The Get Brexit Done lot want cheerful soldiers not Philosopher King technocrats

Much has been made of the appalling spectacle of the cabinet participating in a Q and A chant with Boris Johnson.  The video circulating can be taken to be a homage to those of the Trump cabinet, featuring supplicants offering praise.

Conventionally, UK cabinet members are supposed to be the equals to the PM’s  ‘first among equals’.  Heavyweight minds negotiating policy solutions and probing their costs and benefits ceaselessly.

But the video is not meant to be a mini-documentary shedding light on the workings of government.  This video is a marketing tool.  What is being marketed is the idea of a Prime Minister with cheerful junior soldiers promising to Get Stuff Done.  Those who were seduced by ‘Get Brexit Done’ are calculated to have voted for ‘Boris’ and not be particularly interested in heavyweight Philosopher King technocrats that he might have delegated stuff to.  They might know of very few other politicians, nor feel they need to, and be only dimly aware of the different government departments and what they are charged with doing.

You don’t have to be an actual supplicant to grasp that this is a sound marketing ploy for Johnson and you should agree to it.  (You might even command a price by agreeing to it).   The fact of the video does not actually shed light on the true workings of cabinet or government in general.  The Johnson campaigns and government have frequently involved saying one thing and doing others.  We can presume that they might be fine with the incantation for cameras, but what actually happens away from the cameras will be a function of the same power arithmetic that has always dictated cabinet.

Johnson’s election victory and the size of his majority naturally then raise the possibility that perhaps even away from the cameras, cabinet are really supplicants nowadays.  Johnson’s preparedness to stand by Cummings over the issue of who gets to pick the Chancellor’s advisors adds weight to that.  But other realities have not chnaged:  the impossibility of organising such a large dimension project as ‘Government’ entirely from the centre, and the necessity to delegate and have firewalls between No 10 and reality.  And there are new complications, including the tension between the leftward shift that the levelling up spending prefigures, and the traditional Tory right who won’t want the taxation that goes with it.

 

 

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Power? No thanks, I’m a decently paid and fulfilled megaphone

If you were designing a marketplace for ideas for policies to solve social problems, one thing you might hope is that it would incentivize people actually to take power and do things.  Only by doing things in government do problems get solved and lives altered.

If you are of a particular persuasion, the failure of the Labour Party to orient itself to obtaining power is remarkable.  A demonstration that the marketplace rules are not providing the right incentives.

But perhaps there is no puzzle.  Life as a campaigner and not a doer is not so bad.  At the top of the pile, you can expect a pretty decent salary.  MP’s earn £79k.  More than some Professors [less than others].  About 4/5 of that of a Head of Division in the Bank of England.  Compares well with local government, heads of charity, senior civil service salaries.  But there are other perks.  Fame!  The sofa circuit.  Public speaking at marches, rallies, constituency meetings, favoured campaigns.  Most of those who self-select to be an MP enjoy this.

Why spoil all this  by contaminating the process by actually seeking power?  Doing that involves compromise.  Falling out.  Banging heads together.  Or having your head banged.  Making specific promises and risking not delivering.  Figuring out the boring detail of what you need to do to actually do things.  Reading briefs.  Understanding them.  Forming a view.

For those in constituencies that are safe, you might prefer cultivating your own brand, doubling down on your views, gaining repute and TV time, shaping yourself for the book deal or the paid speaking circuit.

The incentives for the leftist outrider are even less oriented to achieving things and implementing policies.  These people are even more transparently Content Providers for a demographic that consume what they do in the same way that I consume fish and chips and the New Yorker.

Radical imagined futures that fill out newspaper columns and book length manifestos – compiled cheerfully by Owen Jones, Aaron Bastani, Grace Blakeley and others – fulfil the same purpose as literary fiction.  The survival of the value of this content depends on coverage and mentions, and these things are at best tenuously related to whether they describe workable solutions to problems that people face.

I’ve singled out the left tribe because of my relative familiarity with it;  but also because the pathology – not actually attaining power – seems more acute there.  Labour have not won a general election since the person that current tribal affiliations dictate it is necessary to deplore, Tony Blair, last won one in 2005.

But one can equally well apply the same critique to the cesspit of the right.

Dan Hannan’s net worth does not depend on whether he can recommend solutions to problems;  neither Matt Goodwin or Eric Kaufmann or David Goodhart or any of the actual office-holding politicians.  Their earnings also depend on attention.  There are limits, as Katie Hopkins’ career serves to remind everyone.  But provided you can tolerate not inciting legal action against you, the constraints are not that great.  You can and indeed perhaps must say things that are of no use to people:  you can tweet things about tariffs that are not true;  you can retweet material linking race to IQ;  you can selectively and incompetently celebrate things that seem to indicate your populist team are winning and were right all along.

