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Posts Tagged ‘Ed Balls’

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 »

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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.

Two resignations. Two bad decisions?

In Events, Party politics, The Media on February 1, 2011 at 1:10 pm

David Weber

Before I begin, I would like to welcome our newest writer, James Bartholomeusz. I enjoyed reading his analysis of Labour’s past and future, and look forward to future articles.

On the face of it, Ed Miliband’s recent decision to grant the shadow chancellorship to Ed Balls following Alan Johnson’s resignation looks like bad judgement. It is the most potent way he could have gone back on his decision to sideline the Brown treasury team back in September, when he appointed Ed Balls and Yvette Cooper to shadow Home and Foreign portfolios respectively. Not only this, but there would have been a strong logic in offering the shadow Chancellorship to Cooper instead, given that she came first in the shadow cabinet elections and has taken a less vocal line over the economy. Given that Cooper is married to Balls, this would have been a less than meaningful decision, but it might have looked ever so slightly better.

The truth, however, may be more nuanced. We do not know that Miliband had any real choice in who to appoint to the position. Cooper and Balls, sensing weakness and a lack of alternatives, may have threatened to consider their positions if the outcome was not to their liking. Both have a significant number of supporters within the party, and Miliband must be keen to avoid the kind of infighting that characterised Labour’s last spell in opposition. Without knowing the internal politics of the shadow cabinet, which has arguably not been infiltrated by the media to the same extent as the government, or the previous government, it is hard to evaluate Ed Miliband’s judgement.

What it is possible to say is that events are increasingly conspiring against him. Ed Balls repudiates the nuanced and flexible position laid out by Alistair Darling prior to the last election. He stood for the leadership on a platform laying out his opposition to the need to cut spending at all. This article will not speculate whether or not he was right to do so, but merely note that the public disagreement between Johnson and Miliband over tuition fees will pale in comparison should Balls choose to disagree over deficit reduction. An agreed economic policy is essential.

It is all very well for the political freedom of ideas brought by coalition, but I suspect that this is more workable in government, where the need to make tough decisions is at least recognised by the public, than in opposition. And it is perhaps an irony of coalition politics that people may become more accepting of disagreements between parties, rather than inside them. The opposition’s task in the short-term is to bring a simple, well-defined and credible alternative to the table. Only then can it worry about the niceties of pluralism and diversity of opinion.

Incidentally, I do not agree with those who argue that appointing Johnson in the first place was a mistake. There are two lines of argument: one which points to Johnson’s mistakes since being appointed, which is obviously opportunistic, and another which points to his lack of economic experience or qualification prior to being appointed. The latter holds more weight, but fails to credit his experience in government, which is greater than most of the current government, and surely counts for much more than a degree in PPE from Oxford. The argument also has no evidential strength to back it up so far. If George Osborne, who has been criticised too for a lack of economic credentials, single-handedly wrecks the economy before long, it will be strong evidence that Alan Johnson’s appointment was not a good decision. But unless that happens, we will not know whether economic qualifications are needed to take the role of chancellor.

So much for Reddening Ed. What of David Cameron, whose judgement is now called into question with the resignation of Andy Coulson? For many commentators, the ongoing fallout from the News of the World hacking scandal shows David Cameron’s judgement to be highly flawed in allowing Coulson to continue, and actively supporting him, for so long. I will not pass comment one way or another on the case, however. I know too little about it. I will rather look at a tangent that stems from it.

I believe this is further evidence to suggest the tenuous theory that Cameron is a far more relaxed Prime Minister than either of his predecessors. Although Brown’s government was famed for dithering over certain matters; when it came to the continued existence of liabilities, it tended to be more because of the party political context than because of any evidence of the Prime Minister being particularly relaxed. And Blair’s behaviour earlier on in his tenure bordered on paranoid at times, so determined was he not to lose momentum through scandal. A particular example was the first Mandelson resignation, which was back-dated in an attempt to make it look as if he had resigned the previous day, to avoid the opposition taking credit.

