Why Labour disappoints

It's widely, though not universally, agreed that the Labour party has not advanced the interests of the worst off by as much as it might have. The right complains that the welfare state has created a "dependency culture" whilst the left complains that it has been insufficiently redistributive. This poses the question: why has the party not done more to help its natural constituency?

Standard accounts focus upon "betrayal" or - for the right - the unintended consequences of (mild) redistribution. However, a new paper has another explanation. Andrea Vindigni and colleagues use a game-theoretic model to show that it is in the interest of leftist party leaders to act against the interests of the poor:

Policies that reduce the income of the poor relative to the average income...paradoxically consolidate the political power of the Left. This is because these policies make the natural constituency of a left-wing party endogenously more dependent on it and, therefore, increase the support for the party itself.

They give the example of left parties supporting bad educational policies or free trade and migration, but we could add anti-union laws and less redistributive policies than the left would like.

And there's good evidence that, when the working class does get richer, support for the left wanes. Some of Thatcher's support came from part of the (southern) working class that had done well thanks to the long post-war boom.

Vindigni et al's analysis suggests that there are two things which make anti-poor policies especially likely. One is if left parties' leaders obtain high private benefits from being (or having been) in power. The other is if they fear an ideological shift to the right, say because they are intellectually insecure or because they fear the (perhaps mythical) power of the right-wing press. Both were features of the New Labour government.

How should we interpret this paper? It might be just another example of economists seeing something happening in practice and wondering whether it's possible in theory.

But there is another reading. The paper shows, or reminds us, that there are structural pressures upon leftist governments to disappoint their constituents - or, in other words, that we should be sceptical about the efficacy of a parliamentary road to socialism. In this sense, we have yet another example of how mainstream neoclassical economics vindicates a Marxian insight.

Comments

[Jonathan]

Recent UK experience, I would suggest, indicates that this is more of a case of economists figuring out whether something works in theory without worrying whether it actually works in practice. Under new Labour it was those at the bottom who gained relative to the middle, see e.g.

http://www.ifs.org.uk/comms/comm118.pdf

[chris]

Yes, Jonathan. But the Left's gripe with New Labour is that it could/should have done more, given its popularity and the health of the public finances in its early years.

[Pablopatito]

Isn't it more the case that we haven't had a leftist government since 1979? Maybe Labour didn't do more for the poor simply because it didn't fit its Thatcherite ideology?

[Edd]

It's a dangerous game though because if the poor become disillusioned with the left they often end up voting far right. See the rise of the far right across Europe.

[Account Deleted]

The paper is unrealistic because it presents a model based on two distinct and homogeneous parties, Left and Right.

In reality, there is a third, meta-party, spanning the right of Labour, the LidDems and the left of the Tories. It is the continuation of the Whig/Liberal party by other means.

This is why the ideological distance between Blair and Cameron is so small, and why Labour governments (invariably controlled by the right of the party) pursue essentially Liberal policies.

The paper might have drawn another conclusion: that the pursuit of policies that entrench poverty, and so reinforce Labour's natural constituency, paradoxically helps to prevent the growth of parties further to the left.

[Tim Newman]

Politicians "in it for themselves, f*ck the poor" shock. Is there anyone still deluded enough to think a politician is going to come along who isn't in it for himself?

[John@MoneyPrinciple]

I have seen a number of economics papers which purport to represent political systems but this one makes far too many assumptions to be of any serious value.

And as a statistician I have seen far too many cases of economists misusing statistical modelling for me to want to plough through the maths!

There are fundamental assumptions that make this paper only of academic work-in-progress interest.

eg Apart from there being more than two parties in most systems (although power always devolves to a choice between the two largest), there is also the non-voting proportion which is high.

But it also begs the real question. Just as it is - or should be - the function of every parent for their children to become better than they are, it is the function of every political party to do the same job.

Therefore one could argue that when there is full employment and everyone is rich, the Labour party will have completed its purpose and will disappear. Or that the inevitable government for a rich nation is right wing. (I would suggest Scandinavia as a rebuttal of such arguments.)

This has been the hope of the right. The reality is (a) that the job is never completed and (b) the Labour party realised this conundrum under New Labour.

Now you may or love of hate NL but that is what Blair delivered - minimum wage, relationship rights, Northern Ireland peace, Kosovo, record spending on NHS and education. Not all of this was efficiently delivered but the changes from 1997 should not be forgotten.

The left hates Blair because he wasn't 'one of us' and Iraq went to demonstrate that.

That he was continuing policies that Thatcher started is in many ways a relief because the last thing any country needs is to lurch from one system to another. This is why France has done fairly well, apart of course from being heavily subsidised by the rest of the EU.

The interesting question now is that now we have a government intent on slash and burn, when will (New/Old/Geek) Labour realise that it has to come up with much better policies.

I hope they do but so far there is little evidence. Osbornes recent budget shows how stupid he is (as well as Cameron for appointing him) particularly over the child benefit issue, the tax avoidance shock-horror and the bad PR of tax breaks for the rich while squeezing everyone else.

Otherwise in 2015 the country will return Cameron with a majority, the liberals eliminated and will the last one to leave plese switch out the lights.

[Keith]

The simpler explanation for Labours policies would simply be that changes are limited by what the leaders think as the constraints on redistribution; under a mixed economy and a number of choices at the ballot box.

I think a more redistributive policy might have been possible with a different leader or team but probably not in a to a degree all on the left would find acceptable.

Cosying up to bush and the messianic crusade against "evil" was a big fail. Wilson kept well clear of Vietnam. All the shit produced by the wars will damn Blair as an historical figure. Like the charge of the light brigade into the valley of death.

[Paul Hillyard]

If John Smith had lived to be Prime Minister Britain would have been a very different place, I believe.
Several things come to mind, less media cronyism, less support for the Iraq or Afghan wars, more social democratic distributive measures etc etc.
Would he have won 3 elections? Given the state of the Tory Party in the 2000's, probably.

[Andrej]

The paper might be completely right. This is why the left parties choose which policies to support regardless of their benefit to wealth of workers, but they take into account whether the policies offer some redistribution opportunities.

Firstly, redistributive mechanisms reduce overall efficiency and therefore make everyone poorer (except those who can get some way to exploit the sistems).

Secondly, redistribution doesn't just implement itself. It needs to be done by potentially large specialized, permanent workforce (bureaucracy), who identify themselves with redistributive goals and provide strong bastion of support for the left parties.

Redistribution also generates dependency. People who get used to being on receiving end don't give it up so easily and become the most commited, also long-term supporters.