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Posts Tagged ‘cuts’

The Big Society, the market, and society: why deficit reduction might actually be a good thing

In Economy, Events, Ideology on July 28, 2011 at 2:07 pm

David Weber

I must admit that I originally intended this to be a full response to James Bartholomeusz’s recent article on working class politics and welfare reform. However, while reflecting on his various arguments, my response to his comment underneath the article quickly became feature length, and an article in its own right:

The problem is, [the Big Society] dovetails a little too nicely with the market fundamentalism that got us into this mess, and the tough deficit reduction plan which has ostensibly been forced upon the government against its will. [emphasis added] Read the rest of this entry »


Ed, show us the alternative

In BBC Question Time, Government Spotlight, Home Affairs, Ideology, Party politics on April 6, 2011 at 7:21 pm

By James Bartholomeusz

Audience responses on the BBC’s Question Time usually range from the mildly interesting to the banal, providing little more than an identification of which panel member the viewer most aligns with. However, once in a while, someone says something so original and yet so obvious that it merits serious consideration. Such a thing was said on last Thursday’s episode: a woman, chosen by David Dimbleby to speak, asked why Labour, if it’s so committed to the alternative, doesn’t pen a Shadow Budget to lay out their alternative deficit reduction plan.

The panelists response to this was painfully predictable. Diane Abbott, as the Labour representative, spluttered something about it being nonsensical four years before an election, whilst Mark Serwotka, the head of the PCS union, repeated his tenuous claim that there is no necessity for any spending cuts whatsoever. And yet this idea of a Shadow Budget, levelled by someone so lowly as to not be a professional economist or politician, is one that, I think, should be adopted by the Labour Party without hesitation.

The current debate on the economy, both national and global, has lined up between the two foremost schools of economic thought: neo-classicalism and Keynesianism. The neo-classicalists, inspired primarily by the 19th Century economist David Ricardo, see budget deficits as dangerous and immoral: according the Ricardian equivalency, any national deficit between income and spending (the UK’s being approximately 10% of GDP) is just taxation deferred for future generations. By radically cutting public spending to balance the deficit (‘expansionary fiscal contraction’, or, in Cameron’s terminology, ”rolling back the boundaries of the state”) neo-classicalists believe that the private sector will be freed from taxation and competition with the public sector to drive the economy back to prosperity. Keynesian thought, meanwhile, led the original response to the financial crisis, bailing out the banks and implementing fiscal stimuli to drive the economy quickly out of the recession. Now out of the immediate danger zone, Keynesians, such as Robert Skidelsky and Joseph Stiglitz, do not dispute the need for eventual deficit reduction, but are concerned that a premature fiscal contraction underestimates how much the private sector relies on the public sector, and so will drop the UK economy back into recession. Instead, Keynesians argue for fiscal policy based on growth and investment to stably harbour the economy, whilst slowly but steadily cutting the deficit.

This is the debate which, since the initial crisis response, has been mapped on to British party politics. Last May, both the Labour manifesto was based on the Keynesian response, whilst the Conservative one was neo-classicalist, and the Lib Dems in between but Keynesian-leaning. At least partially on these grounds, the majority of commentators predicted, before the election, a Lib-Lab coalition in the event of a hung parliament. And a hung parliament we had, except that the Lib Dem high command, vested with the choice of how to form the next British government, elevated David Cameron’s Tories over Gordon Brown’s Labour. Now in government, Clegg and his allies have apparently been won over to the neo-classicalist, and by extension George Osborne’s, fiscal plan: to entirely eliminate the deficit by the end of the parliament through a 73:27 ratio of spending cuts to tax rises.

All the evidence suggests that Osborne’s economic management so far has ranged from lacklustre to abysmal. The Office of Budget Responsibility, set up by the current government, has downgraded its growth forecasts from 3-3.5% to 2.6%. Unemployment is still rising, now at a 17-year high, with one-fifth of all young people unable to find a job. Inflation is at 4%, the highest in 20 years. The Consumer Confidence Index was last measured at -29, the biggest drop since 1994. Even the mainstream centre-Right newspapers, which had previously praised the Chancellor’s conviction, have now turned their attention more to the human costs of deficit reduction than the stability it will ostensibly bring. Osborne’s attempt to blame poor economic performance on heavy snowfall over December fooled no one: the US, German, French and even Spanish economies grew by over 0.5% in the last quarter of 2010, whilst ours shrunk by more than 0.5%. The problem is, what is the alternative?

