Links between austerity and immigration, and the power of information

This discussion by Roger Scully about why people in the Welsh Valleys voted Leave is depressing although not surprising. In essence it is immigration, bolstered by local stories of Polish people coming into communities and reducing wages. I doubt if quoting econometric studies about how little immigration influences wages would make much difference to these attitudes (although that is no excuse for people in authority who should know better ignoring these studies). I think it is attitudes like this, in places unused to immigration partly because work is not plentiful, that makes some politicians say that arguing in favour of immigration is ‘politically impossible’.

This is the first link between immigration and austerity I want to draw. The Labour party before 2015 had also decided that attacking austerity was politically impossible: ‘the argument had been lost’. Focus groups told them that people had become convinced that the government should tighten its belt because governments were just like households. The mistake here, as I wrote many times, was to assume attitudes were fixed rather than contextual. I was right: austerity is no longer a vote winner. [1]

Why might attitudes to immigration change? I strongly suspect that anti-immigration attitudes, along with suspicion about benefit claimants, become stronger in bad times. When real wages are rising it is difficult to fire people up with arguments that they would have risen even faster in the absence of immigration. But when real wages are falling, as they have been in the UK in an unprecedented way over the last decade, it is much easier to blame outsiders. Equally when public services deteriorate it is easy to blame newcomers.

It is wrong to think that this only happens among working class, left behind communities. Catalonia is a relatively rich part of Spain, and there has always been resentment about this area ‘subsidising’ the rest of the country. But it is very noticeable how support for pro-independence parties increased sharply as Spain turned to austerity, although that could also be a reaction to corruption scandals.

Here is the second link between immigration attitudes and austerity. Austerity has contributed to the slow growth in real wages and is the main cause of deteriorating public services, but often outsiders are easier to blame.

This is particularly true when it is in the interests of the governing political party and its supporters in the press to deflect criticism of austerity by pretending immigration is the real cause of people's woes. This is the third link between austerity and immigration, and it is one deliberately created and encouraged by right wing political parties. In this way Brexit has its own self-reinforcing dynamic. People vote for it because of immigration, its prospect leads to falling real wages as sterling falls and the economy falters, which adds to bad times and anti-immigrant attitudes.

If all this seems very pessimistic, it shouldn’t be. While the right will almost certainly continue to play the anti-immigration card in the short term, because they have few other cards to play, they can be opposed by a left that makes the case for immigration. As just as views on austerity have clearly changed, so can views on immigration. particularly once hard times come to an end.

However it is a mistake to imagine it is all about economics, or even ‘culture’. One of the unfortunate consequences of the culture vs economics debate over populism is the implication that one way or another views are deterministic, and the only issue is what kind of determinism. The reason I go on about the media so much is that information matters a lot too. Although people may be anti-immigration because they have xenophobic tendencies which are reinforced when times are bad, they can also be anti-immigration because they have poor information, or worse still have been fed deliberately misleading facts.

In my intray of studies to write about for some time has been this paper by Alexis Grigorieff, Christopher Roth and Diego Ubfal. (Sam Bowman reminded me it was there from this piece.) It is well known that people tend to overestimate the number of immigrants in their country. This international experiment showed that when people were given the correct information, a significant number changed their views. What is more, this change of view was permanent rather than temporary. Here is a VoxEU post about an experiment from Japan pointing in the same direction.

As well as emphasising simple information like this, politicians should expose the kind of tricks people promoting tougher controls on immigration play. The public tends to be receptive to the idea that it is beneficial for the economy to have immigrants with important skills, so they switch to calling for controls on low paid, low skilled workers. As Jonathan Portes demonstrates, that in practice can involve plenty of pretty skilled workers. The trick for pro-immigration politicians is to ask which occupations do we want to exclude: nurses, care workers, construction workers, primary school teachers, chefs? With UK unemployment relatively low, there are not many jobs where employers are not complaining of shortages.

