A Labour Breakthrough?

Britain’s Labour Party made big gains yesterday in the local government elections and today party activists are celebrating what they see as a breakthrough for leader Ed Milliband.

And there is much to celebrate for them. Not all results are in from the elections for 128 English councils, 32 Scottish councils and 21 Welsh councils but it looks like Labour will capture more than 700 council seats from the Conservatives and wind up with 39 percent of the national vote.

More promising for Labour, the party has won control also of councils in the south and east of the country away from their traditional heartlands, places like Exeter, Southampton, Plymouth, Thurrock, Harlow, Norwich and Great Yarmouth.

But is this the breakthrough? It is often a mistake in British politics to project from mid-term local elections and assume the same result can be repeated for the national parliamentary contest.

Both Margaret Thatcher and Tony Blair suffered mid-term local election setbacks as prime ministers before going on to win subsequent general elections. In both cases the defeats of the governing parties were severe.

In 1981, two years after losing office to Thatcher, Labour gained 988 seats, with the Tories losing 1,193. In 1999, William Hague’s Tories gained 1,348 seats and Tony Blair’s Labour Party lost 1,150 seats.

In the national contest turnout is higher as are the stakes. Midterm elections are treated by many voters as an opportunity to grumble (1). By a big margin voters still believe the coalition government’s spending cuts are necessary (by 54 percent to 27 percent according to one recent opinion poll).  But they are allowed to express their dislike of the medicine.

The fight now for Labour and the Conservatives is surely going to be over Liberal Democrat defectors. Which side they swing to could well determine the next general election.

1. Re-reading this posting I think “grumble” is too weak a word for how many Brits feel about their plight now. “Shriek”, I think in hindsight, would have been a more accurate verb.

We Are Trapped

Charles Krauthammer offers some hard cautions to the “conservative counter-revolutionaries” determined to continue “their containment of the Obama experiment.” While applauding their efforts to contain Obama, saluting them as “remarkable”, and sympathizing with their goal to rollback government, he argues that it “is simply not achievable until conservatives receive a mandate to govern from the White House.”

“Under our constitutional system, you cannot govern from one house alone. Today’s resurgent conservatism, with its fidelity to constitutionalism, should be particularly attuned to this constraint, imposed as it is by a system of deliberately separated — and mutually limiting — powers.”

Back off, then, is his counsel. And take this to electorate in November 2012.

Sound advice. But Krauthammer like too many American conservatives likes to place this battle as the latest in the long-running struggle between “social-democratic versus limited-government” visions. And that is their mistake and also the drawback to left Democrats who fall into the same line of thinking.

Despite what ideologues on either side of this increasingly stark and distorting confrontation like to make out, it is possible to blend both visions. It is what most American voters would like to see. It comes through loud and clear in opinion polls the past few years. When majorities say that they think government is too big on the one hand but don’t want to see massive entitlement reform on the other, they are trying to communicate their belief in a “third way” to a deaf political class locked in ideological prisons and tribal caucuses.

That is why the pendulum swings back and forth between the parties in elections with such regularity. It is the electorate’s way – or at least independents and non-tribal Republicans and Democrats – of showing dissatisfaction with either competing vision. And they don’t believe they are being contradictory by wanting a blend of social democracy and limited government.

And there is nothing wrong with the blend – either in practical terms or intellectual ones. For most classical liberals – as distinct from liberals – it makes perfect sense. Read John Stuart Mill, for example, or even Adam Smith, who despite being hijacked by libertarians, saw a large role for government. Those conservatives who like to cite FA Hayek should remember, if they ever knew in the first place, that he accepted that there are legitimate grounds for government to supply health care without people having to shriek “Marxism.”

And in practical terms combining social democratic and limited government visions has not proven impossible for, say, the likes of Margaret Thatcher, another classical liberal.

But you won’t hear from the left of the Democratic Party or the right of the GOP anything like this. Mention social democracy and the Glenn Becks and Rush Limbaughs of this world morph it all into “socialism.” Mutter the words “limited government” and MoveOn.org and Rachel Maddow react with equal intellectual-distorting horror.

In practical terms, too, both militant sides are blind to their lack of consistency with their visions.

On the right, we have all of this talk about “limited government” and how we can’t afford things but conservatives continue with massive corporate welfare. Cut Social Security and Medicare – those programs Americans have contributed to and are relying on – we can’t afford those, but let’s not cut tax loopholes for the rich or stem the flow of taxpayers’ money to successful agri-business or other corporations. The GOP likes to see itself as the friend of small business but has turned its back on serious health care reform. Health-care costs cripple small business.

On the left, we have lip service paid to enterprise, small business and the American entrepreneur. But little restraint when it comes to over-regulation. And where is the recognition that corporate tax does need to come down for America to be globally competitive?

We are trapped.


Closing the Gap

Why should the British middle-class instantly reach for their wallets whenever they hear a British politician talk about closing the gap between the rich and the poor? Nick Clegg, the U.K.’s deputy Prime Minister, demonstrated exactly why in London today with his speech on creating a more socially mobile society. The rich quickly morph into the middle class, and so what he really means is closing the gap between the middle-class and the working-class. The real rich, as we all know, will just move overseas, if there is too much redistribution out of their pockets.

Of course, Clegg can’t say that, especially as he is in coalition with the Conservatives, but that is what he means.

I am all for greater social mobility – that is one of the driving reasons I, British-born, embraced the United States – but “wealth” redistribution is not the way to do it, or shouldn’t be the main driving force. Britain has been trying that since the Welfare State was established in the wake of the Second World War and as studies have shown it hasn’t been so successful. The increased redistribution primarily from the middle-class to the working-class and tremendous subsidies to geographically poorer areas of the UK under the Brown government failed dramatically to close the gaps dividing north from south or the one separating the middle-class from the working-class.

The review the Coalition government is undertaking now of the universal benefits system is a good thing – the well off surely should not be receiving subsidies in the form of child credits and heating allowances they don’t need. But how much is going to get taken from the middle-class at the same time as they are facing higher taxes before they decide either that they have had enough of the Coalition government or decide to trigger a 1970s-style brain drain?

Social mobility comes with providing fine schools, access to excellent higher education and the economic, commercial and regulatory circumstances that encourage entrepreneurialism, wealth creation and prosperity. And as history has shown, countries that declare war on their middle-class tend not to do so well when it comes to economic growth.

Arguably, Margaret Thatcher did more than Brown or Blair for social mobility and encouraging working-class aspirations. She did it by allowing council houses to be bought by their occupants at below market value – a policy fought tooth-and-nail by the left and center-left in British politics. She did it by welcoming success, encouraging entrepreneurism, keeping taxes low, reducing public expenditure and ceasing the British industrial habit of propping up lamb-ducks. She was also more heavy-handed with high-blown, snooty and traditional institutions than many Labour ministers were before her and have been since. And aspiring working-class voters loved her for it – that’s why she was re-elected.

Obviously, it was good to hear Clegg saying that the Coalition government aims to assist social mobility by improving people’s lives rather than by providing hand-outs, but sadly missing from the Clegg speech was anything about lower taxes — just more stuff about “fairer taxes”, in short more taxes on the middle class.

And this on the day when an excellent economist, Danny Blanchflower, a former member of the Bank of England’s monetary policy committee, urged the Coalition government to cut taxes or face another recession.