You say success, I say failure. The difficult politics of telling the difference

It could have been far worse, you know. No, really: the thing that you don’t like, that you are annoyed about, it could have hurt more. In fact — stay with me here — you should actually be relieved, maybe even a tiny bit grateful, that something worse was averted.

Welcome to the inner-most thoughts of many a frustrated policy-maker. These are hardly lines to inspire, never mind ingratiate, disgruntled voters. To utter them would risk sounding delusional and invite ridicule. But those seasoned in the world of policy will recognise the unspoken sentiment.

That dissonance exists because economists and analysts occupy a world of counterfactuals. These are places furnished by the alternative paths that events would have taken had different choices not been made. The benchmark for success or failure is not our current location: it’s our best guess as to the destination that the ship of state would have reached if the hand at the tiller hadn’t altered course. It’s the impending economic depression that got managed into a mere recession; or the steady rise in prosperity that could have been enjoyed if poor choices hadn’t reduced it to an era of slow-growth.

The nature of these yardsticks — what they are and who sets them — is vital not just for policy anoraks: they’re also the raw material of politics. They shape the contours of political debate and the reporting of it, even if for many they are a subterranean force. This was true during last parliament’s big tussle between the parties over fiscal policy, just as it was in this year’s EU referendum campaign, and will be again in determining how Brexit is deemed to have played out over the next few years.

The trouble is that even sensible counterfactuals have always translated poorly from the world of policy into the cut and thrust of politics — and never more so than now in an era marked by disdain for experts and cynicism about evidence. For policy-makers they are the means, despite all the uncertainties, through which the impact of any given course of action is assessed. They help us to distinguish between the charity, school or job-centre achieving heroic results against the odds from the one garnering plaudits for something that was going to happen anyway.

Yet many people don’t think this way. The fact that something could have turned out even worse (or indeed even better) absent a set of decisions isn’t that intuitive. The politics of a particular issue often boils down to whether, in absolute terms, things improved or got worse.

Working in government during the hurricane that was the global financial crisis there was frustration about the absence of any positive coverage for the impact of this or that counter-recessionary measure which seemed to be having a positive impact. The headlines were all about ‘failure’ — unemployment or repossessions rising — never the ‘success’ of this or that policy in preventing something far worse. ‘If you’re explaining, you’re losing’, goes the favoured soundbite of political strategists. Well, if the explanation rests on a second derivative then, trust me, the game is well and truly over.

Consider also Labour’s fiscal stance in opposition after 2010. The essence of Ed Balls’ ‘too far, too fast’ mantra was that the scale of George Osborne’s fiscal consolidation would weaken the recovery compared to a softer stance. He was hardly alone: the OBR would regularly report on the extent to which consolidation did indeed act as a drag on growth. Yet the argument failed to translate into an alternative yardstick in the public’s mind about the improved path of growth that would have been possible had George Osborne pursued a different course. Balls’ position eventually became elided with the view that the economy would continue to perform badly — indeed, that austerity meant that growth wouldn’t happen (whether or not this was a fair reading is another matter). So when growth eventually did happen, as it was always going to, it was perceived as a ‘gotcha’ moment. Labour was checkmated by the wrong counterfactual.

There are echoes of this in the ongoing political debate about how Brexit will play out. Last week there was a lot of interest in a poll showing that half of all leave voters aren’t prepared to be a penny worse off as a result of exiting the EU. This is indeed a striking result and some on the Remain side of the argument might think it provides a clear opening. Look, they might say, pretty much every piece of analysis suggests a negative Brexit-effect on growth and wages. How are Leave voters going to feel when they realise that growth is significantly slower by 2020 than it would have otherwise been?

An important question, but it poses another one. Even if these projections are borne out, would voters arrive at the implied conclusion: will they really adopt a ‘no-Brexit’ hypothetical growth path for GDP or wages as their benchmark — or might they simply compare their own financial position in 2020 with that of 2016 and assess whether or not they feel better off? If so, then many people are likely to be better off even if Brexit does indeed result in slower-growth than would otherwise have occurred. (A caveat: a good number of people are likely to be made worse off in absolute terms over this Parliament, including for reasons that have nothing to do with the EU vote, so Brexit could catch some of this blame).

The narrow political point is that establishing the yardstick of success that sticks in the public mind matters greatly. Often campaigners and politicians get it wrong. Yet it’s at least half the battle. After all, if you want to pass a test it helps if you set it.

The wider and more important point is that using counterfactuals properly is vital to the quality of democratic decision-making. To attempt to understand the potential impact of different choices in politics, we need to have a sense of what might otherwise occur. Without this, evidence and rational discourse are the first casualty. But explaining alternative and uncertain future paths to the wider world is hard graft. At the end of 2016 it feels like a goal that has never been more vital — or more difficult to achieve.

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