There are, as I have often said on this blog, just four ways to restore the economic activity needed to create full employment in the UK.
One is for consumers to spend more, and they aren't; they're saving instead and understandably so in the climate of fear the government has created.
The second is for business to invest and we know they're not doing so and why should they when the government is cutting spending and consumers are saving?
Third there is a net increase in exports which increases domestic economic activity.
And last there is an increase in government spending.
This is an accounting identity: other options do not exist.
The third - an increase in exports - could counteract the first two where we know the downside is persistent at present. But as the FT notes of yesterday's trade figures:
An economic rebalancing away from a reliance on imports continues to elude the economy as Britain's current account deficit — which measures trade — rose to its highest level in almost 25 years last year.
The data, released on Wednesday, were met with grim acceptance by UK manufacturing companies, which have not been impressed by the government's attempts to help the sector rebound.
So that's options one to three out of the window. Our only hope is of increased government activity and that the government is refusing to do.
That means this recession has been adopted by choice and is the result of deliberate government policy when borrowing at almost no cost to create the investment in the future that this economy needs is possible.
Why isn't Labour saying that?
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Because Labour are operating under the same neo-liberal economic fallacies that the Tories are.
We have no opposition. We have two near identical strategies for government where the difference is literally the Pantone shade on the rosette.
The debate we should be having is whether the government’s overdraft at the Bank of England should be extend by direct government spending or by additional tax cuts.
There is the opportunity here for Labour to introduce a full blown Job Guarantee that would eliminate poverty at a stroke and end the chase to the bottom in wages and work conditions.
A job for all at a living wage, paid for by the state and the labour used to advance the common good.
It would be a monumental achievement up there with the NHS.
What do we get – a PR veneer over a small amount of money that will be paid to private sector operators who are refusing to pay the full cost of labour.
I despair. I really do.
As Neil says, the simplest way to eradicate poverty and social security dependency is to give people jobs that will pay for the cost of living.
Add to that a Citizens Income, non-means tested and for all adult citizens and you’d have the foundations of a truly egalitarian social democracy.
Where is Labour? Supporting sanctions and refusing to commit to any policies whatsoever.
I hope to have comments on a citizens income soon
Labour may not be enough of an opposition but there is the Green Party (disclaimer: I am a member but I am not tribal and will work with other political colours where necessary). They have recently enshrined social justice into their constitution and don’t pander to the tabloids unlike some in Labour. Plus they would be better for the environment…
Not highly political but can’t ignore it. Working class, illegitimate when it mattered, and Grammar School.
Have complete belief in the power of good education, but not the Eton bully boys who never need to work!!
I felt from the beginning that they were all out to create a recession, which could be blamed on Labour. They should have kept everyone in work, built council houses, taxed second homes, put doctors in charge of NHS and concentrated on education and production. I’m a retired headteacher, and see their policies as totally destructive and designed only to
make money for their own kind
I suspect that through your various contacts and channels you have a clearer insight into this than many of the readers of your blog, Richard, so perhaps you could hazard a few guesses 😉
Personally, the decision last week to abstain over the workfare bill was the final straw for me and I resigned as a member. A party that can be totally lukewarm in its attitude to bankers’ bonuses but aid this government in its persecution of the unemployed and poor isn’t one I can support. Indeed, later that week I saw an interview with Chuka Umunna on our regional news in which he said that Vince Cable’s most recent attack on the unwillingness of banks to lend was too harsh. That spoke volumes about the direction of travel and real interests of one nation Labour: One Nation = The One Percent.
As someone who never joined I can’t resign
And I keep talking
But I note what the unions are doing with real interest
I think I caught sight of an article in The Guardian yesterday about some leading lights trying to start a new political party. I meant to go back and read it. But yes, you’re right about the trade union movement. Personally I take the view that it’s time to cut their affiliation to the Labour Party. I note from my (ex) membership card that it says: ‘The Labour Party is a democratic socialist party’ If only!!
