Everything is possible, David Miliband

I last posted about David Miliband on 23 May 2015, 18 months ago. I was writing just after a Sunday Times magazine cover story had appeared, Celebrity big brother How David Miliband conquered New York, and was following up earlier posts on the theme of whether Miliband would “do a Boris” and return to Westminster politics. Now, after so many major and unexpected events, there seem to be good reasons to revisit the subject:

The UK general election in May 2015 was won by the Conservatives. Ed Miliband then resigned as leader of the Labour party to be replaced by Jeremy Corbyn who was re-endorsed by the party membership in 2016.

The EU referendum in June 2016 came down in favour of Leave. David Cameron resigned as Prime Minister and was replaced by Teresa May. She appointed Boris Johnson as Foreign Secretary.

In November Donald Trump was elected President of the United States defeating Hillary Clinton.

When in 2014 I reviewed Clinton’s book, Hard Choices, I noted that “On David Miliband the adjectives pile up:

David proved to be an invaluable partner. He was young, energetic, smart, creative and attractive with a ready smile. We found our views on how the world was changing remarkably similar.

As Donald Trump might tweet, Very nice! And it wasn’t surprising to read Tom Newton Dunn’s Sun story in April this year that

David Miliband is expecting to be given a top job in the US government by Hillary Clinton if she is elected president in November. The New York-based former Labour Foreign Secretary has told MP friends that the Democrat candidate for the White House wants to make him a foreign envoy. … Mr Miliband [may] have to take up US citizenship to accept the job offer. And it would mean he will have effectively ruled out a return to British politics for good.

So in September, when Miliband offered advice (writing in “a personal capacity”) in the New Statesman on the new challenges for the British left post-Brexit, it couldn’t have been difficult for him to muster the equanimity to observe that:

[Labour] have not been further from power since the 1930s.

and that:

The main charge against Jeremy Corbyn is not just that his strategy is undesirable because it makes the party unelectable. That is only half the story. The real issue is that his strategy makes the party unelectable ¬because it is in many aspects undesirable.

and on Corbyn’s foreign and domestic policies:

There is one other element that is not only undesirable, but disastrous. It is the critique that everyone who disagrees with Jeremy Corbyn is in fact a closet Tory – or “Tory lite”. The US Republicans have a similar problem, with anyone to the left of the hard right called “Rino”, meaning “Republican In Name Only”.

But now the real megafauna are on their way to Washington and any prospects of Clintonian patronage have vaporised. And who should show up in London, as The Times tersely reported on 18 November (right), within a week of the Trump victory, but one David Miliband. Nigel Nelson had offered a more timely report in the Mirror on 13 November, David Miliband set to return to the UK after Trump victory- sparking rumours of Corbyn leadership challenge, The former foreign secretary was reportedly hoping for a position in a Hillary Clinton White House:

David Miliband is ready to come back to Britain now Hillary Clinton will not be US president. And that would allow the former Labour Foreign Secretary to return to British politics for a new leadership challenge against Jeremy Corbyn now being touted by MPs for 2018. A friend of Mr Miliband said: “He was only hanging on over there in the hope Hillary would give him a big job. “Now Donald Trump is president it is more likely he will come home.”

Nelson went on, in sentences that would have been more relevant had Clinton won, to review the jobs that she might have put his way, and his rather gushing opinion of her. At this point it is worth pulling up a quote from the May 2015 post:

"The typical term for the boss of this organisation [the IRC] is 10 years. He made a commitment to stay for seven, which takes him to 2020, but with, effectively, a break option at five.”

So, all Miliband has to do next year is find a safe Labour seat which hasn’t been taken over by extremists (unlike poor Hilary Benn) and which will survive the constituency boundary changes, get adopted instead of Ed Balls (an emerging national treasure on the strength of Strictly Come Dancing), be sufficiently pro-Brexit to defeat UKIP at the general election in 2020 which Labour will probably lose, be elected Labour leader after Corbyn resigns, pushing Keir Starmer and others out of the way, and then lead his party to victory in the 2025 election when he will become PM at the age of 59, almost 60. At least his age would be the least of his problems, the average age of world leaders seems to be on the way up.

We live in a time when the improbable can’t be ruled out and the expected doesn’t happen or, to quote Bernard-Henri Lévy:

If Trump is possible, then everything is possible. Nothing, from now on, is unimaginable.

Like a Brexit-driven UK general election in the first six-months of 2017, Miliband being inserted into a safe seat early next year, possibly assisted by Tony Blair's "new political institute", and a defeated and demoralised Labour party looking for a new leader?

Where are think tanks coming from?

In the UK’s 2015 election campaign, now well under way I’m afraid, among the many things that the parties will throw at each other are selected conclusions reached about all manner of things by think tanks. In the last week, the Centre for Cities has been arguing for the devolution of powers to cities, the RUSI has opined on the value of the nuclear deterrent being at sea continuously, the IFS picked fault with Ed Balls’ claims about the revenue that a 50p tax rate would raise, claims made at the Fabian Society’s New Year Conference.

Most think tanks seem to be described in the media as “leading” or “respected”. Their leading lights provide articles and appear on TV and radio news programmes and before parliamentary committees, nearly always with an unquestioned assumption about their objectivity and neutrality. Think tank press releases seem to be translated into news stories – often on the front page - without very much scrutiny. Prospect Magazine has part of its website. the Prospect Think Tank Pages dedicated to them:

This website is a hub for think tanks around the world and for debate about their best new work on political, social and economic policy. It is also the home for the Prospect International Think Tank Awards, [which] set out to give credit to the independent organisations that produce the most original, influential and rigorous work on the most pressing challenges facing people, governments and businesses. The awards, described by the BBC’s Radio 4 as “the Oscars of the think tank world,” are an annual celebration of this work across the globe.

Centre for Cities, by the way, won the Prospect 2013 One to Watch award, while their UK Think Tank of the Year was the Resolution Foundation (I commented here on some work by them three years ago).

But are these think tanks as neutral as they are often portrayed? The only attempt I am aware of to assess where they stand on the political spectrum is by an economist, Andrew Whitby. His method was based on the Follow patterns of think tanks by the UK MPs who are on Twitter and he posted the resulting chart last August:

No great surprises, although few come out as strictly neutral, and worth bearing in mind in the months ahead.

Is Ed Balls a lucky general?

Was it Eisenhower or Napoleon who saw advantages in generals who were lucky rather than clever? Dr Anthony Seldon, being an historian and Master of Wellington College (named after Napoleon’s nemesis), should know. Seldon (left) must be a man of exceptional energy and ability. As well as holding a job at the top of private education, he is an active modern historian (co-founder of Institute of Contemporary British History with Peter Hennessy) and the author of studies of the administrations of both Tony Blair and Gordon Brown. No doubt during his toils he has encountered many of the current shadow front bench, so his open letter to Ed Balls, the shadow chancellor, published in the New Statesman on 21 February, For the good of himself, his family and the party, it’s time for Ed Balls to fall on his sword, has to be taken notice of. Seldon’s message to Balls is that:

… quitting in the next few months until, say, 2017 would undoubtedly benefit your leader, your party, your wife and even yourself.

His motives in producing this epistle are a mystery to us peasants outside the Westminster Village, and probably many inside. But it may contain some clues as to what could be going on, for example:

Possibility 1: Seldon is acting in support, unsolicited or otherwise, of those who want rid of Balls – perhaps they see him as a stumbling block in forming a Labour/Lib Dem coalition:

Ed Miliband would be a much stronger leader without you. … he doesn’t need you … you stop Ed breathing fresh air. … You say you like David Miliband, but his followers are not doing well under Ed, are they? The party would be much stronger with David back in the frame. So, too, would it with Alistair Darling returning to the front bench. In the event of a hung parliament, Labour would stand a better chance of putting together a workable coalition with the Lib Dems without you. … Others, including Ed Miliband, share responsibility for the Brown errors: you will earn praise for taking the hit.

Such persons may have calculated that with a maximum of just over two years to the next election, Balls has to go now or it’s too late.

