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Wednesday, 22 June 2016

That EU Vote - 3. Sovereignty

Sovereignty comes in two forms. Internal sovereignty refers to the ultimate authority of the state: who is in charge. External sovereignty concerns the exchange of rights and obligations between states: what they grant each other. One is foundational, the other contingent. Outside of the single market, the UK has pooled relatively little sovereignty in the EU. While the free movement of labour is an issue of external sovereignty (i.e. the rights accorded citizens of other states), the language used in the referendum has focused on internal sovereignty: "taking back control". This echoes the concerns of the Out campaign in 1975 for whom continued membership of the EEC threatened parliamentary sovereignty and therefore (in the eyes of the left) the ability of a future government to implement socialist policies. While the current Leave campaign talks in more cartoonish terms ("Brussels makes most of our laws"), the issue remains the same: there should be no constraint on the "elective dictatorship" of the Commons.

In most countries, there is a distinction between the sovereign (whether the people or a constitutional monarch) and the legislature, which easily maps onto the distinction between internal and external sovereignty. The government can freely negotiate matters of external sovereignty, subject to electoral approval, without compromising internal sovereignty. The peculiarity of the UK system is the idea of parliamentary sovereignty, "the Crown in Parliament", which locates the ultimate authority of the state in the legislature and thus combines the external and the internal. This is a relic of Britain's incomplete revolution in the 17th century, which has left us with an essentially aristocratic form of government onto which representative democracy has been grafted but without any concept of popular sovereignty. One consequence is that British politicians have traditionally regarded national referendums as foreign to the UK system, being by definition a challenge to parliamentary sovereignty.

Paradoxically, just as the UK system means that we do not need a referendum to endorse any act that cedes sovereignty (e.g. the Maastricht Treaty), so we cannot cede sovereignty in perpetuity because Parliament can always repeal any prior act. When EU law has been accepted as superior by the UK courts, this has been on the basis that a UK law has mandated that superiority. Contrary to the claims of the Leave campaign, not only has external sovereignty not been irrevocably ceded, but internal sovereignty has not been compromised. For the same reason, the government will not be legally bound by the referendum decision, whichever way it goes, because that would be a constraint on parliamentary sovereignty. Of course, in the event of a Leave vote, any government attempt to delay Brexit could prompt a motion of no confidence, leading to a General Election, and a new Commons majority (potentially) willing to enact the decision.
 
The Leave campaign's criticism of the EU's dilution of national sovereignty associates the general erosion of democratic control during the neoliberal era with a single political structure. Ironically, the EU is one of the more democratic neoliberal institutions. With no sense of absurdity, the Leave campaign offers up other, non-democratic supranational bodies to whom we have ceded external sovereignty, such as the WTO and NATO, as reasons why we don't need the EU. Neoliberalism has reduced popular sovereignty both by transferring public goods to the private sphere and by privileging the rights of international capital. In doing this it has effectively raised the market to the status of a sovereign, justified not on the basis of any a priori claim to legitimacy but on a utilitarian assumption of efficiency.


In contrast, popular sovereignty holds that the people are right even when they are wrong and that optimality is not an adequate reason to usurp the general will. We've all had a laugh at Michael Gove's contempt for experts, but most people fail to see that he is thereby challenging parliamentary sovereignty, which is potentially revolutionary. That he is Lord Chancellor only makes it more surreal. What is in play on Thursday is not just our continued membership of the EU but the constitution of the state. Devolution created the concept of popular sovereignty in Scotland, and the SNP has thrived by seeking to embody it in the absence of a Scottish constitution. When Cameron promised "English Votes for English Laws" in the wake of the Scottish independence referendum, he was seeking to placate the demand for English popular sovereignty through a fudge of parliament. But this cannot work: parliamentary sovereignty and popular sovereignty are mutually-exclusive.

If we vote Remain on Thursday, it is highly unlikely we will see any further significant pooling of external sovereignty in the EU by the UK. This is because major EU initiatives (if any) are likely to bias towards the Eurozone core, and because the closeness of the referendum outcome will constrain UK governments for a generation. No one is going to risk a substantive concession for fear of invoking demands for a further referendum. The precedent has now been established and, when you consider the triviality of the "renegotiated terms" that we are supposedly voting on, the bar has been set very low. If we vote Leave on Thursday, few of the concessions of external sovereignty that we made to the EU down the years are likely to be reversed, simply because we will need to offer them again to secure advantageous trade terms. The "bonfire of red tape" will concentrate on internal regulations that don't impinge on trade, such as workers' rights and consumer protection.

