Power v poverty

Privatisation, free trade and market forces . . . the rich world insists poor states play by our rul

The global food price crisis is exposing frightening levels of vulnerability in poor nations around the world. Yet these are countries into which the rich world, for half a century or more, has diverted hundreds of billions of dollars of humanitarian aid in pursuit of the high ideal of ending poverty. It is a good moment to take stock and ask what went wrong.

Compare two of the most vulnerable economies, Haiti and Botswana. In Haiti, spiralling food prices have in recent months prompted widespread rioting, claiming the lives of six people and forcing the resignation of the prime minister. This unrest has set back the search for political stability in an archetypal "fragile state". No such riots have occurred in the Southern African nation of Botswana. In a country that imports 90 per cent of its food, soaring prices have undoubtedly hurt the poor, but the state has the money and capacity to help them cope.

Why does Haiti sink while Botswana swims? A landlocked state with a small population and an arid landscape, Botswana has a high dependence on diamonds - the very "curse of wealth" that has destabilised many other African countries. At independence in 1966, it had just two secondary schools and 12km of paved road, and relied on the UK for half of government revenues. Botswana ought to be a basket case.

But Botswana has become Africa's most enduring success story. Its GDP per capita has risen a hundredfold since independence. Over the past three decades it has been the world's fastest-growing economy. It negotiated hard-fought deals for its diamonds with De Beers and used the royalties well. It has throughout remained one of sub-Saharan Africa's few non-racial democracies, despite being bordered (and occasionally invaded) by racist regimes in South Africa and Rhodesia.

The secret of Botswana's success lies in politics. The country's elite come from a single dominant ethnic group (the Batswana) whose governance systems, emphasising broad consultation and consensus-building, emerged largely unscathed from colonialism. Botswana's leading human rights activist calls it "gentle authoritarianism". The government broke every rule in the so-called Washington consensus, setting up state-owned companies, nationalising mineral rights and steering the economy via six-year national development plans. "We are a free-market economy that does everything by planning," one local academic told me, laughing.

In the second half of the 20th century, dozens of developing countries emulated Botswana's success and achieved similar growth rates. "Getting the politics right" was key for them all. These countries have built effective states that guarantee the rule of law, ensure a healthy and educated population, control their national territories and create a positive environment for investment, growth and trade. For many, the growth spurt began with the redistribution of land and other assets.

This story bears little relation to the cruder theories of development advanced by rich-country governments or, for that matter, some NGOs. Yet, getting the politics right really can "make poverty history". Aid alone cannot.

In many countries the state remains a work in progress and the rosy picture is not without flaws. Power battles and shifting alliances mean reverses are frequent. Raw power and gangsterism prevail in states that are more master than servant to their citizens. In his novel Nineteen Eighty-Four, written at the onset of the Cold War, George Orwell portrayed a totalitarian state built around the cult of Big Brother: "If you want a picture of the future, imagine a boot stamping on a human face - for ever." In the 20th century, some 170 million people were killed by their own governments, four times the number killed in wars between nations. But the worse deprivation and suffering now are not Orwellian in nature. They exist where states are weak: half of all children who die before the age of five live in states defined as "fragile".

Fixing this is not easy, but it can be done. Some states once branded as "failing" provide evidence. Malaysia went within a few decades from a post-independence meltdown of ethnic rioting to an industrial powerhouse. The economist Ha-Joon Chang points to his own country, South Korea, from where, in the 1960s, government officials were sent by the World Bank to Pakistan and the Philippines to "learn about good governance". The pupil swiftly outstripped the master.

If you define development merely as rising GDP per capita, then the story almost ends there - effective states create the basis for rapid growth. But development, parti cularly tackling poverty, is about far more than that. When the World Bank, in an unprecedented exercise, asked 64,000 poor people around the world about their lives, what emerged was a complex and human account of poverty, encompassing issues that are often ignored in the academic literature: the importance of being able to give one's children a good start in life, the mental anguish that poverty brings. The overall conclusion was that, "again and again, powerlessness seems to be at the core of the bad life".

Tackling such powerlessness is not just about election campaigns and government. Building "power within" - for example, women's assertiveness to insist on their right not to be beaten in the home - and "power with" - in the form of collective organisation - is essential to achieving the wider empowerment that transforms politics and societies.

