Beyond Neoliberalism, Nationalism and Socialism: Rethinking the Boundary Between State and Market - Softcover

Aubrey, Thomas

Softcover

ISBN 10: 1786604779 ISBN 13: 9781786604774

Publisher: Rli, 2017

Synopsis

This collected volume asks whether there might now be another way to reform our economic system to drive inclusive growth without having to return to the failed ideologies of the 20th century.

About this title

About the Author

Thomas Aubrey is a senior adviser at Policy Network and chief executive and founder of Credit Capital Advisory.

Excerpt. © Reprinted by permission. All rights reserved.

Beyond Neoliberalism, Nationalism and Socialism

Rethinking the boundary between state and market

By Thomas Aubrey

Rowman & Littlefield International, Ltd.

Copyright © 2017 Centre for Progressive Capitalism
All rights reserved.

ISBN: 978-1-78660-477-4

Contents

About the Contributors, 
Introduction Thomas Aubrey, 
A DISENCHANTED ELECTORATE, 
Beyond immigration: The search for policy responses to the populist surge must look to infrastructure and education Andrew Cooper, 
Time to concede on free movement?Examining the reality of free movement of workers Vince Cable, 
The morning after the night before: What does Brexit mean for British identity? Stephen Green, 
THE FAILURE OF NEOLIBERALISM, 
Partners for a new kind of growth: Progressive politicians must come together with business and trade unions to build an economy of purpose Stephen Kinnock, 
What is the role of the state in the economy? Progressive capitalism and a look beyond the third way David Sainsbury, 
A broken system: Why has neoliberalism failed to produce inclusive growth? Andrew Gamble, 
Representing needs: A new language for politics and economics Lawrence Hamilton, 
The end of laissez-faire: Advancing the national economic interest Patrick Diamond, 
THE MARKET DOESN'T ALWAYS WORK, 
Fixing the housing market: Is the act of government building houses enough? Kate Barker, 
Funding the future: The importance of equity capital in financing jobs and firms Jenny Tooth, 
In demand: How can we plug Britain's technical skills gap? Alastair Reed, 
THE GOVERNANCE GAP, 
Companies and the common good: Harmonising the aims of firms and society Sharon Bowles, 
Reinvigorating governance: Institutional shareholders should step up to the challenge of holding executives to account John Plender, 
The pensions problem: Time to face uncomfortable truths and make different choices? Dina Medland, 

CHAPTER 1

A DISENCHANTED ELECTORATE

BEYOND IMMIGRATION

The search for policy responses to the populist surge must look to infrastructure and education

Andrew Cooper

The year of 2016 will forever be associated with the populist surges that ambushed the political establishment, taking Britain out of the European Union and installing Donald Trump in the White House.

In Trump's encapsulation, it was a vote 'for nationalism and against globalism'. Emotive and often bitterly divisive debate revealed a deep gulf in both countries between, as Tony Blair put it, 'open' and 'closed' outlooks. Those who believe in globalism – and that an open economy is innately better than a closed one – need to reflect frankly on how and why these arguments were lost in 2016, or they will continue to lose.

Polling failed to foresee the victories for Brexit and Trump, but deep data analysis of the results tells us a great deal about the forces driving the march of populism. This starts with the important conclusion that the demographic pattern of leave voters in the UK and Trump voters in the US was almost identical. The significance of this is further underlined by the fact that the same pattern also applied to voters in the Austrian presidential election for the narrowly defeated ultra-nationalist Norbert Hofer, those in Italy who voted successfully to reject Matteo Renzi's constitutional reforms, and the supporters of the Front National in France who are lining up enthusiastically behind the 2017 presidential election campaign of Marine Le Pen. The same forces, more or less, are changing the political landscape in these countries and others; they charged the campaigns of Geert Wilders in the Dutch election in March and will charge those of the Alternative für Deutschland party in Germany's election in the autumn.

