Coronavirus embarrassed Trump and Bolsonaro. But the global right will fight back.

Science and welfare are at the heart of this crisis – which is bad for right-wing populists. But they won’t be wrongfooted for long

The populist right has built their electoral strength on boisterousness and arrogant self-confidence. Yet, amid the coronavirus pandemic, figures such as Donald Trump, Boris Johnson and Jair Bolsonaro seem to be confounded. They are either desperately clinging to a narrative of normality (it’s just a flu), or have already been forced to make embarrassing U-turns acknowledging the gravity of the crisis.
Boris Johnson had to abandon the government’s “herd immunity” strategy when new scientific evidence made apparent its horrific human cost. He recently tested positive for the virus and is now accused of complacency and lack of leadership. In Italy, Matteo Salvini, leader of the far-right League party and former deputy prime minister, appears downbeat, unable to wear the robes of the responsible statesman this emergency calls for; his unabashed criticism of government has even earned him the label “unpatriotic”. In France, Marine Le Pen seems to have vanished altogether from the media, while Bolsonaro’s persistence in denying the crisis is leaving him increasingly isolated.
Will the coronavirus ‘kill populism’? Don’t count on it | Cas Mudde
In the US, Trump’s strategy has been zigzagging. After downplaying the significance of the virus for weeks, he was forced to declare a national emergency. Having backtracked last week, asserting that the lockdown would end by Easter to avoid damaging the economy, he has now conceded it will have to last until the end of April. It is true that his approval ratings have gone up, paralleling what happened with George W Bush after September 11. But Trump is clearly worried about the electoral consequences of a massive death toll and a recession that could see unemployment of over 20%.
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The difficulties experienced by national populists are unsurprising given they are no friends of the issues at the heart of this crisis: health, welfare and science. On the health front, the crisis reveals the folly of decades of underfunding and privatisation of the health system. Trump, Johnson and Salvini have embarrassing questions to answer in regard to their record as enemies of public healthcare. Furthermore, the crisis calls for a sea change in economic policy that is at odds with the ideological premises of national populism, which combines chauvinism on the cultural front and ultra-neoliberal policies on the economic front.
The glaring need for state protection of strategic national industries, starting with health equipment and pharmaceuticals, is no anathema for national-populists who have already embraced trade protectionism. But the populist right has strongly opposed welfare measures that are becoming a matter of necessity to avoid social catastrophe. Having repeatedly branded these policies as “dangerous” and “anti-patriotic”, these politicians find themselves in the embarrassing situation of having to espouse them.
Another skeleton in the closet is national-populists’ disparagement of science. The coronavirus emergency confronts us with a threat that is best understood and measured through the lens of science. Epidemiologists and virologists have acquired media prominence and the public has been diligently following their recommendations. It is not clear whether this will lead to greater public trust in science and an erosion of the anti-science attitudes that national populist leaders have toyed with. However, it can be expected that citizens will take more heed of the risks flagged by scientists, including the climate emergency, which is also bound to exacerbate the spread of diseases.
National-populists are well known for stoking people’s fears. But the fears now prevalent are not of the kind these leaders are best positioned to exploit. Due to the urgency of health and economic worries, migration – the populist right’s main enemy – has fallen in the list of priorities. Travel bans, and the fact that Europe and the US are the present focus of the pandemic, are leading to a drop in migration to these regions. In fact, we are now witnessing a historic reversal, with Mexico aiming to block the border with the US and African countries suspending flights from Europe, while UK farmers are organising charter planes to fly in farm workers from eastern Europe to prevent fruit and vegetables being left unpicked. However, if the global economic crisis results in a new wave of migration like that of 2015, this scenario could drastically change – national-populists will try to validate their narrative of cosmopolitan globalisation as a dangerous vector of all sorts of ills.
If the coronavirus crisis has momentarily disoriented the populist right, this does not mean it is vanquished. It would be misguided for the left to believe that this crisis will work out in its favour. The health crisis is bound to be followed by a deep economic crisis, more similar to the Great Depression than to the 2008 financial crisis, and the populist right has already demonstrated its ability to prey on popular despair and find social scapegoats for economic ills. It can be expected that it will go down the same road, if anything becoming even more vicious.
The authoritarian measures implemented on Monday by Viktor Orbán in Hungary, with the suspension of parliament and the introduction of government by decree, may be the shape of things to come. In Italy, Salvini had no qualms about applauding Orbán’s move. We are also likely to see an exacerbation of anti-Chinese rhetoric. Trump made no apologies for calling Covid-19 “the Chinese virus”, while Steve Bannon argued that Covid-19 is a “Chinese Communist Party virus”. Salvini has proposed that “if the Chinese government knew [about the virus] and didn’t tell it publicly, it committed a crime against humanity”, and allies in Brazil and Spain are adopting a similar line.
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Given the ties among national-populists, including their botched attempt to establish a “nationalist international” under the auspices of Bannon’s Movement, this synchrony should not be taken as accidental. It has all the look of a coordinated strategy to channel the rage and despair caused by the crisis’s brutal human and economic toll towards a racial and ideological enemy conveniently identified in the Chinese government. Along with self-proclaimed socialists, all opponents are likely to be smeared as “Chinese collaborationists”: centrist US presidential candidate Joe Biden has already been termed “China’s choice for president” by the conservative National Review.
What may be in store is thus something much worse than the populist right of the 2010s: an extreme right using the whole arsenal of the red scare and rightwing authoritarianism to intimidate opponents and defend its interests from demands for meaningful economic redistribution. Though it has been confounded by this crisis, the populist right has not been suppressed. It is just mutating.
• Paolo Gerbaudo is a political theorist and the director of the Centre for Digital Culture at King’s College London

