Johnson's spending challenge

The old myth of government finances being like household ones is about to hove back into view. Johnson is promising to increase spending on the NHS, as well as on schools and higher public sector pay, as well as offering a big tax cut. To the question, “how can he afford this?”, Tories reply:

It is because we took tough and necessary decisions to cut Labour’s borrowing after 2010 that we can afford to spend more now.

In this way, popular spending rises now can be used to defend past austerity.

Which poses the question: how can the left combat this?  

It’s not good enough to say that it too favours such spending. This risks it looking like an old hipster: “Yeh, I was into fiscal expansion before it was cool.”

Yes, we have lots of other arguments. Austerity was never necessary because there was never a danger of a sell-off in gilts; the only constraint upon government borrowing is inflation. The only “evidence” that high public debt was a threat to economic growth was a spreadsheet error. The cost of austerity – in terms of thousands of lives lost, increased poverty and despair and lower incomes – were horrendous.

These are all true. And irrelevant. If you don’t believe them now, you never will.

Instead, I’d suggest some other lines of attack.

One is: if the Tories are such good stewards of our money, why is sterling so weak – down over 7% against the euro and 15% against the US$ since 2010? This isn’t a cheap debating point. A weak pound (if sustained) is a sign of a lack of confidence in the UK’s economic prospects.

Secondly, austerity failed by its own standards. It did not reduce borrowing anything like as much as planned. For example in 2010 the OBR forecast that PSNB would be just £20bn by 2015-16. In fact it turned out to be £71.8bn. Over the first five years of austerity the government borrowed £158.9bn more than expected in 2010. A big reason for this, of course, is that in depressing economic activity austerity also cut tax revenues.

Thirdly, austerity was counterproductive and unsustainable. Cutting prison staff looks like a “saving”, until prisoners riot or re-offend upon release because of a lack of rehabilitation. “Savings” on flood defences prove expensive when we need to repair the damage done by flooding. Cuts in psychiatric care and youth services impose extra pressures upon the police. A lack of spending on schools isn’t a saving if parents pay a hidden tax by donating money to schools. 

Aditya therefore has a point:

Every time Johnson promises some spending, Labour should retort: which are you going to believe, his press releases or the devastation you can see on your high street, at your town hall and local food bank? 

I fear, though, that these replies aren’t good enough. Truth doesn’t always win in the battle of ideas. With a supine media, the Tories can get away with reversing their position on austerity when it suits them.

For me, what this shows is that there should have been, and must always be, much more to leftist economics than mere opposition to austerity and demands for higher public spending. Instead, we need policies and institutions that achieve not only greater equality of income, but of wealth and power too. The Tories might be able to match Labour for public spending, but they will never offer these.

Comments

[e]

First things first 'we' need to want to make it happen....and therefore, not mind being called all sorts of disparaging names whilst scoring goals.

[Tasker Dunham]

"It does not have to be like this.!"

[Blissex]

«if the Tories are such good stewards of our money, why is sterling so weak»

Ah this could be a line item in whatever "talking points memo" may be doing the rounds, as even the FT is giving prominence to it.

But while the exchange rate was a big deal in the 1960s and 1970s, in recent times its fall caused no conniptions, most people don't care.

«With a supine media, the Tories can get away with reversing their position on austerity when it suits them.»

Yet in 2017 the g.e. result was pretty close as most people are not really swayed by the media, as the business model is to pander to whetever their audience already opines.

«we need policies and institutions that achieve not only greater equality of income, but of wealth and power too.»

The Mandelsonian Tendency entrysts in Labour could have done something about this, but obviously they did the opposite, chasing the tory aspirational voters who shop at M&S and Waitrose, and the campaign money from billionaire rentiers and business owners, to ensure that New Labour were a marketing brand rather than a movement. A Campbell's deputy spinmeister reported in 1999:

“Philip Gould analysed our problem very clearly. We don’t know what we are.
Gordon wants us to be a radical progressive, movement, but wants us to keep our heads down on Europe.
Peter [Mandelson] thinks that we are a quasi-Conservative Party but that we should stick our necks out on Europe.”

It takes a lot of work to re-establish a “radical progressive, movement” with a wide membership to drive forward a change in policies and institutions.

[Dipper]

just a reminder that tax take as a proportion of GDP is at a multi-decade high. There are no Austerity cuts, just a refusal to borrow to pay for every-day services.

If mass-immigration is such an economically great idea, how come it isn't paying for itself?

And if your political philosophy is that people's stake in society is based not on people's creativity, skills and work, but on their ability to identify as a victim, don't be surprised when you are faced with an overwhelming demand for victim-related services.

[e]

@ dipper
Our society is not based on creativity, skills and work. If only! Its based on an employed employee money nexus, or be damned. Unless you own a spare property of course.
Victims ffs. If pomposity paid we'd be laughing; just about anyone can do an 'I'm better than you chant'

[Dipper]

@e - eh?

our society is based on creativity, skills and work. Apart from corbynites who regard it as a vast pot of money that can be seized and distributed without consequence, and intend to do so on the basis of identity and victim-hood.

History tells us that pot in as much as it exists isn't as big as the left says, and isn't going to hang around to be pilfered. It will go, and then the revolution will start eating itself.

[Soreko]

"For me, what this shows is that there should have been, and must always be, much more to leftist economics than mere opposition to austerity and demands for higher public spending. "

I couldn't agree more. But for the left to be effective it must free itself from the curse of mainstream economics which is built on philosophical foundations that are fundamentally anti-social, even if it is tweaked to give different results.

Instead the left plays the game, bringing up bogus arguments like the zero lower bound. Austerity, was as you point out, extremely costly - socially and in other ways. But the problems in capitalism go deeper and were there even during the pre-crisis Great Moderation which the mainstream calls 'normal times'. Even if you had a huge macro expansion, the result would be a credit boom, inflated real estate prices and other speculation, which ultimately distort resources in such a way that they make the worst sections of the population actually even worse off.