There is no single demographic factor behind these political movements and a lot of commentary has over-simplified what happened, often in order to confirm pre-existing biases about the right political response. On the left, many have wanted to believe that the political eruptions of 2016 were, in essence, the revolt of the economically left-behind against a failing global economic orthodoxy – caused by inequality. On the right, many have preferred to conclude that these votes were the assertion of national identity and economic self-interest over a metropolitan elite internationalist consensus.

Close examination of micro-level demographics reveals a rather more nuanced picture. There is a stark geographical pattern in the support for Brexit, Trump, Hofer and Le Pen, as well as a consistent demographic pattern. Archetypally, support was anchored among voters who shared not one or two demographic factors in common, but several. Compared to the average in their country, they were older, whiter, less well-educated, living on lower incomes and in lower-value housing; they were more likely to be obese and in less than good health. Definitively these voters were concentrated in places characterised by lack of diversity; homogeneous areas of ever more heterogeneous countries. Voting behaviour was strongly driven by people's proximity to diversity as well as by their social and economic situation; to make sense of what happened we must take account of both of these dimensions.

The 2016 US election map shows that poorer rural areas voted predominantly for Trump. But analysis at the level of the 3,143 US counties rather than its 50 states, reveals a more pixelated map in which the most unequal areas of America swung away from the Republicans, not towards them; income inequality is, overall, negatively correlated with support for Trump. Over the last 10 presidential elections, the average Democrat voter has become steadily wealthier and the average Republican voter steadily poorer – but over the same period cultural and identity politics have grown in impact too: the diversity dimension has become increasingly significant. Trump's victory came from a coalition of relatively prosperous, predominantly white traditionally Republican voters and relatively poor, overwhelmingly white former Democrat voters.

Brexit, like Trump, did best in less urban, more rural areas – and in places where the population has been getting older; support for the UK staying in the EU, like support for Hillary Clinton, was much stronger in urban, especially metropolitan areas, and in places where the population has been getting younger. Over recent years, more economically and socially mobile people (who tend also to be younger) have moved into more urban and diverse places; the places they have moved from have become correspondingly older and 'left behind' physically and culturally as much as economically.

Cultural attitude was a strong determinant of how people voted in both the EU referendum and the US election – much more so than party affinity or economic situation alone. There is, for example, a close and direct correlation between whether someone voted remain/Clinton or leave/Trump and their feelings about concepts like multiculturalism, globalisation, social liberalism, the Green movement and feminism. Those who view these things as a force for good were overwhelmingly likely, if they are British, to support staying in the EU and, if they are American, to support Hillary Clinton.

This tells us something important: for most who voted in the momentous electoral tests of 2016 – in Italy and Austria as well as the US and Britain – the decision was the consequence of a worldview, not just a pragmatic judgement about a political choice. This helps to explain why leave voters in Britain were utterly unmoved – perhaps even further emboldened – by the imperative warnings of the mainstream establishment and the 'experts'. It helps to explain why Trump voters in the US discounted arguments that he was not a fit person to be president.

The theme, perhaps, is 'disconnection', which has a broader connotation than 'left-behind'. Two tribes of voters disconnected from one another's life experience, cultural touchstones and worldview. One group of voters feeling disconnected from the direction in which their country seems to be going. The same group of voters disconnected from the opportunities that seem, increasingly, confined to large towns and cities. In Britain this also translates into a deep and growing antipathy, in the rest of the country, towards London, from which the disconnection feels most profound.

London – easily the most diverse part of the UK – voted 60:40 to remain in the EU. Many Londoners view the city as an open, cosmopolitan hub. To many others, London seems more like an island of prosperity that is open to the rest of the world, but closed to the rest of Britain. London – and other big towns and cities – have a proximity to opportunity, information, skills and networks; they are connected, not disconnected.

The political debate since the EU referendum, especially among those who unsuccessfully campaigned for a remain vote, has focused on immigration (or 'free movement') more than any other single issue. For many of those who voted leave, by far the biggest benefit of Brexit was felt to be regaining the power to curb immigration from other EU countries – with all the benefits that they thought that this would bring for Britain: more jobs, shorter NHS waiting times, smaller class sizes, easier access to social housing.