Link to Guardian

COVID-19: how the UK’s economic model contributes towards a mismanagement of the crisis


Carolina Alves and Farwa Sial discuss the efficiency of the UK’s economic response to the COVID-19 crisis and explain why it does not directly support households but companies.

The global market gyrations since February 2020 have fed on a simultaneous supply and demand shock as well as crude oil price war. This is not a 2007-8 style financial crisis and there is no doubt that its impact is directly linked to disturbances in the circulation of capital: the stock market crash, rise in corporate debt, decline of the aviation and tourism industries, and the blow to the retail industry being some manifestations. However, the morbidity is not simply linked to the virus and the forced break in economies around the world, but to a multifaceted and contradictory historical process of how regulation escaped capitalism in the 21st century.

Since the 1970s, capitalism has undergone significant changes regarding production and distribution of value. Despite different and often contested approaches looking into these changes, a more prominent role for capital gains, fee incomes and, more broadly, rent-seeking behaviour is hardly denied. This shift has been described through various dimensions including heightened speculation in the finance, insurance, and real estate sectors, financialisation of non-financial spheres, and the emergence of new rentier classes. At the heart of this process we saw predatory value extraction and increase in inequality, which in turn has been enabled by the reinforcement of market fundamentalism and mechanisms that have led to the hollowing of states and institutions.

Although many regulations were implemented and redesigned since the 2007-8 crisis, aggressive risk-taking and moral hazard, which marked the foundations of the crisis, did not simply evaporate but have been extended and socialised in many different ways. Late capitalism rests on the ease to transcend institutions because the checks and balances which regulated profit accumulation during the post-WWII era are no longer in place. The hollowing of state has been accompanied by both allegedly neutral ‘technocratic bureaucracies’ and an absence of development indicators such as class mobility and welfarism.

Within this context, the expertise of epidemiologists to contain the virus may be more successful if accompanied by systemic reforms to address the imbalances resulting from the current structure of rentier extraction that, explicitly or implicitly, hinder policies aimed at common good.

Let’s consider, for example, the surge in demand for some products due to reasons including hoarding on an individual and corporate level. The supply side of this story may be facing input price rise, like pharmaceutical companies raising prices on essential drugs citing a halt in the import of raw materials from India and China. However, the current context may also give rise to exploitative practices. Either way, the most financially vulnerable will feel this cost in a time of illness, and their perception may exacerbate surges in demand (including hoarding) – especially in a system which is not prepared to challenge unexpected increases in production costs.

The Competition and Markets Authority issued a statement to ensure that companies should not engage in exploitative practices at the expense of customers. Yet this statement is effectively no better than a non-legally binding code of conduct, with no punitive consequences for unscrupulous market participants. This state of affairs is representative of a wider trend across UK regulatory and supervisory authorities, which short of litigation, have tended to merely deal with failures in consumer protections with toothless platitudes.

Rescue economic packages: how efficient?

The gravity of the current crisis has led governments to implement ambitious stimulus packages to revive the economy. Economists and policymakers have intensely scrutinised these packages. A very peculiar point cutting across some of these criticisms, however, lies within the need to focus on households and workers. In the case of the UK, the rescue package does not empower or directly support households but companies. Its measure for the most part expressly targets businesses with VAT and other tax holidays or deferrals, interest rates cuts, and various other kinds of operational assistance. Even when the approach deals with the workforce – for example, the scheme offering up to 80% of an employee’s wage – it has been geared towards the objective of business continuity, with no focus or conditionalities aiming at precluding a class of zero-hours contract employees to follow, keeping employed as many workers as possible, and enabling them to make productive contributions.