Possibility 2: It’s not really about politics: primarily Seldon wants to make an impression on the current or potential parents whose fee-paying is fundamental to his College’s existence. Such people by now may be alarmed at the prospect of Ed Balls as the next (or next but one) Chancellor of the Exchequer. Probably for the benefit of the same audience, less than a month ago Seldon was reported in the media complaining about bias (eg in the Daily Telegraph):

Dr Seldon claimed there are 62 pupils at Wellington bright enough to get an Oxbridge interview this year, but said he only expects 20 offers of places to come in. He said: "From our perspective it looks as if some public school students are being discriminated against at the final hurdle. It's painful because we are seeing some excellent candidates who would go on to get firsts who are not getting offers, about 10 this year.

Given that in 2012 Wellington College was ranked 76th in independent school A-level results (62.2% gainingA*/A or equivalent; 1st Wycombe Abbey 92.8%) are 20 Oxbridge places so few?

The boarding fees at Wellington are £31500 pa and one of the experiences they secure is a course on happiness and well being, one of Seldon’s innovations. Never having had the benefit of such education, but being all in favour of “build[ing] strong and positive relationships with others”, I can offer one piece of advice for free: avoid commenting on the dynamics of another couple’s relationship and on how they should bring up their children. But I’m not sure Seldon would agree:

Yvette would not say it to you but, like many women working in the same organisation as their husband, she would be freer to think and act without you in her hair. You would have more time, too, for your three children. As a headmaster, I know how hard it is for children who have just one parent in the public eye. Having two is harder still and your family would only benefit with you being more present and less preoccupied.

(Yvette Cooper, ie Mrs Balls, is shadow home secretary.)

Possibility 3: It was a gross error of judgement by Seldon, clever man though he is. This seems to be borne out by the sceptical responses to Seldon’s advice from both left and right, summarised in the New Statesman subsequently. To me it seems bizarre to propose that, with a Labour lead in double figures and a good chance of winning an election in 2015, any member of the shadow front bench should walk away from frontline politics. Particularly if they are 46 and would be 50 at the proposed date of return, at which point their colleagues/rivals would have been in office a couple of years. And:

What might you do during your long sabbatical? … What about a biography of Brown? Not Gordon, nor your friend Nick, but George: you would learn much more about how factionalism damaged Labour in the 1960s. … You could even study for an MBA and learn, unlike many others who become ministers, how to run large organisations.

So you can guess what Seldon has among his four advanced qualifications.

As for its impact on Balls, so far the open letter doesn’t seem to have gained any traction at all. And it probably won’t.  Timing being everything and Balls being a lucky general, within 48 hours of the Seldon article appearing, Moody’s had announced that they were downgrading the UK’s credit rating from AAA to Aa1 because of the UK’s poor growth prospects. It’s against this background that the real Chancellor will be delivering his budget next month.

But there remains:

Possibility 4: Seldon knows something that most of us don’t, but if we did would put a completely different slant on his advice.

Footnote: It wasn’t until writing this post that I discovered that Seldon’s father was Arthur Seldon, the right-wing economist and joint founder president, with Ralph Harris, of the Institute of Economic Affairs. Also Seldon, like Mr and Mrs Balls, both Milibands, David Cameron and so many other members of the British political class, is an Oxford PPE graduate.


UPDATE 28 February

The Seldon letter was re-opened yesterday at the first PMQs after the Moody’s downrating of UK debt. Ed Miliband’s questions were directed at the economy, eventually being replied to with:

The Prime Minister: … let us look at the right hon. Gentleman’s policy. Let us examine the fact that the New Statesman, the in-house magazine of the Labour party, says that his “critique of the government’s…strategy may never win back public trust”,  

his  

“proposals for the economy will never convince”,

 and his  

“credibility problem will only become magnified as the general election approaches”. That is not Conservative central office saying it, but the New Statesman.  

Edward Miliband: With the greatest respect to the New Statesman, the Prime Minister is scraping the barrel by quoting that. All we have heard today … is a Prime Minister who refuses to accept that he has failed on the central test he set himself. He has failed to meet that first test. It is not just our credit rating that has been downgraded. We have a downgraded Government, a downgraded Chancellor and a downgraded Prime Minister.  

The Prime Minister: The right hon. Gentleman says that the New Statesman is scraping the barrel, but it was the only newspaper that endorsed his leadership. In this Oscar week, perhaps the best we can say is that Daniel Day-Lewis was utterly convincing as Abraham Lincoln, and the right hon. Gentleman is utterly convincing as Gordon Brown: more borrowing, more spending, more debt.

The PM was quoting from a passage of the “open letter” directed at Ed Balls:

Economic credibility would be more readily restored with your departure. Your critique of the government’s austerity strategy may never win back public trust and your proposals for the economy will never convince. Your credibility problem will only become magnified as the general election approaches.

On February 28 Peter Oborne in the Daily Telegraph argued that Ed Miliband should sack Ed Balls - and as brutally as possible. He thought the most telling [political] event of the week was:

… the dreadful showing by Ed Balls, the shadow chancellor, in the House of Commons on Monday, when George Osborne was forced to come and explain himself following Britain’s loss of its AAA status with the rating agency Moody’s. In theory this should have been an open goal for Mr Balls.  Yet when the session ended an hour later, Mr Osborne had got away with it and Mr Balls was out of sorts. The truth is that Mr Balls isn’t any good as shadow chancellor. This is an open secret in the Labour Party (where discussions about his successor are ongoing) ..   

… as shadow chancellor, he is a failure. Monday showed that he cannot damage George Osborne even if confronted with an easy target. There are various reasons for this, one of which is Mr Balls’s total identification with the economics and politics of the Gordon Brown era. The basic reason why Britain is in such an economic mess is because Mr Brown, advised by Mr Balls, spent too much and fuelled a boom. We are coping with the resulting bust. There is no getting away from this.

Some people might think this is letting the bankers off rather lightly!

… Mr Balls has not seriously challenged the basic Coalition strategy. There has been no great collision of ideas. As a result he has nothing interesting to say, which is probably the reason he compensates with bombastic but ultimately meaningless Commons performances. The former chancellor Alistair Darling and David Miliband (who appears to have at last got over his long sulk at losing the Labour leadership to his younger brother) are being aired as replacements. Either would be an improvement, as would Yvette Cooper, Mr Balls’s wife.  

Last weekend Anthony Seldon, the Master of Wellington College, wrote an article in which he urged Mr Balls to go one step further, retire from politics, and take up some other occupation. I hope that Mr Balls does not do that. He has much too much to offer, and there are all kinds of front-bench jobs at which he can excel.  

Mr Balls is a highly intelligent and self-aware man, and I am sure that he realises that he is in trouble. If he really wants Labour to win the next election, he can do Ed Miliband one last favour. He should not merely offer his resignation. Rather, he should allow his party leader to sack him as brutally as possible. By doing in his former mentor in this way, Mr Miliband would look strong and ruthless. Favourable comparisons would be made with Tony Blair, who always lacked the courage to sack Gordon Brown. And questions would be asked about why David Cameron has been unable to follow suit.

How Miliband could “sack” Balls “as brutally as possible” but have him in a “front-bench job[s] at which he can excel” is far from clear – that’s just a reshuffle isn’t it?

The UK macroeconomic facts of life

In his Labour Party Conference speech on 2 October, Ed Miliband asked the audience:

Have you ever seen a more incompetent, hopeless, out of touch, u-turning, pledge-breaking, make it up as you go along, back of the envelope, miserable shower than this Prime Minister and this Government?

Good rollicking stuff, to which the cynic can only answer: possibly not, but surely rivalled by the one led by Gordon Brown and in which you were Secretary of State for Energy and Climate Change! In the Daily Telegraph, Allister Heath, the editor of City A.M, provides a more adult perspective on what he calls:

The dirty little secret of contemporary politics is that there is very little difference between what the Coalition and Labour intend to do on macroeconomics. Ed Miliband's policies are little more than Coalition-lite. In an economy worth £1.57 trillion a year, and with the Government spending at least £683bn, of which around £130bn will probably be borrowed, a raging argument over whether £1bn extra should be spent on apprentices or £3bn of 4G money on housing is tantamount to a phoney war over 0.3pc of GDP. Such differences are little more than rounding errors.  

A genuinely game-changing left-wing alternative would need to involve numbers 10 times larger: spending would have to be increased by £45bn to make a real difference. Such a move would be suicidal, so we should count our blessings that Labour are only pretending to reject austerity. But the furiousness of the debate in Westminster is often inversely proportional to the true significance of the issue at hand. Britain's political classes have succumbed to what Sigmund Freud described as the narcissism of small differences. It suits everybody involved to exaggerate differences.

(our awareness of “small differences” possibly having been raised by Grayson Perry)

Heath concludes that

:… a Miliband administration would end up spending roughly the same share of GDP as the current Coalition, and would be forced to stick with austerity.  

… In the absence of dramatic supply-side and tax reforms – which neither Government nor Opposition back – the New Normal over the next few years will be growth of 1pc or so a year, meaning no extra money to spend on Labour's client groups or on public services, robbing the party of its main justification.   

… Labour is in desperate need of fresh thinking. It should ditch its meaningless "predistribution" idea, pseudo-intellectual drivel that could be used to justify anything.

Heath, whose article should be read in full, goes on to suggest some changes, particularly on monetary policy, should Ed Miliband be inclined to take on Ed Balls. He does not address two major problems – the impact on already strained household expenditure of increased mortgage repayments should (when!) interest rates go up, and how much longer lenders will allow the UK to borrow £130bn a year, which is, slightly more tangibly, about £356million every calendar day or £513million every day that the markets are open - about £10 for each adult.


ADDENDUM 17 October

In an article in the Daily Telegraph, Allister Heath has now started to address the point “how much longer lenders will allow the UK to borrow £130bn a year” above:

Since August 1, the Debt Management Office, which is tasked with raising cash for the Treasury, has sold £34.3bn of new IOUs. During the same time, the Bank of England bought £32bn of them. The difference – a relatively trivial £2bn – is the net amount the market had to absorb. There is actually a scarcity of some kinds of gilts. Interest rates on government debt are no longer a meaningful representation of what private lenders are demanding to extend cash to the British state. There is a false market in government bonds.  

… In August, the Bank actually bought more gilts (£14bn) than the Treasury issued (£10.1bn). So far this financial year, the Bank has bought £62.5bn worth of gilts, almost two thirds of the £100bn or so issued. Total gilt purchases by the Bank have reached £365.7bn out of a total gilt market of £1.164 trillion. he state now owes 31pc of the national debt to itself. The official line is that these gilts will eventually be sold back to the private sector, as QE makes way for quantitative tightening (QT), but this is unlikely. Either the gilts owned by the Bank will be held until maturity and then rolled over; or they will eventually be cancelled.  

… Forget about the tough rhetoric: the UK is being kept afloat by a new bubble, albeit one caused by QE rather than house prices. It is only when reality eventually reasserts itself that we will finally understand what fiscal pain really means.

Unfortunately August 1 is about 11 weeks ago, which suggests that the UK is currently borrowing at a rate of over £160bn a year.

The two Eds: smoke and fire or neither?

The majority of us, far from the inner circles of politics as we are, can only glean what is going on from what we are told by the media. Much of that is fed to us, directly or indirectly, by an army of media handlers and is intended to manipulate our opinions rather than to inform us. On the other hand, more than ever before there are numerous accounts what actually went on in the not too distant past available in the form of diaries and memoirs. So, although we have to pick our way through what is presented to us day by day, we probably have better tools for intelligent and sceptical scrutiny than people had even twenty years ago.

As an example, consider the story by Andrew Pierce in the Mail on Sunday on 2 September about poor relations between Leader of the Opposition Ed Miliband and Shadow Chancellor Ed Balls, The Ed to Ed feud that could wreck Miliband's No10 dream. The article is well worth reading in full, but some key extracts are:

Earlier this year, as Ed Miliband launched into one of his long-winded speeches to his shadow cabinet, everyone at least tried to create the impression they were giving the Labour leader their undivided attention. But there was one notable exception, a man who made no effort to conceal the fact the Labour leader had lost the interest of the room. Ed Balls, the pugnacious shadow chancellor and devout disciple of Gordon Brown, was nonchalantly reading and sending messages on his BlackBerry while Mr Miliband droned on. As Mr Balls tapped away, indifferent to the embarrassment of colleagues and anger of the Labour leader, Mr Miliband asserted his authority and snapped: ‘Ed, people can be just as interesting as BlackBerries . . .’ The spat was the latest sign that the relationship between the two men is breaking down both in public and private. They neither like nor trust each other and, crucially, Mr Balls thinks he could do Mr Miliband’s job much better. …  

But the poisonous history between the Eds goes back to the early days of the Blair era, when they were youthful advisers to Mr Brown after he became shadow chancellor in 1994 and then Chancellor in 1997. … Mr Balls was economics adviser, while Mr Miliband was a mere special adviser. Ed Balls, now 45, loved to lord it over his staff, just as he does today. Colleagues at the time recall he treated Mr Miliband, 42, like the ‘office boy’. Mr Balls liked Mr Miliband to make his coffee every morning. ‘He loved to bark out “coffee time”,’ says one well-informed source. ‘Ed sheepishly got up to make it.’ …  

Today as leader it is, of course, Mr Miliband who is more senior. It is he who plays the role of ‘chairman’, summing up the views of his colleagues at the end of shadow cabinet meetings. But, tellingly, this happens only after he has invited Mr Balls to give his verdict on the contributions made by other members of the shadow cabinet to any meeting. The result is that Mr Balls sometimes talks for three times as long as Mr Miliband. ‘A fly on the wall would assume Balls was leader,’ says one witness to the proceedings. …  

It should have been a marriage of equals between leader and shadow chancellor. They are both Oxford educated. Mr Balls studied at Harvard and Mr Miliband taught there. But increasingly these days whether it is in meetings or on the telephone, Mr Balls talks over his leader. It infuriates Mr Miliband but he does little other than shrug his shoulders and say: ‘That’s Ed.’ …  

But the problems between them go beyond personal ambition and resentment over the handling of the shadow chancellor portfolio. Mr Miliband is trying to detoxify the Labour brand so damaged by infighting between Blair and Brown. Labour pollsters have identified Gordon Brown’s term in Number 10 as a ‘huge negative’ for the party’s election prospects. And no one in the Labour Party is more closely associated with Mr Brown than Ed Balls. …  

One party figure said: ‘The two Eds have a fundamental disagreement over the City but Balls is making the running and bullying Miliband’s people into submission on a range of policies. ‘It began with Labour’s spending commitments, but now we have to get permission from the shadow chancellor’s office on everything from the future of Trident [nuclear missiles] to keeping open police stations at weekends. Power has shifted from one end of the shadow cabinet table to the other.’  

It is an uncanny echo of the Blair and Brown relationship. And the question is whether it will fester in the same way — and once again tear the Labour party apart.

So, what to make of this? Of course the Mail is a Conservative-supporting newspaper. It must be expected to run stories unhelpful to Labour, particularly in the hope of Labour’s opinion poll lead being dislodged by post-Olympics feel-good and all the positive spin that can be wrapped around the Coalition reshuffle. At the same time, how better to take the heat off a beleaguered Chancellor than to turn it up on his Shadow? Certainly at PMQs on 5 September David Cameron took up the opportunity presented by Pierce’s article:

The Prime Minister: First, I am glad that the right hon. Gentleman mentioned the issue of Chancellors, because I have got my first choice as Chancellor, while he has got his third choice as shadow Chancellor. Apparently, he still has to bring in the coffee every morning—that is how assertive and butch the Leader of the Opposition really is. … 

Edward Miliband: The difference between the shadow Chancellor and the Chancellor is that the shadow Chancellor was right about the economy and the Chancellor was wrong. …

The Prime Minister: … He praised his shadow Chancellor to the gunnels, but let us remember that it was the shadow Chancellor who landed us in this mess. Who was the City Minister when the City went bust? The shadow Chancellor. Who was the man who gave us the biggest budget deficit in the developed world? The shadow Chancellor. That is what that team has delivered and that is why the British people will never trust them again. …  

The Prime Minister: The big difference in British politics is that I do not want to move my Chancellor; the right hon. Gentleman cannot move his shadow Chancellor. The fact is that in spite of all the economic difficulty this is a strong and united Government, and in spite of all the opportunity this is a weak and divided Opposition.

