Thursday, 6 September 2018

IPPR: the report that nobody's talking about

The Institute for Public Policy Research think tank has published a report on economic justice. Proposals from the IPPR formed much of Labour’s agenda under Tony Blair and Gordon Brown when it took office in 1997 and has continued to influence Labour policy. In recent times even Theresa May has stolen their clothes.

As is the way with these things, because IPPR is in London and it being silly season (now all year round) the report has received full spectrum media coverage. Much of it is devoted to telling us how important they are, attracting patronage from such luminaries as the general secretary of the Trades Union Congress, Frances O’Grady; Legal & General fund manager Helena Morrissey; the head of the City of London Corporation, Catherine McGuinness; Dominic Barton, McKinsey’s Global managing partner; and Mustafa Suleyman, co-founder of artificial intelligence firm DeepMind.

For it to get noticed by anyone in the bubble it has to be leaden with prestige. The media will not cover it otherwise. If you have prestige you can publish virtually any old toss and high society will lavish it with praise. 

The report itself is an amalgamation of centrist talking points on anything from a national investment bank, increased public investment, a social dividend (whatever that means), expansion of collective bargaining, worker representation on company boards etc. Milibandian in its blandness.

The report immediately nosedives on page thirteen where it tells us "We have not taken a position on Brexit; our analysis shows that the UK’s economic problems are of long standing". I'm not at all sure how you can set about an economic master plan without Brexit being a central theme. Everything investment wise will hinge on the Brexit outcome and our future trading relationships.

Very often in the Brexit debate you will find remainers observing that we could be doing so much were we not tied up with Brexit and if you asked them what that would look like, they would produce a report much like this in the belief that Brexit is primarily a consequence of economic injustice. Far from being radical what we are actually looking at is business as usual thinking from roughly the same people who brought us to this point to begin with. 

Some of the proposed reforms include:
  • An immediate increase in the minimum wage to the real Living Wage of £10.20 in London and £8.75 outside the the capital.
  • A requirement that workers on zero-hours contracts be paid 20% above the higher real Living Wage rate.
  • An industrial strategy to boost the UK’s exports, backed by a new national investment bank that would raise £15bn a year to push public investment to the G7 average of 3.5% of GDP.
  • Major changes to how UK companies are governed, such as: enshrining a broader purpose in directors’ duties; the inclusion of workers on company boards; a rise in the headline rate of corporation tax and a minimum rate of corporation tax to tackle tax avoidance by multinationals.
  • Taxing work and wealth on the same basis, with a single income tax for all types of income (meaning the abolition of capital gains tax and dividend tax), and the replacement of inheritance tax with a lifetime gift tax, levied on recipients rather than estates, which would raise £9bn a year.
This is pretty pedestrian stuff along with all the tedious nods to renewable energy and smart grids. This is all generic manifesto fodder that pads out the prospectuses for all of the major parties, and activists will dutifully adopt such talking points as an when is required of them. Original it is not. 

And that is the real poverty in the UK. It is a poverty of ideas. What we see here is the uninspiring managerialism of the establishment that wouldn't know radicalism if it bit them in the face. That as much as anything is the reason many voted for Brexit. Straight off the bat most of these ideas are swept out of the realm of possibility by Brexit, not least because, if it goes the way we think it's going, we'll be broke. 

As for things like workers on company boards, this measure was met with confusion and puzzlement when announced by Theresa May. Nobody knew what the policy was designed to address or what it even solves. As to tinkering with minimum wage, again Brexit puts a huge question mark over that, but there are more serious issues with it. If London requires a high rate then that is directly related to the cost of housing and transport, in which case we are tackling a symptom, not a cause. 

In tackling housing costs we need to look at the artificial floor price created by housing benefit, and we also need to look at demand, which may stabilise depending on our future immigration policy. More to the point, though, we need to look at de-londonising the economy and encourage more home working. This can be done with tax incentives and if you can get people working from home even one day a week then that is a 20% reduction in infrastructure costs. 

The report mentions a number of measures to deal with low pay and zero hours contracts but again these are reactive measures that fail to address how we got here to begin with. Several years worth of regulatory incursions have gradually strangled labour market fluidity where we could very well do with substantial liberalisation of the labour market. Making it easier to hire and fire is good for workers. I would quite happily dump the EU Agency Workers Directive.

The report then latches on to the notion of a "green industrial strategy" which ultimately means choosing expensive intermittants for the sake of creating jobs while sending our bills skyrocketing and increasing energy costs for business. This is then met with daft suggestions for an energy cap which Corbyn and May alike have alluded to. This is the prevailing mindset in the Westminster establishment. Their policy proposals are nearly always reactive measures to deal with problems they caused. Investment banks etc proposed by government are not going to solve anything. All it does is entrench the quangocracy we already have, creating boondoggles for tier one consultancies. 

