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When Mark Rutte, the Liberal prime minister of the Netherlands, said that “England has collapsed”, he was not referring to England’s elimination from the European football championship by Iceland.  What he meant was that the UK has collapsed, in his words, “politically, monetarily, constitutionally and economically”.  Far from looking like a party of government in waiting, capable of offering an answer, the Labour party has become entangled in this systemic crisis and may end up splitting as a result.  The party’s reaction to the outcome of the referendum on the UK’s membership of the European Union demonstrates that the image of unity and pro-European conviction that could be detected before the referendum was little more than a façade.  The pro-European conviction is being shaken to the core and unity, if it ever existed, has evaporated.

Key facts indicate that it did not have to be like that.  Recent polling indicates that 81% of Labour party members are in favour of the UK’s membership of the EU.  nearly two thirds of those who voted Labour in 2015 are estimated to have voted for the country to remain a member of the EU.  More than 90% of Labour’s MPs were active supporters of the Remain campaign and the leaders of virtually all trade unions and the TUC.  For a party that over the past year has been divided over a number of policies, these are indications of a remarkable degree of unity. In reality, though, things are quite different.  The behaviour of leading Labour politicians indicates that both the left and the right wing of the party find it very easy indeed to move away from their declared pro-EU stance.

Jeremy Corbyn performance in the referendum campaign was so lackluster and he was, arguably, so late in supporting the Remain camp (a stance that may be the result of his Bennite associations), that a couple of weeks before the referendum almost half of Labour’s voters said they did not know where the party stood on the referendum question.  The extraordinary degree of hostility from the media towards its leader (a hostility that brings to mind the mendacity of the British press against the EU that arguably had a decisive impact on the referendum’s outcome) can explain only part of this state of affairs.  Even if one ignores the multiple allegations that Corbyn and his collaborators actively sabotaged the party’s Remain campaign, the suspicion that Corbyn actually preferred Brexit was compounded by his spokesman’s statement that the result shows that Corbyn’s view is much closer to the views held by the British public.

Secondly, the extent of anti-EU sentiment in the party’s former heartlands in the North of England was such that just days before the referendum leading members of the party’s frontbench like its deputy leader Tom Watson and prominent backbenchers like Yvette Cooper argued in favour of restrictions in the free movement of people inside the EU.  Cooper in particular was so desperate in this attempt that she argued in favour of the abolition (in all but name) of the essence of Schengen area (i.e. one of the most significant achievements of the process of European integration) despite the fact that the UK is not part of it.  This was a belated and ultimately unsuccessful effort to appease the anti-immigrant (to put it mildly) feeling that was unleashed by the referendum.  It was reminiscent of the party’s 2015 general election pledge to reduce new EU migrants’ access to some benefits for two years: late, wide of the mark, out of line with the party’s pro-EU stance and ultimately unsuccessful.  Crucially, these Labour politicians did not try to confront the public’s misconceptions and prejudices at a time when academic research shows the significant contribution that EU immigrants make to the exchequer, even before one considers the cultural and other forms of their contribution.  Nor did they say much about the fact that for decades non-EU immigration (for which the UK has sole responsibility) has been higher than immigration from the EU.  So, even if one (despite the evidence) believes that immigration in the UK is a problem, policy failed in the part that is under the control of the UK government.  Though changing public perceptions during the post-fact politics is anything but easy, these Labour politicians have failed the party and the country by allowing the fact-free, anti-EU and anti-immigration sentiment to settle.

To his credit Corbyn publicly rejected the notion that immigration is a problem.  Both he and John McDonnell, the shadow chancellor, were right to argue that parts of the country were feeling the negative impact of immigration as a result of decisions made in Whitehall, not Brussels.  Proof of this is the scrapping by the Conservative/Liberal coalition government in August 2010 of the fund that was meant to help ease the pressure on housing, hospitals and schools felt by these communities.

The huge row inside the Labour party after the referendum has focused much more on Corbyn than on the policies that the party ought to pursue in the future.  In this context even some of Corbyn’s supporters (including amongst trade union members) have acknowledged that under his leadership Labour cannot make the electoral progress that it needs to make and offer the country a real alternative to the Conservative government.  At the same time, internal analysis of Labour’s performance in last Amay’s local elections shows that the party has increased its share of votes in areas where this progress would not affect the outcome of a general election.  As the authors of that analysis put it,

“The strategic problem is that only 14% of our gains were in areas we need in order to win general elections – while just under 50% of our losses were in those areas.”

This poses a major dilemma, the answer to which will determine the fate of the Labour party in the next decade or so.  Should it abandon its pro-Europeanism of which its support for immigration is a key indication and hope to attract some of the voters it has lost in its Welsh and northern English former heartlands or should it stick to facts and principles and try to change (rather than echo) the views of these voters some of whom harbour xenophobic opinions.  In other words, at the end of the day, it must decide whether it is a progressive, left-wing party or not.

