Meet Mr Predistribution: Jacob Hacker

An interview with the Yale political scientist behind Ed Miliband's big idea.

For this week's New Statesman, I interviewed Jacob Hacker, the Yale political scientist who coined the term "predistribution". The concept, referring to how governments should seek to create more equal outcomes even before collecting taxes and paying out benefits (before redistribution, in other words), attracted the attention of Westminster last year after Ed Miliband used it in an interview with the NS and a speech to Policy Network. 

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."

Such was the mockery that when Miliband met Hacker in Portcullis House last month he began by apologising. 

"Ed was very funny," Hacker told 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 state run 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."

The political and economic case for predistribution is a persuasive one. The financial crisis and the resultant surge in the deficit, which the OBR 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 told me. "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 was 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."

But would a predistributive policy agenda look like? That's the question I'll answer in my next post on Hacker. 

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Yale professor Jacob Hacker first used the term "predistribution" at a Policy Network conference in Oslo in 2011. Image: Dan Murrell.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR