Better dead than Red Ed

June 30, 2011

John Lennon once infamously said of Ringo Starr that he wasn’t even the best drummer in the Beatles. In a similar vein, you could probably say of Ed Miliband that he wasn’t even the best Labour leader in his own family. His decision not to support the strike that is happening today is a reflection of that.

750,000 public sector workers are striking today. Their rationale is rather simple. It is claimed repeatedly by David Cameron that public sector pensions must be reformed because the present system is “unaffordable”. In actual fact the amount we will be paying less for public sector pensions, as a percentage of GDP, will decrease even without any reforms.

These pensions are not gold-plated. The recent Hutton Report on pensions (the above graph is from p. 23 of that report) had this to say:

The Commission firmly rejected the claim that current public service pensions are ‘gold plated.’ The average pension paid to pensioner members is around £7,800 per year, while the median payment is around £5,600.

In the civil service pension scheme, for instance, most workers receive a pension of less than £6000 per year.

(from False Economy)

It’s hard to disagree with Dave Prentis when he describes these pension pots as “a cushion against poverty in retirement”.

What the pension reforms effectively mean is that employees will contribute more for their pension and receive less out. That, as False Economy argues in the blog I linked to above, is essentially a pay cut. Or, as another blogger puts it, as a tax to pay off the deficit.

It’s true that these pensions are better than those received by the vast majority of private sector workers. Apart from, obviously the very rich. As the TUC briefing makes clear (p. 3):

In 2007/8 tax relief cost £37.6 billion – almost ten times the net cost of unfunded public sector pensions. This tax relief is heavily skewed towards the well off. 60 per cent goes to higher rate tax payers and a quarter of tax relief — nearly £10 billion a year – goes to the one per cent of the population who earn more than £150,000.

None of this seems like an argument to further hit public sector workers, who are already facing a pay freeze for two years in times of high inflation and what could amount for some to a 10% cut in pay.

So it’s easy to see why some public sector workers have decided to take the most extreme action possible to try and protect their already-eroding living standards.

And what was Ed Miliband’s response?

The Labour Party I lead will always be the party of the parent trying to get their children to school, the mother and father who know the value of a day’s education.

On behalf of those people I urge unions and ministers to get back around the negotiating table and sort this out…

The public deserve better. All sides need to get round the table and back to negotiations.

And he tweeted today:

For a start, it’s only a one-day strike. It’s not like the teachers have padlocked the school gates, starting singing The Internationale and taken to the streets until the government falls. If closing schools for one day affects children’s education so adversely, why was the decision taken to close schools for the royal wedding? Or close scores of them so that they could be used as polling stations on May 5th? To criticize a one-day strike because it’s hugely detrimental to children’s education seems disingenuous, to say the least.

I know that’s what many of the small socialist groups giving out leaflets on the march today, as well as people like Laurie Penny, want them to do.
But this strike isn’t about a revolution. It’s ordinary working people who have taken a democratic decision to strike in order to defend their pension. It certainly isn’t the start of an insurrection.

You can extend it to a march of people who wish to reverse the government’s economic policy. In which case, what about the parents who work at courtrooms that may be closed, who rely on Sure Start centres that may be cut, the parents that work at businesses like Thorntons and Habitat who are now feeling the pinch of the current economic climate? How is Labour going to stand up for them?

Ed Miliband’s decision not to support the strike doesn’t even make sense from a political point of view. I can only assume he’s done it because he doesn’t want to be seen as “Red Ed”, in thrall to the unions, but this seems to be mistaken. A majority of people have consistently said they are in favour of workers striking to protect terms and conditions. So Ed has ignored polls, alienated the unions who fund Labour, disappointed a lot of members and Labour’s core supporters, all for what? To stop a few bad headlines in the Daily Mail. There’s only one response for that:

And don’t even get me started on this God-awful performance.

I do think that Ed Miliband’s words say something about the existential crisis that Labour is in at the moment.

It’s becoming very difficult to answer the question of who exactly Labour is for, and what its core values are. There are those that Owen Jones calls the Blairite ultras, and Con Home calls the thoughtful leftwingers, who are essentially Blairites and believe Labour should support the cuts in their entirety. On the other extreme, there are some members of the no-cuts brigade, with every shade in between. All have different opinions on why Labour lost 4 million votes between 1997 and 2010, and all have different opinions on how Labour best wins them back.

At the moment it feels like he’s trying to please all sections of the party whilst appeasing the right-wing tabloids, and ending up pleasing nobody.

This blog will have much more to say about the direction of Labour. At the moment though, I get the feeling that this incident will have done Ed Miliband more harm than good.

Marching for the Alternative: A protest of two halves

March 28, 2011

The first thing to say about the march: it was a helluva lot of people.

In the small world of parochial politics, getting fifteen people to a meeting is great, and getting 35-40 for a talk on campus is impressive. Estimates vary from 250,000 to 500,000. Either way, that’s a huge amount of people.

