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How safe is your job?

This has been a year of financial panic, but 2009 will be dominated by unemployment. In a flexible l

The poster that won the 1979 general election was a fake. The "Labour isn't working" dole queue was ac tually composed of 20 fully employed Hendon Conservatives, photo graphed by Saatchi & Saatchi. But there was nothing synthetic about the impact that the poster had on the Labour government of James Callaghan. Never again, Labour resolved, could the party afford to go to the country when the country was out of work. Yet that is what Gordon Brown risks doing, if you believe the spin about him delaying the next general election until 2010.

This was a year of financial panic as oil prices spiked, banks collapsed and stock markets tumbled. But it is likely that 2009 will be the year of the dole. Unemployment, already higher than at any time since Labour came to office in 1997, is expected to climb to almost three million by 2010, according to the Confederation of British Industry. The turnaround in the UK employment market has been astonishing. The pace of job losses, led by the shake-out in the banking sector, has astounded analysts: the Centre for Economic and Business Research (CEBR) has forecast that 300,000 private-sector jobs will have been lost in the six months to the end of this year alone. The CBI's forecast, made only a few days ago, is almost certainly an underestimate, because it is based on Britain's GDP declining by 1.7 per cent in 2009. The Bank of England is now talking about the economy shrinking by 2 per cent next year, as Britain enters the worst recession since the 1980s. Capital Economics has forecast that unemployment will peak at 3.3 million in 2010.

The situation is already worse than the formal statistics suggest. Stephen King, of HSBC, argues that the official International Labour Organisation unemployment figures exclude two million people who are economically inactive but would like a job.

What is undeniable is that British firms are taking advantage of the "flexible" labour market to fire first and think later. Unusually, the region hardest hit is likely to be the one most able to cope: the south-east. The London area alone could lose 650,000 jobs, according to the Local Government Association. This is one of the wealthiest areas on the planet thanks to the financial services sector based in the City. Redundant middle-class professionals might find life a little different on £60-a-week Jobseeker's Allowance, but most can probably look after themselves. The people who will have their lives destroyed first are the legion of temporary and casual workers, many of whom do not figure in the unemployment statistics because of their age or country of origin.

Many of the new redundancies are unavoidable, but there are signs, too, that some firms are reducing their workforce as a message to shareholders, hoping to bolster their equity prices. When BT announced 10,000 redundancies on 13 November it made no attempt to play down the human cost and, according to some analysts, even exaggerated the job losses for effect.

After three decades of losing industries, the UK desperately needs to protect the skills it has left, not allow them to dissipate in the lengthening dole queues

Firms such as Virgin Media, Rolls-Royce, Yell, Wolseley and Citigroup have all announced thousand-plus job cuts in the past few weeks alone. The flexible labour market, inspired by the Tories and realised by new Labour, has allowed contraction to be a first, rather than a last, resort. It is the quickest way for a management in trouble to show that it is doing something.

The problem is that these job losses, rather like the banks' refusal to lend to small business, are enormously destructive to the broader economy. After nearly three decades of losing productive in dustries, the UK desperately needs to protect those skills it has, not allow them to dissipate in the dole queues. But with trade unions weak, employment law liberal and the government compliant, firms are being allowed to throw out the seedcorn of the future.

Only the state would be able to counter the effects of this attrition. In the pre-Budget report, the Chancellor's measures on benefits, pensions and VAT were intended to boost pre-Christmas demand in the high streets. However, the government is severely limited in its ability directly to fill the jobs gap. Yes, the public sector is still hiring, and will have put on 50,000 jobs in the six months to the end of the year, according to the CEBR. But, with public borrowing likely to reach at least £118bn next year, there will have to be a retrenchment in the labour-intensive public sector to get the public finances into some kind of order in the medium term. Make no mistake - the price of this year's fiscal stimulus is likely to be public-sector job losses, even with the Chancellor's heroic, and unrealistic, assumptions about an economic recovery in 2010.

In this instance, the weakness of the pound is unlikely to boost employment in export industries. This is a global recession, perhaps a global depression, and Britain cannot rely on international markets to replace lost domestic demand. There is also likely to be a wave of protectionism, starting in the US, as countries seek to save their own core industries with state subsidies and other anti-competitive tools. The world market may be a tougher place in which to sell in future. Anyway, Britain has lost most of its manufacturing base - down to 14 per cent of GDP.

