In the run up to the Election, the Oxford economist, Simon Wren-Lewis, wrote an excellent series of blog posts entitled, ‘Mediamacro myths’, where he drew attention to the false claims made by the Tories and their supporters about Labour’s record in office and their own economic policy achievements. These include the charge that Labour was financially profligate between 1997 and 2008 and that Austerity has worked. So I was surprised to read a more recent post in which he questions whether Labour in general and Ed Balls in particular had any choice but to commit to reducing the Deficit by making cuts in public spending now, now, now! As he put it:
Some, like Robert Skidelsky for example, describe these movements, and a failure to extol the virtues of fiscal policy under Labour, as a mistake. However, I suspect that if Labour’s shadow Chancellor Ed Balls could ever speak the truth, he would say that he did not want to gradually acquiesce to the austerity line, but the evidence from focus groups was overwhelming. Defending Labour before the financial crisis was pointless because it just reminded people that the Great Recession happened under their watch, and that Labour (like everyone else) gave finance too free a hand. The ‘too far, too fast’ line just sounded feeble when the news was all about the Eurozone crisis. In the end, Labour just had to be ‘tough on the deficit’.
Do we have to be so pessimistic? After all, the Labour Party had 5 years in which to develop and sell its own narrative about its record in office. A story could have been told about all the achievements of the Blair-Brown era - the minimum wage and increasing funding for the NHS up to European levels to name but a few. This could have been followed by an explanation of how this period of progressive improvement was brought to an end by the worst Recession in 300 years. The Recession was the result of a crisis in financial markets that was conceived, designed and delivered by the private sector. There could have been a mea culpa about how Labour in office was seduced, along with all other governments in the developed world, by the argument that markets needed only light touch regulation. The Great Recession showed how the public needed protecting from what the drive for profit maximisation will create in a free market that is left to its own devices. Once you have established the case for the State as regulator and protector and that this role has to be more interventionist and robust than previously accepted, you could go on to talk about other things that the State can do to benefit everyone, not just the poor and needy. For example, the economist Mariana Mazzucato, who wrote the book, The Entrepreneurial State, in which she shows how the technological innovations that made the iPhone possible were created by state-funded research programmes, has suggested that we should be talking about the State as a major wealth creator.
Is this just too fanciful?
One of Ed Miliband’s achievements as Labour Leader was to make inequality an issue. I remember initially when he and other Shadow Cabinet members started talking about the ‘Squeezed Middle’, people laughed as it conjured up images of people walking around in varying degrees of discomfort because their trousers were too tight. But gradually, as the points being made were based on the facts, the issue, re-presented more snappily as ‘The Cost Of Living Crisis’, gained traction in the public mind and in the media. The proof of this was that during the last part of the Coalition government, the Tories found that they had to try to counter this issue. Thus, in February this year, we saw David Cameron telling bosses to give workers a pay rise. Then in March, an IFS paper that explained that since 2007/8, living standards had fallen for everyone except those over 60, was spun as proof that living standards had risen. Most bizarrely of all, the approach of deflation which is generally understood to be a bad thing (otherwise why does George Osborne charge the Bank of England with the job of keeping inflation at 2% rather than zero??!) was hailed as a brilliant policy achievement as it was argued that it would raise real incomes even as nominal pay remained subdued.
So, it was possible to set the policy and campaigning agenda, even if the attempt met with a less than enthusiastic reception initially. The problem with Labour’s decision to embrace Austerity economics was not just that it meant a refusal to rebut the argument that it had been spendthrift in office, but that it seemingly led to an unwillingness to defend anything about its record in office. Does anyone remember the 18 month hospital waiting lists that were normal under John Major, of Gordon Brown’s achievements on Third World debt forgiveness? Talking of forgiveness, it seems to me that if Labour continues to refuse to defend its record in government then it will have to rely on the Electorate’s willingness to forgive it for all its supposed failings before it can be re-elected. Or, of course, wait until everyone who was around in the Naughties either forgets or dies. I, for one, would like to put my trust in something a bit more inspiring than this.
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