Economics and politics - comment and analysis
9. October 2016 I Will Denayer I General

It’s not the economy, stupid, it’s your identity. The post-truth, exclusionary, pseudo social corporatist welfare state. Part 1

Introduction

This article is in two parts. In the first part, I discuss post-truth politics, citing Theresa May’s speech as an example. Immigration is being used as smokescreen to divert attention away from years of failed policies. As such, immigration is a clear class issue. The focus of the second part is somewhat broader. The phenomena we see in the UK are far from exclusively British. Using theory from the French regulation school, I argue that a new mode of regulation is now in the making. If it is true that Thatcherite neoliberalism is dead, what comes in its place? Philip Hammond, the new Chancellor of the Exchequer, may be silently abandoning Osborne’s insane deficit targets. None could ever be met. But this does not mean that ‘austerity is over.’ The new regulation comes at a new social cost. The failing neoliberal structures will be repaired by hatred of difference, spreading fear, inflexible uniformity and the assertion of one kind of citizenship over another. After years of falling or stagnating wages, no recovery and a likely scenario of low growth for decades (according to an OECD prognosis), politics needs to re-align according to economic and social circumstances and the problem of political legitimacy needs to be addressed The new regulation will, in all likelihood, be a post-democratic, post-truth, more authoritarian, more ‘patriotic’ and nationalist model, driven by a more interventionist, more corporatist state and a pseudo-social, surveillance and punitive welfare state.

Theresa May’s speech

In UK politics, truth is now often a thing of the past. The political culture is such that stating facts excludes you from the debate. It is not facts that matter, but perceptions and emotions. A 24 hours news cycle provides a chronically distorted balance and social media, research institutions and what not do the rest. The result of this post-factual politics is that everything can be said, without blinking, coherence, consistency or accuracy are unimportant. May’s speech at the annual Conservative conference can be summarised in one sentence: Corbyn is right when he says that the game is rigged in favour of the rich (so vote Conservative) and Farage is right when he says that foreigners are taking your jobs and make you poorer (so vote Conservative) (see here for a transcript). Mind you, May does not mean it when she says that Corbyn is right and she knows well enough that Farage is wrong (you might remember that May campaigned for remain during the Brexit campaign). But that does not matter (see here and here).

She said: “Our economy should work for everyone, but if your pay has stagnated for several years in a row and fixed items of spending keep going up, it doesn’t feel like it’s working for you. (…) Because it wasn’t the wealthy who made the biggest sacrifices after the financial crash, but ordinary, working class families” (see here).

Last year, YouGov found that 88% of the public thought the Tory party was too close to the rich – even higher than in 2010. To win over centre ground voters, May knows she has to lie. Attack the elite on Sunday, slash pensions on Monday, under-fund education further on Tuesday to such degree that some schools just cannot longer function and consider a school week of four days (see here). After six years in two governments that presided over the longest fall of wages since the 19th century, May criticises social injustice. It is of course also May who wants to drop out of the European Convention of Human Rights (which has nothing to do with the EU, it precedes it by decades). As Mark Steel cynically writes, and as we all know, if there is one area in which human rights are irrelevant, it is of course the military and their wars. Let’s have a British Bill of Right instead, he writes, then we can discuss violations of human rights of, for example, florists (see here).

May said: “If you’re one of those people who lost their job, who stayed in work but on reduced hours, took a pay cut as household bills rocketed, or – and I know a lot of people don’t like to admit this – someone who finds themselves out of work or on lower wages because of low-skilled immigration, life simply doesn’t seem fair” (see here).

According to Steel, the last time immigration was not mentioned in the UK anywhere was during a broadcast of a Swedish snooker tournament. For a whole four minutes, the word ‘immigration’ was not mentioned: a post-Brexit record (here and here).

Immigration revisited

It is, once again, time to present some findings and facts. The crux of the matter is that there is no evidence that British people are “out of work or on lower wages because of low-skilled immigration.” There is one study, from 2012, by the government’s Migration Advisory Committee, which did find some evidence of “displacement” in the labour market, but only in economic downturns and only from non-European immigration (see here for the report). The MAC explicitly asked people not to take its work as conclusive proof that immigration causes British job losses:

“Our study has numerous qualifications and caveats. In particular, any link between immigration and employment of British-born people cannot be proved to be causal. Rather, it should be thought of as an association” (see here).

That is how far May or anyone else can get if they would be interested in providing a scientific foundation for their arguments: basically nowhere. The MAC study is only one among several. There are others, some of which find no evidence of displacement.

What about wages then? Are people really “on lower wages because of low-skilled immigration”?

