The Labour Party\u00a0conference\u00a0is over.\u00a0Overall\u00a0those on the left have reasons for hope, even if being cheerful isn't on the agenda right now. Ed Balls made some sensible suggestions on the economy; Ed\u00a0Miliband\u00a0signalled a clear change in direction and a big idea on the economy that has the capacity to\u00a0resonate with millions of people way beyond normal Labour territories.<\/p>\n
And yet there remains this lingering feeling that if only Labour were willing to be a little more bold how much better things would be. Let's be honest. The economy is in a dire place.\u00a0Growth\u00a0has collapsed.\u00a0Unemployment\u00a0is up. The claimant count is up.\u00a0Investment\u00a0has all but\u00a0disappeared. Real wages are falling. Inflation (partly due to\u00a0government\u00a0policy) is way above the rise in wage incomes for most. And\u00a0government\u00a0borrowing is increasing. Anyone - anyone but a fool, a Treasury mandarin or George Osborne could read just one word into\u00a0all\u00a0that, and it is 'failure'.<\/p>\n
Serious\u00a0economists\u00a0and commentators realise this. David Blanchflower does. Adam Posen does. Samuel Brittan does. Martin Wolf too. That's\u00a0serious\u00a0economic\u00a0firepower beginning to line up in the way Krugman has done in the States and say that Plan A is not just not working, but that it's\u00a0fundamentally\u00a0wrong.<\/p>\n
Martin Wolf repeats\u00a0this\u00a0message in the FT this morning<\/a>. As he says:<\/p>\n It is the policy that dare not speak its name: the printing press. The time has come to employ this nuclear option on a grand scale. The alternative is likely to be a lost decade. The waste is more than unnecessary; it is cruel. Sadists seem to revel in that cruelty. Sane people should reject it. It is wrong, intellectually and morally.<\/p>\n A recession looms close in the UK and other high-income countries, less than four years after the start of the last one. This would be a disaster for those who would lose their jobs or the young, who would find their hopes of work further postponed.<\/p><\/blockquote>\n Yoiu can't get much blunter than that. But the emotive language is right. As I said in a speech at a Labour fringe meeting this week: we have a choice. Let's not\u00a0pretend\u00a0otherwise. We can choose to have people out of work. We can choose to punish the poor, the young, the elderly, the sick, the disabled, the unemployed and those on average and lower wages. And we can choose to do all that to ensure that the the\u00a0wealthy\u00a0and powerful do not feel remotely challenged by the risk of\u00a0inflation.\u00a0Or we can choose to help all those people and in the\u00a0process\u00a0generate real\u00a0wealth\u00a0that is only ever made by people at work. But let's not pretend there is no choice, because one i available.<\/p>\n Now Martin Wolf is not from the left and I'd never say he was. But he is saying much the same thing. He is saying that we have a choice. More than that, he's saying it would be immoral to leave\u00a0people\u00a0out of work when that\u00a0choice\u00a0is available. And he's right.<\/p>\n He's right to also say\u00a0quantitative easing that goes\u00a0straight\u00a0to banks is not an option.<\/p>\n Quantitative easing that funds real growth - the sort I have argued for<\/a> - is what he and Adam\u00a0Posen\u00a0now call for.<\/p>\n And he\u00a0unambiguously\u00a0says tax cuts (and I'd add,\u00a0benefit\u00a0rises) are also essential - although I'd also add that I do not think this true for those earning over \u00a3100,000 a year since they will\u00a0simply\u00a0save any\u00a0benefit\u00a0they get and there is no economic\u00a0benefit\u00a0to that as we already have a glut of saving.<\/p>\n And\u00a0will\u00a0we get\u00a0inflation? Martin Wolf says:<\/p>\n Some will argue that a policy of direct financing by the central bank must be inflationary. This is wrong. No automatic link exists between central bank money and the overall money supply. Above all, the policy would be inflationary only if it led to chronic excess demand. So long as the central bank retains the right to call a halt, that need be no serious danger.<\/p>\n A far greater threat is that a prolonged period of feeble demand would undermine supply, impoverish the country and bequeath a legacy of huge public debts. The big risk, in short, is now of a lost decade. Act now. That must not happen.<\/p><\/blockquote>\n Absolutely right.<\/p>\n Now it is time for Labour to be as bold.<\/p>\n And to state as confidently that strong action to boost the economy will be a win: win without downside risk,\u00a0because\u00a0that's the case right now.<\/p>\n And that message needs to be delivered, loud and long.<\/p>\n","protected":false},"excerpt":{"rendered":" The Labour Party\u00a0conference\u00a0is over.\u00a0Overall\u00a0those on the left have reasons for hope, even if being cheerful isn’t on the agenda right now. Ed Balls made some
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