Ed Miliband’s Labour, having dithered in the autumn months, has now settled on maintaining Alastair Darling’s plan of halving the deficit in a single parliament. With Ed Balls as Shadow Chancellor, this position has now been confirmed. Labour has since busied itself with rebuking the Tory-led government on its choices for deficit reduction: the VAT rise to 20% (predicted to cost families with children £450 extra in 2011), the rise in higher education fees, and front-line cuts to public services have been particular targets of the Shadow Cabinet. But Labour has yet to commit to what it would cut, or which taxes it would rise, were it currently in government. Although exactly how much would have to be cut under Labour’s plan is unclear, Miliband and his colleagues have so far sidestepped the sticky issue of what their ‘alternative’ would actually entail. It is this, more than any other factor, which will cost them electoral support.

I marched, carrying a Labour Party banner, alongside up to half-a-million others in London two weeks ago. And yet, will Labour’s reticence to commit to a specific deficit reduction plan, I am losing faith that there is a credible alternative to the government’s plan, however badly executed. A YouGov poll conducted on the same day found that the majority of the population, 52%, now supports the campaign against public sector spending cuts. But Labour should not fool itself that, just because it happens to be in opposition to an unpopular government, it will automatically gain the support of the electorate. This was the mistake made, in the last two decades, by both Kinnock and Cameron; 1992 resulting in a narrow Tory victory, and 2010 in a hung parliament. Labour should pen a Shadow Budget, laying out exactly which cuts and tax rises it would make. Ed Miliband has rightly sounded the death knell of New Labour and embarked on a holistic policy review, refusing to make manifesto commitments before the cuts have really started to affect the nation. But reconstructing its economic credibility needs to be the party’s top priority, and Miliband cannot afford to be haunted by the ghost of Gordon Brown any longer.

The Defence of the Ignorant Teenager

In Events, Home Affairs, Party politics on September 11, 2010 at 12:30 am


A message from the Co-founder

by Jack Blankley

First things first, may I say hello to all the readers of The Daily Soapbox out there, as a co-founder of this blog I am utterly disgusted that this is actually the first time I am actually writing for it. I suppose my excuse is I actually didn’t know how difficult it is to write one of these things, and also downright laziness.

If you’re reading this expecting a teenager (or twenteen in my case) to defend myself against all the prejudices which there are against the younger generation then I’m afraid I’m going to disappoint you. I am actually going to defend New Labour, which as of the 8th September 2010, was 16 years and 2 months old, and which like many of us at that age is going through a very sickly and worrying patch.

The importance of New Labour cannot be understated. Without it I would worry this country would not have a credible opposition to the coalition, at a time when cuts are going to devastate huge regions where the public sector is the main employer. With an Old Labour, 80’s opposition, the country would not trust Labour; now I know the critics would argue that they lost faith in New Labour at the last election, but even though there was the worst economic disaster in 70 years, an unpopular war, an even more unpopular leader, and the infamous “bigot” quote; the country still didn’t give the Tory party a majority in parliament, at 36% of the vote, nowhere near as much New Labour won in 1997 when it was still a toddler.

The biggest ideological difference New Labour has over Old Labour is actually a very Tory idea, that is that you will make much more of a difference in government then outside of it, and the way you do that is by appealing to everyone, not just the left (and this is coming from a nutty lefty at Sussex University).

Remember the minimum wage, devolution, improvements in waiting times in hospitals, the complete regeneration of some inner cities which were horribly ignored by the last Tory government. Remember the Good Friday agreement, equal rights for homosexuals, remember the rebuilding of relations with Europe, remember that New Labour politicians made unprecedented actions on the banks to stop this country from having a depression. These changes were mostly opposed by the Tories and can only be done inside government.

I know New Labour isn’t the finished article – it had cash for honours, the Iraq war and foundation hospitals, it gave too much power to the banks – but who is at 16? And going through that traumatic break up of its parents Brown and Blair has always limited its growth. But it’s now looking for a new parent, to take it through the next stage of its life; and I fear if it gets the wrong guidance and leadership, it could turn from a promising, still relatively new ideology into a forgotten about, no hoper who has never really been given the opportunities to fulfil its own potential, nipped in the bud at only 16.

The Labour leadership contest will decide this. I hope people give it a second chance or I fear the Tories will be able to put through their own policies for the long term.