The truth about problem solving does not lend itself to the politician/outrider industry.  It is probabilistic and multivariate.  Things may or may not work, or have worked, in concert with lots of other things.  It frequently will be discordant with the emotional resonance needed to maximise the entertainment value of an outrider piece.  You are not going to get a book deal with the pitch that we need a policy programme put together on an evidential case-by-case basis, updated in the light of data of imperfect and uncertain quality.  [Just to test this:   if anyone wants that book, I can write it.]

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A failing marketplace for ideas and policies: parties, party governance and FPTP

The UK system for marketing ideas for policy has failed us.  My own ‘centrist Dad’ brand of economics and politics no doubt colours this view.  But I think even if you do not subscribe to that kind of politics it’s possible to discern failures in the process.  A lot of this was prompted by a conversatoin with an old friend who, given his job, I can’t credit here.

Both major parties departed in pretty serious ways from recognisably sound economics, and, in the case of the Tories, frequently veered far from fairly basic norms of honesty and rationality.

On Labour’s side, the economics offences were twofold:  one faction supporting Brexit in favour of it freeing the UK economy to undertake thorough socialist intervention and/or reconnecting with an imagined and euphamistically named ‘traditional’ working class base.  Although boxed in by the rest of the party, the strain of ‘Lexit’ thought was there.

A second offence was the always evident ideological opposition to the operation of markets.  This manifested itself in the program of nationalization for utlities;  not itself an idea to be rejected out of hand;  but in the context of not giving any ground to the equally plausible model of continuing and reforming regulation to achieve the same ends, and the impulses to eliminate markets anywhere they felt able, the blanket disapproval of ‘contracting out’ in the NHS, the real ideological motive was clear.

The Tories rather obviously departed their previous role as the guardians of capitalism in their embrace of the nationalist project of Brexit;  the accommodation of nativist tendencies in that movement [tolerating, for example, Boris Johnson’s racist outbursts], whih we know to be economically damaging;  the preparedness to threaten great economic disruption and harm in the form of pursuing ‘No Deal’ as a way to ensure Brexit happened;  the pursual of the sovereignty abstraction at the price of free trade.

Both parties also departed previous norms of honesty and rationality in policymaking.  Labour in its cultivation and handling of the antisemitism virus;  obstructing understanding of what it wanted, and what was to be gained by being members of the Single Market [viz Corbyn and others’ comments about ‘access’;  and about state aid rules;  the ‘bollocks’ of the Six Tests.]

The Tory Party took a much more comprehensive and enthusiastic leap into the dark ages in its manipulation of the media [tricking the BBC into having Neil interview Corbyn with no Johnson interview in return, mimicking a BBC factchecking site, deliberately manipulating a Kier Starmer video clip];  its attempt to pevert constitutional law by proroguing Parliament and lying to the Queen about its purpose;  lying about the presence of border checks in the Withdrawal Agreement;  failing to embrace the economic understanding of trade, such that the freest trade was to be had by staying in the EU’s Single Market; and more.

To re-emphasise, even if you do not agree with my list of Labour and Tory failures, it is less contentious that controlling interests in both parites changed, and brought about changes in the policy program, and you can ask yourself questions about whether that process serves the wider interests of us all.

The controlling factions of both major parties are in large part products of the memberships, which have the final say over the choice of party leader.  The Conservative membership is small [191k?] and famously old.  The Labour Party membership is much larger, [580k?] but still small compared and unrepresentative of the electorate as a whole [as their views on subjects like Brexit and Jeremy Corbyn illustrate].

The problem for the rest of us comes with how this system interacts with the formidable brand and infrastructural incumbancy conferred on the major parties, and our First Past the Post system [which is of course a major part of the reason for the strength of the incumbent brands to begin with].

Individual companies represent and strive for no interests but their own.  Under benign [but rare] circumstances, competition between them encourages them to behave in our interests, rather than theirs.

Likewise, the pernicious intent of the far left and right would be of no concern if there was a geniuine competition for ideas and the plaforms needed to distribute them.  However, no such free competition exists.  There are considerable financial, organizational and media barriers to entry giving existing party brands a huge advantage over startups or breakaways.

