Thursday 31 August 2023

Keir Starmer's Divided Base

This week we learn 70 economists have sent Keir Starmer a letter decrying Labour's future spending plans. This comes after Rachel Reeves telling The Telegraph last weekend that there won't be any wealth taxes and mansion taxes, nor movements on top rates of income tax and capital gains. When pressed on how she expects to fund public services and all the other things Labour wants to do, her stock answer is economic growth. But as Josh Ryan-Collins rightly argues, these hopes are forlorn if Labour is to meet Starmer's mission of the strongest sustained growth in the G7. This is because the country's tax structure incentivises asset hoarding and investments that don't contribute to rising employment and "good" growth. What's more, not only is this plan out-of-step with what's happening in the United States, which Reeves affects to admire, but is miles away from what the economics establishment are saying. He notes, "The OECD, IMF, Institute for Fiscal Studies and Financial Times have all come out in favour of higher taxes on property and wealth in recent times as a means to support public investment and growth and reduce inequality."

Starmer will undoubtedly ignore this missive. After all, his shadow chancellor is also an expert and her background in Bank of England/Treasury orthodoxy dovetails with the priorities of the press and the oligarchs the Labour leadership have spent all summer courting. But this is storing up very big problems for Labour on the other side of the election.

As argued here many times before, Starmer's acceptance of Tory framing across all the important policy areas as defined by the right wing press neutralises hysterical attacks from them now, but isn't giving people anything to vote for. At this rate Labour are on course to win the next general election simply because they're not the Tories, not thanks to any positive policy agenda. And when in office he proceeds to govern the country along these same lines, albeit with a bit of tinkering here and there, viable electoral alternatives are primed and ready to go. As will be the inevitable, right wing petty bourgeois street movements in the absence of a credible Tory opposition.

There is another problem. Starmerism's immediate base is within the state machinery, and outside of that it is the professional managerial class. Again, there is nothing particularly startling or innovative about this. From its beginning, the Labour Party was an alliance between the organised working class and the middle class. For the last 120 years, the ancestors of Starmer's base have voted Labour, joined Labour, campaigned for Labour, and have intellectually and politically dominated Labour. During the Corbyn years, while many of what Dan Evans calls the downwardly mobile professional managerial class (i.e. graduates without graduate jobs) also attached themselves to Labour, not all of this strata flounced out for adventures with Change UK and the second referendum campaign. Corbynism appealed not just because its programme meant better pay and properly funded public services, it held out the promise of properly utilising their talents and skills to rebuild a Britain worth living in.

And here's where Starmer's difficulties lie. His biggest supporters are to be found in the professional managerial class, but that enthusiasm is by no means universal. Indeed, Labour appear more concerned with antagonising those in the public sector on behalf of imaginary voters. The shadow health secretary enjoys attacking the medical professions while Starmer himself talks vaguely about reform with no spending commitments. Not what senior NHS administrators want to hear either. In higher education with its academics, managers, and the next generation of professionals, we've seen the scrapping of pledges made. For local government, schools and FE, the civil service, even the police, there are no commitments to fix the messes the Tories have created. No movement on pay, and no vision of national renewal in which the professional managerial class could positively locate themselves. All Starmer wants to be seen offering is more of the tiresome, soul-sapping same. And that's before we mention how many of them have taken strike action over the last year and aren't about to abandon the picket lines just because Labour are in office.

What this means is, again, most of this strata will vote Labour when the election comes round. But it will be without enthusiasm in the absence of offering them something more than top down restructuring that ties them up with more bureaucracy while funnelling more state money into corporate coffers. As I said, Starmer will likely ignore the concerns of the economists, but what they're articulating is a deep unease across his natural base. If he continues alienating those who should be in his pocket, any government he leads will hit the buffers very quickly.

Image Credit


Anonymous said...

My last vote for Labour, but once this government are gone I am out.

Kamo said...

The wealth tax is a rubbish idea, it plays well with comedy leftists who want to target 'the rich', but those who properly understand the economics realise it's simply not worth the aggravation or the negative side effects it generates. It's appeal is entirely emotive and not at all pragmatic, Reeves and Starmer understand this, they also probably realise it's a lost cause trying to explain it to those who 'feel' it's a good idea because they're incapable of 'thinking' why it's a bad one.

