The time for sneering is over

Naive politics will always have to deal with economic truths. And the latest data leaves Osborne, an

I have to say, I am beginning to feel a bit sorry for our dear Chancellor, who has backed himself into a corner. He was so confident when he came into power that he was right. All that sneering about the Labour government having failed and that he was going to put us on the path to nirvana.

Unfortunately, naive politics of that kind was always going to have to deal with the economic data. Osborne's economic strategy was always doomed principally as it had zero plans for growth; indeed, we are still awaiting an announcement of a policy for growth but now it is too late. Denying the need for a plan B was always a dangerous strategy.

In a speech at Bloomberg on 17th August 2010, Osborne argued as follows:

I'm optimistic that if we:
- stick to the course we have set ourselves on;
- hold firm to our plans;
- deal with our debts;
- start to rebalance our economy;
- and provide the stability Britain has been so lacking in recent years;

then we can navigate our way through to calmer waters.

The alternative -- to change course, put off dealing with our problems, be in denial about the scale of the deficit -- is the surest way to disaster. It would wreck the British economy.

And, ludicrously, he went on to argue: "We are all in this together."

Unfortunately, as I have been predicting would happen from the formation of the coalition, sticking to Osborne's economic plans is wrecking the British economy. No stability, rising unemployment, no calm waters and no rebalancing; and, most importantly, the consumer is running scared with negative real wage growth, rising prices and rising fear for the future.

The data today on the consumer side is horrid once again and, added to that fear, is likely to be a major downward pull on growth. This is another nail in the coffin for the OBR's growth forecast. In March 2011, the OBR forecast that consumption would make a positive contribution to growth in 2011 and even more so in subsequent years. That doesn't look likely.

Retail sales volumes fell, on a year ago in August, at the fastest pace for over a year, the CBI said today. Retailers were the most negative they have been about the general business situation since February 2009. The CBI's latest quarterly distributive trades survey found that 31 per cent of retailers saw the volume of sales rise in the two weeks to 16 August, while 46 per cent said they fell. The resulting rounded balance of -14 per cent was in line with expectations (-12 per cent) and the most negative since May 2010 (-18 per cent). A balance of -11 per cent of retailers said they felt more negative about the business situation over the next three months than they did three months ago; the most negative for 18 months. Retailers are scaling back investment plans over the next 12 months, with the balance of -11 per cent the most negative since February 2009 (-26 per cent). Not good.

The Nationwide Consumer Confidence Index for July fell by two points to 49 points and now stands at a near identical level to January 2011. Over half of consumers believe that it is currently a bad time to make a major purchase. Especially worrying was how the proportion of people who believe the economic situation will be better than today in six months time decreased by 3 percentage points. Robert Gardner, Nationwide's chief economist, said:

At 49 points, the main confidence index remains well below its long-run average reading of 79. With the economic recovery still facing strong headwinds it is unlikely that we will see any considerable improvement in confidence in the remainder of 2011. Indeed, it may be that we see a further deterioration in August, following riots in a number of UK cities and the sharp declines seen in stock markets around the world. Overall, conditions for the UK economy remain challenging, especially for consumers.

Bad.

Plus, Martin Weale, one of the inflation hawks on the MPC, in a speech today in Doncaster explained that he changed his vote this month from an increase of 25 basis points -- that he had voted for in the previous seven meetings -- to one of no change. It was because of:

. . . the weaker economic outlook . . . the need for insurance is less than it was; by the time we produced our August forecast, the market path for interest rates consistent with keeping inflation close to its target was much less steeply sloped. Averaged over the next two to three years, the interest rate did not need to be as high. As a result, I did not see the case for an immediate increase in bank rate at our last meeting in August.

The economy is weakening and the chances are that the MPC will have to do more quantitative easing -- and soon.

We are not all in this together and Osborne's policies are wrecking the rapidly slowing UK economy. The time for sneering is over.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

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Why Barack Obama was right to release Chelsea Manning

A Presidential act of mercy is good for Manning, but also for the US.

In early 2010, a young US military intelligence analyst on an army base near Baghdad slipped a Lady Gaga CD into a computer and sang along to the music. In fact, the soldier's apparently upbeat mood hid two facts. 

First, the soldier later known as Chelsea Manning was completely alienated from army culture, and the callous way she believed it treated civilians in Iraq. And second, she was quietly erasing the music on her CDs and replacing it with files holding explosive military data, which she would release to the world via Wikileaks. 

To some, Manning is a free speech hero. To others, she is a traitor. President Barack Obama’s decision to commute her 35-year sentence before leaving office has been blasted as “outrageous” by leading Republican Paul Ryan. Other Republican critics argue Obama is rewarding an act that endangered the lives of soldiers and intelligence operatives while giving ammunition to Russia. 

They have a point. Liberals banging the drum against Russia’s leak offensive during the US election cannot simultaneously argue leaks are inherently good. 

But even if you think Manning was deeply misguided in her use of Lady Gaga CDs, there are strong reasons why we should celebrate her release. 

1. She was not judged on the public interest

Manning was motivated by what she believed to be human rights abuses in Iraq, but her public interest defence has never been tested. 

The leaks were undoubtedly of public interest. As Manning said in the podcast she recorded with Amnesty International: “When we made mistakes, planning operations, innocent people died.” 

Thanks to Manning’s leak, we also know about the Vatican hiding sex abuse scandals in Ireland, plus the UK promising to protect US interests during the Chilcot Inquiry. 

In countries such as Germany, Canada and Denmark, whistle blowers in sensitive areas can use a public interest defence. In the US, however, such a defence does not exist – meaning it is impossible for Manning to legally argue her actions were in the public good. 

2. She was deemed worse than rapists and murderers

Her sentence was out of proportion to her crime. Compare her 35-year sentence to that received by William Millay, a young police officer, also in 2013. Caught in the act of trying to sell classified documents to someone he believed was a Russian intelligence officer, he was given 16 years

According to Amnesty International: “Manning’s sentence was much longer than other members of the military convicted of charges such as murder, rape and war crimes, as well as any others who were convicted of leaking classified materials to the public.”

3. Her time in jail was particularly miserable 

Manning’s conditions in jail do nothing to dispel the idea she has been treated extraordinarily harshly. When initially placed in solitary confinement, she needed permission to do anything in her cell, even walking around to exercise. 

When she requested treatment for her gender dysphoria, the military prison’s initial response was a blanket refusal – despite the fact many civilian prisons accept the idea that trans inmates are entitled to hormones. Manning has attempted suicide several times. She finally received permission to receive gender transition surgery in 2016 after a hunger strike

4. Julian Assange can stop acting like a martyr

Internationally, Manning’s continued incarceration was likely to do more harm than good. She has said she is sorry “for hurting the US”. Her worldwide following has turned her into an icon of US hypocrisy on free speech.

Then there's the fact Wikileaks said its founder Julian Assange would agree to be extradited to the US if Manning was released. Now that Manning is months away from freedom, his excuses for staying in the Equadorian London Embassy to avoid Swedish rape allegations are somewhat feebler.  

As for the President - under whose watch Manning was prosecuted - he may be leaving his office with his legacy in peril, but with one stroke of his pen, he has changed a life. Manning, now 29, could have expected to leave prison in her late 50s. Instead, she'll be free before her 30th birthday. And perhaps the Equadorian ambassador will finally get his room back. 

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.