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Obama must persuade Americans that not all government is bad

It's a formidable task to explain the human cost of rapidly reducing the size of the state during a recession.

Chief Justice John Roberts, one of the US’s most prominent conservative thinkers, is in bad odour with Republicans. They have accused him of treachery, of closet socialism, of insanity, even of hallucinations brought on by not taking his epilepsy medication – a particularly savage smear as it broadcasts that he suffers from the condition.

Roberts’s crime was to be the casting vote in the Supreme Court’s decision declaring President Obama’s universal health-care law legal according to the constitution. Republicans believe that what they call “Obamacare” is a giant step on the way to a national health service on the British model, a reform they consider tantamount to socialism, if not communism.

In reality, Obama’s law drives everyone into the arms of expensive private health insurance companies, which operate as a cartel, on pain of a stiff fine for those who opt not to participate. It would be like the British government insisting everyone enrol with Bupa. It is hardly socialism of any sort – but no matter.

The criminal act that conservatives accuse Roberts of committing is far greater than in­viting Americans on to a slippery slope that will end in Soviet-style tyranny. In his written judgment, Roberts avers that if Obama had solely obliged everyone to buy health insurance, that would indeed have been unconstitutional, because while the federal government can regulate commerce between states, it cannot regulate those who choose not to take part in a commercial transaction, as the failure to buy a product is, by definition, not commerce.

Tax appeal

But Roberts went on to argue that because the new law imposes a fine on those who do not buy health insurance, it amounts to a tax and therefore, as the federal government is entitled to tax citizens, the health-care law is constitutional. And that is where libertarians posing as conservatives – counting for at least one in ten registered Republican voters, if Ron Paul’s voting tally is any guide – part company with the conservative chief justice appointed by the last conservative president, George W Bush. Taxation is used to fund government and, in the eyes of many Republicans, government is a dangerous institution that threatens individual liberties.

Americans have had a profound hatred of taxation and government since the American Revolution more than 200 years ago. While the cry of the original Tea Party rebels – who dressed as Native Americans daubed with war-paint and tipped tea, which bore a British tax, into Boston Harbour – was “No taxation without representation”, their objection was not so much to the democratic deficit but to being taxed at all. The colonists had such a profound dislike of tax that they would rather have their wives and children scalped by Indians than pay taxes to fund the British soldiers who would keep their families’ hairlines intact.

In modern times the hatred of taxation was turned to political advantage by Barry Gold­water, the Republican presidential candidate in 1964, whose backwoods Arizona mentality made him doubt whether a distant government in Washington, DC was worth the expense. The heir to his mantle was Ronald Reagan, a former Democrat whose epiphany on tax was prompted by the ruinous rate he had to pay on his vast Hollywood income. His cry that not only could government not cure problems, but that government was itself the problem helped propel him into the White House.

Dislike of government of any sort is widespread in the US. For instance, it motivated the killers who bombed the federal government building in Oklahoma City in 1995, murdering 168. A similar anarchic strain fuels the modern Tea Party, named after their rebellious predecessors, which emerged two years ago after Congress passed universal health care. For many Republicans the predominant issues in the November election – the frail state of the economy and the repeal of “Obamacare” – represent a broader, more fundamental choice between big government and individual liberties.

The Tea Party has become the driving force of the Republican Party and the old-school paternalistic tradition is in full retreat. It has already intimidated the moderate Republican leadership by obliging them to sign a pledge not to vote for any measure that will raise even a cent in tax, or they will face challenges for their seats by Tea Party candidates.

The battle over government spending and borrowing and the speed of repayment of public debt resulting from the financial crisis of 2008/2009 has provided the perfect pretext to propose drastically cutting the size of the state by starving it of funds through slashing taxes. The impending election is, therefore, not so much about the unemployed and the spluttering economic recovery or the virtues of health care as the role and size of government.

Friedrich the great

The intellectual inspiration for such thinking comes mainly from Friedrich Hayek’s The Road to Serfdom, a long-running bestseller in the
US. But while Tea Party members have taken the slim tome as their bible, few have read it thoroughly, still less the rest of Hayek’s often dense oeuvre.