UK referendums are failures of parliamentary sovereignty because they hold out the prospect of popular sovereignty. This would be a good thing if it led to a new constitutional dispensation, starting with the abolition of the House of Lords and the declaration of a republic, but the 2016 referendum, with its lies and xenophobia, looks more like the early days of a plebiscitary dictatorship, which is significantly more dangerous than an elective dictatorship. Geoffrey Wheatcroft recently quoted Attlee's antipathy to referendums in 1945: "I could not consent to the introduction into our national life of a device so alien to all our traditions as the referendum, which has only too often been the instrument of Nazism and fascism". But Attlee made a mistake in the postwar years in not seizing the moment to advance popular sovereignty through constitutional reform. Labour's ongoing failure, for which Tony Benn was as guilty as Tony Blair, has been to champion parliamentary sovereignty in the hope of exploiting "elective dictatorship".

To conclude. Were Brexit to happen, the economic impact would be negative, though most of the downsides, such as lower foreign direct investment and a doubling-down on our lopsided economic profile, will largely be the result of political judgements by foreign and domestic capital rather than inexorable economic logic. As we've got closer to the vote, it has become clear that the issue of immigration is a mess. Newspapers have whipped up expectations, of better public services and higher wages, that cannot be satisfied. The political response, whether advocating a points system or greater understanding, has been incoherent at best and craven at worst. Xenophobia has been normalised and political assassination has visited our streets. The issue of control is really about the lack of English popular sovereignty rather than the loss of power to Brussels. I will vote remain, but with little optimism that the EU will be reformed along social democratic lines. Ironically, I have more optimism that the vote may lead to constitutional reform in the UK, and that doesn't actually depend on the result.

Saturday, 18 June 2016

The Politics of Hate

The Sun newspaper decided on Friday that the killer of Jo Cox was a "crazed loner". While both adjective and noun were not inappropriate, this hardly sufficed as an explanation of the man's motives. The fact that at his arraignment today, Tom Mair responded to the request to confirm his name with "death to traitors, freedom for Britain", while the prosecution alleged that he claimed on arrest to be a "political activist", suggests his act was political and the timing was influenced by the EU referendum next week. Whether he was influenced by the recent tone of the leave campaign - not just its fear-mongering over immigration and dismissal of expertise, but its depiction of a shadowy and malign "establishment" that doesn't include Boris Johnson and Michael Gove - is another matter, though I suspect there is a higher probability of this than that the killing was a false flag operation by the Remain camp. Today, The Sun led with "Nazi mania of Jo killer", suggesting (along with the Daily Mail) that the root cause of this tragedy was a twisted mind rather than twisted politics.

Had the killer been a Muslim, you can imagine the op-ed onslaught about the culpability of Islam and the responsibility of the killer's "community". This appetite for simplicity was illustrated by the way the killer in the Orlando mass-shooting flipped from a self-radicalised Jihadi to a self-hating closet homosexual inside 24 hours, though more sober judgement was that this was another example of insane gun laws as much as an insane perpetrator. The anxiety of the Leave camp at the suggestion that Mair was politically motivated (and therefore complex) is understandable. Janet Daley insists "It must be made absolutely clear by everyone of good conscience that acts of violence by unstable individuals have nothing to do with political discourse and cannot rewrite its rules". This is patently false: nutters are just as entitled to a political opinion, and likely to act upon it, as the rest of us. You cannot dismiss Nazism as a political phenomenon by reference to Hitler's psychopathy. Daley's anxiety doesn't just betray a fear that the public reaction to the killing may prove pivotal to next Thursday's result, but a desire to put distance between the rhetoric and the act, in other words, to absolve the press.

This is a view shared even by the pro-Remain newspapers, where liberal commentators like Jonathan Freedland and Polly Toynbee have been decrying the growing contempt for politicians but insist on attributing it to a general coarsening of society driven by social media (one amusing exception is Martin Kettle, who is too Olympian to care about Twitter but nostalgic for the historic power of the press). In other words, the problem is the common herd, with their lack of civility and respect for their betters (to this end, Jo Cox has been promptly beatified, with the focus on her acts of charity and personal perfection showing the continuing influence of religious tropes), not the paid propagandists of the national media. But this stance requires the mental division of society into two parts: the decent and the indecent. For both conservatives like Daley and liberals like Freedland and Toynbee, this means emphasising a core social personality that is "calm, rational, tolerant, grown up, undaunted, and quietly brave". In other words, middle-class.


In Britain, Fascism has always been a product of newspapers. Oswald Mosley could not have thrived without the support of the Daily Mail, and that paper's adulation of Mussolini played a significant role in determining the style of the British Union of Fascists in the 1930s. Similarly, the press coverage of race relations and immigration in the 1970s (e.g. the prominence of "black muggers" and the race-inflected reporting of drugs and prostitution) helped define the tone of the National Front. In the 1990s the BNP deliberately adapted its message to fit the wider media narrative about "bogus asylum-seekers", before going large on the "threat" of Islam after 2001. Since 2010, the EDL and Britain First have been only too happy to indulge Islamophobia and xenophobia, amplifying media tropes about crazed Jihadis and "migrant invasions". While these marginal groups are dismissed as lumpen thugs, the racist message they are responding to is contextualised by mainstream xenophobic propaganda.

