Does fiscal austerity strengthen UKIP?

GraphSpendingUKIP

In their manifesto published yesterday, the Conservative party have pledged to increase funding for the NHS by 8bn a year, besides other policies that have been criticized for for not being clearly funded. Many observers have argued that all these spending increases will need to be be compensated somehow by deep cuts in other domains, such as the welfare budget, where 12bn are to be cut by 2017-2018. In this respect, the Conservative party will be continuing the policy of reductions in public spending which some believe will lead to levels unseen since the 1930s. Now another thing that the Conservatives want, it’s to prevent the rise of UKIP. Can these two things be reconciled? In the graph above, I have plotted together public spending per capita in 2012-2013 (from here) and UKIP voting intentions from the British Election Study. There is a surprising level of fit (72% of the variance explained), and the clearly negative relationship holds if we control for unemployment (data here: UKIPSpending). The less public spending there is, the more UKIP support there is. Basically, if one were to assume that this relationships was causal, it would “cost” 200 pounds of increased spending per capita to reduce the UKIP vote by 1%. I am not sure whether this fits in the long term economic plan.

The irrelevant British median voter

When you watch the campaign for the next general elections in the United Kingdom, you may get the impression that the two biggest contenders, Ed Milliband and David Cameron are competing for the same voters. They promise this, they promise that in multiple attempts to convince what in political science jargon we call the “median voter”, that is, the person in the very middle of the voter distribution, the one that decides elections. In theory, this is how it works in majoritarian systems. In fact, it’s not.

In the theory, the median voter swings from one side to the other, depending on the promises made by the different parties (there is a movie with Kevin Costner about this). In a perfect bipartisan system, one vote lost for one party is a vote won for the other party. This means that the vote share of one party is more or less perfectly correlated with the votes for the other party: 1% more for one party means 1% less for the other party. This describes very well the relationship between the Democratic and the Republican vote in the US, where there are only two relevant parties. The graph below plots together the vote share of the two main parties in Congressional elections between 1960 and 2008. All points (years) are very close to the line. The R-square statistic means that 82% of the variation in the Democratic vote can be explained by the Republican vote. If the Republican vote increases by 1% of the total vote, the Democratic vote is lower by 1.18%.

GraphUS1Now look at the same graph for elections in the United Kingdom. There is no correlation whatsoever between the level of the Conservative Vote and the level of the Labour vote. The R-squared is close to zero, and the results are not statistically significant. This means that the level of the Labour vote cannot be explained by the level of the Conservative vote: when the Labour vote goes down, the Conservative vote doesn’t go up. They are completely unconnected to each other, which seems to imply that that there are very small voter movements from Labour to the Conservatives (this is confirmed by British election survey data). When the Tories lose votes, they go elsewhere.

GraphUK2

Where do these votes go? I have run the same kind of analysis drawing on the UK polling report, which brings together 1913 polls since May 2010. That a very large number of polls which allows to run a few analyses with a higher degree of confidence than election results. What do they show? First, the pattern highlighted above between Labour and Conservative votes is similar: there is only a very weak relationship: only 1% of the variation in the Conservative vote can be explained by variation in the Labour vote. If anything, the relationship is actually positive. If the Labour vote goes up by 1%, the Conservative vote goes up by 0.1%. When Labour loses votes, they don’t go to the Conservatives, and vice-versa. On the opposite, they tend to go up together, even if the association is very weak.

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LabourConUKPOlling3

Now look at the relationship between Conservative and UKIP voting intentions. The relationship is much clearer, and the dots are much closer to the line. 20% of the Conservative vote can be explained by the UKIP vote. When the UKIP vote goes up 1%, the Conservatives lose on average 0.26%.

GraphUKIPConsevative4 Something similar happens with Labour: its voting intentions are negatively associated with Greens and UKIP voting intentions. The association between the Green and Labour vote is actually even stronger: R-squared is 0.51, which means that 51% of the variation in the Labour vote can be explained by the Green vote. The relationship goes in a similar direction with UKIP. When the UKIP vote goes up 1%, the Labour vote goes down 0.76% on average, and 58% of the Labour vote can be explained by the UKIP vote.

GraphLabourGreen5LabourUKIPGraph

What about the Libdems? The Libdem vote is positively associated with the Conservative vote (perhaps that’s what happens when you enter a coalition) (R-square: 0.12) but unrelated to the Labour vote.

