The globalised middle: social justice is key to more easing, less squeezing

by Jonathan Todd

Tony Blair made adaptation to globalisation a Labour leitmotif. Yet the existence of the “squeezed middle” is a symptom that he did not finish the job. Today’s globalisation is more about the rise of Asia than was the case when Blair became party leader. Easing the squeezing requires better adaptation to this Asian age.

It will take more than David Cameron hawking UK PLC from one rising Asian power to the next. The prime minister is listless in the face of power seeping from the over-indebted West to the resource-rich East, so neatly encapsulated by FIFA’s world cup decisions. His PR smoothness is no substitute for leadership in urgent debates about the architecture of globalisation. It seems that his only reason for attending the G20 was, unsuccessfully, to press the flesh for England’s world cup bid.

Perhaps Cameron confused diary entries, and we lost the world cup after he confronted FIFA president, Sepp Blatter, on macro-prudential regulation. After all, the Tory-Lib Dems’ bail-out of the Irish demonstrates that we live in an interconnected age. It exposes their myth: that our economic predicament is solely Labour’s fault.

While Cameron cannot afford himself a robust response to Asia’s rise, leading centre left thinkers are looking at the bargain Labour struck with globalisation. On the one hand, it was relaxed about the filthy rich. On the other, it recycled tax revenues into public services and redistributions, like tax credits, at unprecedented levels. But the most striking feature of this economic model is its dependence upon secondary redistribution. The middle is squeezed because we have not got to a more equitable distribution of market rewards.

John Humphrys may find it bizarrely incomprehensible, but the squeezed middle is not just a British phenomenon. In the US, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973. It used to be middle-class aspiration that Labour needed to tap into. Now the middling sort across the whole of the West is anxious. It is even possible to understand the tea party movement when you realise that at its core is anxiety, not guns and bibles.

Tea partiers, like Essex men, are more focused on keeping what they have than wanting more. They want to take their country back, not look for answers from the great beyond. They are resentful of any perceived threat. Whether that is losing their health insurance to Obamacare or their jobs to the oilfields and factories of the East.

Politicians across Europe are increasingly willing to bemoan minorities and immigrants, other governments and Brussels. There are many corners of foreign fields that seem forever Mrs. Duffy. Tackling the squeeze is a precondition of curbing this.

Globalisation will only go into reverse if an open currency war follows banks and states defaulting. Almost any amount of squeeze for the middle and anxiety for Mrs Duffys is worth it to avoid this 1930s scenario. And the more squeezed the middle becomes, the more politicians will struggle to resist protectionism and competitive currency devaluations. These would be the seeds of a cataclysm of 1930s proportions. We cannot sustain globalisation without improving social justice both domestically and internationally.

In the UK, we must recognise that income distributions that are skewed towards the rich minority are a practical menace, as well as morally questionable. Countries with lower Gini-coefficients (a measure of the inequality of a distribution – the higher the score, the more unequal) are more likely to increase consumer demand in sustainable ways. This means that median workers will not find their wages squeezed, and their maxed-out credit cards will not create booms and busts. Labour must find ways of achieving this while scaling back government to control the deficit. Here – after the public spending largesse of the Blair/Brown years – we start with a blank piece of paper.

Even if social democracy means that the state consumes an ever-larger slice of GDP, it cannot mean it now, in such fiscally straitened times. That states, as well as markets, fail should not leave social democrats bereft of hope. It should inspire a radical pragmatism for whatever truly works. A pragmatism never abashed by cross dressing or reformers and one unafraid to deploy state or market wherever it is best suited.

Advancing social justice internationally won’t be achieved by Cameron’s glad handing. His G20 failure, which Brown would have avoided, was far more of a dereliction of duty than his failure to deliver, in contrast to Blair, a global sporting event. Not least thanks to Brown, world leaders were quick to come together effectively in the early stages of the global crisis.

The extent to which the fundamental causes of this crisis have been addressed is debatable. Global leaders must maintain their engagement in order to tackle these causes. Not just applaud what good chaps Prince William and David Beckham are. Cameron offers vapid PR stunts instead of leadership. Whereas Labour must find practical ways of advancing social justice here and internationally. Only then can the globalised middle end up slightly more eased than squeezed.

Jonathan Todd is Uncut’s economic columnist.

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5 Responses to “The globalised middle: social justice is key to more easing, less squeezing”

  1. This is very good indeed.

    Related thoughts here – on wage shares, globalisation, etc:

  2. Robert says:

    To win in 2015, we need to give people who voted Tory or Lib Dem last year real, credible reasons to vote Labour,” he added.

    “We can’t rely on them to back us simply because we’re not the government. The test for Labour in 2011 is not whether we attend enough demonstrations – it’s whether we can start to demonstrate anew that we are a credible alternative.”

    Mr Alexander’s conclusion was echoed by former Olympics minister Tessa Jowell, who used a comment piece in the Independent newspaper to urge Labour to remain in the centre ground.

    “Just attacking the government is not enough. We must not be afraid to look across political parties to see what we can learn,” she urged, before adding: “Stick resolutely to the centre ground. In an era where people no longer see politics through an ideological prism, that is where they want their politicians to be.”

    can somebody tell me the difference between New labour, Newer labour, and the Tories. Please do not tell me the cuts would be slower because whether you cut my arm off bit by bit in the end I will have no arm, better get it over with then end up in pain for years and years.

  3. Thank you, Duncan. I will read your link and feedback.

  4. william says:

    If ‘our economic predicament is solely Labour’s fault’,which it must be, as we were in charge for 13 years,it follows that this piece is worthless.The public spending largesse of the Blair/Brown years says it all.Did you not notice that the ‘squeezed middle’ in England did not vote Labour?Does the electorate focus on social justice and the gini coefficient?Do they give a toss about globalisation?Is it possible that Mrs. Duffy might reflect the voter?Did the electorate in England roundly reject the demented ‘no more boom and bust merchant’?The paper is still blank:no admission of failure,no new researched policy, just cliches.

  5. james says:

    Mrs Duffy certainly gave a toss about globalisation, William. She was concerned about the accession eight countries joining the EU’s open labour market and the consequent increase in migration to the UK.

    What worries me most about this article is that it doesn’t define globalisation at all – that’s a problem. It would be far better to replace the word “globalisation” with the word “ruling class agenda” in most of the essay.

    In 2006, Ben Bernanke urged US corporations to use their growing profits to increase wages. They didn’t – and it was an absurd statement, but one echoed by central bankers and politicians in other industrialised countries at the time. So it goes.

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