Yale professor Jacob Hacker first used the term "predistribution" at a Policy Network conference in Oslo in 2011. Image: Dan Murrell.
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Jacob Hacker: Ed Miliband’s wonkish pin-up

Jacob Hacker thinks he has the answer to the public’s hardening attitude to welfare – we should “stop inequality before it starts”. But can the idea of predistribution enter the political mainstream?

It was at a think-tank conference in Oslo in 2011 that Jacob Hacker first used the word “predistribution” in public. Among those in the audience was Ed Miliband, whose intellectual curiosity was piqued. Predistribution – the idea that governments should seek to create more equal outcomes even before collecting taxes and paying out benefits – seemed to offer an answer to a question that was becoming increasingly insistent: what is the point of Labour when there’s very little money to spend? Those close to the Labour leader, such as his chief strategist, Stewart Wood, and the shadow chief secretary to the Treasury, Rachel Reeves, began using the word to link together policies such as the living wage, worker representation on remuneration committees and greater vocational training, and also to signal a commitment to fiscal responsibility.

Then, in September 2012, in an interview with the New Statesman and a speech to Policy Network (the organisation that had hosted Hacker in Oslo), Miliband himself presented predistribution as Labour’s “new agenda”. The derision followed swiftly. His use of the term, described by the then director of Policy Exchange, Neil O’Brien, as “the sort of stupid made-up word that only a policy wonk could love”, was presented as proof that the man who won the Labour leadership contest on a promise to “speak human” had given up on doing so. During a memorable session of Prime Minister’s Questions, David Cameron sarcastically declared: “I say that the Labour Party has no plans, but on this occasion I can reassure the House that it has, and the new plan is called predistribution. What I think that means is that we spend the money before we actually get it, which I think the Right Honourable Gentleman will find is why we are in the mess we are in right now.” Alluding to Yes Minister’s hapless Jim Hacker, he added: “His new guru, the man who invented predistribution, is called – and I am not making this up – he is called Mr J Hacker.”

When I meet Hacker at the Kingsley hotel in Holborn, central London, he reports that Miliband began their most recent meeting by offering an apology. “Ed was very funny yesterday,” the 42-year-old Yale professor of political science tells me. “He said: ‘I’m sorry if I screwed up the term for you.’ I said: ‘Are you kidding?’ I’m an academic; I’ve had one idea that’s broken into public consciousness in American political debate and that’s the public option [the proposal to set up a staterun health insurance agency] . . . I’m not used to having my ideas discussed by politicians. So I said, ‘You can talk about it as much as you want. I’m sorry if it made people think that you’re a policy wonk.’”

It was when a friend sent him a YouTube clip of Cameron’s PMQs riff that he realised the influence the term was having. “My first reaction was: ‘This is so cool!’ I am personally being attacked by the Prime Minister of Britain – what more could I ask for? My second reaction was: ‘Who is J Hacker?’ I had to go and look up the reference and now, knowing the reference, it was actually a very good joke and I can see why George Osborne was laughing so hard in the background. It made me think that British parliamentary discussions are a lot more interesting than American ones.”

He reflects, however, that it represented a missed business opportunity. “The punchline of [Cameron’s] joke was, ‘I have seen the latest book by Jacob Hacker. It’s entitled The Road to Nowhere and that’s where this idea will take us.’ And I was deeply offended by that. While I loved being attacked in the House of Commons, the fact that he said the book that I’d written as my undergraduate thesis at Harvard and was published in 1997, that that was my latest book, deeply offended me, because I could have used the free publicity for Winner-Take-All Politics [published in 2010] at the time.”

In person, Hacker is fluent and charming. Casually dressed in a corduroy blazer, beige jumper and black loafers, his brown-silver hair parted, he makes for an admittedly wonkish pin-up.

Born in 1971 and raised in the small college town of Eugene, Oregon, he says that politics was not a big part of his childhood but he felt “a deep unease during the 1980s about the direction of our nation [the United States], an unease that blossomed into more forthright progressivism when I went to Harvard as an undergraduate”. After graduating summa cum laude from Harvard in 1994, he studied for a PhD in political science at Yale, during which time The Road to Nowhere: the Genesis of President Clinton’s Plan for Health Security was published.