In respect of immigration, Jo Cox's husband has said that mainstream politicians "are clueless on how to deal with the public debate. Petrified by the rise of the populists they try to neuter them by taking their ground and aping their rhetoric. Far from closing down the debates, these steps legitimise their views, reinforce their frames and pull the debate further to the extremes". This is true, but the idea that politicians are "clueless" excuses them of responsibility through a charge of stupidity. Just as the far right have parasitised media narratives on migration and multiculturalism, so political parties have willingly signed a Mephistophelian pact that requires them to indulge soft xenophobia in support of a media-defined nationalism. This has become toxic precisely because the referendum campaign has been cast as an issue of  national integrity, both in terms of the presumed existential threat of immigration (Farage's "breaking point" poster) and the erosion of a nebulous sovereignty.

The Institute for Economics and Peace publishes a Global Terrorism Index. While this is a typical neoliberal artifact of national classification, the raw facts are still startling: "Seventy per cent of all deaths from terrorism in the West since 2006 were by lone wolf terrorists ... Eighty per cent of deaths by lone wolf terrorists in the West were driven by right wing extremism, nationalism, antigovernment sentiment and political extremism and other forms of supremacy". The point is not that there is more right wing terrorism than left wing terrorism (or Islamic terrorism or Irish Nationalist terrorism etc), though there is, but that lone wolf terrorism tends to be right wing. The reason for this is not that neo-Nazis or militant racists are particularly antisocial ("somebody who sat alone in front of a computer all day", as Janet Daley puts it - I don't imagine she crafts her journalistic pearls in an open-plan office, though I may be wrong) but that an individual can more easily develop their belief system if it can be rationalised as a logical extension of received wisdom. The dominance of right wing terrorism reflects the dominance of a right wing press.

Wednesday, 15 June 2016

The Elephant in the Room

Dheepan is Jacques Audiard's most Scorsese-like film, and all the better for it. It's critical elevation (it won the Palme d'Or at Cannes last year) no doubt owes something to the salience of the refugee crisis, but it probably owes as much to the subtlety of the film's analysis of migration and motivation. A recurrent motif is the elephant, both real and in the invocation of Ganesh, the Hindu god, who represents the often incompatible boons of good fortune and wisdom. The desire for the trappings of success, and how this takes us away from wisdom, is central to the film's story. While lacking the grandeur of Audiard's Un Prophet, it shares many of the same concerns about the construction of identity and the manner in which this is governed by the fluctuation between the state's overpowering presence and its devastating absence, for example in the way that gangs carve out a territory within a prison, or in the way that refugees are first corralled and inspected and then dumped and deserted.

The film starts in Sri Lanka where a Tamil Tiger fighter, Sivadhasan, first cremates his dead comrades and then throws his uniform on the pyre, signalling his retirement from a conflict that is now lost. In a refugee camp, he is joined with a single woman and an orphaned girl to create a family that will stand a better chance of gaining asylum in Europe by satisfying bureaucratic expectations. To this end he adopts the identity of a dead man, Dheepan, while the woman, who wants to get to England where she has a cousin, becomes Yalini, his wife, and the girl the 9-year old daughter, Illayaal. The family reach France, much to Yalini's disappointment, where during his interview the translator advises Dheepan to drop the implausible tale of having worked for an NGO and simply plead that he was tortured by the army (a force we never see). Being a victim is a more credible role in a world where human rights activists are often privileged westerners.


The family are resettled in a banlieue of Paris, where most of the inhabitants are first, second or third-generation immigrants, largely from North and sub-Saharan Africa. Dheepan is given the job of caretaker for a block of flats, adjacent to another that is under the control of a local gang and used for drug-dealing, parties and the ostentatious display of criminal glamour and material gain in the form of expensive cars. He applies himself enthusiastically to the work, progressing from sweeping floors to fixing electrics and even mending the broken lift. He even finds time to help old ladies with their shopping. Illayaal goes to school and, after initial playground rejection and tears, begins to integrate and develop a love of poetry. The still reluctant Yalini takes a job as the carer of Mr Habib, the mute and disabled father of gang leader Brahim, freshly returned from jail. The three begin to believe in themselves as a family, so much so that Dheepan and Yalini eventually start a sexual relationship, but the happiness is only skin-deep.