Those amongst its most prominent MPs and officials who (with varying degrees of enthusiasm) prefer the former to the latter must be aware of the costs that this option will entail.  Joining the anti-immigration bandwagon (instead of, for example, attacking austerity and beefing up labour standards) is no free lunch.  The millions of cosmopolitan, urban dwellers (including those who helped propel Sadiq Khan to victory in the 2016 London mayoral elections) who support Labour (and have boosted its membership since Corbyn’s victory) will abandon it if it becomes little more than ‘red UKIP’ while it is hard to see why other voters (who could be tempted by the anti-immigration line) will prefer the copy to the original.  After all, preliminary evidence shows that a) there is absolutely no correlation between wage growth and support for Brexit and b) culture and personality, rather than material circumstances, lie behind majority support for Brexit.

This was originally posted on http://ukandeu.ac.uk/labour-after-brexit/

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Britain’s choice to vote Leave, we are told, is a protest by those left behind by modernisation and globalisation. London versus the regions, poor versus rich. Nothing could be further from the truth. Brexit voters, like Trump supporters, are motivated by identity, not economics. Age, education, national identity and ethnicity are more important than income or occupation. But to get to the nub of the Leave-Remain divide, we need to go even deeper, to the level of attitudes and personality.

Strikingly, the visible differences between groups are less important than invisible differences between individuals. These don’t pit one group against another, they slice through groups, communities and even families. Our brains deal better with groups than personality differences because we latch onto the visible stuff. It’s easy to imagine a young student or London professional voting Remain; or a working-class man with a northern accent backing Leave.

fig 1

Open and Closed personalities are harder to conjure up: yet these invisible differences are the ones that count most – around two or three times as much as the group differences.

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A second problem is that many analyses are spatial. Don’t get me wrong: I love maps and differences between place are important, especially for first-past-the-post elections. However, some characteristics vary a lot over space and others don’t.

Figure 1 ranks Local Authorities and England and Wales by the average social grade of their White British residents. The lower the average class position of White British residents, the higher the vote for Brexit. In fact this working class index explains 58% of the variation in the Leave vote across districts. But, according to the 2015 British Election Study Internet Panel of over 24,000 respondents, class only explains 1-2% of the variation in Brexit voting intention among individuals. There may have been a slight shift over the past year, but this won’t have altered the results much.

Figure 1.

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Source: https://www.nomisweb.co.uk/ (census data); http://www.electoralcommission.org.uk/

Why the discrepancy? Social characteristics such as class, ethnicity or region are related to where people live, so they vary from place to place. Psychology and personality do vary over space a little because they are affected a bit by social characteristics like age. But they’re mainly shaped by birth order, genetics, life experiences and other influences which vary within, not across, districts.

Aggregate analysis distorts individual relationships even when there aren’t problems caused by the ecological fallacy. The sex ratio, for instance, is more or less the same from one place to another, so even if gender really mattered for the vote, maps hide this truth. On the other hand, maps can also exaggerate. If 1% of Cornwall votes for the Cornish nationalists then Cornwall would light up on a map of Cornish nationalist voting with a 100% correlation. But knowing that all Cornish nationalist voters live in Cornwall doesn’t tell us much about why people vote for Cornish nationalists.

As with region in the case of Cornish nationalism, class matters for the vote over space because it affects, or reflects, where we live. This tells us a lot about a little. Notice the range of district average class scores in figure 1 runs only from 1.8 to 2.4 whereas individuals’ class scores range from 1 (AB) to 4 (DE). The average difference from the mean between individuals is ten times as great as that between districts.

Let’s therefore look at individuals: what the survey data tell us about why people voted Brexit. Imagine you have a thousand British voters and must determine which way they voted. Figure 2 shows that if you guess, knowing nothing about them, you’ll get 50 percent right on average. Armed with information on region or their economic situation – income and social grade – your hit rate improves to about 54 percent, not much better than chance. In other words, the big stories about haves versus have-nots, or London versus the regions, are less important.

Age or education, which are tied more strongly to identity, get you over 60 percent. Ethnicity is important but tricky: minorities are much less likely to have voted Leave, but this tells us nothing about the White British majority so doesn’t improve our overall predictive power much.

Invisible attitudes are more powerful than group categories. If we know whether someone supports UKIP, Labour or some other party, we increase our score to over 70 percent. The same is true for a person’s immigration attitudes. Knowing whether someone thinks European unification has gone too far takes us close to 80 percent accuracy. But then, this is pretty much the same as asking about Brexit, minus a bit of risk appetite.

Figure 2.

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Source: British Election Study 2015 Internet Panel, waves 1-3

For me, what really stands out about figure 2 is the importance of support for the death penalty. Nobody has been out campaigning on this issue, yet it strongly correlates with Brexit voting intention. This speaks to a deeper personality dimension which social psychologists like Bob Altemeyer – unfortunately in my view – dub Right-Wing Authoritarianism (RWA). A less judgmental way of thinking about RWA is order versus openness. The order-openness divide is emerging as the key political cleavage, overshadowing the left-right economic dimension. This was noticed as early as the mid-1970s by Daniel Bell, but has become more pronounced as the aging West’s ethnic transformation has accelerated. Figure 3 shows that 71 percent of those most in favour of the death penalty indicated in 2015 that they would vote to leave the EU. This falls to 20 percent among those most opposed to capital punishment. A similar picture results for other RWA questions such as the importance of disciplining children. RWA is only tangentially related to demographics. Education, class, income, gender and age play a role, but explain less than 10 percent of the variation in support for the death penalty.