In recent years, most of our "exports" have been in financial services - "invisibles", the demand for which will be slight for the duration of the credit crunch.

We can be thankful at least that the right man is in the White House at the right time. Alistair Darling has moved some way towards matching Barack Obama’s plan to create 2.5 million jobs over the next two years through public work projects and alternative energy investment. Yet this will not happen quickly and will do little to alter job losses already in train. And, in America, which is 12 to 18 months further advanced into the recession than Britain, life is already desperate for people on the margin.

The US department of agriculture reported on 17 November that the number of children who went hungry in 2007 - the first year of the credit crunch - jumped by 50 per cent to almost 700,000. It said that, overall, 12.2 per cent of Americans, 36.2 million people, "do not have the money or assistance to get enough food to maintain active, healthy lives". It could happen here.

At the very least Britain faces a return to a period of sustained joblessness, and to the destructive psychology that accompanied it. There will be dole queues, of course, but the social composition of the new jobless - led by financial services, property, retail - will be very different from what we saw in the early 1980s. As a recent report from the Chartered Institute of Personnel and Development argued, those at most risk in the coming "redundancy torrent" will be managers, professionals and skilled non-manual workers.

Tens of thousands of jobs are about to eva porate from British banks. Multiply that by all the professional jobs which depended on those middle-class incomes, such as estate agents and lawyers. Certainly, the first to be hit will be those at the bottom. But they are likely to be joined by large numbers of articulate, middle-class individuals shaken out of the financial, media and peripheral service occupations - from aroma therapy to management consultancy - which have grown up during the long boom.

Middle-class workers are not ready for this and it will be a shock to their self-confidence and self-esteem – a social and cultural transformation that could have profound political implications.

In the 1980s, the middle classes were still relatively secure in their career structures in management and the professions. They had homes, occupational pensions, clear employment paths. Certainly, they were a world away from the trade unionists fighting for their jobs in the old industrial heartlands of Britain. Margaret Thatcher relied on the middle classes to support her war on the militants with their braziers - and to blame them for the recession of the 1980s. The braziers are gone and the industrial working class has largely been dismantled. So, too, have the secure middle-class career structures.

Those who will suffer are the children of the baby boomers, who graduate with high debts and higher expectations

In the 1980s, professional and other white- collar jobs were, by and large, jobs for life, with annual pay increments, annual promotion, pension rights and a predictable future. Not any longer. The modern media, for example, are a shifting sea of freelance and contract workers for subcontractors to the large institutions. Even at the BBC, where I started out, there may be a crust of well-paid performers and anonymous executives who earn more than the Prime Minister, but below that is a huge army of irregulars, often on low salaries, coming in and out of the corporation's revolving doors. The commercial sector has been relying on large numbers of underpaid or unpaid "interns" desperate for work. This is the flexible labour market at its most pernicious. Such practices are widespread throughout the British economy.

Deregulation and leveraged buyouts by private equity over the past two decades have left many firms with flattened management structures, often relying on outside consultants to get them through busy periods. Occupational pensions have become a rarity. Promotion has become intensely meritocratic. Companies increasingly "offshore" white-collar functions to countries such as India, where an educated middle class is willing to work for much lower wages. Most of the job losses at BT are among self-employed contract workers in the UK; the firm has not cut any of the jobs it has outsourced to India.

The group hit hardest is the under-35s, sons and daughters of the postwar baby boomers, who have emerged from university with high debts and even higher expectations. These are the young people who have little experience of recession and none of mass unemployment. Neither have many of their parents, who lived through the 1970s and 1980s largely untouched by unemployment or debt. If there is to be a political response to the new depression, it is likely to emerge from this group of déclassé graduates, many of whom face a future without the security they have been brought up to expect. They will not be able to afford houses or establish careers. Indeed, the under-35s have so much personal debt that their net wealth is actually negative. Three-quarters of the under-35s are in the red, according to the Skipton Building Society, owing more than £9,000 on average. They will look to the state for security, but the state will not be able to deliver.

This time there is no trade union menace to blame for economic distress

A Ministry of Defence think tank has made a remarkable forecast about political militancy. The Development, Concepts and Doctrine Centre published a report in April 2007 in which it speculated that in coming years “the world’s middle classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest”. “The middle classes could become a revolutionary class taking the role envisaged for the proletariat by Marx . . . the growing gap between themselves and a small number of highly visible super-rich might fuel disillusion,” the report said.

