• A Dose of Reality

    As the cheerleaders for economic recovery build up to a Christmas frenzy, it is worth injecting a dose of reality into the optimism. Let us recall that the so-called recovery comes off the back of five years in the doldrums – a period of policy failure that has cost us an immense amount of lost national wealth, thrown thousands on to the scrapheap, relegated thousands more (and not least their children) to poverty, and left public services, including the defence force, in tatters.

    The recovery, such as it is, owes much to the Christchurch re-build, begging the question of why we had to wait for an earthquake before finding the money to get the economy moving again. But the real questions arise in respect of where the recovery is likely to take us and – most importantly – whether it means that we have at last resolved our deep-seated economic problems.

    The key feature of the government’s policy is, after all, – as the Herald identified in its leading article on Monday – short-termism. The government’s apparent strategy has been merely to apply a series of sticking-plasters rather than to find long-term solutions.

    Asset sales, for example, have filled an immediate gap in the government’s finances, even though in the longer term there will be a significant loss of government income; that, apparently, is something for future governments to worry about. The so-called industrial strategy amounts to no more than large taxpayer-funded subsidies to film companies, ill-judged deals with the likes of Sky City, and jeopardising our environment by backing any overseas project to dig up or drill for hoped-for mineral wealth under our land or sea.

    None of these strategies helps in any way to resolve our economic problems – indeed, the opposite is true. Our dangerously narrow productive base? We are more dependent than ever on high dairy prices which won’t necessarily last forever. Turning our backs on investment in new productive capacity in favour of an overheated housing market? Much of the increase in economic activity comes from the greater spending power home-owners imagine they have as a consequence of the rise in house prices.

    Our predilection for consuming and importing? Stronger than ever. The need to borrow from overseas and to sell our remaining assets to foreign owners in order to fund our spending spree? No change there. Our continued use of interest rates to restrain inflation as the sole goal of economic policy, with the consequent overvaluation of the dollar and its damaging impact on our ability to compete in the world? No lessons learnt. All of these familiar problems are about to rear their heads again.

    We are enthusiastically getting back, in other words, on to a money-go-round that means a damaging failure to pay our way and a weakened productive base. It is a safe bet that – after a brief consumer bonanza – there will be (with much wringing of hands) a new outbreak of bewildered concern as to why our powerful new competitors in Asia and elsewhere are doing so much better than we are.

    In the meantime, the government will carry on with the bizarre conviction that our economic future depends essentially on sucking up to overseas corporates whose sole interest is in cherry-picking our assets – actual or potential – and leaving us to pick up the pieces after they leave with the booty. At the same time, it is apparently believed that the plight of an increasingly large proportion of our population – with no jobs, poor prospects, worse education, sub-standard housing, third-world health standards – is irrelevant to our economic prospects and is merely a matter of individual responsibility.

    The government certainly cannot be accused of proceeding by stealth; it has loudly proclaimed its sadly misplaced faith in international finance and overseas corporates coming to our aid; it has been equally clear in its casual dismissal of any thought that our fellow-citizens might be worth consideration, not only as essential elements of a healthy and integrated society but also as important contributors to our economy.

    There will be, quite understandably, those who accept this critique of current strategy but look in vain for an explanation of what an alternative strategy might look like. But we can’t even begin to understand the need for an alternative until we understand why the current strategy is doomed to be self-defeating. And the case for an alternative is inevitably more complex than can accurately or persuasively be described in 800 words; readers might like to look out for my next book!

    The first important step towards a better strategy, though, is to avoid misplaced optimism as the economy recovers from a long period of stagnation. And one point is clear; the best guide to a better economic future is to enable our own people to become economically active and productive, so that everyone can share in economic success – everyone, after all, is entitled to a merry Christmas – rather than accepting the doubtful benefits of the self-interested whims and vagaries of overseas bargain-hunters.

    Bryan Gould

    17 December 2013

  • Aiming at the Wrong Target

    Labour will be “tougher than the Tories” when it comes to forcing long-term beneficiaries back into the labour market; so Labour’s new shadow Work and Pensions Secretary, Rachel Reeves, was reported as saying last week. The comment, which was presumably made deliberately to secure the headline, seems to be a mistake on a number of levels.

