lost. All that counts is the book.

In punditry, it is otherwise. As Dan says, “being really aggressively unpleasantly wrong on your supposed subject of expertise has no downsides in the UK media.” Christopher Booker kept his job at the Sunday Telegraph despite his climate change denial. Those who told us that leaving the EU would be easy continue to expound despite their ideas being marked to market and found in the red. And those who greeted Theresa May as a new Thatcher continue to opine, heedless of their earlier error.

Granted, regular confrontation with expensive losses can turn traders into thick-skinned bumptious arrogant prats, who remember their successes but forget their failures – the sort who confuse the size of their pay-packet (often earned through mere asset-gathering or by state bail-outs) with the size of their talent.

But there is another reaction. This particular school of hard knocks can teach you humility – to be aware that the world is a more complex thing than your limited cognition can comprehend. The best traders and investors draw (at least) four inferences from this. Political pundits should too. These are:

 - Always ask of any item of news: is it noise (pdf) or signal (especially if it corroborates your prior belief)? One of the great errors traders make is to trade (pdf) on noise – something that looks like genuine information but in fact tells us nothing about the future or is even downright misleading. Theresa May called a general election in 2017, believing that council election results and opinion polls were a signal about her electoral prospects. In fact, they were noise. Everybody commenting on a poll now should therefore consider whether these have any more predictive power than they did then, or whether they are just noise.

 - Remember there’s a margin for error. If you are using a formal model, tell us what its confidence interval is and why past relationships break down. Do the same even if you are using an informal one: confidence intervals and parameter instability exist whether you know them or not.

 - Know the edge of your competency. As Charlie Munger says, you must know what you don’t know. There are no general purpose experts. Be honest about the gaps in your knowledge.

 - Value cognitive diversity. The best investors welcome people who disagree with them, because these help them test their own ideas better. Whilst echo chambers might in some cases yield useful information they are more likely to produce groupthink and overconfidence. Just because a nice guy agrees with you does not mean you are right. 

Although following these rules might well help you think better (I say this without of course always following them myself) I’m not sure they provide a viable business model. In the media – and certainly in politics - there is demand for overconfident prats. But then, there are trade-offs everywhere. One of these might be that there’s sometimes a tension between an ability to think properly and an ability to earn a living.

Class and optimism

One thing that attracts people to Boris Johnson is his cheerfulness about Britain’s prospects. Liam Halligan and Owen Patterson both praise his “sunny optimism”, whilst Matthew Leeming writes – I kid ye not – that “we need a cheerleader to remind us we are an erect and manly people.” But I wonder: is there a class aspect here?

I ask because of recent paper by Erin McGuire. She shows that:

Individuals who begin their lives by observing an economic downturn remain pessimistic and risk averse with respect to investments over the course of their lifetimes.

This corroborates work (pdf) by Ulrike Malmendier and Stefan Nagel and by (pdf) Miguel Ampudia and Michael Ehrmann. And it’s consistent with research by Henrik Cronqvist and colleagues. They show that people who grew up in poorer homes or who entered the labour market in recession tend to avoid growth stocks even years later.

Much the same might also be true for attitudes to unemployment. Memories of the Great Depression suppressed wage militancy in the 1950s, just as memories of the financial crisis might have caused millennials to be timid today. Wolfgang Maennig and Markus Wilhelm have shown that spells of unemployment depress well-being even after people return to work, perhaps by inducing the fear that it could happen again.

All this suggests that hard times in our formative years make us pessimistic long after those times have passed.

Which is where class comes in. Being posh insulates you somewhat from hard times, thus making you more optimistic than the rest of us. Johnson and I are both of an age to have spent our formative years during a time of soaring unemployment. But whereas I saw it close up, Mr J did so from a safer distance. It is perhaps therefore no accident that he has a “sunny optimism” and I, well, don’t.

The mechanism here was described by David Hume. Our lived experience creates impressions which enter our minds “with most force and violence”, whereas reports are only “faint impressions” of these. Those who have experienced poverty or unemployment, or seen them close up, have therefore a greater fear of it than those who only saw them from a distance, if that.

What I’m describing here is a little different from the tendency for posh people to be more confident than the rest of us, but perhaps connected. My point is that posh folk are more optimistic than others not just about their personal prospects, but about prospects for the economy generally. Of course, you can think of counter-examples to this – of posh but melancholic people (Townes van Zandt?) – but I suspect there is a tendency here. This fits with the fact that leading Brexiters such as Rees-Mogg and Farage as well as Johnson come disproportionately from comfortable backgrounds.

