Shadow chancellor, Rachel Reeves MP, explained her vision for the UK economy to the Peterson Institute in Washington DC, yesterday. You can watch the whole agonising hour here if you want. I watched it live.
Labour also published a booklet to go with the event. I can only find that here.
There is also a transcript available.
Reeves claimed that there had been two big mistakes made over the last forty years. The first, she said:
The first of these is what I consider a fundamental under-appreciation of the role of government.
That error dictated that a government's primary economic imperative should simply be to get out of the way of free enterprise.
It is hard to disagree with that. The second was:
The second error flowed from the first.
It was the assumption that the people and places that matter to a country's economic success are few in number.
This misconceived view held that a few dynamic cities and a few successful industries are all a nation needs to thrive.
In Britain, this meant that the South East of England could forge ahead while the City of London and a few thriving industries could power our economy.
The result was a paucity of ambition for too many places, the hollowing out of our industrial strength and a tragic waste of human potential across vast swathes our country.
For these two reasons, everything went wrong. That's it.
No mention of Brexit. Nor of the decline in the quality of our democracy. No mention of the assault on trade unions or so many other freedoms. Or come to that the decline in many public services, let alone the pay of those who work in them, unless the first heading was to encompass all that. Instead, she offered a simple two-issue analysis with a focus on Red Wall seats. Not good enough, in other words.
The solutions were worse though. Everything hinges on one thing:
I can promise today that a Labour government would be different.
Earlier this year, Keir Starmer announced that Labour will be guided by a set of missions.
The first of which is to secure the highest sustained growth in the G7 with good jobs and productivity growth in every part of the country.
I know how ambitious that sounds but that does not deter me.
Because I know we can build a prospectus for economic prosperity that allows Britain to embrace the opportunities of the future built on the rock of financial stability and economic security.
She called this securenomics, a term we are going to become incredibly bored by.
So what are the foundations of this? First there was this:
There's no going back into the single market or the customs union, with Labour we would make trade easier with Europe, and rebuild ties with our closest neighbours.
Then there was, in the pamphlet:
Stability rests upon robust institutions and on strong rules. Two years ago, I set out the fiscal rules which will guide the next Labour government and from which we will not deviate. I declared then that debt will fall as a share of GDP and that day-to-day spending must be sustainably funded. Everything Labour does in government will be in keeping with those rules. Every line in our manifesto will be fully costed and fully funded. The past year erased all doubt: it is Labour that is the party of economic responsibility and sound finances.
So, Labour's promise is to be outside world trading blocs, to balance the budget, to never run a deficit to promote growth and to cap investment at levels set before inflation hit and which have not been revised since when they were inadequate in the first place.
That's it.
Adam Posen, who chaired the meeting, asked in his first question how Reeves would tackle the problem of chronic underpayment to staff in the NHS and elsewhere which was crippling public services. She never answered. I think we can safely assume she has no intention of doing anything about any of this.
And her sops to green issues are all related to growth in green manufacturing and never to the changes in society that might be demanded.
In summary, Reeves gave no real hint whatsoever, as to where she thinks growth might come from, and yet everything that she says, is dependent upon her, finding that growth in an economy, where there is no reason at all for it to happen.
And worse, in one of the few statements that she made that gave a hint of her policy thinking, she said she wants to encourage the growth of savings in shares in the UK because she thinks that this will unlock the potential in small businesses in this country. As a result, she indicated two things. One is that she has adopted the ideology of Margaret Thatcher. The other is that she does not understand that share capital, particularly in the form in which small savers can invest, does not now almost ever provide any working capital for business.
Reeves is a person out of time, out of ideas, and right now with no answer to any question that might reasonably be asked of her. It's very depressing.
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If I was being charitable, ……Liebore is so worried about winning power that it refuses to put forward anything that significantly deviates from what passes for vile-tory mainstream economics. In its own mind, Liebore thinks it would leave itself open to attack by the vile-tories if it starts talking about money.