    The report suggested that the comment was a response to polling that showed that voters were twice as confident of the Tories’ effectiveness in dealing with the issue as they were of Labour, and was presumably an attempt to nullify the supposed advantage that the Tories enjoyed.

    But my own political experience, and particularly experience of campaigning, suggests that the initiative was based on a false premise. Most voters, unlike those who are politically active and committed, do not have coherent political positions that are consistent across all issues. They are perfectly capable of adopting attitudes that contradict each other from one issue to the next.

    What determines the way they vote is not necessarily what they think on a given issue but which issues are uppermost in their minds on polling day. History shows that, with their allies in the right-wing media, the Tories are expert at tweaking the issues that give them an advantage at the crucial time.

    So, immigration, supposed benefit “scroungers”, trade unions bent on strike action, all attract headlines as part of a deliberate attempt to raise the salience of issues that suggest that our deep-seated problems are caused by failing to rein in the nefarious activities of ordinary people and are in no way the responsibility of the powerful people who run our economy and take most of its benefits.

    It is an important part of this well-proven strategy that Labour should be lured into contesting such issues so that public attention is focused on them. I recall that, in the run-up to the 1992 general election, the Tory press provided the “oxygen of publicity” to fears that a new Labour government would raise income taxes.

    The Labour response was to launch, at the beginning of the election campaign, a plan to raise National Insurance contributions. The idea was to use John Smith’s Scottish prudence to show that this was a sensible initiative that should not be regarded as an increase in taxes.

    Not surprisingly, this proved difficult to sell to the electorate. Labour’s tax plans became the dominant and continuing theme of the election campaign, with the result that John Major’s government was re-elected.

    The lesson to be drawn is that election campaigning is largely about controlling the agenda. A successful opposition campaign should be about exposing the government’s failures and focusing on those elements in its own policy that are likely to strike a chord with most voters.

    Time spent on trying to negate vulnerability on issues peddled by the Tories, in other words, is likely to be wasted at best and counter-productive at worst. And that is never more true than on the issue on which Rachel Reeves thought it wise to make her own demarche.

    Her comment spells bad news for Labour. It focuses attention on an issue which can only benefit the Tories. No one will believe that on this issue the Labour opposition will be as ruthless as the Tories (and heaven help us if they did!) The most the voters should hear from Labour on the issue of benefit fraud is that, as in every part of public spending, dishonesty will be punished and value for money will be insisted upon.

    But what it does do is to validate the Tory insistence that benefit fraud and supposed “scrounging” is an issue that deserves to be at the top of the government agenda. The more Labour proclaims its “toughness’, the more voters will believe that this is an issue that deservedly requires priority government attention – and the more likely they are to think that Labour is simply posturing and that only the Tories are to be trusted to take real action.

    Worse, it diverts attention from what Labour should really be saying about the fact that so many people are victims of unemployment and are therefore forced to depend on a generally miserable level of benefits in order to keep house and home together.

    The most effective means of reducing the number of beneficiaries would be, in other words, not punishing the unemployed further, but restoring something approaching full employment; and the most important obstacle to that is a damagingly under-performing economy, the direct consequence of failed government economic policies and of their insistence on austerity as a response to recession (now disowned by the IMF, no less) in particular.

    Nor is it the case that this is an accidental by-product of Tory policy. It is an essential part of the Tory strategy that the burden of getting our economy moving again is to be borne by working people. According to this doctrine, it is their responsibility to price themselves back into work by accepting lower wages, and accepting fewer rights and protections at work – “zero hours” contracts are a good example.

    The pressure on beneficiaries is all of a piece with this approach to our economic problems. In the absence of new jobs, forcing the unemployed back into the labour market can only mean that those with jobs will be compelled to withstand that competition by accepting lower wages if they wish to stay in work. The result? Downward pressure on wages as a whole.