This was the staunch view in Tory heartlands like Lincolnshire, Kent and Essex, just as in Labour bedrocks in Hull, Stoke and Doncaster – all places where more than 70% voted leave. There is an easy logic to the conclusion, which many politicians seem to have reached, that reconnecting with these voters requires mainstream politicians to reverse themselves on immigration, to echo voter concerns about the free movement of labour and to put forward policies, in some form or other, to restrict it.

The demographic analysis of the Brexit vote provides an important reality check to this train of thought. There are parts of Britain that voted heavily to leave the EU and that have been profoundly affected by economic migration from Europe. But they are a minority. Demographic analysis unambiguously shows that the core leave vote was anchored in places that are specifically defined by their lack of diversity; places, in other words, with few, if any, migrants from the EU. This is important for a simple, obvious reason: curbing EU migration would make no material difference to the real problems experienced by people living in these places or the disconnectedness that defines them.

Brighton is a southern seaside town about 70 miles from London, accessible by train in around an hour, for less than £100 per week. More than a fifth of its population was born outside the UK and just under 90% are white, about the same as the national average. Around 16% of the population is aged over 65, similar to the national average, and about 40% are in full-time employment. In the EU referendum Brighton backed staying in the EU by a margin of 69% to 31% – one of the highest remain votes in the country.

Margate is also a southern seaside town about 70 miles from London. It takes at least 90 minutes to get there by train from the capital – and a weekly season ticket costs about £150. Less than 5% of its population was born outside the UK and less than 3% are non-white, while 20% are aged over 65, and only a third are in full-time employment. In the EU referendum Margate voters backed leaving the EU by about a 2:1 margin.

Curbing immigration – if that is indeed the consequence of the UK eventually leaving the EU – will do little or nothing to lift the fortunes of the people of Margate. Even if the net effect of leaving the EU and curbing immigration from EU countries is, eventually, to strengthen Britain's economy – which is far from certain – the benefits are very unlikely to cascade down to the people of Margate, because it won't address the facets of disconnectedness that afflict their town.

The people who lose, even if the country as a whole is slightly better off in the end, will be the people who have been losing for years: those with no skills, old skills or wrong skills; the disconnected. The future holds further great challenges for them; if we map the places where local jobs are most vulnerable to the march of robotics and artificial intelligence, it is by and large the same disconnected places that voted in large numbers for Brexit (and for Trump in the US). Those looming economic pressures cannot be wished away any more than the economic pressures of globalisation could be held at bay or reversed by voting to leave the EU or for President Trump.

Politicians in the political mainstream will no doubt continue to contort themselves in search of a form of words on immigration that will reconnect them with voters and, they hope, win them permission to be heard again on other issues. But this is somewhat to miss the point. Immigration wasn't, ultimately, the driver of the populist uprisings of 2016. Telling voters what they want to hear on immigration skirts around the real problems that are all too readily blamed on immigration, but which curbing immigration won't resolve. The search for policy responses and political solutions needs to look far beyond immigration – to transport, housing, education and retraining, as well as to innovative ways to regenerate the places that have become disconnected.

TIME TO CONCEDE ON FREE MOVEMENT?

Examining the reality of free movement of workers

Vince Cable

All my instincts about immigration are liberal. I enjoy diversity and diverse London in particular. I value having colleagues, friends and family from different national, ethnic and cultural backgrounds (and had a long, successful interracial marriage of my own). I have been in the political trenches fighting racism and anti-immigrant prejudice for half a century, from Enoch Powell's "rivers of blood" to Nigel Farage's army of unwelcome refugees. I am a fully paid up remainer – and remoaner – and did my bit trying to persuade elderly villagers in the prosperous south that 80 million Turks were not about to descend on them. As an economist, I am an old-fashioned and shameless free trader. And I spent five years as secretary of state in the coalition government fighting endless skirmishes with Theresa May's Home Office over the Tory net immigration target and damaging curbs on overseas students and workers.

