Wednesday, August 31, 2016

Did Jonathan Portes Cause Brexit?

I should like to show that Jonathan Portes most probably did not cause Brexit. To do so, however, I first must examine the plausibility of the case that his actions and words did indeed provoke a decisive margin for the Leave vote in the EU referendum last June.

Portes is Principal Research Fellow, formerly Director, at the National Institute for Social and Economic Research in London. From 2002 to 2008, he was chief economist at the U.K. Department of Works and Pensions and, following that, chief economist at the Cabinet Office. David Goodhart has described Portes as "one of the architects of Labour's immigration policy" during that period. He is a regular contributor to the Guardian, frequently on migration issues.

In a 2012 blog post, Portes fondly reminisced that explaining the lump-of-labour fallacy "to six successive Secretaries of State for Work and Pensions, usually in the context of immigration… was probably the most useful thing I did, from a public policy perspective, in my six years as Chief Economist at Department for Work and Pensions."  The lump-of-labour fallacy is the spurious claim that supporters of some policy or other are motivated by a false belief that there is only ever a "certain amount" of work to be done.

The alleged belief is indeed false, as is the claim that support for the policy in question is motivated by it. The bogus fallacy claim was a staple of 19th century anti-trades union propaganda. Portes thus prided himself on his acumen in persuading Labour cabinet secretaries "to go out and defend policies that were consistent with" an archaic, reactionary view of the labour market.

That is not to say that the policies defended by cabinet secretaries coached by Portes were reactionary. The phrase "were consistent with" is notoriously ambiguous. Wearing an amulet is "consistent with" being a Satanist. It is also consistent with not being a Satanist. One must always be wary of "affirming the consequent."
Not wearing an amulet is consistent
Portes not being a Satanist.

In response to Portes's 2012 blog post, the Sandwichman wrote an open letter to him to point out some of the key historical context of the fallacy claim. Portes was kind enough to reply and to grant permission to publish his reply. It didn't seem to me, though, that he adequately addressed the points I had raised about the validity of the fallacy claim.

A year after our exchange, Portes wrote a review in the London Review of Books in which he called David Goodhart's The British Dream "an exercise in scapegoating." Once again he hauled out his cherished lump-of-labour fallacy to dismiss a contention by Goodhart that "a disproportionate number of new jobs seem to have been going to recent immigrants":
But this is an expression of the ‘lump of labour’ fallacy he elsewhere dismisses. The belief that if immigrants get ‘more’ of something (jobs, education, opportunities, political power), natives (or whites) must get less. This guides his discussion of the local economic impact of immigration in Merton, South-West London…  It isn’t entirely obvious from Goodhart’s description of Merton why immigration is responsible for this. Do the immigrants displace natives from jobs, schools and polling booths, or do they somehow drag them down?
In his reply to Portes's review, Goodhart rightly pointed out that the unreality of the lump-of-labour is no guarantee that there is no displacement:
Of course there is no fixed lump of labour, many newcomers fill jobs that are complementary to existing workers and some of those jobs would not have been created at all if the outsiders had not turned up. And, of course Jonathan is right, even with no immigration the hard to employ in almost completely indigenous former industrial areas like Barnsley would remain hard to employ. 
But it is surely dogmatism to argue, as Jonathan appears to, that the “lump of labour fallacy” means there is no displacement or discouragement of resident British workers as a result of immigration: what one might call the opposite “no displacement fallacy.” As the top economists at the government’s Migration Advisory Committee agree, there is clearly some trade off between immigration and opportunities for domestic labour especially in a weak labour market with competition from often better motivated foreigners with lower wage expectations, which raises issues about the country’s social contract with its poorer citizens.
Alas, in his responses to Goodhart's reply, Portes simply ignored this rebuttal to his fallacy claim. Apparently, Goodhart's refutation left no deeper impression on Portes than had Sandwichman's.

Last month, I emailed Portes regarding my blog post, "Can John Cochrane and Jennifer Rubin handle the truth about the lump-of-labor fallacy?" in which I stated, "In my research of 236 years of the fallacy claim, I have come across very few examples of claimants offering any evidence whatsoever for the existence of the belief." I received an adorably sarcastic reply from Portes to my observation about the conspicuous lack of evidence for the fallacy claim:
You're completely right of course. It's almost impossible to find any examples at all of anyone of any significance ever even hinting, for example, that by taking jobs immigrants might reduce the number of job opportunities for natives and that this might just possibly be a reason for opposing immigration (that is, using the lump of labour fallacy in a political context). 
Indeed, it took me many long seconds of tortuous research (google) to find somebody saying this: 
"Now I know there are some people who say, yes there are costs of immigration, but the answer is to manage the consequences, not reduce the numbers.  But not all of the consequences can be managed..  there are thousands of people who have been forced out of the labour market, still unable to find a job." -- The Independent 
And even then I have to admit that the person who said this is not very prominent or important, so she can probably be ignored, and doesn't count as a counterexample to your point.  Whatever happened to Theresa May anyway?
Remember what I wrote above about "affirming the consequent" and X being "consistent with" Y? Theresa May's comment may indeed be "consistent with" a false belief in a lump-of-labour but it is not persuasive evidence that she actually has such a belief. No doubt Conservative MP Kwasi Kwarteng was thinking of someone a lot like Portes when he observed, shortly after the Brexit vote:
A lot of clever people talk about the “lump of labor fallacy” and all the rest of it, but there are lots of different economic theories involved. But the perception was what drove the politics, not the economic theory. In large parts of rural England—a town like Boston, which your own town of Boston is named after—the perception was that things were changing, life wasn't getting better for quote-unquote indigenous people, and they voted against that.
Fancy that! People valuing their perception more than they do clever people's talk about a whimsical belief in a fixed amount of work. Admittedly, those perceptions may have been wrong. But whether right or wrong, there is no still no evidence the perceptions were "guided by" a ridiculous false belief in a fixed amount of work to be done. The latter explanation is a non sequitur.

