A party divided by ?

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What exactly is it that the 4.5% MPs* disagree with Jeremy Corbyn about?   I mean which of his domestic policies?   I have to say that for all their daily media attacks, I’m still none the wiser but I defy them to disagree in principal with Jeremy Corbyn’s speech… otherwise, why on earth did they join the LP and not the Conservatives?

 

Liverpool July 2015

(What’s more Jeremy Corbyn is the sort of human being who’ll retweet about a missing cat)

4.5% MPs refers to those MPs who supported Liz Kendall’s candidature for the leadership – 4.5% is the % of the membership who voted for her.

The FT, Hedgehogs and the scale of the crisis

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First posted Wednesday, 29 May 2013 on Socialist Economic Bulletin

The FT, hedgehogs and the scale of the crisis

By Michael Burke
In analysis of any issue it is crucial to distinguish between factors that are of primary or decisive importance and those that are secondary or lesser matters.  This applies to economic analysis as much as other disciplines.  There is a vast amount of economic data which is produced by innumerable public and private agencies internationally, and an almost endless number of ways of configuring the data supplied.The most important issue facing the British economy is how to end the slump.  No other issue, employment, incomes, government finances or anything other question can be resolved without it.Therefore it is extremely important to analyse the trends and prospects for growth in a sober fashion and to focus on the most decisive factors.  It is unhelpful or even misleading to focus primarily on secondary matters.The recent Bank of England Inflation Report contained an assessment of the trends in growth of the British economy.  Chris Giles, the economics editor of the Financial Times has provided a very useful chart showing changes in the Bank’s growth forecasts over time.  The chart is shown below.

Chart 1

13 05 29 Anatomy of a recession Chart 1

This is described as a ‘hedgehog’ chart because of the various lines indicating the changes to the Bank forecasts over time.  Chris Giles highlights the fact that this is the first time since 2007 that the Bank has produced an improved forecast, which raises projected GDP growth from 0.9% to 1.2% in 2013.  This is shown on the chart as the difference between the orange and green spikes on the chart.

In reality, the Bank’s forecasting record is an extremely poor one.  The November 2007 forecast (the purple line in the chart) was made just a few months before recession began in the 2nd quarter of 2008.  This was the deepest recession since the 1930s.  Yet the Bank was not forecasting any contraction in output at all.  The various ‘hedgehog’ spikes arise because it has continually forecast a rapid return to growth that did not materialise.

The upward revision to the forecast this year is minimal, comprising just 0.3% of GDP.  For many people, and not just supporters of austerity like Chris Giles, there is a hope that this upward revision to forecasts is the beginning of a trend and that there will be a continuous upward revision of forecasts as the outlook improves.

Yet the focus on such a slight revision to the growth outlook seems misplaced, and not just because it could be altered in either direction.  Even before the slump the British economy was not growing at a fast pace by international standards.  A return to prosperity would imply a rejection of permanently lower growth and a return to the previous trend.  Instead the Bank’s forecasts imply a further widening of the gap between the future growth of the economy and its pre-recession trend.

This is the real scale of the economic crisis and the issue which is of primary importance.  Currently the gap between the level of output and the economy’s former trend is approximately 16% of GDP.

This gap will continue to widen so that any new government will be faced with a shortfall in output of approximately 20% of GDP.  In current prices, these are in the region of £250bn to £300bn.

This is a measure of the effects of both recession and austerity.  Therefore it is also a measure of the scale of the task facing any new government that wants to end them.

Robert Reich on the UK Economy

The debt and the deficit are reflections of the failing economy.  They are not the cause of the jobs and living standards crisis. We need to stop self-harming with ‘austerity’.

tradesunioncongress 

Published on May 17, 2013

Professor Robert Reich talks about what’s wrong with austerity and the current direction for the UK economy. Part of the After Austerity series from the TUC: http://www.afterausterity.org.uk

Why do the Lib Dems stay in the coalition?

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Why the LDs are not desperate (regardless of electoral prospects) to get out of the Coalition mystifies me … that is, it mystifies me for all those who are not Orange bookers and/or not the chosen few who enjoy a ministerial car. Apart from any other consideration, why do they want to stay and be tarred by association with George Osborne’s misguided destructive policies? Osborne’s economic strategy has even been criticized by the IMF!

Liberal Democrat Voice (1) does little to tell me ‘why’, although there are ‘voices’ there, which acknowledge, following the failures of AV and House of Lords reform, that being in government has not given them a ‘sufficient legacy’.  (That word ‘legacy’ has such a contemptuous ring…   reinforcing the conclusion that those activists and politicians are playing the ‘getting elected’ game rather than being passionate about improving the world.)

