Impossibility pervades politics today. The deficit denies all political action outside the tortured logic of cutting the deficit. Short-term political priorities and long-term political cynicism drive spending decisions: just ask the disabled, working families receiving tax credits, or any local council. Ambition and optimism are absent. Our domestic politics feel small, trapped in a deathly dance of technocratic reform and politically-inspired but economically flawed austerity. Within this political thrall, Britain is becoming the can’t do country.
There is a constant appeal to blind forces, as invisible as they are impersonal. Globalisation is blamed for the destruction of jobs from steel to retail. Impossibly high house prices and rents are attributed to “the market” as if it were an abstraction rather than a human construct. Commentators on the right tell us that the NHS is inherently “unsustainable” in the face of a population that is gradually getting older and sicker, as if the real choices about how much to fund it, what to expect from it, or how to best run it, were marginal.
This pervasive pessimism extends into foreign affairs, too. Brexiteers regard Britain as a once great power, now greatly diminished, whose greatest days were in the distant past. Their narrative is one of victimhood: that we are subject to the decisions of a remote European Union wholly foreign and separate from ourselves, rather than a confident country that chooses to cooperate with its neighbours. They absolve our political class of any responsibility for the decisions they have taken on our behalf, in favour of blaming European civil servants, condemned and dismissed as sinister “bureaucrats in Brussels”. This stance reflects a deeper lack of self-confidence: a view that we have more to fear from the outside world than either to offer or to gain.
Within this passive and fearful world-view, the future seems to offer more gloom: the imminent rise of technologies from artificial intelligence to automation are seen with suspicion. The fear is that they will amount not only the destruction of jobs but the destruction of work itself. What will we do in the future, cry the pessimists? Lacking the imagination to think of new jobs, they conclude there won’t be any.
Part of the explanation is cultural as much as political. To be a pessimist is to be serious person: sober, fully apprised of the challenges, a person to be taken seriously. Optimism is distrusted as somehow missing deeper truths. Virtue is made of pointing out problems rather than possibilities.
But the pessimists are wrong.
And this is why: we have more choices and control in our public policy than we imagine – choices at home and abroad, for the present and for our future. What we need is the courage and the imagination to see them. Of course, there are some things that are outside our control. But there are also meaningful and important choices about how we respond to those external forces. Political optimism is about our collective ability to shape our prospects, not about believing that the future is simply rosy and without challenge. It is about a belief in human agency in our lives: understanding that where we are today is a consequence of choices made in our past, and that where our country goes in the future is about choices we make in the present.
The first choice is about our domestic economic model. Our economy today is the product of 40 years of policy decisions that have established a British model of low wages, high private debt, financialisation, and systemically low productivity. As productivity has plummeted, corporate profits have boomed. When wages are low, companies have fewer incentives to invest in improving labour productivity. Why do the difficult work of either substituting labour for capital or raising skills when you can simply add another worker? This can be seductive in the short-run, but creates long-term weaknesses for the economy as a whole. We could choose a more challenging path – of investing in innovation and systematically up-skilling our workforce – that would ultimately be more rewarding.
Changing our domestic economic model must be joined with rethinking our approach to international trade. For far too long, policymakers have been strict adherents to the ideology that markets are rational and the essential role of government is to get out of the way. If all countries played by the same rules, this might just about have been plausible. But they don’t. Other countries have an active industrial policy that seeks to help their businesses succeed and win. After all, if South Korea had left it to the market to define its comparative advantage in the 1950s, Samsung would be a world-leading brand of rice. We should have the confidence to reverse this: government should support great British firms to grow and to flourish, both at home and around the world. How can you have a strong economy without successful, responsible businesses?
A greater proportion of the British economy is foreign-owned than any other nation on earth. Ownership matters precisely because business decisions are made by people. And people are not always rational: they make decisions based on old loyalties and deeply-felt emotions as much as hard numbers. Many business decisions are finely balanced: who can imagine, all things being equal, that any individual wouldn’t be biased towards saving jobs in their home country? The toxic combination of high foreign ownership and an absent industrial policy has left British workers more vulnerable to the vagaries of the global economy than any nation other than the United States. It doesn’t have to be this way. Other European countries, such as Germany, have been more cautious liberalising their economies; we should follow where they lead.
As we look ahead to our economic future, there are increasingly urgent choices that we must make. The new economy has enormous potential to spread wealth and opportunity, if it is embraced with enthusiasm and with the right policy and regulatory framework from government. At the same time, it could be the road to technological serfdom, with the erosion of rights and loose relationships with distant corporations. The crucial point is not “is it good or bad?” but how do we act together to make sure that our society benefits from all its potential rather than suffers from its possible risks? The diminishing power of labour has caused stagnating wages across industrialised countries. New technologies have the potential to accelerate and exploit this; or they could act as a bulwark against it.
