Dividing Lines: The economy

Continuing his series on the major policy divisions in politics, Rafael Behr tackles the economy.

What’s the issue?
This is the big one. When the coalition was formed it claimed its governing purpose was to rescue Britain from an economic emergency. The remedy devised by George Osborne was an immediate course of spending cuts to reduce the Budget deficit and limit the rise in public debt as a proportion of gross domestic product. The theory was that a shock-and-awe display of fiscal discipline would reassure international investors that Britain was a “safe haven” from global turbulence. Cutting the public sector is also meant to release growth potential in the private sector, which was thought to have been “crowded out” by state expansion under Labour.

Is it working?
No. The economy didn’t grow at all last year. It is 3.3 per cent smaller than at its boom-time peak. Osborne is on course to fail his self-imposed tests of credibility – eliminating the “structural” deficit (the part of government overspend that doesn’t vanish automatically when the economy is operating at full capacity) and reducing public debt as a proportion of GDP by the end of this parliament.

What went wrong?
The government says its inheritance from Labour was worse than previously thought and that the eurozone crisis has blown recovery off course. Labour says the rush to austerity has drained demand out of the economy; when companies and households were too indebted or too frightened to spend, the government should have stepped in to stimulate activity – hitting the gas instead of slamming on the brakes.

So, Labour would turn on the money taps again?
Economically, that is the logic of Ed Balls’s position but politically he is in a bind. Lots of people are persuaded that an underlying cause of the crisis was “Gordon Brown spending all the money”. Whenever Balls attempts to make his macroeconomic argument, he ends up trying to rehabilitate the reputation of a period in Labour’s record that even many on his own side think is better off left for dead. Besides, by the time of the next election, the public finances will be in such a woeful state that there will be no spare capacity to increase spending. The campaign will be about who cuts what and with what end in mind.

Couldn’t the government borrow to spend?
Yes. And it is quietly doing just that, because there is no growth. There is a case for saying that the low long-term interest rates available now make it a good time to borrow for investment in such things as housing and transport that would create jobs and strengthen our economic capacity.

Even Osborne has discreetly conceded the point that cuts alone won’t kick-start growth. In his Autumn Statement last year, the Chancellor said he would find £5bn for infrastructure investment, but the money has to be carved out by making cuts to other budgets. He has painted himself into a corner, insisting any dilution of austerity would be a disaster and portraying borrowing as inherently wicked. So, to be true to their own political script, the Tories have to pretend to be less reliant on borrowing than they are. It is higher now than at the last election, and rising. David Cameron recently claimed that the government is “paying down the debt” but by any measure it simply isn’t.

That’s a bit sneaky, isn’t it?
Very. The question is how long they’ll get away with it. There is a strong expectation that the credit-rating agencies will downgrade the UK this year, torpedoing Osborne’s “safe haven” claim. Balls’s problem is that he struggles to call out the Tories for relying on debt: his core macroeconomic analysis demands the same fiscal remedy. Intellectually, his position can be made coherent but it relies on a distinction between “good” Labour borrowing – premeditated to spur growth – and “bad” Tory borrowing – accidental, driven by a failed austerity plan. The difference is not immediately obvious to many voters.

Besides, no one doubts that the Tories at least want to limit public spending, while Labour risks looking like it wants to duck that challenge altogether. In order to reassure swing voters that it is a careful steward of taxpayers’ money, the opposition could end up accepting spending restraints that don’t permit the kind of stimulus that has been central to its macroeconomic prescription.

So Labour thinks we should be borrowing more but doesn’t feel comfortable admitting it, and the Tories are borrowing more but pretend they aren’t?
Pretty much. A vital difference is that many Conservatives think the government isn’t cutting budgets deeply enough. The Tory hawks think the way out of the growth impasse is on the “supply side”– cutting back on regulations and employment rights in the belief that excessive bureaucracy is stifling enterprise. Labour sees that as a sign the Tories are using the financial crisis as a pretext to pursue an old agenda of shrinking the role of government in public life. It doesn’t, Labour says, tackle the underlying problem of inadequate demand.

What do the Lib Dems think?
Their instincts are with Labour. Nick Clegg has conceded that infrastructure spending was cut too hard in the coalition’s early days. Yet within the broad outline of austerity the Lib Dems are lashed to Osborne’s mast; they sign off on his budgets.

That doesn’t sound very comfortable.
In this debate, no one is.


Rafael Behr's "Dividing Lines" series appears regularly in the New Statesman magazine.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

This article first appeared in the 04 February 2013 issue of the New Statesman, The Intervention Trap

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What’s the secret of the world’s best-paid sports manager? Ask the Chicago Cubs

Theo Epstein is a star because he values the person as much as the player.

