Is the economics getting lost in Labour’s Leadership debate? I think so. Only Jeremy Corbyn is talking real economics, the others led by Liz Kendall are talking about credibility, which I assume is code for reducing the deficit through fiscal policy i.e. expenditure cuts and tax rises. I am disappointed in Yvette Cooper, yet strangely not surprised by Andy Burnham.
Corbyn is not arguing for a Soviet style economy, the macro-economics is Keynesian, the micro-economics maybe socialist because he argues, in contrast to the Tories and their media shills, that wealth is created by both workers and entrepreneurs. The others by accepting that the deficit is the problem, fail to talk about
- the Labour Government’s 24 consecutive quarters of GDP growth, averaging 15% p.a.,
- the fact that the Brown Government rescued Britain’s savings from the crash
- and reset the economy on the path to growth,
- that the national debt was the lowest since the war in 2008,
- and that the ownership of that debt was primarily domestic
- and due to Brown’s policies at the Treasury, the national debt had very high average i.e. long dated redemption dates including some very long dated bonds.
Keynesianism recommends deficit financing of public works or investment programmes to stimulate growth and counter recessions. The Labour Manifesto promised to create a National Investment Bank to inject £30bn of investment into the economy. It’s definition of the deficit gave us more room for manoeuvre. One source of funding for these measures includes borrowing, why wouldn’t you borrow at ½ % to invest in people and infrastructure, the other the estimated £122 bn p.a. of tax avoidance.
How can the Party that rescued Britain’s savings in 2008 be accused of not being economically credible?
Labour’s stupidity in allowing themselves to be constrained by this deficit fetishism, was shown during the election when the Tories magicked £8 bn for the NHS and the response was that the promise was unfunded; while now that they’ve privatised large swaths of the NHS they are happy to channel public money into private pockets via the NHS, the reality was that they were lying. Why sit in their straight jacket, they don’t? Also this needs to be challenged! We must show some leadership.
At the leader’s debate in London, only Tom Watson raised the economic record of the last Labour Government, quoting its record on growth but he also pointed out that partly due to the Tory Government’s policy and management the number of sole trader/self employed has exploded. He argues that Labour needs to learn to talk to these new entrepreneurs. Mind you not all of them will be grateful for these new opportunities; the effort overhead of running a business is considerable and it gets in the way of doing whatever it is that one’s good at and some of the problems are very old, when these people are subcontracting from mega corporations such as the BBC, the building companies or the IT Service aggregators, it’s just form of casualisation, just better documented. I agree we may require a new language and maybe new policy responses, but trade unionism remains one of them.
Some of this was originally published as part of my 20th July 2015 blog, but I decided to do it this way. I feel that the defence of the Labour Government’s economic record is important. The featured picture is mine