Figure 3.

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Source: British Election Study 2015 Internet Panel, waves 1-3.

Karen Stenner, author of the Authoritarian Dynamic, argues that people are divided between those who dislike difference – signifying a disordered identity and environment – and those who embrace it. The former abhor both ethnic and moral diversity. Many see the world as a dangerous place and wish to protect themselves from it.

Pat Dade at Cultural Dynamics has produced a heat map of the kinds of values that correspond to strong Euroskepticism, and to each other. This is shown in figure 4. Disciplining children and whipping sex criminals (circled), keeping the nation safe, protecting social order and skepticism (‘few products live up to the claims of their advertisers…products don’t last as long as they used to’) correlate with Brexit sentiment. These attitude dimensions cluster within the third of the map known as the ‘Settlers’, for whom belonging, certainty, roots and safety are paramount. This segment is also disproportionately opposed to immigration in virtually every country Dade has sampled. By contrast, people oriented toward success and display (‘Prospectors’), or who prioritise expressive individualism and cultural equality (‘Pioneers’) voted Remain.

Figure 4.

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All told, the Brexit story is mainly about values, not economic inequality.

Eric Kaufmann is Professor of Politics at Birkbeck College, University of London. He may be found on twitter @epkaufm.

10 downing st

Being Prime Minister is, even at the best of times, rather tough. For the all of the £143,462 a year and free house (in a lovely central London location) it is a difficult and demanding job.

The next Prime Minister’s in-tray is looking particularly problematic. Whoever leads the UK will have to somehow head a divided party, run a divided country and confront the new forces pulling the UK apart, from the SNP’s referendum manoeuvres in Scotland to the borderless uncertainty of Northern Ireland. This is without mentioning the two years of negotiations with 27 rather upset EU member states.

Why, you may well ask, would anyone want to be Prime Minister now? Why are the runners and riders in the Tory party frantically backstabbing and front-stabbing in a Macbeth-style incarnadine orgy? Why is everyone not doing what we can now term a ‘Boris Johnson’ and running from their responsibilities?

Here’s three reasons why people want to be PM-but each comes with a downside.

  1. Because they think they’d be good at it (‘I Should Not fail’)

Many candidates want to be PM because they think they can do it and do it well. They believe only they have the abilities, outlook and temperament to be in control events. Churchill wrote that in the summer of 1940 he knew, as he stepped over the threshold of the famous black door, ‘a good deal about it all, I was sure I should not fail’.

Sometimes they also think that because they have done other jobs well they may be effective leaders-though the evidence for this is not convincing. Gordon Brown was a long serving Chancellor, Eden a (very) long serving Foreign Secretary and John Major did a bit of both. All went on to fail pretty spectacularly in Downing Street.

The problem is that being Prime Minister ruthlessly reveals whether you are truly good at or not. Even though you are still technically only ‘first among equals’ the office of PM is fundamentally different in its exposure from other great offices of state. A Chancellor can, to an extent, duck and hide from the media. A PM cannot. Whoever heads the Brexit government will find out, very quickly, whether they have the skills. And they will have nowhere to hide.

  1. Because they want to ‘Change Things’ and ‘Make a Difference’ (‘Walking with Destiny’)

Those who wish to be Prime Minister often speak of changing things and making a difference, though the desire normally precedes the detail. Thatcher and Blair arrived in power intending to modernise the country. Both of them took some time to find out what this all meant and there was a large element, even for Thatcher, of making-it-up-as-you-go-along. Only perhaps Edward Heath changed things at a stroke when he took the UK into the then EEC.

Some Prime Ministers never even had a plan and never made a difference. Despite ten years of plotting, there was no real Brownism. Similarly Wilsonism amounted to very little while Majorism was nothing more than paraphrased George Orwell quotes and a cone hotline.

Any leader that takes Britain out of the EU would indeed walk with destiny and change things to an extraordinary degree. At least for the post Brexit PM the mission is clear (ish) –to leave the EU (ish). Exactly how this is to be done is extraordinarily complex and very, very fuzzy. Leaving would be as time consuming and attention sapping as Northern Ireland or reversing national decline was for a succession of past leaders. The lurking danger is what other change leaving would bring. Will it trigger the break-up of Britain? Would any leader (especially a Conservative) want to be the Prime Minister that finally, after 300 years, dis-united the UK?

  1. Because of their ego.

Possibly the least noble but most important motive for being PM is ego. The only real immortality, as Machivelli argued, is ‘lasting fame after your death’. In Downing Street, the photos of your illustrious predecessors gaze at you each time you walk up the stairs. Being Prime Minister instantly makes you a true historical figure, inhabiting an office of weather-makers, part of a lineage with Winston Churchill and Margaret Thatcher. That’s an ego boost.