Part of the intention behind this scheme, recently extended to the self-employed, is both to prevent a lapse in consumption and stave off the attendant insolvencies, company voluntary arrangements, and business failures that might originate thereof. In this respect, this scheme is comparable to an extent with the approaches following the 2008 crisis, where a number of financial innovations and measures were introduced with the specific aim to improve the supply of credit to the real economy. But, as history showed us, the availability of such credit did not translate to the expected ‘trickle down’ to either consumers or businesses, as the recipient institutions remained averse to lending (even to each other), protecting themselves. With a faith on businesses rather than financial institutions, in the current case, the wage scheme is to be sought from the government by the employer rather than by the employee, with no explicit mechanism to either avoid firms acting solely for their own benefit (for example, Virgin Atlantic upon seeking a £7.5bn bailout from the government are simultaneously demanding that their employees should forego remuneration for eight weeks) or ensure binding regulation to guarantee employment (see, for example, Wetherspoons which laid off 43,000 workers).

It can’t be emphasised enough that the current pandemic is neither simply a crisis of supply or demand, but a disruption of labour supply followed by unusual shock slowing down demand for some services and goods even when most of the people are still holding their jobs or being monetarily compensated for not being at work. For this reason, although households within economic analysis are usually understood from the lenses of consumption, it seems that now stimulus or reform packages have to be tailored to not only spur demand (at the right moment) and keep businesses alive, but ensure that a complete breakdown of the system due to the need to ‘de-mobilise’ the economy is avoidable.

In this sense, much more needs to be done assuming a more central role in the economic analysis for households. We ought to include measures that look into issues ranging from childcare and elderly care, direct and quick monetary transfers to levels of debt and precarity of employment. This focus is particularly important considering that the weakening of the state in the UK has been accompanied by the austerity policies and misallocation of resources resulting from the privatisation of healthcare.

While alternative measures such as universal income and ‘helicopter money‘ have been criticised on the basis of the amount of money transfer and duration of uncertainty linked to the crisis, the efficacy of both proposals lies in protecting households. This protection, whatever its format, is what we need now, and it should be followed by radical changes in a way we see, understand, and perceive inequality, vulnerability, and class – in the same way that the implementation of the welfare state in the 1940s followed both a radical change in how poverty was perceived after WWII and the acknowledgment of the need for a comprehensive welfare system as a duty of the state. If we will use the war analogy to understand and solve the COVID-19 crisis, this is definitely the main (and perhaps the only) reason to do so.

So, what next?

As others have advocated, a reform/stimulus package has to be a comprehensive intervention which ensures protection for ordinary people. In the absence of a vaccine, the ‘economic contagion’ needed to keep the economy afloat can only work if people are both immobilized and financially secure. The current model of capitalism and its response to crisis is not only inadequate, it continues to fail in protecting the most vulnerable and assuring safety for households. A systematic transformation, which leaves institutions better prepared to deal with crises, can only start with addressing the basic question of unequal distribution and reorienting economic policy from a common good perspective. The UK has a historic opportunity to rethink its economic model: regulation must be strengthened and transformed in favour of the public.


Note: the authors are grateful to Ingrid Harvold Kvangraven and Ilias Alami for helpful comments.

About the Authors

Carolina Alves (@cacrisalves) is Joan Robinson Research Fellow in Heterodox Economics at Girton College, University of Cambridge.

Farwa Sial (@farwasial) is a post-doctoral researcher working on the ESID Project at the Global Development Institute, University of Manchester.

LSE blog link

COVID-19: an overview of the government’s economic priorities so far


Paul Anand highlights the key economic policies announced in response to the ongoing pandemic and assesses their likely implications. He concludes that existential threats to economic systems seem not to be as rare as we believed, and so economists ought to be giving more thought to how we respond to them.

The novel coronavirus pandemic has seen policy-makers shift from pondering whether COVID-19 will have much economic impact to, within two or three weeks, scrabbling around to find policies that address existential threats to economic systems around the world. The economic priorities and problems that emerge are doing so on a daily basis, and it will now be clear to many that conventional policy actions simply do not apply, even if basic underlying principles do.

Businesses

At the time of writing, the major economic challenges concern the likely effectiveness of a series of (fiscal) policies announced by the UK government. Initially, the government and the Bank of England seemed to be focussed on supporting businesses and announced a range of measures including loans to tide businesses over. But it is already becoming clear that the devil is in the detail.

There is still a huge amount of uncertainty about how long social distancing will last – perhaps it will be three weeks or three months; in the UK, emergency powers have been requested for two years. As a result, the massive £350bn package of support – which includes business loans – risks being substantially ineffective. Company directors are being asked to take out loans, but where companies have costs and close to zero revenues for several months, they could face the prospect of being without profits for two or three years. For these reasons, banks offering loans even with substantial underwriting by government will not able to easily judge whether and when many businesses will be clearly solvent.

Inequality

I regularly collaborate with the UN and the World Bank, where the concept of human development is an important driver of economic thinking. The UN has an index which monitors health education and gender equality as well as national income, providing this war a focus for what economies need in a way that goes ‘beyond GDP’, a need that economists have increasingly recognised in recent years. From this perspective, COVID-19 is a human development crisis in the making which also demands immediate policy attention.

