Stumbling and Mumbling

Lying for Money: a review

Just as they tend to over-glamourize murders, so TV dramas over-glamourize fraud: remember the BBC’s rather good Hustle? In the real world, though, both have something in common; they are squalid crude affairs committed mostly by inadequates. This is a message of Dan Davies’ history of fraud, Lying For Money.

He shows that most frauds fall into a few simple types. There’s the long firm – setting up a fake company to borrow money which you run off with; Leslie Payne, an associate of the Krays, was a master of this. There are pyramid schemes, most famously those run by Charles Ponzi but Dan treats us to the story of the Pigeon King too. Then are control frauds, whereby someone abuses a position of trust: rogue traders fall into this type. And then there are plain counterfeiters. My favourite was Alves dos Reis, who persuaded the printers of legitimate Portuguese banknotes to print even more of them – so many as to devalue the escudo.

All this is done with the wit and clarity of exposition for which we have long admired Dan. His footnotes are an especial delight, reminding me of William Donaldson.

Dan has also a theory of fraud. “The optimal level of fraud is unlikely to be zero” he says. If we were to take so many precautions to stop it, we would also strangle legitimate economic activity. He calls this the “Canadian paradox”. Fraudsters have, if only briefly, thrived there – not least by floating mining stocks. This is because Canada is a high-trust society; fraudsters exploit others’ trust and the fact that dishonesty is the exception. By contrast, in low-trust societies people do business only with those they know well. That means less fraud, but also less business and more poverty. Trust, says Dan, is the basis of a prosperous commercial society – but it is also what fraudsters exploit.  

If I have a criticism, it’s that Dan doesn’t much discuss the psychology of fraud – of how we fall victim to it. He writes:

Fraudsters don’t play on moral weaknesses, greed or fear: they play on weaknesses in the system of checks and balances, the audit processes which are meant to supplement an overall environment of trust.

But is this wholly true? Some people are more vulnerable to scammers than others. I’d have liked Dan’s analysis of why. He doesn’t, for example, discuss Werner Troesken’s fantastic history (pdf) of snake oil salesmen.

Also, perhaps we can extend Dan’s work. He discusses outright criminal fraud. But there are similar types of behaviour which are legal – such as selling snake oil in 19^th century America. Dan hints at this when he describes the justification for bans on insider trading and other egregious types of market manipulation:

If you stopped robbing people blind with stock pools and takeover rumours, you would attract more of them into the capital markets, to make more money overall by robbing them through trading commissions and management fees.

We can think of fund management fees as a form of legal control fraud; using a position of trust to enrich oneself whilst failing to provide the service implicitly promised. CEO pay also falls into this category.

Similarly, whilst the directors of failing companies such as BHS and Carillion who took millions of pounds in salaries and dividends were not guilty of a long firm fraud, their behaviour was not wholly dissimilar.

And cynics might add that newspaper columnists, think-tankers or politicians are similar to affinity fraudsters; they take money for misleading like-minded people.

The law of course makes a sharp distinction between criminal and non-criminal behaviour: that’s what it’s for. But I wonder whether the distinction is so clear in reality. It’s not just criminals who lie for money.

The politics of discovery

Here’s a theory. There are two different ways of thinking about politics and policy which are insufficiently distinguished; we can call them politics as imposition versus politics as discovery.

Most people think of politics as the former: how can I impose my will upon others? We can, however, think of it differently – as a discovery process.

This, I think, is what Paul Evans is doing when he calls upon us to rethink democracy. He’s asking: what institutions and practices do we need to discover what people really want? Simple referendums, conducted against the background of an inadequate media, are not the answer.

But it’s not just the political process that is or should be a discovery process. So too are some particular policies.

We lefties are sometimes accused of wanting to impose a system upon the economy. For me at least, this is the exact opposite of the truth. For me, socialism consists in part of creating means of discovering what works best.

Democratising public services, for example, is a way of discovering from workers and users how best to improve them. And encouraging various forms of coops – via public procurement, a national investment bank or tax breaks – is a way of discovering what forms of post-capitalist firms work best – a form of what Erik Olin Wright calls interstitial transformation (pdf).  It’s not at all obvious to me that actually-existing capitalism does an unimprovable job of discovering better forms of ownership and control, given credit constraints, path-dependency and capture by a managerialist elite*.

