Normalisation of racism in our politics and hate crime on our streets

Not long after the shock European Union referendum result in 2016 there were reports of thugs tearing headscarves off the heads of Muslim women. “Fuck off to Poland” letters were posted through the doors of eastern Europeans. People were assaulted on public transport. And worse.

Police reported a surge in racially motivated hate crime. Many linked it to the xenophobic rhetoric of the pro-Brexit campaign, with its naked and rather desperate scaremongering about refugees and Turkey’s supposedly imminent accession to the bloc.

Pro-Brexit media organisations sought to rubbish the link, even the statistical reality of the spike itself.

But it was clearly there in the official figures. And the consensus, accepted even by the Home Office, is that it was not just an artefact of a greater willingness of people to report such incidents to the police.

So why did it happen? Did the British public’s attitudes suddenly become more hostile overnight towards immigrants and ethnic minorities? It’s not impossible. But it’s likely that something more subtle happened.

A new economic paper by Facundo Albornoz, Jake Bradley and Silvia Sonderegger, all from Nottingham University, explains the disturbing spike through a framework of a theory of “social norms” and “information shock”.

“The referendum revealed that anti-immigrant sentiment was more widespread in the UK than was previously believed,” argue the authors. “Following the referendum, people who had so far concealed or repressed their private views for fear of appearing politically incorrect felt empowered and started adopting a behaviour more in line with their true preferences.”

Somewhat counterintuitively, they discovered that the biggest spikes in hate crime tended to occur not in areas that voted strongly for Leave but in majority Remain areas. A one percentage point increase in the Remain vote of an area was associated with a 0.5 per cent increase in the level of local hate crime.

Why would that be? The researchers hypothesise that latent xenophobes in Remain areas had been influenced by local norms about acceptable behaviour. The surprise effect of the national result was thus greater, making them more likely than those in Leave areas to act on their worst impulses.

The results are not conclusive. There needs to be more evidential support, perhaps through polling, for the contention that people’s views on immigration are shaped by local, rather than national, behavioural norms. And it’s not clear why a bigger information shock for a bigot would mean a higher subsequent propensity for violence.

Yet the paper’s argument seems broadly credible. And it’s a useful attempt to explore the mechanism through which the “normalisation” of bigotry by mainstream political discourse in broadcast studios and conference halls can translate into violence and intimidation on the streets.

Economists sometimes assume that people have fixed “preferences” as individuals. This can be a useful simplifying assumption for modelling behaviour. But we all intuitively know that doesn’t always hold. We can be influenced by those around us. Those influences interact with our preferences.

It’s notable that there was a similar spike in hate crime in the US after Donald Trump’s surprise election victory. This followed a campaign, of course, in which he had, among other things, called for a “shutdown” of all Muslim immigration and labelled Mexicans as rapists.

What are the lessons? Well, it tells us to be extremely wary of upsetting anti-racist norms.

Some, like David Goodhart of the think tank Policy Exchange and Eric Kaufmann of London’s Birkbeck College, have been proposing an official recognition, even promotion, of the “legitimate group interest” of white people.

This is based on the theory that the white majority in the UK is economically and socially neglected due to an official fixation on multiculturalism and diversity – and that this has created a “white grievance” which has been fuelling right-wing populism.

Even if one accepts this theory – and there are myriad grounds for challenging it – there are dangers in accentuating the political “salience” of a majority group’s ethnic identity.

Encourage people to believe they belong to a sprawling “white” group with a “legitimate majority grievance” and they are liable to start behaving as if race is the key political dividing line, rather than issues such as, for instance, income inequality or social class.

Turning Britain into a country like Kenya, where politics is a dominated by ethnicity, is not an attractive vision. And the Nottingham empirical work on how bigoted underlying attitudes can be brought to the surface by a shift in political rhetoric reinforces the case for caution.

That will draw accusations of double standards, of course. Why is it acceptable for politicians to talk about the ethnic identity and needs of minorities but not that of the majority? A large part of the answer lies in the simple reality of inequalities of physical vulnerability between groups in our society – something so distressingly underlined in those weeks after the referendum.

