Amid the news that voters prefer a traditionally left-wing Labour Government to a right-wing Conservative one, Peter Hain writes:
No wonder so many people are so turned off by what now passes for politics in Britain. Election year 2015 has opened with the same suffocating claustrophobia of the past five years.
Never mind that living standards for the majority continue to fall while the very rich get richer. Or that the recent much vaunted “growth” has been consumer, housing and debt driven.
Or that far too many of the “record numbers of new jobs” are insecure and terribly paid. Or that some people are driven to suicide as they are stripped of benefits and any means of survival.
“It’s the deficit, stupid!” The Tory mantra, echoed by a compliant media, from Tory-supporting newspapers to the BBC is obsessive: however savage the cuts, everything has to be sacrificed before the deficit altar.
In fact, the deficit is still more than double the target in the Tory plan for this parliament.
And yet, cheered on by the Mail, Telegraph and Murdoch stables and echoed by broadcasters, they plan still more savage cuts if they win.
It may be good politics for the Tories, leading Labour on the economy, according to pollsters.
And this is why Labour’s leaders have been obliged to have their own deficit plan, simply to get a hearing from interviewers and commentators oblivious to Keynes’s excoriating denunciation of similar primitive and failing policies in the 1920s and 1930s.
But it is lousy economics.
Before the last election David Cameron trumpeted that Labour’s commitment to halve the budget deficit would take Britain “over the brink into bankruptcy”.
The whole deficit should be eliminated, he insisted, pledging to cut borrowing to exactly half what Labour had planned – £37bn instead of £74bn by 2014-15.
Yet official forecasts are that government borrowing will exceed £91bn – nearly £20bn more than Labour’s allegedly “disastrously high” target, and more than £50bn above the Tory one.
Never mind: they’ve just moved the goalposts, insisting their “plan” is working after all.
Although Labour’s plan built upon its recovery from the banking crisis already well under way in 2010, it was choked off by Cameron’s policy and Britain returned to recession while Barack Obama and Angela Merkel paralleled Labour’s policies with public investment, not cuts.
When Britain finally bounced back in 2013 (as it has always done after recessions), it was three years later than America and Germany did – billions of lost output and prosperity had been needlessly sacrificed.
With the IMF, the Bank of England and the CBI all expecting slower growth this year than last, all Cameron’s plan has delivered is here-today, gone-tomorrow growth.
The Labour leadership must hammer home how slow economic growth only delays deficit reduction and that Labour will prioritise reviving Britain’s failing recovery by scrapping austerity.
By taking up the slack in the economy – millions of people are underemployed, working fewer hours than they wish – Britain could enjoy fast catch-up growth of the kind it experienced as it recovered from the Great Depression: between 1933 and 1936 UK growth exceeded 4% per year, fuelled by a house building boom.
We urgently need (as some economists argue) £30bn a year for two years of extra capital investment in infrastructure, housebuilding, education, skills and low-carbon industries.
This would rapidly expand the economy and cut the budget deficit by boosting tax revenues as people earn and spend more, working hours rise, and fewer families need to look to the state for support.
But with the Labour leadership trapped between a rock and hard place of political necessity and economic reality, that sum of £30bn is far more than the party is planning.
Yet, frankly, it’s the only way to begin creating a fairer, more sustainable economy – and thereby sensibly rebalancing the public finances.
Tacking to the Tories and their media allies as Ed Miliband’s Blairite and Tory critics demand is to sign up to their Alice in Wonderland economics.
Yes, the shock headlines would announce:
“Higher Labour borrowing early in the next parliament”. But higher public spending and borrowing on capital investment today means lower borrowing tomorrow with the economy growing and tax revenues rising.
The next five years will mean tight public sector budgets whatever the result of the general election.
But Labour could ensure that faster growth bears more of the burden of reducing the budget deficit, easing the pressure for further public spending cuts.
The scope for doing so is much greater than many realise with, for example, Oxford Economics noting in 2014 that “none of the spending cuts planned beyond 2014-15 would be needed to return the deficit to pre-crisis levels”.
The suffocating, neoliberal orthodoxy – favouring market forces and tolerating state regulation only where absolutely necessary – caused the banking crisis, yet it has clung on, as if somehow it was not the very root of the problem all along.
The fundamental choice facing Britain today is not actually about the deficit.
