What Peter Oborne doesn’t get

Maybe Oborne didn’t notice that the whole basis for the Chancellor’s economic strategy – stemming from work by Carmen Reinhart and Kenneth Rogoff – has been shown to be ruined by spreadsheet errors.

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‘‘Economics in the end trumps politics,” said Peter Oborne on Newsnight in his infamous 2011 “that idiot in Brussels” interview. At the time, Jeremy Paxman accused him of being gratuitously offensive – and it seems to be his modus operandi. The mouthy buffoon (MB) was similarly offensive again the other day in a delusional Telegraph column, “The left talks gibberish while David Cameron racks up successes”, in which he argued that after three years the Tory-Lib Dem coalition’s daring reforms are “starting to pay dividends”. No mention, naturally, of the 50-odd U-turns such as the pasty tax, the joint strike fighter and minimum alcohol pricing.
The MB accused me of being a “cod-Keynesian”, which is rather surprising, given that I’ve never expressed any view whatsoever about the fishing industry.
Let’s plaice his comments in context. The MB apparently spoke with Tony Travers, who, he argued, is from the “respectable” part of the London School of Economics, even though he is not a member of the permanent faculty. I am wondering whether he thinks my distinguished friends Tim Besley, John Van Reenen, the Nobel laureate Christopher Pissarides, Nick Stern and John Hills are from the “respectable” bit. Or Richard Layard, or David Metcalf?
Let’s go through a couple of other bits of nonsense. First: “. . . the government’s audacious and thoughtful strategy for economic and social reform is holding up very well”. You could have fooled me. Unemployment is 2.5 million and still rising – the last six monthly observations were 7.8 per cent, 8.1 per cent, 8.0 per cent, 7.4 per cent, 8.0 per cent and 8.0 per cent, and the employment rate is falling. Youth unemployment is still around a million, long-term unemployment is rising and real wages continue to fall. “Thoughtful” the strategy is not. Indeed, it is hard to find a single economist who supports it.
Maybe Oborne didn’t notice that the whole basis for the Chancellor’s economic strategy – stemming from work by Carmen Reinhart and Kenneth Rogoff – has been shown to be ruined by spreadsheet errors. Recall that in 2010 the Chancellor argued in his Mais Lecture that: “The latest research suggests that once debt reaches more than about 90 per cent of GDP, the risks of a large negative impact on long-term growth become highly significant.” We now know it doesn’t.
The underlying picture for the public finances is one of stalled progress in deficit reduction. As the independent consultancy Capital Economics notes, “stripping out various temporary factors, the fiscal position remains fragile”.
Then there’s this from Oborne: “Economic growth, though weak, has not been entirely extinguished in a weak international environment. Anyone who predicted such an outcome three years ago would have been labelled mad.”
In his Budget statement of 22 June 2010 the Chancellor said as follows: “Growth in the UK economy for the coming five years is estimated to be: 1.2 per cent this year and 2.3 per cent next year; then 2.8 per cent in 2012 followed by 2.9 per cent in 2013.” We got 1.7 per cent, then 1.1 per cent and 0.2 per cent and perhaps 1 per cent for 2013. Great success – growth was a quarter of what was predicted by the coalition.
Oborne is right about one thing: economics in the end trumps politics. Given the worst lack of recovery in a century, the only sensible conclusion is that Cameron has established a track record of economic failure. No dividends.
David Blanchflower is the New Statesman’s economics editor 
George Osborne. Photograph: Getty Images

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

This article first appeared in the 29 July 2013 issue of the New Statesman, Summer Double Issue

Photo: Getty Images
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How can the left make the case for immigration?

All too often, we drift into telling people we want to convince that they just don't get it.

We don’t give the public enough credit. You’ll often hear their views dismissed with sighs in intellectual circles. In fact on most issues the public are broadly sensible, most are these days supportive of cutting the deficit and dubious about political giveaways, but in favor of protecting spending on the NHS and education. Yet there is one issue where most, “knowledgeable” folks will tell you the public are well out of step: immigration. 