This suggests a “leadership” (I use the word losely) which lacks confidence in its ability to articulate something/anything which could make a substantive difference to the UK. Thus the likes of Reeves, comes out with anodyne stuff (charitable) or contentless, contradictory blathering bullshit (accurate). The gosts of 2008 and 2010 and vile-tory attack lines “how are you going to pay for it” linger like a fart in a spacesuit.
Liebore, everyday in everyway redefining “pathetic and useless”. & no I did not watch the vid – I’d rather pull my own fingernails out than do that.
I was toying recently with giving the Guardian some of my rather scarce money until I read this numpty-boy (who should know better):
https://www.theguardian.com/commentisfree/2023/may/24/rachel-reeves-economic-thinking-social-democracy
So, I think I’ll stay with Byline Times and join their TV station in addition to their excellent newspaper.
Rachel Reeves is to me nothing more than a economic numpty whose job is to bow and scrape to orthodoxy and disrupt the change we need in the name of Capital.
She is a disgrace to her position. She is nothing more than a hologram of politician and will be the same as chancellor. You get the feeling that if you had a good debate with her, she’d just fall apart – like she does.
BTW – the fact that Reeves is a female has nothing to do with it, I assure you.
So, here we are maybe nearing the terminus of one of the most destructive and laissez-faire governments in recent history and all we get is this. Bollocks.
I stand by my decision to withdraw from this false democracy and not legitimise crap like this.
Reeves not only courts the brain-dead vote, she leads by example.
the highest rated GUARDIAN CiF comment this morning
Nothing, nothing at all that will help the poor, sick and disabled who have been economically ravaged over the past 13 years. The same person who said Labour would be tougher on people on benefits that the tories. Where is the bit about economic equality, closing the economic chasm between rich and poor? Where is the bit about investing in social housing to free those who cannot afford a mortgage from private renter servitude? Where is the bit about taking steps to prevent the UK public from being ripped off by energy providers and supermarkets? Where is the bit about removing private interests from the NHS? Where is the bit about renationalising public transport and utilities? Forgive me for wanting a return to a society that works for all, Reeves seems to have little interest in that.
I appreciate she couldn’t mention everything but it was a ‘don’t frighten the markets’ speech. I want a government with vision, not one who just accepts the status quo. The status quo is dying.
Agreed
Didn’t we try all of the above with Corbyn?
Perhaps the worst element of all was the new goddleydegook of – ‘securonomics’ – a less than meaningless piece of wordsmithery, with which Labour will now try to persuade the witless press to bombard us. Now not only out of ideas but out of intelligible language too, the long slither down the slope, first set by Blair’s penchant for verbless sentences, has reached the swamp of decaying verbal matter that makes up what is left of a once intelligible polity. The historical examples are not encouraging ranging from the fantasy unrealities of the old Eastern Europe – try 1950s Prague – to the collapse of the Byzantine Empire – filled according to one awake contemporary with “the thunder of empty neologisms.” This kind of nonsense never ends well.
As to the actual economics….!! This is the worst of the old failures barely reheated. The gruel of privation presented as prudence and garlanded with fantasies of fulfillmemt as real as Victorian fairy photographs. And all this while the brutal reality of self-harm by Brexit – a self-inflicted disaster historically so rare as to outdo any period comparator – is willed out of existence by silence. This is exactly how empires, societies and regimes implode and are swept away.
Humza recently accused Labour of being a Tory “tribute act”, then corrected himself to say they were actually a “replica”. Perhaps a ‘revenant’ comes even closer; the undead chanting spells.
The Labour Party is not worthy of the title ‘ Labour’. Most of its policies are guided towards the maintenance of the current status quo. Starmer has proved to be a complete disaster in terms of radical policies to benefit the majority of the population.
I saw him at a Fabian Conference not long after he was elected. I was not impressed then and I am even less impressed now. I have to confess that at the time of his election when I was then a Labour Party member I spoilt my ballot paper by inserting the name of Clive Lewis.
After almost 40 years of Labour Party membership and serving 3 terms as an elected member ( 2 in a West Midlands metropolitan borough and 1 in a rural district) I have joined the Green Party.
