sam boyd | politics

The country is ready to listen; Labour just needs something to say

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29th April 2012

Austerity sucks demand out of the economy and pushes up unemployment. Many said it would happen, were derided as deficit deniers, and the argument was lost. George Osborne prevailed, and was hailed as a strategic mastermind. Even last week the Chancellor claimed that the economic argument had been won and those arguing against him sit ‘on the margins’ of debate.

Then came the return to recession. This didn’t change much; the economy has been hovering around zero per cent growth ever since Osborne walked into Number 11. But it more clearly than before brought to light the fallacy of Osborne’s claims that the UK was ‘out of the danger zone’ and a ‘safe haven’ because of his stewardship. No one sensible ever believed that anyway, but now that the economic recovery has officially gone into reverse such haughtiness sounds ridiculous to everyone.

In almost two years since assuming office, Cameron and Osborne have presided over 0.4 per cent growth; less than in Labour’s last three months alone. It marks a slower recovery than after the Great Depression. Whilst Europe’s travails have certainly impacted, economic stagnation and plummeting consumer confidence had set in way before that. Osborne, though, trudges along clasping his failed plan, wedded to the fantasy that sadistic fiscal contraction will in turn inspire messianic private sector growth.

If there’ll be any change in tack, it’ll most likely be in the direction espoused by Liam Fox and others on the Tory right; further spending cuts and the chipping away of workers’ rights. But it won’t work: as David Blanchflower demonstrates, the UK already ranks amongst the highest in the world in terms of the ease of doing businesses and hiring and firing workers. More tellingly, since 2008 countries with less employment protection have in fact seen lower economic growth.

Meanwhile, Labour’s Too Far Too Fast analysis, stuck to doggedly by Ed Balls since 2010, has been proven right. Excessive austerity has stunted our recovery – and the Coalition’s deficit plan – by strangling consumers’ spending power and causing unemployment to spiral. It doesn’t matter how attractive the top income tax rate is for ‘wealth creators’, nor how eager the banks are to lend; companies will not invest and create jobs so long as there is little chance of anyone buying their products.

This month the Government snatched £74 a week away from working families on £17,000, and in the same breath announced a huge tax cut for millionaires. Potentially more devastating than the unfairness of such policies is the economic incompetence on which they are based. People will stomach a degree of Tory nastiness so long as there is a belief that future gain will follow the short-term pain. This central promise of the Coalition is beginning to whither away, and the consequences could be fatal.

But Labour remains plagued by the toxic notion, etched meticulously in the public’s consciousness by the Coalition, that the party exists merely to add to the country’s debt pile. As Miliband and Balls well know, this can only be overcome by answering the most important question in British politics today: how to create a sustainable economy and more equal society whilst balancing the public finances. Cameron has his non-answer: shrink the state and farm out state services to the private sector. The country deserves a better alternative. Labour is still a long way off delivering one, but at least the country may now be ready to listen.

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Written by Sam Boyd

April 29, 2012 at 8:39 pm

Posted in Uncategorized

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