Media Check – Labour Must Avoid Austerity-Lite

John Harris writes some good articles, and can usually be relied on for a good five minute read whenever one of his pieces pops up on the Guardian.

His recent article, sort of a stump speech for John Cruddas’ policy review, leaves a lot to be desired though…

The piece starts with a summing up of how Social Democratic parties across Europe aren’t faring well at the moment. This is not surprising. The Centre-Left has been backed into a corner on the economic issues facing developed nations at the moment. On the one hand they want to offer an alternative from the austerity mantra paraded by EU officials and those to whom austerity equals personal gain. But they also want to seem like ‘serious people’ making ‘tough decisions’.

Rather than creating a different narrative for the current economic situation, the centre-left has been happy to play into the right’s characterization of it as a crisis of overspending, profligacy and debt. But what then – if these are the problems – can the centre-left offer as a solution that the right can’t? In the end the centre-left’s solutions wind up being austerity-lite. Half the pain, but none of the gain. But this route is hardly a successful one electorally. In opposition they promise to end the suffering austerity, only to continue it unabated in office. At least the right are upfront about the pain they’re going to cause…

So, bottom line, social democracy is having a tough time of it, and ultimately has two options – the same two facing Labour: Go right, get into bed with the austerians, and offer your own brand of austerity-lite – and pray to God for a deus ex machina solution… or go left…

Harris doesn’t like this second option:

“from the centre of Labour’s ideological continuum leftwards, there is currently an apparent belief that the party can somehow capture power in two years’ time, roll back the worst of the coalition’s cuts, dig out some old A-level notes about Keynesian demand management – and spend, spend, spend.”

He says, generalising the views of dozens of noted economists and thousands of Labour party members in one fell swoop…

He proceeds to justify this grossly simplistic vision of economic policy:

“There are two answers to that. First, you’ll have an interesting job getting any such vision past the electorate.”

Granted, this is undoubtedly the hardest task the left and Labour face. As he notes earlier in the article, the widespread belief that this is a crisis created by the Labour government’s overspending was allowed to filter into the public’s consciousness, almost unhindered. The reasons why that was allowed to happen are numerous and varied, but it is a key belief that Labour must challenge – regardless of what direction they take on the economy.

But just because the public have been conned into this belief does not mean we shouldn’t try to counter it. The only solution to the kind of depression we’re in involves spending, and the knots Ed Miliband has tied himself up in whilst trying not to answer the question of whether he’d spend more have caused as much political damage in themselves as coming out and straight up saying ‘Hell yea we’re going to spend more in the short term, because that’s the only solution to this mess, read a textbook if you disagree…’

And I don’t believe it’s an argument which can’t be won or successfully sold to the public. I’ll be addressing my ideas for what policies Labour should be pursuing right now and how they can sell them later, but needless to say the current plan to just sit back and hope people are so pissed with the Tories they vote in Labour is not so much a plan as an absence of one.

Anyhoo: he continues:

“Second, even if you managed to do it [Sell the argument], reality would then bite, agonisingly, and the fiscal predicament of the next UK government will be grim beyond words.”

How so? We have record low borrowing levels. Borrowing more in the short term whilst rates are low to get the economy growing, then letting the increased tax revenues from growth reduce the defecit in the medium term is not some far-fetched impossible dream… Sure, we’re not going to be able to spend and borrow at pre-recession levels for a bit, but then the economy is still short of pre-recession levels… And the only way to restore that growth and ever have a chance of the same level of spending in the long run is by growing the economy now.

“In all likelihood, it will have to piece through the wreckage of George Osborne’s voodoo economics”

Voodoo economics which you’re now supporting…? Because really there’s not many options on the table here. We either spend more to grow the economy or we don’t… Anything else is pretty cosmetic.

“and, just to make things really easy, cope with demographic changes (our rapidly ageing population, chiefly) that will make most political and economic orthodoxies completely untenable.”

The demographic challenge we’re going to face won’t be for a few decades yet. Using it as a reason to say we’re stuck with austerity forever is stupid. Grow the economy now, so by the time we have to make difficult decisions about the aging population we’re doing it with a healthy economy, strong private sector, and government with fiscal wriggle room. That, or hold off on spending and forever doom the economy to low growth, high unemployment and give us nowhere to go fiscally but back to austerity.

“In other words, the days when Gordon Brown could deliver budget speeches smattered with millions of this and unending billions of that are over, probably for the rest of most Labour politicians’ lives.”

Yes… because that’s what the New Labour years where like… There’s no reason why we can’t get the economy back into a strong position again before the demographics become an issue, and there’s no reason why that must mean doom and gloom either. During the boom years Labour’s greatest mistake was not overspending but under-taxing. If we don’t make that mistake again, and make real strides on tax avoidance and inequality we can ensure a healthy fiscal position in years to come.

