The centrist crisis

Tim Farron said this week that “there is a hole in the centre of British politics right now.” This is true, if not in the sense he intends.

What I mean is that several big political developments of recent years are a backlash against centrist politics: the rise of Corbyn; Brexit; the collapse in the LibDems vote in 2015; growing distrust of experts; and increasing hostility to immigration. The hole in centre exists because voters have deserted it. Such trends, of course, have counterparts in the US and much of Europe.

There’s a reason for this. Centrism requires a healthy capitalism. Support for a mixed economy rests upon the ability of capitalism to raise living standards and generate the taxes that pay for public services. And the centre ground requires that people have a stake in the system (so they don’t want radical change) but also have trust in the Establishment and goodwill towards others, so they support mildly progressive policies. This too depends upon capitalism being healthy – because as Ben Friedman has shown, good economic growth creates tolerance, trust and open-mindedness whist stagnation breed intolerance and extremism.

But this economic base for centrism has greatly weakened. As the IFS says, real median earnings are still lower now than they were before the crisis. As a result, older workers’ incomes haven’t changed since then whilst younger ones’ have fallen significantly.

On top of this, unaffordable housing means that younger people have less stake in the economy than they used to have, whilst job polarization and the degradation of formerly middle-class jobs have undermined the sense of content with the system which has often been the bedrock of centrism.

We saw in the 1930s and 70s that economic crises weaken the political centre. We’re seeing that again.

However, centrists haven’t just been hurt by the economic crisis. They are also in intellectual disarray, which might in part be the result of their failure to adapt to the stagnation of capitalism. Yesterday, thehistorian said that Labour’s centrists “don't have enough alternative ideas”. Bang on cue, David Miliband’s piece in the New Statesman vindicates him. Whilst David is absolutely right to say that secular stagnation and turbocapitalism pose new challenges for the centre left, he is sadly silent on what policies might meet these challenges.

Anti-centrists do have answers here. Nativists say closed borders; the libertarian right says freer markets; and the Left says higher corporate taxes, nationalization and printing money. Such answers might be inadequate or worse. But something beats nothing. And nothing is what the centrists seem to have.

This, however, need not be the case. Support for tax credits, infrastructure spending, more choice and voice in public services, the softest of Brexits (if any) and better early years education are good coherent policies which the centre could offer*.

And there’s one big cognitive bias which centrists could exploit. This is the compromise effect – the tendency of people to choose middling options when faced with extremes. Voters have often backed centrist parties for the same reason they buy the second-cheapest bottle of wine rather than the cheapest or middlingly-priced TVs rather than high-end ones. If the centre could find a viable proposition, and sell it by exploiting the contrast to the extremes, it might have a future.

Or would it? Whilst the intellectual crisis of centrism is resolvable, the economic stagnation that has caused a revulsion with the centre might not be.

* Personally, I doubt that they’d be adequate – but they’re better than nothing.

Comments

[Warren Tarbiat]

Good post, agree with it in essence.

But however I think the problem is the center-left/Social Democratic/Social Liberalism are in a fudgy situation all over Europe. The traditional comfortable swing voters are being captivated by the Centre-Right voting base who are wary of deficit spending and think public spending "benefits somebody else". Radical/Populist Left think in the opposite direction and distrust "Establishment" Centre-left. Populist Right/Nativism stealing the Working-class base.

Most Centrists in the Labour party just seem hard-on with the idea of devolution. Lke Don't worry some poor sod with constrained budgets will provide the answer to our problems. The center-left needs to be controversial IMO, like as you have suggested how about Tax system reform with moving taxation from Labour and Business onto Land/property? Make work pay. Though as much as I want Land Taxation/Reform it'll result in Baby Boomer rage ripping the center-left guts out.

Probably the only way the Centre-Left succeeds again is demographics, we're hitting the baby boomer buldge and probably will hinder the center-left. Maybe for the Labour party in the UK will become competitive is waiting for Demographics to become more Labour friendly cynically, wait for the Baby boomers to die off en masse) & a center-left Labour leader with ideas. But I don't know where said leader or demographic change come into effect, said leader probably isn't in parliament yet.

*sigh* I wish I wasn't so eyed up on politics and could just take a decade's rest until things go back to normal. I feel nostalgic towards the last decade pre-financial crisis, it wasn't this dumb Eton Mess that David Cameron & Boris Johnson created.

[Luis Enrique]

what do you think the best policies are to mitigate the impact of globalization on people? (have you seen this one by the way? http://www.nber.org/papers/w22637 )

do you think higher transfers would do it? what else is there? import tariffs? (I presume you rule out migration controls).

[Bob]

"Left says higher corporate taxes, nationalization and printing money"

I don't think so. It is the centrists who want to hand out money for free - e.g "helicopter money." ALL spending is "money printing." Of course, since the value of the currency is determined by what government buys with it, the value tends towards "nothing."

Functional finance and not handing out free corporate welfare via "borrowing" = stable inflation.

Furthermore the centrists support ‘gross substitution axiom’ is true, ie you can turn anybody into a brain surgeon just by applying more transformational techniques (aka training courses).

There is a certain amount of "money printing" literally done, but all government spending works by "printing money" that then generates tax and savings. And of course bank loans are creating money. So who ISN'T suggesting "printing money."

What the left suggest is a better welfare state and auto stabilisers, along with control of banks.

"Nativists say closed borders"

Non-nativists suggest massive population increases and stealing of skilled staff across the developed world sucks.

"Support for tax credits, infrastructure spending,"

Which is just dogma not "centrism."