Now,  having reviewed some of  the relevant context, on to the important question of whether Portes caused Brexit.

The victory margin for Leave was 1,269,501 votes, meaning that a 634,751 "flip" from Leave to Remain would have resulted in a victory for the Remain side. It would be fallacious, however, to assume a fixed number of voters.  If 600,000 of those Leave voters had stayed home on referendum day and 700,000 more potential Remain voters had actually gone out and voted, then Remain would also have won. With a voter turnout of around 72%, the number of non-voters outnumbered the final margin by approximately an order of magnitude. Suffice it to say that the outcome could have been different regardless of whether or not any given number of Leave voters "flipped" to Remain.

Regardless of what specific churning might have been required to change the outcome of the referendum, it is highly unlikely that Jonathan Portes's dogmatic parroting of the lump-of-labour fallacy claim moved hundreds of thousands of voters one way or another. There are probably no more than tens of thousands who even know who Portes is or read his columns in the Guardian. Only a small percentage of that would have grasped exactly what he was talking about and only a tiny handful would have been so seduced by his eloquence or so offended by his arrogance for it to have altered their vote.

Similar reasoning applies to the matter of Portes being, supposedly,"one of the architects of Labour's immigration policy." If Portes hadn't taken that job somebody else would have. Unlike the broader job market, there presumably is a limited quantity of Labour immigration policy architect jobs to go round.

I am pleased to conclude, therefore, that there is no more evidence that Jonathan Portes caused Brexit than there is for the claim of a widespread belief in a fixed amount of work to be done. And there is absolutely no evidence for that latter assertion.*

*Not only is there no evidence, there is substantial evidence of no evidence. Such evidence can never be conclusive but I would submit it is persuasive. I have compiled a database of more than 500 assertions of the lump-of-labour fallacy claim spanning the 120 years from 1890 to 2010. Not a single instance cites an overt statement of the false belief by a supposed believer. Furthermore, I found only six allegations that even named an alleged culprit and each of those turned out to be unflattering inferences by the accuser rather then direct utterances by the accused.

Meanwhile, I stumbled across an 1890 survey of over 600 labor unions conducted by the New York State Department of Labor Statistics. The unions were asked whether and why they supported legislation for an eight-hour day. There was again no direct statement of the false belief. A small number of the unions said that a shorter day would employ more workers given "the same amount of work" but that "same amount" clearly indicated a qualifying conditional and not a "belief" about the amount of work being inherently static.

I discuss this evidence, and more, in finer detail in a post scheduled for Labor Day entitled, "The Outlaws of Political Economy." (link will not be activated until Monday)


Magpie said...

In a 2012 blog post, Portes fondly reminisced that explaining the lump-of-labour fallacy "to six successive Secretaries of State for Work and Pensions, usually in the context of immigration… was probably the most useful thing I did, from a public policy perspective, in my six years as Chief Economist at Department for Work and Pensions."

The Adventures of Fallacy Man:

Disclaimer: That cartoon is a work of fiction. Any similarity with living, real economists at Her Majesty's service is unintentional.

Sandwichman said...


There is indeed an important literature in philosophy, since
publication of C.L. Hamblin's book, Fallacies, discussing the inadequacy and inconsistency of the "standard textbook treatment" of fallacies. So when economists use the word "fallacy" they literally do not know what that word means.

Magpie said...

So when economists use the word "fallacy" they literally do not know what that word means.

Perhaps they don't know what that word means, but they know how to use it: one hits with it someone else saying something one doesn't like.

One's target, stunned, naturally tries to understand what on earth one was trying to say. The burden of the argument shifts: it's no longer one's concern to engage with the other guy's argument and come up with a counter-argument; it's his burden to disprove he didn't commit a fallacy.

It's actually pretty clever and simple. It's not a matter of logic, but persuasion.

Sandwichman said...

Yes, I would agree it is all about shifting the burden of proof. And shifting. And shifting. And shifting. It is rhetorical three-card monte.

But it is not about persuasion but violence. It is a profoundly dishonest way of refusing to discuss a matter while shifting the blame for the refusal to the one who wanted to discuss it.

Magpie said...

Above it should say: it's his burden to prove he didn't commit a fallacy

I ain't no perfect :-)

Magpie said...