In the past few days, one UK charity food bank has reported a quadrupling in referrals over the space of a week. At the same time, other food banks and organisations trying to arrange food deliveries for the most vulnerable have reported thefts of food. Supermarkets have been addressing some of the challenges by creating particular times when older people or front-line workers can shop. These latter initiatives are welcome, but local government does need to be empowered to address the issues of hunger that some families are already facing.

There are also huge short- and long-term implications for education and labour markets. The closure of schools challenges both children’s learning and schools’ abilities to offer learning online. But it also throws into sharp relief the extent to which businesses depend on schools for childcare and we should expect the losses of national income to be significant if closures carry on for several months.

Furthermore, there is evidence that those who find it difficult to enter the labour market for the first time because of economic recessions are scarred and achieve poorer economic outcomes over the longer term. This is yet another source of inequality that we should try to combat.

Healthcare

In terms of health and health services, shortages of protective equipment in the NHS are contributing to staff shortages, as doctors and nurses self-isolate or go sick. Matt Hancock has suggested this reflects a logistics problem but whatever the reason, this is a serious constraint on the country’s response and one that makes understandable the reason thousands of NHS staff have complained about the lack of appropriate masks and gowns.

Currently, medics are also suggesting that by early April there will be a need to make decisions about who gets access to a ventilator. The government has, for several weeks, said that it will purchase all the ventilators that suppliers can produce but there are limits to how quickly their production can be ramped up. The fact that doctors and nurses are being invited out of retirement and back into work is an indication of just how dramatic the demands on the service are expected to be and highlights also the fact that other aspects of healthcare will suffer.

Salaries

The pandemic has created unexpected calls for economic policy responses. Over the course of three budgets in nine days, Chancellor Rishi Sunak has acknowledged that this is not just another recession and this is not a time for ideology. Rather, he has shifted to a position where he is listening and responding to the existential risks to large numbers of jobs, to whole industrial sectors, and to vulnerable groups within society. The offer to underwrite 80% of worker salaries up to £2,500 per month is a potentially sizeable and welcome signal that livelihoods should be the focus of economic policy because they support workers and businesses at the same time. In normal times, policies for both seem to be siloed and disconnected – but we cannot afford to think like that right now.

That said, support for the self-employed and those in the gig economy on zero-hours contracts has been slower to work out. There are some five million workers classed as self-employed in the UK and another million working on zero-hours contracts; these cover a diverse set of groups – from high-paid celebrities to working mums and taxi drivers. When they stop work, currently many are entitled to £94.25 per week, a figure that Matt Hancock accepted that he could not live on.

The issue caused some confusion, particularly in the construction industry where many workers have wondered if they should carry on working on the grounds they cannot work from home and need to put food on the table. As a result, the London underground, supposed to be running for emergency workers with passengers keeping two meters apart, has been crowded and remained a hotspot for transmission that undermined the first days of the three-week lockdown.

Following the initialy delay, on March 26 the Chancellor announced a scheme that would give such workers 80% of normal earnings up to £2,500 per month and subject to a means test of no more than £50,000 per year to ensure benefits are targeted to those in greatest need.

Rents and mortgages

There are also issues concerning rents and mortgage repayments that affect most of society. The agreement between the government and the banks that those paying rent or repaying mortgages would be able to have a three-month holiday was welcome a couple of weeks ago. But it now looks certain that those living on low incomes in high-cost cities like London will need much more help if we are to avoid a rise in evictions further down the line.

The COVID-19 pandemic created a twin economic and human development crisis that standard economic thinking is not well-suited to. The Chancellor is to be applauded for moving quickly and dramatically in the right direction but there is still much evidence of what behavioural economists call anchoring and adjustment – that is, failing to adjust enough because our actions are often based on small incremental steps from where we start. The signs from China suggest severe measures can be effective over a three-month period and it remains to be seen whether Johnson’s libertarian inclinations will allow him to pursue the strategy, even though it seems to be supported by most. Existential threats to economic systems are not commonplace, of course, but experience of the financial crisis, the climate crisis, HIV and AIDS, as well as war is beginning to suggest that economists should give more thought to policies and analysis of such situations, which are perhaps less rare and unusual than we might have thought.


About the Author

Paul Anand is a Professor of Economics at the Open University and Research Associate at Oxford University and London School of Economics.

LSE blog link

COVID-19 and economic lessons from previous pandemics


Looking at past pandemics, Costas Milas expects the economic downturn caused by the novel coronavirus to be significant but temporary. He also explains why some wages rise during such episodes and why unemployment benefits must rise as well.

