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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Justin Trudeau points the way forward for European politics

Is the charismatic Canadian Prime Minister modelling the party of the future?

Six months after Canadian election day, Justin Trudeau’s Liberal party continues to bask in the glow of victory. With 44 per cent of support in the polls, the Liberals are the most popular party amongst every single demographic – men and women, young and old, and people of all educational backgrounds. 

While most European mainstream parties only dream of such approval, this is actually a small dip for the Liberals. They were enjoying almost 50 per cent support in the polls up until budget day on 21 March. Even after announcing $29.4 billion in deficit spending, Canadians overall viewed the budget favourably – only 34 per cent said they would vote to defeat it.

Progressives around the world are suddenly intrigued by Canadian politics. Why is Justin Trudeau so successful?

Of course it helps that the new Prime Minister is young, handsome and loves pandas (who doesn’t?) But it’s also true that he was leader of the Liberals for a year and half before the election. He brought with him an initial surge in support for the party. But he also oversaw its steady decline in the lead up to last year’s election – leadership is important, but clearly it isn’t the only factor behind the Liberals’ success today.

Context matters

As disappointing as it is for Europeans seeking to unpack Canadian secrets, the truth is that a large part of the Liberals’ success was also down to the former Prime Minister Stephen Harper’s extreme unpopularity by election time.

Throughout almost ten years in power, Harper shifted Canada markedly to the right. His Conservative government did not just alter policies; it started changing the rules of the democratic game. While centre-right governments in Europe may be implementing policies that progressives dislike, they are nonetheless operating within the constraints of democratic systems (for the most part; Hungary and Poland are exceptions).

Which is why the first weeks of the election campaign were dominated by an ‘Anybody But Harper’ sentiment, benefitting both the Liberals and the left-wing New Democratic Party (NDP). The NDP was even leading the polls for a while, inviting pundits to consider the possibility of a hung parliament.

But eight days before election day, the Liberals began to pull ahead.

The most important reason – and why they continue to be so popular today – is that they were able to own the mantle of ‘change’. They were the only party to promise running a (small) deficit and invest heavily in infrastructure. Notably absent was abstract discourse about tackling inequality. Trudeau’s plan was about fairness for the middle class, promoting social justice and economic growth.

Democratic reform was also a core feature of the Liberal campaign, which the party has maintained in government – Trudeau appointed a new Minister of Democratic Institutions and promised a change in the voting system before the next election.

The change has also been in style, however. Justin Trudeau is rebranding Canada as an open, progressive, plural society. Even though this was Canada’s reputation pre-Harper, it is not as simple as turning back the clock.

In a world increasingly taken by populist rhetoric on immigration – not just by politicians like Donald Trump, Nigel Farage, Marine Le Pen and other right-wingers, but also increasingly by mainstream politicians of right and left – Justin Trudeau has been unashamedly proclaiming the benefits of living in a diverse, plural society. He repeatedly calls himself a feminist, in the hope that one day “it is met with a shrug” rather than a social media explosion. Live-streamed Global Town Halls are one part of a renewed openness with the media. Progressive politicians in Europe would do well to take note.

Questioning the role of political parties today

Another interesting development is that the Liberal party is implicitly questioning the point of parties today. It recently abolished fee-paying, card-carrying party members. While this has been met with some criticism regarding the party’s structure and integrity, with commentators worried that “it’s the equivalent of turning your party into one giant Facebook page: Click ‘Like’ and you’re in the club,” it seems this is the point.

Colin Horgan, one of Trudeau’s former speechwriters, explains that Facebook is “literally a treasure trove for political parties”. All kinds of information becomes available – for free; supporters become easier to contact.

It was something the Liberals were already hinting at two years ago when they introduced a ‘supporters’ category to make the party appear more open. Liberal president Anna Gainey also used the word “movement” to describe what the Liberals hope to be.

And yes, they are trying to win over millennials. Which proved to be a good strategy, as a new study shows that Canadians aged 18-25 were a key reason why the Liberals won a majority. Young voter turnout was up by 12 per cent from the last election in 2011; among this age group, 45 per cent voted for the Liberals.

Some interesting questions for European progressives to consider. Of course, some of the newer political parties in Europe have already been experimenting with looser membership structures and less hierarchical ways of engaging, like Podemos’ ‘circles’ in Spain and the Five Star Movement’s ‘liquid democracy’ in Italy.

The British centre-left may be hesitant after its recent fiasco. Labour opened up its leadership primary to ‘supporters’ and ended up with a polarising leader who is extremely popular amongst members, but unpopular amongst the British public. But it would be wrong to assume that the process was to blame.

The better comparison is perhaps to Emmanuel Macron, France’s young economy minister who recently launched his own movement ‘En Marche !’ Moving beyond the traditional party structure, he is attempting to unite ‘right’ and ‘left’ by inspiring French people with an optimistic vision of the future. Time will tell whether this works to engage people in the longer term, or at least until next year’s presidential election.

In any case, European parties could start by asking themselves: What kind of political parties are they? What is the point of them?

Most importantly: What do they want people to think is the point of them?

Ultimately, the Canadian Liberals’ model of success rests on three main pillars:

  1. They unambiguously promote and defend a progressive, open, plural vision of society.
  2. They have a coherent economic plan focused on social justice and economic growth which, most importantly, they are trusted to deliver.
  3. They understand that society has changed – people are more interconnected than ever, relationships are less hierarchical and networks exist online – and they are adapting a once rigid party structure into a looser, open movement to reflect that.

*And as a bonus, a young, charismatic leader doesn’t hurt either.

Claudia Chwalisz is a Senior Policy Researcher at Policy Network, a Crook Public Service Fellow at the University of Sheffield and author of The Populist Signal: Why Politics and Democracy Need to Change