As I write, the Chicago Cubs, perennial underachievers, are three wins away from reaching baseball’s World Series for the first time since 1945. By the time you read this they may have crashed out. Besides, baseball – like cricket – is a language that asks a lot of its translators. So, in writing about the Cubs, I’ll skip the baseball bits. Fortunately, the lessons of the Cubs’ success (they were the outstanding team of 2016, even if they don’t win the World Series) transcend baseball.

To understand the future of sport – and perhaps employment – I recommend a pair of profiles of Theo Epstein, the president of baseball operations for the Cubs, one published in the New York Times and the other written by David Axelrod (Barack Obama’s strategist) for the New Yorker.

Epstein, 42, has just agreed a contract extension worth $50m over five years, making him the highest-paid non-player in professional sport. There is plenty in the profiles on his whizzy use of data analytics; his algorithmic tests that measure players’ co-ordination (essentially using neuroscience to measure talent); as well as the Cubs’ coaching programme dedicated to mental health and managing stress. Most timely and important of all is Epstein’s emphasis on character. He talks about “scouting the person more than the player”. He wants the right kind of people on the field.

“In the draft room [where the team decides which players to sign], we will always spend more than half the time talking about the person rather than the player,” he has said. “We ask our scouts to provide three detailed examples of how these young players faced adversity on the field and responded to it, and three examples of how they faced adversity off the field.”

Epstein is well known for empowering a “geek department” inside his baseball teams. Yet instead of perceiving a conflict between science and the human realm, he sees the two as part of the same big picture. He craves players with character who can benefit from the insights of science.

“Character” is a vexed subject inside sport. It sets off uncomfortable associations. Talking too much about character – building it, or even just valuing it – sounds dangerously close to endorsing an amateur ethos. Victorian public schools often celebrated sport explicitly in opposition to intelligence, even achievement. H H Almond, the headmaster of Loretto from 1862, got an A for candour (if nothing else) when he ranked his school’s priorities: “First – Character. Second – Physique. Third – Intelligence.”

The Victorian notion of games cast a long shadow over sport and society in the 20th century. The first phase of ultra-professionalism, in the office as well as on the sports field, was a reaction to Almond’s set of values. The concept of character was recast as a consolation prize, doled out to the class dunce or the twelfth man. Crucially, reformers and nostalgics alike bought in to the historical perception of a separation or conflict between character, intellectual life and sporting achievement.

The Cubs, however, know better. To adapt Almond’s clumsy saying: intelligence and physical skills derive, significantly though not entirely, from character. Character is now being understood not as the destination, but the foundation, even the process.

This is an overdue reassessment. In the loosest terms, I would identify three phases in the development of professional sport. Phase one optimised the body. Sadly, though we are still inching forward, the human body is now reaching the outer wall of virtuosity. All sports will tail off in speed of progress, in terms of pure physicality.

Phase two of modern sport turned to psychology. Realising how hard it is to gain an edge through physical conditioning, everyone suddenly started talking about the mind: the inner game of this, the mental game of that. However, reconfiguring the mental approach of elite athletes – already in their twenties and thirties, with deeply ingrained habits and highly evolved psychological software – is also exceptionally difficult. That is why many top athletes recoil from conventional “sports psychology”; the discipline is oversold and under-sceptical.

We are now entering phase three: the whole person. Sustained high achievement relies on something much deeper than a few sessions with a sports psychologist. So you need the right people in the room.

Coaches in future will be numerate and intellectually unthreatened by the scientific advances that illuminate sport. But the best coaches will never lose sight of a parallel truth: that although science can help us to understand what happens on the sports field, and sometimes how to do it better, it cannot conveniently convert athletes into inert particles, as though it were a ­physical science. Coaching can benefit from ­science but remains an art – one that revolves around understanding and helping people.

In most sports, players and coaches are really in the business of decision-making. The winning team, as Pep Guardiola says, makes more good decisions. Sport, in other words, advances when it trains people to make better decisions. There are now highly evolved analytical techniques for understanding how those decisions influence results. However, the athletes themselves are still people, imperfect and imperfectible. If you want machines, you get dummies.

This month, I was asked to found a new institute of advanced sports studies at the University of Buckingham. The mission is to create undergraduate and postgraduate courses that attend to the entire mindset – critical thinking, ethics and leadership, as well as data analytics and sports science: a kind of “PPE of sport”. After a misleading triple fissure – character, body, mind – sport is starting to put the pieces back together again. That’s why, this month, I’m rooting for Epstein’s Cubs.

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 20 October 2016 issue of the New Statesman, Brothers in blood