Even after Thatcher, the Conservatives never learned the benefits of redistribution

Sometimes you want to make everyone better off, not just the rich.

One of the clips of Thatcher which has been passed around in the days since her death is this one, of two exchanges from her last speech in the House of Commons on 22 November 1990. In it, she attacks the left-wing focus on equality by arguing that that focus ends up resulting in making the poor poorer – just by less than it makes the rich poorer:

I've never understood why it's an exchange held in quite such high regard – the bit at the end, where she starts making graphs with her hands, is a particularly excruciating bit of political communication – but the point does stick home. It's not that common to hear arguments for the poor to be made poorer, but it remains the case that policies which help both rich and poor are argued against on the grounds that they help the rich more.

There's good reasons for this, of course. As Richard Wilkinson and Kate Pickett's book The Spirit Level documents exhaustively, in developed nations like our own, a huge number of social, political and health outcomes are dictated by equality, not absolute wealth. So even given the fact that Thatcher's legacy was of the poor getting richer, the fact that that it included a massive increase in inequality may have meant that poor people were worse off at the end of her premiership than the beginning.

But if hurting the poor to hurt the rich more is a trap for socialists, there's a sort of parallel problem that Conservatives fall prey to: an opposition to redistribution which prevents them enacting policy combinations that help everyone.

A new paper by economists David Autor, David Dorn, and Gordon Hanson, titled "Untangling Trade and Technology: Evidence from Local Labor Markets", compares and contrasts the effects of trade and technology on employment. On the face of it, it doesn't matter to you whether you lose your job because a robot can do it cheaper, or because a Chinese labourer can do it cheaper: you still don't have your job, and your employer has more money. But in actual fact, the two have markedly different macroeconomic effects:

Trade exposure reduces overall employment and shifts the distribution of employment between sectors, [but] exposure to technological change has substantially different impacts, characterized by neutral effects on overall employment and substantial shifts in occupational composition within sectors.

Trade in particular is found to impose "particularly large" employment losses on workers without college education; but even technological change, which is neutral on "overall employment", has the effect of destroying middle income jobs while bolstering high- and low-paid labour.

Of course, all of that is background to the strong evidence that technological change and free trade make society as a whole richer. The problem isn't with the lack of gains – it's with the distribution of those gains.

How do you deal with good gains and a bad distribution? You bank the gains, and fiddle with the distribution. Cut taxes – or boost tax credits – at the bottom end of the income distribution, and pay for it with higher taxes at the top end. Or even just leave taxes at the top the same, and use the fact that the rich are getting richer – and thus paying more tax – to (more than) compensate the poor for the losses.

This is the lesson that Thatcher, and the Conservatives who have followed her, never learned. It's more than just economic good sense: it's politically useful, too, to be able to tell everyone that they will be made better off. Think how much easier the debate over immigration would be if the Tories could point to a tax cut – for the poor – which was funded through the increased gains migration brings.

In the language of economics, there are very few pareto-optimal policies left; the number of changes you can do which help everyone, as opposed to helping some and harming others, has dropped close to zero. But a good bundle of policies can still make everyone better off – and that bundle will nearly always include redistribution of wealth.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Manchester attack: Theresa May condemns "warped and twisted" terrorist

The Prime Minister said the police were treating the explosion at the Manchester Arena as "an appalling terrorist attack".

At least 22 people are dead and around 59 have been injured, including children, after an explosion at a concert arena in Manchester that is being treated as a terrorist attack.

Police believe the attack was carried out by a single suicide bomber, who also died. However, the police have also announced the arrest of a 23-year-old man in South Manchester in connection with the attack.

Speaking before the announcement, chief constable Ian Hopkins said: "We have been treating this as a terrorist attack." The attacker was named by papers late on Tuesday as Salman Abedi, a British man of Libyan heritage. The source for this is US, rather than British, intelligence.

The victims were young concertgoers and their parents. Victims include the 18 year old Georgina Callander and the eight year old Saffie Rose Roussos.