On the other hand, Pierce has his reputation to protect so his references to:

Senior party figures are talking openly  

Colleagues at the time …

says one well-informed source.

One shadow cabinet source said 

The Miliband camp fears 

Blairites wryly observe  

One party figure said

are likely to have some substance and look as though they come from individuals close to Miliband. Mary Riddell had followed the Mail story up in the Daily Telegraph (another Tory-inclined paper) on 4 September in a thoughtful article (again worth reading in full) which, somewhat surprisingly, sought to redress the balance. Indeed, she gave the impression of having spoken to persons close to Balls:

The wars convulsing the Tories and the Lib Dems are supposedly being mirrored by a struggle between Ed Miliband and his pugnacious shadow chancellor, Ed Balls. The evidence for this stand-off is somewhat slight. Reports that Mr Balls sends messages on his BlackBerry while the leader is addressing shadow cabinet, and that he hogs the floor, are less than incendiary. Mr Balls is indeed an inveterate texter whose meeting room etiquette may leave something to be desired. None of that is new. …  

The shadow chancellor, capable of inspiring both loyalty and loathing, is a textbook villain. To those who do not like or trust him, he remains Gordon Brown’s “kneecapper”. Yet Mr Balls’s insistence that any policy with a cost attached should be cleared with him is indeed imperative, according to allies who point out that the worsening economic situation means that Labour cannot make any new spending promises for after 2015. Minor disgruntlement on some colleagues’ part has, supporters say, been blown up into a baseless storm. Certainly, the two Eds are not re-enacting the Blair/Brown campaign of mutually assured destruction. …  

And yet the rumours are not entirely baseless. Where Blair and Brown could stake out separate fiefdoms, with Mr Brown (or Mr Balls) calling the economic shots, now the economy is all that matters. That leaves the Eds encamped on the same terrain. No one disputes that there are differences. A Balls ally describes the divides as small and bridgeable, but another observer cites “real tensions and problems”. The latest poll lead, down to six per cent, gives little cause for complacency …  

Labour’s attempts to reforge a one-nation Britain will depend on the alignment of Planet Miliband and Planet Balls. That confluence will, in turn, mean determining exactly where power lies. The interests of both Eds, not to mention the party and the country, may rest on just how assertive the leader is prepared to be. Mr Miliband cannot afford the creeping perception, expressed by one insider, that he “is physically and mentally intimidated” by Mr Balls. While both men would dispute that impression, it is now incumbent on them to demonstrate its untruth.

And if we turn to the diaries and memoirs? An insight into life on Planet Balls during the Labour government comes from Alastair Campbell’s Diaries – for those who lack the stamina to reach down all four volumes, the index pages for Volumes 3 and 4 for “Balls, Ed” are shown below (left and right), and the tone of many of the entries is probably enough. One gets the impression of Campbell’s heart sinking whenever Balls came into sight. The entry “has a civilised discussion with AC” was presumably so rare an occurrence as to merit being recorded for posterity!

A broader perspective can be found in the Epilogue in Alistair Darling’s memoir of his time as Gordon Brown’s Chancellor from 2007 to 2010, Back from the Brink:

Perhaps most damaging, for Gordon in particular, but for all of us in the end, was that he surrounded himself with a cadre of people whose preoccupation was the removal of Tony Blair and the installation of Gordon Brown. They had their own reasons, some political, others personal, but blind loyalty meant that Gordon was only told that which he wanted - or could bear - to hear and that meant, ultimately, that he was ill-served. Speaking truth to power never came into it.  

It would be wrong to claim that there was a plot to get rid of Tony Blair; there was no plot. A plot is secret. This was an open campaign, and as far as the Brownite cabal was concerned, you were with them or against them. It was a fairly brutal regime, and many of us fell foul of it. After Gordon became Prime Minister, the cabal sought fresh enemies and as chancellor I quickly found myself in the firing line. Their underhand tactics, particularly the continuous briefings and leaks to the media, were difficult to bear and were also incredibly damaging to the reputation of the party. Tony and Gordon dominated the Labour party for more than ten years and were an overwhelming force for good, but by the end their feud allowed a cancer to grow which, I believe, contributed to our defeat in 2010. The lessons of this crisis have yet to be fully Iearned and the consequences of what happened are still playing out. (pages 322/323)

All of which leads me to conclude that the smoke isn’t concocted and to suspect fire. After all, I can remember people telling me a few decades ago that newspaper stories about the problems between Prince Charles and Princess Diana were invented, and something similar about the early reports of the Blair-Brown feud. In fact, while the reports in the media may not always have been accurate or complete, the underlying sense of the situation in both cases wasn’t too far from what turned out eventually to have been the reality.


ADDENDUM 6 September

Ed Balls was interviewed today for the Independent by Steve Richards and Andrew Grice, and dismissed the subject discussed above as “complete and utter, total garbage”. In more detail:

… There have been reports of seething tensions between the "two Eds" over policy and Balls' apparent rudeness towards Miliband in Shadow Cabinet meetings. His version is expansive and unequivocal.  

"I came back from holiday and discovered while Ed was also on holiday we are having this big dispute. It was more laughable than concerning. I got back on Sunday and we spent an hour and a half together three days running, talking about what we are doing and where we are going and we spent very little time talking about these stories because they are complete and utter, total garbage."  

The Shadow Chancellor dismisses the stories by placing their complex relationship in a much wider context –the now openly-admitted running battle between the two Eds' former bosses Gordon Brown and Tony Blair. "We are two of the people who in the last Government were trying to fix problems with Alastair Campbell and others. We have learnt from all those problems. The reality with me and Ed is that if there's a problem we sort it out between us because we have the sort of relationship where we can sit down in a room and resolve it and that's how it will be. If there's anyone – whether its Conservatives… or any other noises offs who think their briefings can become a self-fulfilling prophecy by inventing this kind of stuff – we will prove them totally and utterly wrong."  

One allegation, that presumably came from within the Shadow Cabinet, is that Balls ostentatiously consults his BlackBerry while Miliband speaks at length to his frontbench team. Balls jokes about the habit and suggests he is by no means the most addicted to the device. "I was the first person who informed the Leader of Opposition during a Shadow Cabinet meeting a year or so ago about the forthcoming Royal Wedding. All of us are a bit guilty of using our BlackBerry but Yvette [Cooper, Balls' wife] said to me: 'Me and Douglas [Alexander, Shadow Foreign Secretary] are far worse than you!' "

Readers might be forgiven for concluding that Balls’ recollection of his relationship with Campbell is as shaky as his wife’s grammar. The article concludes:

Today Miliband and Balls speak at a special conference on economic policy. Balls describes it as one of several "stepping stones" towards the next election, in which they seek to frame and win the "intellectual" as well as the political debate. More Labour policy detail will come next year, as Labour combines Miliband's "responsible capitalism" agenda with the party's traditional goal of redistributing wealth. "We need to look at the rules that govern competition, corporate governance. They need work in a long- term way. But for a route to a fairer society the minimum wage and tax credits are essential."  

Whether the "two Eds" succeed in navigating the "stepping stones" together is one of the biggest questions in British politics. For sure, they are fully aware of the fatal consequences if they fail to do so. ...

ADDENDUM 7 September

The Independent has come back to the subject again today, this time in the form of an opinion piece from its chief political commentator, Steve Richards. Although headed Ed and Ed won't split – they know there's too much at stake and sub-headed There will be no repeat of the Blair/Brown rivalry that still traumatises Labour, what follows is a little more ambivalent by the end:

The relationship between Ed Miliband and Ed Balls is the most important in British politics. David Cameron and George Osborne are in power but their relationship is settled and fully formed. As close friends, they have set their course. The more complex and less harmonious relationship between the two Eds evolves with big strategic and policy decisions still to take. If they can make the partnership work, Labour's chances of winning the next election will be high. If they fail to do so, Labour will lose, irrespective of the Coalition's obvious failings.  

