Saturday, 25 April 2015

Sadly, austerity-lite is completely necessary

Labour's plans of fiscal responsibility and some cuts in public services (although possibly not much, according to the IFS) are completely necessary.

People often use the example of the US to say that a massive deficit is fine. This argument isn't very helpful for the UK. Essentially, the entire world is dependent on the US (which was the main creator of both the Great Depression and the Great Recession) and vast swathes of the world use currencies pegged to the dollar. If the US goes under, then the world goes under (although the rise of China is lessening this potential impact). Hence the US budget deficit doesn't matter because the world is happy for the US to keep afloat on its back.

The same isn't true of the UK. We provide some financial services...and that's about it. The pound is nowhere near as ubiquitous as the dollar and we don't have anywhere near as many massive companies based in the UK as there are in the US. The UK is nowhere near as powerful as the US politically either.
Cancelling austerity might improve growth, tax receipts and employment, but not enough to actually offset the increase in spending (according to most). It's too much off a risk.

You can't just borrow indefinitely, once the world starts to realize that the UK has no intention to pay off its debts then its credit rating will fall. During a recession, countries won't find it attractive enough (or, maybe, they won't actually have enough money!) to lend to the UK even though we need to increase spending even further.

As 'anti-socialist' as it may seem, we have to continue with 'austerity-lite' (and, a Lab-SNP-Lib bloc might be able to stop cuts after 2016 if they go with what the IFS says) so that we aren't in a massive mess when a recession comes along.

Just borrowing more and more thinking that you never have to pay off your debts is incredibly naive.

It should be stressed that the SNP does have a somewhat valid argument that increased spending will result in increased tax revenues. However, it is highly unlikely that for every £1 spent there will be over £1 received in tax, unless if the economy does far better than predicted. Also, Labour are allowing for increased investment spending because that really does make returns. However, increased welfare payments, as harsh as it may sound, doesn't - and non-core-investment spending probably won't pay for itself very quickly.

Labour are making the hard compromise between fiscal responsibility and compassion. The SNP are inadvertently dodging it and kicking the can down the road which won't help any of us at all when the next crash comes along. Vote for the party that is compassionate and knows what they're doing. #VoteLabour

Friday, 10 April 2015

Minus Iraq, Blair did well - Labour must trumpet the progress he made

It was recently announced that Blair will be helping Labour in their 2015 election campaign. Of course, there was the usual flood of 'warmonger' in anything related to that story and many people - even I - thought it was a poor tactical decision.

However, now Labour have made the decision, we must focus on what Blair did right and what Miliband will do right (which Blair supports). Yes, Iraq was a massive mistake - but we can't forget everything else that Blair did as a result. He:
  • '[The Government] turned out to be the most redistributive in decades'
  • Increased child benefit and income support by 72% (in real terms)
  • Gave grants to improve insulation
  • Caused child poverty to halve:
  • Extended maternity pay
  • Increased child benefit //
  • Introduced the Scottish Parliament and Welsh Assembly after referendums
  • Resolved the crisis in Northern Ireland - with a very balanced Northern Irish Assembly being created as a result
  • Made the Bank of England independant
  • Removed most hereditary peers from the Lords
  • Created the position of London Mayor and created the Greater London Authority
  • Equalised the age of consent for gay sex with heterosexual sex
  • Created civil partnerships
  • Introduced new employment rights
  • Introduced the National Minimum Wage - against Tory cries that it would increase unemployment and inflation
  • Increased spending on education and health (after increasing taxes to pay for it)
  • Won the London 2012 Olympics bid - presence of Blair at IOC session credited for the win
When Labour face criticism about Blair's record, they must demonstrate that, even though Blair is on the Labour campaign trail, Labour have changed their stance on foreign policy proved by Miliband's opposition of an invasion in Syria previously. Miliband recognized that Britain doesn't always have to agree with the US on foreign policy and should get authorization from the UN on military issues.