For that reason, my abiding memory of the day will be crossing over a bridge over the River Thames and seeing the march for the first time. There were, as Michael Caine would have said, “thousands of them!”, snaking along the roads as far as you could see, both left and right. There were so many people that it was more of a shuffle than a march at times.

A main reason why huge protests such as the March for the Alternative are brilliant is because it’s not just “the usual suspects” who are attending. There were many families on the march, and people from all backgrounds and ages. I saw banners from the Crown Prosecution Service, student nurses, teachers, Equity, even “Gleeks Against the Cuts”.

Paul Mason has written a very good piece on the protest, and this is what he had to say:

Unison – a union which has a reputation in the trade union movement for passivity – had mobilised very large numbers of council workers, health workers and others: many from Scotland and Wales; many from the north of England. Unite likewise, and the PCS seemed capable of mobilising very large numbers.

What this means, to be absolutely clear, is people who have never been on a demo in their lives and in no way count themselves to be political.

I also saw many small self-selected groups not mobilised by unions: family groups, school groups, speech therapy groups.

There were even people protesting about the closure of their day centre. It’s a very moving image:

The march itself was astonishingly peaceful. On the coach going back, one of our number was checking their blackberry and said there had only been nine arrests. Out of about half a million marching, that’s very impressive.

There was also some good humour amongst the protestors. My favourite placards that I saw were “Charlie Sheen wouldn’t take this shit” and “Stop being naughty you lying meanies”, carried by a young child.

Imagine my surprise, then, when I got back home around midnight, checked Twitter and found that goodness knows what had broken out in Piccadilly and Trafalgar Square. When we passed Trafalgar Square around 4-4.15 it was very peaceful. There was music, singing, dancing and someone giving out leaflets for Republic. And not a kettle in sight.

Some of that seems down to some heavy-handed policing. Dave Osler has a balanced blog on the Trafalgar Square kettle for Liberal Conspiracy:

I’ll admit that the activists were hardly angels. But the policing was ridiculously heavy handed for much of the time.

The ugliest thing that came to my notice occurred in Craven Street, where the boys in blue wanted to push the demonstrators back and shoved their riot shields into some girls of about fifteen or sixteen. I won’t forget the look of fear on those poor kids’ faces in a hurry.

We were passing by Fortnum and Mason between 3.30 and 4pm, soon after the shop had been occupied. This was because it had taken us 20 minutes to go to the toilet in a Costa Coffee House. The atmosphere had completely changed. We could see red flares had been set off further down the road. There were anarchists there from the “Black Bloc” who had covered their faces; that’s never a promising sign. A group, I think from UK Uncut, had started singing outside the shop “They’re selling chocolate eggs for forty pounds”, to the tune of “She’ll be Coming Round the Mountain”.

The mood was beginning to get a bit dicey. What’s more, the line of police had their riot helmets down, and our group of five had split into two. The three of us at the back of the group managed to push through the collection of anarchists, UK Uncut people and other marchers who had stopped to watch, and gratefully joined the other two members of our group who had joined the back end of the march.

I’m inclined to agree with the views of Paul Sagar and Anthony Painter that not only was the violence daft, it was also a strategic error from UK Uncut to host protests on the same day as the TUC march. (See also Mehdi Hasan and this on Next Left as well).

As I’ve made clear before, I do not condone any violent protests whatsoever, even if I can understand the sentiments that made them happen. A democratic solution to protecting public services has failed. A majority of the public voted for parties (Labour and the Liberal Democrats) who had less draconian spending cuts planned than the Conservatives. Yet, just as with the tuition fees issue, we have Lib Dem MPs voting for measures that are directly contradictory to their manifesto. It’s no surprise, then, you’ll get some angry people trying to effect change “by other means”.

I also don’t have much time for anarchists. This isn’t just because they throw bricks through windows, which does the cause of the protestors more harm than good and detracts from the much larger, peaceful protest.

At some point I’ll hopefully get round to writing a more detailed blog post on the subject, but basically my main problem with anarchism is that it’s a rubbish, unworkable political philosophy. I never understand why there are people who consider themselves left-wing who are anarchists, since there’s no real difference between anarchism and libertarian free-market fundamentalism Milton-Friedman-style.

Also, these anarchists who were part of the UK Uncut protests seem to be in favour of businesses paying more tax. What kind of crazy off-shoot of anarchism is that?!

The strategic errors made by UK Uncut were put very trenchantly by Mehdi Hasan. I can’t help but quote it at length because I agree with every word of this:

But I’m entitled to my views – and I’m annoyed with the violent “protesters” (thugs?) who tried to wreck an important and historic march by rewarding right-wing, pro-cuts media outlets with the negative headlines and imagery that they had so craved. Then again, what else does one expect from a bunch of outraged kids who prefer to gesticulate for the sake of the Murdoch-owned television cameras? For whom “solidarity” is merely a word to daub on the side of TopShop, rather than a lived act of joining fellow citizens on a mass scale? In my view, solidarity isn’t about smashing windows in a coordinated manner. (Oh, and I refuse to refer to those louts as “anarchists” until I see any evidence that the disgruntled youth I saw kindling that pointless bonfire in the middle of Oxford Street has read even a page of Kropotkin.)