Winner-Take-All Politics, his most recent book, was co-written with Professor Paul Pierson of Berkeley (who supervised Stewart Wood’s doctorate while on the staff at Harvard). It is an eloquent j’accuseagainst a Washington elite that has waged a 30-year war on behalf of the rich against the rest. “Yachts are rising, but dinghies are largely staying put,” they write, adding: “There is reason to suspect that the dinghies are staying put in part because the yachts are rising.”

Hacker explains predistribution to me as “simply the idea that government makes markets, and that rather than redistributing income through benefits and transfers the first focus should be on working to make the market more equal and fair”. If he is sanguine about the mockery the concept has attracted, it is partly because most of those who derided it simultaneously conceded that he might be on to something.

Given the financial crisis and the resultant surge in the deficit, which the Office for Budget Responsibility forecasts will stand at £108bn (5.9 per cent of GDP) in 2014-2015, Labour can no longer hope to spend its way to social democracy. At the same time, the increasing public hostility to conventional welfare policies limits the scope for a strategy centred on redistribution. “In a society that grows ever more unequal, you cannot sustain the social contract simply by taking from some of the fortunate, the affluent, and redistributing to the rest of the society. It just doesn’t work politically,” Hacker says. “It doesn’t work because it creates an environment in which the middle is more likely to be resentful towards those at the bottom, who are the largest beneficiaries of public transfers, than they are towards those at the top, despite the fact that the rich are really the ones who have rigged the game.”

He is sharply critical of New Labour and the Third Way approach of “letting the market be the market and mopping up afterwards”. By tolerating the excesses of the City in the belief that its lucre could be redistributed through the tax credit system, Tony Blair and Gordon Brown created the conditions for the crash and ultimately failed to stem the rise in inequality. As Stewart Wood, who served as an adviser to Brown between 2001 and 2010, reflected when we spoke separately: “We were doing remedial work, rather than getting to the root of the things that drive unequal outcomes. Predistribution allows you to address the forces that create less efficiency and greater inequality, which often go together.”

While redistribution will remain an important part of the left’s armoury, not least for those permanently or temporarily excluded from the labour market (the retired, the unemployed, the long-term sick, the disabled), Hacker tells me that “as a society we’re more likely to create solidarity and to get what we want as social democrats and as progressives if we make redistribution as little necessary as possible. That’s why it’s important, in the simplest terms, to stop inequality before it starts.”

The question that immediately follows is: “How?” Hacker says that when he met Miliband, the first and most important thing he emphasised was “getting the macroeconomy right”. In the short term, he says, this means “keeping the door open for stimulus”, and he quips that the International Monetary Fund has “moved to the left” of Labour on this score. He warned Miliband not to repeat the mistake of Barack Obama, whose administration derived little political benefit from the US stimulus “because they did it through a payroll tax cut that most people didn’t see”.

“Politically, the problem is if it’s invisible you get no credit for it. So do something concrete, like literally something concrete – build something, put people to work building things.” Having called consistently for a temporary, similarly “invisible” cut in VAT, Ed Balls wisely signalled in his 3 June speech on the economy that the policy would be abandoned at some point in the coming year in favour of greater capital investment. It is housing, Hacker suggests, that could be the silver bullet for Labour. “If you did a serious housing investment, you could have a pretty large effect in the short to medium term, which could help a lot in rebuilding trust in whichever party implemented it.”

Though Hacker is surely right to emphasise that growth is a prerequisite for any successful centre-left project, his presentation of predistribution is frustratingly diffuse. When I challenge him to outline five distinctive policies, he cites better financial regulation, a workers’ bill of rights, stronger corporate governance, full employment, greater investment in skills and early-years education and, as a bonus, supporting a small-enterprise economy. Here is a strategically smart agenda for a post-crisis left that recognises both its ability and its duty to shape the rules of the market.

Of a workers’ bill of rights, Hacker says: “None of this involves spending. You could have a living wage requirement linked to average wages over time, a right of request for workplace flexibility and pay transparency.” He notes: “It’s a huge issue that the workers themselves don’t understand that someone who’s working right next to them, or a manager, is earning vastly more than them. And it really depresses their ability to demand higher pay. If we’re talking about a free market for labour, you need to have information on both sides.”