Of course most people want to stop immigrants coming here and claiming unemployment benefit. This is why newspapers keep playing the trick of talking about the large number of migrants ‘who are not employed’, conveniently forgetting to mention that this includes people like mothers looking after children. In reality unemployment among EU immigrants is below that among the native population. In addition, we can already deport EU immigrants that remain unemployed under EU law if the government could be bothered to do so.

For politicians who do want to start making the case for immigration, the place I would start is public services. Few economists would dispute that immigrants pay more in tax than they take out in using public services. Yet most of the public believe the opposite. In this post entitled ‘Is Austerity to blame for Brexit’ I show a poll where the biggest reason people give for EU immigration being bad is its impact on the NHS. Getting the true information out there will have a big effect. Just as public attitudes to austerity can change, so can they over immigration, but only if politicians on the left start getting the facts out there.

[1] To be fair, whether I would have been right in 2014/15 if Labour had taken a clear anti-austerity line we do not know.   

Did centrism beget populism?

Warning: amateur political science below

Stewart Wood has a well argued piece in the New Statesman, saying that it was the move by left and right towards a common centrism that laid the foundations for populism. Although parts of his argument ring true, I find others less convincing..Labour certainly moved to the centre and beyond in terms of its economic policies. The Conservatives moved to the centre in terms of social policy. But on economic policy, the Conservatives moved strongly to the right with austerity. Senior Labour thinkers still seem to have a blind spot on austerity.

Let me start by looking at the country that now has populism in spades as a result of electing Donald Trump as President. To argue that the Republican party has been moving to the centre over the last 30 years is obvious nonsense. The traditional centre right virtue of fiscal rectitude went out of the door with Ronald Reagan, and was completely ignored under the second Bush. The Republicans only extol the virtue of cutting budget deficits when they are not in power. When they are in power, they want cuts in taxes for the rich, increases in military spending but cuts in other government programmes.

Margaret Thatcher was considered pretty right wing when she was in power. Many of her key achievement in terms of her own agenda, such as a diminished union movement and shrinking the state through privatisation, were not reversed by Blair and Brown. It is difficult to argue that the Cameron/Osborne duo made any attempt to undo the Thatcher legacy. Instead they tried to go beyond it, by shrinking the state to a size relative to GDP not seen since the end of WWII. They did it under the pretense that they were forced to because otherwise the markets would no longer buy government debt. This was a colossal deceit. There no evidence that markets were concerned about government debt, and strong evidence that they were not. [1] This deceit should have become clear when Osborne cut taxes at the same time as continuing to cut spending.

Let me use a diagram to illustrate what I mean. [2] (The vertical axis could also be labelled 'identity' as well as 'culture'.) No doubt we could discuss the detail of the size and direction of the arrows, but I think this is roughly right.

In the US, the Republicans had moved steadily in a downward, socially conservative right wing direction, whereas the broad church that are the Democrats have largely remained in the same place (unless you go as far back as the southern Democrats). One possible argument is that this move by Republican politicians helped create the Tea Party. Republicans have always pretended their policies would help ordinary people, whereas in reality they have helped a rich elite. This has laid the ground for a populist leader who was prepared to move economic policy in certain respects away from the right (in particular advocating protectionism). The growing loss of respect of Republicans for their party elite allowed voters to ignore the views of senior Republican leaders in selecting Trump as their candidate.

In the UK David Cameron moved the Conservatives to become much more liberal, by in particular supporting gay marriage. (When I argued in an earlier post that the Conservatives had moved to the right, I was surprised how many comments I got back telling me this was nonsense, and naming gay marriage as the main reason why.) In the UK this left a large gap in this political space, which UKIP - the first successful mass party in England since the SDP - filled. As Jonathan Wheatley showed, UKIP members are social conservatives, but are much more left wing than the Conservatives in terms of economics.

