Is 1p Too cheap?

By Shibley Rahman / @ShibleyLondon

Ed Miliband yesterday offered Labour Party membership for a penny to anyone under the age of 27. This is apparently part of Ed’s firmly-held belief that young people should have a political voice, as part of his “Speak out for your generation” campaign. This article looks at whether a penny is too low – it is beyond the scope of this article to consider whether it’s too high.

I have discovered, in a totally non-scientific way, that those who aren’t Labour members reckon it’s a terrible idea. On the other hand, people who are Labour supporters think it’s a terrific idea.

One of my Twitter followers said (in less than 140 characters), “It is good.. we need a mass membership party and I hope many will take up the offer” Another argued, ” Absolutely excellent idea. Encourage young people to join but must make it relevant to them”

Whilst elsewhere the difference between cost and value has been discussed, offering membership for a penny threatens to send out the message that being a member of Labour has both low cost and low value. This is not a particularly desirable message.

The Labour movement doesn’t simply wish to attract eligible voters, although that, of course, is a major ambition. Labour, as a large members’ organisation, does aim to get as many people with similar beliefs involved in building the movement. Appealing to young voters with a relatively low cost product is a business strategy successfully pursued by IKEA.

To put a bit of downer on all this, one is forced to acknowledge that the problems with such ‘discount retailing’ are already well known in the worlds of economics and commerce.

Discounting may imply that a product is not particularly desired in the marketplace at full price. The price of discounted products is what economists call “elastic”. Price elasticity of demand is a measure of how much the demand of a product varies with price. A product is very elastic if a small change in price leads to a massive change in demand. It remains to be seen whether the price of Labour membership in young voters is at all elastic. That sort of data genuinely would be interesting.

It will be evident therefore from this short article that the issues concerning ‘discount retailing’ are potentially complex. Whether lessons from economics or marketing should be brought to the political world is a thorny issue in itself. However, when you consider voters or political parties as buyers and suppliers, you’re on a slippery slope? Of course, you’d never tolerate “Vote one party – get one free”, or would you?