The twin problems of socialised debt and the rise and rise of populism

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Professor Tim Bale makes an argument quoted by Harry Wallop in the Telegraph on the rise and rise of UKIP (despite some pretty grim gaffes):

…they are articulating a wider feeling that politics has become disconnected from ordinary people. The key to understanding them is their populism rather than their policies. Ukip’s appeal is that they are outside that Westminster elite.

Both European integration and the immigration we saw under the Labour government play into that feeling, because those are two things that large numbers of people in this country don’t agree with, and which were done without really consulting us.”

At the same time, with the exception of China, states are getting poorer and much less able to do the things they have become accustomed to since the end of the second world war. Even Germany’s debt has tripled since 2008.

The reported rise incomes in UK is not being felt in part because of the stubbornly levels of personal and government debt. And the complex interdependent governance put in place to improve lives begins to feel like fiddling whilst Rome burns.

Into the growing trust gap step the populists, who don’t live by the rules set for them by the chattering classes, or indeed anyone whom they consider to be opponents. Including the press.

Just as people, at first, accepted a substantial lowering of production values on YouTube in order to hear fresh unmachined views of how the world might be, as pretenders to power populists aren’t held to the same levels of scrutiny as the established parties.

Add to that the fact that Europe is simultaneously their best card, and the election held to be least meaningful to the British public at large, and they are making some pretty big public waves right now:

At the same time, in Ireland, SF is set to take a seat in each of the four EP constituencies on the island despite (and in some cases perhaps because of) their leader being beset by troubles that would have killed any other senior democratic figure stone dead.

No one who votes for them minds that the UKIP leader exaggerated the numbers of Romanians and Bulgarians (29 million, as opposed to combined total of about 27 million), never mind those thinking about coming to the UK. It feels right, even though in fact it’s wrong.

Back in 2009, my old friend and colleague David Steven warned:

If we experience a long crisis (or a chain of interlinked crises), we are likely to see either a significant loss of trust in the system (globalization retreats), or a significant increase in trust (interdependence increases).

You need to stretch time horizons to get the latter – shared awareness (joint analysis of risks and challenges), as a basis for shared platforms (loose coalitions of leaders), which can lobby for a shared operating system (a new international institutional architecture).

And he added, for good measure…

Oh and be ready for the backlash – people are angry and rightfully so, but that may well lead us down some populist blind alleys.

Which brings me, finally, to debate around the imposition of ‘austerity’ which is making the ruling elites in peripheral EU countries so nervous (and unpopular), and making it tough to stretch governmental time horizons in the way David recommends.

As Martin Wolf noted back at the start of this crisis:

Outsiders were already aware it was a black box. But they were prepared to assume that those inside it at least knew what was going on.

This can hardly be true now. Worse, the institutions that prospered on the upside expect rescue on the downside. They are right to expect this.

But this can hardly be a tolerable bargain between financial insiders and wider society. Is such mayhem the best we can expect?

If so, how does one sustain broad public support for what appears so one-sided a game?

No one yet has a direct answer to this (except do your best until the electorate have another bout of ‘throwing the bums out’) since we are all so interconnected, as much by the internet as our collective reliance on black box international finance.

So, take it away Declan…. Stop The World and Let Me Off

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  • Kensei

    “At the same time, with the exception of China, states are getting poorer and much less able to do the things they have become accustomed to since the end of the second world war. Even Germany’s debt has tripled since 2008.”

    Could you please supply some sources for the claim that “states are getting poorer”. I’d prefer figures and graphs here, as opposed to waffle, too.

  • Mick Fealty

    Nice to see you back Ken, try this statement of “the bleedin’ obvious”: http://stats.oecd.org/Index.aspx?DataSetCode=GOV_DEBT

  • DC

    The banking bail outs and repayment of that should have been tied into that sector isolated from national debt whereby the banks repay their own bailout. That would have forced banking CEOs into becoming more realistic about how much they value themselves. Of course we learn today about a tax loophole exploited by Ecclestone to the value of £2 billion, that will raise eyebrows and feed into the resentment and think back to his dealings with the Labour government on advertising, reinforcing the concerns people have about government and politicians, for whom are you governing and in many ways the EU just gets in the way of taking back control.