To say that I am so disappointed with what the Labour Party has become would-be an understatement, but at least I am able to say that I did not vote for Starmer.
I am not surprised by your choice
Agreed, little to add. I note that just as Stalin had people airbrushed out of historical photos, Starmer is trying to get Corbyn airbrushed out of Labour history; we can’t have reminders of ‘for the many and not the few’.
Securenomics? What in heavens name does that mean? Sounds like the type of silly word soundbite that a PR company charging thousands a day would come up with. Totally meaningless.
There are many things that Reeves (and Labour) say that just don’t add up given as you say.
“So, Labour’s promise is to be outside world trading blocs, to balance the budget, to never run a deficit to promote growth and to cap investment at levels set before inflation hit and which have not been revised since when they were inadequate in the first place.”
Leading the G7 in growth? Fantasy given all the fiscal constraints that she believes in. I can’t see how it can be done?
Reeves final fantasy is the negotiation of a better Brexit deal. While her sentiment of wanting a better relationship with the EU is admirable, she doesn’t seem to appreciate that having chosen the “third country” option relationship, the UK has effectively shot itself in the foot on any better deal than the one we now have. There is no reason for the EU to do us any favours anymore. No reason for them to upset the balance of relationships that they already have both within the EU and with countries outside that have negotiated single market access. Why would the EU give us a better deal? They have always said that as a third country we cannot have our cake and eat it. The better deal is single market access, rejected by Reeves. At best we may get some tinkering around the edges of the current deal, but that’s it. The EU said when it was signed that was the best on offer. Reeves must know that?
I suppose there is an elephant in the room when discussing the economy and when it comes to inequality and perhaps one Britain will never be capable of shaking.
In response to Covid we essentially had an additional year of government spending over what was expected and by the nature of the economy this has increased inequality.
Who has the money now that was given out during covid?
It tricked up, inevitably
Tricked up
I think that is more accurate than ‘trickled’ when you consider the whole picture
Labour must have some economists advising them, surely? This can’t all be coming from Reeves alone, can it?
Does anyone know who they are?
Well over 90% of all economists believe in the same mad mantra that she does
She loves parading her insane orthodoxy
Well, she worked for the Bank of England so I don’t think we can expect much more than shallow macro thinking on her part, and she has given every indication that she is unable to think for herself. She’d be an incompetent chancellor, I would have thought, as a consequence.
It’s just expansionary austerity all over again, isn’t it? Who thinks it will work better this time than last?
The real point here is not that Austerity simply doesn’t work, but rather that it CANNOT work! Can you accelerate your car (stimulate the Economy) by using the brakes (Austerity)? I am no mechanical genius, but the obvious answer is NO.
If you challenge them, you get the same response as Martin Kettle essentially gives in his Reeves opinion piece in the Grauniad today – this is ‘grown up politics’. This new mantra enables Labour to refuse many coalitions that could take over local government (Wirral and my local Lichfield are cases in point) but even go into coalition with the Tories (e.g. in Scotland).
“Grown-up politics” is a weasel-word insult, a condescending dismissal of all criticism of their pathetic, neo-Tory efforts.
Agreed
And the last thing these politics are is gown up. Grown ups should take evidence into account.
Richard you rightly say:
“Reeves is a person out of time, out of ideas, and right now with no answer to any question that might reasonably be asked of her. It’s very depressing.”
I have already recorded my judgement on her and Starmer – they are what I call flat-earther economists = people who think the pre-Copernican/Ptolemaic economic cosmos of the pre-Great Financial Crash represents reality, and that all the measures that were tried and that spectacularly failed pre-2007/8 are still valid, when the GFC blew Neoliberalism to smithereens.
Idiots like Reeves (and all the Chancellors since the GFC, with the possible exception of Alistair Darling) spend, and have spent, all their time trying to prove the headless chicken of Neoliberalism is still alive and kicking, when a new paradigm is desperately needed.
And the tragedy is that it’s there for the taking, in the form of the sort of thinking that can be called MMT, or heterodox economics by the many economic voices you continually refer to, Richard – such as Marina Mazzucato and Stephanie Kelton, and you and Danny Blanchflower, and so many others.