I’d put a citizen’s basic income into this category: the question of the appropriate level, and any add-ons it needs, is one that could be discovered as we go along. It need not, and maybe cannot, be imposed in perfect form from the start.

This isn’t to say that the politics of discovery is purely a leftist exercise. It’s not. Michael Gove’s free schools policy was in this vein – a way of experimenting to see what sorts of school work best.

And one under-rated argument for devolution and stronger local authorities is that they would facilitate discovery: if they follow different policies, we can see what works best.

We think of markets as discovery and selection mechanisms (pdf) – albeit ones that often don’t work as well as they might. But a healthy political process would have such mechanisms too.

Which brings me to Brexit. Everybody is discussing the Brexit deal with the mindset of the politics of imposition – as if the deal will permanently settle in stone our relationship with the EU for ever more.

This of course is to misrepresent human life. Relationships change. The “transitional period” won’t end in 2020. It’ll carry on for as long as the UK and EU exist.

 This is no mere pedantry. One of the key aspects of good negotiations is to see that agreements can be provisional, not final. Theresa May should be saying to all sides in the Tory party: “This isn’t the final word. Let’s give this a go. And if it proves to be as bad as you claim, we can change it.” (Maybe she is saying this in private.) I’ll grant, however, that this is more feasible for hardline Leavers than Remainers, as the EU might not want to renegotiate closer ties with so fractious and febrile a counterparty**.

If there is anything in what I say, it poses the question: why do we hear so much about the politics of imposition and so little about the politics of discovery?

One answer is that political discourse is dominated by those who believe they know the answers, and so don’t need to discover them – which is of course a symptom of overconfidence. We do not sufficient self-police and self-criticize our views. And perhaps we lack the mechanisms and institutions to incentivize us to do so.  

* It’s odd how some rightists are so keen to point out that state functions are prone to bureaucratic capture and so silent on the possibility that private companies can be too.

** Yes, I know that we Brits tend to under-estimate the extent to which the EU is a rules-based organization (which I think is an argument for the Leave side). But rules can and do change.

Not debating immigration

Some new neighbours recently moved in next door to me. They seem nice, but the point is that I had no say whatsoever in the matter. And yet almost everybody believes that, together with my fellow Brits, I have a right to stop people moving into the UK. This is weird. Why should I have a right to stop people moving into, say, London when I have no right to stop them moving next door, even though I don’t care who lives in London but do care whether I have good neighbours or not? And how can a group of people acquire rights that individual members don’t have?

Chris Bertram’s new book Do States Have The Right To Exclude Immigrants? tackles such questions.

His key point, derived from Kant, is:

Claims of right, in order to be other than mere assertions of power against others, have to be justifiable to everyone…nobody should simply impose their will on someone else unilaterally.

Instead, there needs to be an implicit bargain, whereby everybody has a reason to obey the rules.

Such reasoning justifies why I have no right of veto over who moves in next door. My lack of right in this regard is compensated for by the fact that nobody else has a veto over my moving where I want. Most of us think this is a reasonable bargain.

But this doesn’t apply to immigration. Why, asks Bertram, should would-be immigrants respect our claim to exclude them?

The answer is: they shouldn’t:

A world in which states simply assert their right to unilaterally exclude would-be migrants…is a world in which a kind of tyranny is imposed upon the excluded.

He argues that if we were behind a Rawlsian-style “veil of ignorance” we wouldn’t agree to draconian restrictions of free movement as they might trap us into horribly oppressive governments or condemn us to a life of poverty: John Gibson at the University of Waikato has estimated (pdf) that migrants from Tonga to New Zealand, for example, earn three times as much as comparable people remaining in Tonga. Behind such a veil of ignorance, he says, we’d pick open borders.

Now, I’m sympathetic to this. Which means I’m not the sort of person who should be reading it. It should instead be read by those who favour migration controls.

I asked myself: how might a reasonable defender of migration controls respond to it?