Diseases cause panic and take a significant social and economic toll. The Black Death, for instance, which lasted between 1348 and 1350, killed between 75 million and 200 million people worldwide and about half of the population in England. It also contributed to a dramatic cumulative GDP fall of 29% and to a ‘flight-to-safety’ increase in the price of gold by 8% between 1348 and 1351. Nevertheless, as a consequence of the scarcity of labour, real farm wages in England went up (cumulatively) by 116.2% whereas real wages of building craftsmen went up by ‘only’ 42.6%, which makes sense if we consider that avoiding a disruption in farm production was a priority. At the same time, flight from cities led to a downward pressure on rents and, therefore, the incomes of the upper class. Last, but not least, the English Parliament was prorogued several times in 1349 and only met again in 1351.

Some of the above observations were repeated during the 1918-1919 Spanish flu pandemic, estimated to have killed 40 million people worldwide. It is difficult to separate the economic effects of the Spanish flu from those of World War I because wartime production arguably put upward pressure on wages as a result of rising labour demand. Nevertheless, research has found that US manufacturing wages increased; indeed, US cities that had greater influenza mortalities experienced higher real wage increases. Data from the UK suggests that the real wages of building labourers in London went up (cumulatively) by 34.2% in 1918-1919, whereas real GDP in the country fell by 6%. On the other hand, house prices increased (cumulatively) by 20.3% in 1918-1919. In Sweden, which was not involved in World War I and so more clear-cut references can be made about the economic consequences of the Spanish flu, the pandemic affected incomes from stocks and rents negatively, whereas wage rates were not affected. Last, but not least, the price of gold increased (cumulatively) by 6.1% in 1918-1919.

Notice some parallels with today’s economic situation. As stock markets drop on fears of a coronavirus-related economic slump, the flight-to-safety investment strategy repeats itself. Indeed, the price of gold hit a seven-year high before dropping again as investors sold gold to cover their losses elsewhere, which serves as a reminder that although gold is a flight-to-safety investment strategy, there are periods in time that it loses, at least temporarily, its safe haven status.

With Britain’s public becoming increasingly anxious about the novel coronavirus outbreak and both monetary and fiscal authorities responding to address the looming recession, it makes sense to explore how rising financial stress impacts on the economy. As can be seen from Figure 1, there is an adverse relationship between financial stress and economic growth. The financial stress indicator pools information from the volatility of the exchange rate, the volatility of the equity market, the volatility of the bond market and the risk premium that investors demand to hold UK corporate bonds rather than the less risky UK government bonds.

Figure 1: UK GDP growth and financial stress, 1970-2019

Financial stress is a good predictor of future movements in real GDP growth. From a historical point of view, a rise in financial stress signals a slowdown in UK growth between one and three quarters prior to growth turning negative. Although data for the first quarter of 2020 is not yet published, we know that financial volatility is on the rise which suggests a significant hit to the economy.

Nevertheless, it is important to look beyond the negative impact of financial stress on the economy and pay particular attention to those who will lose their jobs or take an income hit if they are quarantined. This is really pressing because unemployment benefits in the UK are much lower than those in other countries or the OECD average. Indeed, unemployment benefits in the UK account for 34% of previous incomes for the first two months. On the other hand, unemployment benefits in the US account for 57% of previous incomes for the first two months. Unemployment benefits rise to 60% of previous incomes in the case of Germany and rise further to 64% of previous incomes for the OECD average.

Many will feel uncomfortable at the prospect of central banks taking additional quantitative easing measures to support the economy. Quantitative easing, or large-scale asset purchases, refers to monetary policy actions whereby central banks purchase predetermined amounts of government and corporate bonds in an attempt to inject money directly into the economy. There is pressing need for policy-related action because economic policy uncertainty, both in the UK and worldwide, is on the rise. This halts investment planning and undermines productivity. At the same time, the confidence of our business leaders in the economy is being affected.

Still, with current government bond yields at extremely low levels, it is questionable whether further quantitative easing is an effective way of suppressing sovereign interest rates further and reviving the economy in terms of injecting additional liquidity. In fact, Chris Martin and I have recently shown that quantitative easing loses its effectiveness at very low interest rates. Notice, however, that sovereign interest rates dictate, to a large extent, corporate interest rates within a particular sovereign. Mid-March saw, at least temporarily, an increase in government yields and an even sharper increase in corporate yields. This forced the Bank of England and other central banks to intervene by authorising additional quantitative easing which, in effect, acted as a ‘catalyst’ in driving (again) government bond yields down. Whether this translates also into lower corporate yields remains to be seen. This is because firms are currently operating in (dangerously) sliding supply and demand conditions which makes it more likely than not that they will have to lay off workers even if they secure temporary government support. This is why, as I mentioned above, unemployment benefits need to rise.