There is a 2015 Bank of England paper which did find a correlation between immigrants working in low-skill sectors such as hospitality and retail and lower overall wage rates. But how much did the paper suggest British wages fell? Using figures from the Bank of England study, Jonathan Portes from the NIESR estimates that low-skilled immigration leads to a reduction in annual pay rises of about a penny an hour (see here).

This result is controversial, but let us assume for a moment that Portes is right. According to OECD statistics, the average annual number of hours worked by a worker in the UK was 1.674 hours (see here). If Portes is right and low-skilled immigration decreases wage by about one penny an hour in the lowest income bracket, this amounts to a loss in pay rise of approximately £ 16.74 a year.

As said, Portes may well be wrong. The effect of low-skilled migration on low-skilled pay rise may well be lower. A paper by the the Centre for Economic Performance at the London School of Economics concluded that:

“There is still no evidence of an overall negative impact of immigration on jobs, wages, housing or the crowding out of public services. Any negative impacts on wages of less skilled groups are small. One of the largest impacts of immigration seems to be on public perceptions” (see here).

I do not argue that immigration is not displacing any low-skilled British workers. But it is clear that the effect, if it exists, is small, and that studies are heavy with nuance and caveats. On wages, the evidence is even thinner. But none of this stops the great majority of the political class – the Tories, UKIP and right wing Labour – to say exactly the contrary.

Blairite MP Rachel Reeves calls for an end to EU freedom of movement because, she says, “The (Labour) party has ignored the effects of immigration on wages for too long.” Owen Smith made a similar claim during his failed campaign against Corbyn for the leadership:

“In some places the way in which we saw a rapid influx in particular of Eastern European migrants after ascension of those countries to Europe, definitely caused downward pressure on wages, definitely caused changes to local terms and conditions for some workers in some sectors.”

Likewise, Andy Burnham told the Labour conference that migration from Eastern Europe had meant “job insecurity, more pressure on primary schools and GP services.”

According to Goodfellow (and others as well as scientific research) nothing of this is true. Goodfellow argues that the opposite is the case: because migrants consume goods and services they increase demand, creating opportunities for UK-born workers. The political discussion is hypocritical anyway. It should be clear that behind every immigrant who drives wages down, if that is what happens, stands the decision of an employer to engage in social dumping. The whole problem could be solved immediately if it were not for the fact that none of the politicians who cannot be silent about immigration for even half a day are joining the fight for a £ 10 per hour minimum wage. That the Blairites do not talk about.

Anyway, something extremely remarkable is taking place if even the Telegraph calls May’s speech a heap of nastiness, when it compares May’s remarks on immigration and employment with the post-truth politics of Donald Trump and concludes that the new PM is borrowing from UKIP.

As UKIP MP O’Flynn posted on Twitter:

“The number of policies Mrs May is lifting out of the UKIP GE15 manifesto is astonishing. Almost like we are in power, but not in office!”

And Nigel Farage praised Theresa May’s as “remarkable.” May’s Home Secretary, Amber Rudd, has unveiled a number of policies that have come straight out of the UKIP manifesto. With the aim of curbing immigration, Rudd announced a crackdown on overseas students and foreign workers:

  • Firms would be required to publish the proportion of international workers they employ to ensure “British jobs for British workers” – this is the ‘name and shame’ policy, because hiring migrant workers is now ‘shameful.’
  • A two-tier visa system for foreign students would be brought in, based on the quality of the student’s university or other education programme. This is a policy that basically no one is asking for and which serves no rational purpose.

But this is, it seems, what the majority of the population wants.

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Figure 1: Result of YouGov survey measuring agreement with ‘name and shame’ in the political parties (Source: YouGov). 

May put herself on the post-truth side of things – it is far from the first time. Accuracy and evidence in public debate should be ignored, she said. It is perceptions and feelings that count. If you are angry about migration, you are right. The extreme dangers of such a truly incredible position are evident (see here). For one, it destroys democracy or what remains of it. From the moment democracy is all in the numbers, there is none left. If I hate immigrants, I am a racist and I am on the wrong side of things. However, if millions hate immigrants, they are no longer wrong and policy-makers should take their ‘feelings’ into consideration and facilitate a solution they find acceptable. This is, logically speaking, what May and Farage and right wing Labour are saying, although they would certainly deny it. It s fundamentally wrong.

Labour’s answer

Labour press published the following statement of Jeremy Corbyn:

“Conservative Party leaders have sunk to a new low this week as they fan the flames of xenophobia and hatred in our communities and try to blame foreigners for their own failures. Drawing up lists of foreign workers won’t stop unscrupulous employers undercutting wages in Britain. Shutting the door to international students won’t pay young people’s tuition fee debts, and ditching doctors from abroad won’t cut NHS waiting lists. The Conservatives will instead foster division and discrimination in our workplaces and communities. Once again, they are making false promises on immigration they can’t deliver. Instead of turning people against each other, ministers should take action now to deal with the real impact of migration. They should stop the abuse of migrant labour to undercut pay and conditions, which would reduce numbers. They should support communities with high levels of migration and they should set out a positive agenda for fair migration rules as part of the Brexit negotiations for a new relationship with the European Union.”