One possibility is to deny the appropriateness of the veil of ignorance thought experiment. Maybe our nationality isn’t something we can slough off but is instead an inherent part of who we are. Perhaps, as Michael Sandel said in Liberalism and the Limits of Justice, we are “radically situated subjects” with loyalties that are deeper than mere contingent accidents.

I would have liked Chris to have done more to tackle this. I myself don’t know what to make of it. It gains credence from the fact that people die for their country. But on the other hand, nations are “imagined communities” and, as Chris says, historically quite recent ones: for most of our history, humans have not considered themselves defined by nationality.

My criticism of Chris on this point, however, is minuscule compared to my criticism of our political-media culture. Alasdair MacIntyre complained – rightly – that we lack the intellectual resources for serious moral enquiry, and also the institutions that would permit it. No, the Moral Maze does not count. The sort of world in which Chris might have been seriously grilled by a Bryan Magee-type is long gone. Instead, “debate” about moral questions (not just immigration)  is more commonly merely an exchange of self-righteous shrieks and politics merely a haphazrd way of discerning the "will of the people". Much as I enjoyed Chris’s book, I fear it is wasted in this climate.

Corbyn's neglected question

Jeremy Corbyn’s speech this morning raises a big question in economics that won’t get the attention it deserves: is there a trade-off between static and dynamic efficiency?

Corbyn wants to use government procurement policies to “build things here again that for too long have been built abroad” and objects to the decline of UK manufacturing and growth in cheap imports.

His critics read this as him wanting to roll back the international division of labour. That’s inefficient, As Adam Smith famously noted, it is the division of labour that boosts productivity. Pushed to an extreme,  this mentality leads to North Korea or to Mao's ruinous backyard blast furnaces.

Now, these critics might not all be wholly sincere. Many of them have been silent about the fact that capitalism itself has greatly slowed down the international division of labour; world trade growth has been much weaker since the 2008 crisis. And not all them are sufficiently awake to Dani Rodrik’s point that the benefits of that division of labour have been distributed unevenly.

Nevertheless, they do have a point. Corbyn’s plan looks inefficient in static allocational terms.

There might, though, be a defence of it. It’s that supporting manufacturing might provide opportunities for future productivity growth that would otherwise be lost. “A lack of support for manufacturing is sucking the dynamism out of our economy” says Corbyn, giving the example of how cuts to subsidies to solar power have cut UK-based innovation in the sector. And he speaks of developing “the virtuous cycle, where the success of one industry or company helps others.”

He’ll not thank me for saying this, but he’s echoing New Labour here with its enthusiasm for endogenous growth theory – the idea that success breeds success, that innovations and productivity gains today lead to more gains tomorrow.  

In other words, he wants to sacrifice a bit of static efficiency to gain some dynamic efficiency.

The case for doing this isn’t purely economic. It’s plausible that the decline of manufacturing and rise of finance is one factor (of several) behind job polarization – the decline of half-decent jobs for diligent but unacademic people. This polarization, one could argue, has unpleasant social effects.

Insincere as many of his critics are, however, I fear they might have a point. Endogenous growth theory cuts both ways: if success breeds success, so failure breeds failure. The UK’s longstanding weaknesses in manufacturing – a lack of vocational skills, poor management and the consequent lack of animal spirits – might well condemn us to continued failure. And Corbyn – like most politicians – is I fear insufficiently heedful of a point made (pdf) by Landon-Lane and Robertson, that national policies might (within reason) be unable to do much to raise growth.

You might, however, draw another inference from such scepticism – that it shows that we need radical and broad-spectrum policies to try to raise growth: not just UK-biased government procurement but also better macro policy, a national investment bank, better training and so on.

I’ve an open mind on whether this can work. But Corbyn is at least asking the question, Which is more than can be said for the government. If Corbyn’s critics want to be more than tribalist gobshites, they would engage with it seriously.

The Brexit con

Brexiters told us that leaving the EU would be quick and easy and would save us £350m a week. With a chaotic no-deal looking a real possibility, however, Jacob Rees Mogg now tells us it could take 50 years to reap the benefits.