GraphConservative Libdem

LabourLibdem

A few caveats: OLS regression as used here do not seem to be a good method to analyse and predict votes in multiparty systems. However, graphically this provides some insights on the dynamic of electoral competition in the United Kingdom: parties compete for votes within rather than across ideological blocs. Few people switch from Conservative to Labour or from Labour to Conservative. More people switch from Libdem to Labour or from Labour to SNP (within the left) or from Conservative to UKIP (within the right). This tends to indicate that contests between the two main parties and their smaller challengers on each side of the political spectrum are more important than between them. Politics is moving to the extremes and is no longer fought in the center, if it ever was.

The Political Economy of the British General Election

The real campaign for the British general election is now in full swing and there’s a new poll every hour predicting a lead of one or the other party. Now polls change all the time, and most of the time they are wrong. I don’t care that much about how many votes Labour gets today as compared to yesterday. What I’m interested in, however, is the broader dynamic of representation across income groups and social classes, which tend to be fairly stable. Last weekend I have been playing with some data from recent waves of the British Election Study and drawn some graphs about the appeal of the different parties across income groups, and the composition of their electorate by income group. A few interesting facts:

1. Income matters a lot more for the Tories and UKIP than for Labourimage (35)

The Graph above (large interactive version here) shows the share of party support among income groups (yearly gross household income) in Wave 3 of the British Election Study. The lines are quite different for the big parties: support for Labour is fairly stable across income groups, and only drops among the rich, from 60’000k onwards. Labour looks like a cross-class party where increases in income do not significantly raise or decrease support, at least until a certain threshold. The picture is very different for the Tories, where there is a much larger difference in support between voters across levels of the income distribution. Poor voters are much less likely to vote Tory, while rich voters are much more likely to do so. In some way, this can explain the policies that the government is pushing through, namely cutting benefits at the bottom (who do not vote Tory anyway) to lower the fiscal burden at the top (who do disproportionately vote Tory). Interestingly UKIP has a line going in the opposite direction: UKIP support declines steadily as income increases. It has the working-class profile that Labour doesn’t (no longer) have. Note the high support for the Greens among voters a the very bottom of the distribution, which may be due to the high proportion of students.

The second graph (below and interactive here) shows the difference in support between the different income groups and the mean. What the graph means is that the difference in Tory support between people with an household income of 150’000 pounds and higher and the whole electorate is 120% (this is a difference; they are 2.2 times more likely to vote Tory than average). Once again, the trend described above is visible: income groups are very polarised in Tory (and UKIP, which is the mirror image) support, while the difference is small for Labour

image (36)

The graphs above don’t tell you how important these different income groups are electorally. The very rich vote to a much larger extent for the Tories, but they may be a small minority. The graph below shows the size of each income group in proportion to the overall electorate. The larger income groups are located between 10’000 and 40’000 pounds a year. In all of these, Labour wins, while the Tories clearly dominate in the higher ones, but they are much smaller.

2. Different compositions in the electorate create different policy incentives

This is not very surprising but it is nice to see in the data. In the graph below I have divided the voters of the main parties in three income groups of similar size in the overall electorate (I have recoded the categories above). It could represent the working class, the middle class and the upper class. When parties devise policies, they seek to forge alliances between these different groups, which is likely to be at the expense of one group (e.g the rich want low taxes and the poor want more spending, but it is difficult to do both). Within Labour, the lower class is the biggest, while the upper and middle class are close and equally sized. Within the Tories, the upper class is by far the biggest, while the lower class is the smallest. Internally, an alliance between middle and upper class has a clear majority within the Conservatives, while this alliance fails to do so within Labour. Instead, an alliance between lower and middle class has a majority (last graph). In a very stylized way, this internal balance of power explains fairly well the policies that the different parties offer to voters.