One of the main causes of the stagnation of British wages, which began in 2003, is the steep decline in trade union membership (from over 13 million in 1979 to 6.5 million) and collective bargaining agreements, and Hacker suggests we will require new institutions in order to protect workers’ rights. He offers the example of US open-source unions, which “use social media and new organising tactics to run campaigns to change the terms of employment”, and Germanstyle works councils, which “adjust national labour agreements to local circumstances”, as models for the UK.

But can predistribution succeed in a global economy in which companies relentlessly seek out low-wage, low-tax locations? Hacker concedes that “some form of global regulation or government would help a lot with predistributive strategies” – which suggests we could be waiting some time – but adds more encouragingly, “We should recognise that companies do not just go to low-wage, low-tax locations; they go to high productivity relative to wage locations. And with regard to taxation, it’s pretty clear that stability is more important than the level. The key is to figure out how to raise productivity and skills investment would help greatly with that.”

The UK productivity gap – the difference between our productivity and that of other countries – is at its highest level since 1993, at 21 percentage points below the G7 average. Yet while the British government has pledged to reduce corporation tax to 20 per cent in 2015 (the joint lowest in the G20), more productive economies such as the US and Japan retain corporation-tax rates of 39 per cent and 38 per cent, respectively.

In any case, as Hacker argues, “You’ve got to focus on the primarily non-traded sectors: education, health care, social care, face-toface services. There’s no global competitive reason why you can’t do that.”

Five years after the start of the greatest crisis in capitalism since the 1930s, and after the comprehensive failure of austerity, the centre left remains becalmed. In Britain and elsewhere, it is the populist right that is gaining ground as voters shun mainstream social democracy. Even so, Hacker says he is “cautiously optimistic”.

“I do think there’s this hunger for direct and simple policies to help the squeezed middle. And one thing you can say for predistribution ideas, like ‘Hey, let’s have a living wage’, is that they’re pretty straightforward to explain.” He also remarks: “The cost of organising has come down with the information revolution. You can marry simple policies with new organising strategies. That’s a pretty powerful force multiplier.”

While Miliband and his allies often speak of the potential for a Thatcheresque transformation of the economy and society, Hacker suggests greater modesty is in order. “You’re not going to get a big bang of policy change. Instead, what progressives need to do is gain office, do some important things that improve the overall situation of the squeezed middle, and then get re-elected and repeat.” If Labour is to win in 2015, Miliband will need to pull off a daunting balancing act, persuading the voters that he offers a bold alternative to the coalition and at the same time reassuring them that Labour won’t run out of other people’s money again. Though the word may rarely pass his lips now, predistribution remains his best hope of doing so.

George Eaton is political editor of the New Statesman.

This article first appeared in the 08 July 2013 issue of the New Statesman, The world takes sides

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After Strictly, I'd love to see Ed Balls start a new political party

My week, from babbling at Michael Gove to chatting Botox with Ed Balls and a trip to Stroke City.

If you want to see yourself as others see you, write a weekly column in a national newspaper, then steel yourself to read “below the line”. Under my last offering I read the following comment: “Don’t be angry, feel pity. Her father was a member of the European Parliament. Her older brother has been a member of parliament, a cabinet minister, a secretary of state, a historian, a mayor of London. Her younger brother is a member of parliament and minister for universities and science. She has a column in the Daily Mail. Can you imagine how she feels deep inside?” Before I slammed my laptop shut – the truth always hurts – my eye fell on this. “When is Rachel going to pose for Playboy seniors’ edition?” Who knew that Playboy did a seniors’ edition? This is the best compliment I’ve had all year!

 

Three parts of Michael Gove

Part one Bumped into Michael Gove the other day for the first time since I called him a “political psychopath” and “Westminster suicide bomber” in print. We had one of those classic English non-conversations. I babbled. Gove segued into an anecdote about waiting for a London train at Castle Cary in his trusty Boden navy jacket and being accosted by Johnnie Boden wearing the exact same one. I’m afraid that’s the punchline! Part two I’ve just had a courtesy call from the Cheltenham Literature Festival to inform me that Gove has been parachuted into my event. I’ve been booked in since June, and the panel is on modern manners. De mortuis nil nisi bonum, of course, but I do lie in bed imagining the questions I hope I might be asked at the Q&A session afterwards. Part three There has been what we might call a serious “infarction” of books about Brexit, serialised passim. I never thought I would write these words, but I’m feeling sorry for the chap. Gove gets such a pasting in the diaries of Sir Craig Oliver.

