The econ­omy is bro­ken, but our lead­ers have no clue how to fix it

The Guardian - Journal - - Opinion - Aditya Chakrabortty

Just af­ter mid­night on 25 May 2016, a se­nior staffer in the remain cam­paign sent col­leagues an ur­gent mes­sage. “Vot­ers are very scep­ti­cal about our warn­ings on the econ­omy,” be­gan his email. “They don’t trust the num­bers. They don’t trust the Trea­sury.” As head of strat­egy for Bri­tain Stronger in Europe, Ryan Coetzee had bom­barded Bri­tons with ev­i­dence of the eco­nomic dam­age they would do to them­selves if they didn’t stay in the EU. He and his team en­listed the Bank of Eng­land, the IMF, the OECD and pretty much ev­ery acro­nym that mat­tered. They’d wagged fin­gers, flung num­bers around and pointed out the dan­ger signs.

From David Cameron down, lead­ing re­main­ers con­sid­ered the econ­omy their trump card. In the big­gest single choice Bri­tain had had to make for four decades, they were sure eco­nom­ics would be the de­cid­ing fac­tor. But with less than a month to go be­fore the vote, sea­soned op­er­a­tive Coetzee could see the strat­egy was fail­ing. Why, just a few days ear­lier, George Os­borne had pro­duced Trea­sury anal­y­sis that Brexit would send house prices plung­ing by as much as 18% – and

BBC jour­nal­ists re­ported be­ing del­uged with calls from would-be buy­ers ask­ing where they could sign up.

As remain started los­ing its cen­tral ar­gu­ment so, in­ter­nal polling anal­y­sis showed, it be­gan trail­ing leave. Hence the panic in that late-night memo, quoted by Tim Shipman in his his­tory of the ref­er­en­dum, All Out War. One of Shipman’s Labour sources in the cam­paign cut close to the bone: “When we started just say­ing, ‘the econ­omy will be fucked’, it showed what a pro­found mis­un­der­stand­ing they had of Labour mo­tives. Across the north-east and the north-west peo­ple al­ready felt like the econ­omy was fucked and not work­ing for them.”

Bingo. Project Fear stuck as a catch­phrase pre­cisely be­cause Os­borne’s rhap­sodies over the health of the econ­omy sounded to so many like Project Fan­tasy.

Os­borne banged on about Bri­tain’s mir­a­cle re­cov­ery even while pay re­mained be­low pre-crash lev­els. His re­place­ment at No 11, Philip Hammond, made a big flour­ish in his last bud­get of dol­ing out “lit­tle ex­tras” to schools where teach­ers now face huge fund­ing short­falls. Over the past few years West­min­ster has em­barked on a march of the mak­ers that looked more like a punch-drunk stag­ger, erected a north­ern pow­er­house al­most in­vis­i­ble to the naked eye, and de­clared a war on skivers and free­loaders – led by Iain Dun­can Smith, the cab­i­net min­is­ter who claimed £39 in ex­penses for one soli­tary break­fast.

But this eco­nomic chasm runs deeper and longer than just the past decade. Around the same time that Coetzee was rais­ing the alarm in West­min­ster, I was re­port­ing in Pon­ty­pool, south Wales. It was mar­ket day, and lo­cals rem­i­nisced about old times, when the town cen­tre would be “rammed”. In that day’s driz­zle it was half-de­serted. In the 80s and 90s, vot­ers in south Wales were as­sured that vi­brant new in­dus­tries would re­place the coalmines and steel­works that had shut down. What ac­tu­ally filled the void was pub­lic spend­ing, and ca­sual work and self-em­ploy­ment that barely paid its way.

“It’s dead now, be­cause they took what they wanted,” Neil told me, his glasses specked with paint from his day job as a dec­o­ra­tor. “They” meant West­min­ster, Lon­don, the rich. “Thatcher smashed the unions. Boosh! We’re out of here. Boosh! They’ve moved on.” Raised in a Labour fam­ily in a blood-red part of the coun­try that had been de­ceived by the po­lit­i­cal classes for so long, he now con­sid­ered all politi­cians “liars”. And in the EU ref­er­en­dum, he in­tended to let them know.

In the crud­est of ways, Neil and oth­ers got some of what they wanted. Since the sum­mer of 2016, politi­cians and pun­dits will freely de­clare that some­thing in Bri­tish pol­i­tics and eco­nom­ics is bro­ken. The trou­ble is, the gov­ern­ing classes are no closer to know­ing what ex­actly is bust, let alone how to fix it.

It ul­ti­mately comes down to this: decades of pri­vati­sa­tion, ham­mer­ing unions and chuck­ing bil­lions at the hous­ing mar­ket while strip­ping the wel­fare state has ef­fec­tively ended any sem­blance of a na­tional, re­dis­tribu­tive econ­omy in which a child born in Sun­der­land can ex­pect to have sim­i­lar life chances to one born in Sur­rey. Yet politi­cians remain fix­ated on mech­a­nisms that no longer work ad­e­quately for those who ac­tu­ally de­pend on the econ­omy. They ob­sess over GDP growth when the ben­e­fits of that are un­equally shared be­tween classes and re­gions. They boast about job cre­ation when wages are still on the floor.

The irony is that Neil and other Labour leave vot­ers have handed the keys to the very peo­ple least in­ter­ested in re­vers­ing any of this. The top eco­nomic brains among the Brex­i­teers, mis­er­able throw­backs such as Pa­trick Min­ford and John Red­wood, be­lieve the prob­lem with Thatcher’s rev­o­lu­tion is that it didn’t go far enough.

We rarely ask peo­ple what they want from the econ­omy; if we did it more of­ten, the an­swers might sur­prise us. The free-mar­ke­teers at the Le­ga­tum In­sti­tute did pose the ques­tion in a sur­vey con­ducted in 2017. Top pri­or­i­ties for re­spon­dents were: food and wa­ter; emer­gency ser­vices; uni­ver­sal health­care; a good house; a de­cent well-pay­ing job; and com­pul­sory and free ed­u­ca­tion. At the bot­tom were own­ing a car and cheap air travel. HS2, a new run­way at Heathrow or a gar­den bridge on the Thames didn’t even rank.

Af­ter re­port­ing the sur­vey, the Le­ga­tum In­sti­tute con­cluded: “Sig­nif­i­cant por­tions of the coun­try … are ve­he­mently anti-cap­i­tal­ist.” The re­port was co-au­thored by Matthew El­liott, for­mer head of the Vote Leave cam­paign. Which just about sums up the Brex­i­teers’ pol­i­tics: savvy enough to lis­ten to what peo­ple want, cyn­i­cal enough never to en­act it.

The top brains among the Brex­i­teers be­lieve the prob­lem with Thatcher’s rev­o­lu­tion is that it didn’t go far enough

IL­LUS­TRA­TION: SE­BASTIEN THIBAULT

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