Looking at the history of pandemics, there is hope that some wages will have to rise. This should definitely apply, as a matter of urgency, to those who are currently on the front line, such as nurses, whose starting salaries took a hit in real terms after the last financial crisis.

There is another lesson from the economic effects of past pandemics and earlier recessions. As the Economics Editor of the Sunday Times recently noted, recessions tend to be short-lived. If history were to repeat itself, the chances are that we will witness a deep economic downturn. Forecasters predict that the looming economic downturn will be a ‘V-shaped’ rather than a ‘U-shaped’ one. In other words, the downturn should be significant but temporary. To what extent history will repeat itself remains to be seen.


About the Author

Costas Milas is Professor of Finance, University of Liverpool.

LSE Blog Link

European health systems and COVID-19: Some early lessons



COVID-19 is putting unprecedented pressure on European healthcare systems. Tamara Popic draws together some early lessons, arguing that the crisis should prompt a rethink of the direction of healthcare policies across Europe, and that the principle of solidarity must now move to the forefront as countries seek to mitigate the impact of the outbreak.

The spread of COVID-19 has put new pressures on already strained national health systems across Europe. In Italy, the country reporting the highest number of deaths linked to the virus in Europe so far, hospitals are facing severe crises trying to deliver the necessary care, while doctors are making heart-breaking decisions on how to distribute scarce resources. The usual stereotypes of Italian dysfunctionality notwithstanding, the 2018 Bloomberg ranking of the countries with the most efficient healthcare systems around the world places Italy fourth. The Italian population also ranks as the second healthiest population in the world. As one of the most efficient health systems and one of the healthiest populations in the world is struggling under the pressure, there are at least two lessons that could already be learned from the present crisis.

All that glitters is not gold

First, European governments should re-think the direction they have pursued with their healthcare policies over recent decades. A breakdown of coronavirus risk by demographic factors shows that those most likely to die are the old and the sick, population groups most dependent on the public healthcare system. Yet, European health systems in 2020 are less public than they were 30 or even 10 years ago. The logic behind these developments, guided by the New Public Management approach, has been that scaling down of the public sector would make health systems more efficient and responsive to the population’s needs.

The consequence of this approach has been a slow but steady reduction of public spending for healthcare. OECD Health Data show that since 1990 public spending as a share of the total spending for healthcare has decreased in most European countries. In some countries in Eastern Europe the decline has been even higher than 30 per cent.

While this trend has produced a variety of effects, a reduction of hospital capacity is one of the most important. As hospitals deliver costly specialised care and as European hospitals are still predominantly public hospitals, one of the key cost-containment measures has been to reduce the number of hospital beds. The figure below shows there has been a significant decline in curative hospital beds since 1990 across the whole of Europe (with the notable exception of Finland). In Italy, the number of beds per 1,000 people declined from 7 in 1990 to 2.6 in 2015. The tragedy is that these beds are now among the most needed elements of healthcare system capacity in the context of the present crisis.

Figure: Curative (acute) hospital beds per 1,000 of the population (1990-2015)

Source: OECD Health Data 2019

A call for solidarity

Second, the current crisis underscores the key principle of public healthcare – solidarity. A reduction of public spending for healthcare across Europe was paralleled with a series of policy measures that involved privatisation and the introduction of market-like instruments in the provision of medical care. In the hospital sector, these measures involved the privatisation of hospital beds and changes in the model of hospital ownership, including transformation of public hospitals into private-for-profit hospitals and joint-stock companies. The logic, similar to the one applied to reductions in public funding, has been that replacement of the public sector led by the state with private and competitive, market-oriented care provision would make health systems more efficient and responsive.

However, research shows that these types of policy changes have contributed to the creation of two-tiered healthcare systems. In this kind of system, access to necessary care is dependent on one’s capacity to pay for it and solidarity granted by the public system is eroded. And this is happening at a time when the general trend in inequality has spared neither our health nor our health systems, as countries face persistent inequalities in health and in access to healthcare services.

If these developments were not worrying enough, then the current health crisis caused by the coronavirus demonstrates that solidarity matters now more than ever. A quick look at the United States reminds us that having universal access to care is key in responding to the present crisis. News that the UK’s NHS will use private beds for virus sufferers may have seemed encouraging at first, but the subsequent announcement that private hospitals will be charging the NHS £300 per bed suggests that solidarity risks disappearing at the time when it’s most needed. Having resilient, well-funded public health systems with universal access to healthcare is key not only for solidarity, but also for national if not global salvation. It’s time to come together.


Note: This article was first published on LSE EUROPP. Featured image credit: Marcelo Leal on Unsplash.

About the Author

Tamara Popic is a Research Fellow at the Max Weber Programme of the European University Institute.

LSE Blog

How will lessons from Windrush be learned when the Home Office is institutionally resistant to learning?