Everyone is a stranger to each other, though they eagerly seek connection or a modus vivendi, and language is a frustration as much as a tool. They are torn between trying to hold on to and honour their past and making alliances to build a future. In one scene Dheepan creates a shrine to the "real" family he has lost in Sri Lanka. In another he meets his old commander, a PSTD sufferer who still believes the Tiger's cause can be revived but who is descending into madness. He turns violent in the face of scepticism and Dheepan accepts his blows, reluctant to strike back. At times the characters tire of the effort at communication though they appreciate the therapeutic power of talking, and even reciting and singing, whether to the void or an uncomprehending listener. Eventually this is reduced to gesture: just nod your head and smile.

Migration means adopting a suitable identity. One gang-member confides to Dheepan, who gives no convincing sign he understands a word, that he and the others are brought in from different banlieues and paid per day by Brahim so they have no local loyalties or emotional investment in the estate. In other words, he is migrant labour too, but white and native. The tension between loyalty and betrayal is played out in the family, not just Dheepan's (Yalini is attracted to the gang leader) but in Brahim's immediate family (his father was injured in a shooting and his uncle killed) and the extended family of the gang. Brahim sees himself as a small businessman ("un commercant"), but he is also the nearest thing to a physical representation of government on the estate with his electronic ankle-tag (improbably, we never see the police appear, despite gunshots being casually loosed-off).


Yalini, terrified by a drive-by shooting as an internecine gang conflict erupts, flees to the train station, intending to join her cousin in London, but is roughly dissuaded by Dheepan who confiscates her passport. He then confronts some gang members, now patrolling the wider estate, when they attempt to search Yalini on their return. She is unimpressed by his chivalry: "I am not your wife" she reminds him, accusing him of believing his own lies. Ever practical, he diverts his anger into drawing a white line on the scruffed earth between the blocks to mark a "no fire zone", which ironically means he has drawn a target on his own back. In contrast, Brahim fails to quell the disloyalty in his extended family and is shot in an attempted coup. Mortally wounded, he restrains Yalini, there to make Mr Habib's meal (the old man is killed outright), and demands she help him. She calls Dheepan, who awakes from a booze-induced slumber, still feeling guilty about his treatment of her, which marks the start of the climactic scene.

The bloody denouement is improbable but dramatically satisfying. Dheepan becomes an avenger, something few immigrants would risk in the face of deportation, improvising weapons like a handyman John Rambo. This is where the film's debt to Scorsese's Taxi Driver is most obvious (Audiard has confirmed this), with its stylised treatment of the scene where he takes the stairs involving an unsual camera angle (we're level with his lower legs), a sense of near-slow-motion as he patiently ascends, and the hellish smoke that obscures most of the mayhem as he shoots or stabs one thug after another. He had been drinking, so perhaps this is a waking dream between Yalini's call and his arrival at the flat to find Brahim now dead and the other gang members fled. When he is reunited with Yalini he suddenly seems jumpy after his supposed impeturbability as he laid waste to the gang on the way up. Is this a triumph or just another in a series of defeats?


There are many small gestures to Taxi Driver along the way, such as the protagonist's practical inventiveness: Travis Bickle constructs a holster, Dheepan a tool box. After the prologue in Sri Lanka, Dheepan emerges out of the gloom of night in Paris wearing a cheap, flourescent headband, part of the tat he is trying to illegally hawk on the streets as he waits for his asylum claim to be processed, which echoes the emergence of the headlights of Travis Bickle's yellow cab amidst the billowing steam vents of New York. The cry goes up, "les flics!", and Dheepan and the other hawkers scarper, but we never see the forces of law and order. This is where the film departs from Taxi Driver, where politicians and police were very visible. The agents of the state we do see, the imigration official who interviews Dheepan and the headmistress who interviews the family, are well-meaning but remote, a factor of class rather than ethnicity or language.

Like Scorsese's masterpiece there is a coda that is undoubtedly a dream: Dheepan is seen in London a year or two later, driving a black cab, returning to a well-appointed suburban house and his family (Yalini with newborn in arms, Illayaal playing with new friends), enjoying a multicultural social circle in a large garden lit by a golden light that appears more typical of Jaffna than Ealing. He appears to have acquired "The Knowledge" and a financially and emotionally rich life in double-quick time, but that is surely ironic. Some critics were disappointed with the ending, both on grounds of style and plausibility, but I think this misses the key point that all immigrant narratives are predicated on unreasonable expectations: on dreams of material success and cinematic glory. Why else would you take the risks of migration? The elephant reminds us that wisdom is hard-won.