I consider it to be of prime importance that truly progressive forces and voters do all they can to prevent Starmer and Reeves from being anything more than minor members of a progressive coalition (and preferably still no more than members of His Majesty’s Loyal Opposition) that can govern in not just the interests of the 99%, but in their true needs.
The knee-jerk headless chicken Neoliberalism of these flat-earther economists is the very LAST thing we need. And besides, Reeves (and Starmer? Yes, I’d say) is a thuggish politician.
On which, see Reeves skewered
https://twitter.com/JackMonaghan1/status/1593265355253846017?t=xIwOt6uraSRupVq3khSDqA&s=07
To have a country where the two main parties are led by comedians would suggest the Gods like a joke!
I am quite certain the x million children that go to school hungry each morning, plus their parents are rolling around laughing, how they laughed at the antics of their betters, the vile-toires, vile-liebore and the lying-dems all doing their bit to make sure the disunited Briandom is a progressively shittier and shittier place for those not born with a silve spoon in their mouth and/or going to private schools.
BTW – this is not a criticism of your point Mr Schofield – the gods deliver to humans what they often deserve, or are groomed to chose.
My despair at the politics of the right (and that includes Labour) dominating debate is very strong.
On a happier note – after several months trailing, the latest poll for Scottish indepencdence puts support for independence in the lead at 51% (support for the union nowadays rarely gets to that level, even though it has – until now – been ahead of independence for a few months).
Think how much bleaker things would be if the “United Kingdom” or ‘Ukania’ as Tom Nairn called it, wasn’t a multinantioal state, with the constant threat of parts of it breaking away. (England and Scotland both founded in the 9th century, are amongst the world’s oldest coherent nations, that could easily and naturally be freed from the millstone of the “UK”.)
The “UK” (inverted commas as it is not ‘united’ in many things) is a reactionary state, but would be even more so if England, Scotland, Wales, Northern Ireland, London didn’t exist.
Her CV includes Oxford, LSE, BOE and HBOS. She is steeped in economic orthodoxy and we will get more of the same with her as Labour Chancellor. I too have joined the Green Party whose policies are progressive. Hopefully Labour will need support from other parties when the next government is formed. The price should be PR.
A Shadow Chancellor addressing the Peterson Institute? Rather like a chief constable trying to butter up the Brinks-Mat gang. Or is she so deeply Thatcherite that she admires them? Gawd help us.
Not understanding how money really works is the equivalent to being Neolithic (stuck in the Stone Age) and no political party in the UK shows any sign of not being despite all the abundance of information around to explain how it does.
Difficult to disagree with Richard and all the other overwhelmingly negative comments. Martin Ketttle effusine in the guardian saying Reeves is among the leading left thinkers of the world! She is suposedly doing a Biden and other left governemnts in Austraia, Germany etc
And even though every comment here is probably correct about Reeves’ overwhelminglyy ‘convential’ economics, nevertheless the document is littered with contradictions – between what she says and doesnt say -about poverty, about the ‘need to support the human side of the NHS’ – ‘not just technology and buildings’ – that the state should be proactive and involved in reorganising the economyinstead of leaving it to the market etc
It is really quite funny – I put up a proposed respone by the local Labour Party to the National Policy Forum – of which the Reeves New Business Model is a part. I more or less interpreted much of what she said and didnt say as illustrating how the economy really works and that Labour will generate plans and programmes along with ‘real’ Richard-type fiscal rules, not targetting debt but including assets – etc harnessing bonds to savings and pension funds etc etc, and increasing the minimum wage – ‘investing’ in doctors and nurses to reverse the skill drain from the NHS etc. using BoE-generated money and taxes on monopoly profits and top incomes .
This would all be consistent with much of her paper – just as so would and total balanced budget conitinued austerity.
I suppose it may still be worth engaging with and pursuing the contradictions – something has to give. If they are going to renegotiate the EU leaving agreement to save the car industry they will end up with something akin to the single market.
Reeves even tried to cite Mazzucato – as part of her insipiration – whatever next?
