Ed Miliband at the Labour conference in Brighton last year. Photograph: Getty Images.
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How the left can win in the 5-75-20 society

Social democrats must champion the interests of the newly insecure middle class if they are to govern again. 

For decades, social democrats in western Europe conceived their natural constituency as the "blue-collar" working class: the affluent middle class aligned themselves with Conservative parties. In the intervening decades, social and economic change has transformed that world out of existence. Today, lack of aspiration and insecurity are not only afflicting the "left behind". The disease is spreading to the middle class, manifested in declining real incomes. Parents are struggling to reconcile the pressures of earning and caring. Middle class families fear their children will have less opportunity given booming house prices, escalating university costs, and inadequate pensions. The radicalised working-class which propelled "the forward march of labour" has been declining since the 1970s, as Eric Hobsbawm envisaged: social democrats today should be champions of the ‘new insecure’, transcending traditional class divides.   

Yes, the centre-left is weakened as "traditional" working class supporters drift towards populist parties. Anti-immigration, anti-European sentiment should be heard respectfully, but social democrats must not fight on territory they can never win. The dominant trend in the last two decades has been the emergence of a "5-75-20" society. Roughly 5 per cent at the top - professionals working in finance and those who inherit wealth - enjoying "runaway" rewards as asset prices and returns to wealth have soared. Twenty per cent at the "bottom" of society are at risk of permanent marginalisation. The middle 75 per cent are usually in work or have retirement incomes, but are apprehensive: they not only comprise "blue-collar" employees threatened by outsourcing, but middle class professionals who fear their jobs will be next.

It is the "insecure" middle class who will be the historical agent of change in combating the economic and social cleavages of our age. The insecurity which characterises our societies is being accentuated by structural forces and political choices. This is partly to do with globalisation and trade liberalisation. More than 75 per cent of employment in the OECD is in services. Technological change not only threatens the position of low skilled workers, but professionals too, as Professor Anne Wren has shown. In the 1970s and 1980s, "blue-collar" and low-skilled occupations were vulnerable; today middle class jobs are under threat. The ICT revolution means employment in finance, the law, media and business is readily exported.

No wonder an increasing share of GDP is flowing to capital at the expense of labour. Liberalisation puts downward pressure on market incomes. Collective pay bargaining that traditionally protected middle class living standards is disappearing. Inequalities are spiralling: there is a secular decline in the relative status of middle class households. Median incomes in Germany between 2000 and 2010 lagged behind GDP; in Japan, incomes fell by an average of 1 per cent a year; in the UK, long-term income growth has declined to zero. The shift in the distribution of GDP is not cyclical, it is structural. 

In the meantime, taxation systems are less progressive. As Brian Bell and Steve Machin demonstrate, the "cling on" middle class need collectivised social security to be assured of income adequacy, especially in retirement. As the balance of caring and earning is recalibrated, women face spiralling pay inequalities. Families are under pressure as increasing working hours coincide with rising care costs. Women are forced out of employment, or compelled to accept jobs below their labour market potential.

As a new generation of centre-left politicians gathers in Amsterdam at the Progressive Governance Conference, they must be wary of relapsing into what Tony Judt termed ‘defensive’ social democracy. Bending to populist attacks on globalisation and the European Union is futile and self-defeating.     

The strategic goal is to sustain the political coalition in favour of inclusive systems of social security: the left has to reach out to, and embrace, the new middle class in a world where skilled workers in sectors exposed to global competition are less sympathetic to social spending: as Wren points out, they are least likely to support centre-left parties while fewer middle class professionals occupy public sector jobs. The answer is not to reclaim the lost era of post-war collectivism, but to recast centre-left parties. Five concrete steps should be taken. First, reforms are needed to make taxation systems properly progressive. Policy-makers should focus attention on assets and unearned income – including inheritance and property – which are immobile and hard to evade.

Only a revitalised education and skills system will preserve the promise of opportunity for all. Every government pays lip service to the imperative of lifetime learning. A personal account in which individuals invest in their human capital with state support should generate a culture of active learning ‘from cradle to grave’.

Third, asset ownership must be enlarged: widening the base of employee share ownership and profit sharing; expanding the pool of home owners not by reckless lending to vulnerable households, but extending "part rent, part buy" schemes with major capital investment in housing supply; developing an EU-wide "baby bond" – an asset stake for every child through a combination of government contribution and parental saving.  

Fourthly, championing gender equality is critical to rebuilding support for inclusive social spending. Although industrialised countries have witnessed the rapid entry of women into the labour force, it is an "unfinished revolution". Working women are likely to support investment in public goods from universal childcare to shared parental leave. Public services also need to be world-class, improving outcomes for hard-pressed taxpayers.   

