In his interview with the Economist, Tony Blair seems like a sad old man living in the past. He says that "the Labour Party succeeds best when it is in the centre ground" - something which entails "not alienating large parts of business, for one thing”.
What this misses is that things have changed since the 1990s. What worked for Labour then might well not work now.
What I mean is that in the 1990s Labour could plausibly offer positive-sum redistribution and could therefore please both left and right. Take for example expanding higher education. This was leftist - because a higher supply of graduates would bid down the graduate premium and hence help reduce inequality. But it was also rightist because it improved skills and opportunity. Or take tax credits and minimum wages. These were leftist because they reduced poverty, but also rightist because they encouraged work. Similarly, the promise of policy stability was intended both to please business and to encourage job creation.
Such policies were centrist, vote-winning and (within limits) reasonable economics.
However, we don't live in the 90s any more. There are at least five big differences between then and now.
1. In the 90s, New Labour's centrist policies were consistent with mainstream economics. There was a decent overlap between good politics and good economics. This is no longer the case. The political centre supports austerity and tough immigration controls. These are not just inhumane but economically illiterate. The political centre and the economic centre are two very different things.
2. If positive-sum redistribution is at all feasible (and it is an if) it consists in wage-led growth. This is not especially politically centrist.
3. The danger for Labour is no longer merely that voters will leave it for the Tories for fear that it cannot be trusted on the economy. It's also that they won't vote at all or will switch to Ukip because they fear Labour is insufficiently anti-establishment and too centrist; Ukip supporters, remember, overwhelemingly support (pdf) price and rent controls and nationalization. They want a government that alienates business.
4. New Labour thought that managerialism would increase efficiency in the public and private sectors. However, with productivity stagnating in both public and private sectors, the evidence now tells us that this is not the case and that, instead, managerialism is an ideological cover for the enrichment of a minority. Policies to increase equality and efficiency must, therefore, challenge managerialism.
5. In an era of secular stagnation, macroeconomic stability - even if it can be achieved which the experience of 2008 suggests is not possible - is not sufficient to boost investment, innovation and growth. Perhaps, therefore, greater intervention is necessary.
My point here is that Blairism should not be rejected (merely) because it is insufficiently left-wing as Neal Lawson claims, nor (just) because the centre ground is a "nonsensical chimera" as Phil claims. Instead, it should be rejected on the purely pragmatic grounds that the economy has changed since the 90s and so we require different policies. In failing to say this, Blair appears to be an irrelevant out-of-date ideologue.
"In the 90s, New Labour's centrist policies were consistent with mainstream economics."
Including support for raising minimum wages?
It's possible that your idea of mainstream economics is different from mine.
Posted by: David Friedman | January 02, 2015 at 04:25 PM
I always have to take issue with the phrase'economically illiterate' as used in this context.
Leave aside the fact that the UK's fiscal and monetary position remains expansionary, and therefore the 'austerity' is second order (the rate of change of stimulus).
The fact is that the charge of illiteracy, meaning unread, cannot be levelled at me as broad supporter of the current deficit path. I'm well read in economics. It certainly cannot be levelled at the many eminent and thoughtful scholars who support the position as well. It is a false appeal to authority.
Posted by: Matt Moore | January 02, 2015 at 05:14 PM
David Friedman - yes, Card Krueger is the mainstream on the minimum wage
Posted by: Jon | January 02, 2015 at 05:39 PM
Both parties cannot offer anything voters want. Older voters want living standards to be maintained. The UK is living a lie and running out of road fast.
I vote for reality. It's gonna get in. Enjoy.
Posted by: Ben | January 02, 2015 at 10:39 PM
«in the 1990s Labour could plausibly offer positive-sum redistribution and could therefore please both left and right.»
Perhaps the left and the North just voted New Labour because they had no alternative, and the right voted New Labour because Blair, very well aware of "Southern Discomfort" made it clear that he would continue Thatcher's upwards redistributive policies.
Because the keyword was "aspiration": aspiration to massive tax-free work-free capital gains on assets.
«Take for example expanding higher education. This was leftist - because a higher supply of graduates would bid down the graduate premium and hence help reduce inequality. But it was also rightist because it improved skills and opportunity.»