However, I was finally moved to write after reading John Kampfner’s extraordinary piece in the Guardian The Lib Dems are in a stronger position than the Tories – but hide it well – Cameron needs Clegg more than Clegg needs Cameron – so why won’t the Lib Dem leader show some muscle?’ (2)

John Kampfner writes:

Clegg trades on the fact that he is the first peacetime Liberal in a century to preside over government. That is no mean feat and, by the nature of coalition, requires compromise. The public appears to appreciate, better than the Westminster village, that give and take is a sign of a mature political system.

In what sense is it ‘no mean feat’ to happen to be the leader of a political party when another party fails to secure a majority, and to be prepared to accept the offer to form a coalition?

And given the LDs crashed-standing in the opinion polls, where does he observe the public appreciating that LD ‘give and take is a sign of a mature political system’.  Maturity?  Exactly what is immature about vehement opposition when faced with the disastrous policies that are being imposed on the UK populace?  Why is it ‘grown-up’ politics to stay ‘stumm’ as Kampfner suggests?

In fact, what ‘give and take’? On what, in particular, have the Tories compromised?  Yes, they organized (and sabotaged) a referendum on AV, and went through the motions of supporting (and sabotaged) House of Lords Reform.

The much vaunted Pupil premium was supposed to be ‘the reddest of the Liberal Democrats’ red lines’ with an additional £2.5 bn for the education of disadvantaged children.  But, in fact, the pupil premium was ‘robbing Peter, to pay Paul’… the majority being recycled from within the education department’s budget’ – largely from the abolishing of EMA

In June, ‘David Cameron promised to “take money from outside the education budget to ensure that the pupil premium is well funded”. ….  Cathy Newman’s verdict,
on Factcheck, was that ‘so far from bringing “real social justice and opportunity to Britain’s children”, as Nick Clegg claimed before the election, the pupil premium was just filling a hole in the budget’. (3)

Another LD ‘achievement’ was to raise the personal allowance, ‘taking the poorest out of taxation’, but Patrick Collinson in the Guardian dismissed it as an ’empty gesture’

As income goes up benefits will go down, and a million more basic-rate taxpayers are set to move into 40% tax band (4)

Shamik Das of Left Foot Forward made this clear (5):

As Chart B2 of the Budget 2012 Red book (pdf) shows, the cumulative effect of this budget and previous announcements is regressive for the bottom eight deciles. The ninth decile pay less proportionally than the poorest half of people. But the budget is progressive when looking at the richest 10 per cent versus the rest.

This process of the Tories ‘sort of supporting’ (and then sabotaging) is acknowledged by Kampfner, when he writes:

The Protection of Freedoms Act, which received royal assent in May, was a small but important step forward in limiting the authorities’ use of individual data. This is in danger of being more than offset by the hideous “snoopers’ charter” and plans to introduce secret courts for intelligence-related criminal cases, such as the use of torture. (2)

 

According to John Kampfner, Nick Clegg has a more coherent vision for social justice and social mobility, with which he advises Nick Clegg to stick….  However, I simply cannot see that Nick Clegg has ever advanced anything like a coherent vision.

A belief in social justice for the disabled, the unemployed, the low waged, is totally incompatible with voting through of the Welfare Reform bill and supporting the Legal Aid bill, let alone reducing the highest tax rate to 45% for the very wealthiest people.

And as for social mobility…  Has John Kampfner seen the fallen rate of applications to University after the introduction of £27K student tuition fees, and the impact of removal of EMA?

He must also know that there are over 1m unemployed 16 to 24y olds.  Does he realise that new official figures covering the academic year to April 2012 reveal the number of 16 to 18-year-olds starting on-the-job training schemes increased by just 1.4pc, to 104,500 (6)Whilst in the North East, North West and South West, apprenticeship starts have dropped.

Furthermore, the quality of those apprenticeships is highly questionable.

A BBC investigation has found that Morrisons supermarket employed more than 1 in 10 of all apprentices across England last year (7).

In addition, where is the social justice in the government rolling out workfare on a massive scale?

Tens of thousands of forced unpaid work placements have already taken place.

The government intends 250,000 workfare placements on the Work Experience scheme alone. If each placement is 8 weeks of 30 hours work, this is 60 million hours of forced unpaid work.

850,000 people are expected to be referred to the Work Programme by the end of this year. However, due to the “black box” approach the government uses with the private providers, it has so far refused to publish how many of those are being forced to work without pay.