Of course, optimism is sometimes justified. But this isn’t my point. My point is merely that our attitudes and preferences are not “given” as simplistic neoclassical economics often pretends. They are instead endogenous (pdf), shaped by among other things culture, gender, history, peer pressure and – yes – class.  

The Tories' imaginary world

Sometimes, the Tories offer us a glimpse into their psychology. So it was yesterday when Sarah Vine tweeted:

Watching the #RestaurantMakesMistakes and astonished to learn that people with dementia struggle to get benefits. Is this true? And if so, how is this not a national scandal?

What she’s expressing here is the cognitive dissonance that her own party’s policies actually have nasty effects upon real people. Her consternation arises from the fact that, for many Tories, this is not supposed to happen. Many of them, I suspect, are not actually evil but rather guilty of a recklessness that comes from a particular conception of politics – a conception which sees it as a game of positioning, and of pandering to the imagined world of the Daily Mail. Politics is a post-modern activity in which words and appearances are everything and consequences and reality are nothing.

So for example:

 - Benefit sanctions are supposed to crack down on cheats and malingerers, not real, deserving people. It is only when these appear on TV that the illusion – and it has been just that for years – is broken.

 - The “hostile environment” policy was meant to remove illegal immigrants rather than members of the Windrush generation who are, remember, 100% British.

 - Austerity was intended to establish prudent control of the nation’s finances. The fact that it has killed thousands is at best, a mere statistic, and at worst just another controversial claim.

 - Brexit is about prioritizing a conception of national sovereignty over GDP. And GDP is a mere statistic, not the jobs and livelihoods of real people. What was so transgressive about Jeremy Hunt’s promise this week to shut down Titan Steel Wheels was that he broke this illusion, and linked what is supposed to be a mere abstraction to the lives of real people.

All of this is possible because for Tories – at least professional ones in the media-political Bubble - politics is a reified activity separate from ground truth. Robert Protherough and John Pick have described how modern management “deals largely in symbols and abstractions...[with] little direct contact with the organization's workers, with the production of its goods or services, or with its customers.” For Tories, politics is like that. It’s a cosy game in which nobody is supposed to get seriously hurt: the losers only leave to get well-paid sinecures from fund management companies.

Of course, if we had a functioning media, reality would intrude. But we don’t, so it often doesn’t. The truth is difficult and complicated and in John Humphrys’ revealing words “a wee bit technical and I’m sure people are fed up to the back teeth of all this talk of stuff most of us don’t clearly understand.” Bubble journalists are much happier covering the Tory leadership race than they are at analysing the real-world effects of actual Tory policies - a preference which generates sympathy for charlatans rather than experts. As Tom Mills says, the BBC “will aim to fairly and accurately reflect the balance of opinion amongst elites.” That can efface ground truth.

The upshot is that our media-political establishment conforms to what Kenneth Boulding said (pdf) back in 1966:

 All organizational structures tend to produce false images in the decision-maker, and that the larger and more authoritarian the organization, the better the chance that its top decision-makers will be operating in purely imaginary worlds.

The problem which Ms Vine discovered this week, though, is that reality has a nasty tendency to intrude occasionally into the imaginary world.

The human factor

Could AI replace managers and even politicians? In their now-famous paper (pdf) describing how half of American jobs could be replaced by computers, Carl Frey and Michael Osborne say no: they estimate that chief executives, line managers and HR managers are among the 10% of occupations least likely to be computerized.

From the perspective of neoclassical economics, this is weird. It pretends that the job of bosses is to maximize profits, given a production function and prices of inputs. This is a constrained optimization problem which can easily be done by a computer.

Similarly, if you believe, Sunstein-stylee, that policy-making is a technocratic function of choosing optimal fiscal or monetary policy or the right choice architecture, the job can be delegated to computers, which have the benefit of being immune – in principle – to cognitive biases.

Which poses the question: what is it about bosses and politicians that make their jobs so unlikely to be replaced by tech? There are, I suspect, four things.