The essential finding of the Windrush Lessons Learned Review is that the Home Office will not engage in learning from its past, writes Mike Slaven. He discusses the Review’s findings and argues that a value change at the Home Office – the key lesson from the Windrush Scandal – would not serve this government’s policy.

The government’s decision to bury the release of the long-delayed Windrush Lessons Learned Review amidst the COVID-19 crisis – as if they had been waiting for the right pandemic to come along – underscores what an embarrassment it is for them. Wendy Williams’s report is both comprehensive and scathing. Drawing from hundreds of interviews with officials and tens of thousands of pages of archival documents, it paints a portrait of developing institutional myopia and callousness which led ‘Windrush Generation’ immigrants who had every right to be in the UK to be gravely mistreated as suspected ‘illegal immigrants’. But far from bookending the Windrush Scandal, the report also identifies the precise barriers that make remedying the problems that led to it, for now, a remote prospect. When the institutional features of the Home Office which precipitated scandal align with the immigration policy priorities of the government of the day, it raises the spectre of further scandals, and makes it difficult to regard the Windrush Scandal itself as ‘over’ at all.

It is striking that the government is so clearly reluctant to release a report which actually aims most of its fire at the Home Office, which might be written off as a ‘problem department’ with entrenched cultural shortcomings that governments can only change so much. While, of course, the Windrush Scandal is often seen as an indictment of Conservative Party policy, Amber Rudd, who was forced to resign over the case, is no longer an MP, while Theresa May is a backbencher, echoing government apologies of the kind the report itself calls insufficient. Williams also takes a longer view of the political impulse to clamp down on ‘illegal’ immigration while assuming that everyone with status in the UK would have documents to prove it. She does not let the Labour Party off the hook for its restrictive turn in the latter part of the 2000s, but also does place blame at the feet of the Coalition and Conservative governments, which demanded ‘radical thinking’ about meeting migration targets which diminished checks that might have foreseen unintended consequences.

However, it is the culture of the Home Office over the long run which Williams blames most for precipitating the Windrush Scandal. Williams clearly communicates a key finding from our research, which we shared with the Review team: that the history of Commonwealth immigrants under a document-light system before 1973 had been institutionally forgotten. With a clear right to live in Britain, Commonwealth immigrants of that period could not have been expected to monitor the immigration system as it changed rapidly around them. It was the Home Office’s responsibility to remember them – but instead, it developed an increasingly hostile and sceptical view of immigrants and the proof they needed to offer to be allowed to stay in Britain, which inevitably ensnared the Windrush Generation alongside other, more intended targets. With a mindset increasingly dominated by metrics intended to show the public immigration was under control, the quality of decision-making deteriorated, as consciousness that immigration casework was about human lives fell by the wayside. Guardrails which would have kept political impulses in check corroded. While stopping short of finding institutional racism, the report does find a profound lack of reflection in the Home Office about race in immigration policy.

This all leads to a particularly troubling aspect of the report: one of the essential findings of the Review is that the Home Office is institutionally resistant to learning. Williams points out that the Home Office had many opportunities to figure out that something was going to go wrong regarding pre-1973 Commonwealth immigrants, or to detect the scandal as it was unfolding. However, these warnings came from outside advocacy groups who were habitually discounted rather than learned from. Williams concludes that what went wrong in the Home Office can must be fixed by the fostering of a ‘learning culture’, which would amount to a ‘major cultural change for the whole department and all staff’.

Opening itself up to outside criticism and to a broader view of its role in British society, the Home Office would re-centre fairness and humanity in its decisions. The staff of the Review whom I met, largely seconded from other parts of the Home Office, showed me that there are indeed individuals within the department who value these principles. Nonetheless, there is little question among those who deal frequently with the Home Office – including advocacy organisations – that this is not the case for department culture. In short, how will lessons be learned by a department whose problem is that it will not engage in learning?

The only clear answer is political leadership. This clearly will not be coming soon: the government will not even make amends for the scandal in the only way the report identifies as possibly making a difference, and compensation for the victims remains stalled. Beyond this, the reality is that a value change at the Home Office would not serve this government’s policy. Why would the Home Office centre the humanity of immigrants when the government’s new points-based system intends to treat them as economic assets? Why would the Home Office engage in learning when this might only reveal the shortcomings and fallacies of the government’s drive to (symbolically, at least) ‘take back control’? The narrowness of the Home Office’s view befits this government’s policy intentions, as it has previous governments’. Indeed, it mirrors a certain narrowness of the Windrush Scandal itself, which has focused less on merits of the ‘hostile environment’ in general, than on the ways in which particular groups of immigrants with wide public sympathy were swept up in it. Construing the scandal in such a narrow way, as the current government and earlier responsible ministers have done, means a real risk of further scandals down the line, particularly regarding the status of settled EU immigrants.

