Sunday, 29 April 2012

Why 'Double-Dip' Means Nothing For Labour

Today's Sunday papers are full of retrospectives anticipating George Osborne’s political obituary. 
Personally, I would not be so quick to pronounce him dead and gone.


 

Typical of today’s offerings is Heather Stewart’s – at the risk of being offensive – rather shallow review of the Chancellor’s situation for the Guardian.

Ms Stewart’s comment was not short on hyperbole.  The Tories’ plans, apparently, have been ‘shattered’.  The economy is ‘flat on its back’.  George Osborne's central economic gambit ‘has failed miserably’. 
But before we commit Mr Osborne to the dustbin of history, perhaps we need to be not-so-hasty.  Rejoicing over the government’s economic difficulties is a path fraught with danger, and Labour needs to be very careful.

Rejoicing about recession
Firstly, are we happy with an article which uses the word ‘gleefully’ to describe Ed Balls’s reaction to Osborne’s predicament?
Recession is a terrible scourge.  It is people suffering – factories closing, workers losing their jobs, stress, worry, hardship and – in some cases – suicide.  Down there in the Westminster bubble, an economic dip might well be surmised to cause joy in the Shadow Cabinet … but the appropriate human reaction is very different up here in the north-east, at the sharp end of economic failure.
‘Bitterness’, ‘anger’, even ‘reproach’ would have been reactions to welcome.  ‘Gleeful’ is an unsatisfactory word – a vote-loser.  People up here already believe that their lives and fate have become a pawn in a politicians’ game; all the word ‘gleefully’ does is convince them that the Shadow Cabinet are no better than the Tories.

Gambling on the economy
Secondly, are we sure that -0.2% really is a ‘double-dip recession’?  And are we really going to base our opposition to the government’s economic policy on the claim that we are now into a ‘double-dip recession’?
When I went to church in my younger days, I was always wary of those preachers who tried to ‘prove’ the validity of the Christian faith by bombarding me with ‘evidence’.  What happens to your faith, for example, if you have founded it on the miracle of the Turin Shroud, when some scientist comes along and demonstrates it to be a medieval forgery?
In the same way, what happens to Labour’s economic credibility next quarter if the economy shows a +0.2% growth?  Are we going to eat humble pie and acclaim Osborne’s resurrection from the dead?
Moreover, even if it could be proved that the Chancellor was to blame for the dip, the fact that the economy MAY be flat-lining does not necessarily mean that it would be right to embark on a Keynesian spending-spree and start racking up the national debt.
Fiscal responsibility is a given, whoever is in government, and Mr Balls needs to be very careful before he puts all his chips on the roulette wheel of economic growth, +/-0.2%.
The truth is that – even were the economy growing – Osbornomics is a very wicked strategy, deeply harmful to the disadvantaged and the vulnerable, and economically damaging to regions such as the north-east.  If we are going to oppose it, we do not need to invoke a double-dip recession to do so.

We do not want to follow the USA

Neither, thirdly, quite frankly, am I very impressed by comparisons to other countries’ economies.  As Ms Stewart points out, Austerity isn’t working in the eurozone because the Finance Ministers of Spain and Greece do not have the benefit of devaluation or quantitative easing. 
Neither, equally however, to be candid, am I as impressed as Ms Stewart with America’s so-called economic recovery.  So yes it is true that Obama has continued borrowing, and yes it is true that the US economy is growing.  But all the evidence from the US indicates that, although there has been positive growth, the consequent increase in GDP has been overwhelmingly swallowed up by the top 1% … and that the experience of American’s poorest is no better than that of Greece’s poorest – poverty, tent-cities and exclusion-from-welfare.
There is no point in a country having a growing economy, if the benefits of that growth are not being passed on to its citizens.
And that is the biggest problem of Britain’s economy – not whether growth is flat-lining or not, but the way the product of our economy is being distributed … and it is THAT, not any spurious wrangling about decimal points, which ought to form the basis of Labour’s critique of Osbornomics.

Tax-avoidance, infrastructure and jobs

It is often the ephemera that capture the headlines and – to be blunt – ‘ephemeral’ is the correct word to categorise last week’s (challengeable) -0.2% growth figure.
What has been happening below the headlines, however, is that there has been an extended debate about what a Plan B might involve, and there is growing consensus about what it should include, particularly: a degree of rebalancing of tax, investment in infrastructure, and financial stimuli to industry which require jobs-for-grants.

To be fair to Ms Stewart, that is fairly much how she ends her article:

“Even within his spending plan, Osborne could have thought urgently about easing the squeeze on hard-pressed families, funding infrastructure projects that would create jobs and boost productive capacity, and channelling investment to firms still starved of the funds to expand. Instead, his priority was to deliver a tax cut to some of the highest earners in the country.”
And it is with such a narrative – not any triumphalistic gloating about a double-dip recession – that Labour needs to be articulating its pronouncements on the economy.

As for Mr Osborne, I would not write him off quite yet.  We have all seen the films, and we all know better – even when the demon is slain – than to turn our back on him and relax.

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