Labour - A Study In Cowardice

Once more we are informed that Rachel Reeves is asking spending departments of Government for cuts. There have been tax rises, but little investment. Pensioners, the disabled, those on or below the poverty line, and most recently WASPI women, all have been turned away. They will have to make do with less. It does not have to be this way, and well she knows it.

Someone bereft of ideas, versus ...

The Starmer Government has itself stuck in what Simon Fletcher called a “Right wing doom loop” in a recent Byline Times article (read it HERE). Ms Reeves has pinned her hopes on growth, but growth is not forecast to occur any time soon. Her embrace of economic orthodoxy means more needless austerity, more wasted years of poor economic performance.

That it does not need to be this way has been known for more than 85 years, since the first publication of The General Theory Of Employment Interest And Money. John Maynard Keynes’ ideas, and, indeed, his prediction of where over-reliance on economic orthodoxy would lead, were not lost on a new generation of economists, as J K Galbraith later observed.

He later put this directly in The Age Of Uncertainty: “In 1937, recovery from the Great Depression was slowly under way; production and prices were rising, although unemployment was still appalling. The men of sound judgment now asserted themselves. They moved to cut spending, raise taxes and bring the federal budget into balance”. There was more.

“The few Keynesians protested; our voices were drowned out in the roar of orthodox applause. As the budget moved towards balance, the recovery came to a halt. Presently there was a new and ghastly slump, a recession within the Depression. It was entirely as Keynes had predicted. The men of sound judgment had made our case”. Pages 219 and 220 in my edition.

What is Ms Reeves doing? It looks very much like “cut spending, raise taxes and bring the … budget into balance”. And the forecast result, no growth in the foreseeable future, or even a recession, is, once again, exactly as Keynes would have predicted. The mistakes made in the USA in the late 30s were only countered by increased spending, this time on war.

... someone who was never thus constrained

The Keynesian remedy - running a deficit when the economy needs supporting - is known to any economist, or economic thinker, in the UK, Europe and elsewhere. It is available to any economy with control of its own currency - like the UK. For a country whose infrastructure is in such a run down state after fourteen years of Tory neglect, it seems a no-brainer.

Yet Starmer and Ms Reeves appear unable, or unwilling, to embrace the approach that served the Labour Government of the immediate post-war years so well. Britain was virtually bankrupt by 1945, yet Attlee and his team brought the Welfare State into being, along with a series of nationalisations, and of course the NHS. Plus, yes, more or less full employment.

Instead of actually taking action, though, we are assailed by a deluge of press releases masquerading as policy. One day it is the deeply dislikable Wes Streeting telling how he is transforming the NHS; today has brought Lucy Powell claiming, and as Treeza might have said, I am not making this up, “We're turning the tables to put ordinary people at the front of the queue”.

One slice of meaningless drivel after another. What does Powell’s assertion even mean? And all the while, there is a daily slew of bad faith knocking copy emanating from our free and fearless press. In a routine show of hypocrisy, they slate anyone they deem to be “talking the country down”, while they constantly talk the country down. But only when Labour are in charge.

As Simon Fletcher has observed, Labour is “relying on an argument that growth in the future will deliver a resolution to the country’s problems”. But what they are doing is not bringing growth, and in the timescale required, is most unlikely to bring growth. Thus they are talking themselves towards defeat, and worse, enabling the far right con men of Reform UK.

Keynes had the answers. His legacy still has them. Hello Rachel Reeves.

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