Cameron, in contrast, has shown little evidence of paranoia or dithering. He has wisely kept himself further from the forefront of the coalition in the media than Nick Clegg, investing his efforts (as far as one can tell) in its smooth running behind the scenes. This has worked well for his political momentum, as it leaves those out of the know more confused about his political positions, leaving him more room for manoeuvre and minimising accusations of dithering and U-turns. It also avoids the impression that he seeks to control every area of government, which ironically ended up costing Blair so much control.

So both resignations are at present very open to interpretation. Both risk accusations of bad judgement, slow decision-making and lack of control. Yet as we have briefly discussed, there is in reality very little difference to the way previous resignations have played out, other than in spin. Both were of figures who their employers were less than willing to lose; Johnson because of the political significance of his appointment, and Coulson because of the importance of his job. Both Miliband and Cameron may have been wise to play a relaxed game, letting events unfold leisurely rather than spin out of control as a result of frantic behaviour.

True, the wind may be blowing more in Cameron’s favour than Miliband’s; after all, when have more parties been united in government than opposition? When has the collected opposition lacked not just a majority of seats but also of votes? The other conclusion, which I was uncharitably tempted to disguise, is that this is a key lesson in the limits of pluralistic politics, such a key feature of my reasoning in recent articles. Oppositions, as I pointed out earlier, have traditionally had to put up an artificially united front in order to be seen as credible. This is a problem which needs addressing, but which it is difficult to see a solution to.

If I were a Labour leadership candidate…

In BBC Question Time on September 22, 2010 at 11:35 am

Part of a Question Time column

David Weber

Not that it’s likely, but for what it’s worth, this is how I would respond to their recent Question Time…

1. Is Tony Blair right that the Labour party lost the election because it abandoned “New Labour”?

A) It depends entirely on what “New Labour” is. Cheat answer, but There You Go. Blair and comrades (sorry; “friends”) have always been notoriously unclear upon this point. If pressed, I would be tempted to answer yes, for the cheeky reason that I don’t think New Labour, at its most successful, was much more than an election winning strategy. But I could be wrong. Blair certainly seems to think that New Labour amounts to more than that, to an ideology of some sorts. This isn’t surprising, as it would otherwise mean that Blair’s political direction was entirely controlled by a desire to win elections…

Not that it was. However, the big exceptions come across as exceptions to New Labour strategy, as well. The Iraq War is hard to see coming looking back at Labour’s 1997 election campaign. Blair’s public service reform ideas also materialised rather much later than the New Labour machine came into force. The two things; his original election strategies, and his attempt at a policy drive; were quite separate, which is why he has been criticised, both by Anthony Seldon and David Cameron, for not doing enough to plan for government.

But in any case, to get back to the point, looking at what Blair defines as “abandoning New Labour”, I don’t think the party should have much to worry about. His analysis smacks of that of someone who has been out of the country too much to have really understood the flow of UK politics in the last few years, and panders to his own hobby horse — an obsession with the “middle classes”. He talks about welfare and public service reform being at the heart of why Labour lost the last election, but I believe the truth is far simpler and far less policy specific than that. Labour lost because people lost trust in their government, and when the recession came, they were blamed for it.

Think about it. The real mortal wound to Labour didn’t happen over any specific policy failing — the lost data discs, Mid Staffordshire, Northern Rock. It was before all of this, in autumn 2007, with the now notorious election that never was, when Brown lost something worth far more than the public’s agreement. He lost their respect. This was further cemented, I believe, by the 10 pence tax row, which is bafflingly absent from Blair’s diagnosis of Labour’s ills. Nothing hurt Labour more than to be seen as dithering and hypocritical.

On the other hand, at least Blair does not define tuition fees as one of Labour’s worst failures. You will laugh, as this is now a favourite hobby horse of mine; but at least three of the candidates do, and it baffles me. I think after the Iraq War, the 10p tax rate, undermining jury trial and the Vetting and Barring scheme; a reasonably decent system of funding university education compares quite well with Labour’s overall record.

2. The Economist has endorsed David Miliband, arguing against a “lurch to the left”. Would a “lurch to the left” win a candidate the leadership election, but lose them the general election?