Sunday, 12 June 2016

That EU Vote - 2. Immigration

Immigration looks like it may be the decisive factor on the 23rd of June. As Jonathan Portes notes, "Negative attitudes to immigration are by far the strongest predictor of opposition to UK membership". Ipsos-MORI has been tracking "The Most Important Issues Facing Britain Today" since 1974. Two points need to be made about the way it does this: it grouped race relations and immigration together until 2014, and it is measuring relative rather than absolute importance, so there's a "flavour of the month" element to the scoring. That said, the data tells an interesting story. After a spike in 1977-8, coincident with the high water mark of the National Front, race relations and immigration dropped back to being the primary concern for less than 5% of the population by the early 80s and stayed that way for almost two decades. The number starts to grow in 1999 and reaches a plateau of 30% in 2002. There is a further step-up to 40% in 2006. The figure then drops to 25% by 2011, as concerns over the economy take centre stage, and then grows again to over 40% by 2015.



What we can conclude from this is that the hardcore racist population is probably no more than 5% (the separate score for race relations from 2015 onwards is at or below this figure). Also, while the influx of Eastern Europeans may have played a part in raising the profile of the issue in the mid-00s, the major step-up in concern over immigration predates EU expansion in Eastern Europe. In other words, this is about non-EU immigration as well, which increased in the 90s as the economy grew during the recovery after Black Wednesday. Though Sterling's exit from the ERM may have helped trigger this growth, the EU had no direct influence over it. Likewise, the level of non-EU immigration won't necessarily be affected by the referendum outcome and, to judge by the claims of Brexiteers like Priti Patel, immigration from Commonwealth countries may even increase. Despite this, the 2015 British Social Attitudes survey found that 57% believed Brexit would reduce immigration.

The Leave campaign's immigration plans are contradictory and implicitly racist. The claim that we could secure access to the single market but without the quid pro quo of free movement of labour is specious (EEA membership is predicated on free movement). We all know that the attraction of the "Australian points system" is that it makes us think of white, English-speaking back-packers. A genuine points system, geared to facilitating the immigration of the skilled workers our economy lacks, wouldn’t guarantee a reduction in immigration because the rate is determined by employer demand, not by labour supply. Over the longer-term, an ageing society means that a rational points system would actually increase immigration, not reduce it. When Nigel Farage insists that post-Brexit we'd have fewer Polish plumbers and more Bangladeshi curry chefs, you can be sure his core supporters don't believe a word of it and are secretly chuffed that he is turning the tables on the "liberal media".

The economic evidence is that immigration depresses wages at the lower end of the pay scale (though it's worth noting that the groups who suffer most from this are existing immigrants), while it increases wages at the upper end of the scale (due to population growth feeding GDP), with the net effect on average wages being neutral. Immigration will be "naturally" constrained only if wages are depressed to a point where they are relatively unattractive to global labour. Those who think that constraining immigration by fiat will boost wages are wrong: it will simply incentivise automation to avoid wage rises (i.e. capital investment and inequality will both rise: a mixed blessing). Incidentally, this is one reason why support for a citizens' basic income is growing. A generous CBI plus low marginal pay would "fix" immigration at a stroke as a non-citizen's pay at the lower end of the labour market would be worse than in the economies we recruit from (higher wage immigrants, like professional footballers, would obviously be unaffected).


The dip measured by Ipsos-MORI between 2008 and 2013 suggests that immigration is actually quite a soft concern. It can be quickly pushed up the charts, but it can just as easily be pushed down when other issues come to the fore, particularly issues to do with the economy and personal income. A recent YouGov survey found that being £100 a year worse off "changed a neck-and-neck result to a 12 point victory for Remain". Among undecided voters, the result shifted 18 points in favour of Remain. What should be noted here is that for the purpose of the poll the respondents will have accepted the truth of the economic impact. The chief problem the Remain campaign has faced is scepticism about its arguments, like George Osborne's £4,300 estimate of household damage, which has arisen as much from Cameron and co's poor credibility in the eyes of non-Tories as from Leave's deliberate commitment to "post-truth politics" (such as their laughable £350m a week claim).

It's hard not to conclude that the vote on the 23rd will have little to do with the EU for many voters, despite their protestations to the contrary, which goes some way to explain the widespread, casual derision of "experts" and the amused tolerance of "big lies". It looks like many are motivated by simple xenophobia, something the Leave campaign even made explicit with its now-notorious "Syria and Iraq" leaflet, even if it is made semi-respectable by the language of concerns over public services and security. The Economist chart above suggests a correlation between migrant flows and popular concern, but the implication, that this concern would evaporate if we severely curtailed immigration, strikes me as unlikely. This is about more than numbers. The antipathy towards immigration was not triggered by EU expansion in 2004, but nor does it appear to reflect a growth in racial intolerance or discrimination.