What he’s doing here is something con-men have always had to do – stopping their victim going to the police when the goods they have charged him for fail to arrive. This job is called cooling the mark out, as described (pdf) back in 1952 by Erving Goffman*:

An attempt is made to define the situation for the mark in a way that makes it easy for him to accept the inevitable and quietly go home. The mark is given instruction in the philosophy of taking a loss.

Rees Mogg is employing the method Goffman called “stalling.” He’s saying that the goods will turn up, but just a bit later than promised and at a higher price.

The thing is, this tactic could work. It plays upon several psychological mechanisms.

One is a desire for consistency. As Robert Cialdini says:

Once we have made a choice or taken a stand, we will encounter personal and interpersonal pressures to behave consistently with that commitment. (Influence, p57)

One aspect of this is that people hate admitting even to themselves that they were wrong. They therefore look for reasons to believe their decision was a good one, and downplay evidence to the contrary. Stock market investors hold onto losing stocks in the hope they’ll break even: wishful thinking causes them to over-estimate future returns. The same wishful thinking might cause Leavers to think a chaotic Brexit will be worth it eventually.

Secondly, there’s the “if it’s expensive it must be good” syndrome. Peddlers of textbooks and financial advice play upon this by charging extortionate amounts. They do so because it works. As Dan Ariely famously showed, expensive placebos work better than cheap ones.

It’s for this reason that college societies often have humiliating initiation ceremonies. Having borne the cost of joining the society, you value its membership more highly (pdf).

Relatedly, there’s the “ikea effect”. We tend to value things more highly if we have struggled for them; the home-assembled bookcase looks better than the factory-made one.

In this way, the very fact that Brexit is initially expensive might actually sustain support for it. People will think “if it’s this much trouble, it must be worth having.”

Thirdly, there’s simple sunk costs: “we’ve come so far and paid so much we can’t turn back now”.

And here’s the thing. A clever con-man can exploit these mechanisms and extort even more money from the mark. He can play the ancient Spanish prisoner (or advance-fee) con. The goods have been held up on route, he’ll say, and a small extra payment will release them.

In the Brexit context, this extra fee might well consist of labour market deregulation. To take advantage of the new trading opportunities outside the EU, they’ll say, we must be as competitive as possible.

It’s no coincidence that so many Brexiters such as Dominic Raab are also de-regulators.

Nor, perhaps, is it a coincidence that so many of them act just like con-men.

* Hat tip to Dan Davies’ superb Lying For Money.

Anti-communism as bad faith

One of the advantages of being old is that you get the sense of perspective that comes with having seen things before. So it is with the attacks on Ash Sarkar and Aaron Bastani for their support for communism.

I’m old enough to remember anti-communists in the 70s and 80s. Which means I remember just how much crass bad faith and hypocrisy they contained. Some of this bad faith was clear at the time, some is more evident with hindsight. Here are seven examples of what I mean:

 - They attacked the Soviet Union for its denial of freedoms. But many of them opposed gay rights and “women’s lib”, supported Pinochet and apartheid and to this day are relaxed about coercion within the workplace. The freedom many of them value is the freedom to oppress and dominate others.

 - They criticized Marxism for having a crude conception of historical inevitability: Isaiah Berlin wrote a famous essay on the subject. But they claimed that the Gulags were an inevitable result of Marxism.

 - They apply a double standard. Whereas they claim that oppression is an inseparable element of communism, they regard slavery and imperialism as mere accidental features of capitalism. I’m not sure this position is rescued by the fact that capitalism has thrived after the ending of imperialism and slavery. In many cases, imperialism was ended by armed struggle, not by enlightened capitalists realizing it wasn’t in their interests.

 - When I was a young idealistic socialist I was told – again by people channelling Berlin – that it was impossible to achieve utopia because there are inescapable trade-offs between fundamental values such as equality and liberty. Some of those same people, however, are now blind to the trade-off Brexit reveals between sovereignty and  prosperity: a meaningful free trade deal requires regulatory alignment, but this entails adopting some of other countries’ regulations, which is a loss of sovereignty.