Here’s my rather simple and old-fashioned view: the trade union movement persuaded 500,000 people to turn out on Saturday to protest against the coalition’s spending cuts and “march for the alternative” – the Robin Hood Tax, green investment in education and jobs, reform of the banks and a crackdown on tax justice. 500,000 people. That’s half a million people for those of you who can’t count.

There were dozens of speakers at the Hyde Park rally – from the Leader of the Opposition to elected general secretaries of Britain’s biggest and smallest unions, from the National Pensioners Convention to Operation Black Vote, from poets to freeminers. There was a call-centre worker who’d walked all the way from Cardiff to make his voice heard. And, no, I didn’t spot a pot of hummus in his hand.

So why was there a need for an “alternative” protest, away from the main march in London and the rally in Hyde Park? Why did UKUncut – a group, incidentally, whose aims, principles and even tactics I have wholeheartedly supported since its creation last year – decide to stage a sit-in at a posh shop no one’s ever heard of on Saturday afternoon? Don’t get me wrong: UKUncut had nothing to do with the violence at the weekend, and have since been wrongly maligned by much of the mainstream media, but why consciously opt out of a march involving – one more time – 500,000 of your fellow citizens? Couldn’t the well-heeled shoppers in Piccadilly have been rudely interrupted on Sunday instead? Or Friday? Or Monday? Any day other than the day of the TUC march? This scene from the Life of Brian comes to mind…

Put simply, the March for the Alternative was not UK Uncut’s parade to rain on. Instead, the march’s message has been urinated on from a great height.

The Budget: it’ll take more than deregulation to stimulate growth

March 24, 2011

George Osborne made it clear very early on in his Budget speech that it would be “fiscally neutral”. This meant there were no large-scale tax cuts or any rises in public spending.

You see the key points here. I don’t really want to concentrate on the details: wading through the nitty-gritty can be left to the professionals, thank you very much. Instead, I’d rather focus on the tone of this budget.

As you’d expect from this coalition government, it’s dedicated to a free-market, neo-liberal economic model. Following up from Cameron’s “Enemies of Enterprise” speech, which talked of wanting to cut red tape, plans were laid out to cut taxes and regulation for businesses. Sadly, such an approach is misguided.

Labour keep on saying that the Tories are taking us “back to the 1980s”. One way in which they are doing this is in creating 21 new “Enterprise Zones”. This announcement was no big shock – such a plan was leaked to the Evening Standard as far back as January, and Osborne talked about creating these zones in a speech made only a few weeks ago.

Essentially, Enterprise Zones are specific areas which “will include tax breaks, deregulation and relaxing of planning rules to ten areas across the UK, costing the government £100m over four years”. Margaret Thatcher and John Major created 38 of these areas in the 1980s and early 1990s. Cutting red tape to stimulate growth sounds very sensible, but these schemes have not been very successful in practice.

Last month The Work Foundation planning published a report on Enterprise Zones. It found that their success across various countries had been “ambiguous at best”, and often had a “resoundingly negative” impact. (p6)

In Britain, Enterprise Zones had created 63, 300 jobs by 1987, but only 13, 000 were “new jobs”. The other 80% of these jobs were merely displaced from other areas. A government report put the cost at £45, 000 per new job created in the Enterprise Zone.

All this deregulation also didn’t seem to attract companies to the Enterprise Zone. Surveys suggested that only one-quarter of new jobs could be seen to have arisen from this deregulation, with site characteristics and market access seen as being more important reasons for them to invest. (pp5-6)

The one main success story of the Enterprise Zones was the emergence of Canary Wharf as a thriving employment hub. However, that can be attributed to the government investment in the Dockland Light Railway, rather than the deregulation present in the Enterprise Zone. Most jobs were created in the area after the area lost its “Enterprise Zone” status. (p7)

The whole ethos behind this budget and the creation of the Enterprise Zones is to create a “flexible labour market”. David Cameron has been banging on about this since the start of this year: in January he talked about plans to make it easier to sack workers who had worked for a company for less than two years.

That implies that it’s good to have a lightly-regulated, flexible labour market. However, such a market can have just as much inefficiencies as a labour market which has buckets of regulation. Ha-Joon Chang writes about one illuminating example in 23 Things They Don’t Tell You About Capitalism.

South Korea has one of the most lightly-regulated labour markets in the world, with the result that many South Koreans end up in very insecure, temporary jobs. Around 60% of workers are on a temporary contract. Workers in their 40s and 50s are often “shunted out” to make way for younger workers: a chilling prospect given Korea’s meagre welfare state. Because of this, most young South Koreans are trying to become doctors if they have a science degree, or lawyers if they are humanities-inclined, because there is (slightly) more job security in these areas than in engineering, say.