The idea of a revolution sweeping suburbia is faintly risible, though it was a subject of a recent J G Ballard novel, Kingdom Come. But the MoD may have grasped an important truth about the nature of politics in the new global economy. It is beginning to erode class differentiation and has left many middle-income earners exposed to the kind of insecurities that formerly afflicted only lower-class workers. Clearly, the economic circumstances of management consultants cannot be compared directly with those of retail workers. But when they lose their jobs, they face very similar challenges: mortgage and credit-card debt, catastrophic loss of earnings and the need for retraining.

Part of the difficulty experienced by the Conservative leader, David Cameron, in developing a coherent political response to Gordon Brown's neo-Keynesianism, is that the party of capital has lost its "class enemy": the industrial working class. There is no trade union menace to blame for economic distress and the Conservatives have had to fall back on "fiscal conservatism" - or reduced public spending. This is simply not a priority for an electorate that is looking to the state to protect it from the predations of the market. Equally, new Labour under Brown has been forced almost against its will to become more critical of the plutocracy running the banks, to accept nationalisation and greatly increased government spending. Brown's government has even had to abandon one of the founding principles of new Labour by proposing higher taxes on the rich.

The Conservatives, who have not entirely lost their Thatcherite reflexes, are looking to the middle classes to react against the new profligacy - but they will find it difficult to do so. As un employment mounts among the middle classes, especially among the under-35s, there is going to be a much stronger demand for policies which promote jobs and growth even at the cost of public borrowing. The Tories cannot afford to be on the wrong side in this battle.

As Martin Hutchinson, author of Great Conservatives, has expressed it: "A world in which few if any have security in their livelihood is not conservative, it is anarchist. It is also deeply repugnant to the average voter."

If Labour isn't working, neither are the Conservatives.

This article first appeared in the 01 December 2008 issue of the New Statesman, How safe is your job?

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Donald Trump and the age of rage

What the rise of Trump tells us about our failing politics.

I met Donald Trump at a party in midtown Manhattan hosted by Dominick Dunne, the novelist and Vanity Fair journalist. It was October 1999 and the party was being held to celebrate the launch of Dunne’s new book, The Way We Lived Then, which is about old Hollywood (the title is a nod to Anthony Trollope).

Trump wasn’t there to talk to people, of course, but to be photographed, an ambition at which he fully succeeded, significantly helped by the presence of his striking new girlfriend, Melania Knauss (now his third wife). Trump’s urgent need to be noticed manifested itself as a kind of weird social radiance. What is interesting, from my point of view, is that I’ve forgotten the other guests at that party, many of equal ­celebrity, far greater achievement and much more ­interest. Trump registers with people, including, to my surprise, with me.

Those strands of Trump’s personality have served his presidential ambitions well. He leaves an impression, his central point of difference from the amorphous Beltway professionals whom he ridicules. “Ghastly” or “vulgar” aren’t really criticisms in Trump’s world-view; “forgettable”, however, is the bottom of the moral scale. This instantly creates asymmetries for his opponents: it is difficult to inflict reputational damage on a politician who neither needs nor craves respectability.

But personal magnetism – I cannot bring myself to type “charisma” – does not explain the Trump phenomenon. He is the most spectacular beneficiary of something far wider and more international: the perception that politics as we know it is failing. Running against Washington is as old as Washington, but never has it looked quite like this.

How do you like anti-politics now? For it is anti-politics – the contempt for the “establishment” and the convenient flight from serious debate about how it could better exercise power – that has taken Donald Trump to within striking distance of a shot at the White House. And as the search for the right person or plan to stop him becomes frantic (the responsibility is America’s, the concern is global), we should ask the wider questions. What if intelligent people – pundits and voters alike – had stood up more bravely for the political mainstream, pointing out the necessity of compromise, pragmatism and disappointment? Strands of the Republican Party now regret the visceral attacks they sanctioned against President Obama. The party unleashed a demotic rage that subsequently turned against its own establishment. The analogy applies far beyond the Republican Party: is anti-politics a parlour game that has got out of control?