We know that self-reported racial prejudice increased slightly after 2000, following a gentle decline in the 1990s, though it has turned down again in recent years. What's interesting about the numbers (from the National Centre for Social Research) is that "mild" racial prejudice has been fairly steady over the last 30 years at around a third of the population, though tangible evidence of discriminatory attitudes, for example with regard to inter-marriage, has shown a steady decline. In other words, there isn't a correlation with the fluctuating concern over immigration, suggesting that the latter isn't a simple proxy for racial prejudice. Between 1995 and 2013, the percentage of respondents in the British Social Attitudes survey who wanted immigration reduced "a lot" went from 39 to 56%, which is significantly higher than the level of self-reported prejudice. There are a lot of people who consider themselves unprejudiced who are very opposed to immigration.


One piece of evidence for this shift is that outriders, like Nigel Farage, who necessarily operate on the edge of acceptable discourse, are now obliged to employ ever more lurid claims in argument. Whereas xenophobes previously spoke euphemistically of a "failure to integrate", they now talk of the risk of sex crimes in language not heard since the 1950s, or accuse HIV sufferers of being benefit tourists depriving native patients of treatment. This points to one important mechanism: the concerns of identity politics have been recuperated by xenophobes. This is most obvious in the way that immigrant populations, particularly Muslim, are accused of being sexist, homophobic and enemies of free-speech through excessive religiosity, a manner of attack that echoes tropes previously deployed against "culturally conservative" communities like working class Catholics. The point is that while these behaviours may be present in Muslim communities, and even dominant, they do not define every member of the community, any more than every Irish person can be considered anti-abortion.

We know that xenophobia is a matter of sentiment rather than facts, and we also know that there was a shift between 1999 and 2005 when outright hostility to immigration went mainstream in public discourse. This turn appears to have been fuelled by two major developments: the cross-party focus on "bogus asylum seekers" in the 1999 to 2003 period, and the political salience of Muslims after 2001. It also appears to have been encouraged by concerns over welfare funding, notably of health and education. While New Labour increased funding, it did so in a manner that emphasised the difficulty of finding the money and the growing demand on public services, often by those of questionable merit. "Prudence" was the rhetorical precursor of "austerity", just as "rights and responsibilities" prefigured "strivers and skivers". While most Blairite ministers may not have consciously intended to link asylum seekers with an NHS beds crisis (I'll make an exception for Jack Straw), the coincidence of the two meant that the media stories almost wrote themselves.

While it is fashionable among the liberal commentariat to claim that the influence of newspapers is not as great as is claimed on the left (reflecting their own sad foreboding about marginalisation by new media), it remains true that they do influence the public agenda, if only through the relative prominence they accord certain issues. We know that press coverage of immigration has become increasingly toxic in recent years, but the roots of this lie in the mid-90s when the Conservative Party attempted to arrest their post-1992 decline in popularity with a turn from economic to cultural issues (the "nasty party" years), notably with the 1996 Asylum and Immigration Act, which was followed by the first Blair government's 1999 Act that rearranged the same words. In 40 years between 1950 and 1989 there were 3 immigration acts. In 20 years between 1990 and 2009 there were 7. Again, one could ironically point to the ERM debacle as the trigger for this development, and it's also true that the governmental focus on asylum has been a compensatory gesture for an inability to restrict EU free movement in the face of an increasingly hostile press, but it's difficult to pin the blame on Eastern Europeans.


What is indisputable is that the attitude of mainstream UK political parties has moved away from challenging xenophobia to "understanding" it, which suggests, in the words of John Grayson, that "the electorate is racist, not the politicians, or the political and media discourses they create". Inevitably, "The electorate is also seen as 'entitled' to be racist, politicians are simply giving them a voice, and the myth of the lack of debate on immigration and asylum is wheeled out. When Gordon Brown in 2010 called a Labour Party worker a 'bigot' for her prejudiced views on Polish immigrants he broke the new golden rule of electoral politics that xenophobia, prejudice and racism should be harnessed, not confronted, for the political cause". One could see this tolerance as a cynical quid pro quo for the social strains caused by neoliberalism, but the despair among liberals, who assume the working class is incorrigibly bigoted, is all too genuine. This is, of course, nothing more than a traditional conservative lament with the addition of the word "empathy".

This "understanding" has been with us since the late-70s (Margaret Thatcher's "swamped" remark came in 1978), though it took till the mid-90s to be normalised, and is clearly a feature of the neoliberal order. Despite its prominence in political debate for almost 40 years, efforts at understanding appear to have achieved nothing other than to sanction xenophobia. The neoliberal evacuation of politics from economics, and the general demotion of class as an explanatory model in social affairs that this has given rise to, has made immigration (like identity politics) more politically salient. This has been exacerbated by the shift towards social parasitism as an explanation for the fraying of the welfare state - i.e. the language of skivers and something-for-nothing has provided a vocabulary that has made bigotry acceptable: "I'm not a racist but ... they get all the best council houses, they get more in benefits, they clutter up the GP surgery" etc.