80% of top-performing graduates say they want to study medicine. It is harder to get into South Korea’s 27th-best medical school than the country’s top engineering department. All this is despite the fact that now doctors’ wages are falling, in relative terms, because of the over-supply in doctors in South Korea. Summing up, Chang concludes that “one of the freest labour markets in the rich world…is spectacularly failing to allocate talent in the most efficient manner. The reason? Heightened job insecurity.” (pp222-224, at p224)

There are a couple of elephants in the room with the Coalition’s attack on regulations on business. The first is that some regulation is necessary. Very lightly-regulated economies that sought to encourage business (especially financial businesses) such as Iceland, Ireland and Britain are amongst those who were hit hardest by the crash: an unsustainable boom caused a long and gloomy period of economic insecurity afterwards.

Regulations might impinge on short-term growth, but they can then lay the foundations for longer-term, stable growth. Back to 23 Things again (p197):

(R)egulating the intensity of fish farming may reduce the profits of individual fish farms but help the fish-farming industry as a whole by preserving the quality of water that all the fish farms have to use.

It’s not as if regulation is incompatible with economic growth. Per capita income growth in the developing world was 3% per annum in the 1960s and 1970s. From 1980-2009, after the free-market reforms were introduced, the rate of growth fell to 2.6%. That figure is inflated by the fact that it includes the performance of India and China, neither of whom embraced neo-liberal policies. (23 Things, p73)

Going back to South Korea again, businessmen in the early 1990s needed to collect 299 different permits from a number of different government agencies in order to set up a factory. Despite this, its economy had grown at 6% in per capita terms since 1960. (p196)

The important thing is not to have no regulation, but the right regulation.

That’s what Osborne’s budget misses. Instead, we have indiscriminate deregulation and lowering of corporation tax. This benefits wealthy businessmen whilst stripping workers of basic rights, such as maternity leave and health and safety laws which could protect them. It’s only going to perpetuate inequality.

Also, and oddly for a budget meant to deliver growth by stripping red tape, the rate of growth was downgraded. The Office for Budget Responsibility revised its growth forecasts for 2011 and 2012 (1.7% and 2.5%, down from 2.1% and 2.6% in November). What’s more, these figures seem optimistic compared to other forecasts (see the Blanchflower article I linked to for these).

That’s not the only forecast that’s more grim than was predicted:

The deficit increase of £11.8bn in February was almost double the £6.9bn expected by the market. Also unexpected was the increase in the Consumer Prices Index (CPI) rate of inflation to 4.4 per cent, with core inflation jumping to 3.4 per cent. This has increased the pressure on the Bank of England’s Monetary Policy Committee (MPC) to raise rates, which would be disastrous for growth.

I can think of no better way to round off this blog than to paraphrase Paul Krugman from a few months ago: George Osborne’s plan is bold, but he’s boldly going in the wrong direction.

The impact of the spending cuts: an e-interview with Kate Belgrave

March 23, 2011

In the run-up to today’s Budget and the March for the Alternative this Saturday I’m writing a few bits and pieces on the impending spending cuts. Below is an e-interview conducted with Kate Belgrave. Kate has been travelling the country interviewing people who rely on council services. She publishes articles of these interviews here and tweets as @hangbitch.

You’ve been travelling the country interviewing people about the impact spending cuts would have on their area. Could you talk a little bit about that? Where have you been, what have you seen, etc?

I spent December in the Northwest and January-Feb in the Northeast. My aim is to talk to council service users over a year to see how council cuts really play out with people who rely on those services.

I’ve been writing about council for a long time and it occurred to me that not everyone knew what sorts of services councils provided – people know about rubbish collection and so on, but councils also provide care services, carehomes, daycentres for people with physical disabilities and learning disabilities, community centres (which
sometimes provide cheap meals, etc), respite care services, meals on wheels, housing maintenance, advice services, and a lot of complex care packages which are provided between themselves and the NHS.

They also often provide and/or support drug and alcohol rehabilitation services, and fund voluntary groups that support people with serious mental health problems and so on. I felt that the major political parties were glossing over all of this. The focus was on libraries, forests and the NHS (which are all important – it’s just that there’s

So, I saved up for about six months and then headed out in December. I talked to people using housing and care services in Manchester, disabled daycentre users in Shropshire, parents of severely disabled children in Lancashire, council housing tenants in Skelmersdale, drug, alcohol and mental health support service users in Newcastle, community centre users in Middlesbrough, parents of kids at a special needs unit in Cambridgeshire and also a lot of people in London, which is where I’m based.

I’ve been pretty shocked by what I’ve seen – the cutting of that special needs unit in Cambridgeshire, Lancashire county council’s tightening of care eligibility criteria, those severely physically disabled people in Shropshire losing their daycentre and so on. Those cuts decisions will affect lives adversely and it seems unacceptable in this day and age.

At the very least, you want to know that if you have a debilitating stroke at the age of 38, you’ll get decent care
and have a place to go during the day where you can rehabilitate and spend time with other people. You also want to live in a society which provides those services for people. That’s why you pay tax.