    Populists aren’t right wing imo they are people who just want some control back over things that they believe need to be controlled and managed, the level of control is what concerns some people and is a debate worth having.

    I used to be pro EU but it is clear if we believe the economy needs managed so too immigration surely, why should there be a free for all? If neo liberal financial markets cause instability and inequality surely running neo liberal labour markets will do likewise?

    In Northern Ireland segments of its population are leaving school under educated it makes no sense to have an open labour market where over educated middle class EU nationals take up working class min wage jobs, what are we going to do with the locals pushed out who cannot compete even for non-skilled work because EU nationals want out of their less-advanced formerly soviety-controlled countries? One EU policy does not fit all, some regions it might be worth leaving it open to all EU nationals to compete others like NI perhaps not given the state of our labour market and skills shortage.

    The article provokes so many thoughts I don’t know where to begin, I think England in particular is in a bit of a mess politically and culturally and has failed on the integration front and there is no doubt parts of England have changed beyond recognition, if the English believe there to be a lack of integration this is going to cause trouble. I believe England has been poorly governed as have many states in the Western world not leaving out Ireland either! I think a lot of politicians in England have relied on hope, sure set up faith schools it’ll be alright, sure rely on debt it will be alright, but to borrow a Nietzsche quote:

    “Hope in reality is the worst of all evils because it prolongs the torments of man.”

    How’s hope working out for Mr Obama?

    I actually think locally or regionally here in NI that this will impact on Alliance as the liberal vote has tanked in England I think people as the economy deflates here in NI to pay back the banking bailouts will become much less charitable towards “hope” particularly one not grounded in anything of much substance if any. A party that doesn’t know how it is constituted is surely in no good state to weather the storm.

  • Mc Slaggart

    DC

    “segments of its population are leaving school under educated it makes no sense to have an open labour market where over educated middle class EU nationals take up working class min wage jobs, what are we going to do with the locals pushed out who cannot compete even for non-skilled work”

    The new approach on this issue will be that everyone in Europe under a certain age will get a job/work.

    The people who currently think they can leave school without an education will soon have to change their ways.

  • DC

    Of course the problem McSlaggart is what we do in the here and now, there are no levers to pull in the eyes of the populists and they think it is just a trick a con this EU free for all is in fact Britain handing over its cash and jobs to other disadvantaged Europeans at the expense of its own perhaps arguably less disadvantaged but still disadvantaged all the same.

    Here’s the thing you see, the clue is in the name, unskilled work doesn’t really require much of an education that’s my point this by its name is more open to EU nationals to succeed in largely because you don’t even need English to get by to work in the unskilled sector, this affects those least able to compete such as those leaving school in NI with feck all qualifications that we do not have magic wands to change. So it is likely that they will be stuck in that situation so unfort they need unskilled work in the here and now but are having to compete potentially with most of Europe. Particularly eastern Europe whose populace come to the UK and work min wage trading on the advantage of Britain having better public services, more wealth built up and perhaps more freedoms and opportunities to bring a family up in etc etc or it is perceived to be so.

    You can see how the resentment could build up getting knocked back for unskilled work when all you need to do is turn up and turning up other people are.

    I work in the public sector and it is possible I might lose my job on down the road to pay for the banks, but to have to compete with potentially millions of others for min wage work as a stop gap till I find other more suitable work I can begin to understand why people might say please put a stop to this sort of arrangement.

    The well paid middle class liberal politicians have enough fat and capital accumulated in their personal accounts to be so far removed that it is all but impossible for them to even begin to comprehend this sort of situation or indeed why people might think like this – racist they would probably call such people holding such views.

    Ask yourself this as a European, where could you and I go to clean toilets at levels of pay that we simply couldn’t get here add into that the bonus of working in a wealthier state than our own present one? There might be one country paying slightly more maybe not, Germany perhaps? Is this the same for other eastern Europeans for instance, whose economy is less advanced and developed with less wealth? Of course the powers that be in the EU know this, they also know most Europeans speak English thanks to USA global dominance, first port of call then the UK where pidgin English will suffice for min wage work, most Europeans know pidgin English thanks to English being the lingua franca the business language more or less of the world to date, not French, not German. So I think this could disproportionately affect the UK.