Hahahahahahahaaha! That's so "intellectual". The high push into higher education was sold on the promise that "everybody will become a manager or a scientist with above average wages", and was done because it drove the reported unemployment numbers down by a lot.
«Or take tax credits and minimum wages. These were leftist because they reduced poverty, but also rightist because they encouraged work.»
These were the New Labour internal bribe to the Brownista left indeed and as Fields noted it has a transformative effect on the live of the poor, especially in the North, but as "The Economist" noted New Labour did not boast about it to avoid terrifying the asset-speculating middle classes.
«Similarly, the promise of policy stability was intended both to please business and to encourage job creation.»
That was another Brownista story. The Blair side to it was mad changes whenever a spin opportunity came up or Bush told him to jump.
When I read these "intellectual" (highly hypocritical ,I hope) arguments I really laugh. New Labour was all about delivering massive tax-free work-free capital gains and more cheap debt to the South East middle classes, who only care about cash today. Consider how Blairites criticize Brown who was the left wing of New Labour, not of Labour, after all:
http://www.theguardian.com/politics/2006/sep/27/uk.society
«New Labour is aspiration and compassion reconciled. We reach out not just to those in poverty or need but those who are doing well but want to do better; those on their way up, ambitious for themselves and their families. These are our people too. Not to be tolerated for electoral reasons, but embraced out of political conviction.»
http://www.independent.co.uk/news/uk/politics/lord-mandelson-tells-ed-miliband-to-stop-bashing-the-rich-9911400.html
«Ed Miliband should abandon his “them versus us” strategy pitching the poor against the rich, so he can extend Labour’s appeal beyond the party’s core vote, Lord Mandelson has said.
The former Cabinet minister voiced in public the private fears among Blairites that Mr Miliband’s criticism of the rich and big business risks alienating “aspirational” middle class voters.»
http://www.newstatesman.com/politics/2014/11/ed-miliband-s-problem-not-policy-tone-and-increasingly-he-seems-trapped
«From the beginning Labour was always an uneasy coalition of the organised working class and the Fabian or Hampstead intellectual. Later it also became the party of public-sector workers, social liberals and dispossessed minorities. Miliband is very much an old-style Hampstead socialist. He doesn’t really understand the lower middle class or material aspiration. He doesn’t understand Essex Man or Woman.»
http://www.theaustralian.com.au/news/world/new-labour-flounders/story-e6frg6ux-1225780935815
«Today Brown will make his pitch to middle England with a promise to do more to tackle anti-social behaviour - part of the Blair agenda that he deliberately sidelined when he first moved into No 10.
He is focusing on what he recently called the "squeezed middle" because he knows that the aspirational voters who supported Tony Blair have turned away from him. But the phrase he has chosen is telling: Gordon is interested in the middle classes only if he thinks they are "squeezed" - and therefore joining the ranks of the poor who have concerned him most for all his life. These voters want to feel loved when they are comfortable too. And as they see their taxes rise, they feel increasingly that Labour disapproves of them.»
http://www.telegraph.co.uk/comment/columnists/rachelsylvester/3556538/Brown-and-the-conservatory-building-classes.html
«With the cost of housing, energy, childcare and food going through the roof, people who are relatively well paid can no longer afford to live the way they did even a year ago.
As the middle classes book holidays in Torquay rather than Tuscany, drink tap water instead of San Pellegrino and put the conservatory they had been planning to build on hold, they start to question the amount they have to pay to the Government.»
http://www.theguardian.com/commentisfree/2013/mar/25/george-osborne-britons-economic-cannon-fodder
«This is what the political economist Colin Crouch has dubbed "privatised Keynesianism": debt is used to reflate the economy, but it is taken on not by the public sector but by individuals, couples, families.