What do you think the impact of these cuts will be?

I think for a lot of people, they’ll be truly devastating. Those people in Shropshire say that without their daycentre, they’ll be stuck at home “staring at the four walls.” Lancashire county council is planning to close care respite homes for children with disabilities. Those families rely on that respite care.

Without respite care, you just never get a break. Disabled people who are reassessed and found to have only ‘moderate’ needs will lose their care packages. Others will be charged for care services and if they can’t afford to pay, they just won’t get those services.

One man I’ve been speaking to in Lancashire is extremely concerned that the nursing care his severely disabled son receives will be compromised because the groups that provide nurses are facing cuts. The parent is an elderly man, but he and his wife will have to make up any shortfall in care or finance themselves. They also have the added worry that when they’re not longer around (they’re in their 60s), their son won’t have anyone who can provide that backup.

The parents of kids at the special needs unit in Cambridgeshire were terrified – their children (some were on the autism spectrum) had ended up at that unit because they’d had dreadful experiences in mainstream education. The council was planning to send them back to mainstream schools.

If the Middlesbrough community centre I went to closes, so will the daycentre facilities for people with learning and physical disabilities that the centre hosts. It’s extraordinary that people in these groups are being forced to pay for the banking crisis and zero council tax increases.

There are other issues, of course. An important one is that thousands of people will be made redundant in areas where there really are few other employment options. It seems very likely that people will lose their homes and that we’ll end up seeing a lot more of the social problems that accompany large-scale unemployment.

The other important point is that other nations will take the UK’s lead. Neoliberal politicians in New Zealand (where I’m originally from), Australia and Europe especially will be watching these cuts with interest and will feel inspired if Osborne manages to pull any of this programme off. We’re some way ahead of the UK in dismantling the welfare state in places in NZ, but that doesn’t mean our own Conservative government won’t be taking considerable interest in the UK government’s attempt to sell this “the deficit justifies an attack on the state” rhetoric.

You’ve written a little bit on the difficulties bloggers and citizen journalists have had when trying to report on the activities of local councils. Is this an attitude common to all councils, and what role do bloggers have in holding these officials to account?

I wrote in some detail on this subject recently for Open Democracy.

I have generally found councils obstructive and difficult. It’s not only that they won’t let journalists into council meetings, or try to ban filming and recording. They also actively try to stop you talking to service users, and refuse to take your calls, or provide you with information.

It’s my view that some of the best journalists of this era are bloggers covering local rounds – they’re the people who read agendas, attend meetings, comb reports, talk to people and work up big contact books and readerships. That’s what journalism is. There’s a great deal of professionalism there.

I think the term “citizen journalist” is no longer appropriate for a lot of these people. They’re fully-fledged reporters – real “nose for news” types who don’t suffer politicians at all. They refuse to be pressured. A number of us are trained journalists and NUJ members and are regularly contacted by the mainstream for content and contacts. Local councils are shit-scared of us as well – Roger T at the BarnetEye has put the wind up Brian Coleman on several occasions and councils have tried to throw me out and ban me from talking to people.

Union members have even told me they can no longer access my blog on Hammersmith and Fulham servers.

I’d make the point also that some of us have mixed feelings about participating in the mainstream press. I like getting published there from time to time for obvious reasons and I think there are some excellent people working at some papers, but I tend to feel that generally, the mainstream press is part of today’s political problem.

It’s about opinion, ego, exaggeration and party alignment, rather than good old shoe-leather, grassroots journalism. I really don’t think it’s about talent any more, by and large, and hasn’t been for a while. If you schmooze and push yourself forward and write about “controversial” things like stripping, sex and boozing, etc, you’re probably going to make some – well, headway. If you don’t have the stomach for that sort of “look at me” writing, you won’t.

I think as you get older, you lose interest in that kind of writing as well – I did more of it when I was younger and working in the mainstream. I can’t see that any big paper would pay me a salary to do the work that I do now. Talking about daycentres in small councils, or community centres in Middlesbrough is just not exciting enough and/or likely to shift product in the way that big media is desperate to. They’re important stories, but they’re not “big” stories that will generate advertising.

We’re talking about a mainstream press that will send literally hundreds of people to cover the Chilean miners’ rescue, or the Japan earthquake disaster, but nobody to cover the fallout from, say, a carehome privatisation, or massive funding cuts. That’s not to say major world events shouldn’t be covered – just that some of us passionately believe there are other priorities and are prepared to put a lot of time and money into covering those priorities.

I do think a lot of people in the mainstream feel that way as well – a hell of a lot of them follow respected bloggers on twitter and are regularly in contact and talk as equals. I feel that senior mainstream people like Andrew Marr are dismissive of good bloggers, but a lot of good mainstream people are not. They can see that good work is being done and respect it.

Are you going on the March for the Alternative on Saturday? And if so, what is your alternatve to the coalition’s spending plans?

