19th September 2012
Claim: Public sector workers are likelier to vote Labour than Conservative, and their number is declining at a rate that should perturb Mr Miliband.
It is undoubtedly true that the public sector is shrinking (over the cries of a number of New Keynesian economists). However, whether this will boost the Tory vote in 2015 is conjecture based on the bias of those who currently work in the public sector.
Ganesh claims that you could extrapolate from this that as soon as these people leave public employment they become liable to switch allegiance because they are no longer reliant on the state. Yet having lost their jobs as a direct consequence of the Coalition's austerity policies they are surely as likely, if not more so, to become further entrenched in their opposition to the authors of them.
Claim: Take those tax credits, for example. The government is imposing a tougher means test on them; households earning more than £40,000 will see their entitlements shrink. Come the next election, those Tory candidates will encounter fewer well-to-do families with government income to jealously defend.
It is entirely possible that a number of wealthy households voted for Labour in part to defend their tax credits but that does not suggest that they will suddenly switch allegiance simply because they no longer have access to them. The argument here comes close to characterising voters as "homo economicus" where an individual makes a perfectly rational choice based on what will ultimately be of greatest benefit to them.
However, the concept of homo economicus has been under sustained attack, particularly in the aftermath of the financial crisis. Indeed the entire behavioural finance movement can be seen as an effort to debunk the myth of a market consisting of perfectly rational players.
Richard Thaler's paper From Homo Economicus to Homo Sapiens offers some interesting insights into this. He notes that while "building models of rational, unemotional agents is easier than building models of quasi-rational emotional humans" ultimately it must be more logical to base economic descriptions on more realistic conceptions of economic agents. Transforming a voting public into ruthlessly logical automatons may be an imaginative leap too far.
Claim: In poor parts of the country, government jobs are more attractively remunerated than equivalent work in business. As a result, the public sector dominates the local labour force and the Tories struggle for votes… reforms [could] make areas such as the north-east more hospitable to the party.
This is certainly Ganesh's most compelling point. An April study conducted by Policy Exchange had this to say about the North-South divide in English voting patterns:
"Commentators often talk about a North-South divide in voting. But the division is not simply to do with the North but Northern cities specifically. There are 80 broadly rural seats in the North and Midlands. The Conservatives hold 57 of them (or 71%). No Northern problem for the Tories there – their problem is in the Northern cities. There are 124 parliamentary seats in cities in the North and Midlands. Of these seats the Conservatives hold just 20 – or 16%."
It is true that this is an anomalously low base for the party relative to the rest of the country. Even if austerity merely causes voting habits in the north-east to mean revert then there will certainly be room for the Tories to gain a foothold.
Yet the short term cost to the party as a consequence of job cuts could be to set them back even further and fortify existing biases. There seems no reason why the seats would be contested Labour-Conservative rather than Labour-Liberal Democrats so some abstract hope of long term gain may well prove folly.
I agree with Ganesh that George Osborne will likely be searching for shards of light in an otherwise gloomy outlook for his party. Where I depart from him is in the claim that this somehow represents "tactical nous".
What will boost the Conservatives at the next election is the voting public being able to see signs of a sustained economic recovery. If, as a growing number of economists are suggesting, Osborne's commitment to austerity fails to deliver these by 2015 then his party may find the political cost/benefit analysis makes for unhappy reading.
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