Labour’s fiscal rule is Osbornomics

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The debate on Twitter between Simon Wren-Lewis, Jonathan Portes and me on Labour's fiscal rule was resumed last night, and continued long after I'd dropped out to go to bed. I'll comment separately on my engagement later. What I instead want to do is give full credit to someone called Darrell Kavanagh, who said this to Jonathan Portes:

And secured this response:

At last we got to the nub of the issue here. First, Portes and Wren-Lewis don't do politics. It shows, I have to say.

Second, they don't think economics and policy are politics. I hate to say it, but nor do any neoliberals. Instead, economics and policy are for them 'the revealed truth', as they clearly are for Portes and Wren-Lewis.

Third, and rather tellingly, the result is a Labour Fiscal Rule that is the same as the LibDems approach and is, apparently, almost indistinguishable from anything Osborne did.

In other words, my suggestion that this is a continuation of the logic of austerity is right. As Darrell Kavanagh put it:

Precisely. To which Portes replied:

So, the drive for a balanced budget had nothing to do with the policy then, Jonathan?

I note you saying 'I can't speak to the politics' in the tweet I quote, above. Too true you won't, I am sure. Because four things are very clear.

First, this is Osbornomics.

Second, its use in the hands of the Bank of England - who it is intended to empower, again - will be to recreate Osbornomics.

And third, your rule strips away the power of the Treasury to stop that.

So, fourth, this rule is intended to re-establish the old economic order of neoliberalism, again.

And for the record, as Portes and Wren-Lewis think it should be used, that is what it would do.

I call that politics.

And I call that the politics that perpetuates all the errors of the pre-crash era (because this is also the Brown / Balls rule in all but name) as well as all the worst of the post-crash era.

And Jonathan Portes and Simon Wren-Lewis 'sigh' (to quote Portes) and think I 'seem to want to misunderstand' (to quote Wren-Lewis) at my comments, in an attempt to belittle them.

But I get what these two are saying. In fact, I got them entirely right. This is Osbornomics, as Portes has confirmed. And that's a million miles from where Labour should be. And I say that because I do speak to the politics. And I understand them. Which is why we differ, completely.