One is that the choice of what technology to adopt is not merely a matter of objective efficiency. It is also about power. In his excellent new book The Technology Trap, Frey describe how pre-industrial governments often forbade the use of labour-saving techniques, fearing they would cause a backlash and disrupt established hierarchies. And Joel Mokyr has written:

Resistance to technological change is not limited to labour unions and Olsonian lobbies defending their turf and skills against the inexorable obsolescence that new techniques will bring about. In a centralized bureaucracy there is a built-in tendency for conservatism. Sometimes the motives of technophobes are purely conservative in the standard sense of the word. This is equally true for corporate and government bureaucracies, and cases in which corporations, presumably trying to maximize profits, resisted innovations are legend. (The Gifts of Athena, p238)

A second problem is that knowledge is not necessarily codifiable. AI works where all possible options can in principle be listed. Alphazero, for example, learned chess and Go by being programmed with the laws of the games and then playing millions of games against itself. In other contexts, such an approach doesn’t apply, and not just because what we are trying to achieve is sometimes not as simple or articulable as winning a game.

In many contexts there are what Donald Rumsfeld called unknown knowns – things we don’t know that we know. Tacit knowledge – hunches, gut feelings, things we have forgotten that we knew – matters. One reason why management is not merely a constrained optimization task is that even with given technology, good managers can tweak the production possibility curve outwards (pdf) by incremental improvements based upon hunches. Maybe brute force algorithms can replicate all these possible hunches and find the optimal one. But this is most easily done where the environment can be completely described – which is true of chess but not the real world.

There’s something else. An algorithm is, by definition, a set of rules. Sometimes, though, we succeed by breaking rules. For Israel Kirzner, this is in fact the very essence of entrepreneurship:

The Schumpeterian entrepreneur does not passively operate in a given world, he creates a world different from which he finds. He introduces hitherto undreamt of products, he pioneers hitherto unthought of methods of production, he opens up a new market in hitherto undiscovered territory.

Entrepreneurship, he says, “is the process of discovering new knowledge and possibilities that no one has either previously imagined or noticed."

Herein lies one reason why AI can’t replace politicians. The success of Trump, Farage and Johnson has come from breaking conventions, be it the idea that leaders should conform to a particular ideal of good character, or that policies be evidence-based and compatible with the interests of business and the median voter. As Will Davies says:

Come November this year, Farage, Johnson and their allies may well have achieved a far greater disruption of the political and economic status quo than Thatcher or Blair ever managed, with a smaller popular mandate and far less effort. They don’t need think tanks, policy breakfasts, the CBI or party discipline. They don’t even need ideas. All they have to do, in pursuit of their goal, is to carry on being themselves.

There’s one final thing. Even if algorithms weren’t racist, they’d be only indifferent managers for one other reason. Sometimes, we want the human touch – the arm round the shoulder, the jolly-up, or the understanding that we’re having an off day.

It’s for a similar reason that AI will, I suspect, never write great music. Yes, it can produce passable if derivative tunes. But it has not yet given us truly original songs or insightful lyrics, nor what great music gives us, the sense of one soul speaking to another.

The same thing applies in journalism. AI can, in a fashion write news stories: these follow articulable rule. But it cannot (yet) produce marketable opinion columns: readers want the prejudices, biases and errors that only humans can provide.

What they also want are stories, even, or especially, if they are nonsense. We’ve good evidence – corroborated by the fact that so many of them recommended Woodford’s funds – that financial advice is poor. And yet robo-advisors have not expanded as much as they should. A big reason for this is that people don’t want to believe that simple rules work (such as buy cheap tracker funds). They want narratives and great investors they can trust. Only humans offer these.

And this is why AI cannot replace politicians. We prefer bad decisions taken by humans to good ones taken by machines. As Ben Jackson says:

Much of our politics today revolves around the perception that decisions are being taken elsewhere, whether in Westminster, Brussels or Washington. Passing off the work of decision-making to the ultimate aloof elite, a computer, is not a serious way of confronting this issue. Sometimes it’s important to decide things for ourselves, and to feel like we’re deciding, even if we often go astray.

What I’m driving at here is not merely a version of Moravec’s paradox. Nor is it a story about computers, especially as we might be on the verge of an era of super-powerful ones. Instead, my point is about the nature of power and decision-making. These are not merely technocratic algorithmic processes but are instead essentially and inherently human. Which is what conventional neoclassical economics has traditionally under-estimated.

The recrudescence of zero-sum thinking

President Trump believes we live in a zero-sum world in which one country’s gain is another’s loss. This is evident in his reaction to Mario Draghi’s comment this week that additional monetary stimulus will be needed if euro zone inflation doesn’t rise. Trump tweeted:

Mario Draghi just announced more stimulus could come, which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others.

