Thursday, 13 April 2017

The 'red devil' (who brings progressive politics back to life)

With the first round of the French presidential election approaching quickly, interest in what will be a decisive political juncture not just for France but for Europe and the rest of the world is rising – even among the British media, usually more fascinated by irrelevant intricacies of US-American politics than by political developments in continental Europe. In recent days, attention has slightly shifted from the two longstanding front-runners, the centrist Emmanuel Macron and the far-right Marine Le Pen, to scrutinise another candidate who has gained support in recent polls, and who now seems to stand a low but reasonable chance of being qualified for the second round of this election: Jean-Luc Mélenchon, representative of the movement ‘La France insoumise’ with its currently 400,000 supporters.

With a lot of finesse and nuance, a range of labels were swiftly attached to the man, ranging from ‘hard-left rebel to ‘far-left firebrand’, while a small selection of manifesto pledges were selected to demonstrate that his programme truly is either dangerously unrealistic or insane. It is therefore time to tackle at least a few misunderstandings (let’s start with three), and to stress that this presidential election will have repercussions that go far beyond French borders, notably in the case that Mélenchon manages to win. 

So, here we go:

First, for British observers, Mélenchon undoubtedly is an oddity. In his long meetings, he alternates between ironic humour, careful explanation of policy measures and analysis of social problems, and fiery rhetoric, to end it all with… a poem. He is unashamedly intellectual, proud of his knowledge in literature, history and philosophy, but also combative and folksy. Even though he knows how to coin a memorable expression (after the disastrous reign of current French president François Hollande, who would today disagree with Mélenchon’s description of Hollande in 2011 as a pedalo captain in a stormy sea), he is not someone who will go from one interview to another parading soundbites that were written by a committee of communication and PR consultants.

However, this combination of intellectualism, strong oratory and popular attachment has been a staple of French politics for centuries, especially on the left, and Mélenchon hence follows directly in the footsteps of Jean Jaurès, but also to some extent François Mitterrand or Maximilien Robespierre.


Secondly, the manifesto of ‘La France insoumise’ (available as a bestselling book, on an online platform or as a comic strip; the headline measures have also been translated into English) may contain eye-catching pledges (which may frighten those who have interiorised the dictum that ‘there is no alternative’ to the existing order of things), such as a 100 billion Euro investment programme, a shift to exclusively renewable energy production, an ambitious re-regulation of labour markets, or exit from NATO, but what makes it interesting and worth of much more serious attention is its coherence and theoretical grounding.

It is, first of all, built on an analysis of contemporary societies’ key problems and opportunities and draws heavily on insights from critical social sciences, for example regarding the devastating social and ecological effects of financialised global capitalism, but also the potential of highly educated networked societies with increasing levels of interdependencies to cooperate in the name of social progress.

Furthermore, the manifesto incorporates recommendations and demands of a range of civil society organisations, which helps to explain why it was widely lauded by the voluntary sector for its consideration of, among others, environmental concerns, public health and sustainable development (regarding for example the plan for African countries).

Finally, the manifesto is more than a simple collection of focus-group tested pledges, to appeal to different social groups. Its core proposals are closely interlinked, so that for example the reform of the monetary system and the fight against tax avoidance provide the funds for a substantive public investment programme, which focuses on the ecological transformation of energy production as well as of the production and distribution of goods, and which goes hand in hand with a relocalisation of agriculture and industry. This investment programme, thanks to its Keynesian multiplier effect, is to stimulate the broader national economy, so that in combination with an overhaul of the income tax system, measures against precarity and an expansion of social insurance overall living standards are to be raised. 

On a different level, the idea of a constitutional assembly to rewrite the French constitution shall not only serve the purpose of enlarging and protecting individual rights (for example by including the right to abortion and assisted suicide), and of allowing the multitude of the French population to reconstitute itself as a political subject across ethnic, religious and class lines. It would also facilitate the kind of popular engagement that would be essential to implement such an ambitious programme, which undermines vested interests of all sorts.


Thirdly, a main pillar of Mélenchon’s manifesto is a profound reform of the European Union (EU), notably to change all those directives and treaty obligations that foster competition between member states and lead to social dumping, that stifle the ability of states to boost public investment and to protect public services from liberalisation and privatisation, and that use the EU to impose unfair trade conditions on emerging and developing economies. Mélenchon's aim is hence not to destroy the EU or lead France out of it, but to reform the EU thoroughly, in order to maintain the spirit of collaboration and solidarity that ought to underpin any European project that seeks to attract wide popular support.

The approach to achieve such reforms will be familiar to British readers, as it mirrors David Cameron’s plan to renegotiate EU membership conditions and to then submit the outcome of these negotiations to the people via referendum. There is no doubt that Mélenchon would find it challenging to succeed in such a far-reaching reform of the EU, but his chances are arguably much better than that of the UK were, not only because France is a more essential member of the EU and its departure would likely be the end of the EU (whereas Britain leaving is more like the departure of a party guest who never took her coat off), but also because France could galvanise support from those European states that suffer from the economic imbalances within the EU that arise out of the structural flaws of, in particular, its monetary union.


It is obvious that the manifesto of ‘La France insoumise’ goes beyond making small step changes. It is openly radical on all levels, and herein lie certain risks: The risk (for its supporters) that voters will at the last minute shy away, influenced by the growing deluge of reports depicting the end of the world if Mélenchon ever were to govern. The risk (for everyone) that organised interests in France and Europe, the path dependency and complexity of policy-making, and the power imbalances on the global stage will undermine the possibility to transform the manifesto into reality.