With [today’s] net migration figures showing yet another record high, it is an ever more salient issue. On a lot of measures ‘too much immigration’ ranks highest as the number one concern (see Ipossmori). The ongoing rise of right wing political parties across Europe demonstrates that simply enough. But concerns about immigration don’t just sit with those with more extreme views, they’re also shared across the mainstream of public opinion. Yet unlike thinking on cutting the deficit or funding the NHS the public consensus that immigration is bad for Britain, flies flat in the face of the intellectual consensus, and by that I mean the economics. 

Given the intense public debate many a study has tried to spell out the economic impact of immigration, most find that it is positive. Immigration boosts the nation’s GDP. As the theory goes this is because immigrants bring with them entrepreneurialism and new ideas to the economy. This means firstly that they help start new ventures that in turn create more wealth and jobs for natives. They also help the supply chains to keep ticking. A example being British agriculture, where seasonal workers are are needed, for example, to pick the strawberries which help keeps the farms, the truckers and the sellers in business. 

Most studies also find little evidence of British jobs being lost (or displaced) due to immigrants, certainly when the economy is growing. Indeed economists refer to such “ “they’re” taking our jobs” arguments as the “lump of labour fallacy’. On top of all that the average migrant is younger than the native population and less likely to rely on welfare, so their net contribution to the state coffers are more likely to be positive than natives as they don’t draw as much state spending from pensions or the NHS. 

So why haven't the public cottoned on? Many progressive types dismiss such views as racist or xenophobic. But it turns out this is to misunderstand the public just as much as the public ‘misunderstand’ immigration. When you study people’s views on immigration more closely it becomes clear why. Far from being racist most people asked by focus groups cite practical concerns with immigration. Indeed if you go by the British Social Attitudes Survey a much smaller number of people express racist view than say they are concerned about migration.  

The think tank British Future broadly set out that while a quarter of people are opposed to immigration in principle and another quarter are positive about it the majority are concerned for practical reasons - concerns about whether the NHS can cope, whether there are enough social houses, whether our border controls are up to scratch and whether we know how many people are coming here in the first place (we don’t since exit checks were scrapped, they only came back a few months ago). But more than anything else they also have very little confidence that government can or wants to do anything about it. 

This truth, which is to often ignored, begets two things. Firstly, we go about making the argument in the wrong way. Telling someone “you don’t understand immigration is good for our economy etc etc” is going to get a reaction which says “this person just doesn't get my concerns”. Despite the moans of progressives, this is precisely why you won't hear left leaning politicians with any nous ‘preaching’ the the unconditional benefits of immigration.

More importantly, the economic arguments miss the central issue that those concerned with immigration have, that the benefits and effects of it are not shared fairly. Firstly migrants don’t settle homogeneously across the country, some areas have heavy influxes other have very little. So while the net effect of immigration may be positive on the national tax take that doesn't mean that public services in certain areas don’t loose out. Now there isn't clear evidence of this being the case, but that could just as well be because we don’t record the usage of public services by citizenship status. 

The effects are also not equal on the income scale, because while those of us with higher incomes scale tend to benefit from cheep labour in construction, care or agriculture (where many lower skilled migrants go) the lower paid British minority who work in those sectors do see small downward pressure on their wages. 

It’s these senses of unfairness of how migration has been managed (or not) that leads to the sense of concern and resentment. And any arguments about the benefit to the UK economy fail to answer the question of what about my local economy or my bit of the labour market. 

Its worth saying that most of these concerns are over-egged and misused by opponents of immigration. Its only a small factor in stagnating wages, and few local areas are really overrun. But the narrative is all important, if you want to win this argument you have to understand the concerns of the people you are trying to convince. That means the right way to make the argument about immigration is to start by acknowledging your opponents concerns - we do need better border controls and to manage demands on public services. Then persuade them that if we did pull up the drawbridge there is much we’d loose in smart entrepreneurs and in cultural diversity. 

Just whatever you do, don’t call them racist, they’re probably not.

Steve O'Neill was deputy head of policy for the Liberal Democrats until the election.