In 1900, New Zealand was the only country with a government elected by all its adult citizens. By the end of the century, despite severe reversals, including fascism and communism, and succeeding waves of military coups against elected governments, there were ostensibly 120 electoral democracies in place. Democracies are often flawed and, as we have seen in several African countries, progress is reversible, but the overall trend remains positive.

Successful transformations

Effective states in east Asia and elsewhere have typically taken off under autocracies. In Latin America, active social movements and political organisations have rarely been accompanied by effective states. Does this mean active citizenship and efficient governments are mutually exclusive? Happily, the evidence suggests that the "Asian values" argument for benign dictatorship, once espoused by leaders in Singapore and Mal aysia, is wrong. A recent survey by the Harvard economist Dani Rodrik found that democracies produce more predictable long-run growth rates, greater short-term stability and more equality, and are better able to handle economic shocks.

Many of the countries that have had active citizens and been run efficiently have already ceased to be poor and disappeared off the development radar. Some of the most successful transformations in the past century, such as those of Sweden and Finland, have been triggered by social pacts within a democracy, showing what the combination of activism and good government can achieve.

Yet, though this combination is at the heart of development, it is seldom acknowledged in debates about the "development industry", typified by international institutions such as the World Bank and the IMF. Here, economic policy is king, and politics is often seen as an irritating process through which unworthy individuals use their power to unravel the plans of wise economists. "Getting the prices right" requires the state to get out of economic management, freeing the stage for the true heroes of development: the entrepreneurs.

It hasn't worked. The retreat of the state in Latin America, once a faithful devotee of Washington consensus prescriptions, failed to lead to lasting progress. Meanwhile, countries such as China and Vietnam, which maintained a central role for the state, prospered.

The importance of politics in development will only grow. The world is entering a new age of scarcity, in which food, water and carbon are rationed, either explicitly, through regulation, or implicitly, by price. In this environment, conflicts over access to basic resources are bound to intensify. Politics and power will decide who gets what.

All this poses challenges to the $100bn global development industry. Official donors such as the UK's Department for International Development are trying to reassess their thinking to understand better the role of politics in development. But they face a dilemma: any outside body, especially a government institution, interferes with domestic politics in developing countries at its peril. To get round this, there is always a temptation to turn political issues into technical ones - for example, by focusing on "governance" or "institution-building". But, by failing to confront issues of power, such approaches often give rise to the same frustrations as those that focus on economic policy: why won't these countries do what's good for them?

From grass roots to government

International organisations such as Oxfam have long been criticised by some developing-country partner organisations for preferring policy to politics. But they face real limits. Charity law, mission and bitter experience should dissuade them from becoming mere support groups for any political party in a given developing country. Instead, they have to promote empowerment without becoming politicised. It is a fine line to tread, but it is eminently feasible.

In Bolivia, for example, 20 years of support for the Chiquitano Indians helped them move from semi-slavery to becoming a political force, with the founding of indigenous people's organisations, such as that led by José Bailaba, and the election of Chiquitano mayors and senators. Following the election of South America's first indigenous president, Evo Morales, a land reform bill gave the Chiquitanos rights to a million hectares of traditional lands.

Even though the alchemy of development takes place primarily in the crucible of effective states with active citizens, global institutions such as aid donors, the UN and transnational corporations play a significant role.

Nation states will not wither away, even if their actions are constrained by an ever-growing web of global and regional trade agreements, bilateral investment treaties and the proliferating "soft law" of international conventions and codes of conduct on everything from financial services to human rights. Rich-country governments and their citizens need to ensure that this system of global government supports national development efforts based on the state and its people working together. They must also deter powerful countries and corporations from doing harm, whether through paying bribes or imposing policies that hurt the poor.

The fight against poverty, inequality and environmental collapse will define the 21st century, as the fight against slavery or for universal suffrage defined earlier eras. It is hard to imagine a more worthwhile cause.

Duncan Green is the author of From Poverty to Power
published by Oxfam on 23 June

This article first appeared in the 23 June 2008 issue of the New Statesman, Truly, madly, politically

JON BERKELEY
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The empire strikes back

How the Brexit vote has reopened deep wounds of empire and belonging, and challenged the future of the United Kingdom.