The media tends to frame the present by what has happened in the immediate past. In the case of Miliband and Balls, the temptation to present the duo as a repeat of the Blair/Brown rivalry is proving irresistible, not least because the parallels are obvious. Like Brown, Balls was the more senior figure when the leadership vacancy arose. Like Blair and Brown, the two Eds are two contrasting personalities.  

… Unlike Cameron and Osborne, they are not close. When Miliband left the Treasury for a year in the US, he told friends it was to get a break from Balls as much as from Brown. Not surprisingly, given his experience and range, Balls would at some point like to be leader and Prime Minister. Miliband is nervily aware of this and gets worked up when he reads that Balls is the real leader of the Labour Party. 

So there are the outlines of a potential collapse of a relationship even before an election is won. For their part, Blair and Brown won three. Yet the parallel is too easy and superficial. It does not stand up to closer scrutiny. The differences between the Blair/Brown relationship and the one between the two Eds are far more marked and significant than the similarities. If I were Cameron and Osborne, I would not count on a major split. 

… In terms of ministerial pasts and proximity to power, the two of them are the most experienced leader of the Opposition and shadow Chancellor for decades. Unlike most such duos, they also have a big chance of winning an election after a single term. Given this benevolent context, they will have only themselves to blame if they give fatal ammunition to malevolent internal briefers who only help Cameron and Osborne, the duo who prove that genuine friendship does not guarantee a smooth political ride.

Is Ed Miliband Fukuyama’s Scribbler?

Not everyone who is directed here by Google will know as much about Ed Miliband as they do about Francis Fukuyama, or vice versa. So, at the outset and in alphabetical order:
Francis Fukuyama is Senior Fellow at the Center on Democracy, Development, and the Rule of Law at Stanford University. A third-generation Japanese-American, he was trained as a classicist, but turned to political science. As well as being in government, before Stanford, he was at Johns Hopkins, RAND and Harvard. He is probably best-known in the UK as the author of an essay, The End of History, written in 1989 at the end of the Cold War, an event which he saw as bringing about universal liberal democracy. The essay led to considerable debate, much of it critical, and Fukuyama’s views have evolved since, including his comment, "there can be no end of history without an end of modern natural science and technology".
Ed Miliband is the leader of the UK Labour party and hence Leader of the Loyal Opposition to Her Majesty’s Government, currently led by the Conservatives in coalition with the Liberal Democrats. Like many British politicians he graduated in Politics, Philosophy and Economics at Oxford (PPE), and he has also spent time at Harvard. He gets to put six questions to Prime Minister David Cameron (also a PPE graduate) at the Prime Minister’s Questions (PMQs) on Wednesdays, a session closely watched by British political wonks. Miliband became Leader of the Opposition after defeating his older brother, David, (another PPE graduate) who was the favourite in the contest held in 2010 after Labour lost the election. Of late (early February 2012) there is a grudging admission that he has been getting better at a difficult job, but commentators speculate on his replacement by his brother, or Ed Balls or Balls’ wife, Yvette Cooper, who both, guess what, have PPE degrees. Certainly, it would seem from the opinion polls that Miliband still has much to do before the voters regard him as a potential PM.

The question posed in the title of this post stems from a January 2012 article by Fukuyama and a February speech by Miliband on similar themes. The article, The Future of History Can Liberal Democracy Survive the Decline of the Middle Class?, appeared in Foreign Affairs, and, as far as I can tell, has not received any attention in the UK. So, I will attempt to summarise it by drawing on the author’s words, starting with the key proposition he made at the start:

… despite widespread anger at Wall Street bailouts, there has been no great upsurge of left-wing American populism in response. … Something similar is true in Europe as well, where the left is anemic and right-wing populist parties are on the move. There are several reasons for this lack of left-wing mobilization, but chief among them is a failure in the realm of ideas. For the past generation, the ideological high ground on economic issues has been held by a libertarian right. The left has not been able to make a plausible case for an agenda other than a return to an unaffordable form of old-fashioned social democracy.

He then offered a historical perspective on what has happened:

The first major secular ideology to have a lasting worldwide effect was liberalism, a doctrine associated with the rise of first a commercial and then an industrial middle class in certain parts of Europe in the seventeenth century. (By “middle class,” I mean people who are neither at the top nor at the bottom of their societies in terms of income, who have received at least a secondary education, and who own either real property, durable goods, or their own businesses.) …
The Communist Manifesto was published in 1848, the same year that revolutions spread to all the major European countries save the United Kingdom. And so began a century of competition for the leadership of the democratic movement between communists, who were willing to jettison procedural democracy (multiparty elections) in favor of what they believed was substantive democracy (economic redistribution), and liberal democrats, who believed in expanding political participation while maintaining a rule of law protecting individual rights, including property rights.
At stake was the allegiance of the new industrial working class. Early Marxists believed they would win by sheer force of numbers: as the franchise was expanded in the late nineteenth century, parties such as the United Kingdom’s Labour and Germany’s Social Democrats grew by leaps and bounds and threatened the hegemony of both conservatives and traditional liberals.
Throughout the first half of the twentieth century, there was a strong consensus on the progressive left that some form of socialism—government control of the commanding heights of the economy in order to ensure an egalitarian distribution of wealth—was unavoidable for all advanced countries. …
Yet even as the great ideological conflicts of the twentieth century played themselves out on a political and military level, critical changes were happening on a social level that undermined the Marxist scenario. First, the real living standards of the industrial working class kept rising, to the point where many workers or their children were able to join the middle class. Second, the relative size of the working class stopped growing and actually began to decline, particularly in the second half of the twentieth century, when services began to displace manufacturing in what were labeled “postindustrial” economies. Finally, a new group of poor or disadvantaged people emerged below the industrial working class—a heterogeneous mixture of racial and ethnic minorities, recent immigrants, and socially excluded groups, such as women, gays, and the disabled. As a result of these changes, in most industrialized societies, the old working class has become just another domestic interest group, one using the political power of trade unions to protect the hard-won gains of an earlier era. …
There is a broad correlation among economic growth, social change, and the hegemony of liberal democratic ideology in the world today. And at the moment, no plausible rival ideology looms. But some very troubling economic and social trends, if they continue, will both threaten the stability of contemporary liberal democracies and dethrone democratic ideology as it is now understood. …
… what if the further development of technology and globalization undermines the middle class and makes it impossible for more than a minority of citizens in an advanced society to achieve middle-class status? There are already abundant signs that such a phase of development has begun. Median incomes in the United States have been stagnating in real terms since the 1970s. The economic impact of this stagnation has been softened to some extent by the fact that most U.S. households have shifted to two income earners in the past generation. … Americans may today benefit from cheap cell phones, inexpensive clothing, and Facebook, but they increasingly cannot afford their own homes, or health insurance, or comfortable pensions when they retire.
A more troubling phenomenon, identified by the venture capitalist Peter Thiel and the economist Tyler Cowen, is that the benefits of the most recent waves of technological innovation have accrued disproportionately to the most talented and well-educated members of society. This phenomenon helped cause the massive growth of inequality in the United States over the past generation. In 1974, the top one percent of families took home nine percent of GDP; by 2007, that share had increased to 23.5 percent. …
The other factor undermining middle-class incomes in developed countries is globalization. With the lowering of transportation and communications costs and the entry into the global work force of hundreds of millions of new workers in developing countries, the kind of work done by the old middle class in the developed world can now be performed much more cheaply elsewhere. Under an economic model that prioritizes the maximization of aggregate income, it is inevitable that jobs will be outsourced.
Smarter ideas and policies could have contained the damage. Germany has succeeded in protecting a significant part of its manufacturing base and industrial labor force even as its companies have remained globally competitive. The United States and the United Kingdom, on the other hand, happily embraced the transition to the postindustrial service economy. … There was a lot of happy talk about the wonders of the knowledge economy, and how dirty, dangerous manufacturing jobs would inevitably be replaced by highly educated workers doing creative and interesting things. This was a gauzy veil placed over the hard facts of deindustrialization. It overlooked the fact that the benefits of the new order accrued disproportionately to a very small number of people in finance and high technology, interests that dominated the media and the general political conversation.