I think it was Ed Miliband (surprise, surprise) who responded to this by saying that such terms of debate were unhelpful. They are, although in my view in a different way to what Ed meant. I suspect he meant merely that it causes the type of division between candidates that a successful leader wants to avoid looking back on, both for his leadership’s and his party’s sake. I, however, am more and more thinking the the labels of “left” and “right” are unhelpful, simply because they seem to arbitrarily cut across the things Labour has actually claimed to stand for.

Tution fees are, again, a wonderful example. On the face of it, they were a right wing policy. But scratch the surface and you will see the Labour has actually improved matters quite significantly when it comes to University education. Not only did they change the ways loans were repaid in 1998, making it virtually impossible for student loans taken out post-1998 to bankrupt you, but they also shortened the lifetime of the loans more recently when they introduced top-up fees. The debt used to last till retirement — and many people I know have loans of this nature. Now they are written off after 20 years. So underneath the surface, who did Labour’s policy serve? The vast majority of people on low and middle-income backgrounds. At this point, I think “left” or “right” is pretty much irrelevant.

Another example is that of some of Ed Miliband’s policies. He supports various things, the two foremost which come to mind being the living wage and the High Pay Commission. Both policies definitely sound left, but both entirely depend on the means taken to achieve them. Remember, what they refer to are results. And the processes taken to achieve these results are just as important as the results themselves.

The Living Wage might sound brilliant, but if it were achieved by hugely increasing the minimum wage with no government contribution it could have very bad side-effects for employment. Given that Ed Balls talks about the importance of creating jobs, I am surprised he doesn’t pick up on this. The High Pay Commission is worse. No-one has defined what it is, apart from Compass, whose vision seems to be that of a pointless talking shop. But if it had any teeth things would hardly be better. There is no evidence I am aware of to suggest that government is successful at setting wages in the private sector. They struggle enough to decide what approach to take in the public sector.

So, again, “left” and “right” serve to distract us from meaning, rather than help us find it. Let alone the question of whether Ed Miliband would win or lose Labour the next election, the real question is how he would do in government.

3. Given the relationship between Labour and the Unions, will the proposed strikes simply damage the party further?

A) In fairness, this is one area where I can’t add much to the answers of the candidates. Of course, strikes may damage Labour’s standing, but there’s a world of difference between balloted strikes taken by a democratic process, and the strikes of pre-reform Unions in the 70s and 80s. I’m sceptical of the idea, as some of the candidates put it, that the big unions want to “want to be tactical about this”. We’ll see — but if the Unions think the public mood is sympathetic to rolling strikes to oppose the general policy of public sector cutbacks, then I think they’re on a massive gamble. There’s evidence so far is that the majority — or a plurality — of people think cuts even to core services are unavoidable.

It’s interesting that the candidates shy away — in some cases strongly — from the very idea of civil disobediance. Not surprising, of course, as to be seen to support it would most probably be disastrous for a leadership, let alone an election, campaign. But it interests me because I thought that the idea of civil disobediance, rather than simple disobediance, was an acceptance of the social penalties which are attached to it. No-one in the debate made that point, and that certainly didn’t surprise me.

Incidentally, I laughed at David Miliband’s reaction. “Bob Crow is not Ghandi”. Cheap, lazy, but funny. And also, if you analyse the difference between modern day Britain and pre-independence India, you’ll see there’s a serious point. Civil disobediance will probably backfire badly if it is not seen as a necessary step. And I highly doubt that many people see it as such today. That said — that was a reaction some made against the tactics of militant suffragettes, who people would be far more inclined to sympathise with today. Times change, and it’s not impossible for the public mood to swing violently against cuts. From my own ideological position, I think they’d be wrong to at the moment, however.

As usual, I’ve run out of time. I also suspect that my article is already long enough. I’m aware that further questions were asked, but I’m satisfied with my reactions to the ones I had time to watch, and will leave you to draw your own conclusions about the remaining ones. My own impression of the first half of the debate is that David Miliband came out strongest, whilst Ed Miliband has improved significantly as a communicator. At the end of the day, it’s not as if most of us have a vote in the Labour leadership election. If you do — use it well.