Finally, none of these policies are credible without a strategy for wealth creation, generating surpluses for "social investment". Boosting growth requires structural reforms, not short-term fixes. These include improved access to finance for SMEs and mid-caps, promoting high-tech manufacturing through R&D, and strengthening the HE sector’s contribution to technological innovation. The European Infrastructure Bank should modernise the continent’s productive capabilities.     

The wealthy few are enjoying runaway rewards, but the middle class are feeling the sharp edge of insecurity. To help those most in need, including nearly 2 million families in the UK identified by Oxfam as being pushed further into poverty, social democrats should champion the newly insecure. The next centre-left generation have to embrace the "new" middle class if they are to govern again. 

Patrick Diamond is vice chair of Policy Network. The publication “Making Progressive Politics Work” is available at www.policy-network.net

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Daniel Hannan harks back to the days of empire - the Angevin Empire

Did the benign rule of some 12th century English kings make western France vote Macron over Le Pen?

I know a fair amount about British politics; I know a passable amount about American politics, too. But, as with so many of my fellow Britons, in the world beyond that, I’m lost.

So how are we, the monolingual Anglophone opinionators of the world, meant to interpret a presidential election in a country where everyone is rude enough to conduct all their politics in French?

Luckily, here’s Daniel Hannan to help us:

I suppose we always knew Dan still got a bit misty eyed at the notion of the empire. I just always thought it was the British Empire, not the Angevin one, that tugged his heartstrings so.

So what exactly are we to make of this po-faced, historically illiterate, geographically illiterate, quite fantastically stupid, most Hannan-y Hannan tweet of all time?

One possibility is that this was meant as a serious observation. Dan is genuinely saying that the parts of western France ruled by Henry II and sons in the 12th century – Brittany, Normandy, Anjou, Poitou, Aquitaine – remain more moderate than those to the east, which were never graced with the touch of English greatness. This, he is suggesting, is why they generally voted for Emmanuel Macron over Marine Le Pen.

There are a number of problems with this theory. The first is that it’s bollocks. Western France was never part of England – it remained, indeed, a part of a weakened kingdom of France. In some ways it would be more accurate to say that what really happened in 1154 was that some mid-ranking French nobles happened to inherit the English Crown.

Even if you buy the idea that England is the source of all ancient liberties (no), western France is unlikely to share its political culture, because it was never a part of the same polity: the two lands just happened to share a landlord for a while.

As it happens, they didn’t even share it for very long. By 1215, Henry’s youngest son John had done a pretty good job of losing all his territories in France, so that was the end of the Angevins. The English crown reconquered  various bits of France over the next couple of centuries, but, as you may have noticed, it hasn’t been much of a force there for some time now.

At any rate: while I know very little of French politics, I’m going to go out on a limb and guess the similarities between yesterday's electoral map and the Angevin Empire were a coincidence. I'm fairly confident that there have been other factors which have probably done more to shape the French political map than a personal empire that survived for the length of one not particularly long human life time 800 years ago. Some wars. Industrialisation. The odd revolution. You know the sort of thing.

If Daniel Hannan sucks at history, though, he also sucks at geography, since chunks of territory which owed fealty to the English crown actually voted Le Pen. These include western Normandy; they also include Calais, which remained English territory for much longer than any other part of France. This seems rather to knacker Hannan’s thesis.

So: that’s one possibility, that all this was an attempt to make serious point; but, Hannan being Hannan, it just happened to be a quite fantastically stupid one.

The other possibility is that he’s taking the piss. It’s genuinely difficult to know.

Either way, he instantly deleted the tweet. Because he realised we didn’t get the joke? Because he got two words the wrong way round? Because he realised he didn’t know where Calais was?

We’ll never know for sure. I’d ask him but, y’know, blocked.

UPDATE: Breaking news from the frontline of the internet: 

It. Was. A. Joke.

My god. He jokes. He makes light. He has a sense of fun.

This changes everything. I need to rethink my entire world view. What if... what if I've been wrong, all this time? What if Daniel Hannan is in fact one of the great, unappreciated comic voices of our time? What if I'm simply not in on the joke?

What if... what if Brexit is actually... good?

Daniel, if you're reading this – and let's be honest, you are definitely reading this – I am so sorry. I've been misunderstanding you all this time.

I owe you a pint (568.26 millilitres).

Serious offer, by the way.

 

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Daniel Hannan. You can find him on Twitter or Facebook.

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