- The country is dangerously in debt. ("...the whole world is concerned about high deficits, and our economic stability depends on allaying those concerns [...] We will not take Britain back to the brink of bankruptcy [...] the country has run out of money")
- Labour spent too much. The debt is their fault. ("...we have inherited from the previous Government plans – if you can call them that [...] Not a single penny of savings had been identified [...] The debts we were left threatened every job and public service in the country")
- Too much was spent on public services and, in particular, welfare. We can't afford to spend so much on these things. ("We have chosen to cut the waste and reform the welfare system that our country can no longer afford...")
- Therefore public spending must be cut as fast as possible. ("...eliminate the structural deficit by balancing the cyclically-adjusted current budget over five years, by 2015-16. And we set a target of national debt falling as a proportion of national income by that same year [...] for reasons of caution, we will achieve both these objectives a year earlier in 2014-15">
- Cutting spending will, in and of itself, provide a stimulus to economic growth. ("The crisis in the Eurozone shows that unless we deal with our debts there will be no growth. And these forecasts demonstrate that a credible plan to cut our budget deficit goes hand in hand with a steady and sustained economic recovery.")
Labour is having trouble countering this story, which makes a certain amount of simplistic sense when repeated often enough with firm hand gestures. Nothing is that simple, however, and the government's story is based on ideology and fallacy. Labour, here is a suggested economic story that you could be telling.
Let us go back to the very basics. An economy is a system for allocating resources. Economies came into being as a method for humans to allocate resources more effectively. They do not exist in order to grow endlessly. An economy that does not improve the wellbeing of those who participate in it is a failure, whether or not it is growing according to measures of Gross Domestic Product (GDP). An economy that inflates on paper but has no impact on quality of life is wasting resources.
It is becoming increasingly clear that increases in national GDP have little or no impact on wellbeing in developed countries. Indeed, a rash of recent books (I recommend Happiness by Richard Layard) point out that measured wellbeing has flatlined in recent decades. The government has even acknowledged this, but without accepting that they might need to do something about it. Politicians are elected with a responsibility to improve the wellbeing of their electorate. The economy is not the electorate, and a narrow focus on promoting economic growth is an abrogation of responsibility.
When you approach the government narrative from that perspective, it looks much less credible.
"The country is dangerously in debt." Government debt has previously been at higher levels and the country has survived . What makes the current situation specifically worse is that credit ratings agencies, financial markets, and the International Monetary Fund say it is worse. All three have strongly vested interests in taking that view. Credit ratings agencies make assessments of how well national governments and companies can repay debt, but are not held accountable for the accuracy or impact of their assessments. They are profit-seeking companies, not independent agencies. Credit ratings agencies are in fact part of the financial markets that make their profits from betting on whether debt can be repaid. The IMF is an organisation driven by flawed free-market ideology. Reducing public spending is its policy prescription for any economic downturn, an approach which contributed disastrously to the 1997 Asian financial crisis.
"Labour spent too much. The debt is their fault." The last government spent a lot of money bailing out the banks. I don't know whether that was the right decision, but it should at least be seen in a wider context. Most European countries were also bailing out their banks in late 2008, as was America. Blaming the Labour government specifically is ridiculous, as this was the same approach taken, for good or ill, by the rest of the Western world. Until the bailouts, UK debt levels were stable.
"Too much was spent on public services and, in particular, welfare. We can't afford to spend so much on these things." This is manifestly ideological. There is no specific level of public spending that an economy can afford. Different countries choose to tax and spend to different degrees, according to political persuasion. To say that basic public services cannot be afforded presupposes that the economy is more important than people's wellbeing. If the economy is growing but wellbeing decreasing, the government has the wrong priorities and policies. Whilst it isn't inevitable that lowering public spending will reduce wellbeing, in the case of the coalition's cuts it seems inevitable. Security is an immensely important aspect of wellbeing. Reducing the welfare safety net, the quality of healthcare, the accessibility of education, the affordability of public transport, and the availability of the emergency service, whilst unemployment rises and prices inflate; that's a recipe for insecurity and anxiety.
"Therefore public spending must be cut as fast as possible." The speed at which cuts take place is likewise ideological. Spending time carefully considering the evidence and evaluating the risks of withdrawing and reducing public services assumes you value them in the first place. The government simply does not. Their debt deadline is entirely arbitrary; there will not be bailiffs banging on the door of the Treasury if we still have a deficit in 2015.
"Cutting spending will, in and of itself, provide a stimulus to economic growth." This is a delusion. Spending cuts have only just started and the economy is already contracting, with growth forecasts repeatedly cut. Even if economic growth was an aim worth pursuing in itself, rapidly cutting public spending would not make it happen.
The government is cutting public spending quickly, with no understanding or interest in how it will hurt the vulnerable. Not only is this damaging the wellbeing of millions, it is not even going to achieve the stated aim. These are the messages that Labour should be emphasising more clearly. When the challenge comes back, "But you didn't have a plan to deal with the deficit!", the obvious response is that rebuilding and reforming the economy in order to avoid a repeat of this kind of banking collapse takes time and evidence. A considered approach is clearly preferable to rushing into dramatic contraction of the whole public sector, with only discredited ideology to support you. The coalition government threw together an emergency budget in less than a month, cutting millions without considering the unintended consequences. Labour need to say clearly what this means: that the government does not care how the cuts blight people's lives. Labour should position itself as the party that puts people before economic ideology, whereas the government does the opposite. Perhaps they might even consider supporting the claim with some policies.
I should mention that I've never actually voted for Labour in a general election. It isn't that I'm a staunch Millibandit (or whatever you'd call it), I just yearn for a strong opposition in Westminster. Hopefully Labour are currently formulating an approach that will lift the level of debate above the present no-cuts-versus-all-the-cuts doldrums. I enjoyed the friendly atmosphere whilst marching for the alternative on March 26th, but demonstrations like that aren't nearly enough. The government's economic policies must be challenged more strongly by politicians. The coalition's narrative is not just slightly misleading, it is entirely wrong. It's time that the opposition stood up and said that.
If they already have and the media has failed to inform me of the fact, please be so kind as to provide a link.