He goes on to outline a ‘plan’ courtesy of some insiders he’s clearly become enamored with:

“there will be no reversal of existing cuts, in the context of George Osborne’s howling failure that loud debate about whether to stick to his post-2015 spending plans is completely misplaced. But at the same time, if Labour is to win the next election, it will have to commit to a set of iron, independently enforced fiscal commitments, perhaps to be met over a 10-year cycle, focused not just on the elimination of the deficit, but the ratio of public debt to national income – many of the consequences of which, to quote one Labour insider, could be “brutal”.”

Basically, we pick some numbers from thin air and decide we must stick to them to show how ‘serious’ we are. This is just the same kind of nonsense Osbourne and the austerians fawned over at the beginning of the crisis. Pick some numbers, stick to them, ignore the collapse of the economy going around you…and then blame it on Europe…

Economic policy should be fluid. It shold react to the world around it. If the economy is in the tank, the government should invest to get growth going. When the economy is doing well, it should reign itself in to let the private sector flourish. Saying ‘we have some cast iron, independentently enforced numbers and we’re sticking to them’ is as childish a way of dealing with the economy as deciding tax rates based on the lottery results and government spending on the results of the grand national. Granted, that would be more enjoyable than the current way the government does things, but still…

“Second, the party will need a clear-cut, demand-driven growth plan, based on a housebuilding blitz in particular.”

Oh… you mean… I dunno, utilising the nation’s record low borrowing levels to take out a one off loan to pay for an economic stimulus plan to get the economy growing… You mean that… that thing that everyone you’ve been decrying as being all about ‘spend, spend, spend’ want? No… because this plan is going to fund it cleverly using the power of ‘seriousness’…

“And how to square one with the other? The answer leads to the third part of the blueprint: a strong story about radically pruning central government, and pushing power downwards as never before.”

I’m unsure here whether this ‘story’ is just that – ‘a story’ that would be told to excuse this spending. ‘Yeah, we’re spending a billion quid on houses, but we’re going to save it by cutting waste blah, blah, blah’… or whether this is the genuine plan. If the former, then this plan is just what we on the left have been proposing (with the addition of some nonsensical plan for ‘independently enforced fiscal commitments’). If the latter then this is ludicrous and will no doubt require cuts to vital services on top of what the Tories have done or privatisation.

He goes on to extrapolate some additional policies, plenty of which make sense, and seem pitched to appeal to the Labour Left whilst being potential vote losers in their own right. All in all this seems like a pitch to persuade the left that Keynesianism isn’t the way forward. That we must rigidly enforce spending cuts whilst also… spending more… Austerity-lite anyone?

(Austerity-lite: The view that we ‘must be serious’ and ‘cut spending’, ‘be brutal’, ‘feel the pain’, ‘make tough choices’ etc… but we need to actually grow the economy so we spend money to grow the economy. Net result: the economy hardly grows and the deficit doesn’t shrink and the right point their fingers and say ‘see, socialism failed to sort the crisis out, guess we need more austerity…’)

Clearly there’s a view that too many of us Lefties are over-optimistic in our belief that stimulus spending will work. And granted, in trying to sell it, we’ve undoubtedly made it seem like a panacea. But when the Labour leadership is shooting itself in the foot trying to not use the words ‘spending’ and ‘more’ in the same paragraph, and when there’s elements of the party creating these overly complex attempts to sell Labour as the ‘serious’ guys on the economy again, you have to forgive us for trying to sell the one policy which will actually work.

I’ll outline shortly what policies I’d be talking about if I were Labour leader and how I’d portray them and sell them. I do believe there is room for a left of centre Labour party, and that for every vote we’d lose to the Daily Mail, we’d gain from the ranks of those disaffected by the Tories’ economic incompetence and disillusionment with the current political orthodoxy.

I’m not saying it would be an easy sell, but I think the most important point is this: the public respect a leader. Whether it was Churchill, Thatcher, Blair… they were not the greatest governors the country has seen, but they chose a path and stuck to it. At the moment Ed Miliband is having problem after problem which he’s more or less creating for himself. A leader creates a vision, and sells it. Ed seems to still be working out what his vision is, and has spent more time saying his vision isn’t than what it is. Going round in circles to avoid saying you’ll spend more is a pointless exercise at a time when the opposition leader has to be using every second of media attention they receive to go on the offensive against the Tories and be crafting their own narrative and selling their own policies to the public.

Articles like Harris’ obfuscate the real issues facing Labour at the moment, and set the debate away from where it should be. Talking about things like ‘localism’ and ‘”eye-wateringly tight” fiscal rules’ will be all good and fun to do – once we’re in power. But until then, everyone who is anyone who cares about ending this coalition nightmare must be working to change the incorrect narrative about how we got into this mess and be explaining (with diagrams if necessary) how we get out of it.


Tax Research UK – When will Labour Lean that neoliberalism will never work, and most especially for the left?


About iwastoldtheredbegin

Politics of the Left Wing and Liberal variety, plus gin!
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