The issue of NHS funding is a fraught one, chucking ever more money in to a gaping maw is not sustainable, and I say that with two close family members who are front-line medical professionals and true believers in the NHS cult. Pepetual real terms funding increases, stagnation in healthcare productivity and an ageing population are not a good mix, it doesn't take a genius to realise that without long-term reform it is unsustainable.

gastrogeorge said...

Citations required.

Old Trot said...

Dearie me, Kamo, laddie, you have certainly tried to pump out the full spread of neoliberal, Daily Mail/Economist, ideological guff in your post here ! you could have also included an attack on our state pensions, and benefit levels too - and demanded the cutting of all that terrible restrictive 'Red Tape' - to 'unleash the dynamism of an unfettered financial sector' (a la Liz Truss) too .

I think the current open letter from the 70 UK professional economists to Starmer and co , criticising in detail the economically bankrupt and socially suicidal strategy of Starmer/Reave and co in mimicking Tory economic policy has rather more credibility than your 5th form Young Tory nonsense. I'm afraid you evidently actually understand nothing about economics , and to think free healthcare for all is merely a 'cult' reveals what a sad sociopathic belief system you hold. Tragic. If two of your close family members really are 'front line medical professional's , they must truly despair of you ! Genius you ain't matey. Have you thought of a career as a NuLabour2 MP perchance ? I'm sure you would be welcomed with open arms.

Anonymous said...

A dishonest and charmless Starmer offering no solutions is going to render him the most unpopular PM in British history. That's up against some pretty stiff competition from the Tories.

Dipper said...

Kamo - yes indeed.

Basing your economic policy on theft of already taxed income doesn't inspire confidence. Did the 70 economists volunteer to include their own pension funds in the wealth tax? Or was it someone else's wealth they had in mind?

Shaun said...

Oh dear, Kamo.
Perhaps you should tell that to Thomas Picketty, the pre-eminent economist of our times. 'Capital in the 21st Century' takes 700 pages to offer analysis of, and justification for, a global wealth tax as the most effective way to address the problem of our time: inequality.

Old Trot said...

Come on Dipper, even a neoliberal Tory like you must concede that none of the 70 economists are likely to be multi millionaires likely to face the imposition of a supertax , and certainly not billionaires - or major shareholders in the UK and overseas owned mega businesses , like Amazon, Google, etc , which pay very little tax on the huge business they conduct in the UK , via dodgy, but legal, tax avoidance tricks.

The thriving UK superrich and multinational corporations doing big business in the UK have never done so well in grabbing a disproportionate share of national income since Victorian times - whilst our public realm , from our hospitals to our schools crumble - and our poorer citizens line up at food banks. Only higher taxation for the very rich can change this, (as Thomas Picketty explained in great detail) . Despite the nonsense from Rachel Reaves on 'economic growth', mere 'economic growth' will not in itself change this disparity at all - because with deliberately low taxation of the asset owning superrich, the fruits of economic growth simply go to them, the superrich asset owners, not the rest of us.

UNITE the union recently funded a huge detailed examination of current high UK inflation - and it showed that it is the exorbitant super profits of monopolistic/cartel big business which is clearly driving this huge inflationary upsurge - driving ordinary people into ever more abject poverty. The neoliberal nonsense spouted by the likes of Dipper and Kamo - is tragically now also spouted by the Labour Party too . The end result of this death of genuine mainstream political choice in the UK (as in the USA and most of Europe) will be the rise in the UK of divisive pseudo radical very Far Right populism (as has already happened across Europe) . The current imminent collapse (after decades of poor maintenance and repair and dodgy concrete) of so many of our schools and hospital buildings is a vivid metaphor for our wider UK society ! Starmer's corrupt Labour Party is now simply part of this ever-growing social disaster , not any sort of solution.

Anonymous said...

Won't people please think of the billionaires? We can't be taxing what little they have left to rob from this country.

David Parry said...


I'm genuinely curious as to what you have in mind when you speak of 'long-term reform' of the NHS. Do you mean yet more quasi-marketisation? Because the evidence is that that will only make the NHS even more expensive, by ensuring that copious sums of money end up paying the costs of tendering contracts, management consultancy and all the rest of it.