Labour moved to the right under Blair, while remaining socially liberal. I agree with Stewart Wood that this alone was important in preparing the way for populism. As well as the lack of a major industrial policy, they did nothing to curb a rampant financial sector or reverse the gains of the 1% that were a feature of the Thatcher period, a point emphasised by Jean Pisani-Ferry in respect of both the UK and US. I think New Labour’s position is better described as liberal rather than neoliberal: New Labour substantially increased the amount of resources (as a proportion of GDP) going to the NHS, and they also did a great deal to try and reduce child poverty. Labour moved further right (and more neoliberal) as they became more accommodating towards austerity. It was hardly a surprise that party members tried to pull the party back by electing Corbyn as leader.

As I argued here, Brexit was a perfect storm where the economically left behind united with social conservatives. With Labour no longer seen as representing the working class, this allowed the right wing media (with the support of the Conservatives) to help convince the left behind that their problems were a consequence of immigration. The Leave campaign was populist in the sense I describe here: advocating a superficially attractive policy to some that would leave everyone worse off. Much the same is true for Trump, who won the electoral college by convincing the left behind that he really could bring back their traditional jobs, something he will be unable to do in any kind of general way.

So the idea of growing centrism in the US makes no sense, yet it is they who have just voted for a populist President. In the UK it only makes any kind of sense if you think in one dimensional terms.

[1] This is essentially because the Bank of England was pledged to buy whatever it took in the way of government debt to keep interest rates low.

[2] I think the first time I began thinking in this two dimensional way was this post, but more recently I used it to analyse the forthcoming French election.  

The French election and two-dimensional politics

Unless something very surprising happens, the French presidential election will be between Marine Le Pen of the Front National and François Fillon, who recently won the primaries for a collection of parties (essentially the right wing republican party). Fillon’s platform was extremely neoliberal. As Renee Buhr describes here:

“His policy proposals largely indicate a small government, low taxation and free market approach to economic policy, while his campaign rhetoric takes aim at the usual ‘boogeymen’ cited by liberal politicians – government regulations, public expenditures, high taxes and public sector institutions and employees.“

This makes we worried that Le Pen will win.

If you see politics as all about a left/right axis, my concern makes no sense. Choosing someone whose economic policy is very much to the right of the centre/right parties should eat into Le Pen’s support, while those on the left will vote (reluctantly) for the lesser of the two right wing parties. However this one dimensional view is far too simplistic, and perhaps fatally so in this case.

To illustrate why, I want to briefly look at a piece by Jonathan Wheatley, which uses UK politics before the 2015 election. A sample were asked their views on 30 different policy issues. A technique was then used to find a pattern in the responses. The first interesting result was that the strongest pattern was two dimensional: there seem to be two common factors underlying these responses. To quote:

“The first is an economic dimension, drawing on issues such as the mansion tax, the bedroom tax, and privatisation of the NHS. The second is a cultural dimension, drawing on issues such as EU membership, immigration, same-sex marriage and English Votes for English Laws.”

We could say the cultural dimension was about identity, varying from communitarian to cosmopolitan views. He then looks at the political party people supported. Here is the result:

On the cultural dimension, party supporters are where you would expect. But on economic issues UKIP supporters are less rather than more right wing than Conservative party supporters.

I know of no similar analysis that looks at French voters, but this does not matter for the point I want to make. Suppose we use the same diagram to represent a political party's policy position. In that case the area occupied by UKIP in the diagram above does seem to correspond to Front National policies. Their position on the identity axis is certainly well to the south of other parties, but their position on economic issues is far from neoliberal. In choosing who to vote for, the voter will position themselves on the diagram, and look for the party that is closer to them in this two dimensional space. (Of course we cannot use the diagram to actually measure distance, as the implicit weighting between the two aspects is arbitrary, and may not correspond to that of the voter. But the conceptual argument still works.)    

From this two dimensional perspective, choosing a candidate to oppose Le Pen who is pretty right win in economic terms does nothing to capture Front National voters. But more seriously, it risks losing the support of left wing voters. While they may dislike Le Pen because of her stance on immigration and other identity issues, Le Pen is more acceptable in terms of economic policies than a very neoliberal candidate.