Ironically, the ascent of the establishment as a focus of hatred and political anger has coincided with the decline of the establishment as an instrument of power. Think of the weakness of the establishment currently governing the Republicans in America. It has proved notably useless at doing all the things establishments are supposed to do: manipulate power behind the scenes, undermine mavericks and keep the show on the road.

This failure seems especially out of character for the Republicans. Even allowing for the insanity of its Tea Party strands, you would have expected the GOP – if its “establishment” was what we imagined it to be – to have snuffed out this Trump nonsense, probably during a grouse shoot in South Carolina, or over a few holes of golf at Augusta National in Georgia. Isn’t power what these people do? No longer, it seems, except in our imagination. So why are we so sure that the establishment, which can’t even cough up a decent candidate, is the power pulling the strings? I am beginning to wonder if the establishment’s new role, far from the exercise of unchecked power, is to provide a convenient palliative sideshow. So long as we insist that the establishment is messing up the world, then we won’t have to face up to tangible and worsening political problems and our reluctance to debate them seriously.

***

Donald Trump is both the em­bodiment of political failure and the result of political failure – or perceived political failure. He represents political failure because he has accelerated the descent of political discourse: “They’re rapists, build walls, ban Muslims.” He is the result of political failure because he taps in to a deep, subliminal anger: the conviction that “the system” has betrayed and abandoned the people.

Why do so many people feel this way, to the extent that even Trump (and other preposterous candidates) become palatable? Despite widespread political correctness, there is one group that it is perfectly legitimate to despise: politicians. When I worked for a newspaper, I was surprised one day to hear a reporter, usually so fair and mild-mannered, describe her hatred and contempt for politicians – “the worst people, just disgusting”. This is the kind of comment you hear from normally civilised and balanced people, who usually don’t know any politicians personally, but feel quite certain of the truth of their conviction.

In Britain, the parliamentary expenses scandal, though indefensible, was not the cause of this contempt, but rather its consequence. Given the strength of the underlying hatred, an appropriate story was always going to come along that allowed our contempt to be channelled into ridicule. I’ve seen news stories operate along the same lines in professional sport. When a manager or team has become unpopular with the fans, an event or “error” will act as a lightning rod for general ill-feeling. Usually the tipping point is quite routine; people get away with much worse when their stock is high.

Why are politicians and the “establishment” so despised? The new populism is partly a delayed consequence of the end of deference, in part fuelled by the emergence, especially on social media, of a strong, hard-edged and almost daily picture of “the will of the people”. Maybe this is what real democracy looks like?

Economics is also central to the “age of rage”. In the loosest terms – except among the very poorest – even “late capitalism” has continued to raise absolute living standards, albeit increasingly slowly. But few people judge their wealth according to absolute living standards. Wealth is perceived as relative to something else: relative to the past, relative to others (especially those inside “the establishment”) and, crucially, relative to individuals’ own expectations.

By those criteria, most people feel much poorer. The political class itself is the target of these economic frustrations, exacerbated by the financial crisis, even though politics is far from a complete explanation.

Second, there is a sense that politics has “failed” at ground level. This has two deep causes, which, taken together, create a significant credibility gap. First, as politics has been professionalised, its practitioners have become better at knowing what to say to get elected. Whatever their other failings, none of us can doubt that politicians spend more time than ever working out what the electorate wants, and devote greater energy towards trying to suggest that they know how to deliver it.

Having professionalised electoral messaging, politicians simultaneously professionalised avoiding controversy once in power. The degeneration of the political interview into unlistenable banalities is only one side of the coin. The flipside is the gaffe-hungry media, encouraged by an anti-politics sentiment in the electorate. The “gotcha” culture of debate doesn’t make politicians accountable, it makes them evasive.

The continual threat of being “caught out” saying the wrong thing – or saying ­anything – coexists with the perpetual expectation that politicians will be saying something at all times. We have drifted towards the assumption that politicians will speak in public non-stop, yet without taking any risks: the definition of a boring conversation. Trump’s ghastly voice seems fresh to so many people because he isn’t schooled in this tradition.

Professional political strategy clings to the notion that any vacuum creates space for an opposition advance. I think they’re wrong, and that it is impossible for politicians to have interesting and important things to say on the hour, every day. My view, in contrast, is that politicians devalue their own words by printing too many of them. But would they do it if the electorate didn’t expect it?

