Tuesday, 24 December 2013
A truthful songsheet for Liberal Democrats to sing from
Least week I received an Email from Danny Alexander, Liberal Democrat number two in the Treasury.
"Dear Peter," he begins, though I have never met him personally, and goes on to congratulate himself on the "good news" that unemployment has fallen "because we've stuck to our sound economic plan" in spite of the difficulties of "clearing up Labour's mess."
So far he hasn't responded to my reply that he should be ashamed of himself, because his message contains two misrepresentations, or lies, if you want to be blunt.
First, the economic "mess" was and is not Labour's. As has been spelled out ad nausium in this blog and many more authoritative sources, although Labour happened to be in charge in the UK when the economic crash happened, it was caused not by their government but by the irresponsible behaviour of the international financial sector made possible by the policies of deregulation introduced by and so beloved of the Tories and their international allies (the Reagan-Thatcher axis). Perhaps Labour at the time could have done more to rein in the bankers, but had they done so they would have been ridiculed by the right, who were actually calling for more deregulation.
It also needs to be spelled out that when the coalition came into office the economy was actually recovering. Osborne's "sound economic plan" hit the recovery on the head and caused three years of unnecessary recession.
We now need to move on to the second misrepresentation: that the coalition has stuck to Osborne's economic plan of "expansionary fiscal contraction." Oxford economist Simon Wren-Lewis has done a detailed examination of the figures which shows that, whereas in 2011 government expenditure as percentage of national income fell by 0.1% (the plan), in 2012 it actually increased to 2.6% Wren-Lewis therefore concludes:
So there you have it. Plan A was temporarily abandoned. Austerity stalled. Was that important in boosting the recovery that followed in 2013? We cannot know for sure, but that is not the key issue here. The important point was that Plan A was clearly put on hold. Claims that the government stuck to Plan A are false. The reason Plan A was abandoned, of course, was that it was delaying the recovery, and the government needed a recovery before the next election.
Liberal Democrats can reasonably claim some credit for this, as a result of the expansionary projects initiated by Vince Cable in his capacity as Business Secretary. Of course they were minor and nothing like the full blooded Keynesian pump priming needed, but as much as could be achieved given that the Tories have 305 MPs and we have only 57.
This is the song we should be singing, not, as the party that promised more honesty in politics, conniving at Tory misrepresentations.
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I was beginning to think I was alone in not buying the argument that it's solely the Labour mess we"re sorting out.ReplyDelete
The Tories commitment to deregulation in the Thatcher years carried over to their years in opposition. The commentators have conveniently overlooked the 'report' led by Redwood and published about same month that N Rock shocked the banking system. That claimed the finance sector warranted even less regulation.
Thanks for your comment, Gesherts. You are certainly not alone, but it is sad evidence of the power of Tory perception management, fully supported and spread by the largely right-wing press, that, according to the opinion polls, over 50% of the electorate actually do blame Labour for the recession. Labour themselves seem to have given up hope of asserting the truth. Liberal Democrats should be made of sterner stuff and shun the present opportunism based on lies, however convenient it may seem in the short run.ReplyDelete
The Labour Government took bank regulation away from the Bank of England and gave it to the FSA. The FSA proved to be ineffective at implementing the perfectly adequate regulations to stop bad lending (the cause of the bank crash). It seems to me the know how at Bank of England would have been far more effective than the weak management at the FSA at enforcing the regulations.ReplyDelete
The Labour Gpvernment deliberately set out to spend public money at an unsustainable level in order to win the election. Whilst Godon Brown as Chancellor followed the Conservative budget in the first couple of years, he then exceeded his own spending limits by changing what was or was not the structural deficit estimate.
So Labour were definitely responsible for the unsustainable deficit and the need to slash public spending (which still has not happened). Whilst the bankers and the FSA are largely reponsible for the excessive and bad lending that led to the bank crash, the Labour government was responsible for moving bank regulation to an ineffectoive FSA with ineffective people.