The City has always felt that it can get away with State bailouts, run this country into the ground, and still award itself large bonuses. That Ed Miliband gave a detailed speech for the ‘Policy Network’ which was wonkish is of course acceptable. No doubt if he were presenting the idea for Daybreak, he would have taken a different tack. I am bound to be warm to the idea as I am a wonk, although I am not really in any think-tank properly. Prof. James Heckman is a big proponent of it – in case you worry that he is, of course, not a household name like Balls, Miliband, or Brown – he won the Nobel Prize in Economics in 2000. Swoon. This was the year before Prof. Joe Stigliz, for information asymmetry in 2001. Double swoon. Why does Stiglitz’s work matter? It matters as it clearly explains why an insurance-based system for a privatised NHS would explosively fail. In wonkish terms, ‘pre-distribution’ marks a departure from a Crossland-Blairite approach. In the real world, it’s about making “all people matter” and feel wanted. It’s about a Society which has a changed emphasis from changing problems after they’ve happened – e.g. paying unemployment benefit long-term to some individuals – to a priority of preventing problems before they happen, e.g. trying to enhance a person’s first ever job in meaningful employment or stopping in its tracks excessive pay of a CEO of a utility-company when the service has not improved or a banker with a bank making a loss of millions.
‘Pre-distribution’ can be tackled at a number of different levels. It is essentially about Labour being a ‘government being fit for purpose’, addressing the needs of Society. When I asked a Comrade of mine to take this photograph of Ed Miliband at Haverstock Hill at Ed’s last ever hustings, at Haverstock Hill Comprehensive School, Chalk Farm, I said to Ed, ‘I’ll tell you something which will make you smile’. Ed said, ‘Go on, surprise me!’. I then told Miliband that, in Tony Blair’s autobiography entitled ‘The Journey’, the word ‘inequality’ does not even appear in the index. Ed simply said, ‘You’re joking’, and burst into this smile.
This policy, which is well formulated elsewhere (see, for example, the recent description in the New Statesman by George Eaton in the New Statesman, which cites the seminal work of Prof. Joseph Hacker from Yale), is about tackling this inequality, in doing something which both the main parties which to do at present – redistribute the UK economy. George’s description of it is helpful:
“To this end, it should legislate for policies such as a living wage and introduce curbs on predatory energy and rail companies, pursuing what Miliband’s consigliere, Stewart Wood, has called a “supply-side revolution from the left”. As he wrote in a piece earlier this year:
We will need different kinds of banks and stronger competition in the banking industry; corporate governance reforms to incentivise good ownership models and longer-term business strategies; ensuring that companies see the continuing upskilling of their workers as an obligation and not simply a luxury; and the courage to challenge vested interests in the economy that charge excessive prices for energy or train fares and squeeze families’ living standards.
In his speech to today’s Policy Network conference, Miliband will elaborate on this theme, stating that while redistribution will remain a “key aim of the next Labour government”, a greater focus on predistribution is needed. He will advance two main arguments for this claim. Firstly, that the failure of the last Labour government to reduce inequality proves that while redistribution is “necessary” it is “not sufficient”, and secondly, that the fiscal constraints a Labour administration will face (based on current forecasts, it would inherit a deficit of £96.1bn or 5.8% of GDP) mean that it will be not able to increase tax credits (the last Labour government’s primary redistributive instrument) in the manner that Tony Blair and Gordon Brown did.”
Ed should think very carefully about how he wishes to present this policy to our Party next month at Conference. The policy is relevant to people who find themselves unfairly treated by Society. Of course, Miliband is unwise to use the word ‘fair’ given its exhaustive overuse atrophy by Clegg, but it is ensuring that people at the low end of the income scale get adequately paid, for example, through the Minimum Wage. It also ensures that private utility companies are not able to make excessive profits at the expense of the quality of the service for the customer. The economic narrative of failed competition in private (or public) limited companies, ranging from banks to utility companies to exam boards, is well known. Also well known are political stigmata of this such as Brown’s bold claim to ‘abolish boom-and-bust’, meaning that due to over-confident growth Brown had been the first person ever to abolish the cyclical demands in economy. Economists on the left wish an inclusive, accessible, sustainable economy; leaving Wonkland for a moment, it’s fundamentally about making all people matter.
Critically, pre-distribution is not a ‘tax-and-spend’ policy, though it has to be said that the redistributive attempts of the final days of the Labour administration might have been more successful than first appeared. It is not anything to do with following targets meticulously such that it involves losing the ‘big picture’. Voters will of course be concerned whether the policy will cost money. Any laws are costly, but the UK produces a huge volume of them, and ultimately voters, whilst finding some laws prohibitive and restrictive, might find some statutory instruments there for a good reason and protecting the public (i.e. preventing advertising of harmful products on children on TV, or the safety of ‘clean air’).
In a way, it is a bit like ‘responsible capitalism’. It is very hard to see why corporates would wish to be ‘responsible’, when ultimately the function of a company in law is to promote its success by making profit. However, many companies, and many charities in the third sector, use their ‘responsible capitalism’ credentials, otherwise known as ‘corporate social responsibility’, as a way to distinguish themselves in a crowded market with customers. Law students apparently ‘like’ law firms with a strong pro bono output, and so on. Even ‘responsible capitalism’ might be a good way to make money.
That strikes at the heart at another fundamental principle of Ed Miliband and Labour. There is no need for Ed to embrace corporate strategies which achieve their ends through potentially achieving misery like taking disabled people off the benefits register through improperly delivered benefits assessment mechanisms or allegedly phone hacking to sell copy in newspapers. The City might find itself at the receiving end of ‘irresponsible capitalism’, if international markets perceive London as a more dangerous ‘light touch regulation’ place to do business (where allegations of fraud have recently arisen.)
The idea of pre-distribution has also a strong undercurrent. It displaces the primacy of the market, over the State. However, because of the language and genuine concerns of abuse of power of the State, this pre-distribution of the UK economy will be a redistribution of political power. This is highly significant, as low-paid workers and members of the Unions will feel valued. There is a way to legislate for this, in giving tax breaks for teachers and nursing workers in the public sector. The advantage is that these ‘tax credits’ would be to a deserving group of people, and, if employment and disability support allowance were properly administered, the value of people working in the public sector would be enhanced. Miliband has often criticised how the economy of the UK is too factional, and this is of course part of the need to ‘rebalance’ the economy; the City can of course play part by ensuring that even their most badly paid workers are given a ‘living wage’, which would not be a problem for them given their recent revenues even despite the recession, but it would reinforce that we are all contributing to the economy. That Miliband should wish to ‘reward’ skills should be an extension of the better successes of the Blairite knowledge-based economy, and would not even be objectionable from the Right. However, it would be impossible to run this economy without the public sector, and that is simply a fact.
Ed’s message next month must therefore be ‘clean and simple’. Nobody wants to hear the word ‘pre-distribution’, and even the Keynesian word ‘investment’ has been a word which the Tories desired to toxify. The Tories are of course wrong on this, as their failure to invest in schools led directly to the implosion of the construction industry in September-October 2010 onwards, with a rapid expansion of conservatories in September 2012 regarded as ‘too little too late’. The word ‘fair’ has been toxified by Nick Clegg (ironically, given that the name of the 2010 Labour manifesto written by Ed Miliband chiefly was ‘A future fair for all’.)
What about ‘Making people matter’?
