Jeremy Corbyn’ nativist dogwhistle

Given the mountains of economic garbage we’ve been served up by both right-wing and left-wing Brexiteers in recent years, the words “benefits” and “Brexit” used in the same sentence inevitably sets off alarm bells.

So it was disconcerting to see them juxtaposed in a Jeremy Corbyn speech. “Our exporters should be able to take proper advantage of the one benefit to them that Brexit has already brought, a more competitive pound,” the Labour leader told industrialists in Birmingham on Tuesday.

“After the EU referendum result, the pound became more competitive and that should have helped our exporters. But they are being sold out by a lack of a Conservative government industrial plan, which has left our economy far too reliant on imports.”

The framing is unfortunate. The reason for the record drop in the pound on the night of the referendum was a rush of expectation across financial markets that the UK economy will be considerably weaker outside the EU’s single market and customs union. There’s no long-term economic benefit implied in the currency slump – only cost.

Yet, in fairness to Corbyn it’s not mad to suggest that a weaker pound should be providing a short-term lift for manufacturing firms. Even the Bank of England has suggested that UK manufacturers have been in something of a “sweet spot”, with sterling weak but Britain still, for now, remaining in the EU’s economic institutions.

More troubling are Corbyn’s comments on imports. “We’ve been told that it’s good, advanced even – for our country to manufacture less and less and instead rely on cheap labour abroad to produce imports, while we focus on the City of London and the finance sector,” he lamented.

There’s nothing wrong with promoting a rebalancing of the UK economy away from its 30-year over-reliance on finance. Yet the implication that the UK would benefit from churning out manufactured products domestically that are currently made in the developing world is nonsense.

New research from the Resolution Foundation this week shows incomes for the worst off in Britain are no higher than they were 15 years ago. A major part of the reason is that low-skilled men have seen their weekly hours collapse. Reshoring low-value manufacturing will not help such people. Nor will it restore depressed communities to economic health. That is the kind of con artist’s fantasy that Donald Trump has been spinning to US steel workers in the American rust belt.

The only sensible and feasible vision for the future of UK manufacturing is a high value added one, using skilled workers, cutting-edge equipment and, if necessary, foreign investment and expertise.

Corbyn’s reference to “cheap labour abroad” smacks of the beguiling creed of economic nationalism. His remarks may not be explicitly anti-foreigner but they are still resonant of Trump-style tirades against corporate outsourcing.

And, in this context, his talk of keeping government contracts in the UK, rather than allowing foreign firms to bid for them, was also disturbing.

Yes, all nations already do this to some extent. But one has to be extremely careful about turning it into a general principle of government. For if you shut others out of your market, they will, inevitably, shut you out of theirs.

Corbyn joined the Daily Mail, of all publications, in complaining about the fact that the contract to manufacture new British passports has been awarded to a French firm, rather than Gateshead’s De La Rue.

But De La Rue does printing jobs for many foreign governments. Make no mistake, if all contracts were awarded on nationality grounds British firms – and British workers – would ultimately suffer more than they would gain.

In truth, the overall tone of Corbyn’s speech was more than a little alarming. The protection that UK workers need is from destabilising globalisation of “hot money” capital flows and undercapitalised multinational banks, not the globalisation of manufacturers’ supply chains.

They need protections from macroeconomic mismanagement in the form of self-defeating austerity, not from “cheap labour abroad”.

The problems of the British economy stem from under-investment, deficient training, short-termist bosses and shareholders, unbalanced regional development, an official blind eye turned to inflows of dirty money, and poor macroeconomic management – and Corbyn was justified in raging against all of these. But he was quite wrong to blame the UK’s general policy of economic openness.

At best this speech was an unwelcome distraction from the dominant challenge of protecting UK jobs in the face of the catastrophe of a “no deal” Brexit and the long-term pain of a hard one. At worst it was a cynical dog whistle aimed at already grievously misled Leave voters – and the dipping of Labour’s toe into some very dangerous waters.

#trade #DonaldTrump #manufacturing #globalisation #JeremyCorbyn

The privatisation porkers have grown even fatter since the days of Cedric the Pig

In 1994 the chief executive of British Gas, Cedric Brown, was awarded a 75 per cent pay rise in a single year, taking his remuneration to £475,000.

At the time,this seemed an extraordinary sum for the boss of what had, relatively recently, been a nationalised industry. Uproar ensued.Brown, dubbed “Cedric the pig” by trade unions, become a symbol of post-privatisation boardroom excess.

So what would £475,000 be worth in today’s money? The answer is around £750,000.Yet that’s a mere drop in the trough by today’s standards. The pigs have fattened up over the last quarter century.

In 2017, Iain Conn, the new boss of Centrica (parent company of British Gas), enjoyed a total remuneration package – including share bonus schemes –worth £1.7m. But that was modest relative to the £4m (including a £1.4m “recruitment award”) he was awarded the year before.

Whatever else those union protests back in 1994 achieved, they didn’t manage to put a brake on executive remuneration.

Last week, pay awards at a more recently privatised company created an upset in the business farmyard.The total remuneration of Rico Black, the incoming head of the Royal Mail, is set to be up to £2.7m, while its outgoing chief executive, Moya Green, is receiving a £900,000 “golden parachute” payment.

This prompted a 70 per cent Royal Mail shareholder revolt at its annual general meeting. But the vote was only “advisory”. And unlike with the Brexit referendum result –another technically advisory vote –the Royal Mail board is showing every indication of treating it as such.