The accelerating pace of technological change can be viewed as a threat to our modern lives. But it also can be seen as a great adventure that lies ahead for us. The way to lead better lives. The enabler of higher productivity at work meaning more time with our family and friends at home. Greater convenience for daily life in all its aspects, from better food (through tech-enabled supply chains for fresh fruit and vegetables) to public services (imagine if you could book a GP appointment through an NHS app). The choice is not between resistance and retreat; it is between ensuring that the benefits are broadly-shared or the all-too-predictable results of doing nothing.
The voices of ‘we have no choice’ are loudest when it comes to the public finances. The conflation of the debt and the deficit is best illustrated in the claims that ‘we have maxed out the national credit card’ and ‘every family knows it must live within its means’. Well, that is surely true. But taking this argument on its own terms, would you think that a typical family with a household income of £40,000 was struggling because they had a mortgage of £32,000? That is the equivalent of our national income and our national debt. It makes sense to pay over many years for things we use over many years, whether they are houses or cars or schools or hospitals. Not all debt is a bad thing.
Now, imagine that same family were spending more than they earned by adding to their debt to study at night school to learn new skills. Surely most people would say: that makes sense; they are wise. They are a family making an investment in their future that would mean they could get higher paying jobs. Conversely, if they were borrowing to pay for a more lavish lifestyle beyond their income, we would say that those were ill-judged choices. The same is true for our economy. It makes sense to seek to eliminate the deficit in current spending. But it makes no sense to choke off investment that can grow our future income. The point is: there are better economic choices that can be made.
The level of national debt has been an effective device in closing down political space through the politics of impossibility and powerlessness. Closing the deficit and reducing the national debt has become the primary objective of policy. It does not have to be this way. In 1948, the year the National Health Service was founded, debt-to-GDP stood at 214 per cent. Today it is at 83 per cent. The point is that our current fiscal position should not prevent us from doing big things. Out of the sacrifice demanded by conflict, we had the courage to do great things as a country. Never let politicians tell you that we can’t afford to invest in our future. How can we afford not to?
The problems facing the NHS are more properly attributed to choices that have been made, than to gradual changes in demography and epidemiology. In the last 5 years, the population hasn’t become suddenly older and sicker, even if it is gradually becoming so. Deliberate policy choices have driven the health service into its current predicament. The Lansley reforms proved to be a spectacular disaster: Maoist in their inspiration, thousands of NHS managers were lined up against office walls, whilst GPs were dragged from their consulting rooms to become administrators and purchasers of care. GPs now spend less time treating patients, for which they were trained, and more time commissioning care for which they received no training at all. Is it any surprise, then, that patients can’t get appointments to see their GPs? This was not a conspiracy; it was a cock-up visible from space. The point is: a different path could have been chosen; and we could still choose a different path.
In Scotland, the debate about a different path from the rest of the UK continues to run strong. The spirit of optimism was captured by the Yes campaign with their promise of a brighter future with independence. Politics as usual prevailed by stoking fears of the consequences of leaving rather than describing how or whether Scotland could flourish in the Union. Similarly, whatever the outcome of the European referendum, the political class is largely unable to describe an optimistic, hopeful vision of Britain’s place in the world. Rather, it is dominated by a passive and reluctant stance in world affairs. Only our own ambition and imagination holds us back from rethinking our role in the world.
How do we reform our economy to secure economic justice and create broadly-shared prosperity? How will Britain compete and win in the decades ahead? What are the ways that we can strengthen British society? How can we help families – no matter their structure – to lead the good life? How can a cultural and economic renaissance flourish in our cities? What do 21st century public services look like and how can we transition to them from today’s broken models? How can a new constitutional settlement animate our politics? What will be our role in the world and our sense of our national story?
Crucially, we have the power to answer these questions; they will not be answered for us. There is not some inevitable, empirical answer that exists but rather a process of careful reasoning and deliberate choices. The greatest risk of all is to choose to do nothing, to conclude that we have no agency, and to leave ourselves subject to the decisions of others. More than that, it is an agenda that aims to rediscover the hopefulness of lives of meaning and joy, where we are more than what we owe and what we own.
And so, over the next two years, the Institute for Public Policy Research will ask and answer the big questions. We won’t always get it right but we shan’t shy away from bold answers. We need a new radicalism in our public policy. Like its historical antecedents this programme of new radicalism will be about reform to the roots. An optimism of substance, rather than of style.
Our country must recover its sense of courage and confidence as we face the future once more. After all, not only are we the country that can, we are the country that always has.
Tom Kibasi is Director of the Institute for Public Policy Research (IPPR). He tweets @TomKibasi
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