23 March, 2011
Harold Macmillan, when asked by a journalist what might blow a government off-course, replied, “Events, dear boy. Events.”
As an interested, if not entirely innocent, bystander, I am following Opposition Labour’s discourse pretty closely. It’s not a pretty sight.
Not because of the content – although there is precious little of that.
What worries me is the mood. It is stuck.
Brave a Labour blog or a Guardian article on Labour’s future and it won’t be long before you come across a solemn sentence starting with the words, “Only when…” which goes on to bemoan the persistence of the party’s ghosts, and forlornly to lament the time required to heal. Only when the past has been examined, understood, reconciled; only when apology has been issued and accepted; only when the contract between party and public has been redrafted and signed anew; only then will Labour come in, chastened, from the cold. The long march towards rehabilitation, on this gloomy and widely-shared analysis, might not be over in time for 2015.
But I’m not convinced that so much self-flagellation needs to be endured, that so much navel-gazing needs to be indulged in. I think that with some shows of bold and charismatic leadership, some indications of fresh and intelligent policymaking and above all an injection of energy and confidence, the party could reposition itself in short order. The requisite self-belief is not yet there, but it could easily come.
Remember how quickly the Tories and LibDems got into bed with each other? They formed a legislative agenda and modus operandi in the space of a weekend. Labour can and should aspire to such agility.
Managed properly, the public will not only not resist, but positively welcome the reinvigoration of Labour. Last May was not so much a turning towards Conservatism as a turning away from some specific Labour problems; the public wanted change, but not so much that it really preferred the alternatives on offer. Voters left it until the last minute to decide because the broad brush of what Labour stands for was, and is still, what the public wanted. All parties claim to be progressive – for a reason.
I admit it’s only a hunch (and my old politics tutors would kill me for talking about “the public” as if it were one sentient being) but I have a hunch that that public doesn’t want atonement from Labour. Last May, yes, it perhaps wanted to punish Labour. It was uncomfortable with Iraq. It was uncomfortable with Brown. It was uncomfortable with the deficit. But electoral defeat was the punishment, and it was instantaneous. Look how new members – and old – flocked to the party in the days after the election. The public can move on very swiftly. It does not want to see Labour in a protracted period of psychoanalysis. It wants a responsible, mature, vigorous Opposition. Capable, if need be, of running the country.
The narrative on the economy must be sorted. In the interregnum of last year, Labour failed to prevent the Tories branding the party as profligate. That mud has stuck despite Ed Balls’ spirited start. Labour now finds itself in the unhappy position of having to consider the old, humiliating strategy of promising to match the Tories’ spending plans in order to shield itself from attacks on the economy. I’m not convinced it would work this time, or, even if it would work, whether it is the right strategy – given that the Tories’ spending plans are so repellent. But that’s for a separate discussion. (In the meantime Labour could recover ground with cleverer and more consistent use of language on all issues but particularly the economy. This is a perennial problem for the more subtle economics of the left. The right have this one easy; corner-shop speak is so much easier to sell. “Maxing out the credit cards,” etc.)
But mostly my contention is that Labour will be ready when it decides to be ready. And I hope/pray/worry that the day when it needs to be ready could be more imminent than most insiders seem to imagine. The Coalition is not set in stone. Libya could change everything. The referendum could change everything. Another economic crisis could change everything. Not in 2015, but in months.
Events, dear boy. Events. Labour should stop atoning and start preparing.
So the 23% cuts that labour would have performed? Or would they have QE and reduced the purchasing power of sterling even further and hit most of the population? How much would reducing the deficit slower add to our 2.3tn debt pile and the interest payments? What are these subtle economics? What about Blair realising the need for and FSR to stop spending and begin to get value, but Brown objecting?
Quite a lot to reply to there, DC. Suspect you don’t really want a reply! I would just elucidate what I mean by “subtler economics” – which is that in the economic narrative of the right, the country’s finances are likened to those of a corner-shop or a domestic budget. This makes things easy to explain and is fine if your politics are all about cost cutting and not about demand management. Unfortunately for the left, the story is necessarily more complex. The subtler (and more accurate) economic story is that government spending is a key component of demand in the economy. Cut govt spending and the economy shrinks, reducing tax receipts and, as jobs are lost and incomes fall, increasing the welfare bill. Which leaves the govt worse off.
The truth is that the left needs to elucidate this more complex story because it wants to look after the victims of a shrinking economy. And the truth is that the right doesn’t care to elucidate the story because it doesn’t want to look after the victims.
The subtler economics was the key idea really.
However, if the public payroll continues to increase or is unsustainable, or if a large amount of the money comes through tax credits/benefits then ideas you outline here are just Tax churn. Gov spending will always play a big part of GDP but if you are paying 1.04GBP for 15 years for 1.02 “growth” this year, for no productivity increase then it’s going to fall over quickly.
That’s a very good way of thinking about it – a cost/benefit analysis of government spending. Then it becomes a number-crunching question. In principle I prefer individuals to spend, not governments. But when the market fails, do you (not) think the state should intervene to smooth out the highs and lows – to spend when the private sector runs scared? If the borrowing costs more than the growth produced, or more than the recession averted, then that is tricky for me. But 1) the danger of a market without intervention is free-fall; markets don’t self-correct at all well; 2) not all borrowing is bad – we understand that a mortgage can be a good thing even if it means our house costs us a lot more than the purchase price and 3) there can be a social good to interventions, which has its own long-term social (and economic) benefits.
The market failed because the gov interviened. But if we look at your point 1 markets go up, go down, that is the point of a market. The market doesn’t self correct – it’s always the right price at the right time – that is why markets function. As to 2) you’ve ignored my point about productivity. In fact I believe your example wrt mortgages is what you describe as “corner shop economics” wrt 3) you are taking a moral judgement ignoring that the terms rich and poor are relative. Encouraging some business when they should fail isn’t particularly moral.
“The market failed because the gov interviened.”
Really?
“But if we look at your point 1 markets go up, go down, that is the point of a market. The market doesn’t self correct – it’s always the right price at the right time – that is why markets function.”
Markets crash and markets overheat. If you think that’s okay – if you think WHATEVER happens in a market is okay, then it is unlikely we can find any common ground. I believe civility and decency require us to help the casualties of fate – and that means intervention.
“As to 2) you’ve ignored my point about productivity.”
Yes I have. I don’t see how it is a necessary element in the cost/benefit analysis of government spending.
“In fact I believe your example wrt mortgages is what you describe as “corner shop economics””
Quite right. I hesitated about that, but it seemed pertinent. As I don’t know who you are, it is hard to know how to pitch my response.
“wrt 3) you are taking a moral judgement ignoring that the terms rich and poor are relative.”
Did I use those terms in 3)? I don’t think I do, as a rule, ignore the relativity of claims about rich and poor. I do make moral judgments, however.
“Encouraging some business when they should fail isn’t particularly moral.”
I’m not sure I mentioned “encouraging some businesses” but yes, I think it is moral to intervene in markets. Morality is all about intervention, all about not leaving those worse off to their fates.