Adding that this is “very unfair to the United States!”

This, of course, is bollocks. The US would actually gain from monetary stimulus to the extent that it strengthens the euro zone economy, thus allowing US firms to sell more to it: exports are more sensitive to demand than they are to exchange rates. What’s more, insofar as expectations of low interest rates cause investors to reach for yield and buy shares they are likely to also buy some US equities thereby giving Americans the benefits of a positive wealth effect and lower cost of capital. Sure enough, the S&P did indeed rise after Draghi’s speech. Trump tweeted that the index hit an all-time high this week, but failed to connect this fact and Draghi’s words.

Yes, Draghi deserves criticism. But it is for not responding soon enough to the weak economy and low inflation rather than for belatedly talking of doing so.

This is not the only example of Trump’s zero-sum “thinking”. He also recently tweeted that:

The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars.

You don’t need me to tell you that this is also bollocks. It is like me complaining that I lose money by my trading with Lidl. I don’t, of course. I merely exchange goods for money – which is exactly what US citizens with China are doing. Free exchange benefits both buyer and seller. It’s positive sum. In believing otherwise, Trump is expressing the pre-Smithian mercantilist idea, that wealth consists in piling up money by running a trade surplus, rather than in the expansion of consumption opportunities and increased productivity that comes from trade.

Everybody who has even the foggiest notion of economics can see that Trump is spouting mindless drivel: you don’t need to be a devout free-marketeer to see that trade usually benefits both parties.

Which poses the question: how can such nonsense even be entertained?

It’s here that we Marxists are alive to a fact that centrists and rightists sometimes neglect – that ideas have a basis in real material conditions. It is surely no accident that Trumpian zero-sum thinking became accepted among many voters after years of economic stagnation: even after their recent rise, median real household incomes are now only 2.2% above 1999’s levels. If the typical person’s income is flat-lining, he will eventually be willing to believe that one person’s gain is another’s loss. As Ben Friedman argued in a 2006 book which has been vindicated by subsequent events, economic stagnation breeds intolerance.

It’s not sufficient for those who support rational economics and an open society to decry Trump’s gibberish. If they are to triumph, such values require a society which delivers the goods for most voters. Much of the ruling class in both the UK and US neglected this fact before 2016, and we are all paying the price of their failure.

Another thing: this is not to say that there are no zero-sum processes in economics. It's quite possible that the increased wealth, power and incomes of the ultra-rich have come at the expense of everybody else. Despite his fondness for zero-sum thinking, however, Mr Trump never mentions this. 

New Labour: success and failure

Did New Labour really ignore inequality? Responding to Corbyn’s claims that successive governments have neglected it for decades, Blair replies that New Labour “made the UK more equal, more fair and more socially mobile.”

Both men, I think, are partially right.

Blair is correct to say that New Labour massively increased spending on public services and reduced child and pensioner poverty.

However, overall inequality did not change much under New Labour despite that fall in poverty. One reason for this is that as Robert Joyce and Luke Sibieta at the IFS have pointed out (pdf), their tax and benefit reforms “had relatively little net impact on the top half of the income distribution”. Another is that pre-tax inequality rose in one important respect at least: the share of pre-tax incomes going to the top 1% rose from 10% to 12% between 1997 and 2007, before falling back as a result of the banking crisis.

It is in this last fact, I think, that New Labour’s failure lies, and where Corbyn has a point. Blair and Brown were far too managerialist, and too deferential to bosses: this much was evident not just in Brown’s lauding of them as wealth creators and courageous leaders but in his inviting the likes of Derek Wanless, David Freud and James Crosby to conduct policy reviews. Bosses, New Labour thought, were trusted experts.

In this respect, New Labour was indeed neoliberal. And this had at least three big costs.

One is that the importing of crude managerialism into the public sector failed to raise productivity: the ONS says this flat-lined (pdf) under New Labour. Yes, the public services improved. But this was simply because the government threw money at them. This made the health of the public sector dangerously dependent upon that of the private sector.

The second is that it meant that New Labour under-appreciated the many pathways through which the excessive wealth and power of the top 1% can worsen economic performance.

 Thirdly, it fostered the belief that private sector companies could run themselves tolerably well if left alone. The banking crisis, however, revealed this to be a fiction.