Fukuyama then expanded on his original proposition:

One of the most puzzling features of the world in the aftermath of the financial crisis is that so far, populism has taken primarily a right-wing form, not a left-wing one. In the United States, for example, although the Tea Party is anti-elitist in its rhetoric, its members vote for conservative politicians who serve the interests of precisely those financiers and corporate elites they claim to despise. …
It has been several decades since anyone on the left has been able to articulate, first, a coherent analysis of what happens to the structure of advanced societies as they undergo economic change and, second, a realistic agenda that has any hope of protecting a middle-class society. …
Over the past two generations, the mainstream left has followed a social democratic program that centers on the state provision of a variety of services, such as pensions, health care, and education. That model is now exhausted: welfare states have become big, bureaucratic, and inflexible; they are often captured by the very organizations that administer them, through public-sector unions; and, most important, they are fiscally unsustainable given the aging of populations virtually everywhere in the developed world. Thus, when existing social democratic parties come to power, they no longer aspire to be more than custodians of a welfare state that was created decades ago; none has a new, exciting agenda around which to rally the masses.

He then considered what might be required:

Imagine, for a moment, an obscure scribbler today in a garret somewhere trying to outline an ideology of the future that could provide a realistic path toward a world with healthy middle-class societies and robust democracies. What would that ideology look like?
It would have to have at least two components, political and economic. Politically, the new ideology would need to reassert the supremacy of democratic politics over economics and legitimate anew government as an expression of the public interest. … The ideology would need to somehow redesign the public sector, freeing it from its dependence on existing stakeholders
Economically, the ideology could not begin with a denunciation of capitalism as such, as if old-fashioned socialism were still a viable alternative. It is more the variety of capitalism that is at stake and the degree to which governments should help societies adjust to change. Globalization need be seen not as an inexorable fact of life but rather as a challenge and an opportunity that must be carefully controlled politically. …
It is not possible to get to that point, however, without providing a serious and sustained critique of much of the edifice of modern neoclassical economics, beginning with fundamental assumptions such as the sovereignty of individual preferences and that aggregate income is an accurate measure of national well-being …
The ideology would be populist; the message would begin with a critique of the elites that allowed the benefit of the many to be sacrificed to that of the few and a critique of the money politics, especially in Washington, that overwhelmingly benefits the wealthy.
... It is possible that the developed world is on the cusp of a series of technological breakthroughs that will not only increase productivity but also provide meaningful employment to large numbers of middle-class people.
But that is more a matter of faith than a reflection of the empirical reality of the last 30 years, which points in the opposite direction. Indeed, there are a lot of reasons to think that inequality will continue to worsen. The current concentration of wealth in the United States has already become self-reinforcing: as the economist Simon Johnson has argued, the financial sector has used its lobbying clout to avoid more onerous forms of regulation. Schools for the well-off are better than ever; those for everyone else continue to deteriorate. Elites in all societies use their superior access to the political system to protect their interests, absent a countervailing democratic mobilization to rectify the situation. …
That mobilization will not happen, however, as long as the middle classes of the developed world remain enthralled by the narrative of the past generation: that their interests will be best served by ever-freer markets and smaller states. The alternative narrative is out there, waiting to be born.

Is Ed Miliband, starting to address the “failure in the realm of ideas” which Fukuyama identified? The inaugural lecture he gave on 9 February to open the Sheffield Political Economy Research Institute suggests that he might be trying to. Again excerpting:

There has never been a better time to open a centre which thinks about the challenges posed to our economy and our politics by the financial crisis. As a society, we must respond to the deep lessons of the crisis and find new answers, including by learning from historical and international experience, …
My argument is that to command consent and to be sustained, the political economy of the country must deliver for the working people in this country. Tonight, I want to make the case that failure to do that has since the war led to radical transitions in the political economy of our country.
The 1945 welfare state settlement was built in response to the failures of the 1930s.
The 1979 market settlement was a response to the failures of the 1970s.
What you might call the 1997 settlement was a response to the failures of part of that settlement when it came to the public realm.
And now in the period after the financial crisis, we face such a challenge once again. The failures that led up to the financial crisis of 2007 and with which we are still living today demand a new settlement.

For non-UK readers: in 1945, the Labour government put in place a welfare state, in particular the National Health Service. After 1979, the Thatcher government took the UK in a different direction, which other EU countries tend to regard as the anglo-saxon model of capitalism. New Labour came to office in 1997 with policies which were intended to ameliorate Thatcherism rather than reject it. However

… the new settlement was incomplete. After the banks crashed, and the boom years turned into the toughest times for working people in a generation, a whole set of challenges were exposed.
The first is that working people are being squeezed between stagnant incomes and rising costs. For thirty-odd years, the bargain had been clear: Let the economy grow, and everyone, including the low paid, would get richer.
And it worked for a time, partly because of greater productivity, and partly because of changes like more and more women coming into the workplace. But working peoples’ rise in incomes and living standards over those years was also supported by particular factors – the rise of credit, cheap imports from Asia and tax credits. But by 2007, it was clear that these factors were not enough to sustain rising living standards for working families.
The basic promise of the 1979 era, that those at the middle would benefit as well as those at the top, began to unravel. For the five years before the last recession, the economy grew by 11%, but the wages of everyone earning less than average incomes stayed the same. And on current forecasts, the average worker will be earning the same in three years’ time as they were ten years ago.

Miliband then started to “scribble”:

… anger at the old system’s flaws is not enough to produce change. It needs the ideas and the political movement to transform discontent with the old settlement into consent for a new one.
Stage by stage, we are taking on this project in Opposition. Identifying the issue itself, and beginning to set out solutions. This is the subject of our ongoing policy review, but let me today give some brief pointers to Labour’s agenda. We know the limits of the previous settlement: just getting the government out of the way won’t work. We know the economic climate will be far tougher: there will be less money to spend. And we know that in any case, if Labour wins the next election, it will not be good enough to simply rely on spending money to patch up the failures of the economy we inherit. A more fundamental change is needed. From the ashes of the kind of irresponsible capitalism which led to the crash, we need to build a new kind of capitalism, a responsible capitalism.
A capitalism based on long-term productive behaviour with a fairer distribution of rewards based on a new set of principles:
Long-termism not short-termism.
A fairer sharing of rewards not growing inequality.
An understanding that successful firms are those that invest in their people rather than neglecting them
And that the environment is not an enemy of economic progress but essential for it.
…
So what does this mean in practice?
First, Britain needs a new era of long-term wealth creation. Both to pay its way in the world and to create fairness in tough times.
We need to use the power of government in new ways. To set new rules that promote the long-term and fair wealth creation we need.
To share a vision with British industry of how we pay our way in an ever more competitive world with an active industrial policy. That’s why we are looking at plans for a British Investment Bank so small businesses can invest and grow.
That’s why we will need new leadership from industry, undertaking their responsibilities to bring on the next generation. As a first step, we say no major government contract should be awarded unless companies offer apprenticeships.
We must tackle the historic British problem of short termism in our corporate life. And it is why we have to end the situation where we have rewards for failure at the top, harming both the company and its workforce. That’s why Labour has suggested a number of reforms, including an employee on every remuneration committee.
…
Across the economy we need executives to recognise that exceptional rewards should only be for exceptional performance. Tackling excessive executive pay and bonuses is not an end in itself but a necessary first step towards a bigger change in our economy in which people get fair rewards for their contribution at every level of society.
Secondly, standing up for the squeezed middle today also means challenging the powerful vested interests which are squeezing working people in this country for every penny they can. It means standing up to the banks, the train operating companies, and the electricity firms with simple measures to cap fare increases, lower electricity prices, and guaranteeing the cheapest power for the most vulnerable. …
Third, standing up for the squeezed middle also means always making sure there is a fair tax system and a fair benefits system. That means everyone paying what they are supposed to, including those at the very top. It means cutting the 50p tax rate is the wrong priority. And it is why, for example, I have spoken out about offshore tax havens.
And on welfare, I believe in a welfare state based on contribution as well as need. We need a better welfare state when it comes to issues like childcare and social care. But we cannot deliver it, unless we continue to reform the welfare state so it delivers high employment and demands responsibility from all.

