Ed Balls torpedoes Labour’s credibility…
Words don’t exist for how many shades of wrong Ed Balls is in his interview withThe Guardian this morning. It wasn’t always this way – there was a time when Balls started to sound like the voice of economic reason in the madhouse that has become the economic discourse in this country. However, since he started listening to Ed Miliband and forgot about the economics in favour of political expediency Balls has slowly but surely lost the plot.
It amazes me that sensible, intelligent men can peddle such drivel and fail to see the contradiction in saying ‘George Osborne has got it wrong’ but then in the next breath say irksome things like ‘I endorse his public sector pay freeze’. This is entirely and utterly wrong. Households are groaning under frankly staggering levels of debt, nobody is spending enough money to keep the private sector even close to float but people like Mr Balls seem to think the solution is ensure that people have less money to service their debts and put back into the economy.
This is the cardinal, first and most deadly sin of the apostles of austerity to put the cart before the horse. It is not the job of households to bail out the government but the other way round – the government must bail-out the real, living and breathing economy. Our policies and the rhetoric of Balls and Miliband occasionally go some way to recognising that when they talk about, for example, job creation. However, what use is a job that pays peanuts and doesn’t substantially increase your financial clout? In the context of our wider capitulation to the austerity agenda, the job-creation policies are a bit like chucking a rottweiler a chicken-bone, not nearly enough and likely to choke the hapless hound.
Governments are not households, they have a much greater stress-tolerance for debt because they can do things your average household can’t, like print money and fundamentally alter the macroeconomic landscape. Neither is the cupboard ‘bare’ – it has been proven that Britain’s national debt has been vastly greater than it is now historically. Secondly, it’s worth noting that if GDP does not grow then even a static level of debt will in-fact increase it as a portion of GDP.
Conservative MP’s understand this – this is why some of them have urged George Osborne to borrow more to fund tax cuts. Sadly, Labour’s leadership seems to have missed the memo on this one. Don’t believe me? Think I am a ‘lefty living in cloud cuckoo land’? Ok, ask Standards & Poors, who yesterday declared war on the Euro and Eurozone countries, here is what they had to say about the reasons:
“We believe that a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating, as domestic demand falls in line with consumers’ rising concerns about job security and disposable incomes, eroding national tax revenues.”
So, why can a capitalist credit ratings agency recognise the sensible and sane but an allegedly social democratic Labour leadership be as blind as a bat wearing extra-thick shades? The answer lies in politics – the Conservatives, the media have made the national debt the focus and totally ignored the quiet crisis of people’s private debt – the very thing which underpins the national debt. Desperate to do what they see as being ‘credible’ they will do anything to get a favourable headline. This is shameful and not worthy of either of them or the office that they currently hold.
I will be honest – I think whatever you do, capitalism will fail. It will fail because socially produced wealth always eventually clogs the arteries of our economy by being un-democratically and unevenly concentrated in the hands of the few, not the many. However, I do want to see the best outcome for people that we can possibly achieve will simultaneously arguing that eventually, that will lead us to the fundamental changes that are most closely associated with socialism.
Even by that logic Mr Balls and Mr Miliband are in the wrong. The left should make no bones about saying this – indeed, it should proceed with self-confidence because the evidence is on our side. We need to make big changes to the structure of our economy and to the poisonous cultural ethos of consumerism that capitalism has ingrained in us to feed its profits. This wont be easy, as Richard Murphy says;
The idea of ‘more’ is deeply ingrained in us, but we will have to change in any event: the alternative is simply not sustainable.
In other words, we need to replace the idea of ‘more’ with ‘equitable sustainability’ and replace the structural inequities of the system with a structurally balanced, equitable system. This means more for those under the elite and less for the elite; massive redistribution of wealth is required to ensure sustainability and the structural democratisation of the economy – not this cyanide pill of austerity. All this will require politicians to do something they rarely do – show some backbone. Sadly, no backbone was on display from Mr Balls today – he has become a simpering servant of Mr Miliband, Mr Cameron and the medias wrong-headed agenda. In capitulating he is doing himself, the Party and the country a great disservice.