When the benign circumstances that prevent competition from either working at all, or working and producing harm, fail to operate, the state can step in to improve matters.   This can take the form of dismantling monopolies, forcing them to divest of bits of themselves;  or regulating their activities.

Competition in the marketplace for political and economic ideas is not working.  The incumbent duopoly is currently controlled by extreme and factional interests on the left and the right.  These parties are meant to serve the collective good, by manifesting the accumulated wisdom about how to solve our collective problems in their policy programs.  They are failing to do this because of lack of competition and poor systems of governance.   Both main membership systems have shown themselves to be vulnerable to entryism, from UKIP and the Brexit Party on the right, to Momentum and other left groups in Labour.

Entryism would not be of any concern – in fact probably would not happen – if there were proper competition in the marketplace for ideas and solutions.  ‘Entryists’ would set up their own brand.  Or the parasites of an infected host would simply be killed off by  From their private perspectives, membership control makes sense via logic along the lines of ‘no taxation without representation’.

Members pay for the party, so they feel they should be deciding what the party does, in the same way as shareholders property rights makes them feel entitled to decide company strategy.  But the internal struggles and wishes of members have consequences for the rest of us.  Private financial interests, whether in politics or commerce, have to be forced to serve the rest of us, one way or another.

In politics, of course, we might predict this to be difficult.  Who decides, effectively, whether the system is working and what to do about it if it is not?  Parties do, responding selfishly to the incentives facing them.  With what legitimacy could a state intrude on the governance arrangements and policy formulation process of its major parties?   Very little.  Doing so sounds like a recipe for totalitarianism.

A referendum on Electoral reform seems to me the least contentious way to solve the problem, and break the recursive knot around how you justify reform.  Some form of PR would make smaller parties more viable, and increase the incentive for startups, and for the enlightened wings of old brand hosts that have – like ours – been taken over by intellectual parasites to break away.

But obviously the recently successful interests in our system never want it, because they see themselves [mostly correctly] as only losing from it.  And when it was put to the country, a referendum forced on the Conservatives by the Lib Dems as the price for sustaining coalition, it was easily defeated as an obscure, mad reform wanted only by nerds.

The intertia in our electoral system isn’t necessarily bad.  The restrictions imposed by the incumbent party brands and other aspects of our system could be argued to serve like the restrictions in a formal constitution.  They are a record of once widely held views considered important, and subsequently hard to change for a reason that might well be a good one, like an act of widely shared rational reflection on how certain things should be.  But in the case of the UK the restrictions on policy have proven superficial.  Behind the scenes the parties became very different things, serving different ends, both of them, in my view, failing us in ways I desribed earlier.  The brand restricts entry into the marketplace, but not an entryist takeover.

An analogy might be the subversion of a once stable interpretation of constitutional law by a newly formed coalition of constitution-interpreters in favour of something new.  Conservatives used to view the Warren Supreme Court as doing just that.  Liberals [that includes me] now view the justices assembled by Reagan, the Bushes and Trump as doing the reverse.

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No blogging. Too much Twitter.

Apologies for the lack of posting on this blog.  Or perhaps you are relieved.  Most of my blog like thoughts seem to have migrated onto Twitter.

This may or not be a good thing.  I don’t think I am alone, as several authors have Tweeted or written columns on proper websites about the decline of the blog.

Is this the honing of thoughts into ever neater kernels, forced by the benevolent market place of ideas?   Or the slow corrosion of attention spans and mental health as Brexit and Trump consume each layer of the house of cards of our institutions and democracy?

If you don’t follow me already, try it at @t0nyyates.  I think there is even a widget somewhere on this page, lower down on the RHS, that you can click.

But I will try to get back to the blogging again soon.

 

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Monetary policy delegation rebounded, and an odd trade-off

Back in the day, monetary policy economists and practitioners discussed the benefits of delgating monetary policy to an independent central bank.

There were two kinds.

The first was to remove an ‘average inflation bias’.  Think of a two period game.  In period 1, the government says to an all encompassing trade union ‘we are going to give you 2 per cent inflation’.  Unions bargain for 4 per cent nominal wage increases to cover productivity and expected inflation.  Once those contracts are locked in, the government surprises the economy with 4% inflation, compressing real wages by 2% and boosting employment, which it thought would help with the next election.  However, knowing the government’s trustworthiness, or lack of it, in advance, the union would bargain for 4% plus productivity.  This forced the government’s hand right from the off to generate 4% inflation, or suffer a real wage increase and lower employment.  Delegation to an independent central bank prevented the surprise inflation.