I think we can be certain if that if Labour, or any party (perhaps even the Tories?) presented a progressive economic program (decent wages, non-poverty social welfare, investment in social infrastructure, investment in industry, investment in regions etc etc) based on a clear understanding of government finance, they would be instantly hammered by the press, and the BBC, with the single question “how are you going to pay for it”.
That question, it seems, can’t be answered honestly because the belief that government borrowing is like business or household borrowing is so throughly baked in. It makes austerity seem a sensible option for those that don’t suffer from it, and somehow justifiable for those that do.
John McDonnell did, I think, a pretty good job of framing his way out of it it as “borrowing to invest” (while interest rates were near -zero) to generate growth which would pay back the debt.
The exact same stranglehold applies in Australia and New Zealand. Jacinda Ardern’s government could not meet its promises – not even in ending child poverty in that tiny country – because they let themselves be constrained by the Fiscal Responsibility Act which caps government spending.
Australia’s Labor government came to power offering nothing (its “small target” campaign approach avoided any “wedging” and just let the truly awful Morrison government implode), and is following the fiscal responsibility orthodoxy line too, promising to “balance the budget” and its increases in spending on social welfare are microscopic. Almost all the commentary following the recent budget centred on government debt. If you are a Liberal party voter there’s scarcely anything to dislike.
And in the US there’s the predictable, crazy and utterly false debate over the debt ceiling where both sides play the game, no one calls it out, and in the end social welfare and investment programs gets cut and the lie that government debt is a bad bad thing perpetuates.
How do we ever get out of this political trap? It seems that the only way UK Labour can be elected is to seem as Tory as possible, sans the chaos, incompetence and corruption. And if it does get elected, any deviation from fiscal orthodoxy will be seized upon by the Tories and amplified to the extreme by the media. It’ll be “tax and spend” Labour all over again.
I disagree
I think people want to hear the truth
But most people think that that *is* the truth, Richard.
Why should they think any different when 99% of economists, commentators, journalists and politicians (to name but a few) are telling them that state spending depends on how much tax they pay (and only talk of income tax) ?
As I’ve said before, efforts to present them with a different narrative don’t go down at all well…
There will be a tipping point
I think Maggie is a tad pessimistic Richard. I find that when people’s preconceptions and misconceptions are questioned right back to the root, they are interested to hear what the alternative is.
As for those who are hard to crack, it is good to leave them with trying to solve the paradox of history, when examples of what they think is correct consistently turn out, when examined, to be wrong or contradictory.
Ignorance is not the problem; the problem is preconceptions.
Why would anyone expect decent ideas from a party who in various areas of the country have done deals with the Tories in preference to working with the Greens, and utterly disgracefully in Hastings have chosen to do a deal with far right loons Reform UK in preference to doing one with the Greens?
Labour under Starmer has gone full on right wing.
Staggering, isn’t it?
I found some of her statements about a more active role for the state interesting. Perhaps Mazzucato is having an effect. I assume Mazzucato is at least sympathetic to MMT thinking.
I cannot say that I am very hopeful that it will come to anything if Reeves becomes chancellor.
I think sympathetic but not wholly convinced might be the best description
None of it is really convincing – but follow the dialectic – they/she may find they have little choice but to do more of the right things – despite themselves (Hadn’t realised Starmer is going to tax under taxed hedge funds for example.)
They just have to have a fiscal rule which actually enables ‘investment’ in doctors and nurses and raised minimum wages etc etc
It will be interesting to see how far trying to interpret/translate the draft ‘National Policy’ and the Reeves ‘Business Model’ – in terms of how the economy actually works (rather the desperate failed model we know they still believe in) will be accepted within the local and wider Party.
The interpretation tries to make explicit what can and must be done to rescue public services, living standards reduce inequality etc which Reeves sometimes sort of implies – but never actually states.
I had a long discussion with a well informed person on this today
They suggested the inly key issue is that Labour says the state will have a role
They will after that be dragged kicking and screaming into doing what is a required by public pressure
A hung parliament would help that