But I would argue there is a much bigger risk, one ignored in an irresponsible manner by all those who seem to be much more critical of Mélenchon than of the far-right candidate Le Pen:

There are four serious contenders for the French presidency in 2017. Emmanuel Macron and François Fillon represent ‘business as usual’, a continuation of economic and social policies that have failed for years to achieve well-being and social cohesion, and to tackle global challenges such as climate change or fair international development; policies that furthermore led to a rise of right-wing populism, xenophobia and to conflicts within and between nation-states. Marine Le Pen’s Front National and other far-right parties are a political expression of this anger and sense of powerlessness, fuelled by a rising willingness of people to denigrate others because they are ‘different’ – a political expression that could ultimately tear societies apart.

In 2017, it seems unlikely that Le Pen can win the French presidency, but if Macron (or Fillon) were elected and pursued their programme, I would not bet against Le Pen in 2022. In this case, the relative calm and relief that elites would express if Macron’s victory is announced on the 7th May might be nothing but the calm before a very dangerous storm.

Jean-Luc Mélenchon’s candidacy offers a way of channelling widely held frustration with the status quo into an ambitious progressive and humanist project. If it were to be successful, it would substantially improve the lives of millions of French people by creating a more equal, democratic, healthy and ecologically sustainable society. Given France’s power and influence, this success would echo far beyond Western Europe. It would be a beacon of hope in an ocean of misery and chaos.


Enrico Reuter – follow me on Twitter

Friday, 31 March 2017

It’s UC and the MIF, not NICs, we should be focusing on!

Since the 2008 financial crisis, self-employment as a sector of the British labour market has increased sharply, and accounts for nearly one third of the growth in employment figures since 2010. The rate of self-employment now stands at approximately 15% of the labour force, in other words about 4.64 million individuals (BoE, 2015; ONS 2016). Self-employment has “outstripped growth in permanent employment by 3 to 1 in the last decade” (O’Leary, 2015: 9) and has “accounted for nearly half of the increase in total employment since the recession” (Deane, 2016: 7).

It is some of this group (those earning more than £16,250 pa) that were most concerned by the changes in National Insurance Contributions (NICs) for the self-employed announced by the Chancellor Phillip Hammond in the 2017 Budget in the House of Commons on 8th March 2017.

As a relatively small change in the Budget, the Chancellor announced that Class 4 NICs for the self-employed would rise from 9% to 10% in April 2018 – and then to 11% in April 2019 – on income up to the higher rate threshold of £45,000 pa. The new rates are still lower than for employees who pay NICs at 12% on the same income levels, while both groups will continue to pay at 2% on income above the higher rate threshold.

This caused a great deal of furore in various circles, both in The Guardian and The Telegraph amongst others, and not a little traffic on my Twitter timeline with a range of people arguing for this change as well as against. What didn’t make it through the knee-jerk reactions was that only those of the self-employed earning in excess of £30,000pa would be worse off – so whilst no one likes paying more, it was in its own way progressive.

However, not only did this change to NICs fall foul of the 2015 Conservative Party election manifesto’s commitment to a 5 year lock against income tax and NI rises, but combined with the scrutiny that the Chancellor’s decision was put under, and coupled with the political capital that is being used by the Prime Minister to push through the unnecessary and damaging hard Brexit, saw the decision reversed in a matter of days.

I’d suggest that the focus of the (social) media-led outrage was misplaced. The real culprit affecting self-employed persons on low incomes is Universal Credit (UC), and specifically the Minimum Income Floor (MIF):

The most pertinent element of UC and self-employment in relation to vulnerability is the MIF, which applies to those who make a claim for UC and who have been self-employed for a minimum of twelve months. As the DWP (2016) makes clear, the “MIF is an assumed level of earnings”, based on an expectation of what a similarly gainfully employed person might be expected to earn. An individual’s MIF is calculated on the basis of:

Age applicable national minimum wage rate per hour x expected hours per week x 52 weeks = annual gross income, divided by 12 = gross monthly income

For the self-employed to claim Universal Credit, earnings must be declared to the DWP on a month by month basis, and if an individual’s earnings exceed their set MIF, self-employed claimants will receive less UC. However, if they earn less than their MIF, they will receive no increase in their UC, and in addition the MIF is only reviewed on an annual basis. Those who are self-employed are liable to earn less than employees and their income is likely to fluctuate throughout the year. In evidence given to the Work and Pensions Committee on 22/01/17, both Victoria Todd from the Low Income Tax Group and Benedict Dellot from the RSA suggested that a relatively low paid self-employed individual claiming Universal Credit will be worse off than an employee earning the same amount.

Clearly Universal Credit and the MIF disadvantages those who are self-employed, and this further increases their economic vulnerability as a result of a potentially fluctuating income and a social protection system that clearly fails to take account of this.

So although it is a clear truism that no one likes the idea of increased NICs, the real problem for the self-employed is Universal Credit and the Minimum Income Floor. It is this which the public, press and politicians should be aiming their ire towards. It is this which increases the likelihood of in-work poverty for those who, we are told, are a clear sign of success for the UK economy and are in part a driver of recovery both from the 2008 crisis and the inevitable fallout from Theresa May’s decision to pursue an ultra-hard Brexit… but that is a topic for another blog on another day.

Kevin Caraher – follow me on Twitter

Sources:

Bank Of England (2015) Self-employment: what can we learn from recent developments?, Quarterly Bulletin 2015 Q1, http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2015/q105.pdf



O’Leary, D. (2014) ‘Going it alone’, http://www.demos.co.uk/files/DEMOS_GoingitAlone_web.pdf?1409503024

ONS (2016). UK Labour Market: April 2016: Estimates of employment, unemployment, economic inactivity and other employment related statistics for the UK, https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/april2016#employment