Why Greece Needs a Pinochet: A Modest Proposal

A panel of distinguished German experts led by Lars Feld have recently written an interesting column about the Greek debt crisis. It largely echoed a recent piece by Jürgen Stark, former (German) European Central Bank Board member. The gist of these two pieces is basically a) that the problems that Greece faces are essentially self-made b) That austerity works and is the only solution to solve Greece’s economic problems c) that the newly elected Syriza government should continue on the path of drastic austerity of its predecessors in spite of the unrealistic promises it has made to its voters. Germany, of course, is acting responsibly whereas Southern countries have lived beyond their means:

“The political elites of the eurozone periphery are responsible for having lost access to the financial markets in 2010. Years of mismanagement and failure to observe the rule of law have led to increasing budget deficits and mounting debts (…) The truth is that, in contrast to many eurozone countries, Germany has reliably pursued a prudent economic policy. While others were living beyond their means, Germany avoided excess”

Of course, this view has been criticized by dangerous leftists such as Paul Krugman and Simon Wren-Lewis, who argue that the pain inflicted by austerity reforms could have been avoided if it had been carried out less violently, more slowly, or possibly if Greece had left the Eurozone, through external – rather than internal – devaluation. Now, since the Syriza government has committed to stay in the Eurozone, internal devaluation is the only available option, and prices and wages should go down. The state should be rolled back, the public sector downsized, pensions should be cut, wages should decrease, the labour market should be deregulated.

The problem with the reforms favoured by our German friends and the Troika is that they are very difficult to implement in a democratic regime where voters can kick out governments out of power. Indeed, such measures tend to be very unpopular, and governments trying to implement them are bound to face significant electoral losses up to a point where they can no longer rule. This is precisely what happened in most countries of the European periphery, where incumbents at the beginning of the crisis have been systematically voted out of power (e.g Fianna fail in Ireland, the Socialists in Portugal and Spain, Silvio Berlsuconi in Italy, and more recently PASOK and New Democracy in Greece). In Italy, Spain and Greece, anti-austerity or anti-system parties have become leading political forces ahead of established “centrist” parties. The latter have tried to band together in political cartels to implement unpopular austerity reforms, but this strategy has faced severe limits. Indeed, their electoral base has shrunk to a point where they may no longer hold a majority, as happened in Greece. Hence, the main stumbling block impeding Greece from implementing further austerity is a democracy where dissatisfied voters hit by unemployment and falling living standards can vote governments out of power. Karl Polanyi rightly showed that market liberalisations always create a countermovement of protection from society, and citizens badly hit by austerity will turn to political forces that promise to stop the pain, triggering a “countermovement”. This is why extreme austerity such as that implemented in Greece seems difficult to reconcile with democracy.

There is of course a fairly simple solution to this, and that is the establishment of a military junta such as that of Augusto Pinochet in Chile, which has been praised by the likes of Friedrich Hayek and Milton Friedman for the extensiveness of his economic reforms along market lines. Technocratic governments in Greece and Italy were already an attempt to suspend democracy and implement austerity partly in isolation from electoral politics. However, they proved short-lived an fragile. A real military regime would have nothing to fear from unhappy voters bearing the consequences of austerity reforms, and the occasional protest could be easily dealt with through military repression. Pay cuts, which are difficult to achieve in a system with powerful unions, could easily be enforced with military intervention in factories. Portugal’s Salazar, for instance, has a fairly good record in wage restraint during the 1950s and 1960s under state control over unions, and demands observed elsewhere to expand social programs could be swiftly squashed by the political police. It no coincidence that Chile was able to achieve such a level of economic liberalization whereas other countries were wasting time with the consensus-building imposed by democratic institutions.

Greece displays a number of favourable conditions for the establishment of such a political regime. First, it has one of the biggest armies in Europe compared to its population, and up to the crisis, had the largest military expenditures as a share of GDP in the European Union. Second, it also has a past of military dictatorship (1967-1974), and the large support received by Golden Dawn in the last elections shows that a sizable share of its population would be confortable with a fascist regime. This creates good conditions for radical methods. These are clearly the only way to overcome opposition to the radical economic reforms that the Troika and Germany wants implemented in Greece.

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Syriza shows the failure of ‘cartel politics’

As expected, the radical left party Syriza was the big winner of the Greek elections, coming only two seats short of an absolute majority in parliament. But it’s unclear if new Prime Minister Alexis Tsipras will be able to effectively pursue his anti-austerity agenda and renegotiate the terms of the Greek bailout with creditors — and he will surely need to make a number of concessions to its coalition partners, the Independent Greeks, a right-wing anti-immigration party.

What does this victory mean for Greece and for the debt-ridden countries of southern Europe?

Read it over at CNN.com.

Read our article on austerity politics and clientelism in Greece and Portugal in the Journal of European Public Policy.