    UKIP it would seem has set out campaigning on much of Maurice Glasman’s intellectual work on problems for the UK economy as a result of EU membership, whether UKIP can be the political solution, who knows.

  • DC

    Just to add, Maurice Glasman’s work being so intellectually sound is probably why the mainstream parties are so in trouble.

  • Barnshee

    “In Northern Ireland segments of its population are leaving school under educated it makes no sense to have an open labour market where over educated middle class EU nationals take up working class min wage job”

    There a resturant I frequent on a regular (ish) basis

    The Owner is (I believe ) Turkish–Employees over the years have been female Romanian and Bulgarian (and stunningly attractive but I never noticed) Compare to the occassional local employed -their service is outstanding. Smiling friendly etc etc

    Its not just in education that the “natives” are in difficulties

  • Kensei

    Mick

    That says states have being borrowing more recently. It does not say that they are getting poorer.

    Here is UK Real GDP per capita:

    https://www.wolframalpha.com/input/?i=uk+real+gdp+per+capita

    There is a dip due to the recession, but you’ll notice

    1. There are other dips we’ve recovered form
    2. The UK is substantuially richer than it was even in the year 200

    Here is Ireland’s:

    https://www.wolframalpha.com/input/?i=ireland+real+gdp+per+capita

    Nastier, but the broad thrust remains.

    National economies do not work like households, and you can’t just go “More debt, less pensions”.

    What we spend our money on and what taxes on who we impose to pay for it are political choices.

  • mr x

    Kensei

    when the UK offshore wind power sector provides the highest margins for electrical companies in the entire world the UK is being ripped mightily. Even intellectual giants like Margaret Hodge have noticed.

  • FuturePhysicist

    Of course the problem McSlaggart is what we do in the here and now, there are no levers to pull in the eyes of the populists and they think it is just a trick a con this EU free for all is in fact Britain handing over its cash and jobs to other disadvantaged Europeans at the expense of its own perhaps arguably less disadvantaged but still disadvantaged all the same.

    It’s difficult for a poor person to Erm pay get to the GB unless they were born there. And the poor people who are born here are treated like muck anyway as would any poor immigrant.

    The other thing is that immigration for work ensures work is done here, workers contribute and spend in the domestic economy, probably moreso than the average native middle class internet shopper. The non-immigration alternative is outsourcing where these advantages don’t even exist.

    Companies run by natives use workers to generate profit, they rely on employed local consumers or the export market, so the profits of the work should in theory be taxable here.

    The problem there is the UK protects obvious Belizean nationals like Michael Ashcroft British Citizenship because they invest in militarising the country to invade others.

  • FuturePhysicist

    “In Northern Ireland segments of its population are leaving school under educated it makes no sense to have an open labour market where over educated middle class EU nationals take up working class min wage job”

    There a resturant I frequent on a regular (ish) basis

    The Owner is (I believe ) Turkish–Employees over the years have been female Romanian and Bulgarian (and stunningly attractive but I never noticed) Compare to the occassional local employed -their service is outstanding. Smiling friendly etc etc

    Its not just in education that the “natives” are in difficulties

    There are very few Romanians or Bulgarians living over here, Bulgarians prefer Poland and Germany, and Romanians Italy and Spain to the UK. Poles and Lithuanians favour heading to the UK and Ireland instead of Germany for historic reasons, we accepted them during the war years. The British and Irish themselves immigrate to Spain, there is well over 2 million of them there.

    In terms of unemployment, I am sceptical about this “take our jobs” nonsense, I see jobs re-advertised and companies complaining about skills as if they didn’t have the choice of an entire continent’s people to fill them. We have graduates on the dole with degrees in STEM subjects being dismissed by companies who won’t employ someone with Aspergers. We see naive business models gaining bank loans that are wasted on property and hedonistic instant self gratification that could be invested in employees who could provide real sustainable services now and to their future, we have idiots who invest in oil simply for the windfall, and would prefer more money steered to them busting unions to get a skeleton staff crew, than they would the Research and Development or realistic staff levels to ensure the company survives the next five years.

    There are Senior UKIP figures who have “worked” for four bankrupt stockbrokers who took the money and run and gave it all to his son, slaves to Mammon, the last thing they are thinking of is giving people a worthwhile means of contributing to their nation.