That train don’t stop here any more
The other day, as happens, I was accused of being a Blairite zombie. Perhaps other readers of this publication are accused of the same.
I was a little taken aback, because my basic political position is that the political model that sustained the New Labour political model under Blair and Brown is defunct, and that if the left wants to find a way to be successful governments and election winning oppositions, we need to find a replacement that is equally politically and economically effective for our straitened times.
Still, after repairing to the pub following the Progress annual conference, I heard someone say, of the attendees’ attitude to Ed Miliband: ‘I think they’re coming round to him. I mean, they’ll always be “he’s not Tony, blah, blah, blah, Oooh, Tony”, but I think they’re beginning to get it’.*
This observation reflects what I suspect might be the real divide in the Labour party. How do we avoid engaging in what Douglas Alexander called ‘ancestor worship’ and what Ed Miliband termed ‘looking like the last government in exile’?
I suspect that if there is a single reason Ed Miliband won the leadership election, it was not because he apparently opposed the Iraq war, as Ken Livingstone suggests, but because he best articulated a sense that Labour needed to change, needed to move on.
Indeed, one could argue that his most impressive political achievement in that campaign was the way he seemed to be entirely distanced from the battles of the immediate past.
Now, I’m a proud Tony Blair fanboy, so it might well be far too late for the likes of me, but locked happily in my small band of zombies though I am, I think this tells us we must focus on the future in the same way.
I’d begin with the rueful knowledge that for the next few years we will likely see a painful combination of sluggish growth and low living standards, which will lead to deficits that are stubbornly high and significantly limited scope for the painless expansion of revenues, or easy reduction of spending through lower welfare bills. If this is wrong, hooray, but then politics will be easy and you can all just get on with it without my help.
Further, in the longer term, countries like the UK face significant demographic cost pressures as the population ages. So just trying to stand still won’t work for long.
Next, I’d argue that the neo-liberal consensus (whatever it is) will remain pretty firmly in place. I say this because I’ve yet to hear anyone propose anything by the way of a serious alternative.
Is anyone proposing to row back on free trade, or do anything other than entirely superficial to reduce the free movement of labour and capital in Europe**? Is there much political enthusiasm for returning utilities to public ownership, and, if there is, where will the state get the money to do it?
But hold on, what about the euro? To my cynical mind, the pressure on the euro represents, not a challenge to orthodoxy (whatever it is, etc), but a rampaging endorsement of its power.
Economic orthodoxy said you can’t effectively run a monetary union without a fiscal union because, y’know, interest rates. The EU said pshaw, we’ll use the power of mediating institutions to put the market in its place. Didn’t work out well.
After, if Greece ends up leaving the euro in order to be competitive by having a floating currency, isn’t that a triumph of unrestrained markets over the puny efforts of governments to assert that the value of a Greek coin can be exactly the same as a German one?
As for changing the Banking system, maybe it’s just me, but the Vickers report does not strike me as a blow at the heart of free market economics.
As for steps like putting workers on the board, or publishing pay ratios, these are interesting and useful reforms, but as my imagination is limited, I don’t see how they would make a huge macro-economic difference. Throughout human history, the boss class has proved entirely capable of looking serfs in the eye to tell them that they jolly well deserve their golden thrones.
Of course, there may be popular revolt against the above. Unfortunately, a revolt is not, in and of itself, a solution. The only thing more disastrous for the left than a resigned dejectedness would be a rush to revolt which revealed a complete inability to offer a workable solution. That way, we really would be out of power for a generation.
So, given two parameters: times are hard, and there are no easy answers to give regarding changing the contours of capitalism entirely, what can be done?
I think the debate will revolve around three axes:
- How much money comes in
- How that money is found
- What that money gets spent on
You will notice that I do not mention growth, even though it is what should obsess leaders.
I don’t do so for two reasons. First, a politician being in favour of growth today is like being a unicorn hunter. We all claim to know where to find them, but all have a terrible track record in proving we do.
In Britain, the political argument is between a party that thought it had abolished boom and bust and a party that thought it had got Britain out of the economic danger zone in their first three weeks in office. This reflects well on neither.