So did Miliband begin to provide the alternative narrative Fukuyama thinks is needed? Well he certainly wasn’t offering “a serious and sustained critique of much of the edifice of modern neoclassical economics” in this lecture, anyway. But perhaps that isn’t as necessary in the UK, where the political centre has always been to the left of that in the US and many voters are far from “enthralled by the narrative of the past generation: that their interests will be best served by ever-freer markets and smaller states”. More seriously though, he didn’t address whether Fukuyama’s careful political control of globalisation would be needed if industry is to be expanded or the need to “redesign the public sector, freeing it from its dependence on existing stakeholders”. So there's plenty more to do, but if Fukuyama's prescription is right, Miliband seems to be making a start in providing Labour with the message that it would need to win an overall majority in 2015.

Politicians and Twitter – “just like me” or you?

The Telegraph magazine on 12 November carried an article, Too Big to Fly?, by Joe Hagan:

While Twitter struggles to impose order on the 200 million messages a day that cascade through its servers, the battle to make the company profitable has become a race against time.

The article concluded that the potential for profitability exists, but a way has to be found to introduce advertising without turning the tweeters and their readers off the whole thing. Hagan’s article contained a lot of interesting material, some of it particularly so:

To attract and hold the audience, and to attract the talent, Twitter needs the media as its accomplice. In 2008, Twitter hired Chloe Sladden, a former executive at Al Gore’s TV network, Current, to work with news agencies and cable networks. An attractive and animated speed-talker with bright, flashing eyes, Sladden was tasked with convincing old media that Twitter was the handmaiden to their future. … 

The impact of all this hand-holding was not only to help the media but also to help the media help Twitter. To make Twitter seem inevitable, it got people with large organic followings, like newspeople and celebrities, to use it and draw in more users - what social-media investors call ‘viral looping’. Sladden is in charge of schooling these adoptees – television’s talking heads, reality television producers, newspaper columnists - in the ways of Twitter, which is, in essence, about giving followers that ‘magical feeling’ of being inside with the insiders. Sladden’s message is that to build an audience, you have to draw back the curtain on your life, or appear to. In Sladden’s view, this is perfectly in step with broader developments in the culture. ‘We’re changing to this more quote-unquote authentic media experience,’ she says, and everything is caught on tape. And that was a big part of the mission here, making it a two-way experience.

The key to this ‘authenticity’ is the use of the word ‘I’. The first rule of Twitter is that talking about yourself makes the tool work better. The upshot is a narcissism so democratized that users don’t have to feel guilty about it and, in fact, barely notice it.  

In 2007 Twitter hired Adam Sharp, a former aide to Senator Mary Landrieu of Louisiana, to promote Twitter among the political class. Working closely with new-media staffers in the congressional caucuses, Sharp held private events to teach senators and congressmen why and how they should use Twitter, promising that they can ‘build a deep echo chamber to have a continuing dialogue with these people, who then go into their communities and they can say, “I was tweeting with Senator So-and-so last night.”’  Sharp figures three-quarters of Congress have signed on to Twitter. Sharp says, ‘If they can make that connection – “Oh, he’s a family man, he’s just like me,” or “She’s a working mother, just like me” - the candidates realise that the “just like me” is the most effective foundation for engaging in the political conversation.’

So, when we read tweets from British politicians, like Ed Balls’ about his culinary achievements, or Louise Mensch’s on going to Asda, and if we experience a ‘magical feeling’ of being insiders in their lives, we should bear in mind that it’s just possible that they (or their staffers) have had private training in how to build ‘deep echo chambers’. Remember, politicians are by definition not “just like me”, or you, at all.

Hagan’s article, which is well worth reading in full, doesn’t seem to be on telegraph.co.uk, but his similar piece published on 2 October, Tweet Science, is available on the New York magazine’s website.

The Political Potential of Price Indices

The significance of inflation for the Coalition’s economic policies was made clear, from the opening paragraphs of the Executive Summary onwards, in the March 2011 Economic and Fiscal Outlook produced by the Office of Budgetary Responsibility (OBR):

1.1 The key economic developments since our November 2010 Outlook have been an unexpected fall in UK GDP in the final quarter of 2010, a rise in world oil prices, and higher-than-expected UK inflation. The labour market has performed much as expected, with unemployment rising after registering significant falls in the middle of last year
1.2 These data have on average prompted external forecasters to reduce their estimates of economic growth in 2010 and 2011. The average external forecasts for CPI and RPI inflation have risen significantly, again reflecting recent data.

RPI AND CPI TECHNICALITIES

Although they are among the most familiar of government statistics, the generation of the Retail Price Index (RPI) and the Consumer Price Index (CPI) is a complex business. The Office for National Statistics (ONS) CPI Technical Manual explains the derivation of the RPI and CPI figures and the differences between them. To understand these more fully, it is helpful to look at an Information Note produced by the ONS in August 2010, Differences between the RPI and CPI Measures of Inflation. This shows (extracts below) that, although “both track the changing cost of a fixed basket of goods and services over time and both are produced by combining together around 180,000 individual prices for over 650 representative items”, there are three significant methodological differences between the RPI and CPI: Coverage, Population Base and Index Construction.

COVERAGE

POPULATION BASE

INDEX CONSTRUCTION

As the chart below, also taken from the Information Note, shows, index construction is the most significant of the various factors which lead to changes in CPI being lower than in RPI over the same period. It is often referred to as the “formula effect” because of the difference between the geometric mean (GM) and the arithmetic mean (AM) of the same set of data.

The next most significant factor is housing.  There is a comprehensive explanation of the problems in taking account of this in CPI provided in Wikipedia.

IMPORTANCE OF THE CPI

In December 2003 the CPI, which is comparable internationally, became the basis of the inflation target of 2% set by the government for the Bank of England Monetary Policy Committee (MPC). The RPI continued to be used for other significant purposes – for example, pension increases and uprating of taxation allowances. However, the 2010 Coalition budget announced that the CPI will be used for the indexation of benefits, tax credits and public service pensions from April 2011. Later this was extended to be an option for private pension uprating. In the 2011 budget it was announced that most taxation allowances and thresholds would also be uplifted in future by reference to the CPI.

Not surprisingly given the beneficial impact of the formula effect on public expenditure, the OBR, in its March 2011 Outlook, paid close attention to the likely difference between RPI and CPI in the next few years (Box 3.5 page 70), and provided this chart:

Clearly, the impact of the formula effect increased during 2010. The cause, (clothing and footwear) had been the subject of a further ONS Information Note in January 2011, CPI and RPI: increased impact of the formula effect in 2010.

The OBR asserts that the CPI “is better-suited to accounting for the effect of substitution between goods and services when relative prices change”, echoing the ONS’s statement that “An advantageous property of the geometric mean is that it can better reflect changes in consumer spending patterns relative to changes in the price of goods and services.” However, the Royal Statistical Society (RSS) does not agree. In a recent letter to the Chair of the UK Statistics Authority (UKSA) (the ONS being its executive office) they state:

The UKSA's Monitoring Report concluded that the uses of consumer price indices both as macroeconomic measures of inflation and as "compensation indices" imposed different requirements on the indices. We believe that the need to address this and other issues is now pressing, and are keen to offer the Society's help in doing so. We are concerned, as I am sure you are, about the further damage that will be done to consumer confidence in official statistics if it is perceived that uprating to pensions and other benefits is being governed by an index perceived by many as inappropriate and unfair without a more relevant index being offered by statisticians.
There are good arguments for the CPI as a macroeconomic indicator (particularly once some indicator of owner occupier costs has been included) but, as you know, we do not feel that it currently serves the purpose of being a sufficiently good measure of price inflation as experienced by households to be used in uprating pensions and benefits or for use in wage negotiations …

Lord Hutton recently proposed a new basis for public sector pensions - Career Average Revalued Earnings (CARE) pension schemes, (good outline on the BBC website). A key feature during employment when the pension is being accrued, is the annual uprating, which Hutton thinks should be in line with earnings. Hutton proposed:

Recommendation 8: Pension benefits should be uprated in line with average earnings during the accrual phase for active scheme members. Post-retirement, pensions in payment should be indexed in line with prices to maintain their purchasing power and adequacy during retirement.

