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Say no to protectionism

The most important focus for the left should be on equipping people to live in an uncertain economic

François Hollande may be running for president of France, but his election manifesto reads to me like a sign of the general times for the global left. Parts of it could have been written by the protesters in Athens or Madrid. Parts of it could have been lifted from Barack Obama's recent State of the Union speech. What links them is a sense of lost control and a desire to take it back. Control taken away by financial markets, by the forces of globalisation, in Europe by Brussels and, by implication, Berlin.

This is an important moment for the left. Globalisation is attacked from all sides. Capitalism is apparently in crisis. The EU's collective rush to austerity politics presents a grave threat to growth. The instinct of the left is to position itself against all three, but it needs to choose its targets carefully. This implied warning was the theme of an IPPR report I helped prepare on the "Third Wave of Globalisation".

If the left's strategy is to take back a greater measure of control over our economic lives there are plenty of credible candidates. Tougher regulation of financial markets will help, as will promoting greater long-termism in investment. Reducing deficits at an appropriate pace will help keep the bond market off our backs. But the most important focus for the left should be on equipping people to live in an uncertain economic world, not shutting that world out. Railing against globalisation misses the target.

Because globalisation itself is not really the problem. The pre-globalised world was not a secure and egalitarian paradise. Every politician who has ever uttered the words "export-led recovery" has acknowledged the reality that Britain and Europe need to sell to global markets to prosper. Our huge European single market and the growing markets of the emerging world are critical to our economic future.

However, you cannot realistically be pro-exports but anti-imports in an international economy built on global supply chains, as much of what we import we transform into goods that we then sell abroad. Every politician who has ever worried about the cost of living must have noticed that international production models have lowered the costs of the basics of life to levels that have no precedent in economic history.

The banking crisis discredited certain kinds of financial capitalism and financial regulation, not capitalism in general. It was a warning about consumer debt and the fact that you can't build an economy on it. It was a warning about short-term incentives trumping long-term goals. And in its aftermath we recognise very starkly that the gap between the rich and the rest in our society has grown unacceptably wide. But these are problems of taxation, regulation, corporate culture and personal responsibility. We still have to have faith in the basic model of an open and competitive economy.

What is undeniable is that open markets on a global scale have increased the competitive pressure on the west in a way that has made life a lot more insecure for anyone whose livelihood depends on the production of internationally traded goods, which is a very large and increasing number of us. That insecurity, coupled with the growing inequality of the past decade, is a genuine political problem that demands a real solution.

Holes in the net

The European left should seize the opportunity to argue, contrary to the prevailing political view internationally, that the European social model remains our best tool for living with globalisation. Not because it is a burden on our flexibility to compete but because, designed right, it can be central to our competitiveness. It makes us less vulnerable to volatile collapses in demand by ensuring a minimum level of income. It can make us more flexible and confident if it gives workers confidence that unemployment will not be a life-destroying tragedy. Thoughtful Republican commentators in the US have occasionally drawn the connection between the US's weak safety net and its vulnerability to blue-collar calls for job protection. If losing your job means losing your health care, protectionism will always trump openness.

There is no question that many of Europe's social models need dramatic reform to make them affordable and durable. They can be a dependency trap if badly designed. But this is a challenge of practice, not of principle. A big part of the challenge of exiting from the eurozone crisis is putting in place that reform plan. The current EU fiscal treaty prioritises deficit contraction over everything else in a way that poses a serious challenge to Europe if it is not balanced by a new, concerted growth strategy.

Our long-term strategy has to include a credible plan for deficit reduction and public-sector reform on a realistic timetable. It needs to include a growth plan that spends Europe's structural funds better on building future competitive capabilities and a medium-term prospect for collective liability of eurozone debts.

It also has to include reform of Europe's social models for a different century. The passion, pro-Europeanism and urgency in the Hollande campaign can and should be channelled into all of these aims. A realistic, responsible "Non" to some of the prevailing tenets of conservative economic strategy is needed. The same challenge faces the rest of the European centre left. The left has arguments to win this debate if it can overcome the instinct to lose it.