 - Again, when I was young, cynical old anti-communists told me that it was impossible to build a substantially better society because the crooked timber of humanity lacked the rationality and knowledge to do so. As Tim Worstall recently said, grand plans don’t work. Oddly, though, such scepticism about state capacity disappeared with Brexit: untangling 40 years of intertwined laws, we were told, would be simple.

 - One example cold warriors gave of communism being the enemy of freedom was its attitude to migration: dissidents such as Sakharov and Solzhenitsyn were for years banned from leaving the USSR. These people are not so keen on free movement today, however. Many of those who cheered when Reagan said “tear down this wall” also cheered when Trump proposed building one.

 - When they spoke of the Soviet Union, cold warriors claimed that centrally planned economies were a lousy idea. But centrally planned economies are still with us: bosses claim to be able to manage large complex organizations from the top down. Cold warriors are relaxed about this. They’re blind to the fact that if you want a modern example of a Stalinist you should look not among lefties but at men like Fred Goodwin or Philip Green. It’s not good enough to reply here that it someone doesn’t like their employer they can leave. None of us could escape the financial crisis, which was due at least in part to the failure of capitalist Stalinism.

Now, I do not say all this to defend Soviet Communism: it was an abomination. Nor do I decry those east European dissidents who paid a heavy price defending it. Western anti-communists, however, paid no such price. Quite the opposite.  For them, anti-communism was and still is a very comfortable part of a defence of inequality in the west. In this sense, we can charge them with another double standard – a very partial reading of Adam Smith. Whilst they are keen to stress the virtues of the invisible hand, they are less keen to heed Smith’s warning that we tend to be too deferential to the rich and powerful:

We frequently see the respectful attentions of the world more strongly directed towards the rich and the great, than towards the wise and the virtuous. We see frequently the vices and follies of the powerful much less despised than the poverty and weakness of the innocent…The great mob of mankind are the admirers and worshippers, and, what may seem more extraordinary, most frequently the disinterested admirers and worshippers, of wealth and greatness. (Section 3 Ch III)

Subsequent work – on the status quo bias, just world illusion and system justification (pdf) – has vindicated Smith here. Not that you’d know it from defenders of capitalism.

Granted, Ash’s idea of communism needs a lot of work. But if I had to choose between her youthful idealism for a better world on the one hand, and smug defenders of an unjust and inefficient existing order on the other, I’ll choose Ash every time. As the woman who inspired my blog’s name sang, “teenagers, kick our butts.”

Capitalism as a fetter

I was a little disappointed to see Tony Yates’ reaction to Aaron Bastani:

Can we ditch 6th form debates and have someone arguing for evidenced based improvements to our policy portfolio please?

My disappointment is the failure to see that there is, if you like, a third way between utopian communism on the one hand and technocratic tweaks on the other.

It begins from the idea that ten years of stagnant productivity might mean we are now at the phase of capitalism that Marx foresaw:

At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or – this merely expresses the same thing in legal terms – with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters. 

If this is the case, then Tony’s reply to Aaron is half right. He’s right to decry utopianism and demand improvements to our policy portfolio. Where he might err, though, is in not seeing that capitalism itself is the problem. If so, we need quite radical solutions.

So, how might capitalism now be a fetter on the productive forces? Here are a few ways:

First, low investment and innovation might be due in part to the fact that these have external benefits which firms cannot internalize. William Nordhaus famously showed that capitalists capture only a “minuscule fraction” of the benefits of innovation. It might well be that one reason why techno-optimism co-exists with low investment is that firms are loath to invest for fear that their profits will be competed away by future innovations.

Secondly, it’s possible that tough intellectual property laws stifle innovation whilst protecting monopolies.

Thirdly, the failure to align managerial and shareholder incentives has led to a lack of productive investment. As Stutz and Kahle have shown, quoted firms today tend to be older and to invest less than their counterparts did years ago. In a similar vein, entrenched management acts as what Joel Mokyr calls a “force of conservatism.” Eric Brynjolfsson and Andrew McAfee say that "significant organizational innovation is required to capture the full benefit of…technologies." But bosses lack the incentives or the skills to undertake such innovations.

