...a blog by Richard Flowers

Tuesday, September 15, 2015

Day 5370: John McDonnell had a Farm, Q E… I M F


It was pretty inevitable that Jeremy Corbyn would pick his old tribal mate John McDonnell, draftsman of his economic strategy as well as his victorious campaign, to be Shadow Chancellor.

To be fair, as former finance officer of the GLC he has more experience than the real Chancellor had.

And McDonnell is one of the few Labour MPs, along with Corbyn himself, not to have compromised themselves by abstention on the Government's welfare bill, the point at which with hindsight, the other candidates handed Corbyn the leadership, making the REAL architect of the Corbyn victory… Master Gideon Osborne baronet.

Jeremy's first day didn't go so well.

To an extent there's a certain amount of "well they would say that, wouldn't they" over the right-wing newspapers' negative coverage. And to be fair, he really did need to spend all day on Sunday getting a front bench in place in order to face the Tories long-planned trap of the debate on the Trade Union Bill – "not a declaration of war", claimed Sajid Javid. So, more of an extrajudicial execution by drone strike then.

But he didn't help himself any, what with the anger over his all male picks for the "top jobs" (compounded by his inelegant excuse that people criticising him were living in the Nineteenth Century and 2 a.m. fix of anointing Angela Eagle Shadow First Secretary), and the brewing confusion over his stance or even what his stance will be over Europe.

Spot the Mandelson

It is easy to mock.

There have been plenty of "Tom and Jerry" jokes about Labour's new leadership already, although Alex pointed out that Tom and Jerry are also the neighbours in the Nineteen Seventies self-sufficiency comedy "The Good Life", with Tom choosing to get out of the rat (or possibly cat and mouse) race. Pity there's no room for a Margo or a Barbara at the Corbyn top table. (Not that circumstance has left us in a good position to comment.)

But going back to the Seventies and homespun self-sufficiency is not at all what that Mr Corbyn is about. Not at all! HE'S for going back to the Seventies and Big State corporatism doing everything! Don't do that, Jerry!

Labour's position since the crash of 2008 has been one of denial – cries of "Labour's overspending didn't cause the crash" and endless games of "Pin the Blame on the Bankers" – and far from a new direction, that continues now with their new spin finding new ways for it not to be their fault.

That Corbyn economic strategy:

1. Ending austerity:–

if Master Gideon wipes out the deficit by 2020 as promised, Corbyn's Labour won't run a current account surplus (but will borrow for infrastructure – beware more PFI); but if Osborne fails to keep his promise, as he has before, remember, they will "close the current budget deficit through building a strong growing economy that works for all".

(In either case, that means "leave it to someone else to fix the deficit for them".)

The recent suggestion from the IMF that we "could afford to live "forever" with relatively high debt shares" seems to say we have room for manoeuvre, in the event of further economic shocks, and a gap that would let us live with the current level of debt, not that we can pour on more debt forever.

That means we DO need to fix the deficit – remember the difference between DEBT (how much we owe) and DEFICIT (how much we ADD to how much we owe). We probably don't need Master Gideon's more vicious cuts. In fact, dare I say it, it's more an endorsement of the CLEGG plan of fix the deficit and then start to give people some money back, than of Osbornomics OR Corbynomics.

2. Spending money:–

on investment in "large scale housing, energy, transport and digital projects", funded by QE (printing money) and cutting "£93 billion" in "Corporate Welfare" (the Grauniad has a breakdown of where this number comes from and there are some pretty fundamental errors there in assuming that this is just "bunts" for nasty businesses – including things like £15 billion in subsidies for running the trains, which presumably Mr Corbyn will not be cutting when he nationalises them. But when they say "the largest amount is spent allowing businesses to write off billions spent on plants, machinery and equipment among other items" this shows a frightening lack of understanding. We tax businesses on the profits they make (not just their sales); plant and machinery is a cost of running the business – you could equally say "the largest amount is spent allowing businesses to write off the salaries of their workers".)

It’s just the obvious end point of Milibandism, where only people paid by the State are really worthwhile and private enterprise is greed and profiteering! Which means that every nice (Labour) person paid for by the State is really productive, while all private business is a drain on the State, so obviously it must be cut.

And black is white and white is black and watch out at the next zebra crossing, Mr Corbyn.

3. Raising taxes:–

They promise to make the tax system more progressive (while specifically* saying that the details are not the question), but clearly with a view to raising more by getting "some of the wealthiest individuals and biggest corporations to pay anything like their fair share"; they intend to raise £120 billion based on Richard Murphey's analysis of the tax gap (fact check: I refer you to our good Liberal Bureaucrat to understand that this is almost certainly unrealistic)

*As it’s Jezza, this doesn’t mean what it ought to mean!

Even in that simplified sketch form you can see that it really is just old-fashioned tax and spend, with an added dash of SNP-flavoured "end to austerity" (and hang the consequences). And you can already see the holes punched in it.

But that's not the point.

It LOOKS like he's got an alternative plan.

"it is unarguable that no modern party leader can win an election if behind in the polls on economic competence"

It may be that what matters is not CREDIBILITY but CONFIDENCE. If Corbyn and his team can present this plan with a swagger, their army of neophyte supporters are already willing to buy it (and form a Twitter lynch mob against anyone who says it's bunkum) because they – to quote the "X Files" poster – WANT to BELIEVE.

So what do we do instead?

To be continued…!


Mike Taylor said...

"Labour's position since the crash of 2008 has been one of denial – cries of "Labour's overspending didn't cause the crash" and endless games of "Pin the Blame on the Bankers"."

Really? That is not at all what I was hearing from Labour in the run-up to the last election. What I heard was a feeble capitulation every time Cameron waved around his "the money is all gone" note, and a sequence of craven promised to try harder to be just like the Tories next time.

Millennium Dome said...

Yes, really Mike.

Even the most cursory of Google searches reveals denial after denial going back years and up to and including during the big leader's debate during the election:

Ed Miliband (Times and Labour Website, since removed): What is this deceit? It is that the deficit was caused by chronic overspending rather than a global financial crisis
(Quoted by Chanel 4 Fact Check)

Fabian Society: The myth of Labour’s excessive borrowing: why it’s time to fight back

Labour List: Ed Miliband’s speech: the missing bit "Labour didn’t cause the banking crash and it didn’t cause the recession. Neither was caused by government overspending."

Ed Miliband (in the Leader's Question Time): Labour did not overspend in government

Guardian: Labour overspending did not trigger financial crash, says senior civil servant

Yvette Cooper: Labour didn't spend too much before the crash
14-May-15 (they're still saying it after the election)

Perhaps it just shows the fundamental weakness of the Miliband team's messaging that you didn't even notice.

Mike Taylor said...

Your evidence is impressive.

Perhaps what it really shows is that Miliband's team were trying to push two quite separate and indeed contradictory messages at the same time.