This sounds good, really good, but some of the left are not happy and perhaps they should not, because the statement fails to make clear what these ‘real’ impacts are, how stopping the abuse of migrant labour would reduce numbers and what Labour considers to be ‘fair’ migration rules. Many are asking Labour to make up its mind: are you going to be pro-migrant (i.e. free immigration) or anti-immigration? Being somewhere in the middle won’t work.

Nicola Sturgeon, the Scottish PM, said Theresa May’s speech came as the Tories targeted foreign workers in “the most disgraceful display of reactionary right-wing politics in living memory. (…) It is an appalling, regressive, and hugely troubling development which will leave many people in Scotland – and across the rest of the UK and beyond – wondering, with real concern, what kind of country the Tories want us to be” (see here).

Absolutely. But the position from the centre and right wing Labour is very clear. MP Reeves, who in 2013 said she would be tougher than the Tories on benefits, has warned that the UK could “explode” into riots if immigration is not curbed following. Maya Goodfellow of Media Diversified has the following to say about it:

“(…) this kind of mealy-mouthed approach encouraged some to vote for parties that are aggressively anti-migration because they were seen as being able to deal with falsehoods Labour had legitimised” (see here).

The falsehoods that Blairites have been peddling in the press have vindicated the Conservative government and UKIP’s anti-immigration position, allowing both to pick up more votes (see my reference to the Oxford study about the reason why Labour lost the 2015 election here).

One of their theses is that, very simply, immigration leads to racist resentment. As Stephen Kinnock, another Blairite MP, said: “Nobody is born racist, but immigration that reaches levels beyond a society’s capacity to cope can lead, in extremes, to racism.” But, as Goodfellow explains, this is not true. If it were true, how is it then possible that people who have experienced the highest levels of migration are the least anxious about it? A report from the Guardian has shown that areas with the highest level of immigration overwhelmingly voted to remain in the EU. London, which absorbed 133,000 of the 330,000 net arrivals in 2015, voted the most strongly for remain (see here). Manchester also voted for remain, although it has nearly double the level of net migration seen in Birmingham, which voted leave (see here). This is nothing more than the confirmation of a finding in sociology which has been established for a long time. The phenomenon of racism without immigrants is very well documented. For example, during the Dreyfus affair, anti-Semitic resentment was strongest in regions of France where there were the least Jewish inhabitants. Such is the power of ignorance and propaganda. Should their perceptions and emotions have been facilitated?

And, as Goodfellow writes, and this is of course true, Kinnock draws fire away from the Tories when he suggests that immigration is “beyond a society’s capacity.” As figure 2 shows, homelessness increased in England with 44% since the Tories came to power. That has nothing to do with immigrants, but Kinnock and co. have nothing to say about that (see here and here).

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Figure 2: Households found to be unintentionally homeless (Source: YouGov and @LabourEoin). 

The impact of cuts to public spending on the NHS can be seen in figure 3. As LabourEoin writes, it took two years for Jeremy Hunt to wreck the NHS. That has nothing to do with immigration either. The figure shows that almost all NHS providers have gone from a surplus to a deficit within just two years.

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Figure 3: Evolution of financial situation of the NHS in England 2012 – 2015 (Source: YouGov and @LabourEoin). 

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Figure 4: 8 facts (which, as such, are now not longer important) one should know about the NHS (Source: @LabourEoin). 

I will cite figures on housing in part 2.

Corbyn is completely right when he attacks the narrative that migrants are the cause of crippling public services: “This isn’t the fault of migrants – it’s a failure of Government.” It could, however, also be a well-thought out, well-implemented plan (see here). But all of this makes little or no impression outside left Labour. For Owen Jones, at one time more or less Labour’s unofficial left-wing intellectual, Labour needs progressive patriotism, leftwing nationalism to win votes of white British workers. He is radically wrong. Left Labour will go after the vote of all workers or it is done, which is, I suspect, what Jones desires.

You can read in the second part about the new regulation mode which is being developed. Clearly, the heydays of Thatcherite neoliberalism are over. The ideological case for austerity is crumbling. The political class has lost an inordinate amount of legitimacy. Therefore another mode of regulation needs to be developed to keep things from falling apart: the build up of a post-truth, exclusionary, pseudo-social corporatist welfare state.