The apparently even split in the population between xenophobes and the rest has prompted some commentators to talk of "culture wars" between university-educated liberals and a left-behind working class, or between "that there London" and the provinces, but this strikes me as ridiculously reductive. The idea that Brexit is being driven by working class voters in the North is just a continuation of the current anti-Labour strategy of the liberal media (the aim being to blame a defeat, or even a narrow win, on Labour "shirkers"). A desire to leave the EU and severely curtail immigration is a combination predominantly found among cultural conservatives, small capitalists and working-class Tories. Far from being iffy, Labour voters have been consistenly pro-Remain and more enthusiastic than LibDems in some polls. If the Leave camp wins, the finger of blame should point at David Cameron for his miscalculation, not at Jeremy Corbyn for his supposed lack of enthusiasm.


The threat of Brexit is increasingly seen as socially destructive: "The UK’s EU referendum has eroded social trust more than immigration per se ever did". There is a sense of "them and us" that hasn't been around since the early-80s. Come the 24th of June, and regardless of the result, not only will the UK be facing possible fragmentation but England itself will be in a state of rhetorical civil war (with the real possibility of actual violence, not just in France but in our Muslim communities at home). I think it's little appreciated that the rise of English identity over the last 20 years has come to be seen in existentially threatening terms by those whose identity is either British or British/European. I've noticed a few people recently who have said, in all seriousness, that they'll leave the country in the event of Brexit. In other words, Remainers are beginning to feel like strangers in their own land, an ironic echo of xenophobic sentiment. I've yet to spot a Blairite who sees the tragedy (in the original Greek sense of the word) in all this.

The punitive attitude displayed towards the working class since the 1980s has been justified and normalised by the demonisation of immigrants as "problematic labour" and by asylum seekers as emblematic "claimants". Whatever the outcome on the 23rd, the toxic role played by immigration in the debate will leave England divided. We can also say with confidence that whoever wins will be disappointed with the eventual outcome. If Remain clinch it, the Leavers will not be reconciled because they view immigration as an existential threat (even if many are merely grumpy in practice), while those who voted Remain will find future UK governments committed to a policy of masterly inactivity towards the EU. If Brexit occurs, immigration will only decline steeply if the economy craters, which is quite possible but not what most Leavers anticipate. Remainers will know that a rapid re-entry to the EU will depend on a Labour government, which will make liberals even more frantic for regime change in case Corbyn starts taking the pursuit of EU democracy seriously. And on that amusing thought, the next part of the referendum preview will address the vexed issue of sovereignty.

Monday, 6 June 2016

That EU Vote - 1. Economics

We're less than three weeks away from the EU referendum so I need to start consolidating my thoughts. As background, I've already discussed the baleful influence of newspapers on the language of domestic debate, the historic roots of the EU's democratic deficit, and the wider context of migration. The current consensus is that economics is losing out as the salient issue to immigration, though the Remainers seem convinced that financial self-interest will flush-out enough "shys" to get them over the line on the 23rd. The other issue in the top-three is sovereignty, though we are no closer to defining what that means. Some see it as an expression of English self-determination, while others see it as the rhetorical reflex of a global resentment towards the neoliberal order. The question of whether sovereignty is substantial strikes me as the most important, but it's the one that the public debate has barely touched on as yet. I'm going to tackle these three topics in separate posts, in ascending order of significance. First, economics.
 
All economic forecasts have a margin for error. This applies even more to post-Brexit predictions because we cannot know in advance how much the costs of political disengagement would be offset by compromises to maintain access to the single market, a point conceded by pro-remain economists if not by politicians. In other words, the forecasts are not only conditional on economic variables but on political ones too. The suggestion that the EU would demand punitive divorce terms to discourage emulation by others looks like scaremongering. The Greek crisis proved that the EU core was sanguine about a Grexit and that the Greeks were unwilling to risk a departure despite their pain. Of course, this was the Eurozone and a shattered economy, where the risks of exit were greater, but I think it shows that the EU core aren't fussed by deserters or the semi-detached. Variable geometry has been the EU reality for over twenty years. Pissing off the UK as a warning to Sweden seems improbable.

