Policy Research in Macroeconomics

“Bribing voters” and all that: neoliberal contempt for democracy?  

Labour’s shock success in the “snap” general election left poll takers more than slightly embarrassed (except YouGov and Survation), and political commentators scrambling to cover their backsides.  In their struggle to adjust to a resurgent Labour Party led by the “unelectable” Jeremy Corbyn, the nominal progressives among the pundits provided a textbook guide to the difference between centrist neoliberalism and social democracy.

The Conservative manifesto included among its political disasters the proposal that care for the elderly should be funded by drawing on the assets of those needing care with an exemption floor at £100,000.  The proposal, quickly dropped due to opposition among Conservative MPs, in effect called for wealth-tested funding of residential care (“nursing homes”).  

While ridiculing the Prime Minister for her “U-turn”, at least two opinion writers in The Guardian endorsed the proposal as necessary and fair.  The proposal was necessary because of our ageing population and a life expectancy considerably greater than retirement age.  It qualified as fair because it exempted the poor who rarely hold any assets.  

This proposal, and its appeal to centrists across parties, shows the difference between neoliberals and social democrats.  Neoliberals themselves divide into reactionaries (e.g. Cameron) and progressives (e.g. Blair).  For both tendencies the population falls into two categories, poor and non-poor.  For the reactionaries division is between the undeserving poor and the deserving non-poor (who “do the right thing”), shirkers and strivers.  In this framework the reactionary neoliberals assign government the task of serving the strivers and providing minimalist support to the shirkers (in a manner designed to coerce them out of their feckless sloth). 

For the progressive neoliberals populations are also divided into the poor and non-poor, but they alter the categories to the deserving poor and the undeserving middle class.  The latter have incomes that allows them to take care of themselves without government handouts.  The function of government is to provide a decent “safety net” and other support to those who cannot take care of themselves, the deserving poor.  This approach to social policy is epitomized in an 11 May comment by Polly Toynbee on the Labour manifesto:

…[G]ifting large sums to students from wealthy families, free school meals to those who can well afford them, or triple-locking pensions to the rich retired may add to a sense of [Labour’s] extravagance.

Pure neoliberalism underlies this statement – the role of social policy is to protect the poor, and the market mechanism will take care of the rest of us.  Public provision including decent pensions consist of “gifts” made to curry electoral favour.  

In a letter to The Guardian a Liverpool Labour councillor provided a clear and concise rejection, “Polly and [Teresa] May are wrong to make funding social care a personal not a shared responsibility”.

That sentence captures the social democratic philosophy, which I would elaborate as “equal universal provision, funded by progressive taxation”.  Social provision rather than commercialization through markets is the underlying political economy of social democracy.   Social democrats restrict markets; neoliberals enhance them.

The social democratic commitment to universal provision directly contradicts the neoliberal vision of a market dominated economy.  Over the last decade neoliberals have responded to the social democratic principle of universal provision by labelling it populism of the left.  Again Toynbee provides an excellent example.  While applauding the Labour Party’s gains in the general election, she attributes it in part to “bribery”, Labour and especially Corbyn appealing to crass material interests,

How do you catch the attention of the young, get them out of bed and into the polling booth for the first time? Yes, with a better vision, but also with a colossal eye-catching bribe of free tuition fees for all, however wealthy, never mind the sums.

Centrist neoliberals in Britain accept the principle of general provision for health.  Few if any would make the above statement with “health care” substituted for “tuition fees”.  The same is the case were the replacement words “primary and secondary schooling”.  These are accepted as justified cases of universal provision by the overwhelming majority of neoliberals, but anything more is “bribery” or “giveaways”.  

Yet the arguments for and against are the same.  If “those that can afford it” should pay university fees and we means test for grants and loans, why not the same for primary and secondary schooling?  If “free” university fees represent a subsidy to the middle class and wealthy, then so do “free” primary and secondary education.

The fallacy in the centrist neoliberal argument should jump off the page – the NHS and primary and public education are not free.  Our government funds them through taxation.  US Supreme Court Justice Oliver Wendell Holmes famously wrote, “Taxes are what we pay for civilized society” (in his dissent to a 1927 court case), and as a general rule the more civilized countries levy more taxes.

From Margaret Thatcher through John Major, Tony Blair, Gordon Brown (albeit briefly), the calamitous coalition of Tories and Liberal Democrats, David Cameron and now Theresa May, the neoliberal vision prevailed – market forces would serve the interests of the many and a safety net would protect the few.  The differences between the Conservative and Labour governments consist largely of how meagre or “generous” should be the safety net.

But market forces have not served the many.  On the contrary, they have rewarded very few.  The implementation of the neoliberal vision resulted in growing poverty, stagnant or falling wages and systemic economic instability.

Jeremy Corbyn and the resurgent Labour Party offer a fundamentally different vision, one that Clement Atlee and his colleagues would quickly recognize were they with us – social serves delivered on the basis of universal provision funded by progressive taxation on incomes and wealth.  That vision in its 21st century form provided the basis for a dramatic leap in the general election by the Labour Party, and should in the not distant future “gift” the keys of 10 Downing Street to Jeremy Corbyn.

Universal provision far more than a vote-grabber, it is the only viable and sustainable way to organize a just society, because of its three great advantages.

First, universal provision is non-discriminatory, non-bureaucratic and lacks the arbitrary rigidity of means testing.  All forms of means testing either suffer from the “borderline” problem or prove extremely bureaucratic in application.  A strict income or wealth qualification cannot avoid excluding some needy households while including others less needy (the borderline problem).  

The alternative to all-or-nothing means testing is a sliding scale.  For example, for households in the bottom 10% of the income distribution there would be no payment for university fees, the 10% above would pay a quarter of the fees, etc.  Implementing such a system requires considerable bureaucracy and intrusive monitoring of household income and wealth.  Universal provision of university education funded by progressive taxation would involve less bureaucracy than now exists.

Second, means testing by definition divides households into the “haves” and the “have-nots”; indeed, it reinforces and institutionalizes that division.  This division fosters the shirker/striver and undeserving/deserving ideology of neoliberalism.  Universal provision unites society rather than dividing it.

Third and related to the second, universal provision increases the beneficiaries of social services, thus creating broad electoral support.  The National Health Service enjoys overwhelming popularity precisely because it benefits everyone.  A YouGov poll earlier this year found that the vast majority favoured the public health system and 53% of respondents endorsed a higher employee contribution to fund it.

The NHS provides the vindication of universal coverage, the efficient and effective means of provision and the basis for its own political sustainability.  Thus we have the golden rule of social democracy.  Broaden the beneficiary pool and eliminate poverty and reduce inequality while gaining electoral support.  That is the strategy of the 99%.

2 responses

  1. [quote]
    “Taxes are what we pay for civilized society”… , and as a general rule the more civilized countries levy more taxes.
    Prof Charles Adams has done some interesting work with Richard Murphy looking at the correlation between taxation and IHDI (inequality adjusted human development index) which is high r=0.77. Some preliminary results are here http://www.progressivepulse.org/economics/lower-tax-equals-a-worse-life/
    It is something I have long suspected but nice to see some quantitative analysis.

  2. I’ve never seen it better explained than this. Now I know why I considered the Atlee government the saviour of Britain.
    These, not me, were truly great men they gave us the hope we needed following WW2.
    George Farmer

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