Yes, I’ll be going. I think a show of numbers will be extremely important.

As for alternatives – depends on how granular you want to get. Possibilities vary from council to council – I (and a number of union branches which presented councils with alternatives) think much more effort could have been made to consider small council tax increases at councils, utilise reserves to buy time, jettisoning consultants (some councils brought in expensive consultants to advise on cuts) and charging works to capital accounts, rather than revenue accounts where that was possible.

Notts County, for instance, had some building works charged to the revenue account. Unison thought there was an argument to be made for charging those works to the relevant capital reserves, which would have freed up revenue. There were probably plenty of examples of that sort of possibility in capital and revenue budgets across the country.

The problem is that nobody wants to hear that sort of suggestion if their reasons for cutting services are ideological. What we’re seeing at the moment is a wholesale attack on the notion of state provision and welfare. I don’t particularly think it is about fiscal realities.

Hardline Tory councils like Hammersmith and Fulham and Barnet have been pursuing the cuts ideology for some years – long before the deficit “justified” cuts and charging. They don’t want to hear arguments in favour of preserving services. That argument is at odds with their whole thesis. Tory councils like Lancashire have built up enormous reserves, which they have done instead of spending money on services. Those people are about road improvements, apartment-building and city development. They’re not about carehomes, hostels for people with mental health needs, or sheltered housing wardens.

That’s why, on another level, I want to hear a new, alternative political rhetoric about fair distribution. UKUncut has started to do this and is making an important point in a beautifully simple way – “big corporations need to make a fair contribution.” It’s simple, but it makes the point perfectly. I’ve heard people in non-political circles talking about it.

There’s also a discussion to be had about political priorities – should we be spending a massive amount attacking in Libya while people in wheelchairs here are being thrown onto the street? Have bankers adequately compensated taxpayers for throwing the economy into recession and for bailouts?

This is not a good time in human history, but it’s an important time. Too many people are suffering when they shouldn’t be. We must redefine our world.

Mehdi Hasan: If I was Ed Miliband…

February 27, 2011

Mehdi Hasan of the New Statesman is, without doubt, my favourite political journalist at the moment. He was great on Question Time a few weeks ago, and I quoted him in my blog on multiculturalism.

He also proved why with a barnstorming speech at London’s Progressive Conference.

I meant to post this yesterday, to coincide with the day of UK Uncut action planned, but illness and Yes to Fairer Votes campaigning got in the way.

I’ve taken the liberty of transcribing some of it below, with fuller versions of the articles he quoted.

If I was Ed Miliband, on Monday morning I would hold a Press Conference in Church House in Westminster. I would invite all of the press: broadcasters, TV cameras, lobby journalists. I would flank myself with three men: Joseph Stiglitz, Paul Krugman and Christopher Pissarides.

And I would then invite Joseph Stiglitz, the 2001 Nobel Prize Winner in Economics, to stop forward and address the press. And he would say, as he said to me in an interview in February last year:

I say you’re crazy – economically you clearly have the capacity to pay. The debt situation has been worse in other countries at other times. This is all scaremongering, perhaps linked to politics, perhaps rigged to an economic agenda, but it’s out of touch with reality. One of the advantages that you have is that you have your own central bank that can buy some of these bonds to stabilise their price…[These cuts] would almost certainly lead to higher unemployment.

Then I would invite Paul Krugman, the 2008 Nobel Prize Winner for economics, to step forward and he would say, as he said last September:

The British government’s plan is bold, say the pundits – and so it is.

But it boldly goes in exactly the wrong direction.

It would cut government employment by 490,000 workers – the equivalent of almost three million layoffs in the United States – at a time when the private sector is in no position to provide alternative employment.

It would slash spending at a time when private demand isn’t at all ready to take up the slack.

Why is the British government doing this? The real reason has a lot to do with ideology: the Tories are using the deficit as an excuse to downsize the welfare state.

Never mind that British debt as a percentage of national income is actually below its historical average; never mind that British interest rates stayed low even as the nation’s budget deficit soared, reflecting the belief of investors that the country can and will get its finances under control.

Britain, declared Osborne, was on the “brink of bankruptcy”.

What happens now?

Maybe Britain will get lucky, and something will come along to rescue the economy. But the best guess is that Britain in 2011 will look like Britain in 1931.

Then I would invite Christopher Pissarides, 2010 Nobel Prize Winner for Economics, and he would say at this podium, as he said in the Mirror last October:

But no one doubts that the Chancellor is taking risks with the recovery.

These risks were not necessary at this point. He could have outlined a clear deficit-reduction plan over the next five years, postponing more of the cuts, until recovery became less fragile…

And his unwillingness to further tax the well off is inevitably necessitating more cuts to benefits just when the jobless will need them the most.

And once these three men had spoken, I, as Ed Miliband, would then stare down the barrel of the nearest camera and I would say, “Which of these three men, Mr Cameron, are you calling a deficit denier?”

The rest of the speech is worth watching, too. It’s brilliant. Medhi is such a brilliant speaker, and says some great stuff on the coalition’s muddled economic policies.

