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June 16, 2019

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Jonathan da Silva

Wow you demolished the only thing (+ve) I would give the amoral LLG credit for. Is it fair to say though Labour imposed a form of austerity (surpluses - low deficits) from 97-01 for no reason? [harsher view until Brown expected to be in charge] Also use of PFI was a hostage to fortune? [harsher view paid when Brown was gone]

In 2010 the 3 manifestos were all but the same - all 3 within 8bn (?) rounding error. Coalition relaxed its plans. Labour kept Balls out of shadow chancellor who had proposed spending in his leader campaign for leader. A placeholder Johnson was put in place initially.

Labour 2015 still did not break the narrative that countries are like people who are going to grow old and get lower incomes and the deficit mattered far more than it does.

Most Labour MPs are not MMT they are all for treating money like it's a Gold Standard still.

Other than war torture rendition et al all backed by whole cabinet Blair is incidental economically. Corbyn is attacking the wrong killer B.

James

'The banks that failed in 2007-08 did not, for the most part, do so because their loans turned bad'

This is kind of true but somewhat beside the point. Banks went bust because of an acute liquidity crisis, but once that crisis passed they were also (and not just the ones that went bust) insolvent because of vast quantities of bad loans, particularly against property. This was the legacy of years of lax lending standards and inadequate capital buffers in the run-up to the crisis. These loans sat on bank balance sheets for years, gumming up the system and contributing enormously to the depth and length of the crisis.

It's a bit harsh to blame Labour for this when almost everyone else had similar problems, but Canada for instance did much better.

Alex

It has certainly struck me before that, given the worldwide surge of inequality, New Labour did pretty well to hold it to flat.

James Brooks

One of the biggest issues faced in assessing New Labour's culpability is whether or not they were being responsible, given the information they had to hand. Subsequent analysis by the OBR suggests the output gap had been completely closed, and was in fact possibly as high as +4% of GDP in 2007.

https://obr.uk/docs/dlm_uploads/WorkingPaperNo1-Estimating-the-UKs-historical-output-gap.pdf

We could ask whether the Brown/Blair government would have acted differently, and restrained spending accordingly, had they had this sort of analysis to hand contemporaneously - but it is clearly an issue when GDP based metrics are not factoring in the extent to which the economy is running above full potential.

e

Interesting, so many still arguing the toss given the ease with which it was all, in any case, swept away.

Labour alleviated poverty during its New years. Fine. No argument. Labour's raison d'être has always been to work to achieve, through Parliamentary means, economic and social justice. Merely alleviating the worst of it good enough or no more than a LibDem would have to offer?

Nanikore

This is a little lightweight - and it gets too many people off the hook - especially New Labour and the mainstream economists that advised them.

Blair was an excellent politician. As was Clinton. Their motives were good.

The problem was they were given the wrong advice, and they took it.

To look at the problems that built up to 2008, we need to look at the Great Moderation and the ideas and hubris that were behind it. It saw international capitalism (globalisation) as an unambiguously good thing. New Labour deregulated international capital flows, good flows and labour flows accordingly. The problem was that such policies did not address the fundamental problems that were already beginning to be seen in capitalism. In the UK this was related to deindustrialisation and the concentrations of wealth, of which geographical concentration was of one manifestation. The Blair's Government's response was neo-classical: compensate the losers, but do not get involved in decisions in that distort market prices. Capital controls, industry policy, prices and incomes policies were definitely off the table and for the realm of old left dinosaurs.

We are now seeing the political fallout from this. Austerity cannot be entirely blamed. What we learned from the New Labour era is that expansionary macro policy is not enough. The Government has to get involved in decisions that involve the allocation of capital.

I think this is also the message of Corbyn, His message is not what neo-classical economists want to hear. But their are plenty of historical examples of successful countries that have followed his path.

Nanikore

One more thing.

Mainstream economists like to paint Eurozone economies as neo-liberal. This is actually very misleading. In truth they neither follow the neo-liberal nor the neo-classical rule book. It is true that monetary policy in these countries follows strict rules in terms of monetary growth. But governments and central banks are intricately involved in the allocation of credit. There is also far more active involvement in the labour market, with collective bargaining as a means to set wages and prices. This calls for strong unions.

Labour was let down by New Labour who did not arrest the decline of trade unions. Blair neo-liberalism involved maintaining an extensive welfare state, but with a free market that allowed for the 'efficient' price setting and resource allocation.

And this is the ideology that ultimately failed. You cannot blame globalisation and associated global economic shocks, because ultimately the country had let itself over-exposed to them.

Philjvtaylor

You say:

"From this perspective, it is absurd to blame New Labour for the subsequent austerity (except to the extent that we should blame it for losing the 2010 general election). We’d have had a deep recession in 2009 whatever the government would have done, and this would have greatly increased government borrowing thereby giving the Tories and the media the chance to complain about Labour profligacy. Austerity is the fault of the Tories and Lib Dems, nobody else."

But Darling/Brown implemented an austerity programme 9/10ths the strength of the Coalition one and actually put it in place.

It had three planks:

- £20 billion Nicholson Challenge cuts in NHS
- halving net public investment
- departmental savings of £46bn.

Nicholson kicked off in 2009 by Andy Burnham. Labour put in 2010 manifesto on page 4:3. Tories did not change.

Capital spending cut from £50bn in 2010 to £22bn in 2014 in November 2009 pre-budget report. Tories did not change.

IFS calculated that Darling's March 2010 budget spending envelope implied departmental spending cuts of £46bn. The Tories went in a bit harder on this.

We would have had austerity under Brown and Darling himself said we will have to cut harder than Thatcher.

Graeme

https://www.conservativewoman.co.uk/the-big-lies-about-margaret-thatcher-part-2/

Your answer in a nutshell

Rocco Siffredi

How is productivity going in the NHS? Scotland and Wales.... Versus austerity England. Dillow, lift your doctrinal goggles. Try looking at data

Graeme

Who are the oppressed workers who should embrace the Labour Party? The trades have gone.... Plumbers, miners, electricians, postpeople, dockers, steel makers. Difficult to build a mass movement on council staff and buros

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