#davidgoodhart #erickaufmann #hatecrime #normalisation

Donald Trump’s duplicitous ‘fair trade’ rhetoric

Donald Trump sometimes tries to claim he’s not really a crazed protectionist, merely a champion of what he describes as “fair trade”. The implication is that if trade was not “rigged” by cheating foreigners, he would gladly decommission his battery of new import levies.

So if China stopped its intellectual property piracy, its forced technology transfers, its restrictions on US access to its own market, its currency manipulation, we could have trade peace in our time. If Europe would only end its discrimination against American vehicle imports, we would all be able to get along famously. And so on, with the same applying to Mexico, Canada and every other country that has felt the lash of Trump’s anger on trade. But as Mitt Romney once put it, “such promises are as worthless as a degree from Trump University”.

It should be pretty clear by now Trump’s “fair trade” rhetoric is a study in diplomatic and commercial bad faith.

Today’s 10 per cent tariffs from the White House on a further $200bn of Chinese imports – hitting handbags, rice and textiles, along with several thousand other items – take the total value of trade affected by Trump to $250bn. That’s the value of roughly half the US imports from China.

It would be brave to bet against US tariffs eventually landing on the other half too, as Trump has explicitly threatened. Those who predicted the “grown-ups” in the White House would restrain the president and prevent a trade war breaking out do not look particularly prescient today.

The US claims China is not engaging with its trade concerns. Yet some in the White House privately say they are delaying imposing the full – previously threatened – 25 per cent tariff rate on imports to give US companies more time to shift manufacturing back from China to the US. It seems the real strategy is less about making global trade fairer, in Trump’s eyes, than in incentivising industrial “reshoring” onto American soil.

There is actually a reasonable case for penalising China for its flouting of the rules of multilateral trade, such as through overproduction, dumping overseas and the nation’s excessive restrictions on market access. But a policy of reversing the globalisation of supply chains really does ignore the foundational economic lessons of Adam Smith about the benefits of the division of labour, and of David Ricardo on the merits of a nation recognising its comparative advantage.

The primary loser from Trump’s trade deal will of course be the American consumer. The hypothetical benefits of more manufacturing jobs will be more than cancelled out by higher prices in the shopping malls.

The Trump administration has exempted consumer electronics such as smartphones after lobbying from companies including Apple which, famously, assembles its iPhones in China before importing them to the US.

Chinese bicycle helmets and baby high chairs were also exempted, which suggests someone in the White House, if not the president himself, intuits tariffs are likely to push up domestic prices – which may not be helpful ahead of US mid-term congressional elections.

But whoever it isdid not intuit enough. For the idea one can limit the domestic economic impact of tariffs by carving out exemptions for certain popular or sensitive products is naïve in the extreme. In this age of sprawling and complex cross-border manufacturing supply chains there are connections that are hard, if not impossible, to perceive.

As the Apple boss Tim Cook notes, there are iPhone components manufactured in the US which are exported to the China so it can be assembled. What if China imposes tariffs on those in response to Trump’s tariffs? That will likely push up US iPhone retail prices even if there are no direct tariffs imposed by Trump. Deliberately clog the arteries of trade and the economic damage will inevitably show up somewhere, perhaps where it’s not expected.

What will the impact be on the rest of the world, on growth? China is already retaliating and will probably match US tariffs dollar for dollar, at least as far as it can given its bilateral trade surplus. Europe has hit back on steel import duties with charges on Harley Davidson motorcycles and Florida orange juice.

The Bank of England has estimateda global trade war – in which everyone raises tariffs on everyone else by around 10 percentage points – would slow worldwide GDP growth by around 2.5 per cent over three years. That’s a serious economic loss in the context of a $90 trillion global economy. It would hold back UK GDP growth two per cent and the US equivalent around five per cent.

But such estimates, though reasonable, are also potentially misleading. As Maury Obstfeld, chief economist of the International Monetary Fund, recently warned: “The multilateral rules-based trade system that evolved after [the Second] World War… and that nurtured unprecedented growth in the world economy … is in danger of being torn apart”.

This regime rupture isn’t an outcome which one can reliably model based on historic economic relationships. It would put us in a wholly new and dangerous world. Trump says trade wars are “easy to win”. He’s wrong. But multilateral trade systems could be easy for a belligerent president to break. And we may find it terribly hard to put them back together again.

#China #DonalTrump #reshoring #tradewar

Beware ideologues who would inflict pain on others

At the peak of the global financial crisis a decade ago there were some who insisted that politicians and regulators should sit back and just let crumbling banks go bust.