Charlie Hebdo: In praise of outrage

The kind of humour practiced by Charlie Hebdo has no equivalent in the English-speaking world. They did not care if its satire offended governments, the pope, the clergy, Islam, the police or the army. While it has received international attention for its satire of Islam and religious extremism, nobody has been spared by its vitriolic humour. People who have read reports about it in the English-speaking press may have perceived it as a xenophobic outlet, but it wasn’t. The Front National and the rants of Michel Houellebecq were as likely to be their target as the taliban. What it fought for was the right to criticize and ridicule anybody in a position of power or authority, a stance with a long tradition in France, as well explained by Art Goldhammer here. That’s basically why its forerunner, Hara Kiri, was closed down (or rather banned from sales to minors and publicity) by the French government when it dared make fun of the death of Charles de Gaulle (“Bal tragique à Collombey. Un mort”). Some of it was tasteless, but it took a great deal of courage to face the government and fundamentalists in such an upfront way. It fought for the right for any institution, religion or country to be criticised and ridiculed equally. Some say that they were going too far, but sometimes you need people who are ready to go far to test the limits of democracy and prevent it from shrinking. There is no real equivalent in Britain or in America because many media outlets are obsessed by the fear of offending anyone or anything, for fear of retaliation, accusations of racism or lawsuits for libel. It is quite telling that no British newspaper has dared publish any of the front covers of Charlie Hebdo, even those that did not concern Islam.

In general, those that criticise political correctness and the “PR brigade” usually do so as an excuse to utter xenophobic or misogynistic opinions whose ultimate goal is to censor those that are different from theirs. For instance, Nigel Farage claims the right to say the most outrageous things about immigrants, but then criticises their right to speak their own language on trains. However, very few people or outlets actually assume the egalitarian stance that Charlie Hebdo adopted (and hopefully will continue to adopt in the future), that is, to say “screw you” to everyone and dare to say anything about anybody. They adhered to what Max Weber called the “ethics of conviction” (do what you believe in notwithstanding the consequences”) rather than the “ethics of responsibility” (consider the consequences even if it means betraying your ideals). Many people in Britain adhere to the second. This is because in Britain in particular, any little insignificant word or stance will be taken as a potential offense against one or the other group. Tottenham fans were to be denied the right to called *themselves* yids; the scientist who landed that device on a comet had to apologise because of his allegedly misogynistic shirt; Tintin comics are banned from the shelves because of their racist undertones that were common in the 1930s. Boris Johnson even said that the super-rich are an oppressed minority that shouldn’t be stugmatised. Everything has now become beyond the limits of what is acceptable to say.

However, this only concerns words, and not behaviours. Politically correct language has become a cover for the most abject policies in the areas of immigration and welfare, very often in the neutral, technical, inoffensive language of efficiency and fairness. Adolf Eichmann mostly described his work not in vivid ideological arguments, but in cold, technical words like quantities, solutions, efficiency. The fear of offensive words potentially leads to absurd situations, for instance when Jesse Jackson, a leading figure of the civil rights movement, is forced to apologise for using the word “nigger”. This creates a climate where the wrong people are stigmatised and the real issues are neglected (see Ferguson and white privilege) but also where the control over what we say (or draw) is exerted by those with the most extreme views, or those that want to impose their views on others. I am also a strong believer in the idea that self-censorship in words and images actually leads to the most deviant behaviours: what doesn’t come out often rots in the inside. For instance, I have always been amazed by US puritanism about swearwords and nudity not to offend children and family values, contrasting with gun violence and teenage pregnancy rates seen nowhere else in the advanced world. By respecting the moral authority of no-one, Charlie ensured the freedom of everyone. This was surely worth dying for.

A Political Economy of the Rebranding of King’s College London

My university has decided to rebrand itself as “King’s London”, abandoning the name it has sported since 1828/. According to an email sent by the principal Ed Byrne, market research

“revealed that our current name was causing considerable confusion: is King’s a residential college, is it an academic college akin to the colleges of Oxbridge, or is it an educational institution of some other type such as a further education college? Internationally, there was further misunderstanding as ‘College’ is not a widely understood term in many countries”.

This decision has caused a massive uproar from the student community. The reactions on social media have been overwhelmingly negative, a petition to oppose the rebranding has gathered more than 11’000 signatures in about 3 days (KCL has about 25’000 students), and the facebook page against the rebranding now has 2’500 “likes”. In spite of the “wide consultation” that senior management claims to have carried out, most students and staff had never heard of these plans announced on Wednesday, and it has quickly turned into a big PR disaster only partly hidden by KCL’s stellar results in the Research Excellence framework. Now King’s may be “rethinking” its rebranding plans in the face of the massive backlash.