Few politicians can truly avoid the desire to be top. The hand of history, international prestige, the trappings and power are all almost irresistible (not to mention the gifts and foreign travel).  Churchill, for all his walking with destiny, was deeply ambitious and egotistical. Lloyd George, no slouch in the ego stakes, said of Winston he ‘would make a drum of out of the skin of his own mother in order to sound his own praises’. So it is with others, as an innate belief in yourself is what gets you there. However, ego destroys as well as creates. It can easily give way to hubris, unwarranted certainty and inflexibility.

Whoever enters Number 10 brimming with confidence needs to look closely at those other faces on the stairwell. From Eden to Brown, leaders attracted by the office found that their supposed abilities and plans turned to dust. Even worse are the reputations of Prime Ministers like Neville Chamberlain (and now David Cameron) who were simply overwhelmed and whose names are synonymous with failure. For every ‘winner’ like Attlee or Thatcher on the wall there are two or three losers who were, as Clement Attlee said, simply ‘not up to it’. Coming bottom of this list is not good for the ego.

Being PM

It is, perhaps all about context. In some situations ego, duty, desire and ability fuse and work together well. Churchill, at least in the summer of 1940, had probably the worst welcome to office possible. The Low Countries were invaded by the German army the very morning he became PM, and the British Empire and its allies (note Empire, not Britain alone) were left facing grave peril. However, Churchill spoke of how

I felt as if I were walking with destiny, and that all my past life had been but a preparation for this hour and for this trial…I was conscious of a profound sense of relief. At last I had the authority to give directions over the whole scene.

How will it be for the new Prime Minister? Power, as Robert Caro puts it, reveals. The challenges are awesome, if not terrifying, for whoever wins the Conservative leadership. Their place in history is secured, though whether as a dazzling success or terrible failure is for them to determine. The first few months of our new PM will tell us very quickly if they are walking with destiny or simply tripping over their own ego.

The Leave campaign’s stunning upset has barely sunk in and already the pundits are flogging a familiar storyline. Those ‘left behind’ in the hard-luck provinces have punched privileged, corporate London in the nose.

The facts tell a different story: culture and personality, not material circumstances, separate Leave and Remain voters. This is not a class conflict so much as a values divide that cuts across lines of age, income, education and even party. A nice way to show this is to examine the relationship between so-called ‘authoritarianism’ questions such as whether children should obey or the death penalty is appropriate, and support for the EU. The British Election Study’s internet panel survey of 2015-16 asked a sample of over 24,000 individuals about their views on these matters and whether they would vote to leave the EU. The graph below, restricted to White British respondents, shows almost no statistically significant difference in EU vote intention between rich and poor. By contrast, the probability of voting Brexit rises from around 20 per cent for those most opposed to the death penalty to 70 per cent for those most in favour. Wealthy people who back capital punishment back Brexit. Poor folk who oppose the death penalty support Remain.

chart1v2

 

A similar pattern holds in the British Values Survey for the strongly worded question probing respondents’ desire to see those who commit sex crimes ‘publicly whipped, or worse.’ Political psychologists show a close relationship between feeling fearful of change, desiring certainty, and calling for harsh penalties for criminals and discipline for children. These are people who want a more stable, ordered world. By contrast, those who seek change and novelty are willing to embrace immigration and the EU.

Chart-2-v2

 

Precisely the same relationship – based on values rather than class – characterises support for Donald Trump. “I’ve found a single statistically significant variable predicts whether a voter supports Trump—and it’s not race, income or education levels: It’s authoritarianism,” wrote Matthew MacWilliams back in January.

This doesn’t mean age, education, class and gender don’t count. But they largely matter because they affect people’s level of authoritarianism. Genes, strict parenting and straitened circumstances contribute to people’s aversion to difference, which gets wired into their personality. For Karen Stenner, this makes authoritarians resistant to exhortations to embrace diversity. Younger, wealthier and better educated people, and women, are a bit less oriented toward order and intolerance. But education is not the reason. A recent study in Switzerland showed that liberal-minded kids select into university – their liberalism was apparent as early as age 13. University itself had no liberalising effect on attitudes.

As large-scale migration challenges the demographic sway of white majorities, the gap between whites who embrace change and those who resist it is emerging as the key political cleavage across the west. Compared to this cultural chasm, material differences between haves and have nots, managers and workers, are much less important. From Trump to Hofer, Le Pen to Farage, the authoritarian-libertarian axis is taking over politics.

Where does this leave Britain? The country has emerged from a bruising battle in which those fearing change lined up to Leave while folk comfortable with difference plumped for Remain. However, the two lines don’t perfectly overlap. Boris Johnson, Douglas Carswell and other Vote Leave leaders are libertarian or even globalist in instinct. As negotiations move forward, this freedom-oriented leadership will be inclined to cut deals with Europe on migration in order to secure Britain’s access to the European market. While this ‘soft Brexit’ pose will irritate the authoritarian majority among Leavers, Johnson’s credibility as the man who led Britain out gives him the latitude to make compromises. The history of right-wing populism from the southern US to Northern Ireland is one of populist leaders riding their base to power but rapidly moderating once in office. Expect a fuzzy divorce, not a clean break.