Learning lessons from the Windrush Scandal will be a tall order when the department responsible lacks a ‘learning culture’. This will take political leadership which at the moment we lack, as what critics see as bureaucratic shortcomings are, for current government policy, actually virtues. Williams has put forward a brave and sweeping vision of reform at the Home Office. Hopefully it will be a cornerstone for reform at a moment when British politics can turn its attention again to these issues.


About the Author

Mike Slaven is Lecturer in International Politics at the University of Lincoln.

https://blogs.lse.ac.uk/politicsandpolicy/windrush-lessons/

Budget 2020: why the Conservatives are placing more emphasis on redistribution

Thomas Prosser explains that the government’s turn towards more redistributive policies is an attempt to appeal to its changing support base, specifically those who combine more authoritarian cultural views with left-wing economic ones. He writes that there are nonetheless limits to how far a Conservative government can go on redistribution.

Blogs.lse.ac.uk

The Conservative Party is not associated with redistribution. This is changing. Not only was the party successful among lower classes in the 2019 election, but the Johnson Government has made signals about redistribution, and the 2020 Budget confirmed initial prognoses. Aside from major investments in public services and housing, the Budget raised the National Living Wage and loosened conditions attached to welfare. Treasury analysis shows considerable increases in spending per household, concentrated among lower-income deciles.

Yet there are limits to Conservative ability to achieve redistribution. Not only does the party continue to be supported by businesses and the rich, but the March Budget made less progress on tax and benefits. In this area, gains were concentrated among richer deciles. Despite limitations, the Conservatives are placing more emphasis on redistribution. Some disagree on this, yet there is a need for interpretations which move beyond older conceptions of the party. Important parts of the Conservative base are now low-income voters, not to mention swing voters in 30 or so Labour seats with small majorities. Theories of redistribution predict that parties target such groups.

This kind of politics has precedent. In Poland and Hungary, right-populists have implemented major redistribution. The Polish case is particularly notable, the PiS Government implementing welfare reforms which have transformed conditions for the poorest. Though redistribution and cultural conservatism are not usually associated, this is a Western anomaly: a recent study of 99 countries found that it was more common for right-wing cultural views to be coupled with left-wing economic views, particularly among poorer citizens. In Poland and Hungary, right-populist governments are better known for attacks on institutions such as the courts and media. The Johnson Government appears to have similar designs, recently threatening reform of the BBC and courts.

There is a link between redistribution and attack on liberal-democratic institutions. Because low to middle-income groups tend to prefer redistribution yet also hold more authoritarian values, these demographics are natural supporters of movements which advocate such measures. Admittedly, the Johnson Government has restricted ability to combine authoritarianism and redistribution. Aside from the maturity of British liberal-democratic institutions, richer Conservative voters will frustrate the development of redistributive policies. These differences mean that the Polish case will not be fully replicated; support for the PiS Government is concentrated among low-income groups. The government will also eschew the welfare chauvinism found in Hungary, the Orbán Government combining expansive policies with sanctioning of out-groups such as the unemployed and Roma. Though the Budget contained chauvinistic measures, restricting the access of European migrants to benefits, these are comparatively mild.

Despite differences with other countries, the British political space increasingly lends itself to this kind of agenda. Because of the declining popularity of Labour among low-income groups, the Conservative Party have greater scope to appeal to voters who favour authoritarianism and redistribution. Most obviously, there are lower-class Brexit enthusiasts, many of whom are first-time Conservative supporters. Given their wider sympathies, hardened during post-referendum battles, such voters would relish attacks on the BBC and courts. Redistributive measures would increase Johnson’s appeal, locking these voters into the Johnson support base. Aside from such cases, redistributive policies will satisfy voters who hold mixed opinions on cultural issues associated with Brexit.

Authoritarians are successful when key sectors of society remain silent. Groups placated by redistribution historically gravitated towards Labour, creating a virtuous circle of redistribution and liberal-democratic standards; this is unravelling, with attitudes of Conservative voters towards democracy being particularly troubling. In a recent British Election Study, respondents were asked whether a country is best run by a strong leader who ignores parliament and elections; less than 50% of Conservative voters disagreed.

Any ‘great realignment’ of British politics will remain incomplete. Many lower-income voters will stay with Labour, particularly ethnic minorities and young people. Were the Labour Party to be competently led, there would be further resistance. British politics nonetheless appears likely to move towards this equilibrium. This is associated with Brexit. Even if redistributive authoritarianism can develop within the EU, as Poland and Hungary show, Brexit has created a new authoritarian-liberal cleavage, largely favourable to a right-populist Conservative Party. For the moment, most other Western European countries will resist sweeping changes. Though similar trends exist in the region, the endurance of established politics means that changes will remain incremental. Brexit has nonetheless transformed British politics, creating space for unforeseen alliances.


About the Author

Thomas Prosser (@prossertj) is Reader in European social policy at Cardiff University.