To my mind, the issue you raise is only a problem because we live in a capitalist society where almost everything is commodified in one way or another. (Yes, that includes the services provided by the NHS - it's just that the purchaser is the state, albeit notionally on behalf of the population at large.) If we had a society where these things were properly de-commodified, we could continue providing healthcare free of charge to everyone ad infinitum without worrying about outspending the productive capacity of the economy, regardless of how top-heavy the age pyramid got.

David Parry said...


Another thing: higher labour productivity applied to something like the NHS necessarily means a higher patient-staff ratio, and thus a greater workload per capita for the staff - one of the very reasons the NHS is in the parlous state in which it finds itself.

Dipper said...

@ Old Trot and others.

The problem with taxing really rich people is they will move. And then you will end up with nothing from them.

So we will end up taxing people lower down the chain, and taxing people with a couple of million, and then once you've exhausted that tranche it will be on to those with total assets of a million, which once you add in pensions will include lots of Labour Party members.

The first Principle of Dippernomics is that people respond strongly to incentives. You can't just grab a load of wealth and think that's the end of it. People will respond strongly to that by leaving, or finding ways of transferring wealth that are domiciled abroad, or simply not bothering. It is a highly destructive act of retrospective taxation that will do severe and lasting damage.

Its just another way of avoiding the actual problem, which is generating a productive economy with opportunities for all in the here and now.

Anonymous said...
Proffessor Richard Murphy has some great ideas on what a "real" Labour Chancellor could do with a range of specific taxes the rich and super rich would not be able to avoid.

Anonymous said...

Whodathunkit... "Dippernomics" has Principles?!

"People respond to incentives" is no doubt one of the smarter and truer things that those of us blessed to hear regular dispatches from the world of Dippernomics have ever received from there. And yet, apparently like most of that world, it's 50 years behind ours. One of the more noteworthy things that economics in our world has discovered during that time is that whilst people do respond to incentives, they don't respond in the degree or manner that earlier economists predicted that they would. Homo Economicus is today understood by most - in our world of 2023, at least - to be a cryptid.

As for those flighty rich folks... They usually have quite substantial illiquid assets. If they were truly as invulnerable as their shills like to portray them as, then they wouldn't require so many shills.

Kamo said...

Dipper is correct, people respond to incentives, and expropriating people's property is a definite (dis)incentive. You don't need to be Homo Economicus to realise wealth taxes tend to be most popular with people who think someone else will be paying them... not their home, not their pension pot, not their hard earned, not their hard saved...

As for the '70 economists', it seems quite a lot of them are no such thing, and they certainly don't offer a rock solid case for a wealth tax.

@ David Parry, people usually point at the US healthcare system as a nightmare scenario of NHS reform, ignoring specific conditions behind that dysfunction, even more conveniently ignoring other countries with much better healthcare outcomes using models. We can have universal healthcare, paid for by taxation, but it provision doesn't need to be a state owned monopsony power. Park the myth that private sector provision must be more expensive or must cut corners in pursuit of profits, and other options open up. If a private sector provider could handle some procedures in a nimbler fashion than the sclerotic bureaucratic NHS providers, should we object on the ideological grounds that a more inefficient way with worse outcomes is purer? We need to separate the idea of state funded universal healthcare from the idea that provision must be state owned.

Sean Dearg said...

If @Dipper is against it then it must be a good idea. Not being an expert in "the economics" like he and Kamo, I was shocked by the suggestion that if the rich were taxed more they would all simply move. What a horrible thought. All those oligarchs and bling merchants naffing off to somewhere more tax friendly, like Monaco or Ireland.

There are some who might think that would make for a better country. What about all the jobs they provide you shout? I think you'll find that the jobs are what delivers the wealth, so either they take a drop in income, or they continue to milk the system, just from further away. Ultimately jobs are a result of the interactions of customers, suppliers, retailers and providers. Some rich twat b*gg*ring off won't have any significant effect because entrepreneurs are like mushrooms. More always pop up if there's enough fertilizer around.

We don't need any particular individual rich git, we just need enough wannabe rich gits to keep the system going. If anything, having a faster turnover as they make their money then leave will improve the economy as there'll be more competition and less oligopolising. Something I'd have thought Dippernomics would approve of. The freer the market, the better, right? When there's an infestation of rats, you need to clear out the deadwood of the complacent established fat cats and replace them with hungry strays.

Once someone has made a few million they lose the edge and after that have no new ideas - they just rely on buying other peoples. So, cut out the middle man and we'll all be happier.