Fourthly, inequality – not just of income but of workplace power – might itself be a fetter on production. I’m thinking of (at least) three mechanisms here:

 - It breeds distrust (pdf). The reduces growth in several ways. It might reduce the many transactions which depend upon trust. The fear of future expropriation or tax increases might deter investment and innovation. It might encourage capitalists to invest in guard labour or in political lobbying to entrench their privilege rather than in productive activity. It can lead to worse policy-making as populism increases because people no longer trust “elites”: Brexit might be a consequence of high inequality.

 - The high-powered incentives that lead to big CEO salaries can backfire. They encourage dishonesty, reduce creativity and divert management effort from hard-to-monitor tasks such as long-term innovation and towards easier-to-monitor ones such as short-term earnings management.

 - Inequalities of wages within the workplace cause dissatisfaction (pdf), which demotivates employees and reduces productivity. Inequalities of power can have the same effect. They demotivate more junior staff, who expect to be told what to do rather than use their initiative. They can also suppress productivity by failing to fully exploit the dispersed fragmentary knowledge of “ground truth” which workers possess.

You might wonder: if all this is the case, how did capitalism ever grow? One answer comes from Schumpeter; growth was powered by an entrepreneurial spirit which has been supplanted by bureaucratic management. Another answer is that capitalism has changed. What worked when workers were unskilled drones operating physical machines does not work when skilled immaterial labour works with intangible assets. And thirdly, we must remember that capitalism grew fastest between 1945 and 1973, when it contained a big dollop of social democracy.

If this diagnosis is right, what’s the answer? For me, it would comprise a mixture of conventional supply-side policies, state support for innovation and worker coops, and measures to improve workers’ bargaining power such as a citizens income and full employment to incentivize labour-saving productivity. You might object that these aren’t very socialist. But they should be a stepping stone to socialism, a form of accelerationism. We can’t get to a communist utopia overnight.

On justifying policies

Much as I like Ash Sarker, I’m not happy with this recent thread of hers:

Lots of people have asked what I mean when I say I’m a communist. What I mean is that in the next 15 years, 1 in 5 jobs in the UK will be automated (1 in 3 in the North, and 40% in Hayes & Harlington). What does that mean for workers? it means that *either* 1 in 5 people are excluded from the means of survival, are consigned to the scrapheap and increasingly authoritarian and violent means are employed by the state to manage surplus populations. Or... we find a means to distribute the abundance generated by fixed capital for the good of all. We say that it’s bollocks that something as arbitrary as ownership can dictate whether homes, land, technology are for people, or for profit. in the past, we called that communism.

I’ll leave quibbles about her definition of communism to boring pedants. Instead, I have another problem: we should not – as far as possible – base our policy ideas upon economic forecasts. This is because forecasts, especially about the pace and direction of technical change, can be wildly wrong. To take just examples from Nobel laureates:

“The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive” – Paul Samuelson, 1989.

“Macroeconomics… has succeeded: its central problem of depression prevention has been solved, for all practical purposes” – Robert Lucas (pdf), 2003.

“The growth of the Internet will slow drastically…By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's” – Paul Krugman, 1998.

The notion that robots will take our jobs might fall into this category. Certainly, there’s little sign of it happening now; business investment has flatlined in recent years whilst employment has grown and the OECD says (pdf) the UK has fewer robots than most developed countries. And it might not happen at all. As Acemoglu and Restrepo point out, any incipient tendency for employment to fall would tend to reduce wages and so incentivize employers to create jobs.

I don’t say this to dismiss Ms Sarker’s point. She’s bang right to highlight a risk. This matters because good policy-making (older readers might recall such a thing) requires policy-makers to heed the distribution of risks, not just central scenarios.

Let’s take a brief detour to another example. The OBR warned this week that “the public finances are likely to come under significant pressure over the longer term, due to an ageing population and further upward pressure on health spending.” As a central forecast this is questionable. But it’s surely a risk. So what to do about it?