Erc Kaufmann is Professor of Politics at Birkbeck College

Originally posted here

Many Britons went to bed last night thinking that their country’s membership of the EU was secure. They awoke this morning to hear UKIP leader Nigel Farage declare ‘independence day’ after 52% of voters chose to leave the EU.

Shock seems to be the prevailing mood among politicos, but the referendum result is not entirely unexpected. Opinion polls were too close to call in advance of yesterday’s vote even after, what appeared to be, a late surge for the Remain side. Bookies were even more optimistic about the chances of a vote for Remain but they have now joined the ranks of discredited elites in this country.

EU referendums are always difficult to win, as evidenced by ‘no’ votes against the Maastricht, Nice and Lisbon Treaties and the European Constitution. Winning an EU referendum in Britain was never going to be easy given the country’s fractious form on Europe. Asking a high-stakes question about membership rather than the ratification of a treaty made little difference in the end.

Prime Minister David Cameron knew these risks when he committed himself to a referendum in January 2013 but he judged the rewards to be worth it. With Conservative backbenchers spoiling for a fight on Europe and UKIP surging in the polls, the referendum pledge bought Cameron time and, so it seemed until he resigned earlier today, a second full term in Number 10.

A dynamic campaign in support of Remain might have helped to mitigate these risks but it failed to materialise. Although EU supporters won the economic argument, they failed to address people’s legitimate concerns about how the EU was governed. This left room for Leave’s rallying cry to ‘take back control’ from Brussels, a powerful political slogan that trumped dire economic predictions about the consequences of Brexit.

The UK’s fragmented political parties were another complicating factor in the referendum campaign. That the Conservatives would implode over Europe was always a possibility. Implode they did when Michael Gove and Boris Johnson joined the Leave campaign, allowing the less politically palatable Nigel Farage to stay behind the scenes.

None in 2013 would have predicted that Labour would move to the left and elect Jeremy Corbyn, a leader with little love for Europe. Labour MPs Alan Johnson and Chuka Umunna, among others, made a strong case for EU membership. However, their efforts were undermined by a leader who, when asked to put his passion for Europe on a scale of 1 to 10, replied: ‘seven, or seven and a half’.

Whatever the reasons for the referendum result, and it will take time for the evidence to emerge, Europe has entered a period of profound political uncertainty. All eyes are now on next week’s European Council to see how EU heads of state or government manage the political process set in motion by UK voters. Expect this process to play out over years rather than weeks or months.

The UK will be central to this process but not the sole focus. EU leaders will be concerned too about member states, such as the Netherlands, which are weighing up referendums of their own. Greece too will be closely watched for signs that Brexit might renew risks of Grexit. The euro crisis has demonstrated EU leaders’ ability to do deals during moments of high political drama. Such diplomatic skills are now needed more than ever.

The EU has been deeply damaged by the UK referendum, but crises are endemic to a political project as experimental as European integration. While no member state has ever left the EU, the Union has encountered a succession of constitutional crises since the 1950s. The EU has not always handled these crises well but it has developed a standard operating procedure in such situations based on intensive intergovernmental diplomacy between heads of state or government. This deliberative intergovernmentalism now faces a major new challenge.

The UK faces constitutional turmoil of its own – after a majority in Northern Ireland, London and Scotland voted to stay in the EU – but it lacks comparable operating procedures. Within minutes of the referendum result, Northern Ireland’s Deputy First Minister Martin McGuinness called for a referendum on Irish unification, confirming that fears about Brexit and the peace process were not devised by ‘project fear’. Scotland’s First Minister Nicola Sturgeon soon followed with a statement that a second referendum on Scottish independence is now ‘highly likely’.

Intergovernmentalism within the UK is considerably less developed than it is in the EU. David Cameron promised to include the leaders of Wales, Scotland and Northern Ireland in Brexit negotiations but he said little about how this might work. There is quite simply no template to tackle deep regional divisions in a political system that, in spite of devolution, remains highly centralized.

Dr Dermot Hodson is Reader in Political Economy at Birkbeck.

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Paul Krugman is an esteemed Nobel prize-winning economist: an authority on international trade policy in particular. You might expect that he would have had sharp insights on the Euro to offer to his audience at the Council of European Studies conference in Philadelphia on April 15. But no: we got instead the tired old story that the euro area is not an ‘Optimal Currency Area’ (OCA). Martin Sandbu, who spoke recently at Birkbeck about his new book Europe’s Orphan: The Future of the Euro and the Politics of Debt, was on the podium as respondent and presented an authoritative critique, but Krugman was not swayed, as he explained the next day in his blog.

To be honest, the blog post is so tangential to the issues that one wonders whether Krugman is really following the Euro debate at all. It might help him to understand the force of the criticism directed to OCA theory if he had a bit more idea of the direction the European debate has taken. Here’s a summary in a few paragraphs, for the aid of OCAistas everywhere. (Sandbu has given his own response, more on the economics than the political economy of the debate, in a ‘Free Lunch’ blog  entitled ‘I love the smell of devaluation in the morning’, but unfortunately that lunch is only free to Financial Times premium subscribers.)