Still, I suppose Michael can have his own say, because he’s returning to the Times this week as a columnist. Part of me hopes he’ll “do a Sarah Vine”, as it’s known in the trade (ie, write a column spiced with intimate revelations). But I am braced for policy wonkery rather than the petty score-settling and invasions of his own family privacy that would be so much more entertaining.

 

I capture the castle

I’ve been at an event on foreign affairs called the Mount Stewart Conversations, co-hosted by BBC Northern Ireland and the National Trust. Before my departure for Belfast, I mentioned that I was going to the province to the much “misunderestimated” Jemima Goldsmith, the producer, and writer of this parish. I didn’t drop either the name of the house or the fact that Castlereagh, a former foreign secretary, used to live there, and that the desk that the Congress of Vienna was signed on is in the house, as I assumed in my snooty way that Ms Goldsmith wouldn’t have heard of either. “Oh, we used to have a house in Northern Ireland, Mount Stewart,” she said, when I said I was going there. “It used to belong to Mum.” That told me.

Anyway, it was a wonderful weekend, full of foreign policy and academic rock stars too numerous to mention. Plus, at the Stormont Hotel, the staff served porridge with double cream and Bushmills whiskey for breakfast; and the gardens at Mount Stewart were stupendous. A top performer was Jonathan Powell, Tony Blair’s former chief of staff, who runs his own conflict resolution charity. Powell negotiated the Good Friday Agreement and also has a very natty line in weekend casual wear. Jeremy Corbyn has said he wants a minister for peace, as well as party unity. Surely “Curly” Powell – a prince of peace if ever there was one – must be shoo-in for this gig.

PS: I was told that Derry/Londonderry is now known as “Stroke City”. I imagined stricken residents all being rushed to Casualty, before I worked it out.

 

On board with Balls

Isn’t Ed Balls bliss? From originating Twitter’s Ed Balls Day to becoming Strictly Come Dancing’s Ed Balls, he is adding hugely to the gaiety of the nation. I did the ITV show The Agenda with Tom Bradby this week, and as a fellow guest Balls was a non-stop stream of campery, charleston steps, Strictly gossip and girly questions about whether he should have a spray tan (no!), or Botox under his armpits to staunch the sweat (also no! If you block the armpits, it will only appear somewhere else!).

He is clever, fluent, kind, built like a s*** outhouse, and nice. I don’t care that his waltz looked as if his partner, Katya, was trying to move a double-doored Sub-Zero American fridge across a shiny floor. After Strictly I’d like to see him start a new party for all the socially liberal, fiscally conservative, pro-European millions of us who have been disenfranchised by Brexit and the Corbynisation of the Labour Party. In fact, I said this on air. If he doesn’t organise it, I will, and he sort of promised to be on board!

 

A shot in the dark

I was trying to think of something that would irritate New Statesman readers to end with. How about this: my husband is shooting every weekend between now and 2017. This weekend we are in Drynachan, the seat of Clan Campbell and the Thanes of Cawdor. I have been fielding calls from our host, a type-A American financier, about the transportation of shotguns on BA flights to Inverness – even though I don’t shoot and can’t stand the sport.

I was overheard droning on by Adrian Tinniswood, the author of the fashionable history of country houses The Long Weekend. He told me that the 11th Duke of Bedford kept four cars and eight chauffeurs to ferry revellers to his pile at Woburn. Guests were picked up in town by a chauffeur, accompanied by footmen. Luggage went in another car, also escorted by footmen, as it was not done to travel with your suitcase.

It’s beyond Downton! I must remember to tell mine host how real toffs do it. He might send a plane just for the guns.

Rachel Johnson is a columnist for the Mail on Sunday

This article first appeared in the 29 September 2016 issue of the New Statesman, May’s new Tories