No bailouts. No rescues. What we needed, they said, was creative destruction.

There was plenty of other similarly terrible advice in the following years. There were those who argued that governments needed to slash state spending, even at the very height of the global recession. There were those who shouted that emergency money printing by central banks would rapidly result in destructive inflation. When that crippling spike in prices failed to materialise, they switched to warning that “quantitative easing” would be a form of slow-working poison for the economy, keeping alive zombie companies. They began urging central bankers to put up interest rates as soon as possible.

Although governments, tragically, started to cut deficits far too early, before the recovery was secured, they ignored most of these suggestions. And thank goodness. Such policies would have led to massive economic destruction, and severe social suffering.

To be clear, this isn’t to argue that the mainstream policy view is always entirely right. The mainstream policy view before 2008 was, after all, that the banking system was well capitalised and light-touch regulation was a good idea. Nor is it a rejection of the idea that things should have been handled differently. Unlike the Bank of England, the US Federal Reserve bought other kinds of bonds than just government debt as part of its money printing. The Swedish central bank imposed negative interest rates, where others baulked at going below zero. Iceland put bank bosses on trial. There are legitimate arguments about how the crisis was handled over which reasonable people can disagree.

This isn’t about nuanced policy debate. This is about the dangers of arguments plainly based on ideology rather than evidence, that brush aside the question of trade-offs and uncertainty, whose advocates are suspiciously blasé about the risks of pain that will be borne by others, who seem to luxuriate in their aura of almost Old Testament righteousness.

But, of course, the fact that the advice of the zealots was ignored gave them an opportunity too. It allowed them to say: “Things would have been better if you had done what we said.” And there’s sadly a market for this view of the world. There are plenty of people today who will parrot the line that that money printing has been a disaster, that governments should have cut spending in the bust alongside the private sector, that the financial system should have been allowed to fail in 2008.

Now we can discern a similar dynamic over Brexit. A small caucus clamours for no-deal. A tiny group of economists, whose work has been comprehensively and repeatedly debunked by genuine trade experts, claim it would actually deliver a tremendous boost to GDP. The boss of Wetherspoons, Tim Martin, says crashing out, offering the most risible argument, would be a “huge gain” for consumers, even as the rest of British industry dissolves into terror at the prospect.

We may yet crash out. But the likelihood is, still, that we will not, that responsible voices and reasonable politicians will prevail.

What follows then? The likelihood is that we will be told by the ultras it was because we didn’t drink the Kool-Aid that we haven’t woken up in their Brexit paradise, that the quisling politicians messed it up, squandered the chance.

It’s tempting to hope that the headbangers get what they want. Then they will have to own the fallout.

Then they will be forced to face up to the reality of their ideas and to be held directly accountable. Yet this is to misunderstand their psychology. For the irredeemably ideological it is always someone else’s fault.

There’s always a treacherous stab in the back.

However, responsible policymakers do not knowingly inflict harm on populations in order to win an argument.

There is no simple way out of this trap of responsibility. So how to neutralise the siren voices? We can’t run repeated experiments on economies to discern the merit of various strategies as we might in a video game simulation. The best we have is history and natural experiments.

The US authorities failed to rescue its collapsing banks in the 1930s. The result was an all-encompassing financial panic and, ultimately, a loss of one-fifth of the economy and 25 per cent unemployment. Greece was forced by the rest of the eurozone to cut government spending in the midst of its bust. The result was strikingly similar to America in the Great Depression. Countries that didn’t see demand sucked out of their economies did better. The European Central Bank raised rates and did not start QE until 2015, some six years after the US Federal Reserve. The result was a worse economic performance for Europe since 2008 than in the traumatic 1930s, while the US recovered faster.

For most sensible people that would constitute evidence. But such crutches are not available with Brexit.

There’s no historical precedent for a country leaving a massive trade and regulatory bloc like the EU. And we’re the only one doing so now.

The fact is that there will always be irresponsible ideologues, zealots as dangerous as they are deluded. It’s a test of the maturity of our politics, our media culture, our society as a whole, in how we deal with them.

Sadly, we’ve not been doing too well on that front in recent years.

#Brexit #financialcrisis #GreatDepression