The answer isn’t to jack up taxes immediately: we shouldn’t trash the economy on the basis of a dubious long-term forecast. Instead, one way to address the risk is to adopt policies to raise productivity: the more productive we are, the more we can afford of everything, including healthcare. Here there are countless possibilities even ignoring the obvious (ditch Brexit): better education and training; more infrastructure investment; better planning policy; stronger competition policy; better financing for entrepreneurs. And so on.

And here’s the thing. Most policies such as these can be justified on different bases: they are good things in themselves (education); they create jobs; they give customers a better deal. And so on. You can kick away fiscal forecasts and still justify them. 

Which brings me back to Ash. “Communist” policies should be defensible on bases other than a forecast. Take for example a citizens income. Ash might support this as a way of “distributing the abundance generated by robots”. But we could also justify it as: a way of supporting part-time workers or those in training; as a way of sustaining aggregate demand; or of empowering women and workers to walk away from exploitation; as a way of removing the stigma of being a “benefit claimant”; or as a way of cutting the administrative cost of the welfare state. And so on. This does not mean the scheme is a magic bullet. It's not. It’s just that it can be defended from many perspectives: left, right, feminist and so on. Sure, it might also be a solution to the job losses and inequality caused by robotization. But to argue on those grounds alone is to horribly under-sell it.

I’d argue that workers’ democracy also fits this bill: it’s not just egalitarian in itself, but a way of improving well-being and productivity.

Of course, in saying this I’m not attacking Ash at all. I’m making a general point about policy-making. Good policies should be defensible on many grounds, simply because any single ground might give way (especially if it’s a forecast). To argue for a policy therefore requires you to adopt more than just one perspective.

Brexit as neoliberal politics

Many leftist remainers accuse Brexiters of being neoliberal. In one sense, this is questionable: "fuck business" is not a neoliberal sentiment, and nor is a desire for harsh immigration controls. In another sense, however, I suspect it is true: the Brexit campaign represents a triumph for a view of politics as mere marketing.

To see my point, start with an idealized conception of politics as the management of the public sphere. On this view, politicians are motivated by a sense of public service and they debate rationally and honestly about different conceptions of the public good and how to implement those conceptions.

(Many) Brexiters, however, have a different conception. To them, politics is simply about getting what you want by whatever means you can, regardless of cost. Politicians with a sense of public service would not have broken electoral law on spending limits, or lied about immigration or about the economic effects of Brexit. We could have had a rational debate in the referendum about the trade-off between sovereignty and prosperity. But we didn’t. Those Brexiters who now privately claim that the loss of ‘hundreds of thousands of jobs’ would be worth it didn’t say so at the time. For them, getting what they wanted trumped duties of honesty. Of course, the Brexiters might have won an honest and legal campaign, but they never took that chance.

In this sense, Brexit is like spivs mis-selling financial products. All that matters is that the sale gets booked, that the seller gets his bonus. The cost of achieving those sales – the future fines that’ll be paid by some other mugs - doesn’t matter

Nor does it matter whether those sales represent the interests of the customer. The “will of the people” must be obeyed regardless of how that will is formed or at what cost to the public realm. It is only after you’ve convinced people to buy your snake-oil that the customer is king.

Nor do practicalities such as the difficulty of achieving Brexit matter. Implementation requires hard work and a diligent regard for the public good. Such virtues fit uneasily with the mentality of the salesman. In this sense, there’s an analogy between Brexit and Build-A-Bear’s recent “pay your age” promotion. Both were great marketing tricks marred only by a neglect of whether one could actually deliver the offer. But who cares when marketing is all that matters? Delivery is somebody's else's problem.

I call this neoliberal because one feature of that much-abused idea is the belief that all of society must be dominated by the crudest conception of corporate behaviour – that of the spiv conning his punters regardless of consequences - rather than by any sense of public duty. 

It’s neoliberal in another sense. For me, one feature of neoliberalism is the elevation of the goods of effectiveness over the goods of excellence, to use MacIntyre’s distinction. An excellent politician would be one capable of rational persuasion and good administration. For the effective politician, all that matters is winning, achieving power however you do so.  

It’s in this context that we should understand Brexiters contempt for the Electoral Commission, experts and civil servants. All of these are (imperfectly of course) custodians of the public good. But this doesn’t matter: the sale is everything.