A similar argument held for how the government had an incentive to under-smooth inflation shocks, even once the question of the average level of inflation was resolved.   If it promised to curb them greatly, it could manipulate inflation expectations advantageously.  Delegation was supposed to sort that too, leading to lower inflation variability [and a better trade-off between that and output variability].

Armed with these theoretical results, the observation of lower and apparently less variable inflation in the 90s and 00s was therefore put partly down to this delegaion and assignment.

However, with hindsight, it’s possible to see that the whole thing has rebounded.  By being too ambitious to curb the inflation bias, setting inflation targets that were too low, governments lowered the resting point for central bank rates too far, leading to the zero bound trap being encountered after the 2008/9 crash [with a close run before in the early 2000s, and of course Japan falling foul much earlier].  At this point, monetary policy instruments, conventional and unconventional, having lost their firepower, the job of stabilizing the economy rebounded back to the government, along with the old credibility problems that went with it.

The experience also highlights a peculiar trade-off.  The more you try to squeeze down inflation at the point of instrument assignment, the less successful delegation ultimately is, [the more likely the zero bound trap is fallen into subsequently].

If you don’t believe that central banks need to smooth business cycles, or you think they do more harm than good by trying, you’re likely to think of this not as an unfortunate consequence of targeting too low an inflation rate, but as a stroke of good fortune that leads a society deluded by New Keynesian macro into following the dictum of the Friedman Rule, whereby interest rates are pegged at zero and the penalties for holding non-interest bearing money are eliminated.

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Dismantling and devolving the pernicious union

In recent blog posts, I have been advancing ideas that respond to the frightending dysfunction in the UK polity.

1.  Separation of Northern Ireland, Scotland, and Wales into individual, independent countries embedded into the EU, and England levered to tether itself as a non member in name only, or rejoining at some point.

2.  Membership of the euro and aspects of the ‘ever closer political union’ that the UK has thus far been exempted from.

Using the same logic, regional devolution would help achieve and accentuate the same ends.

I am not a fan of regional devolution.  Devolving tax raising and spending powers impairs risk sharing and risks municipal corruption and cronyism.  I am not convinced that regions are better placed to trade-off whatever special insight they have into their local problems with the aggregate national interest in the supply of public goods.  But anything that can tame the powers of the mal-functioning national parties and executive has to be a good thing.

In the limit, chop the country up into entirely independent regions and have them embedded in the EU.  The break-up of the union would still leave a relatively empowered England able to do harm to its neighbours and itself.  [England has about 56m of the 66m population of the UK].  Dismembered into North, Central and South East and Cornwall, and the consequential parochialism in their politics reducing their collective heft, less harm would be done.

None of these regions would support a nuclear deterrant or a significant standing army.  All would be dependent on the wider European and NATO structures.  The pressure to submit to the rules of the single market for each of the constituent regions would be very great.  Perhaps every 50 years something like the nationalist virus that has infected the UK would take hold of one of the regions, putting it in conflict, or perhaps even for periods outside the EU.  But this would be of much less consequence, affecting fewer people, and much harder to sustain.  With greatly reduced power would come a reduced level of responsibility that the lowest decile of politicians by capability – who are are currently seeing fill the great offices of state and the Opposition – could live up to.

These things I guess are not going to happen, and, borrowing David Cameron’s old insult aimed at UKIP, you might think me a ‘fruitcake’ for proposing them.

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Brexit: the mutually inconsistent views of the desirable anchor and the stormy constitutional sea

One feature of Brexit from the perspective of those who see political and economic benefits to remaining a member of the EU is that there is no safe, perpetual compromise position.

There are soft versions of Brexit in which almost all the economic benefits of membership are reaped [for example by remaining in the single market and customs union].  But once we leave it becomes much easier to take further steps away from the EU, and the UK’s economic trading relations, regulatory environment and even to an extent political rights become unethered and more subject to the ebbs and flows of domestic politics.

For Remainers, EU membership is an economic and constitutional anchor;  anything short of this is casting off.

Some Leavers saw things exactly the other way round, of course.

They either feared, or manufactured fears of Good Ship UK Political and Social Norms being dragged by an ever more powerful EU polity, itself a changing entity with the potential for new members to accede.  Membership of the euro, an EU army, EU wide budgets, funding for future bailouts;  obligations to take some of those who migrate into the EU.

For these leavers, rightly or wrongly [in fact wrongly], Brexit was the anchor and continued membership was casting off.

This is at least part of the reason why the issue is so divisive and intractable.

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