In the screeds of prose currently being written about Barack Obama’s re-election and what it might or might not mean for UK politics, it is the economy, stupid, that stands out as most perplexing.
Conservative strategists are pointing to Obama’s success against the headwinds of high unemployment and falling living standards among median households to suggest that incumbents can win if they can lay the blame for tough times on their predecessors and demonstrate that they are accomplishing progress that their present opponents are liable to jeopardise. In contrast, the left argues that Obama succeeded precisely because he didn’t pursue austerity economics.
The academic evidence on the electoral impact of the economy points in different directions, depending on whether you choose growth or living standards as your key variable. For example, the political scientist Larry Bartels has demonstrated a strong correlation between economic growth in the immediate years before an election and the fortunes of the incumbent party. Weak growth or recession means the incumbent gets dumped, regardless of whether the government is of the left or right. Conversely, strong growth predicts electoral success:
Back in July, Bartels argued that:
‘In 2012, the US economy seems to be rebounding, and Democrats’ electoral prospects are correspondingly brighter than they were in 2010. If economic growth between now and election day matches the current OECD forecast of 2 per cent – and if the statistical relationship observed in recent parliamentary elections can be stretched to apply to a presidential election – then Obama should be expected to win almost exactly 50 per cent of the vote, despite having presided over a prolonged economic slump in the first half of his term.’
As it turned out, the US economy reached 2 per cent annualised growth in Q3, having been at 1.9 per cent in Q1 but only 1.3 per cent in Q2 – so the bounce back came just at the right time for Obama. If Bartels is right then the UK’s Conservatives can expect to do well in 2015 if growth is strong from mid-2013 to 2015. The Office for Budget Responsibility currently predicts growth of 2 per cent in 2013, 2.7 per cent in 2014 and 3 per cent in 2015. These figures look exceedingly rosy, particularly when you consider how badly the OBR has got its forecasts wrong since 2010. Nevertheless, if they turn out to be true then the incumbent government can expect to reap an electoral reward, per Bartels’ model.
An alternative is to look at living standards. As I’ve blogged before, the political scientist Douglas Hibbs has a ‘Bread and Peace’ model which links US presidential results to two factors: weighted average per capita disposable income (that is, average living standards and their level in the immediate years before an election) and US military fatalities overseas. It shows a very close fit with the post-war US election record:
The fit between the model and living standards is a very good one, with the notable exceptions of 1952 and 1968, which are explained by the Korean and Vietnam wars respectively. Unfortunately, the model predicted a much worse result for Obama – 46.6 per cent of the popular vote, to be precise – than he actually achieved. Here’s what happens when we plug Obama’s actual result into the model:
Does this mean that living standards matter less than growth? Hibbs’ model allows for ‘idiosyncratic’ factors, as it must. But the scale of the variance suggests that we need to look at other dimensions of the ‘economy, stupid’ question.
Perhaps the most intriguing is the role that economic populism played in securing Obama’s re-election. From a broadly centrist position, Obama played an economic populist attack on his Republican opponent, painting him as the candidate of Wall Street plutocrats. As Mark Weisbrot puts it:
‘[Obama made] a populist appeal to working-class voters, more populist than any major party presidential nominee in decades. In the last debate, which was supposedly about foreign policy, Obama repeatedly referred to Romney as someone who wants to make sure that rich people “don’t play by the same set of rules” as everyone else. Throughout the campaign, his team attacked Romney for being a rich, unscrupulous politician who didn’t care about working people.’
One can see the obvious attractions to Labour of this kind of populism, sweeping up a critique of out-of-touch Conservatives into a broader attack on bankers and powerful corporate elites. Indeed, this has been a core part of Ed Miliband’s recent political strategy, and it is worth remembering that historically, when the left has made appeals to the nation (or the ‘One Nation’ tradition), it has coupled that with an appeal to the common class interests of the People (capital ‘P’) versus the elites. (The best historical examples are the Labour and Liberal manifestos of the Edwardian era, FDR’s Depression-era populism, the post-war collectivism of the Attlee government, and Peronism in Argentina. But even Tony Blair had some of this populism in the mix in 1997, most notably with the windfall tax on privatised utilities.)
The danger for Labour is that economic populism can readily tip into a politics that is merely anti-business, rather than one that unites the interests of productive capital, small businesses and others against financiers and monopolists. On this score, it is also paradoxically easier to be an incumbent, rather than an insurgent, since (all being well) you have a record of economic management to run on. For oppositions, it is a fine balancing act.
One final point is also worth considering. Obama held onto a greater share of the white working class vote in core states such as Ohio than he got elsewhere in the country because he appealed to their industrial interests, particularly those of workers in the auto industry that he had helped to save in the opening stanza of his presidency. Here, again, there is a challenge for Labour. Britain is an open, trading nation that has both embraced globalisation and lost most of its manufacturing employment. Yet there remains a deep yearning among the British people to do ‘real’ jobs again, to build an economy on firmer foundations than housing bubbles and City profits. Labour wants to appeal to those sentiments and the underlying class interests they express, but it has little recourse to the kind of organised labour that could turn out to vote for Obama in key areas. It will have to craft a new coalition of support rather than simply defend an existing constituency. And it will have to do so without turning its back entirely on globalisation, for that is the road that leads beyond economic populism to economic nationalism.