Conning the working-class

I wrote yesterday that our tendency to take people at face value leaves us vulnerable to conmen. Bang on cue, A Tory-voting recipient of tax credits spoke last night of how she felt conned by the Tories. 
Deomstrating the understanding and compassion for which they are renowned, some lefties have reacted by claiming she had it coming. This ignores the powerful forces which put her into this mess.

One of these, as I've said, is that it is easy to be conned simply because our instinct is to trust people - especially those in positions of authority. As Akerlof and Shiller say, millions of people are phished for phools. There's a sucker born every minute. Hundreds of thousands of people like her were conned when Osborne lied:

Where is the fairness, we ask, for the shift-worker, leaving home in the dark hours of the early morning, who looks up at the closed blinds of their next door neighbour sleeping off a life on benefits?
When we say we're all in this together, we speak for that worker.

But there's something else. Whilst the left is right to complain that low-paid workers like that woman should have felt solidarity with benefit recipients, they should at least understand the psychological mechanisms which stop them doing so. 

One of these is the self-serving bias. People adopt beliefs to enhance their self-esteem. Those on tax credits thus believe they are hard-working and deserving, unlike "scroungers" - even though they are all, from a Tory point of view, getting "the taxpayers' money."

Secondly, wishful thinking and the optimism bias lead us to think "it couldn't happen to me". As @Staedtler tweeted:

What they said: "There will be £12 billion welfare cuts.
What you heard: "There will be £12 billion welfare cuts for other people."

Thirdly, social comparison theory tells us that people compare themselves to those who are like them. As Leon Festinger hypothesised (pdf):

Given a range of possible persons for comparison, someone close to one's own ability or opinion will be chosen for comparison.

This is what Osborne was driving at: he was inviting the low-paid to compare themselves to their neighbours rather than to mega-rich tax-dodgers and exploiters. His invitation worked because it went with the grain of people's inclinations.

Some laboratory experiments (pdf) by Philip J. Grossman and Mana Komai have shown how strong such within-class envy can be. They show that some of the poor are willing to attack other poor people even at their own expense. They conclude:

We find strong evidence of within class envy: the rich targeting the rich and the poor targeting the poor...Within the poor community, the target of envy is usually a poorer subject whose wealth is close to the attacker; the attacker may possibly be trying to preserve his/her relative ranking.

I say all this for a reason. It's tempting for lefties to believe that people vote Tory because of "neoliberal" ideology and the right-wing media. But there might be more to it than this. Even without such propaganda, there are cognitive biases at work which undermine class solidarity. I fear some on the left underestimate this fact because of the same cognitive bias which contributed to that woman voting Tory - wishful thinking.

Comments

[Luis Enrique]

where is the line between a cognitive bias and a (mistaken) belief - I mean she really might just believe the non-working benefit claimants get it too easy.

you cite Osborne conning people, she may of course also have taken Cameron at his word
http://www.mirror.co.uk/news/uk-news/heres-moment-david-cameron-made-6450614

[Chris E]

That second twitter link isn't exactly claiming 'she had it coming', in fact it points to exactly the same 'self serving bias' that you identify.

Secondly, I think it undermines the agency of people to just label within-class envy as a 'cognitive bias', it's the kind of spiteful behavour that we would condemn in children.

[Ben]

Biggest part of the benefit bill? Boomers.

They should stop taking rentier bribes at the expense of their own.

And we should finish off the rentiers.

[Anon]

Maybe you should check what's actually going on and what was actually said? This blog is getting pretty partisan:

https://fullfact.org/factcheck/economy/child_tax_credit_cut_promise-46421

[Luke]

"This is what Osborne was driving at: he was inviting the low-paid to compare themselves to their neighbours rather than to mega-rich tax-dodgers and exploiters."

Remember when Duncan Bannantyne signed a letter with various businessmen saying "conservatives wonderful, labour dangerous" before the election, then changed his mind when Milliband said he'd abolish non-dom status? I'm comfortably off, but nowhere near the wealthy non-doms' league, so it doesn't really bother me. Imagine what it must be like for Bannantyne, knowing that lots of his friends are paying less tax than him.

[e]

I fear arguments that depend on a notion of a coherent left that isn’t getting it right, are too easily viewed contemptuously by the less well educated working-class, or underclass; experience teaches better. And moreover, it’s a line of argument that takes quite obviously repugnant political operators (of whatever wing) off the hook.