Here, I’d distinguish sharply between Thatcher and Thatcherite Brexiters. Thatcher might have subscribed to what we now call neoliberal ideas. But she didn’t use the neoliberal methods I’m discussing here. Although I disagree with almost everything she did, I wouldn’t call her dishonest nor heedless of the difficulties of implementing her ideas. These huge differences between her and her epigones tell us how far politics has declined during my adult lifetime.

On class separation

The Times obituary of Lord Carrington says:

More commonly, he found himself sleeping in a hole beneath his tank with his four crew who came from poor backgrounds and had suffered hardship during the pre-war years. The experience shaped his politics, he said later. “You could not have got a finer or better lot than they were. They deserved something better in the aftermath of the war.

This was a common sentiment. In exposing posh men to the working class, military service increased their sympathy for the poor – and as Adam Smith said, sympathy is the basis of our sense of justice. For this reason (among many others discussed by Walter Scheidel in The Great Leveler) the war led to big fall in inequality.

Herein, though, lies perhaps an under-appreciated social change in recent decades – an increased separation of the classes. I don’t just mean geographic separation, though this is important. I mean separation in the workplace. Years ago, the classes would meet at work. In offices, posh men would meet less educated women in the typing pool: think of the Mad Men office. In manufacturing, middle class managers would rub shoulders with workers. And even in investment banks, there really were “barrow-boy”-type traders alongside old school tie-types. 

This now is now longer so much the case. Many of us are in occupations where we only meet folk of similar class. And thanks to a lack of social mobility, posh people are unlikely too meet many from a different class origin. The only working class person a journalist might meet at work is the cleaner. For all the talk of diversity, many posh people now work in homogenous offices. As Daniel Cohen writes:

Only recently, workers, foremen, engineers and owners were connected by relationships that, though sometimes antagonistic, allowed each group to evaluate where it belonged in a shared industrial world. Now, engineers are in consulting firms, maintenance workers are in service companies, and industrial jobs are subcontracted, mechanized or relocated. (The Infinite Desire for Growth, p148)

I suspect this has contributed to increased inequality.

One obvious route is via increased assortative mating; middle-class men now marry other middle-class women rather than their (working-class) secretaries. That has increased inequality (pdf).

Another mechanism is the “out of sight, out of mind effect”. If the poor never see the rich, they’ll never appreciate just how great inequality is. For example, Sorapop Kiatpongsan and Michael Norton have shown (pdf) that in 16 countries, the ratio of CEO to workers’ pay is massively greater than people estimate it to be.

By the same token, if the rich are out of sight, envy and resentment will be directed instead at the people who are in sight, such as benefit claimants.

But there’s also the reverse Carrington effect: greater class separation means less sympathy and so less taste for redistribution among the rich.

One aspect of this consists of the othering of workers. Because posh people have so little direct knowledge of working people, they impute all sorts of bad habits to them, such as lack of aspiration, poor diet and racism – even though the latter especially is also found in posher people.

Such imputation also serves a reactionary function, as the belief that workers have “legitimate concerns” helps to popularize anti-immigration policy and to displace more radical agendas. There’s just one problem with this. It’s not true. Attitude to immigration have softened markedly in recent years (table 6 of this pdf). And in new research Matthijs Rooduijn concludes (pdf):

There is no consistent proof that the voter bases of populist parties consist of individuals who are more likely to be unemployed, have lower incomes, come from lower classes, or hold a lower education.

Ignorance of workers, then, might well contribute to both inequality and a misreading of politics.

All this said, things aren't so clear. Mere proximity to workers doesn’t necessarily give you great knowledge of them: David Astor, the mega-rich editor of the Observer in the 50s, for example was shocked to discover that his staff had mortgages. Nor does it always generate sympathy. Perhaps the opposite. One reason for Thatcher’s popularity among much of the middle class in the 1970s was that managers knew workers well and saw them to be lazy, bolshy and greedy.

All I’m suggesting is a possibility – that there has been increased separation of the classes since (say) the 1970s; that this might have political and social effects; and that all this is under-appreciated.