The Mandatory Work Activity scheme has recently been expanded to a capacity of 70,000 places a year. (8)

This all sounds less like social justice or mobility, and more like increased profitability for businesses like Morrisons.

We were told that the LDs went into Coalition with the Tories because the UK was on the verge of becoming like Greece.  That the Labour government had irresponsibly overspent on public services, and it was effectively a national emergency.  It was said that Vince Cable u-turned his pre-election economic assessment on seeing the figures, and then agreed with Osborne’s plan for expansionary fiscal contraction (more like inherently contradictory  … expansionary and contraction).

Not only was the national debt inflated by the ‘socialisation’ of banking losses rather than by public spending (9), but there was absolutely no possibility of the UK being like Greece, a country without its own currency and no central bank (Will Hutton called the suggestion risible).

There was no national emergency, on the scale suggested, as the graph below shows (10).  The UK has had much worse national debt and was in a much better position than many other countries.

In any event, expansionary fiscal contraction was an improbable solution to a banking crisis and a global lack of demand. (I struggle to believe that Vince Cable does not know all this.  Just as I struggle to understand the legitimacy of his u-turn on economic strategy.)

Unfortunately for the UK population, but as predicted (11), it has not turned out well.  As Polly Toynbee notes:

Mervyn King has just delivered a more dire judgment than any before, of zero growth this year – far lower than expected over the next two years. Bank lending has seized up, exports are down, the balance of payments is the worst for 15 years. Meanwhile the Trussle Trust is opening four new food banks a week. (12)

Nevertheless, John Kampfner, faint but pursuing, concludes:

‘The Lib Dems have taken the blows, over tuition fees and more. They have lost the opportunity to modernise our moribund constitution. They have kept stumm for the sake of stability, and been accused by the left of treachery and by the right of petulance. Clegg has two and a half years to put a strongly liberal stamp on government as it seeks a path out of the economic mire.

That is a desperately tall order but, as the past two weeks have shown, success comes to those who show muscle and no little guile.’

Fine, fighting words (although I suspect NC is pretty comfortable with Cameron’s world view) but Polly Toynbee offers the opposite advice that the LDs should get out before its too late:

With David Cameron and George Osborne lashed to a failed Plan A and no sign of shifting, lashed to a failed Plan A, the one credible reason for the Lib Dems to break the coalition is to save the country from yet worse damage. Given what Clegg has led his party to vote for – benefit cuts for the poor, tax cuts for the rich – it is almost too late. But for each recession month that they stay on, tolerating all this, the Lib Dems lose credible reasons for ever making the break.

Personally, I have to admit to a fair degree of sympathy for the ordinary grassroots LD whose cognitive dissonance levels must currently be topping even those of grassroots Blair/New Labour believers.  They are having to justify the dismantling of the NHS, the dismantling of local democracy in education, replacement of Trident, dissing of the green agenda, nuclear power, a new runway at Heathrow, taking benefits away from disabled children and so on… for what?  To prove that coalition works?

I have always respected John Kampfner as a journalist, then Editor, at the New Statesman. For the man, who so comprehensively exposed Blair’s failings, to be turning himself inside out trying to justify the LD leadership’s current position seems so very sad.  The upper echelons of the LD leadership do not deserve it.

Related post:  https://think-left.org/2012/02/16/the-nhs-and-tina-mrs-thatchers-ideological-anti-democratic-political-legacy/

(1) http://www.libdemvoice.org/

(2) http://www.guardian.co.uk/commentisfree/2012/aug/09/libe-dems-stronger-cameron-needs-clegg

(3) http://blogs.channel4.com/factcheck/spending-review-the-price-of-the-pupil-premium/4555

(4) http://www.guardian.co.uk/money/2012/mar/21/budget-personal-allowance-rise

(5) http://www.leftfootforward.org/2012/03/budget-2012-impact-per-decile/

(6)  http://www.telegraph.co.uk/finance/jobs/9470715/British-apprenticeship-figures-suggest-drive-has-stalled.html

(7)  http://www.bbc.co.uk/news/business-17584151

(8) http://www.boycottworkfare.org/?page_id=663

(9)  https://think-left.org/2011/12/21/gordon-brown-did-not-spend-all-the-money-the-banks-did/

(10)  http://www.economicshelp.org/blog/334/uk-economy/uk-national-debt/

(11)  https://think-left.org/2012/04/25/dont-say-you-werent-warned-george/

(12)  http://www.guardian.co.uk/commentisfree/2012/aug/13/coalition-olympic-cheer-will-subside