An Analysis of the Electoral Use of Policy on Law and Order by New Labour

There has been much debate regarding the electoral strategy adopted by New Labour in the lead-up to and then during their time in government. This paper addresses the issue from the perspective of left/right and libertarian/authoritarian considerations by examining data on individual attitudes from the British Social Attitudes survey between 1986 and 2009. The analysis indicates that New Labour’s move towards the right on economic and public policy was the main driver towards attracting new centrist voters and could thus be labelled ‘broadly’ populist. The move towards a tougher stance on law and order was more ‘narrowly’ populist in that it was used more to minimise the reduction in support from Labour’s traditional base on the left than to attract new votes.

Disputes, Debt and Equity

We show how the prospect of disputes over firms’ revenue reports promotes debt financing over equity. These findings are presented within a costly state verification model with a risk averse entrepreneur. The prospect of disputes encourages incentive regimes which limit penalties and avoid stochastic monitoring, even when the lender can commit to stochastic enforcement strategies. Consequently, optimal contracts shift away from equity and toward standard debt. For a useful special case of the model, closed form solutions are presented for leverage and consumption allocations under efficient debt contracts.