Hayek thought private enterprise was more responsive than state officials in meeting the public’s demands, but he believed in a powerful government to enforce regulations to ensure the market operated freely and fairly. Nor did he believe taxes should be cut unless the government was running a surplus. He thought John Maynard Keynes’s idea of slashing taxes to lift an economy out of recession was evidence of his innate irresponsibility.

The race between Obama and Mitt Romney, then, disguises a deeper contest between the ideas of Hayek and Keynes. Obama’s formidable task is to explain the human cost of rapidly reducing the size of the state during a recession. It won’t be easy. But if he is looking for a perfect example of how things can go terribly wrong, driving a fragile recovery into a double-dip recession with unintended increases in state borrowing, he need only look across the Atlantic at the antics of Messrs Cameron and Osborne.

Nicholas Wapshott is the author of “Keynes Hayek: the Clash That Defined Modern Economics” (W W Norton, £18.99)


Nicholas Wapshott’s Keynes Hayek: the Clash That Defined Modern Economics is published by W W Norton (£12.99)

This article first appeared in the 09 July 2012 issue of the New Statesman, Honey, I shrunk the Tories

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What's to be done about racial inequality?

David Cameron's words on equal opportunities are to be welcomed - now for some action, says Sunder Katwala.

David Cameron made the strongest, clearest and most high profile statement about ethnic inequalities and the need to tackle discrimination ever yet offered by a British Prime Minister in his leader’s speech to the Conservative Party conference in Manchester.
“Picture this. You’ve graduated with a good degree. You send out your CV far and wide. But you get rejection after rejection. What’s wrong? It’s not the qualifications or the previous experience. It’s just two words at the top: first name, surname. Do you know that in our country today: even if they have exactly the same qualifications, people with white-sounding names are nearly twice as likely to get call backs for jobs than people with ethnic-sounding names? … That, in 21st century Britain, is disgraceful. We can talk all we want about opportunity, but it’s meaningless unless people are really judged equally”, said Cameron.
While the proof of the pudding will be in the eating, this was a powerfully argued Prime Ministerial intervention – and a particularly well-timed one, for three reasons.

Firstly, the Prime Minister was able to root his case in an all-but-universally accepted appeal for equal opportunities. It will always prove more difficult in practice to put political energy and resources behind efforts to remedy discrimination against a minority of the population unless a convincing fairness case is made that values cherished across our whole society are at stake. Cameron’s argument, that any party which tells itself that it is the party of the ‘fair chance’ and ‘the equal shot’ must have a response when there is such clear evidence of discrimination, should prove persuasive to a Conservative Party that has not seen race inequalities as its natural territory. Cameron argued that the same principles should animate responses to discrimination when it comes to race, gender and social class. Put like that, wanting job interviews to be fair – by eradicating conscious and unconscious patterns of bias wherever possible – would strike most Britons as offering as clear a case of the values of fair play as wanting the best baker to win the Great British Bake-Off on television.
Secondly, Cameron’s intervention comes at a potential "tipping point" moment for fair opportunities across ethnic groups. Traditionally, ethnic discrimination has been discussed primarily through the lens of its impact on the most marginalised. Certainly, persistent gaps in the criminal justice system, mental health provision and unemployment rates remain stark for some minority groups. What has been less noticed is the emergence of a much more complex pattern of opportunity and disadvantage – not least as a consequence of significant ethnic minority progress.

Most strikingly of all, in educational outcomes, historic attainment gaps between ethnic minorities and their white British peers have disappeared over the last decade. In the aggregate, ethnic minorities get better GCSE results on average. Ethnic minority Britons are more likely, not less likely, to be university graduates than their fellow citizens. 