Tax credits that subsidise crap jobs. Apparently it is the private sector ‘market’ that creates jobs and that they are the last arbiters of what skills and abilities are worthy of a job at the living wage. Infrastructure spending relied upon as auto stabiliser when it can only stabilise the private sector.

Because construction is generally heavily funded with debt, construction planning management works really well to control spending in the economy. If you stop construction projects, then all that happens is that bank’s credit lines are not drawn and private debt falls.

In other words rather than money being spent elsewhere on other things (as it would be if you banned the sale of sugary drinks), the money simply isn’t created in the first place. The people that lose out are bankers who now get less income because the banks have issued fewer loans.

This can be extended to a general principle. The more you constrain bank lending, the fewer the number of private projects, the less bankers get paid, and the more stuff there is free for government to procure.

In essence, restricting bank lending is the same as raising taxes. That is, after all, the aim of interest rate hikes — reduce bank lending. And interest rate rises are there to avoid having to raise taxes to slow things down.

But you can be more surgical than this. You can restrict what types of project banks can fund. The private projects that then happen are the ones a society want to happen. Undesirable projects are stopped: borrowing money to buy shares back, speculation in commodities or, worst of all, borrowing money to short sell the national currency.

Government can use its sovereign power to manage contracts. For example, if there is a hospital that needs building in an area, the government can set a price and, if necessary, suspend authorisation to build anything else until it gets its price for the hospital.

Note how this works. The government is threatening a localised downturn in a particular industry to force acceptance of its terms. It does this via its sovereign power to grant building rights. This is a far more clinical method of freeing up resources than carpet bombing the economy with tax rises in the hope that will free up enough builders to create a hospital.

[gastro george]

Miliband not only has no policies, he actively rejects the idea, preferring to focus instead on "values", FFS.

[Bob]

"preferring to focus instead on "values", FFS."

EdStone

[gastro george]

@Bob - I have no idea what point you're trying to make.

[Dave Timoney]

One way of thinking about centrist politics is not that its eclipse is a consequence of people "turning away" from moderation and the middle way (in the sense of becoming disenchanted in light of 2008, Brexit and other calamities) but simply the operation of time: we've become utterly bored by it.

Tony Blair benefited from the impression of novelty in the 90s ("you were the future once") due to the popular imaginary of failed socialism and failed Thatcherism, which gave the impression that a "third way" with top notes of technocratic futurism was both historically inevitable and desirable. That vibe is dead (as evidence for the prosecution, I offer David Miliband).

The centre's intellectual vacuum owes much to the success of Brown et al in stabilising the neoliberal order in 2008/9. It has become a morbid symptom because the new has not been born. While politics remains hysterically wedded to the past (May's nostalgic authoritarianism, the Labour right's obsession with the 80s), the people have moved on.

[fledermaus]

The problem is the so called centrists look over at the Lib Dems' 8 MPs and think to themselves "Now there are some popular policies, let's adopt those."

[reason]

thehistorian?

Is there only one?

[Igor Belanov]

'Centrist' politics faces a series of dilemmas. Most centrists are managerialists, so if they seem to be managing things badly, they inevitably get rejected. Plus, most voters do not simply see politics in terms of abstract efficiency, so managerialist politics can be self-defeating even on its own terms.

Second, as gastro george says above, centrists such as David Miliband eschew policy proposals in favour of vague values. This is largely because they fear the consequences of being held to their promises and losing their freedom of manoeuvre. (This is why centrist parties that are keen on power tend to avoid the rank opportunism that is symptomatic of the Lib Dems) The problem for centrists at present is that the 'values' they advocate are so abstract and/or unappealing that they attract little support, while the cynical and manipulative nature of centrist parties (witness the PLP this summer) belies any ethical image they might seek to pursue.

In essence they are restricted to 'lesser evil' politics and the constant smear tactics this demands. The difficulty with this is that unless they are up against a really unappealing candidate, even 'lesser-evilism' has a limited pulling power.

[rshiehyan]

Half the world is in danger of destruction because of climate change or imperialist wars and you are worried about a centrist government which could enable the continuation of the low hedonistic life of a lost tribe.Truly an economist.Economics is not just a profession , it is also a religion and a way of life.It is amusing reading economists' blogs, their obsessions with one or two percent of growth, their highly mathematized stupidity in the form of models which are proven useless in the next crisis and their sectarian wars.We need an ethnography of this tribe to which I was exiled for a while.

[The Philosopher]

Think of a Venn Diagram. In one circle 'labour/democrat', the other 'conservative/republican'.

Now where these two circles meet, we have the Cuckold Party. This party is the London Economist's party, the Brookings party and the real party of power these past 2 decades in most Western countries. Their aim is always the same (with some adjustment to environment). It is to sell out their countrymen.

Now, to the high minded person, of which I assume we all think of ourselves, devotion to the cuckold party is of supreme importance in the autistic travails of 'practical' solutions to our "debt crisis", "aging population" and "sclerotic labour markets".

Can't you hear the wind in the trees, mon freres? Has it really been so long?

These "problems" require the same set of policies seemingly all the time - deregulation, tax cuts, open borders, open borders, open borders, pension cuts, more wars etc. But we know these don't work because the situation is immeasurably worse.

So you see the centrists/cuckolds are interchangeable. Lib dem is to New Labour is to Big Society Conservative as rock is to rock is to rock.

The only "centrism" in town is the Cuckold Party. The "grassroots" centrism you opine seems to be a kind of populist centrism. You need to frack the structure before it can be rebuilt I'm afraid. Thankfully, its becoming obvious that the Cuckolds and their masters, the Extractors hate us.