How can we explain this? Without singling out KCL (thanks to which I manage to pay my rent every month), I think that what happened with the rebranding of KCL is fairly symptomatic of the hierarchical system of governance of British universities. It also reflects the way companies are run in Anglo-Saxon economies as compared to Continental countries. This often results in erratic decisions implemented in a top-down manner, with little involvement from people directly affected by them, including students. In fact, their involvement in the governance of British universities is minimal, and their role is essentially constructed as consumers rather than stakeholders.

In comparative political economy, we usually differentiate between a “shareholder” and a “stakeholder” model of corporate governance. The shareholder model as practiced in the UK or the US gives greater power to shareholders (those who own firms) and little to stakeholders (e.g employees). The governance structure of British or US firms is hierarchical, with a greater concentration of power in the hands of managers, and top-down command structures that can react quickly to changing market conditions. The main way for shareholders (and employees) to exert power is through exit, either by selling their shares or quitting their job. By contrast, the stakeholder model as practiced in Germany or other Continental countries gives greater power to stakeholders, for instance via elaborate structures of employee representation (works councils, etc.). This makes decision-making structures slower but ensures a wider consensus among the the actors involved in the firm, who do have a voice in the governance of companies.

The way universities are run in different countries largely mirrors these differences. In Britain, power is concentrated within a fairly hierarchical structure of management with little veto power for other actors. One symptom of this is the strong role of vice-chancellors, whose stellar pay packages have attracted quite a bit of controversy lately, and the weak involvement of staff and students. In contrast, there is involvement from business actors from outside and a much larger layer of professional “senior managers”. The funding structure of higher education in Britain clearly creates these incentives for universities to be organised like for-profit endeavours, via the fierce competition for student income streams and research funding. For instance, the governing body of KCL is the college council, whose members are drawn from the professoriate, senior management and “lay members” drawn from private companies. The Chairman of the Council (and descendant of the founder of KCL the Duke of Wellington) Lord Douro is also the chairman of a luxury goods company, while other members are drawn from a variety of business backgrounds (e.g communications multinationals or the food industry). The college council only counts one student member, the president of the student union. To my knowledge, there is no institutionalised voice for junior or middle-tier staff, even if there are a number of consultative committees.

This structure differs sharply from my home university in Switzerland, where the Rector is elected by a University Council constituted by an elected body of Professors, junior staff (including PhD students), support staff (office managers, cleaners) and students, and which vets the members of the university direction designated by the rector. Obviously, this system makes decision-making much more cumbersome (change is very incremental, to say the least) , but it also ensures a great deal of consensus within the main stakeholders within the university. Similarly, students and junior staff are more involved in the day to day business of university. When I told my my colleagues in Britain that students and PhD students would be routinely involved in search committees for the appointment of new staff (I know it is also the case in the Netherlands), they would look at me as if I was coming from planet Zorg. Within this context, it is also difficult to imagine decisions such as the programme of mass redundancies that KCL carried out in its health school this year, or the said rebranding because of the number of veto points these plans would have to overcome. Now Swiss universities may not have the reputation of British institutions, but they nevertheless do very well in international rankings.

In a nutshell, British universities seem to be run more like companies, and companies prone to massive blunders, whereas continental universities are run a bit more like democracies (and perhaps subject to sclerosis). The concentration of power within British universities in the hands of managers and business people also probably underpins their obsession with ruinous outsourcing endeavours. The said rebranding, commissioned to Saffron brand consultants, is said to have cost the sheer amount of 300’000 pounds while financial issues have been the main justification for staff cuts.

What is perhaps the most interesting with these developments is that the explicit goal of recent university reforms was to “put students at the centre of higher education reform”. In the words of former Higher Education minister David Willetts (who recently joined King’s as a visiting professor)

Our changes to the financing system will also drive structural reforms in higher education. The force that is unleashed is consumerism. We would not have been willing to put in the extra funds and go through the political pain unless it was for the benefit of students and their educational experience. I recognise that the very term “consumerism” causes deep anxiety for some. But it is not a threat to the classic relationship between academic teacher and student – it is an opportunity to rebalance academia so that teaching gets its rightful place alongside research.

However, if these reforms have empowered students at all, it is precisely as consumers to whom brands are sold, not really as stakeholders or members of a community. A bit like the power I have on the operations of Tesco when I buy yoghurts.