That said, it is a little harsh of Blair’s critiques to blame a lack of banking regulation for the economic crisis. For one thing, the crisis was not due mainly to rising domestic debt. The banks that failed in 2007-08 did not, for the most part, do so because their loans turned bad. Instead, the main failures were due to terrible take-over decisions, such as RBS’s buying of ABN Amro, or because they relied upon wholesale funding which dried up in 2007: this was Northern Rock’s problem. Credit controls would probably not have prevented these failures.

And for another, the crisis was global. It would have hit the UK even if we’d had tighter regulation. In fact, in 2009 UK GDP fell only slightly more than the OECD average (4.2% against 3.4%) and it fell less than it did in Germany and Sweden, whose economies are often held up as models of what the UK should be. No reasonable policies could have insulated us from the global financial crisis.

From this perspective, it is absurd to blame New Labour for the subsequent austerity (except to the extent that we should blame it for losing the 2010 general election). We’d have had a deep recession in 2009 whatever the government would have done, and this would have greatly increased government borrowing thereby giving the Tories and the media the chance to complain about Labour profligacy. Austerity is the fault of the Tories and Lib Dems, nobody else.

New Labour had its faults, many of which are more obvious with hindsight than they were at the time, and the left is wholly correct to want to move on from its economic policies which are now out-of-date. But these facts should not detract from another fact – that Labour did indeed do much to reduce poverty.

The Johnson puzzle

One of the puzzles of our time is why Boris Johnson is considered – not just by Tory members but by much of the media - to be a credible contender for Prime Minister when many of us regard him as a oafish buffoon, serial liar and associate of criminals. One answer to this paradox, I suspect, lies in the concept of ambiguity aversion.

This is the notion that people much prefer the familiar to the unknown, and known risks to unknown ones: they strongly prefer (pdf) 50-50 bets to ones on unknown proportions. Such ambiguity aversion explains a lot of behaviour in financial markets, ranging from the home bias in equity portfolios to the US’s “exorbitant privilege.”

It also, though, explains political attitudes.

The thing is, the Tory party is for many people the familiar option; it is after all the natural party of government. When Cameron threatened “chaos with Ed Miliband” and May promised “strong and stable government” they were appealing to the presumption, that the Tories offered familiarity and comfort whilst Labour offered uncertainty – something people hate. For this reason, turmoil in the Tory party is "drama" whereas that in the Labour party is "chaos".

It’s not just Tory supporters for whom the Tories are the known safe prospect. The same’s true for much of the media.

One reason for this is class. Most top journalists went to private schools. They therefore regard Johnson as “one of us”. For the same reason, they regard a public school-educated commodities broker with suspected links to Russian oligarchs and who doesn’t listen to music or watch TV as a “man of the people.”

It’s not just personal homophily that makes the Tories the familiar option, though. Being privately educated inculcates people into shared presumptions such as about what counts as “educated” (classical references do but numeracy doesn't); what matters (economics doesn’t) and who is or is not part of “the country”.

Much of the media and the Tory party have other things in common, though. One is a shared conception of what politics is – an Oxford Union-style game iof jockeying for position. The BBC, like much of the media, is obviously happier covering the Tory leadership race than it is covering substantial policy which ends up, in Humphrys’ words. “all getting a wee bit technical and I’m sure people are fed up to the back teeth of all this talk of stuff most of us don’t clearly understand.” It thus sees Johnson as a player of a game it understands, whilst it ruthlessly othered technocrats such as Ed Balls or Ed Miliband*. In the same way, the failure to see that politics can be a project of building mass movements has lent the BBC a bias against Corbynites and other activists.

Also, the media prefers human interest stories to theories of emergence, in which social outcomes for good or bad are the product of human behaviour but not design**. This too lends a bias towards seeing politics as a clash of characters rather than as a more complex process.

The Tory party, therefore, is seen – not just by its own members but by most of the media, including the BBC – as a cosy familiar option. From this perspective, Johnson offers it the same thing that Lisa Simpson gets from non-threatening boys – a frisson of excitement in what is actually a safe environment. Tories and the media know that whatever else Johnson does he will not do anything really dangerous such as put an extra penny on the top rate of tax. Johnson’s (and Farage’s) many media appearances reinforce this impression. As Alan Bennett wrote, they make them seem “human and harmless and that their opinions are not really as pernicious as their opponents pretend.”