Put very briefly, OCA theory produces the policy recommendation that countries should only lock themselves into a fixed exchange rate if their economies are sufficiently similar (‘convergent’) that the policy instrument of exchange rate adjustment is not needed. It implies that the countries in the euro periphery have suffered badly in the crisis because they could not devalue. It also suggests that, if the euro is here to stay, then the euro area needs to become more like an OCA by adopting ‘structural adjustment policies’ to make its constituent economies converge. Weirdly, Krugman states his critics advocate structural reform, whereas this is the prescription favoured by OCA adherents.

Critics of OCA theory point out the singular lack of evidence that countries which devalued had a ‘better’ crisis, and ask for the causal mechanism whereby devaluation helps a country to deal with the results of a financial crisis. They note that ‘orderly’ devaluations, whereby the exchange rate is set at just the level the real economy needs, are not available to most countries in our world of high capital flows. Floating exchange rates (such as the UK has) do not help the export sector to thrive, because the exchange rate is an asset price determined in financial markets. Exporters did not rush to invest when the pound depreciated in the crisis, as they were doubtful how long the new parity would last (a well-founded doubt, as it turned out). Krugman interprets these issues as a revival of ‘elasticity pessimism’ (the belief that exports are not elastic – responsive – to changes in relative prices brought about by exchange rate changes). This is a trivialising interpretation: the real issue raised by critics is whether the exchange rate can be made to function as a policy instrument for steering the real economy, given that it is subject to speculative over- and under-shooting.

But most important of all, critics of OCA theory challenge the idea that ‘structural adjustment’ by the periphery is needed to deal with the euro crisis. They offer a different analysis of what has gone wrong in the euro area and a different set of policy prescriptions. Their starting point is that the euro crisis came in the aftermath of a global financial crisis. The euro area did not have the institutions necessary to deal with the financial crisis. The ECB acted as lender of last resort to the banking system, but there was no euro-wide mechanism for bank resolution and restructuring; nor was there a common debt instrument that would prevent sovereign borrowers being picked off by the financial markets. Papers presented at the conference by Waltraud Schelkle and Geoffrey Underhill (the latter co-authored by Erik Jones) set this out in detail. Jones and Underhill have coined the term ‘Optimal Financial Area’ (OFA) to describe the financial institutions needed for stability in a common currency area. The challenge for the euro area is building these institutions, not imposing more structural adjustment on the struggling periphery.

One of the ironies of trying to explain all this to an American economist is that the US offers a great case study of how a currency union might not start life as an OFA. During the C19, the US suffered repeated banking crises which imposed high costs on the real economy due to the lack of institutions to limit their impact. Those institutions were put in place only slowly: progress was impeded by deep conflicts between the north-east and the south-west, which were at least as far apart in their economic indicators as the euro core and periphery are today.

Euro pessimists argue, with some force, that the euro area will not be able to turn itself into an OFA, and it should not even have tried. This might be true, but not for the reasons that the OCA contingent give. According to OCA theory, the problem is that the underlying economic structures of the countries making up the euro area are too different. According to the OFA analysis, economic diversity is not a problem for sustaining a currency union: on the contrary, diversity increases the amount of risk-sharing that can be achieved. Instead, the problem is political: national governments might not agree to build the needed institutions if their perceived conflicts of interest are too deep.

In Paul Krugman’s OCA fantasy world, the alternative to euro membership is that each country has a managed exchange rate, whereby it can adjust its peg as required to maintain international competitiveness. In the Q&A session, he defended the euro’s predecessor, the Exchange Rate Mechanism (ERM), because it allowed pegs to be adjusted. But there were a number of problems with the ERM, not least that it could be subject to speculative attacks, like the one by George Soros that pushed the UK out, at huge cost to the public finances, on ‘Black Wednesday’ in 1992. Krugman joked that the Brits should erect a statue honouring Soros for keeping them out of the euro. It may seem a good joke today, but if the euro area can become more like an OFA, its members may have the last laugh.

Deborah Mabbett is Professor of Public Policy at Birkbeck

Donald Trump Sr. at Citizens United Freedom Summit in Greenville South Carolina May 2015 by Michael Vadon 13

Buffoon. Joke. Jerk. Those are just some of the descriptions of the current front-runner for the Republican Party nomination for president of the United States. From his fellow Republicans, that is. Beyond the party, Donald J. Trump has been lambasted as a bigot, misogynist, and racist. Yet none of this has seemingly hampered the popular appeal of his quixotic quest for the White House.

Should we take the Trump phenomenon seriously? The answer is, emphatically, yes. Laugh at or loathe him, Trump has been the Heineken candidate, reaching parts of the electorate no other candidate can reach. And whilst it remains to be seen whether he can translate his support in the polls into votes, Trump already dominates 2016 in singular fashion. There exists no precedent in the modern era for a political novice setting the agenda so consistently that the media focuses in Pavlovian fashion on whatever subjects Trump raises. From stopping illegal immigration through a ‘beautiful’ great wall with Mexico to a moratorium on all Muslims entering the US, no-one has commanded attention like the New Yorker. Moreover, not only have other Republicans felt compelled to follow his lead but even President Obama’s final State of the Union was essentially an extended rejoinder to the Donald.