It is between the right’s insistence on minimalist government and the left’s belief in active government; between the right’s insistence on a free market free-for-all and the left’s belief in harnessing markets for the common good.
Yet Tory bullishness remains breathtaking.
Having backed Labour’s spending plans in 2007, and pledged to maintain them until beyond the 2010 election, Cameron suddenly switched after the banking crisis to denounce Labour’s spending as the root of all economic evil.
In October 2009 he stated baldly: “It is more government that got us into this mess.” Not irresponsible bankers, still less of the failure of politicians to control them.
The entire global banking crash was apparently nothing to do with Big Finance: it was all the fault of Big Government. The cause was too much public spending – not too little public regulation.
In November 2013 he pledged to build “a leaner, more efficient state. We need to do more with less. Not just now but permanently.”
Hence the Tory plan to, according to the independent Office for Budget Responsibility, cut the share of national income devoted to public spending back to levels not seen since the 1930s when there was no NHS or decent state school system, let alone the monumental costs of elderly care an ageing modern Britain requires.
No one on the left seriously advocates a “fatter” more “inefficient” state, but Cameron’s case went to the heart of the fundamental argument that the coming election should be about: governments across the world gradually allowed the financial system over a 30-year period to become a law unto itself, the real culprit an obsession with keeping government at bay, making non-interventionism rather than interventionism the watchword.
Takeovers and mergers led to banks so big they couldn’t be allowed to fail. Bankers bent rules to lend ever more riskily without anything like enough capital cover, until it all unravelled to catastrophic effect.
Facing this new, integrated, almost impenetrably complex structure of global finance, governments were in truth too small and too passive – not too big and too active.
Democratic socialism, not neoliberalism, should remain the calling for our age.
But amid the soundbites and media spin, is anybody listening?
No wonder so many people are so turned off by what now passes for politics in Britain. Election year 2015 has opened with the same suffocating claustrophobia of the past five years.
Never mind that living standards for the majority continue to fall while the very rich get richer. Or that the recent much vaunted “growth” has been consumer, housing and debt driven.
Or that far too many of the “record numbers of new jobs” are insecure and terribly paid. Or that some people are driven to suicide as they are stripped of benefits and any means of survival.
“It’s the deficit, stupid!” The Tory mantra, echoed by a compliant media, from Tory-supporting newspapers to the BBC is obsessive: however savage the cuts, everything has to be sacrificed before the deficit altar.
In fact, the deficit is still more than double the target in the Tory plan for this parliament.
And yet, cheered on by the Mail, Telegraph and Murdoch stables and echoed by broadcasters, they plan still more savage cuts if they win.
It may be good politics for the Tories, leading Labour on the economy, according to pollsters.
And this is why Labour’s leaders have been obliged to have their own deficit plan, simply to get a hearing from interviewers and commentators oblivious to Keynes’s excoriating denunciation of similar primitive and failing policies in the 1920s and 1930s.
But it is lousy economics.
Before the last election David Cameron trumpeted that Labour’s commitment to halve the budget deficit would take Britain “over the brink into bankruptcy”.
The whole deficit should be eliminated, he insisted, pledging to cut borrowing to exactly half what Labour had planned – £37bn instead of £74bn by 2014-15.
Yet official forecasts are that government borrowing will exceed £91bn – nearly £20bn more than Labour’s allegedly “disastrously high” target, and more than £50bn above the Tory one.
Never mind: they’ve just moved the goalposts, insisting their “plan” is working after all.
Although Labour’s plan built upon its recovery from the banking crisis already well under way in 2010, it was choked off by Cameron’s policy and Britain returned to recession while Barack Obama and Angela Merkel paralleled Labour’s policies with public investment, not cuts.
When Britain finally bounced back in 2013 (as it has always done after recessions), it was three years later than America and Germany did – billions of lost output and prosperity had been needlessly sacrificed.
With the IMF, the Bank of England and the CBI all expecting slower growth this year than last, all Cameron’s plan has delivered is here-today, gone-tomorrow growth.
The Labour leadership must hammer home how slow economic growth only delays deficit reduction and that Labour will prioritise reviving Britain’s failing recovery by scrapping austerity.
By taking up the slack in the economy – millions of people are underemployed, working fewer hours than they wish – Britain could enjoy fast catch-up growth of the kind it experienced as it recovered from the Great Depression: between 1933 and 1936 UK growth exceeded 4% per year, fuelled by a house building boom.