What is actually needed is a total reboot of political thinking because the mindset we see here is the command and control mentality that has been with us all of my adult life - and one that has totally destroyed local democracy and bureacratised government to the point where most of what it spends is on self-administration. It is the mindset that believes we can legislate our way to prosperity, where spending on vanity projects is "investment". This is the fundamental problem and the likes of IPPR cannot solve the problem because they pretty much are the problem. 

This is, in part, why I voted for Brexit, precisely because it will demolish the ambitions of spreadsheet sociopaths and it will force government to do less and reduce its capabilities. The resultant fallout will mean more people have to do things with their own resources - releasing a lot of zombie capital in the process. Only something disruptive like Brexit can possibly reset the mode of thinking in the bubble as they are forced to adapt to a wholly new dimension in government. 

Being that the UK will be repatriating a whole tranche of law and domesticating it, they will find that a number of systems can no longer carry on as before and will have to do the same with fewer resources or not at all. Here is where government will have to find ways to engage the private sector and civil society, which may very well reboot the voluntary ethos that New Labour destroyed.

If we wanted the sort of top down policy making of IPPR we could just as well have stayed in the EU in that this is what the commission does and would have gotten round to all this stuff eventually anyway. What we are not going to get from the IPPR or the Westminster bubble in general is any kind of new thinking because they have ultimately forgotten how to think and there is no mileage in doing so. 

Publishing these reports is their bread and butter. Every once in a while they need to raise their profile to get the donations rolling in so all you need is a glossy PDF packed with all the favoured talking points of all the usual suspects, plastered with all the affiliated logos and you have your day in the media spotlight. Since you don't need to produce anything original or groundbreaking, why would you even go to the expense and hassle?

More to the point, with a report running over three hundred pages, nobody is going to have the time to read it, let alone absorb it in time to publish thorough analysis, therefore whatever passes for analysis will be the result of a quick skim of the executive summary and those praising the report will do so by triangulating against whichever prestigious name has put their credentials to it - ie, whichever establishment drone wrote the foreword.

In fairness, it's not just the IPPR. It's the whole edifice of think tankery. This is the business model throughout, perpetuated by a coprophagiac media for whom these reports fill air time and column inches. IPPR will be slapping themselves on the back this weekend for a job well done and by Monday nobody at all will be talking about it. One or two recommendations will find their way into political discourse but nothing original and certainly nothing realisable. 

This is the Westminster bubble culture that has taken root over many years, where its PPE denizens will trade factoids and nostrums, none of which solve any problems I actually have, and nothing I would go out of my way to vote for. Being that the parties are empty shells with no research capacity of their own and no consultative policy mechanisms, come election time they will sift through the work of IPPR to provide a veneer of social concern. It's all disposable, interchangeable, recyclable churn fodder mainly to keep wonks in political nonjobs. 

The consequence of this is an out of touch politics, unable to inspire the voters or win their confidence, leading to exactly the sort of anti-establishment protest vote that brings us where we are today. If we really want a new Britain then we need new politics broken out of the Westminster circle jerk. That can only come from real local democracy and inverting the power pyramid.

The IPPR alludes to this, but it centres on creating new bodies such as a "new National Economic Council. Based on the principles of partnership and consultation, we argue that the Council should be the key mechanism to secure greater coordination between central government and the devolved nations and regions, and between government and business, trade unions and civil society. Partnership of this kind has sometimes been scorned in this country. We believe it to be essential if we are to transform our economy on the scale required".

Again this is quangocracy. Their mindset throughout is based on creating structures and hierarchies and systems of micromanagement and interventionism. It is beyond them to envisage a society without them as our political masters. Bringing about a fair society involves state intrusion on every level, creating economic justice nonjobs and interfering with commerce. This is Blarisim 2.0. 

Meanwhile, back in the real world, what I could really use is a cut to VAT on the things I buy, a cut to petrol tax so I can do more, deregulated labour markets so I have choice in who I work for, a cut to income tax so I can go on holiday, and a lot fewer quangos with a lot fewer CEOs on salaries exceeding that of the PM. 

Beyond that, we need reform of just about every branch of the state, but that's going to require a lot of tough and unpopular decision making that the likes of IPPR (and all the major political parties) won't touch with a barge pole. Since they won't, we have forced the issue by voting to leave the EU. The IPPR doesn't have any answers to speak of and we'll be waiting til the end of time for anything radical from the Westminster bubble. Radical thinking is far beyond their ability. 

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