Joseph Chamberlain, it has been widely remarked, serves as an inspiration for Theresa May’s premiership. The great municipal reformer and champion of imperial protectionism bestrode the politics of late-Victorian and Edwardian Britain. He was a social reformer, a keen ­unionist and an advocate for the industrial as well as the national interest – all values espoused by the Prime Minister.

Less noticed, however, is that May’s excavation of Chamberlain’s legacy is a symptom of two larger historical dynamics that have been exposed by the vote for Brexit. The first is the reopening on the British body politic of deep wounds of race, citizenship and belonging, issues that home rule for Ireland, and then the end of empire, followed by immigration from the former colonies, made central to British politics during the 20th century. Over the course of the century, the imperial subjects of the queen-empress became British and Irish nationals, citizens of the Commonwealth and finally citizens of a multicultural country in the European Union. The long arc of this history has left scars that do not appear to have healed fully.

The second dynamic is the renewal of patterns of disagreement over free trade and social reform that shaped profound divisions roughly a century ago. Specifically, the rivalry was between a vision of Britain as the free-trade “world island”, supported by the City of London and most of the country’s governing elite, and the protectionist project, or “imperial preference”, articulated by Chamberlain, which sought to bind together the British empire in a new imperial tariff union, laying the foundations for industrial renewal, social progress and national security. The roots of these commitments lay in his career as a self-made businessman and reforming mayor of Birmingham. A leading Liberal politician, Chamberlain broke with his own party over home rule for Ireland and, with a small group of Liberal Unionists, joined Lord Salisbury’s Conservative government of 1895, becoming colonial secretary. He subsequently resigned in 1903 to campaign on the question of imperial preference.

The fault lines in contemporary political economy that Brexit has starkly exposed mimic those first staked out in the early part of the 20th century, which lie at the heart of Chamberlain’s career: industry v finance, London v the nations and regions, intervention v free trade. This time, however, these divides are refracted through the politics of Britain’s relationship with Europe, producing new economic interests and political ­alliances. What’s more, the City now serves the European economy, not just Britain and her former colonies.

Chamberlain is the junction between these two critical dynamics, where race and political economy interweave, because of his advocacy of “Greater Britain” – the late-Victorian idea that the white settler colonies of Canada, Australia, New Zealand and South Africa should be joined with the mother country, in ties of “kith-and-kin” solidarity, or more ambitiously in a new imperial federation. Greater Britain owed much to the Anglo-Saxonism of Victorian historians and politicians, and was as much a Liberal as a Conservative idea. Greater Britain was a new way of imagining the English race – a ten-million-strong, worldwide realm dispersed across the “white” colonies. It was a global commonwealth, but emphatically not one composed of rootless cosmopolitans. Deep ties, fostered by trade and migration, held what the historian James Belich calls “the Anglo-world” together. It helped equip the English with an account of their place in the world that would survive at least until the 1956 Suez crisis, and it was plundered again by latter-day Eurosceptics as they developed a vision of the UK as an integral part, not of the EU, but of an “Anglosphere”, the liberal, free-market, parliamentary democracies of the English-speaking world.

Greater Britain carried deep contradictions within itself, however. Because it was associated with notions of racial membership and, more specifically, with Protestantism, it could not readily accommodate divisions within the UK itself. The political realignment triggered by Chamberlain’s split with Gladstone over Irish home rule, which set one of the most enduring and intractable political divides of the era, was symptomatic of this. For Chamberlain, Irish home rule would have entailed Protestant Ireland being dominated by people of “another race and religion”. Unless there could be “home rule all round” and a new imperial parliament, he preferred an alliance with “English gentlemen” in the Tory party to deals with Charles Stewart Parnell, the leader of Ireland’s constitutional nationalists.

The failure of Chamberlain’s kith-and-kin federalism, and the long struggle of nationalist Ireland to leave the UK, left a bitter legacy in the form of partition and a border that threatens once again, after Brexit, to disrupt British politics. But it also left less visible marks. On Ireland becoming a republic, its citizens retained rights to travel, settle and vote in the UK. The Ireland Act 1949 that followed hard on the Irish Free State’s exit from the Commonwealth defined Irish citizens as “non-foreign”.