***

The ultra-professionalisation of politics has coincided with a huge crunch on the state’s capacity to expand. A simplistic history of politics in the second half of the 20th century would show parties winning power by handing out an ever-expanding range of goodies. Today, however, that ­arrangement is pincered from three sides: an ageing population, burgeoning expectations, and the weight of existing commitments to taxpayers, such as pensions. So, the central challenge facing overstretched liberal democracies is obvious: people want more services and benefits than they want to pay for. (Evidence that voters prefer not to focus on this contradiction lies in the remarkable success of Bernie Sanders, who promises more of everything without explaining how to pay for it. Both the Trump and the Sanders campaigns channel political disenchantment, but they exploit the feeling in opposite ways.)

For governments, however, a credibility deficit accumulates over the long term. And even quite effective administrations, as a result, leave the impression of significant underachievement. In other words, just when politicians have professionalised the art of saying the “right” thing, they have found it harder than ever to get things done in office. As with living standards, it is this deficit – the gap between political promises and governmental performance – that is causing problems, not the performance alone. Are today’s governments really worse than some of those gone? If so, when exactly were these exceptional governments of the past? These questions, intriguing as they are, do not figure in how people think.

How can the political class narrow the credibility gap? The tempting answer is to suggest providing the kind of sparkling, error-free government that has never existed and never will exist. The other problem, revising improbable expectations, at least might be achieved. In the ultra-professional era, political parties have suffered from a kind of prisoner’s dilemma: if, despite the long-term problem of credibility, they don’t play the media-friendly game of promises and button-pushing, someone else will.

After all, what does the alternative look like? “You can’t have this, lower your expectations, things are going to be hard”: it’s easy to see why politicians don’t relish saying these things, even when they’re true. The whole process that has led to today’s political disenchantment is all too rational: rational politicians coming up with rational avoidance strategies for problems that may not be soluble. Haven’t we, the electorate, played a part in that process, too?

Domestic frustrations are compounded by threats emanating from abroad. Hyper-terrorism, globalisation and migration on an unprecedented scale are huge problems and challenges with no obvious solutions. Donald Trump has exploited fears on both counts with crass answers. How much harder it is to turn complex approaches to the two problems into easy soundbites.

When I was living in New York in the late 1990s, the Clintons seemed to represent a great deal of what was wrong with politics. Ethically they hovered somewhere between dodgy and outright corrupt. Their personal relationship seemed an extension of political lobbying, more an alliance than a marriage; politically they told us how much they cared, rather than showing it. Bill had the partially redeeming quality of charm. Hillary had a talking-clock voice and predictable opinions – her 1996 book, It Takes a Village, was beyond parody – without Bill’s knowing wink.

And now? If she is up against Trump in November, I will happily stuff envelopes and campaign for her. Whatever it takes. The nature of my U-turn says everything about Trump: nothing about Hillary, whose reputation has become even more tarnished and whose political voice is more jaded. If she must be the future, we can be in no doubt about the impoverishment of the choice.

There is a view that a win for Hillary, and the restoration of competent (but cynical) middle-ground politics, will show the hollowness of anti-politics as a movement – a frenzy that won’t survive the cold rationality of the ballot box. This opinion holds that it is parties that have gone nuts, not the people. “This is not the revolt of the public against the party leadership,” argued Philip Collins in the Times. “It is the revolt of the party activists against the public.”

Yet the view that a Hillary win will see predictable centrism safely restored feels wide of the mark. I doubt a simple reprisal of Clinton-Blairism (which Daniel Finkelstein defined as the idea that it is “possible to do everything without upsetting anybody”) can get us out of this hole. Trump taps in to something frightening. If it’s defeated this time, it will still come back, even if the man will not. Until the deficit of political credibility is reduced, the demotic potential of the populist “outsider” will remain.

And next time I’m pretty sure it will be someone nastier than Donald Trump. The need is to find a better Hillary Clinton. That will only get harder if intelligent people go on paying lip-service to anti-politics. There are always establishments. The important question is how good they are.

Ed Smith is a contributing writer for the New Statesman

Ed Smith is a journalist and author, most recently of Luck. He is a former professional cricketer and played for both Middlesex and England.

This article first appeared in the 14 April 2016 issue of the New Statesman, The making of a monster