Lord Mandelson led a policy review for IPPR on globalisation which was published last month

This article first appeared in the 20 February 2012 issue of the New Statesman, How do we stop Iran getting the bomb?

Photo: Getty Images
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No, IDS, welfare isn't a path to wealth. Quite the opposite, in fact

Far from being a lifestyle choice, welfare is all too often a struggle for survival.

Iain Duncan Smith really is the gift that keeps on giving. You get one bile-filled giftbag of small-minded, hypocritical nastiness and, just when you think it has no more pain to inflict, off comes another ghastly layer of wrapping paper and out oozes some more. He is a game of Pass the Parcel for people who hate humanity.

For reasons beyond current understanding, the Conservative party not only let him have his own department but set him loose on a stage at their conference, despite the fact that there was both a microphone and an audience and that people might hear and report on what he was going to say. It’s almost like they don’t care that the man in charge of the benefits system displays a fundamental - and, dare I say, deliberate - misunderstanding of what that system is for.

IDS took to the stage to tell the disabled people of Britain - or as he likes to think of us, the not “normal” people of Britain -  “We won’t lift you out of poverty by simply transferring taxpayers’ money to you. With our help, you’ll work your way out of poverty.” It really is fascinating that he was allowed to make such an important speech on Opposite Day.

Iain Duncan Smith is a man possessed by the concept of work. That’s why he put in so many hours and Universal Credit was such a roaring success. Work, when available and suitable and accessible, is a wonderful thing, but for those unable to access it, the welfare system is a crucial safety net that keeps them from becoming totally impoverished.

Benefits absolutely should be the route out of poverty. They are the essential buffer between people and penury. Iain Duncan Smith speaks as though there is a weekly rollover on them, building and building until claimants can skip into the kind of mansion he lives in. They are not that. They are a small stipend to keep body and soul together.

Benefits shouldn’t be a route to wealth and DWP cuts have ensured that, but the notion that we should leave people in poverty astounds me. The people who rely on benefits don’t see it as a quick buck, an easy income. We cannot be the kind of society who is content to leave people destitute because they are unable to work, through long-term illness or short-term job-seeking. Without benefits, people are literally starving. People don’t go to food banks because Waitrose are out of asparagus. They go because the government has snipped away at their benefits until they have become too poor to feed themselves.

The utter hypocrisy of telling disabled people to work themselves out of poverty while cutting Access to Work is so audacious as to be almost impressive. IDS suggests that suitable jobs for disabled workers are constantly popping out of the ground like daisies, despite the fact that his own government closed 36 Remploy factories. If he wants people to work their way out of poverty, he has make it very easy to find that work.

His speech was riddled with odious little snippets digging at those who rely on his department. No one is “simply transferring taxpayers’ money” to claimants, as though every Friday he sits down with his card reader to do some online banking, sneaking into people’s accounts and spiriting their cash away to the scrounging masses. Anyone who has come within ten feet of claiming benefits knows it is far from a simple process.

He is incredulous that if a doctor says you are too sick to work, you get signed off work, as though doctors are untrained apes that somehow gained access to a pen. This is only the latest absurd episode in DWP’s ongoing deep mistrust of the medical profession, whose knowledge of their own patients is often ignored in favour of a brief assessment by an outside agency. IDS implies it is yes-no question that GPs ask; you’re either well enough to work or signed off indefinitely to leech from the state. This is simply not true. GPs can recommend their patients for differing approaches for remaining in work, be it a phased return or adapted circumstances and they do tend to have the advantage over the DWP’s agency of having actually met their patient before.

I have read enough stories of the callous ineptitude of sanctions and cuts starving the people we are meant to be protecting. A robust welfare system is the sign of a society that cares for those in need. We need to provide accessible, suitable jobs for those who can work and accessible, suitable benefits for those who can’t. That truly would be a gift that keeps giving.