The British media have promoted the idea that Brexit would lead to a comprehensive reset of relations, for good or ill, but it would be in the interests of all parties to simply carry on as usual while negotiations proceeded, so deliberate disruption is unlikely. For example, the Common Agricultural Policy could not be immediately rescinded in the UK without creating chaos across not only farms but food supply-chains. Likewise, the idea that VAT would disappear in an emergency budget is for the birds, while we can be confident that visas would not be reintroduced for the 2016 holiday season, let alone the knockout stage of the Euros. This will be a long drawn out process. Of course, this delay would entail longer-term uncertainty and might thereby depress inward investment in the interim, but it could also prompt domestic investment in anticipation of future market protections or deregulation. The most likely scenario is a flurry of market-calming announcements and lengthy talks.

 
Where we might expect existing agreements to swiftly fall apart is where we currently enjoy trading asymmetries to our advantage. In other words, where we've penetrated foreign markets with high-volume goods that would be vulnerable to tariffs and where we don't have equivalent imports from those markets against which we could threaten retaliation. I'm struggling to think of any (for example, we export lots of cars to the rest of the EU, but we import more). The relative decline of the UK export sector since the 1970s has been about a qualitative improvement as much as a quantitative reduction. We increasingly export high-value or non-substitutable goods, from specialist engineering and pharmaceuticals to luxury products, which tend to be relatively price inelastic. We know this because recent devaluations, such as after 2008, have been ineffective in increasing export volumes.

It's easy to over-estimate the role of trade and the contribution of exports to the national economy. The sort of fluctuations in trade envisaged by various pessimistic Brexit scenarios are trivial in comparison to the secular decline of the oil and gas sector, while in the short-term we have more to fear from our worsening balance of payments and weak productivity growth. Global trade flows have been stagnant since 2008 and many economists believe there has been a structural decline in world trade since 2000. This is attributed to production consolidation in developing economies (i.e. less fragmentation of supply-chains across countries), onshoring in developed economies due to advances in automation, and the increasing importance of data (i.e. designs being moved across the globe for local fabrication plus the growth of digital products). In other words, globalisation (as hitherto understood) may have peaked.

We're probably looking in the wrong place if we imagine that the costs of Brexit would mainly appear in the form of trade disruption. In contrast, foreign direct investment would certainly be vulnerable, but it's worth remembering that less and less of FDI is capital invested in traditional factories and plant. Many of the companies recently attracted to the UK (and specifically London) are service providers, such as Amazon and Google, whose business model depends on regulatory arbitrage. Being outside the EU may not prove as costly to them as it might to a Nissan, while the other attractions of the UK, from language to low corporation tax, may well be of greater value (it's worth noting that George Osborne's business policy has been to provide extra-European capital with a favourable route into Europe, which is unlikely to change in the event of Brexit). Part of the problem of the trade debate in the context of the EU referendum is that it is premised on a twentieth century industrial paradigm (or even a nineteenth century one).

 
The warning that Brexit would lead to a shift in financial business from London to Frankfurt isn't convincing. The City was the pre-eminent centre for European financial services long before we joined the EEC, and it remains the leading market for euro (and other foreign exchange) trades despite not being in the Eurozone. While London has timezone and language advantages, it also benefits from a legal system that protects property rights against state expropriation and a political system that accepts the City's privileges. It's not just the football or schools that attract foreign oligarchs. It's possible that this may change over time as other financial centres, particularly in the Far East, attract more business from developing economies, but this will be the result of wider secular trends not anti-London legislation in Brussels. The current "fears" of the City reflect short-term uncertainty, not a long-term conviction that the industry faces decline.
 
The economic case against Brexit is essentially founded on the short-term costs of disruptive change, in particular a decline in investment due to uncertainty, and the expectation that long-term the UK would lose some of the trading advantages it currently enjoys without compensatory gains elsewhere. Behind this lies an assumption that there would be little fundamental change in the structure of the UK economy, even allowing for a declining share of the EU in UK exports. This is reasonable - i.e. a straight extrapolation of current circumstances - but is also assumes political timidity or at least inertia. While the prospect of an interventionist government set on a dramatic reordering of the economy (i.e. true "rebalancing") is currently remote, it isn't beyond the bounds of possibility. Though the chief political beneficiaries of Brexit are expected to be Tories drunk on their own rhetoric, the desire to "do our own thing" might ultimately benefit the Labour Party more.
 
On balance, Brexit would be a negative for the economy but it might prove less dramatic than advertised in the short-term due to the interest of all parties in avoiding disruption (for that reason, the argument that it would jump-start the move to full fiscal union within the Eurozone strikes me as fanciful). That said, a run on the pound and a balance of payments crisis are real possibilities, and the odds are that correcting these would further imbalance the economy in the medium-term. Global sentiment will either turn against the UK or the EU and could remain that way for some years. Over the longer term, the impact of Brexit may well be diluted by secular changes in the composition of the UK economy and global trade. If we assume that the UK maintains most of its integration in the EU single market out of self-interest, then the economic ramifications of Brexit may be minor in comparison to the political.