In all likelihood, the people who will get the credit for growth will be those who happen to be sitting in No. 10 when it returns, whether it has anything to do with them or not.
I believe that centre-left economics will help, but it won’t guarantee it, nor will centre-right economics mean growth never returns. (George Osborne can screw up Britain, but he can’t screw up America, India and China all at once).
The next reason is that the return of growth, while essential, will not solve our problems. If growth were to appear at two per cent tomorrow, all that would happen is that we would nearly be on track to hit the pretty unpleasant fiscal path the government outlined two years ago.
We’ll still have years of debt reduction even after that and we’ll still have the demographic pressures to face too. Absent a sustained global boom, growth won’t magically make it all better.
It is still possible that the next couple of decades will look like the 1950s and 1960s, rather than the 1920s and 1930s, but better to bet on the worse outcome.
In such a scenario you find yourself in the politics of hard choices.
What tax income can you generate from a range of sources without causing flight, depressing economic activity in particular sectors, or entirely removing your competitive advantages?
Given that this number above will likely not be as big as we’d like, and demands for services are increasing, what priorities are you going to ensure do get more support, and where will you strategically limit resources?
Finally, how do you sell this to those to whom that is very painful whether this be better-off pensioners, business used to tax credits for investment, or particular services which you’ve given lower priority.
This does not sound very inspirational, does it?
You don’t get to sound like Bobby Kennedy when trying to work out precisely the right guns to butter ratio you support.
I’m not so sure.
This could be the end of the era of the easy smile and the soft promise.
The first challenge for politics now is to tell the truth.
In all likelihood the next decade will require tax increases and spending cuts on a sustained basis to get us through.
Hopefully, we can put off the worst of these until after growth has returned and higher tax income and limited spending are easier to bear, but that’s a delay, not a way out.
Even once the deficit has been closed, and we begin to reduce debt as a share of GDP, we will have to change the structure of everything from welfare to pensions to housing.
I can’t help but feel there is a huge political reward out there for the politician who does just that. Something like three quarters of the British people think the economy is in a bad state, and most of them think it’s going to get worse, not better.
Maybe we need a healthy dose of medicine to go with our political sugar.
Now, levelling with people might get you some credit, but it doesn’t give any answers. Frankly, the Tories could do it as much as Labour.
So it’s in the politics of who and of how that Labour wins.
The who is easy for the left. We win because our instincts are for a sharing of burdens.
But you only get credit for that if you say clearly how the burden helps on the journey. People might be willing to carry heavy pots and pans, but I reckon they’d mutiny at mysterious black boxes. Why should they believe us when we tell them they have to pay more tax and get less for it and their reward will come eventually?
So instead of making grand transformative promises that leave electors wondering what the bill for all this will be, I’d set clear priorities but limited, delineated policies on industrial investment, infrastructure, spending cost control, increased revenue through targeted tax shifts, a politics of nuts and bolts. A focus on the £10 million R&D fund here, a tweak on the tax treatment of capital gain there. I’d even consider outsourcing every spending proposal to a fiscal control commission whose test would be how likely the spending proposed would be to increase employment and growth over the medium term.
This would mean every time I increased a tax, or proposed spending, I’d have a special fund to put it in, or a spending cut elsewhere to complement, and could say the income would only go to a project that has been shown to improve long run economic or fiscal performance, from skills to infrastructure to early intervention in troubled families.
So my replacement for Blairism would be based on the following.
It’ll be hard work, but necessary.
It’ll be slow going, but it will help get us on track.
It’ll hurt us all, but it’ll hurt those who can bear it less the least.
Inspiring? Probably not. But at this point, I’d settle for grudging respect.
*I paraphrase via the medium of beer fogged recollection, so the following quote may be Hari-like in its creativity.
**One exception – if it looks like the euro goes there may have to be capital controls. I don’t think anyone is arguing this will be a sign of success though.
Hopi Sen is a contributing editor to Progress
Photo: C Simmons
austerity, Blairism, deficit, euro, Europe, neoliberalism