If only
You should join the Greens Richard, your values and their values are very close 🙂
Caroline Lucas tells me so, often
As doe the Greens in Norwich
Why isn’t Labour saying that?
A question I have asked many times myself. I’ve asked various members of the shadow cabinet. The only reply I received said that alternate views were being voiced but not reported. That may be partially true, whilst the BBC has toned down its approach it still seems very ‘pro cuts’. Whilst listening to a ‘debate’ on Radio 2 about the Cyprus problem the show did it’s best to build the idea that public sector pay/pensions and so on had more of a role to play than the financial industry. Although to be fair my growing dislike for the Vine show my have clouded my memory.
Back to the Labour party. No longer fit for purpose. I am rapidly coming to the opinion that they are not a different side of the same coin but the same side of the same coin.
Meaning that public sector people like myself are expected to pay for the mess caused by the feckless, greedy, incompetent and corrupt banking elite? Is that the line taken by the Vine show?
It would seem so. Irrespective of genuine economic policies/principles the truth is that this governments aim is to ensure that the seriously wealthy remain seriously wealthy, and ideally increase that wealth. As such they have been fantastically successful.
And yes much of this has been to the detriment of public servants. But it goes deeper than that. Many DWP workers face another year of zero or near zero pay increases and many of these have agreed with Osborne that those on benefits should suffer the same fiscal fate. So rather than aspiring for better those on low and the lowest incomes are fighting each other in a race to the bottom.
Agreed
It seems to me that the Labour Party is to a large extent running scared at the moment. Running scared of the print media (even though in the wake of Leveson the right wing press is totally discredited), running scared of the BBC and Sky News, running scared of UKIP (hence the attempts to look tough on immigration), running scared of the ConDems (despite the fact that this govt is viewed as pretty incompetent even by its strongest supporters) and above all running scared of a failed neoliberal economic model (it’s this last one which puzzles me most really, as anyone with half a brain can see that neoliberalism is more or less a total failure). The frustrating thing is that Ed Miliband has given repeated indications over the last 2 years that he understands the scale of the problems facing Britain and in particular people on low incomes in Britain but that has not yet (for the most part) translated into decent policies.
Everyone interacting with Labour MPs either through the policy review process or other events has a responsibility to explain that they can only win the next election by being bold and radical and not by being a slightly nicer clone of the Tories. The latter course was, to a large extent, the Tony Blair/Gordon approach and it netted 29% of the vote in the 2010 election. Labour can win next time, definitely, but only if they offer genuine social democratic (indeed one might as well say “socialist”) policies.
Can I also recommend that as many people as possible go on the People’s Assembly Against Austerity march on 22 June (see http://www.coalitionofresistance.org.uk/2013/02/peoples-assembly-against-austerity-launched-in-the-guardian/)
They are trying to get more than the 1.5 million or so who marched against Iraq in February 2003. If there could be (say) 5 million there, that would send a huge message to Labour (and indeed to the Lib Dems) that the current direction of policy is not going to be tolerated.
I’d like to think you’re right Howard, that they can only win by changing course, but i actually think they could get a small majority proposing austerity-lite and calling it something else. As others have pointed out before me though, what’s the point in winning if its more of the same ?
The mantra is that they have to be radical to win, but i think its just that – a mantra. The policy review will have 2 or 3 ‘radical’ policies that cost very little, catch the Westminster media eye but do not change the fundamental dynamics of our economy/society.
Its sadly what happens when winning becomes more important than ideas.
I’d love to be proved wrong, but i’m very sceptical at this moment in time.
You have every reason to be
The Labour Party from Blair onwards has never been a Socialist Party but a Torie Party in disguise, sheep in wolves clothing.
If the Labour Party hierarchy really believed in an alternative they would not be scared to propose it. Which must mean that the thing which scares them is TINA and the fact that they have to follow the same policies as the condems with sadder faces.