A common travel area between the two countries was maintained, and when immigration legislation restricted rights to enter and reside in the UK in the 1960s and 1970s, Irish citizens were almost wholly exempted. By the early 1970s, nearly a million Irish people had taken up their rights to work and settle in the UK – more than all of those who had come to Britain from the Caribbean and south Asia combined. Even after the Republic of Ireland followed the UK into the European common market, its citizens retained rights that were stronger than those given to other European nationals.

In 1998, the Good Friday Agreement went a step further. It recognised the birthright of all the people of Northern Ireland to hold both British and Irish citizenship. Common EU citizenship north and south of the border made this relatively straightforward. But under a “hard Brexit”, Britain may be asked to treat Irish citizens just like other EU citizens. And so, unless it can secure a bilateral deal with the Republic of Ireland, the UK will be forced to reinvent or annul the common travel area, reintroducing border and customs controls and unstitching this important aspect of its post-imperial, 20th-century settlement. Will Ireland and its people remain “non-foreign”, or is the past now another country?

 

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Today’s equivalent of 19th-century Irish nationalism is Scottish national sentiment. Like Gladstone and his successors, Theresa May is faced with the question of how to accommodate the distinct, and politically powerful, aspirations of a constituent nation of the United Kingdom within the unsteady framework associated with the coexistence of parliamentary sovereignty and ongoing devolution. Scotland’s independence referendum bestowed a sovereign power on its people that cannot be set aside in the Brexit negotiations. The demand for a “flexible Brexit” that would allow Scotland to stay in the European single market is also, in practice, a demand for a federal settlement in the UK: a constitutional recognition that Scotland wants a different relationship to the EU from that of England and Wales.

If this is not couched in explicitly federal terms, it takes the unitary nature of the UK to its outer limits. Hard Brexit is, by contrast, a settlement defined in the old Conservative-Unionist terms.

Unionism and federalism both failed as projects in Ireland. Chamberlain and the Conservative Unionists preferred suppression to accommodation, a stance that ended in a war that their heirs ultimately lost.

Similarly, the federal solution of Irish home rule never made it off the parchment of the parliamentary legislation on which it was drafted. The federalist tradition is weak in British politics for various reasons, one of which is the disproportionate size of England within the kingdom. Yet devising a more federal arrangement may now be the only means of holding the UK together. May’s unionism – symbolised by her visit to Edinburgh to meet Scotland’s First Minister, Nicola Sturgeon, in the first days of her premiership – will be enormously tested by a hard Brexit that cannot accommodate Scottish claims for retention of single-market status or something close to it. Separation, difficult as this may be for the Scottish National Party to secure, may follow.

The idea of Greater Britain also left behind it a complex and contentious politics of citizenship. As colonial secretary at the end for 19th century, Chamberlain faced demands for political equality of the subjects of the crown in the empire; Indians, in particular, were discriminated against in the white settler colonies. He strongly resisted colour codes or bars against any of the queen’s subjects but allowed the settler colonies to adopt educational qualifications for their immigration laws that laid the foundation for the racial discrimination of “White Australia”, as well as Canadian immigration and settlement policies, and later, of course, the apartheid regime in South Africa.

Nonetheless, these inequalities were not formally written into imperial citizenship. The British subject was a national of the empire, which was held together by a common code of citizenship. That unity started to unravel as the colonies became independent. Specifically, a trigger point was reached when, in 1946, the Canadian government legislated to create a new national status, separate and distinct from the common code of imperial citizenship hitherto embodied in the status of the British subject.

The Attlee government responded with the watershed British Nationality Act 1948. This created a new form of citizenship for the UK and the colonies under its direct rule, while conferring the status of British subject or Commonwealth citizen on the peoples of the former countries of empire that had become independent. It was this that has made the act so controversial: as the historian Andrew Roberts has argued, it “gave over 800 million Commonwealth citizens the perfectly legal right to reside in the United Kingdom”.

This criticism of the act echoed through the postwar decades as immigration into the UK from its former empire increased. Yet it is historically misplaced. The right to move to the UK without immigration control had always existed for British subjects; the new law merely codified it. (Indeed, the Empire Windrush, which brought British subjects from the Caribbean to London in June 1948, docked at Tilbury even before the act had received royal assent.)