So I should be out there championing European 'free movement of labour'. But I am not. And I am puzzled by the passionate support of the Corbynite left and many liberals for this particular component of the European single market. There are arguments for and against giving Poles, Romanians and Bulgarians the right to compete in the UK labour market on the same basis as the locals, but I struggle to see what great principle of socialism or liberalism is at stake. Nor do I see why a broadly liberal approach to immigration necessitates unrestricted immigration and unrestricted immigration from some countries but not others.

The reality is that Britain does not offer free movement to foreign workers. Indians, Jamaicans, Australians or Americans who wish to work here – and many of them could enrich the UK economy by doing so – have to pass through a complex, bureaucratic maze of visa restrictions. Their employers have to demonstrate that someone with comparable qualifications is not available within the European Economic Area.

These restrictions are real and severe and, as a local MP, I encountered many instances of their harsh and inflexible application. And for relatives who wish to visit, let alone stay, and for prospective marriage partners, the barriers can be prohibitive. Very little of the coverage of the referendum touched on the uncomfortable fact of the large Brexit vote among Asian ethnic minorities, almost certainly due to resentment at the relatively favourable immigration treatment of eastern Europeans with little historical connection to Britain. They could see clearly, even what liberals and socialists could not, that European 'free movement of labour' was essentially, if not explicitly, for white people.

Once that pretence is stripped away, the argument is about the merits of immigration per se. Indeed there is something rather encouraging about the colour-blind prejudices of British people who were equally affronted by blond people talking in Slavic languages on buses as by brown-skinned people wearing Islamic dress (indeed, surveys suggested that the greatest opposition is to immigrants from Poland and Pakistan to roughly the same degree. Indian nationals, who currently account for almost 60 per cent of all skilled worker visas, appear to attract very little opposition.) Previous immigration 'debates' over Caribbean immigration, then east African and wider Asian immigration, occurred at a time of substantial net emigration. Although the 'debate' was conducted in terms of 'immigration', there were net outflows for most years until the end of the 1980s and the real issue was race: white people leaving and brown and black people entering. This century however the influx has been boosted by eastern Europeans and net immigration has been over 200,000 a year, rising to over 300,000 in 2015 and 2016.

Now the debate is largely about the level of immigration, not race.

THE ECONOMICS

Is unrestricted immigration – albeit from some countries – good for Britain? The economics is broadly supportive of immigration, but not without important qualifications. First, immigrant workers add to national income, but not necessarily income per head. They help to create a bigger economy, but not necessarily a richer one. That will only occur if they are more productive than the average British worker. They are likely to be since they are more mobile, are attracted by particular skill or job market shortages and, almost by definition, are enterprising and ambitious to better themselves. But, as they settle with their families, those benefits are eroded.

Second, immigrants are relatively young, which explains why their contribution to the public realm is likely to be disproportionately positive. They pay more in tax than they take out in benefits or use of the NHS and other public services (except, perhaps, schools). But young people get older and these benefits are non-recurring and become negative in due course. Angela Merkel made use of demographic arguments in justifying her approach to Syrian refugees, but as her critics pointed out, these are temporary benefits, even if real.

Third, the counter-argument from critics of immigration is that immigrants depress wages and reduce job opportunities for natives. This will only be true where immigrants are competing rather than complementary. The fruit pickers of Lincolnshire and East Anglia, the computer whizz-kids of Shoreditch, the medical practitioners, the academic specialists and scientists are hardly competing and may actually create local employment in some instances. But there is more direct competition in building trades, taxi driving and in production line work. When secretary of state, I commissioned a range of academic studies of these impacts. The results were sufficiently reassuring that the Home Office would not allow my department to publish them! There appeared, however, to be some negative impact on wages in recession conditions and there may be problems for particular occupations and locations.

(Continues...)

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Edition details

• Publisher: Rli
• Publication date: 2017
• Language: English
• ISBN 10: 1786604779
• ISBN 13: 9781786604774
• Binding: Paperback
• Number of pages: 150