The American political scientist Jacob Hacker has been catapulted into the heart of British political debate as a result of Ed Miliband's prominent endorsement of Hacker's idea of 'predistribution'. Hacker is a distinguished and influential scholar of public policy and American politics, who has also been closely involved in public debates in the United States on issues such as health-care reform and welfare policy. He is the author of numerous books and articles, including The Divided Welfare State (2002); The Great Risk Shift (2006); and Winner-Take-All Politics (2010) (co-authored with Paul Pierson). In this interview Hacker explores what he means by predistribution; its political and economic implications; and why he thinks it has struck a chord in today's Labour Party.
What is predistribution?
To start off, could you just explain what you mean by predistribution?
Yes, it is a very basic idea. It is that government has an enormous range of ways in which it can shape the distribution of income and opportunity in a society that are distinct from simply taxing and providing benefits. The starting point for my observations about predistribution was my research with Paul Pierson on growing inequality in the United States [Hacker and Pierson, 2010]. The common analysis of scholars who had previously looked at this development was that most of the increase in inequality, which has been enormous, involved market income that people earned through their labour and through their capital. The conclusion scholars drew from that was that rising inequality is caused by technological change and globalisation and government has nothing to do with it.
Of course that is just a fundamental mistake. Markets are deeply shaped by government. And over the last generation markets have been shaped in ways that have benefited those at the top far more than those in the middle and bottom. If we are going to have an effective, progressive agenda for the future, we are going to have to think about how to use these ways in which government shapes markets to pursue progressive goals. By progressive goals I mean, first and foremost, broad growth in the economy that translates into social and economic gains for citizens across the income distribution.
Now I should start by saying that getting the macroeconomy right is a pre-condition for all this. What we have learned from the last few years is that the centre left is hurt more than the right is by a sense that government isn't able to create jobs or insure against large macroeconomic and asset shocks. It may not be fair, and in the UK, for example, it certainly isn't fair, that the left's (non-existent) fiscal profligacy was blamed for the crisis. But that is a pattern we see across the industrial world, with the few exceptions of countries in which leaders like Sarkozy doubled down on really conservative policies in the wake of the crisis. Where conservative incumbents were sensible and covered themselves, like Merkel in Germany, the left gained no ground.
I would say that one way to make this agenda broader than just Keynesianism is to say that it is about encouraging macroeconomic stability overall, which is something that needs to be figured out now, before the next asset bubble. It is really important to make both the housing and financial markets more resilient.
With housing, I think this could come primarily from the public sector writing better sets of rules, and getting involved through investment. In fact I would argue that the most straightforward way in which you could tackle both the housing and the macroeconomic problems simultaneously would be to undertake significant public investment in housing in the short-term.
But at the higher end of the income ladder, in terms of thinking about financial markets and the high-income earners within them, sensible financial regulation is long overdue. In the US we at least had, in 2009, some serious reforms. It seems to me the UK is way behind, and given the case of Libor, it is amazing to me that more has not been done. After Libor, all I heard when I was in Britain last year was people talking about the need for some great moral or cultural shift, to which my response is that it's actually about institutions. The problem is not bad people; it's bad policies. Bad policies sometimes encourage bad behaviour, and bad people will take advantage of that, but the truth is this is systemic, it is not personal, and yet we mistakenly talk about it in terms of individuals.
Predistribution and the Labour Party
Were you surprised that your ideas were so well received in the UK? What do you think explains the fact that at this moment in British politics the Labour Party is especially interested in them?
Well, I think part of the explanation is personal. I gave a speech in Oslo in 2011 where I first used the word 'predistribution' [Hacker, 2011]. Apparently the word made an impression on Ed Miliband, because he picked it up then. He also heard me speak at a small conference in Oxford in 2012.
But in both cases I was really talking about the American experience and what we could learn from it. It was only after the conference in Oxford that I recognised the degree to which this had become something that the Labour Party, and Ed Miliband in particular, were talking about.
I found out in perhaps the most alarming but also strangely gratifying way possible, which is someone sent me a video clip of my name being mentioned by the Prime Minister on the floor of the House of Commons. I won't relive that experience, except to say that I considered it a huge honour. There is a joke in the US that you know you have made it as a progressive when you get attacked by the Wall Street Journal. If David Cameron takes you on, I think that is probably a pretty good sign in British politics. But I was deeply offended by the fact that the only book of mine he mentioned was something I wrote in 1997, whereas I could have really used some publicity for my later work!
So why do I think predistribution resonated? Partially because Ed Miliband is attracted to new ideas. You can't discount the fact that there is an idiosyncratic element to it--this term resonated with a particular leader. But I think if you look more deeply, predistribution responds to two strategic challenges faced by progressives today.
The first, and perhaps most important, is the loss of faith in the ability of government to create a more just society. The second is that 'the Third Way' took for granted that you could simultaneously celebrate markets and use the power of government to redistribute, to lift up the bottom and supplement the incomes of the middle. That has turned out to be a hard combination to sustain in an era of increasing suspicion of government, because you are using government in a way that is actually not particularly popular. If you look at support for welfare benefits in the UK, it has really dramatically declined. What 'the Third Way' too often did is take for granted that the market was working well in the initial distribution of rewards, when in fact we know the game is rigged in favour of those at the top.
So predistribution provides a positive agenda, one that I think is attractive to the left...