    Is this the strategy that Rachel Reeves intends to endorse? Wouldn’t she do better to focus on unemployment and its causes, and persuading her colleagues to develop a strategy for dealing with it?

    Bryan Gould

    14 October 2013

  • It Has Come To This

    So, it has come to this. In twelve short years, New Labour has travelled from the exultation and boundless optimism of the 1997 election victory and of a movement whose time had come to a craven pursuit of self-preservation by frightened MPs.

    And even then, it is a self-preservation that can only be pro tem. So narrow have horizons become, so short-term the perspective, that the interests of party and country will be sacrificed for a few more miserable months in a crippled parliament and a dying government.

    Let no one be deceived into thinking that the decision to soldier on under Gordon Brown’s leadership was taken in the wider interests of the party or the country. Nor was it a signal of affection or respect for their leader, or even just loyalty. This was every man for himself. The only calculation that seems to have mattered was the one that said that the pay packet could be kept coming for a few more months. For who could doubt that the warning from Lord Mandelson, with his unerring instinct for the baser motivations of political life, that to change leaders would inevitably mean an early general election, was enough to stop many potential rebels in their tracks?

    This, then, is the end game of the New Labour project. To the extent that history ever makes final judgments, we can begin to see where it has led – not to a long period of Labour hegemony, as was so confidently foreseen, but to the real danger that Labour will have destroyed itself.

    Let us remind ourselves of the course pursued by New Labour strategists. The catalyst for that strategy was the 1992 election defeat, although its seeds probably go back to 1987. The Mandelsons, Blairs and Browns concluded in the wake of those defeats that Labour was unelectable and that the Thatcherite hegemony could not be successfully challenged. They decided that the greater part of Labour’s analysis of what was needed to reform Britain should be abandoned, and that the Thatcherite agenda should in essence be adopted.

    In this, they were surely wrong. Of course Labour needed to modernise, and to adapt its principles to new and continually evolving challenges. But the Thatcherite revolution had largely run its course. Mrs Thatcher herself had been rejected by her own party, which proceeded – under John Major and his successors – on an increasingly uncertain course. By 1997, the Labour alternative under almost any leadership would have defeated the Tories. The sacrifice of Labour’s central values in favour of a callow and unsophisticated acceptance of the market’s infallibility was simply unnecessary.

    By then, however, the New Labour style and purpose had been fully developed. The project developed its own ideology. What mattered was the winning and keeping of power, rather than actually doing something with it. Power, once achieved, should be used for its main purpose – to perpetuate itself. New Labour would be all things to all men, taking the pain and hassle – and even the politics – out of politics. It would occupy the centre ground, careful not to offend the powerful. It would thereby force other contenders to the margins, and usher in a long period of unchallengeable dominance.

    The simplicity of this goal and this strategy meant that the Labour Party itself could largely be ignored, both as an organisation and as a source of ideas and analysis. New Labour leaders and tacticians could appeal directly to the voters, through the media, and through spinning the message, and could thereby free themselves from the need to take the party with them. The loyalty of the ambitious could be guaranteed since they would quickly recognise that the path to power lay through New Labour.

    It hasn’t quite worked out that way. The voters quickly tired of spin. They intuitively recognised the unattractive limitations of pursuing power at any cost. They were repelled by the contortions produced by the absence of principle and strong values. But most of all, they were brought in time to make an ever harsher judgment of policy failures.

    Those failures were partly the result of hubris – on the part of a leader who was so persuaded of his moral infallibility that the country could be led into an ill-judged invasion of another country on no greater foundation than his own say-so – and partly the consequence of a sickening obsequiousness in the face of the rich and powerful. And, while New Labour could just about be held together by a brilliant front man, there was nothing else to fall back on when the voters tired of him and when his successor was revealed as totally lacking in political – not to say human – skills.

    So, the voters look certain to reject New Labour. A whole generation of Labour leaders who could and should have stood for something more than simply hanging on to power will close the New Labour chapter by – appropriately enough – doing just that for a few more months. It will be a long and hard road back if a renewed (please not “New”) Labour Party is to rise from the ashes.

    Bryan Gould

    9 June 2009