At the time, ironically, it was for precisely opposite reasons that Conservative critics attacked the legislation. They argued that it splintered the subjects of empire and denied them their rights: “. . . we deprecate any tendency to differentiate between different types of British subjects in the United Kingdom . . . We must maintain our great metropolitan tradition of hospitality to everyone from every part of our empire,” argued Sir David Maxwell Fyfe, the Tory shadow minister of labour and future home secretary.

As the empire withered away in the postwar period, some Conservatives started to change their minds. Enoch Powell, once a staunch imperialist, came to believe that the idea of the Commonwealth as a political community jeopardised the unity of allegiance to the crown, and so was a sham. The citizens of the Commonwealth truly were “citizens of nowhere”, as Theresa May recently put it. As Powell said of the 1948 act: “It recognised a citizenship to which no nation of even the most shadowy and vestigial character corresponded; and conversely, it still continued not to recognise the nationhood of the United Kingdom.”

Once the British empire was finished, its core Anglo-Saxon populace needed to come back, he believed, to find their national mission again, to what he viewed as their English home – in reality, the unitary state of the UK – rather than pretend that something of imperialism still survived. On England’s soil, they would remake a genuine political community, under the sovereignty of the Crown-in-Parliament. If Greater Britain could not exist as an imperial political community, and the Commonwealth was a fiction, then the kith and kin had to live among themselves, in the nation’s homeland.

Contemporary politicians no longer fuse “race” and citizenship in this way, even if in recent years racist discourses have found their way back into mainstream politics in advanced democracies, Britain included. However, the legacies of exclusivist accounts of nationality persist, and not merely on the populist right. British politics today is dominated by claims about an irreconcilable division between the attitudes and national sentiments of the white working classes, on the one hand, and the cosmopolitanism of metropolitan liberals, on the other.

But thinking and speaking across this artificial divide is imperative in both political and civic terms. Many Remainers have the same uncertainties over identity and political community as commentators have identified with those who supported Brexit; and the forms of patriotism exhibited across the UK are not necessarily incompatible with wider commitments and plural identities. Above all, it is vital to challenge the assumption that a regressive “whiteness” defines the content of political Englishness.

 

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Brexit thus forces us once again to confront questions about our citizenship, and the question of who is included in the nation. In an ironic twist of fate, however, it will deprive the least cosmopolitan of us, who do not live in Northern Ireland, or claim Irish descent, or hold existing citizenship of another EU country, of the European citizenship we have hitherto enjoyed. Conversely it also leaves a question mark over the status of EU nationals who live and work in the UK but do not hold British nationality. The government’s failure to give guarantees to these EU nationals that they will be allowed to remain in the UK has become a matter of deep controversy, on both sides of the Brexit divide.

As only England and Wales voted for it, Brexit has also exposed the emergence once again of distinct identities in the constituent nations of the UK. Although Scottish nationalism has been the most politically powerful expression of this trend, Englishness has been growing in salience as a cultural and, increasingly, as a political identity, and an insistent English dimension has become a feature of British politics. Although talk of a mass English nationalism is misplaced – it can scarcely be claimed that nationalism alone explains the complex mix of anxiety and anger, hostility to large-scale immigration and desire for greater self-government that motivated English voters who favoured Brexit – it is clear that identity and belonging now shape and configure political arguments and culture in England.

Yet, with a handful of notable exceptions, the rise in political Englishness is being given expression only on the right, by Eurosceptics and nationalists. The left is significantly inhibited by the dearth of serious attempts to reimagine England and ­different English futures, whether culturally or democratically.

It is not just the deep politics of the Union and its different peoples that Brexit has revived. The divisions over Britain’s economy that were opened up and positioned during the Edwardian era have also returned to the centre of political debate. Though as yet this is more apparent in her rhetoric than in her practice, Theresa May seems drawn to the project of reviving the Chamberlainite economic and social agendas: using Brexit to underpin arguments for an industrial strategy, a soft economic nationalism and social reform for the “just about managing” classes. She has created a new department responsible for industrial strategy and advocated places for workers on company boards (before watering down this commitment) as well as increased scrutiny of foreign takeovers of British firms. Housing policy is to be refocused away from subsidising home ownership and directed towards building homes and supporting private renters. Fiscal policy has been relaxed, with increased infrastructure investment promised. The coalition that delivered Brexit – made up of struggling working-class voters and middle-class older voters (or the “excluded and the insulated”, as the Tory peer David Willetts puts it) – is seen as the ballast for a new Conservative hegemony.