Privatised Keynesianism sounds a bit joyless, but the political classes found something to give it extra zap. Call it housing-market heroin: the special high the Brits get when property prices are really taking off and Sarah Beeny is on the telly explaining how we can all cash in. Thatcher was the first PM to really push housing-market heroin with her right-to-buy programme and her Lawson boom but, with their love of aspiration and Home Ownership Task Force, Blair and Brown knew its potency, too.»
http://www.telegraph.co.uk/comment/columnists/rachelsylvester/3556538/Brown-and-the-conservatory-building-classes.html
«Like Worcester Woman and Mondeo Man, the conservatory-building classes have become an emblem of the upwardly mobile voters Mr Brown must win back if he is to retain power at the next election.
MPs in marginal seats are worried. Already, the party's strategists are talking about the south-eastern "killing fields" where Labour will suffer most when it next goes to the polls.»
«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.
His preoccupations with child poverty, Africa and banning plastic bags are all very worthy - but they leave the conservatory-building classes thinking: what about us?
The Government's obsession with stopping the middle classes "rigging" the school admissions system - rather than actually improving the results - exacerbates the sense that Mr Brown is frowning at parents who want to do the best for their children.
His talk of "opportunity for all" somehow conveys a vague sense of disapproval of ballet lessons and Carluccio's and Charlie and Lola. The Budget, with its tax rises for wine drinkers and 4x4 drivers, confirmed the feeling of these hard-working families that they were under attack.»
http://www.theguardian.com/politics/2012/may/25/labour-tory-voters-south-election
«Labour will not win the next election by relying on disaffected leftwing Liberal Democrat voters, but will also have to frame policies that are attractive to former Conservative voters in the south, the shadow cabinet member Caroline Flint has said.
Flint also urges the party to realise that many crucial southern voters do not believe public resources should be distributed solely on the basis of need, but instead have a different notion of fairness to the one Labour offered at the 2010 general election.»
«Flint, the shadow energy secretary, also holds a position as the party's champion for the south-east. She writes: "We have to win votes from the Tories as well as from the Liberal Democrats. The collapse of the Liberal Democrat vote alone will not be enough to win in 2015. We have to continue to focus on those voters who supported Labour in 1997 but voted Conservative in 2010."
She adds: "We went into the last general election promising a 'future fair for all', but too often, when we thought we were talking about fairness, we were actually talking about need." She claims that for many swing voters in the south-east "fairness is as much about exchange – taking out once you have put in – as it is about need. They want 'fairness for my family as well.'"»
How do the South Eastern middle classes "aspire" to improve their material well being? All the talk above is just euphemism for pushing the working poor down, and to make a lot of tax-free work-free profits with capital gains on property.
Posted by: Blissex | January 02, 2015 at 11:23 PM
«How do the South Eastern middle classes "aspire" to improve their material well being? All the talk above is just euphemism for pushing the working poor down, and to make a lot of tax-free work-free profits with capital gains on property.»
Because what Thatcher and Blair did not deliver to the working class and in particular to the North on an "aspiration" of better paid, more secure jobs with improved pensions and more holidays and shorter hours.
The great result of Thatcher and Blair on the "aspirations" to a better life of most workers were a narrowing choice of lower paid, more casual jobs with drastically cut pensions, fewer holidays and longer (unpaid) hours; and this only for a majority, because quite a number ended up on mean and ever shrinking benefits.
The jobs and pay of most of the South East middle classes did not improve either, they also became slightly worse, but they did not care, because they also got enormous property speculation windfall rents, government sponsored and guaranteed.
If a "middle class" home of 3-4 bedrooms balloons in price from £200,000 (purchased with the investment of £10,000 in the down payment) to £500,000 in 10 years, that is £30,000 per-year worth of tax-free work-free of "aspiration" satisfied, far more than any potential improvements in wages, job security, pensions, holidays, hours, ...
That £30,000 per year of upward redistribution mean holidays in Tuscany rather than Torquay, drinking San Pellegrino rather than tap water, building a new conservatory, "ballet lessons and Carluccio's and Charlie and Lola" for South Eastern voters, something very different from:
«What I mean is that in the 1990s Labour could plausibly offer positive-sum redistribution and could therefore please both left and right.»
To me instead the politics of "aspiration" seem like pure rightwing rentier tory politics of upward redistribution based on "low pay Britain", not even rightwing whig ones; and the few elements of progressive policies that were inspired by Brown like the EITC were carefully kept under wraps to avoid worrying the "aspirational" middle classes that there was a tiny bit of left remaining inside New Labour.
