Resilience and selection

If truth is the first casualty of war, social science is the first casualty of election campaigns. So it was with Sajid Javid’s speech yesterday. He claimed that Labour will tax everybody more, “saddle the next generation with debt”, “ruin your finances” and would be “letting prices run wild in the shops.”

All this is silly hyperbole.

I say so not just because, as Simon says. Labour’s spending plans are more sustainable than the Tories because it will not inflict a damaging Brexit upon the economy.

Instead, there are two other reasons why Javid is wrong.

One is that developed economies are resilient. They just don’t tip swiftly from prosperity to ruin. For one thing, high debt (even if we get it) is no barrier (pdf) to decent economic growth. Also, as Eric Lonergan says, “inflation is truly dead, and policy makers don’t need to worry about it.” Governments and central banks have struggled to raise inflation despite trying. It would be odd if Mr McDonnell had powers unknown to the ECB or Bank of Japan. And we must remember the finding of John Landon-Lane and Peter Robertson, that government policies don’t usually change trend growth by very much – a result that is comforting as well as dispiriting.

Adam Smith was bang right. There is a great deal of ruin in a nation. Countries can cope with bad policies. Those on the right who say the UK (well, actually Britain) can survive leaving the EU therefore have a point. But you cannot easily claim that the economy is resilient to changes in trading rules but ultra-vulnerable to moderate differences in fiscal policy and taxes.

There is, however, another reason why economies aren’t ruined by bad policy. It’s that such policies don’t persist. They get reversed. Examples of this include Mitterrand’s “austerity turn” in 1983 and Syriza's acceptance of EU-imposed austerity in 2015. But we have also seen examples under the Tories. Thatcher abandoned M3 targets and fiscal austerity in the mid-80s: cyclically adjusted net borrowing rose from a small surplus in 1981-82 to 2.8% of GDP in 1983-84. And Major pulled the UK out of the ERM in 1992.

Liberal democratic capitalism, then, selects against bad policies. Ones which damage the economy egregiously get reversed. If Labour’s policies are as bad as Javid claims (arguendo!) the correct inference is not that Labour will ruin the nation, but that Mr McDonnell will disappoint his supporters as so many of his predecessors have done.

Herein, I think, lies an under-appreciated reason for voting Labour. Selection pressures against bad policy apply more strongly to Labour than to the Tories, not least because policies that hurt capital arouse more powerful hostility than ones that only hurt the poor. Mediocre Labour policies will meet stiff resistance from the media and capital, whereas the Tories can get away with worse. The “hostile environment policy ruined many lives. And Austerity killed over 100,000 people and is only now being reversed (and for other reasons). It’s difficult to imagine that Labour policies that did so much harm could persist for so long.

Risk-averse people who are uncertain about the social and economic impact of the party’s policies should for this reason favour Labour: the worst they can do is very likely ultimately better than the worst the Tories can do.

Comments

[Nick Drew]

You are assuming the "worst Labour can do" is limited to the economic sphere.

That is naive.

[droog]

"Herein, I think, lies an under-appreciated reason for voting Labour..."

This has been my reasoning for a while. Corbyn is so disliked that he can be kept in check or, even more likely, get kicked out in no time. The knives will be out for Jezza on the Labour side with no hesitation.

In contrast, the Tories have been breaking laws, wrecking the state of the nation and going rogue on just about anything that should be meaningful. May and Johnson's empty promises, David Davis' useless tenure as Brexit secretary is forgiven and forgotten, Patel running her own foreign policy shop, austerity until they decide to drop it unceremoniously, universal credit, increase in child poverty, Hard Brexit and Canada+++ spoused by the same government like Schrodinger's cat in its box, Windrush, the ongoing white-wash and escape-goating that is Grenfell Tower disaster...the list goes on.

To give this crew the legitimacy of an electoral victory is like a self-blaming victim of domestic abuse but on a national scale. They are part of the establishment in a way that Corbyn will never be, and the establishment doesn't question itself. We're voting for more damage and telling ourselves that it would have been worse if we didn't hand this outfit power beyond their competence and certainly beyond their virtue.

[Scurra]

@droog: To be honest, this reminds me somewhat of what is happening in the US too. As the fact that Donald Trump is not only a horrible person but an actual massive sociopathic crook becomes more and more inescapable, it has had barely any effect on his "base" at all. Even as his party follows policies that actively hurt them and don't achieve what they were promised, half of the US will still vote Republican.

It becomes distressingly clear that there are an alarming high proportion of folk (likely more than 40%) who are so tribal that nothing anyone can say or do will change their view on anything. Unfortunately, it also turns out that far more of them are 'Tory' than 'Labour' which makes for an inherent bias.

It is possible that the only viable solution in the short-term is to abolish parties altogether. Unfortunately, I am also well aware of why this is impossible in practical terms. So I think we're probably fsked and we've just been going through the motions for the last decade or so.

[J]

An underestimation of the challenge facing Labour and its policies is to regard the UK as actually being a liberal democracy.

When press ownership is so concentrated and operated by the the owners of capital, and parliamentary influence is largely the domain of the same capital lobbying, what power do voters really have with their infrequent and endlessly propagandised opportunities to have their say? This influence gap grows ever greater as inequality grows.

The phrase "Conservatives - Politics on easy" is ever truer.

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