But a problem arises with people who leave public service before retirement age:

Ex.18 Regarding the indexation of deferred members’ benefits, there is a trade-off to be made. If the indexation measure were the same as for active members this would favour mobility. If it were lower, for example, if active members’ benefits were indexed by earnings and deferred members’ benefits by prices, this would favour retention. The Government should decide on whether pre-retirement indexation for deferred members is on an earnings based measure or prices based measure, as this decision will need to be based on the explicit objectives that government has about recruitment and retention versus mobility.

THE POLITICS OF RPI AND CPI

Could the gap between the two inflation measures, and the Coalition’s substitution of the CPI for the RPI, become a political issue? This very much depends on the progress of the UK economy in the next few years. Two broad scenarios can help illustrate the situation at the time of the next election (2015 if the Coalition holds).

In the first, Ed Balls’ and Paul Krugman’s predictions are borne out  (for the former's see an earlier post, for the latter's, see his Op-Ed, The Austerity Delusion, in the New York Times on 25 March):

And then there's the British experience. Like America, Britain is still perceived as solvent by financial markets, giving it room to pursue a strategy of jobs first, deficits later. But the government of Prime Minister David Cameron chose instead to move to immediate, unforced austerity, in the belief that private spending would more than make up for the government's pullback. As I like to put it, the Cameron plan was based on belief that the confidence fairy would make everything all right.
But she hasn't: British growth has stalled, and the government has marked up its deficit projections as a result.

If Balls and Krugman are right, whenever the election comes Labour can campaign on the basis of “we told you so” and “things can only get better”. There will no need for them to get over-involved in specific issues and Labour should easily win a working majority.

In the second scenario, the Coalition’s economic policies are to some extent successful, but the pain incurred is not so easily forgiven. The Coalition will try to hang the deficit they inherited around Labour’s neck. In response, Labour may well want to position themselves on the winning side of voter-friendly issues, taking a line clearly different from the Coalition’s while appearing responsible on public expenditure. The 2010 Budget changes involving CPI affected only a minority of electors, albeit a substantial one, pensioners and benefit recipients. The latest changes, extending CPI to allowances, makes the basis of inflation indexing something which affects most taxpayers and voters.  The general public's boredom threshold for a fairly dry mathematical subject can easily be moved up a notch when they realise it concerns money in paypackets.

On that basis, it is interesting to read Early Day Motion (EDM 1629) put to the House of Commons on 17 March under Ed Miliband’s name and sponsored by the shadow treasury team:

PENSIONS INCREASE (REVIEW) ORDER 2011
That this House considers that the Pensions Increase (Review) Order 2011 (S.I., 2011, No. 827) which was laid before this House on 17 March 2011 should be withdrawn because the Order requires the uprating of public sector pensions using the consumer price index, replacing the retail price index which the Government has indicated will be a permanent change; notes that the Government has refused to heed arguments that a temporary three year change to the index used would represent a fair contribution from benefits and pension recipients, at a time when wage growth generally is suppressed, to reducing the deficit whilst not unfairly impacting on their incomes over the longer term; but regrets that the Government has instead indicated that the change is permanent, leaving public sector workers and the poorest in society disadvantaged permanently, year after year, even once the deficit is gone and earnings growth has returned.

It would be naïve to think that before the 2010 election the RPI CPI change had never been an option for government. The Financial Times Westminster blog on 21 June 2010 posted the following:

Darling predicts coalition will link benefits to CPI not RPI

Alistair Darling [the former chancellor] has just briefed the lobby hacks on what to expect from tomorrow’s Budget. Top of his predictions was a change in index-linking for benefits from RPI (and the less well-known Rossi index) to CPI. The obvious benefit … is that the CPI measurement of inflation is usually lower. As a result the government could save about £1bn a year
...
Darling described the shift from RPI to CPI as one of several ideas lying around the Treasury which – having worked there until 6 weeks ago – he was obviously aware of. Some were more “fit for human consumption” than others, he joked.

The Coalition is not slow to claim that, however unpopular its measures may seem, a Labour government would have had to do the same. In this particular case, it looks as though Labour might have had more sense.  On the other hand, they may have got very close, which could explain, as well as the need to seem responsible on expenditure,  why the wording of EdM's EDM seems rather hedged about.

Another Brother (again)

In a post back in January, I asked:

So, what does Ed Balls think should be done about “rising inflation”, which he seems to think is a bad thing, and to secure the greater borrowing that Labour's deficit reduction plans imply – must interest rates go up? He could ask his brother at Pimco. After all, as the Sunday Times, Independent and Daily Telegraph pointed out last July: “...the bond house's European investment team is headed by Andrew Balls, brother of Labour leadership candidate Ed Balls.”

So it was worth listening carefully on 25 March when BC Radio 4’s Today programme had an item on Portugal’s debt problem which had just led to their Prime Minister resigning. The Today website later reported the following:

Andrew Balls, head of European investments at the world's largest bond traders, Pimco, told the programme that eurozone countries face "weeks of ongoing uncertainty".
"Portugal has essentially lost access to financial markets," he said, making it more difficult for the country to meet repayment deadlines coming up in the next few months.
And he added that it was "hard to see significant default risk" in United Kingdom, the United States and Japan, all of which have their own currencies, their own central banks and more flexibility over financial policy.

Evan Davis, who was Andrew Balls’ interviewer, didn’t introduce him as Ed’s brother. Andrew B wasn’t asked for his reaction to the warnings a day earlier from credit ratings agencies Fitch and Moody's that weaker growth or persistently high inflation could jeopardise the UK's prized AAA rating. Davis also didn’t ask Andrew B about the bond market’s view of Labour’s alternative to the Coalition’s economic policies. This had been set out by Ed B, also the day before, in the Budget debate, and it is interesting to read his speech in full in Hansard. A key extract:

Rory Stewart (Penrith and The Border) (Con): Will the right hon. Gentleman please share his plan and growth strategy with us?
Ed Balls: I will gladly share our plan. First, the economy was strengthening and unemployment was falling- …Unemployment was falling and growth was rising because we were halving the deficit over the four years. The Chancellor has gone from halving the deficit to trying to get rid of it entirely in four years, by implementing the largest cuts to spending and tax rises of any economy in the world. It is not working. In fact, we heard today that Moody's, the credit rating agency, is looking at whether it needs to downgrade the British economy because of the threats to growth following yesterday's Budget.
...
Halving the deficit over four years was ambitious but deliverable. Eliminating the budget deficit in four years means a massive fiscal contraction. Unless we suspend all the laws of economics, assume that no international evidence counts, and believe that fiscal multipliers do not count in our kind of economy, that kind of contraction in fiscal policy and its impact on the public and private sectors is crushing. Only Greece is trying to go faster. We have already seen the biggest fall in consumer confidence for 20 years, and unemployment is up before the cuts have really started to bite.

Andrew came over as a calmer character than Ed, and I would guess he is the older brother. Is he yet another Oxford PPE graduate - like Ed, the Milibands, Cameron et al?

ADDENDUM 30 MARCH: John Rentoul today posted on his Independent blog a profile of Ed Balls which he had written for GQ magazine in March 2009. This reveals that Andrew Balls is seven years younger than Ed, also went to Oxford (subject not clear from Rentoul’s article) and also worked for the FT, but left for fund management.