We urgently need (as some economists argue) £30bn a year for two years of extra capital investment in infrastructure, housebuilding, education, skills and low-carbon industries.
This would rapidly expand the economy and cut the budget deficit by boosting tax revenues as people earn and spend more, working hours rise, and fewer families need to look to the state for support.
But with the Labour leadership trapped between a rock and hard place of political necessity and economic reality, that sum of £30bn is far more than the party is planning.
Yet, frankly, it’s the only way to begin creating a fairer, more sustainable economy – and thereby sensibly rebalancing the public finances.
Tacking to the Tories and their media allies as Ed Miliband’s Blairite and Tory critics demand is to sign up to their Alice in Wonderland economics.
Yes, the shock headlines would announce:
“Higher Labour borrowing early in the next parliament”. But higher public spending and borrowing on capital investment today means lower borrowing tomorrow with the economy growing and tax revenues rising.
The next five years will mean tight public sector budgets whatever the result of the general election.
But Labour could ensure that faster growth bears more of the burden of reducing the budget deficit, easing the pressure for further public spending cuts.
The scope for doing so is much greater than many realise with, for example, Oxford Economics noting in 2014 that “none of the spending cuts planned beyond 2014-15 would be needed to return the deficit to pre-crisis levels”.
The suffocating, neoliberal orthodoxy – favouring market forces and tolerating state regulation only where absolutely necessary – caused the banking crisis, yet it has clung on, as if somehow it was not the very root of the problem all along.
The fundamental choice facing Britain today is not actually about the deficit.
It is between the right’s insistence on minimalist government and the left’s belief in active government; between the right’s insistence on a free market free-for-all and the left’s belief in harnessing markets for the common good.
Yet Tory bullishness remains breathtaking.
Having backed Labour’s spending plans in 2007, and pledged to maintain them until beyond the 2010 election, Cameron suddenly switched after the banking crisis to denounce Labour’s spending as the root of all economic evil.
In October 2009 he stated baldly: “It is more government that got us into this mess.” Not irresponsible bankers, still less of the failure of politicians to control them.
The entire global banking crash was apparently nothing to do with Big Finance: it was all the fault of Big Government. The cause was too much public spending – not too little public regulation.
In November 2013 he pledged to build “a leaner, more efficient state. We need to do more with less. Not just now but permanently.”
Hence the Tory plan to, according to the independent Office for Budget Responsibility, cut the share of national income devoted to public spending back to levels not seen since the 1930s when there was no NHS or decent state school system, let alone the monumental costs of elderly care an ageing modern Britain requires.
No one on the left seriously advocates a “fatter” more “inefficient” state, but Cameron’s case went to the heart of the fundamental argument that the coming election should be about: governments across the world gradually allowed the financial system over a 30-year period to become a law unto itself, the real culprit an obsession with keeping government at bay, making non-interventionism rather than interventionism the watchword.
Takeovers and mergers led to banks so big they couldn’t be allowed to fail. Bankers bent rules to lend ever more riskily without anything like enough capital cover, until it all unravelled to catastrophic effect.
Facing this new, integrated, almost impenetrably complex structure of global finance, governments were in truth too small and too passive – not too big and too active.
Democratic socialism, not neoliberalism, should remain the calling for our age.
But amid the soundbites and media spin, is anybody listening?
The poll didn't show any such thing.
ReplyDeleteIt showed 27% would want a ‘very centrist’ Tory government and 21% want a "traditionally right-wing Tory Government" (whatever that is supposed to mean; when was that?). That's 48% in total. Against just 24% who would prefer a "traditionally left-wing Labour government" (again, whatever that's supposed to mean: going back to the days of ceaseless strikes?).
The problem is, of course, the terms are meaningless because they mean whatever people want them to mean.
Tell Simon Heffer or John Redwood or Peter Hitchens that David Cameron (or Tony Blair) is "Right wing" and they'd laugh out loud.
Yet Tony Benn's definition of a Leftist differs remarkably from the modern lot, who are more interested in nationalising the schools, the police force, the 'third sector', the family and the House of Lords than nationalising the 9:45 to Guildford.
The terms have become redundant and most people who still use them are talking past each other.
No, that's just you.
Delete