It is only those of us from other backgrounds and perspectives who see them otherwise. It is surely no accident that the only times Johnson has been seriously challenged by the BBC has been in interviews with Eddie Mair. He might seem a harmless joker to media insiders, but to the son of a lorry driver he appears altogether more sinister.

In this sense, the mirror image of Johnson is Tony Blair. Whereas Johnson is a slightly thrilling personality from a familiar organization, Blair in the 90s offered a safe and comforting front for what was an unfamiliar and thus unsettling party.

Now, I’m not making a partisan point here. I could say much the same for many metropolitan and academic leftists: for, them, Che Guevara, Hugo Chavez or even various terrorists have served the same function Johnson serves for Tories and the much of the MSM.

Instead, I’m complaining about a tendency for everybody to inhabit bubbles in which they are unaware of the partiality of their own perspective. I suspect this is an increasing problem, caused by decline of two otherwise different characters: the aristocratic Tory who crouched in foxholes with working class men; and the upwardly mobile working class man who enters posher circles. For me personally, the most attractive of the Tory candidates is the (yes, Etonian) Rory Stewart whose career suggests a willingness to step out of a comfort zone of his own background and presumptions.

Such a failure to see that one is in a bubble is perhaps forgivable for those on both the left and right. Whether it is quite so forgivable for the BBC, which pretends to be impartial, is another question.

* Some Tories are victims of this othering: when David Willetts was called “two brains” it wasn’t an unalloyed compliment.

** For example, the media took Osborne at his word when he claimed to be trying to control the public finances, oblivious to the most basic concept of emergence, the paradox of thrift.

The Tories' structural weakness

As a lefty, the disarray in the Tory party provides a lovely schadenfreudic coincidence – that the same intellectual failing that causes the party’s bad government also causes it to elect unsuitable leaders.

This failing is an inability to see failures of collective action – to see that what is rational for each individual is often bad for everybody.

An obvious example of this came in 2012 when Cameron advised people to top up their petrol tanks in advance of a strike by lorry drivers. He failed to see that whilst this might have been sensible for any individual, its aggregate result was to trigger panic buying and fuel shortages.

There are, though, other examples. Collective action problems mean that public goods such as infrastructure are under-supplied and public bads such as pollution are over-supplied: each individual thinks it won’t make any difference to the climate if he gets on a plane, with the result that too many do so. If everybody – especially the government - tries to cut their borrowing the result is not lower debt but lower incomes for us all. Similarly, whilst you might be able to incentivize any one person to find work by cutting benefits, you cannot incentivize everybody this way: the result is just misery for those out of work. And we cannot rely upon shareholders to control company managers because the hard work of doing so is borne by the individual shareholder whilst the benefits are spread widely over all, with the result that we have inadequate corporate governance. And so on.

The point of politics is to solve collective action problems such as these. The Tory party has, however, under-rated the importance of such problems and so have given us austerity, economic stagnation and an inadequate response to the climate emergency,

Here, though, is the nice irony. The same blindness to collective action problems that caused the Tory party to wreck the economy is now causing it to destroy itself.

What I mean is that its choice of leader suffers the same problem. Each individual considering who should be leader thinks of his personal perspective: who personally do I find simpatico? Whose ideology is closest to mine? And, for MPs, who will give me a job?

These considerations of private gain, however, neglect the collective good (from Tories point of view) of the health of the party. What matters for the party is not that it has the leader closest to your own ideology, but that it has the right leader – that a round hole be filled by a round peg.

This is true in business. As Boris Groysberg and colleagues have shown (pdf) If a company needs a marketing man as CEO but hires an engineer, things go wrong. But if it needs a marketer and gets one, it does well.

And it’s true in politics too. For example, Churchill was a man of massive flaws. But in 1940 many of these faults, such as bombast and belligerence, became virtues. And other failings – such as his racism and ignorance of domestic economic and social matters – weren’t important. In 1940-45, Churchill was a round peg in a round hole. Before and after then, he was not.

Or consider Cameron. He was the right man to detoxify the Tory party in 2005. But the same overconfidence that led him to stand for leadership despite a lack of experience also caused him to call the Brexit referendum. What was a strength in 2005 was a catastrophic weakness in 2016. He stayed the same shape, but the hole changed.

Or consider May. One can imagine circumstances in which her stubbornness would be a strength – if the party had a good strategy which needed sticking to. But these are not the circumstances we’ve had recently. We’ve needed a negotiator – someone with intellectual flexibility and interpersonal skills. And May is wholly lacking such skills.