The Prime Minister Theresa May earlier said that the country's "thoughts and prayers" were with those affected by the attack. 

She said: "It is now beyond doubt that the people of Manchester and of this country have fallen victim to a callous terrorist attack, an attack that targeted some of the youngest people in our society with cold calculation.

"This was among the worst terrorist incidents we have ever experienced in the United Kingdom, and although it is not the first time Manchester has suffered in this way, it is the worst attack the city has experienced and the worst ever to hit the north of England."

The blast occurred as an Ariana Grande concert was finishing at Manchester Arena on Monday night. According to May, the terrorist deliberately detonated his device as fans were leaving "to cause maximum carnage". 

May said the country will struggle to understand the "warped and twisted mind" that saw "a room packed with young children" as "an opportunity for carnage". 

"This attack stands out for its appalling, sickening cowardice deliberately targeting innocent and defenceless children," she said. "Young people who should have been enjoying one of the most memorable nights of their lives."

She thanked the emergency services "on behalf of the country" for their "utmost professionalism" and urged anyone with information about the attack to contact the police. 

"The general election campaign has been suspended. I will chair another meeting of Cobra later today."

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Ending her statement, she said: 

"At terrible moments like these it is customary for leaders politicians and others to condemn the perpetrators and declare that the terrorists will not win. But the fact we have been here before and we need to say this again does not make it any less true. For as so often while we experienced the worst of humanity in Manchester last night, we also saw the best.

"The cowardice of the attacker met the bravery of the emergency services and the people of Manchester. The attempt to divide us met countless acts of kindness that brought people together and in the days ahead those must be the things we remember. The images we hold in our minds should not be those of senseless slaughter, but the ordinary men and women who put their own concerns for safety aside and rushed to help."

Emergency services, including hundreds of police, worked overnight to recover the victims and secure the area, while families desperately searched for their children. The dead included children and teenagers. The injured are being treated at eight hospitals in Greater Manchester, and some are in critical condition. 

The so-called Islamic State has claimed responsibility for the attack, although this has not been independently verified, and the organisation has been slow to respond. 

Theresa May chaired a Cobra meeting on Tuesday morning and another in the afternoon. She said police believed they knew the identity of the perpretator, and were working "at speed" to establish whether he was part of a larger network. She met Manchester's chief constable, the Manchester Mayor Andy Burnham, and members of the emergency services. A flat in a Manchester suburb has been raided. 

There were reports overnight of strangers offering their homes to concertgoers, and taxis taking people away from the scene of the explosion for free.

As the news broke, Grande, who had left the stage moments before the attack, tweeted that she felt "broken". 

Manchester's newly elected metro mayor, Andy Burnham, called the explosion "an evil act" and said: "After our darkest of nights Manchester is waking up to the most difficult of dawns."

He thanked the emergency services and the people of Manchester, and said "it will be business as usual as far as possible in our great city". 

Extra police, including armed officers, have been deployed on the streets of the city, and the area around the Manchester Arena remains cordoned off. Victoria Station is closed. 

The main political parties suspended campaigning for the general election for at least 24 hours after the news broke. Labour leader Jeremy Corbyn said: “I am horrified by the horrendous events in Manchester last night. My thoughts are with families and friends of those who have died and been injured.

“Today the whole country will grieve for the people who have lost their lives."

Scotland’s First Minister Nicola Sturgeon said: “My thoughts are with the victims, their families and all those who have been affected by this barbaric attack in Manchester."

Sadiq Khan, the Mayor of London, a city which suffered a terrorist attack two months ago, tweeted that: "London stands with Manchester."

The attack happened while many Brits were sleeping, but international leaders have already been offering their condolences. Justin Trudeau, the Prime Minister of Canada, tweeted that: "Canadians are shocked by the news of the horrific attack in Manchester." The Parliament of Australia paused for a minute's silence in remembrance of the dead. 

 

 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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