The Iraq War was, by far, the biggest mistake of the Blair administration. As was the relative inactivity of Blair's second and third governments in passing legislation (although it did block the Tories from getting into power and reversing the progress made). Labour have many, many policy ideas however and would make sure that the next Labour government(s) is/are active in promoting change.

On the whole, however, the Blair government did a lot for the UK and Labour must remind the public about all the amazing things he did.

Wednesday, 1 April 2015

Labour does represent the working class - despite appearances

The common accusation that Labour is mostly professional careerist is true, yes, we do need more 'workers' challenging for Labour Parliamentary candidate in constituencies. However, once you're in Parliament you can't really be a 'worker' any more. Also having the university education and having studied the mechanisms involved in Politics and Economics is very useful - 'workers' (commonly thought of as those which tend to be unionized and in more 'manual', low-paid, jobs - bus drivers and the remaining miners and construction workers) don't tend to have had this sort of education which limits their effectiveness in Parliament - since they're less likely to understand things like the difference between debt and deficit, the effects of increased government spending on Aggregate Demand etc...

People like Skinner haven't been very influential in Parliament and for good reason. Even Old Labour heroes like Clement Attlee were career politicians but had working interests at heart. It is possible to be a career politician and to really represent the workers - that's what Old Labour did and that's what I think today's Labour still does - just not according to disillusioned leftists from the Blair era!

Labour is capitalist yes, this is no bad thing! I'm proudly a capitalist socialist. I believe in the free market providing most goods and services with the state providing public services which would be monopolies in a free market. I also believe in the public ownership of production in the form of the state owning public products and workers having more say in businesses and a share of their profits. Capitalism and socialism are not mutually excludable and so capitalism is not necessarily a bad thing.

Those in Parliament are not just interested in business and power - those in the Socialist Campaign Group like Dennis Skinner definitely aren't and I don't think others are either. If they were just interested in business and power they would be in the Conservative Party - Labour does genuinely care about the workers and those less well off - look at their policies! More apprenticeships to help people get work, cheaper university education, lower taxes for the poor, higher taxes for the rich etc. etc...

They are interested in getting into power, and maybe personal reasons are a factor in that, but they do have to make compromises so that they are electorally viable enough to get into power. Otherwise they could never do the things that they want to do! Look at Labour from 1979 to 1995-ish - they were far too left-wing and the majority of people simply couldn't vote for them.

Scottish Labour have got to attack the SNP on their economic policies

Labour have got to attack the SNP's anti-austerity position as much as possible. While austerity-lite seems horrible Labour has got to give it their best shot for this election. The economy isn't doing great, but it's doing better than it was in 2010 and the deficit has to be cut for long-term interests. How do we cut the deficit? By reducing government spending and increasing government revenue. We probably can't just do it with high taxes since that could scare away the rich and actually reduce revenue (although this is unlikely ('The New Palgrave Dictionary of Economics reports that estimates of revenue-maximizing tax rates have varied widely, with a mid-range of around 70%.'), but this is what some (especially in the UK) think).

They could probably raise the top rate of tax up to about 65% with the pretence of cutting the deficit with the additional revenue but that's just not electorally viable. How could Labour get many of England's seats if they went for such a promise? They would be instantly branded as Old Labour, old socialist and stupid. There are far more seats in England than in Scotland - no matter how important Scotland is.

The SNP have no plans on how they're going to fund their promises (stopping austerity). It's highly likely that they wouldn't bother trying to fund it and they would just increase borrowing. This CAN'T work in the long-term - they're just going for votes in the present. It is Labour that is actually thinking about the long-term future for Scotland, not the SNP, and, sadly, it involves austerity. Although Labour will put much more of it on the rich's shoulders than the Tories will and won't make silly promises like a surplus by 2018 and then more spending which will require massive cuts.

Note: This argument also applies to Plaid Cymru in Wales as well as other anti-austerity parties such as the Green Party of England and Wales, Left Unity and the Scottish Greens. Austerity-lite will help the UK in the long-term while doing minimal damage in the short-term.