What could upset things, though, is Jeremy Corbyn’s Labour Party winning power and carrying out its manifesto promise to renationalise the Royal Mail, three years after it was sold off by the coalition. The top paid member of a public sector company is the boss of Network Rail, on £750,000.

It’s difficult to see Corbyn and the shadow chancellor John McDonnell cheerfully agreeing to raise this ceiling.

Polls show that Royal Mail renationalisation is popular; even more people want to bring it back into the public ownership than approve of the renationalisation of rail and water.

Debates about the public’s appetite for nationalisation have tended to focus on issues of service quality and value extraction by shareholders. The issue of bosses’ pay is a piggy that hasn’t really squeaked.

This is perhaps surprising, considering its lubricating role in the privatisation process. As John Kay, who has written extensively about the history of nationalisation, notes, the resistance of managers to the Conservative Party’s public sector sell-offs in the 1980s crumbled when they realised they could personally profit through higher salaries and share options.

Whether or not anyone else gains from privatisation, bosses of privatised industries certainly do.

Before British Gas was privatised in 1986, its chief executive was paid £50,000 a year. In today’s money, that is roughly £110,000 –at least 15 times less than what the Centrica boss gets today.

In 2005, a decade before its privation, the chief executive of the Royal Mail was paid £704,000. That’s £1m in today’s money, or less than half of what Rico Black is likely to accrue in a year.

Needless to say, the real-terms pay of the average British Gas engineer has not risen 15 times since 1986,nor has the pay of a postal worker doubled since 2005.

We see the same pattern in rail, in water, in infrastructure: privatisation results in an explosion of pay at the top of an organisation relative to the rest of the workforce.

Company boards and their remuneration committees insist that these business have become far more complex, that they are merely paying a market rate for managerial talent, that their executives really are worth it.

Yet evidence of an explosion of personal productivity from these bosses, or a surge in the quality of the service offered, is elusive. What seems to happen is that excesses in pay at the top of the rest of the private sector drag up the rewards of the former utility bosses, as remuneration committees worry about how it would look if they paid their executives less than the sector average. Thus a rising tide of greed lifts all bosses’ boats.

Whether or not the renationalisation of utilities is an economically progressive agenda, it certainly holds the possibility of sealing off the money trough from some hungry mouths.

#britishgas #privatisation #royalmail

The corruption of US politics shows why the UK is right to limit electoral spending

Perhaps £675,315 doesn’t sound that much in the context of a nationwide referendum. After all, there are an estimated 46.8 million people on the UK electoral register. So the illegal additional spending in 2016 by the Vote Leave campaign, above its official £7m limit, amounts to around 1.5p per potential voter. That barely stretches to the cost of printing a leaflet.

When the information commissioner fined Facebook £500,000 earlier this month for failing to safeguard users’ data in the same referendum, many remarked on how unjustly small the bill was. So why the fuss now about a roughly equivalent sum?

To understand, cast a fearful glance at the US, where there are no limits on what political parties and individuals can spend in the pursuit of winning elections. According to the Centre for Responsive Politics, the average winner of a seat in the House of Representatives spent $1.5m on his or her campaign in 2016.

But that’s chump change compared to the cost of getting into the Senate. The average winner of a berth in the upper house that year spent $12m, a new record. And this is a lower bound estimate. When one factors in spending by “political action committees”, the average bill doubles.

The degree to which unlimited campaign spending has corrupted US politics is difficult to overstate. As the above figures show, to sustain a career in politics requires copious amounts of funding.

And that funding comes, in large part, from corporate vested interests or the ultra-wealthy. It comes, directly or indirectly, from the very firms and individuals affected by the legislation produced by members of congress.

And it is getting worse. The Supreme Court in 2010 ruled, by 5-4, that it was an unwarranted curb on “free speech” to limit the sums that corporations can spend on political attack and candidate promotion adverts.

This has led to an explosion of “outside” political spending over the past eight years.

Much has been made of the fact that Trump’s 2016 campaign spent less than those of several of his Republican predecessors, and only 60 per cent of the $1bn outlay of Hillary Clinton’s, prompting some to suggest money is less important than it used to be in winning US elections.

But there were special circumstances here. The reality TV star Trump was given a vast amount of free air time by television news networks, who, in a cynical pursuit of ratings, broke their own rules which prevent candidates giving interviews over the phone, rather than face to face.

Moreover, one now has to understand Trump as part of a system, rather than as an individual maverick. As the economist Paul Krugman points out, Trump is sustained in office, despite his many impeachable offences, by a broader Republican Party, which is obsessed with a donor-friendly agenda of tax cuts and deregulation.

The 2016 congressional elections still set new spending records of $4bn, up 3 per cent in real terms on those in 2014 and 70 per cent higher than the outlay in 1998. This year’s midterms are not expected to buck the trend. And studies suggest that around 90 per cent of the time, the better-financed candidate wins.

Nor is this capture of politics by mega money popular. Polling suggest that two-thirds of Americans support limits on campaign spending. Even most Republican-leaning voters agree.

Yet the prospect of any change in an era of cowed and corrupt congressmen, a Supreme Court tilting ever more in a corporate-libertarian direction and a pluto-populist president who is scornful of existing democratic norms (let alone shoring them up), the prospect of change seems as likely as Trump voluntarily releasing his full tax returns.

Yes, £675,315 might not sound like a king’s ransom. But the principle of heavily policed limits on the influence of big money in our politics is priceless. It’s right we defend it jealously – even obsessively.

#electoralcommission #politicalfunding #VoteLeave