[SeanV]

This is the best explanation for low real rates:

http://bankunderground.co.uk/2015/07/28/drivers-of-long-term-global-interest-rates-can-changes-in-desired-savings-and-investment-explain-the-fall/

[Metatone]

I think this lets the media off too easy.
Many voters rely on the media to do a lot of the calculations. (e.g. at budget time.)
The media in general failed to highlight what was likely to happen.

[Bob]

Sean, that shit is funny.

[Bob]

"Deomstrating the understanding and compassion for which they are renowned, some lefties have reacted by claiming she had it coming."
Lol Chris? Where did you get the ideas "lefties" are "compassionate" and "understanding."
Look, when did the tax credit cuts happen. 3 MONTHS AGO, early July. Why is there crying now? Seems like a political stunt.
Many businesses are crying due to tax credit cuts.
There are arguments for and against tax credits, however a person having an emotional breakdown is not an argument.
It is obvious that anyone with half a brain that the Tories are capable of lying - see "no top down organisation of the NHS."
Many of us were bitterly disappointed as we DIDN'T vote for the Tories and lose and we aren't crying, even if we are under 25 and worse affected.
Very few % of pop voted Tory.
I'll tell you why she voted for the Tories - it wasn't because she was tricked and too stupid to vote properly and decide. Chris Dillow, hater of democracy. Nope, she saw her house go up in value and voted "Screw you! I'm alright Jack!"

[Bob]

See e.g.
http://www.cityam.com/226307/employee-exodus-housing-crisis-now-dire-threat-future-london-s-businesses
City AM complaining about house prices being too high! Lol!
Everyone is whining but obviously some people voted Tory or they wouldn't have won.
This is what you want, this is what you get.

[Keith]

The main problem with this seems to me to be that I cannot think when the wealthy have attacked each other?

The well off always seem to help each other and log roll politicians with the exception of those well off and well educated people who have a ideological belief in a better society. Rational people realise that you cannot help yourself without helping other people too and that not all of the spending by the state can be directly useful to every tax payer all the time. That is what redistribution and collectivism means.

It always seems to be segments of the working class who stab each other in the back by voting tory or who refuse to join a union or show solidarity with other people. May be a few millionaires are jealous of Billionaires who have a bigger yacht or private plane, but it is not really the same is it. Yes the press is biased but anyone who uses their brain can work that out, it is not a new thing that a Harmondsworth and his paper back the Tory party, and before that were pally with Hitler. Lots of people seem to suffer from remarkable credulity when they read the Mail or see Tory party propaganda. They do have it coming when they show a lack of insight as to the reality of the system of social relationships and the reality of human frailty and economic risk. Have these people never experienced the problems of life, do they know no history?

[Matt Usselmann]

The lady who spoke on QT has been conned. The cognitive bias is of course how the whole of the media preserves its grip. It serves up a narrative which hides the cons. They cons are always by the CON party, but the narrative of the media serves something else.

Unless you are really into economics or politics you will have to get your narrative from the papers you read or the media stuff they blare out, if you listen to it at all.

It is far too complicated an analysis to even think that that woman will even have heard the comparison of Osborne, or only compares herself to her peers. She will have heard somewhere "Labour is irresponsible" and have swallowed that. Most likely scenario, anyway.

Next time around people will remember the LibDems conned them, the Cons conned them, they will vote Labour by default.

[Matt Usselmann]

Yes that is another point, well off do not attack well off. 1% will stick together and blare out in media and through bought economists and think tanks same mantra.

The 0.1% own the media. And the 0.01% are the Bilderbergers or equivalent. None of them attack each other.

[Paul_trembath]

"Some lefties" have been through this for the last 5 years and she voted for more of it. Compassion? We'll try.

[Mme Bovary's daughter]

If you're lower middle class, your abiding fear is to slip down the social rung and go working class. That's why she voted Tory -- to reassure herself that she is NOT working class. Too scared of her own financial vulnerability. Voting Labour would have been a recognition of how fragile her hold on the lower middle-class rung is. It's not about being conned -- though the media bear a huge responsibility for their uncritical rehashing of the dominant narrative. But until the left really understands the psychological barrier for people like her against identifying with the downtrodden, it will have a huge problem.

And when we turn on those like her to cry 'serves her right', it's because we know only too well that gnawing fear of being declassé. It's one thing to be on the left from an intellectual and political position of choice. It's another to be on the left because you're at risk of slipping down to the bottom of the social pyramid. Try it. Bloody terrifying. It takes a lot of guts to identify yourself as Labour when you're lower middle. The problem is not aspiration (pace Kendall); the problem is fear of losing your fragile hold on upward mobility. Frances Coppola analysed this fear at the macro level. It's even more important for Labour at the micro one.