He also gives three ways that we can resist the cuts:

1) Intellectually
2) Judicially
3) Politically

There is a March for the Alternative on March 26th. I expect to see you all there.

Child benefit, sofa government and the principle of universalism

October 28, 2010

Philip Hammond defended the decision to remove universal child benefit as showing that the Conservatives are the natural party of government. The basis for this questionable logic was that the Tories were happy to take tough, correct but unpopular decisions “in the national interest”. If Philip Hammond really does believe this, Paperback Rioter would like some of what he has been smoking.

All through the election Tories stressed that universality of benefit was an important principle that needed keeping. It was, er, Philip Hammond who said as much on Newsnight back in April. The principle reason given is the need to reduce the budget deficit, and we have said plenty on the government’s policies on that regard.

The decision to remove universal child benefit now, and the process by which it was announced, has many disturbing aspects.

The first is that the policy is obviously a back-of-an-envelope job. When one family where one person earns £44,000 does not receive child benefit, but a family where two people earning £43,000 does is blatently absurd. All this does not inspire confidence in the coalition’s other economic plans.

Second, it seems that the cabinet was not consulted about the decision. Theresa May was asked nine (!) times by Paxman, by my count, on what date she was told about these plans. She would only reply that changes to benefits were a matter for the DWP and the Treasury, and that she didn’t first hear about the plans on breakfast TV.

One must therefore concur with Peter Oborne’s inference that cabinet was not consulted about the plans on the Thursday before they were announced by the Chancellor at the Tory party conference.

This is the most disturbing revelation from the awful mess that the government made of this announcement. Much was made in opposition of David Cameron’s “sofa government” and the fact that he made decisions based on talking to a small group of key advisers. It would be hoped that coalition government would necessitate an end to such methods of making policy, but apparently not. The fact that cabinet is not being told of plans that are this important before announcing them is very depressing news indeed.

What is also depressing is that the left is finding it difficult to articulate a proper response in opposition to the policy. The line from Cameron and Osborne runs something like: “Why should those on lower incomes pay taxes to subsidise children of those far wealthier?” Which is a specious argument anyway, because that’s not how tax works. It’s called “general taxation” for a reason. Anyone would think that the tax money from those earning under £15,000 per year was being earmarked specifically to be given to the rich.

To properly understand why universalism is such a cornerstone of the welfare state, we must look to recent history. This is what Tony Judt’s Ill Fares The Land has to say about universalism. (I’ll be quoting from this book in future too, because it’s now my favourite book of all time. You must buy it and read it):

Moreover, it was with social democracy and the welfare state that bound the professional and commercial middle classes to liberal institutions in the wake of World War II. This was a matter of some consequence: it was the fear and disaffection of the middle class which had given rise to fascism. Bonding the middle classes back to the democracies was by far the most important task facing postwar politicians – and by no means an easy one.

In most cases it was achieved by the magic of “universalism”. Instead of having their benefits keyed to income – in which case well-paid professionals or thriving shopkeepers might have complained bitterly at being taxed for social services from which they did not derive much advantage – the educated “middling sort” were offered the same social assistance and public services as the working population and the poor: free education, cheap or free medical treatment, public pensions and unemployment insurance. As a consequence, now that so many of life’s necessities were covered by their taxes, the European middle class found itself by the 1960s with far greater disposable incomes than at any time since 1914.

This is why universalism was such a key principle of the welfare state, and it must remain a key principle of any welfare state. For the coalition to attack it, in such a bungled way, and meet so little resistance, is very worrying indeed.

Why Ginsters pasties prove that the spending cuts won’t work

October 26, 2010

Two seemingly trivial stories that appeared in the newspapers a few weeks ago actually could be of profound significance given the CSR (Comprehensive Spending Review) last week. The first involves clotted cream taking a 340-mile round trip to end up in a supermarket 2 miles away from where it was originally made. The second is a similar story involving Ginsters Pasties: despite being made in a factory that is walking distance from a Tesco supermarket, it takes a 240 mile round trip, via Bristol, to end up back in the supermarket in Cornwall.

The main point here is to highlight that there can be as many different anomalies, diseconomies of scale, and good old-fashioned “waste” in the private sector as well as in the public sector. Over the past thirty years, governments of all stripes have been arguing that “private sector = good, public sector = bad”. This dichotomy is inherently misleading. There are some things that the state is better at providing; others are best left to the free market. Government provision of health, education, street lighting and even transport is the most just way of providing essential services for all, regardless of location or ability to pay. On the other hand, government provision of tomatoes, for instance, would be ludicrous, and this is best left to private companies.

To simply have a Manichean divide between “private” and “public” sector is intellectually dishonest. Yet this is what the coalition has been attempting to do with its spending cuts. The cuts are founded on this logic, and this logic is misguided, as I hope to show below.