IIRC in Radice's diary there is a funny entry where once upon a time the top Blairites met to discuss "what kind of party New Labour are ideologically" and Mandelson said something like "a conservative party that still cares about the poor". But does not emphasize the latter bit.
Overall by far and away the dominant politics in the South East are insiderism aka incumbency: those who have "aspire" to have more, those who don't have don't matter.
Posted by: Blissex | January 02, 2015 at 11:57 PM
«Blairism should not be rejected (merely) because it is insufficiently left-wing [ ... ] rejected on the purely pragmatic grounds that the economy has changed since the 90s and so we require different policies.»
Thatcherism/Blairism as Blair wrote very persuasively in 1987 were based on Scottish oil funding a debt and imports boom for the sole benefit of insiders/incumbents in property assets:
http://www.lrb.co.uk/v09/n19/tony-blair/diary
Those circumstance have indeed changed:
http://mazamascience.com/OilExport/output_en/Exports_BP_2014_oil_bbl_GB_MZM_NONE_auto_M.png
and now Thatcherism/Blairism are being funded by extracting not oil but the standard of living of most workers who have seen real pay cuts of 20-25% over a few years.
«In failing to say this, Blair appears to be an irrelevant out-of-date ideologue.»
Ideologue? After reading his 1987 denouncing a policy that he later fully adopted after his "Sierra man" moment, he seems to be an out-of-date opportunist.
Posted by: Blissex | January 03, 2015 at 12:04 AM
Blissex,
If your narrative is true, and you appear to have convinced yourself it is, a collapse in house prices will be very interesting.
The 2015 election maybe one where the loser ends up being the winner!
Posted by: An Alien Visitor | January 03, 2015 at 11:58 AM
«a collapse in house prices will be very interesting»
Strange that you write in the future tense; we had some years ago a "small dip" in house prices that resulted in the first bank run in over 100 years, hundreds of billions of Bank of England buying government debt to support it, and the "commanding heights" of the UK financial system being nationalized, something that apparently is totally fine with "smaller state (for thee)" George Osborne. Plus over 5 years of recessions with a collapse of 20-25% in median after-inflation wages.
These are all things that have been largely "disappeared" from public discourse, replaced sometimes by "intellectual" discussions about Blair's ideology...
Posted by: Blissex | January 03, 2015 at 12:54 PM
«If your narrative is true, and you appear to have convinced yourself it is»
Well, the narrative reporting by way of many "money shot" :-) quotes seems to me for the longer term largely Blair's own, including his 1987 LRB piece and his 1996 conference talk, and for the more recent events Cameron's, and I requote here an earlier comment as to how much "ideology" matters in his narrative:
http://blogs.reuters.com/felix-salmon/2013/03/13/britains-fiscal-failure/
"It is hard to overstate the fundamental importance of low interest rates for an economy as indebted as ours… …and the unthinkable damage that a sharp rise in interest rates would do.
When you’ve got a mountain of private sector debt, built up during the boom… …low interest rates mean indebted businesses and families don’t have to spend every spare pound just paying their interest bills.
In this way, low interest rates mean more money to spare to invest for the future.
A sharp rise in interest rates – as has happened in other countries which lost the world’s confidence – would put all this at risk… …with more businesses going bust and more families losing their homes."
Thus spoke the beneficiary of a few dozen properties in London, according to some reports.
Posted by: Blissex | January 03, 2015 at 01:06 PM
«Plus over 5 years of recessions with a collapse of 20-25% in median after-inflation wages.»
That collapse in median after-inflation wages is calculated according to government's "specially methodologized" inflation index.
But in a rare moment of public candour we learn instead:
http://www.telegraph.co.uk/comment/columnists/rachelsylvester/3556538/Brown-and-the-conservatory-building-classes.html
«There is nothing that explains Labour's sudden and dramatic slump in the polls more than the fact that the conservatory-building classes are feeling the pinch.
Sir Stuart Rose, who as chairman of M&S could be described as the voice of Middle England, says that the real inflation rate is around eight per cent, while pay rises are closer to three.»