[Blissex]

«It's tempting for lefties to believe that people vote Tory because of "neoliberal" ideology and the right-wing media. But there might be more to it than this. Even without such propaganda, there are cognitive biases at work which undermine class solidarity.»

This is a common and laughable delirium of the resolutionary socialist types, and I thought that our blogger was leaning marxian. Our dear J Corbyn quite similarly recently declared that:

«Also, interestingly, in discussion – it’s not terribly scientific, but talking to people in various places who voted Ukip or Tory or Green – they are open to a debate that is about a different way of doing politics, which is about class politics, rather than consumer politics.»

Oh my, "middle income" (working class) people do practise «class solidarity» and «class politics» with great zeal, they just think that their class is the same as every other property or job rentier, or even every other taxpayer scammed by the luxury-living benefit claimants.

These middle/median income people have class spite versus the lower classes, sometimes because as another commenter says «lower middle class, your abiding fear is to slip down the social rung and go working class» and maybe for some it is «cognitive biases at work», but for most middle income people who vote Tory they do so because of class politics and class solidarity: the politics and solidarity of the rentier, "have" class.

To a large extent it is that Labour are the party of the tenants, and Conservatives the party of landlords, Labour the party of people with no jobs or bad jobs, Conservatives the party of people with (what they think are) good safe jobs.

[Blissex]

«Labour are the party of tenants, and Conservatives the party of landlords, Labour the party of people with no jobs or bad jobs, Conservatives the party of people with (what they think are) good safe jobs.»

Plus Labour the party of young or working age people, and vote-less immigrants, Conservatives the party of middle aged or older and retirement age people, and voting citizens, Labour the party of northern or town residents, Conservatives the party of southern or suburban (and country) residents, but that is secondary here.

Anyhow, some of my usual often repeated quotes, relevant here, please bear with me...

T Benn's diary, 1986-03-24:
«The Party's Campaign Strategy committee, where four men and a woman from something called the Shadow Agency made a presentation.
They flashed onto a screen quotes which were supposed to be typical of Labour voters, for example: 'IT'S NICE TO HAVE A SOCIAL CONSCIENCE BUT IT'S YOUR FAMILY THAT COUNTS.'
What we were being told, quite frankly, was what you can read every day in the Sun, the Mail, the Daily Express, and the Telegraph. It was an absolute waste of money.
Labour was associated with the poor, the unemployed, the old the sick, the disabled, pacifists, immigrants, minorities and the unions, and this was deeply worrying. The Tories were seen to have the interests of everyone at heart including the rich. Labour was seen as yesterday's party.
I came out feeling physically sick.»

www.conservativehome.com/thetorydiary/2014/03/how-thatcher-sold-council-houses-and-created-a-new-generation-of-propertyowners.html
«It was indeed at the diffusion of property that inter-war Tories aimed, as the pragmatic answer to the arrival of democracy and the challenge from Labour. There were even prophetic council house sales by local Tories in the drive to create voters with a Conservative political mentality.
As a Tory councillor in Leeds defiantly told Labour opponents in 1926, ‘it is a good thing for people to buy their own houses. They turn Tory directly. We shall go on making Tories and you will be wiped out.’ There is much of the Party history of the twentieth century in that remark.»

Lance Price's diary, 1999-10-19:
«Philip Gould analysed our problem very clearly. We don’t know what we are. Gordon wants us to be a radical progressive, movement, but wants us to keep our heads down on Europe.
Peter [Mandelson] thinks that we are a quasi-Conservative Party but that we should stick our necks out on Europe.
Philip didn’t say this, but I think TB either can’t make up his mind or wants to be both at the same time.»

[Blissex]

«Next time around people will remember the LibDems conned them, the Cons conned them, they will vote Labour by default.»

The main campaign argument of the Cons was quite transparently "higher house prices in the south" (same old news...).

The Cons voters will feel conned only if house prices in the south fall before the next election.

In that case we may well have a Corbyn government.

[Neil Wilson]

"I say all this for a reason."

Hopefully to conclude that a Basic income scheme is a non-starter *because* of these political issues.

People need to see other people contributing. The 'sleeping off a life on benefits' hits home.