Ideology and cuts

One cannot criticise the cuts simply because they are ideological. This would mirror smears that New Labour drones like Hazel Blears would make of the Labour left, who dismissed any complaints they had of academies, ID cards or killing foreigners as “ideological” complaints that were not of any concern. I would welcome politicians using “ideology” more. Of course the cuts are motivated by a certain ideology, and you could equally argue that those arguing against the cuts are also motivated by a different ideology. The key point is not that the cuts are “ideological” per se, but that the ideology that motivates them has been tried before, and did not work. Johann Hari, in his excellent article on the CSR, had this to say:

When was the last time Britain’s public spending was slashed by more than 20 per cent? Not in my mother’s lifetime. Not even in my grandmother’s lifetime. No, it was in 1918, when a Conservative-Liberal coalition said the best response to a global economic crisis was to rapidly pay off this country’s debts. The result? Unemployment soared from 6 per cent to 19 per cent, and the country’s economy collapsed so severely that they lost all ability to pay their bills and the debt actually rose from 114 per cent to 180 per cent.

George Monbiot wrote another excellent article that is worthy of your attention, comparing the spending cuts to the “disaster capitalism” written about by Naomi Klein in her book The Shock Doctrine. This is what he has to say about Chile, where Pinochet implemented a rather, um, radical free market economy after his coup:

By 1982, Friedman’s prescriptions had caused a spectacular economic crash. Unemployment hit 30%; debt exploded. Pinochet sacked the Chicago economists and started re-nationalising stricken companies, whereupon the economy began to recover. Chile’s so-called economic miracle began only after Friedman’s doctrines were abandoned. The Chicago School’s catastrophic programme pushed almost half the population below the poverty line and left Chile with one of the world’s highest rates of inequality.

Hari summed it up best: “George Osborne has just gambled your future on an extreme economic theory that has failed whenever and wherever it has been tried.”

The alternative ideology

It is also fundamentally dishonest of the right to label those opposing the cuts as “deficit deniers”. Our problem is not that the deficity does not exist, but that the deficit is not such a drastic problem to justify cutting spending in some government departments by as much as 25%. From, here is a graph showing Britain’s deficit as a percentage of GDP since records were kept in the late seventeenth century. The deficit doesn’t look like such a massive problem in this context, does it?

As Hannah has pointed out, our economy depends on debt to some extent. If you don’t like it, then you have a problem with capitalism generally. Don’t we all? Thankfully there’s something called social democracy. You should give it a try.

And before anyone mentions the G-word, here’s Larry Elliott:

Britain is not Greece. Ministers have not been cooking the books to disguise the true state of the budget deficit. At 14 years, the average maturity of Britain’s debt is one of the longest in the developed world. And the fact that the UK has its own currency provides policy freedom in London not enjoyed in Athens. 

The cuts are an over-reaction, pure and simple. Gary Younge put it as not letting a broken leg heal, but amputating it instead. I prefer to use the analogy of Monty Python’s “restaurant sketch”. The deficit is the dirty fork, and the coalition are the kitchen staff. You’ll get the picture:

Also, the deficit was not caused by a crisis in the public sector, but by a crisis of the private sector, which led to the banking bail out. This happened because of inadequate state intervention, not because of excessive state interference! As Paul Krugman has noted, in the US the deficit has increased because of tax revenues dropping, not because of exhorbitant government spending. Instead, in Britain we are cutting the welfare budget whilst making 500,000 more people unemployed. To quote Johann Hari again, surely it is obvious that:

When an economy falters, ordinary people – perfectly sensibly – cut back their spending and try to pay down their debts. This causes a further fall in demand, and makes the economy worse. If the government cuts back at the same time, then there is no demand at all, and the economy goes into freefall.

This is just basic Keynesian economics. Caroline Lucas was making the point very well on QT last week. You make people unemployed, you lose their tax revenues and have to pay them benefits, the deficit goes up. Straightforward really, isn’t it?

Job creation

The coalition, of course, claim that these cuts will create jobs. Rolling back the state will allow the “good” private sector to invest, new businesses will start, and umemployment will fall. The CSR estimated that although 500,000 public sector jobs will be lost, 1.5m jobs in the private sector will be generated. The obvious question is from where? Here’s Flying Rodent‘s typically irreverent take on it:

Still, the news isn’t all bad.  As George Osborne himself has said, cutting government expenditure will create space for several million jobs to be created by the Magical Ponies of Fuckadoodle.  I paraphrase, but the meaning is the same.

The problem that has to be emphasised again and again is that private companies also rely on government expenditure. Cutting government jobs will have a knock-on effect on private businesses. The axing of the Building Schools for the Future programme is an obvious case in point. On QT last week an audience member said that she was trying to start up a small business, but could not get any money lent to her from the banks to get started. The whole situation is baffling.

I hope I am wrong, but I am not sure that I will be. The cuts won’t work, they’ll just make it worse. Those who don’t want cuts are not “deficit deniers”, but are unconvinced that making 500,000 people unemployed will make our economic situation any better.


Get every new post delivered to your Inbox.