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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Hannan Fodder: This week, Daniel Hannan gets his excuses in early

I didn't do it. 

Since Daniel Hannan, a formerly obscure MEP, has emerged as the anointed intellectual of the Brexit elite, The Staggers is charting his ascendancy...

When I started this column, there were some nay-sayers talking Britain down by doubting that I was seriously going to write about Daniel Hannan every week. Surely no one could be that obsessed with the activities of one obscure MEP? And surely no politician could say enough ludicrous things to be worthy of such an obsession?

They were wrong, on both counts. Daniel and I are as one on this: Leave and Remain, working hand in glove to deliver on our shared national mission. There’s a lesson there for my fellow Remoaners, I’m sure.

Anyway. It’s week three, and just as I was worrying what I might write this week, Dan has ridden to the rescue by writing not one but two columns making the same argument – using, indeed, many of the exact same phrases (“not a club, but a protection racket”). Like all the most effective political campaigns, Dan has a message of the week.

First up, on Monday, there was this headline, in the conservative American journal, the Washington Examiner:

“Why Brexit should work out for everyone”

And yesterday, there was his column on Conservative Home:

“We will get a good deal – because rational self-interest will overcome the Eurocrats’ fury”

The message of the two columns is straightforward: cooler heads will prevail. Britain wants an amicable separation. The EU needs Britain’s military strength and budget contributions, and both sides want to keep the single market intact.

The Con Home piece makes the further argument that it’s only the Eurocrats who want to be hardline about this. National governments – who have to answer to actual electorates – will be more willing to negotiate.

And so, for all the bluster now, Theresa May and Donald Tusk will be skipping through a meadow, arm in arm, before the year is out.

Before we go any further, I have a confession: I found myself nodding along with some of this. Yes, of course it’s in nobody’s interests to create unnecessary enmity between Britain and the continent. Of course no one will want to crash the economy. Of course.

I’ve been told by friends on the centre-right that Hannan has a compelling, faintly hypnotic quality when he speaks and, in retrospect, this brief moment of finding myself half-agreeing with him scares the living shit out of me. So from this point on, I’d like everyone to keep an eye on me in case I start going weird, and to give me a sharp whack round the back of the head if you ever catch me starting a tweet with the word, “Friends-”.

Anyway. Shortly after reading things, reality began to dawn for me in a way it apparently hasn’t for Daniel Hannan, and I began cataloguing the ways in which his argument is stupid.

Problem number one: Remarkably for a man who’s been in the European Parliament for nearly two decades, he’s misunderstood the EU. He notes that “deeper integration can be more like a religious dogma than a political creed”, but entirely misses the reason for this. For many Europeans, especially those from countries which didn’t have as much fun in the Second World War as Britain did, the EU, for all its myriad flaws, is something to which they feel an emotional attachment: not their country, but not something entirely separate from it either.

Consequently, it’s neither a club, nor a “protection racket”: it’s more akin to a family. A rational and sensible Brexit will be difficult for the exact same reasons that so few divorcing couples rationally agree not to bother wasting money on lawyers: because the very act of leaving feels like a betrayal.

Or, to put it more concisely, courtesy of Buzzfeed’s Marie Le Conte:

Problem number two: even if everyone was to negotiate purely in terms of rational interest, our interests are not the same. The over-riding goal of German policy for decades has been to hold the EU together, even if that creates other problems. (Exhibit A: Greece.) So there’s at least a chance that the German leadership will genuinely see deterring more departures as more important than mutual prosperity or a good relationship with Britain.

And France, whose presidential candidates are lining up to give Britain a kicking, is mysteriously not mentioned anywhere in either of Daniel’s columns, presumably because doing so would undermine his argument.

So – the list of priorities Hannan describes may look rational from a British perspective. Unfortunately, though, the people on the other side of the negotiating table won’t have a British perspective.

Problem number three is this line from the Con Home piece:

“Might it truly be more interested in deterring states from leaving than in promoting the welfare of its peoples? If so, there surely can be no further doubt that we were right to opt out.”

If there any rhetorical technique more skin-crawlingly horrible, than, “Your response to my behaviour justifies my behaviour”?

I could go on, about how there’s no reason to think that Daniel’s relatively gentle vision of Brexit is shared by Nigel Farage, UKIP, or a significant number of those who voted Leave. Or about the polls which show that, far from the EU’s response to the referendum pushing more European nations towards the door, support for the union has actually spiked since the referendum – that Britain has become not a beacon of hope but a cautionary tale.

But I’m running out of words, and there’ll be other chances to explore such things. So instead I’m going to end on this:

Hannan’s argument – that only an irrational Europe would not deliver a good Brexit – is remarkably, parodically self-serving. It allows him to believe that, if Brexit goes horribly wrong, well, it must all be the fault of those inflexible Eurocrats, mustn’t it? It can’t possibly be because Brexit was a bad idea in the first place, or because liberal Leavers used nasty, populist ones to achieve their goals.

Read today, there are elements of Hannan’s columns that are compelling, even persuasive. From the perspective of 2020, I fear, they might simply read like one long explanation of why nothing that has happened since will have been his fault.

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.