[David]

The Tories learn "divide and conquer" at Eton, but it was Mrs. Thatcher that sowed the seeds of this monster.... a working class that believes it is a sub-group of the aristocracy.
In this new society, where shopping and video games provide the only attainable gratification (marijuana is still illegal) the poor will vote Tory until they are beaten down by their heroes, and then they will vote National Front.

[Blissex]

«Mrs. Thatcher [ ... ] working class that believes it is a sub-group of the aristocracy.»

Actually as my quote above shows even in the 20s the Tories knew that newly-minted petty landlords/rentiers, even of a tiny terraced ex-council 2up-2down, would become «voters with a Conservative political mentality». And Thatcher was not the person who insisted that "right to buy" be part of the Conservative manifesto of the 1979 election, as one of the links above says, they were T Heath and M Heseltine over her objections:

«Robin Harris, an ardent Thatcherite, points out in his biography of her that it was actually at Heseltine’s insistence that in the manifesto of 1979, “council tenants were offered very generous discounts” of “a third off the market price after three years’ tenure»
«In Campbell’s words, “Heath told her exactly what was expected of her: he had already determined on a triple package composed of a reduction in the burden of domestic rates, leading to their eventual abolition; mortgage subsidies; and an acceleration of council house sales. She argued initially against all three; but she soon gave in, accepted the hand dealt her and set to work.”
Thatcher was worried that Conservative voters who had paid in full for their houses would be annoyed if council tenants were able to buy at a discount: “What will they say on my Wates estates?” she asked. But she was prevailed upon to swallow this objection.»

All this in large part happened because in the 1970s one of the conservative think tanks found that even at the same level of income and education etc. voters who owned houses, cars and shares accounts voted Conservative far more than those who rented, used public transport and had a pension account (in the USA gun ownership makes a bit difference).

That is, that well off people using trains, renting, with a pensions tended to vote more Labour, and low and median income people with a car, a house, shares tended to vote more Conservative.

The second effect was of course much bigger in terms of voters affected, and the numbers presented in that study were quite compelling, validating the intuition of that «Tory councillor in Leeds».

Therefore after that study was published the policy of tory governments, whether Conservative or New Labour, has been consistently to subsidize property speculation, undermine public transport, and discourage pensions.

[Blissex]

«working class that believes it is a sub-group of the aristocracy.»

Apart from the property/cars/shares effect I repeat here that is a large element of material support for the belief of those southern working class people who think they are part of the rentier upper class: massive tax-free effort-free capital gains. That is, they actually derive a large chunk of their after-tax income, often as much as 40%, and for retired people much more, comes from upward-redistributing property capital gains.

Thus many southern UK voters really don't care a lot about owning property as such, even the house they live in, which is inflexible and expensive, but they care very much indeed about being able to make 150% gross (and well over 100% net) yearly tax-free effort-free profits on their deposit money with leverage-fueled, government-guaranteed tax-free effort-free capital gains.

This is most obvious comparing North and South: the government does not sponsor huge tax-free effort-free leveraged fueled capital gains in the North, only in the South, and in the North many are happy to live in good cheap rented housing. Same say in Germany, where it is not government policy to redistribute upwards via heavily subsidized property speculation.

[Blissex]

xThis is the best explanation for low real rates»

It is nearly entirely neoclassical bullshit based on the idea that there is a wicksellian rate and real interest rates are set by the market, and uses the usual tired euphemism "savings glut" for the policy of "vendor financing" used by many export-oriented governments.

The entire paper indeed does not mention government policy at all, which is ridiculous.

Interesting numbers on some macro-trends, though and it is good that it is one of the few papers I have seen where the dependency ratio includes young people as dependents too.

[Bob]

Absolutely blissex, it is extremely insane. There are *no* reserve requirements in the UK, and even if there was, the money multiplier is just wrong.
Bullshit debunked here:
http://bilbo.economicoutlook.net/blog/?p=1623

[Bob]

Also,
http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx
BoE says money multiplier is wrong.
Loans create deposits and banks lend by expanding balance sheet.
At the start things are fine and fully funded. However then if you withdraw cash or move deposit to someone NOT in the same bank the bank needs reserves.

[An Alien Visitor]

I think the Tories are confidence tricksters with a portfolio.

Thatcher told an entire nation that privatisation was a form of democratisation, they pumped this lie into every British home nightly for a decade. We were like North Korea on steroids back then kids.

But now look at the stats on share ownership and we can see the whole thing was one big con trick.

Bit like the oil voucher scheme in post USSR that created the Oligarchs and disenfranchised the masses.

[Krish]

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