Well, that was in the boom days of 2008 ;-).
Posted by: Blissex | January 03, 2015 at 01:16 PM
«we had some years ago a "small dip" in house prices that resulted in the first bank run in over 100 years, hundreds of billions of Bank of England buying government debt to support it, and the "commanding heights" of the UK financial system being nationalized, something that apparently is totally fine with "smaller state (for thee)" George Osborne. Plus over 5 years of recessions with a collapse of 20-25% in median after-inflation wages.»
And a 25% collapse in the pound. Which by itself would have been a major political bomb not so many decades ago.
On rereading the above, I am astonished as each of the items above, in particular the 20-25% collapse in real median wages, would have been a major political bomb not so many decades ago.
But thanks to the vigorous shifting of the Overton window and the much changed class interests of many South East voters, that's amazingly now all business as usual.
Who are the "conservatory building classes" and what worries them (usual links):
http://www.dailymail.co.uk/femail/article-2308344/Petronella-Wyatt-Its-hell-posh-poor.html
http://www.dailymail.co.uk/femail/article-2841450/Just-live-1m-house-doesn-t-mean-m-not-breadline-Ursula-knows-ll-little-sympathy-says-trying-match-parents-comfortable-lifestyle-left-penury.html
http://www.dailymail.co.uk/money/mortgageshome/article-2105240/Stuck-rent-trap-How-middle-class-family-kept-remortgaging-home-pay-bills-longer-afford-repayments.html
Of course all three are from the Daily Mail, the mouthpiece of the "conservatory building classes". Reading it is a very good guide to what "Middle England", that is the affluent property owners from the South East who shop at M&S (or even Waitrose) really think.
PS: My impression is that M&S shoppers are slightly more right wing than Waitrose shoppers.
Posted by: Blissex | January 03, 2015 at 02:30 PM
«a collapse in house prices will be very interesting.»
A similar debt-collateral spiral collapse eventually happened in Japan, and in that country the financial sector has been embalmed for decades to avoid having to acknowledge the enormity of the hole in corporate balance sheets once the collateral valuations collapsed.
I expect the same to happen in the UK, with further compression of wages, further falls of the pound, higher masked inflation, more Bank of England lending at very low rates against toxic debentures presented by insolvent banks as [not] recommended by Bagehot.
All this to avoid having to recognize that much of the UK financial system and many millions of South East families are effectively bankrupt like many millions of Northern families have been for decades.
«The 2015 election maybe one where the loser ends up being the winner!»
Perhaps 2015 could be the year where all the pressures in the system coalesce, and the winners gets the economy to blow up in their face but I suspect that the outcomes being planned are very different
My impression of George Osborne's clever strategy is that he is trying to push all critical pressures until after the elections anyhow, so:
* if he is out of government he can blame the incoming Labour government for any collapse, basking in the past glory of the house price boom he has engineered so far, and perhaps the City will choose to get rid of all their toxic stuff "regardless" of the consequences, helping to tar Ed Balls as "the catastrophe chancellor".
* if he is re-elected he gets five more years of making "Northern scroungers" and "overpaid public workers" pay the price of continuing to avert the consequences of the collapse of the debt-collateral spiral on Southern rentiers, helped by the City as "he is one of ours" and to allow him to boast of being the "no crisis chancellor".
Posted by: Blissex | January 03, 2015 at 04:04 PM
Blissex, I humbly suggest you get your own blog.
Posted by: Matt Moore | January 04, 2015 at 10:09 AM
Seconded, in earnest. You seem very astute most of the time, Blissex.
Posted by: Agog | January 04, 2015 at 03:29 PM
"It's also that they won't vote at all or will switch to Ukip because they fear Labour is insufficiently anti-establishment and too centrist; Ukip supporters, remember, overwhelemingly support (pdf) price and rent controls and nationalization. They want a government that alienates business."
You neglected to mention that neither of those are Ukip policy, which rather suggests that they are not vote winners in themselves. The same could be said of rail renationalisation or energy price controls, both policies Labour has partially moved towards with no long-term impact on their poll ratings.
Posted by: Richard | January 04, 2015 at 11:48 PM