What matters, then, is the match between the requirements of the job of party leader, which vary from time to time, and the qualities of individual. Sometimes, as in Churchill’s case, the match is good: the man’s vices can either become strengths or be easily overlooked. What we have now, though, is a terrible match: May’s weaknesses are horribly exposed.

If Tory members and MPS consider only their private gain – “who most agrees with me?” – they’ll not ask who is the best match. It is only by accident then that they’ll elect the most suitable leader. And it’s a long time since this accident happened: the party’s last five leaders – Hague, Duncan-Smith, Howard, Cameron and May – have all left something to be desired.

But it was not always thus. Before 1965 Tory leaders were not elected but rather chosen by grandees. Because they were often old enough to have sloughed off ambition, such men put a higher weight upon the good of the party and less upon their private gain. They solved the collective action problem, and the Tory party was much stronger for it. The party has, however, now lost this solution. And the delightful irony is that the same blind spot that has caused it to wreck the country is now causing it to wreck itself.

How inequality makes us poorer

I welcome the Deaton report into inequality. I especially like its emphasis (pdf) upon the causes of inequality:

To understand whether inequality is a problem, we need to understand the sources of inequality, views of what is fair and the implications of inequality as well as the levels of inequality. Are present levels of inequalities due to well-deserved rewards or to unfair bargaining power, regulatory failure or political capture?

I fear, however, that there might be something missing here – the impact that inequality has upon economic performance.

My chart shows the point. It shows the 20-year annualized rate of growth in GDP per worker-hour. It’s clear that this was much stronger during the relatively egalitarian period from 1945 to the mid-70s than it was before or since, when inequality was higher. 

This might, of course, be coincidence: maybe WWII caused both a backlog of investment and innovation which allowed a subsequent growth spurt and a desire for greater equality.

Or it might not. This is not the only evidence for the possibility that inequality is bad for growth. Roland Benabou gave the example (pdf) of how egalitarian South Korea has done much better than the unequal Philippines. And IMF researchers have found (pdf) a “strong negative relation” between inequality and the rate and duration of subsequent growth spells across 153 countries between 1960 and 2010.

Correlations, of course, are only suggestive. They pose the question: what is the mechanism whereby inequality might reduce growth? Here are eight possibilities:

1. Inequality encourages the rich to invest not innovation but in what Sam Bowles calls “guard labour” (pdf) – means of entrenching their privilege and power. This might involve restrictive copyright laws, ways of overseeing and controlling workers, or the corporate rent-seeking and lobbying that has led to what Brink Lindsey and Steven Teles call the “captured economy.” An especially costly form of this rent-seeking was banks’ lobbying for a “too big to fail” subsidy. This encouraged over-expansion of the banking system and the subsequent crisis, which has had a massively adverse effect upon economic growth.

2. Unequal corporate hierarchies – what Jeffrey Nielsen calls rank-based organizations - can demotivate junior employees. One study of Italian football teams, for example, has found that “high pay dispersion has a detrimental impact on team performance.” That’s consistent with a study of Bundesliga and NBA teams by Benno Torgler and colleagues which found that “positional concerns and envy reduce individual performance.”

3. “Economic inequality leads to less trust” say (pdf) Eric Uslaner and Mitchell Brown. And we’ve good evidence that less trust means less growth. One reason for this is simply that if people don’t trust each other they’ll not enter into transactions where there’s a risk of them being ripped off.

4. Inequality can prevent productivity-enhancing changes, as Sam Bowles has described. We have good evidence that coops can be more efficient than hierarchical ones, but the spread of them is prevented by credit constraints. Poverty reduces education levels by making it impossible to afford books, or encouraging bright but poor students to leave earlier than they should, and women and BAME people might avoid careers for which they are otherwise well-suited because of a lack of role models.

5. Inequality can cause the rich to be fearful of future redistribution or nationalization, which will make them loath to invest. National Grid is belly-aching, maybe rightly, that Labour’s plan to nationalize it will delay investment. But it should instead ask: why is Labour proposing such a thing, and why is it popular?

6. Inequalities of power – in the sense of workers’ voices being less heard than they were in the post-war period and trades unions becoming less powerful – have allowed governments to abandon the aim of truly full employment and given firms more ability to boost profits by suppressing wages and conditions. That has disincentivized investments in labour-saving technologies.