As a result of that progress, Cameron’s intervention comes at a moment of significant potential – but significant risk too. Britain’s ethnic minorities are the youngest and fastest-growing sections of British society. If that educational progress translates into economic success, it will make a significant contribution to the "Great British Take-Off" that the Prime Minister envisions. But if that does not happen, with educational convergence combined with current ‘ethnic penalties’ in employment and income persisting, then that potential could well curdle into frustration that the British promise of equal opportunities is not being kept.  Cameron also mirrored his own language in committing himself to both a ‘fight against extremism’ and a ‘fight against discrimination’: while those are distinct challenges and causes, actively pursuing both tracks simultaneously has the potential, at least, depolarise some debates about responses to extremism  - and so to help deepen the broad social coalitions we need for a more cohesive society too.

Thirdly, Cameron’s challenge could mark an important deepening in the political competition between the major parties on race issues. Many have been struck by the increase in political attention on the centre-right to race issues over the last five to ten years. The focus has been on the politics of representation. By increasing the number of non-white Conservative MPs from two to seventeen since 2005, Cameron has sent a powerful signal that Labour’s traditional claim to be ‘the party of ethnic minorities’ would now be contested. Cameron was again able to celebrate in Manchester several ways in which his Cabinet and Parliamentary benches demonstrate many successful journeys of migrant and minority integration in British society. That might perhaps help to ease the fears, about integration being impossible in an era of higher immigration, which the Home Secretary had articulated the previous day.

So symbolism can matter. But facial diversity is not enough. The politics of ethnic minority opportunity needs to be about more than visits to gurdwaras, diversity nights at the party conference fringes and unveiling statues of Mahatma Gandhi in Parliament Square. Jeremy Corbyn’s first speech as Labour leader did include one brief celebratory reference to Britain’s ethnic diversity – “as I travelled the country during the leadership campaign it was wonderful to see the diversity of all the people in our country” – and to Labour bringing in more black, Asian and ethnic minority members - but it did not include any substantial content on discrimination. Tim Farron acknowledged during his leadership campaign that the Liberal Democrats have struggled to get to the starting-line on race and diversity at all. The opposition parties too will no doubt now be challenged to match not just the Prime Minister’s rhetorical commitment to challenging inequalities but also to propose how it could be done in practice.

Non-white Britons expect substance, not just symbolism from all of the parties on race inequalites.  Survation’s large survey of ethnic minority voters for British Future showed the Conservatives winning more ethnic minority support than ever before – but just 29 per cent of non-white respondents were confident that the Conservatives are committed to treating people of every ethnic background equally, while 54 per cent said this of Labour. Respondents were twice as likely to say that the Conservatives needto do more to reach out – and the Prime Minister would seem to be committed to showing that he has got that message.  Moreover, there is evidence that ethnic inclusion could be important in broadening a party’s appeal to other younger, urban and more liberal white voters too – which is why it made sense for this issue to form part of a broader attempt by David Cameron to colonise the broad centre of British politics in his Manchester speech.

But the case for caution is that there has been limited policy attention to ethnic inequalities under the last two governments. Restaurateur Iqbal Wahhab decided to give up his role chairing an ethnic minority taskforce for successive governments, unconvinced there was a political commitment to do much more than convene a talking shop. Lib Dem equalities minister Lynne Featherstone did push the CV discrimination issue – but many Conservatives were sceptical. Cameron’s new commitment may face similar challenges from those whose instinct is to worry that more attention to discrimination or bias in the jobs market will mean more red tape for business.

Labour had a separate race inequalities manifesto in 2015, outside of its main election manifesto, while the Conservative manifesto did not contain significant commitments to racial inequality. The mid-campaign launch in Croydon of a series of race equality pledges showed an increasing awareness of the growing importance of ethnic minority votes - though the fact that they all involved aiming for increases of 20 per cent by 2020 gave them a slightly back-of-the-envelope feel. 

Prime Ministerial commitments have an important agenda-setting function. A generation ago the Stephen Lawrence case opened the eyes of middle England to racist violence and police failures, particularly through the Daily Mail’s persistent challenging of those injustices. A Conservative Prime Minister’s words could similarly make a big difference in the mainstreaming of the issue of inequalities of opportunity. What action should follow words? Between now and next year’s party conference season, that must will now be the test for this Conservative government – and for their political opponents too. 

Sunder Katwala is director of British Future and former general secretary of the Fabian Society.