Presentationally, May’s vision of Brexit Britain’s political economy is more Chamberlainite than Thatcherite, a shift that has been obscured in Brexit-related debates about migration and tariff-free access to the European single market. Her economic utterances are edged with a national, if not nationalist, framing and an economic interventionism more commonly associated with the Heseltinian, pro-European wing of her party. In a calculated move replete with symbolism, she launched her economic prospectus for the Tory leadership in Birmingham, advertising her commitment to the regions and their industries, rather than the City of London and the financial interest.

It is therefore possible that May’s project might turn into an attempt to decouple Conservative Euroscepticism from Thatcherism, creating a new fusion with Tory “One Nation” economic and social traditions. It is this realignment that has left the Chancellor, Philip Hammond, often exposed in recent months, since the Treasury is institutionally hostile both to economic interventionism and to withdrawal from the single market. Hence his recent threat to the European Union that if Britain cannot secure a decent Brexit deal, it will need to become a deregulated, low-tax, Dubai-style “world island” to remain competitive. He cannot envisage another route to economic prosperity outside the European Union.

It also leaves those on the Thatcherite right somewhat uncertain about May. For while she has sanctioned a hard Brexit, in crucial respects she appears to demur from their political economy, hence the discontent over the government’s deal to secure Nissan’s investment in Sunderland. As her Lancaster House speech made clear, she envisages Brexit in terms of economically illiberal goals, such as the restriction of immigration, which she believes can be combined with the achievement of the new free trade deals that are totemic for her party’s Eurosceptics.

In practice, the Prime Minister’s willingness to endorse Hammond’s negotiating bluster about corporate tax cuts and deregulation shows that she is anything but secure in her Chamberlainite orientation towards industrial strategy and social reform. Her policy positions are shot through with the strategic tension between an offshore, “global Britain” tax haven and her rhetoric of a “shared society”, which will be difficult to resolve. May has embraced hard (she prefers “clean”) Brexit, but a transformation of the axes of conservative politics will only take place if she combines Euroscepticism with a return to pre-Thatcherite economic and social traditions. This would make her party into an even more potent political force. The recent shift of the Ukip vote into the Tory bloc and the notable weakening of Labour’s working-class support suggest what might now be possible. This is the domestic politics of Chamberlain’s social imperialism shorn of empire and tariff – only this time with better electoral prospects.

 

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There are some big pieces of 20th-century political history missing from this jigsaw, however. In the 1930s, Chamberlain’s son Neville succeeded where his father had failed in introducing a modest version of tariff reform, and trade within the empire rebounded. Britain abandoned the gold standard in 1931 and cheap money revived the national economy. The collectivism of the wartime command economy and the postwar Keynesian settlement followed. New forms of economic strategy, industrial policy and social reform were pioneered, and the Treasury beliefs in limited state intervention, “sound money” and free trade that had defined the first decades of the 20th century were defeated.

This era was brought to an end by the election of Margaret Thatcher in 1979. Her government smashed the industrial pillars and the class compromises that had underpinned the postwar world. The ensuing “New Labour” governments inherited a transformed political economy and, in turn, sought to fuse liberal with collectivist strands in a new settlement for the post-industrial economy. What many now view as the end of the neoliberal consensus is, therefore, better seen as the revival of patterns of thinking that pre-date Thatcherism. This tells us much about the persistent and deep problems of Britain’s open economic model and the continuing, unresolved conflict between finance and parts of industry, as well as London and the regions.

Brexit brings these tensions back to the surface of British politics, because it requires the construction of a completely new national economic and political settlement – one that will be thrashed out between the social classes, the leading sectors of the economy, and the nations and regions of the United Kingdom.

Few peacetime prime ministers have confronted the scale and kinds of challenge that Brexit will throw up: holding together the UK, revitalising our industrial base, delivering shared prosperity to working people and renegotiating Britain’s place in Europe and the wider world. This is the most formidable list of challenges. Lesser ones, we should recall, defeated Joe Chamberlain.

Michael Kenny is the inaugural director of the Mile End Institute policy centre, based at Queen Mary University of London

Nick Pearce is professor of public policy at the University of Bath

This article first appeared in the 19 January 2017 issue of the New Statesman, The Trump era