7. The high-powered incentives that generate inequality within companies can backfire. As Benabou and Tirole have shown (pdf), they encourage bosses to hit measured targets and neglect less measurable things that are nevertheless important for a firm’s success such as a healthy corporate culture. Or they might crowd out intrinsic motivations such as professional ethics. Big bank bonuses, for example, encouraged mis-selling and rigging markets rather than productive activities.

8. High management pay can entrench what Joel Mokyr calls the “forces of conservatism” which are antagonistic to technical progress. Reaping the full benefits of new technologies often requires organizational change. But why bother investing in this if you are doing very nicely thanks to the increased (pdf) market power of your firm? And if you have, or hope to have, a big salary from a corporate bureaucracy why should you set up a new company?

My point here is that what matters is not so much the level of inequality as the effect it has. And it might well be a pernicious one. If inequality has contributed to weaker growth, then it is very likely to have contributed to the rise of populism and to Brexit and the divisions with which both are associated. In this way, inequality does political damage too.

From this perspective, pointing out that the Gini coefficient has been flat for years (which is true if we ignore housing costs) is like saying that because the bus has stopped moving we need not care about the man who has been run over by it. It misses the main point.

Debating the far right

The far right has been defeated. Andrew Neil’s interview with Ben Shapiro and Andrew Marr’s with Nigel Farage have exposed both men as shifty, vacuous and evasive. Their support will therefore disappear. What took the might of the Red Army in 1941-45 has today been achieved by two ageing Scotchmen.

Or not. For one thing these episodes won’t weaken the far right’s resolve. Farage is playing the victim card. “We are not just fighting the political class, but the BBC too” he says. Sure, his opponents think his interview was a disaster but his sympathizers don’t: Andrew Lilico called it his “best ever.” Such reactions demonstrate the pervasiveness of asymmetric Bayesianism – that we interpret evidence to corroborate our priors.

If we’re being honest with ourselves, many of our political views – by no means just those on the right – were formed sub-rationally. And as Jonathan Swift said, “reasoning will never make a Man correct an ill Opinion, which by Reasoning he never acquired." This is especially the case if the protagonists are debating in bad faith.

Now, many of you will object to this that whilst such interviews and debates might not persuade rightists themselves, they might help turn neutrals away from the movement. I’m not convinced, and not just because Marr and Neil are only watched by a handful of politics nerds.

One issue here is that defeating rightists in debate is like playing whack-a-mole; even if you knock one down, another pops up. It’s generally agreed that Nick Griffin made a fool of himself on Question Time back in 2009, and sure enough he has since fallen into deserved obscurity (although the BNP did increase its vote in the following year’s general election). But other far-right figures have replaced him, such as Stephen Yaxley-Lennon.

There’s an analogy here with snake-oil sellers. Even when reason and evidence did show that a particular product was inadequate, customers did not shun snake-oil generally. They simply switched to other sellers instead. As Werner Troesken showed in a fantastic paper (pdf), demand was unaffected by failure.

A second problem is that we’ve no good reason to believe that people are swayed by fact and reason alone. We know that huge numbers of voters are ignorant of basic facts, which makes them credulous about all sorts of daft ideas. We know too that they are swayed by things other than rational argument, such as looks (though in fairness these are unlikely to win Mr Farage much support). Rationality doesn’t just require intelligence. It needs immense self-discipline, which many of (not least me) just do not have – and in the case of politics, have neither the means nor incentive to acquire it.

Which means neutral observers – even assuming there to be such things – are prone to countless cognitive biases. A particularly dangerous one in this context is the mere exposure effect; the more we see or hear something, the more we like it. It’s possible (pdf) then that Andy Dawson is right: “the blanket coverage [Farage and UKIP] have been afforded has directly led to the shifting of the political landscape in Britain.”

What matters here is not just Farage’s personal appearances on TV. It’s also what gets discussed. The more time the BBC devotes to the concerns of the right – ethno-nationalism, anti-“elitism”, Brexit and so on – the more normal people think such debates should be. And conversely, in crowding out other matters, such as the decade-long stagnation in productivity and real wages, these become fringe issues. The agenda matters. And merely debating with the right shifts the agenda onto their terms.

I fear, then, that the right will not be defeated by debate. We must instead pull out the roots of its support. It is surely no accident that right-wing populism has increased around the world at a time of economic stagnation. Reducing its support therefore requires an end to that stagnation. It won’t be done by talk alone.