So, what underlies the success? Anger, authenticity, media savvy, populism, and timing.

An unapologetically redemptive force

First, most Americans think their country is on the wrong track. Among white working class Americans – the core Trump constituency – stagnant wages, real income decline, and loss of a once-dominant status in a nation transforming economically and culturally underlies disillusion. For Americans regarding ‘their’ country as in need of taking back and among those fearing the US is in terminal decline – polarised and gridlocked at home, discounted and challenged for primacy abroad – Trump represents an unapologetically redemptive force: a visceral, primal scream from the heart of white American nationalism.

Second, Americans broadly view their government as ineffective and political system as corrupt. Running for Washington by running against it, on a platform of incoherent but potently opaque policy positions, no-one – for those wanting to change Washington – embodies the outsider like Trump. Moreover, uniquely, his personal fortune insulates him from charges that he can be ‘bought’ by vested interests. When Trump talks about knowing how to work the system as a businessman, he is credible. Add to that an outspoken willingness to speak directly, bluntly and without fear of causing offence and millions of Americans view the Donald as a truth teller. Like businessmen in politics before him, Trump promises that what he did for himself he can do for America, and that ordinary Americans will once more partake of the increasingly elusive American Dream.

Social media mogul

Third, Trump has exploited his formidable media knowledge with astonishing shrewdness. Outrageous statements, outlandish claims and telling personal insults – seemingly spontaneous but carefully pre-planned and road-tested – compel ratings. Social media abets the creation of an alternative reality and echo chamber from which the distrusted mainstream media are excluded. Disintermediation – cutting out the middle man – compounds Trump’s celebrity status to forge what his 5 million Twitter supporters perceive as a personal link to their politically incorrect champion.

Fourth, Trump – for whom id, not ideology, is all – upends conservative orthodoxy. A New York native who was for most of his life pro-choice on abortion, pro-gun control and a donor to Democrats, Trump is no staid Mitt Romney. In rejecting free trade deals and ‘stoopid’ Middle East wars, pledging to make allies from Saudi Arabia to South Korea pay for US protection, committing to punitive taxes on Wall Street and preserving entitlement programmes for the average Joe, Trump’s anti-elitism is scrambling a party establishment fearful of an anti-government populism it unleashed but cannot control.

Finally, if Obama won the presidency in 2008 as the ‘un-Bush’, what more vivid an antithesis to the current lame duck could be imagined than Trump? After seven years of the most polarising presidency since Richard Nixon, Trump promises to restore the art of the deal – something the US Constitution mandates for successful governing, and AWOL since 2009 – at home and abroad alike.

Can Trump triumph?

Can Trump prevail in the Republican demolition derby? The odds are still against him. After all, most Republicans do not support him and he has been first in national polls in large part because the ‘establishment’ vote has been so fragmented among Marco Rubio, Jeb Bush, John Kasich and Chris Christie. But if Trump can win or come second to Ted Cruz in the Iowa caucus, and then top the New Hampshire and South Carolina polls, the prospects of him securing the nomination are 50-50 at worst. By the time of the Republican Party convention in Cleveland, Ohio in July, if not well in advance, no one may be laughing other than the Donald.

Find out more

Rob Singh is Professor of Politics at Birkbeck. His new book, ‘After Obama: Renewing American Leadership, Restoring Global Order’ will be published by Cambridge University Press in May. Prof Singh recently appeared on an episode of BBC Radio 4’s The Long View which focused on ‘Donald Trump and the Politics of Celebrity’

book

Last Monday we found out what it’s really like to work for an MP courtesy of Rob Dale (@robandale),  when he spoke about his new book How to Be A Parliamentary Researcher.

  • Is it exciting?
  • Is it hard work?
  • Do you get to hear all sorts of information you shouldn’t?
  • Can you make a difference?
  • Is it more like the West Wing, House of Cards or In The Thick of It?

As Rob explains here researchers are the unsung heroes of Westminster ‘parliamentary researchers are required to support and guide their boss through these new pressures, whilst also helping them with the more traditional aspects of the role: speaking in the House of Commons, tabling questions, establishing campaigns, appearing in the media and attending many, many meetings. It is their responsibility to do much of the legwork so that their boss can focus on his or her main job; performing.’

In his talk he offered a whole range of advice from how to write the perfect CV (tailor it), how to get ahead (get campaigning) and how to do the best you can (make friends, get contacts, pay attention!).

To hear it all and our later discussion about Parliament with Rob, the Parly app creator Tony Grew and our own Susan McClaren listen in here http://backdoorbroadcasting.net/2015/11/fighting-for-a-place-in-parliament-an-evening-with-robert-dale/

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Last week, in the first of our series of new research seminars, Deborah Mabbett presented her ongoing work on the independence of central banks. In the 1990s there was a global trend towards formally designating central banks as independent to take the ‘politics’ out of running the economy by giving authority over monetary policy to experts. Central banks now jealously guard their independence from ‘political influence’ (see what the Bank of England says here). Continue reading

foi

On Friday of last week, the Government announced a new commission on Freedom of Information. What is it looking to do to the UK Freedom of Information Act?

What’s Wrong?

