»Ten years ago this month, Tony Blair was going to stand down as prime minister after 10 years in the job, during which time he had won three elections on the trot with his "New Labour" (read "NOT Labour") neoliberal (read Tory) policies. His legacy?
• Britain was in debt
• the public sector was on the brink of meltdown
• the country was trying to play the part of world policeman on the cheap
• the growing trade deficit exposed the perils of allowing manufacturing to shrivel
• then, a month after Blair’s departure from Downing Street, the biggest financial crisis in a century erupted!
Remember, it was "NOT labour" not Labour that brought all this on.
As in 2007, the economy is still over-dependent on the financial sector and on the willingness of households to load up on debt. When the housing market slows--as in 2011-12 and currently--so does the economy. Income and wealth are highly concentrated because not only has growth been slow it has also been unevenly distributed. In the workplace, management is strong and unions are weak, which helps explain why real wages have grown more slowly since 2007 than in any decade since the 19th Century. London is rich and thriving but might as well be a separate country given how different it is from other, less prosperous, regions. Relative poverty, as the former prime minister Gordon Brown has shown, is heading for levels not experienced even under Margaret Thatcher in the 1980s.
Labour’s draft manifesto at least tries to tackle some of these glaring weaknesses. There is plenty of good in the manifesto:
• Employers who whinge constantly about the poor quality of school leavers and graduates will be asked to contribute more to the education budget through higher corporation tax.
• Labour plans to broaden stamp duty to a wider range of financial instruments, including derivatives, which will raise £5bn and help lessen volatility.
• There is a recognition that macro-economic policy since the crisis has been flawed, with far too much emphasis on ultra-low interest rates and quantitative easing and too little on tax and spending measures.
• Austerity has been tested to destruction, with both deficit reduction and growth much weaker than envisaged.
• There is a strong case, as the International Monetary Fund has noted, for countries to borrow to invest in infrastructure, especially when they can do so at today’s low interest rates.
It is sign of how much ground has been ceded by the left since Blair's "NOT Labour" took over the Labour party, that these ideas are seen as dangerously radical. They were not radical in 1945 when a mild mannered Labour leader, Clement Attlee, was given no chance of winning against the victorious war leader, Winston Churchill.
Germany and France have higher levels of corporation tax than Britain, but they also have better trained workforces and higher levels of productivity. A group of countries are planning a financial transactions tax. Balancing day-to-day spending while borrowing for roads, railways and superfast broadband, which is what John McDonnell is suggesting, is more Keynesian (the principles applied for the first 35 post war years--until Thatcher in this country and Reagan in the USA abandoned them to give wealthy people even more wealth!--when the Western world had more equal societies and more productive economies) than Marxist--the fake fact the Tory press apply to Corbyn's policies. What’s more, these essentially social-democratic ideas will seem even more mainstream if--as is entirely possible--there is another crisis.
And where we are is that:
• Real incomes are falling.
• Inequality is rising.
• The NHS is kept going on a wing and a prayer.
• The economy is barely rising despite more than eight years of unprecedented stimulus from the Bank of England.
• Personal debt is heading back towards its previous record levels.
• International co-operation has rarely been weaker.
• There is a profound disconnect between the financial markets, where asset prices regularly scale new heights, and the state of the real economy.
Now ask yourself this. As this is so, what is the real fantasy, Labour’s manifesto ideas that income, wealth and power should be more evenly distributed or the idea that the current state of affairs can be sustained very much longer?
We just cannot risk the current state of affairs being perpetuated under May's complacent Tories.«
(Adapted from Larry Elliott, The Guardian)