It is a profoundly dishonest way of refusing to discuss a matter while shifting the blame for the refusal to the one who wanted to discuss it.

Welcome to debate in a liberal democracy: only the discussants have a voice in those discussions. You'll find that the word "we" appears everywhere in those discussions, you are just not part of the "we". You were not invited to the proceedings.

Take free trade, for instance. Initially, the selling pitch was that it doesn't matter that blue-collar jobs were being offshored: newer, more interesting, better-paid jobs would become available to unemployed workers in developed countries. In other words: they (blue-collar workers in developed countries and in underdeveloped countries) would both win.

Did they have any say in that?

After a while, it became evident that those better jobs in developed countries never materialized and the new jobs in underdeveloped countries were not very good.

Now, the discussants change the selling pitch: workers in developed countries (them) must lose, so that workers in underdeveloped countries (them) can gain, even if what they gain is not much. You know, the "globalization has lifted millions out of poverty" talking point.

Again, did they have any say in that?

Everything discussed politely, gentlemanly, philosophically, with utmost civility in abstract terms, among the discussants.

The subjects of the discussion have no say in that: they only appear as "they". Pretty much like cattle.

Sandwichman said...


It's O.K. I read "disprove he didn't" as "prove he didn't" anyway!

AXEC / E.K-H said...

Unemployment is the outcome of political economics
Comment on Sandwichman on ‘Did Jonathan Portes Cause Brexit?’

Sandwichman characterizes the lump-of-labour fallacy as follows: “The alleged belief is indeed false, as is the claim that support for the policy in question is motivated by it. The bogus fallacy claim was a staple of 19th century anti-trades union propaganda.” (See intro)

The key point is that there is political economics and theoretical economics and ALL political economics is proto-scientific dung.

To poke fun at the lump-of-labour fallacy is only a distraction from the real embarrassment, viz. that until this day economists have no valid employment theory. Worse, most economists still believe that the (average) wage rate must fall in order to establish full employment: “We economists have all learned, and many of us teach, that the remedy for excess supply in any market is a reduction in price.” (Tobin, 1997, p. 11)

Walrasian, Keynesian, Marxian, and Austrian economists are groping in the dark with regard to the two most important features of the market economy: the price mechanism and the profit mechanism. The fault lies in the fact that economists argue from false premises, that is, Walrasianism in all shapes and forms (DSGE, RBC, AD/AS etc.) argues from unacceptable microfoundations, and Keynesianism in all shapes and forms argues from false macrofoundations. To get out of failed economics requires nothing less than a paradigm shift.

In the following a sketch of the formally and empirically correct employment theory is given. A rather elementary version of the objective structural employment equation (2012) is shown on Wikimedia:

From this equation follows inter alia:
(i) An increase of the expenditure ratio rhoE leads to higher employment (the letter rho stands for ratio). An expenditure ratio rhoE greater than 1 indicates credit expansion, a ratio rhoE less than 1 indicates credit contraction.
(ii) Increasing investment expenditures I exert a positive influence on employment, a slowdown of growth does the opposite.
(iii) An increase of the factor cost ratio rhoF=W/PR leads to higher employment.

The complete AND testable employment equation is a bit longer and contains in addition profit distribution, public deficit spending, and import/export.

Items (i) and (ii) cover Keynes’s arguments about aggregate demand, which have been commonsensically right but formally defective. More precisely, Keynes’s multiplier is provably false (see 2012). The factor cost ratio rhoF as defined in (iii) embodies the price mechanism which works very different from what the representative economist falsely assumes. As a matter of fact, overall employment (in the world economy or a closed national economy) INCREASES if the average wage rate W INCREASES relative to average price P and productivity R.

For the relationship between real wage, productivity, profit and real shares see (2015, Sec. 10).

So, in simple terms, full employment (in any definition) can be achieved by increasing overall demand (expenditure ratio, investment expenditures etc.) or by INCREASING the average wage rate or by a combination of the two.

Both, the Walrasian and Keynesian approaches have produced COUNTERPRODUCTIVE policy advice. Unemployment is ultimately the result of theory failure, that is, of the utter scientific incompetence of economists.

Egmont Kakarot-Handtke

Kakarot-Handtke, E. (2012). Keynes’s Employment Function and the Gratuitous Phillips Curve Desaster. SSRN Working Paper Series, 2130421: 1–19. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
Tobin, J. (1997). An Overview of the General Theory. In G. C. Harcourt, and P. A.
Riach (Eds.), The ’Second Edition’ of The General Theory, volume 2, pages 3–27.
Oxon: Routledge.

Sandwichman said...

You're right here "Unemployment is the outcome of political economics", Kaka. All the rest is just your crank brand of political economics. Don't get me wrong. Being a crank is not worse than being an orthodox crank and sometimes it's better. But a crank is a crank is a crank. I, too, am a crank. The difference between your crank and my crank is that you think you have found the magic bullet. My crank is that there is no magic bullet but that some "bullets" are boomerangs.

Shorter hours is not a panacea; longer hours is a death sentence.