The questions in the remit of the commission boil down to asking ‘is FOI undermining decision-making’ and ‘is it too expensive’? The remit itself is, of course, priming discussion in a particular way, framing it  towards two issues of (1) whether FOI is hampering decision-making and (2) whether it ‘costs too much’ . So what does the evidence say?

Is FOI Hampering Decision-making?

Just to put this discussion into context:

  • Our 2010 study of FOI in the UK found very few requests for Cabinet documents and also found a broader lack of interest in the decision-making process. Leaks are a far more important cause of openness for these citadels of government decision-making than FOI.
  • UK governments since 2005 have used the veto seven (or technically eight) times, compared with 48 times in Australia in the first five years of its own FOI Act. This seems to indicate that ‘dangerous’ requests trying to prise open the very centre of government are relatively few in number, though their psychological effect may be disproportionate.

As I’ve said before, the effect of FOI on policy discussions generates lots of heat but very little evidence. Tony Blair claimed FOI had led to more caution over recording decisions or inhibitions in discussion (the so-called ‘chilling effect’). Former Cabinet Sectary Gus O’Donnell also claimed it has ‘hamstrung’ government, though when pressed he could only offer isolated examples-one hypothetical and one based on the coalition negotiations, one of the most unique and unusual political events in recent decades. Doubtless we’ll hear similar claims made again.

In terms of harder evidence, the Justice Committee ‘was not able to conclude, with any certainty, that a chilling effect has resulted from the FOI Act’ and also felt the protections for policy were sufficient and was ‘cautious about restricting the rights conferred in the Act in the absence of more substantial evidence’. The committee argued against change but cautioned care…

Given the uncertainty of the evidence we do not recommend any major diminution of the openness created by the Freedom of Information Act, but, given the clear intention of Parliament in passing the legislation that it should allow a “safe space” for policy formation and Cabinet discussion, we remind everyone involved in both using and determining that space that the Act was intended to protect high-level policy discussions. We also recognise that the realities of Government mean that the ministerial veto will have to be used from time to time to protect that space.

Our own studies found a few examples but no systematic behavior changes around advice or space-and also many officials more concerned about the dangers of not having a record if a judge came knocking.

But the claim won’t go away. The recent Supreme Court ruling weakened the government’s veto over requests and has undoubtedly caused concern, or at least reignited old worries. But is also partly psychological. Politicians believe it happens and keep repeating it, so it then becomes true to them. It is a rather wonderful example of a self-confirming myth, especially as the myth itself may then make people wary. It is, of course, more politically, a convenient and half acceptable way of attacking FOI, for those politicians who don’t like the disruption FOI brings.

It ‘costs too much’

This is a tricky one. Measuring the cost of FOI in any reliable way is almost impossible. Estimates have varied from

  • A pre-Act estimate of £350 per request
  • A UK government study of 2006 giving £293 per request
  • A Scottish government of 2010 of £193 per request.
  • Cornwall Council calculated an average of £150 per request
  • Bexley council found it was £36 with most requests costing around £19.

As we pointed out here on pg. 33:

  • The costs of FOI are very difficult to measure and calculate. Different studies have used different methods and, unsurprisingly, have come to very different results. While you can simply multiply hours by time taken this may fail to catch, for example, the ‘opportunity costs’ of involving other staff or time spent in discussions. By contrast, the 2006 UK study factored in ministerial time (which is, of course, pretty expensive) while the Scottish study included one request that had taken 200 hours-a little over the 18 hours allowed under legislation. See this report.
  •  The cost of FOI is a political issue. From the view point of politicians and officials FOI introduces ‘concentrated costs and dispersed benefits’ (Fung et al 2007: 117). It is easy to see the resource and, for politicians, the political costs but much more difficult to quantify or see the benefits flowing from FOI, such as transparency. This means there is a hidden bias in any discussion of FOI which tilts discussion in a negative direction.

The real difficulty is arguing in favour of rather vague (but real) ‘democratic benefits’ against concrete numbers. Yet on a day when an FOI revealed that the UK government has been involved in military action in Syria, despite a Parliamentary vote against it in 2013 the argument is there-and from potholes to extraordinary rendition there is a strong case to be made. Not to say that FOI is perfect or unabused but it is an important, if messy, democratic force.

And so…

Neither of the two ‘problems’ the commission is looking into are new. In fact, they represent two of the most frequent complaints or lines of attack on the legislation from Ireland to India. Tony Blair, as we all know, felt FOI was ‘abused’ and was ‘utterly undermining of sensible government’ while Cameron spoke of how some requests were ‘furring up the arteries’, with the Act as a sort of cholesterol on the healthy body politic. The issue of resource costs is, of course, perennial in FOI with police forces and councils keen to complain of frivolous costs. Moreover, FOI discussions are often about what those in power think is happening or what they want to believe, the myths, perceptions or rumours rather than the reality.

The interesting point about the remit is that it tilts all discussion naturally towards the two issues of damage and costs, rather than any more equal cost-benefit analysis. How easy will it be to say ‘actually, it doesn’t…’?

Ben Worthy is a lecturer in Politics. You can see his blog on FOI and Open Data here.