What do our leaders say about the economic "catastrophe"? Nothing

Britain's economic problems are getting worse. It's time the government took notice.

I have read my old friend Bill Keegan's column at the Observer for so many years. He started writing for them in 1977, first as economics editor and latterly as their senior economics commentator. He was previously at the FT and even had a short spell at the Bank of England, poor thing! Every Sunday, I turn to his column for his take on the current economics scene. This week was a real shocker. Bill, as he admitted this week, is not prone to hyperbole -- unlike some I could mention, perhaps including yours truly -- but, this week, he used the word "catastrophe" about the economy. He claimed he didn't relish using that warning but had to: "things are getting serious" because of the collective view of policymakers around the world that "simultaneous deflation is the answer to all problems". It's time to sit up and take notice when Bill starts to panic. I agree with him.

It seemed a good time to check out what our great leaders had to say about the coming "catastrophe" -- zippo, it turns out. First, on 14 September, there was Deputy Dawg Nick Clegg's fatuous speech on the economy at the LSE on the day that unemployment jumped by 80,000. Presumably, a number of LSE students, who, from my experience, are extremely astute, will not have failed to notice that of that increase 77,000 were of youngsters aged between 18 and 24.

Cleggy started off pretty well with this claim, which cheered me up, thinking that something of substance was coming:

The reality we face is stark; there is now little margin for error. But that does not mean we are helpless. It does not mean we intend to sit on our hands while the global economy falters. Our critics say that all this government is capable of is cuts. That, beyond lowering a few business taxes, reducing a bit of red tape, there is little else we are willing or able to do. That is absolutely wrong. We can do more, we are doing more, we will do more.

Great, at last some action.

Sadly, my hopes were quickly dashed, when shortly thereafter he claimed there will be "no deviation on deficit reduction". He made it clear that this government had every intention of sitting on its hands while the economy falters.

Then, on 16 September 2011, Slasher Osborne made a speech to the Daily Telegraph Festival of Business conference. He also showed that he had thrown in the towel, arguing that there was nothing he could do, as everyone else was to blame for Bill's catastrophe. There were a couple of choice quotes though:

Our plan was designed for both good times and tough times. Flexible enough to let the automatic stabilisers work. Strong enough to command the confidence of world markets. If we abandoned it now, there would be a collapse in that confidence and a surge in interest rates. Look at our neighbours. In Greece, market interest rates are almost 23 per cent. In Italy, 5 per cent. Our market interest rates this week were the lowest they have ever been in our history. Below 2 per cent.

The automatic stabilisers are simply increased spending that occurs in a downturn when unemployment rises. To argue that his policy was "flexible enough" to let them work is absurd. They kick in when economic policies fail. This week, the latest data release from the ONS on the labour market showed that the number of public-sector jobs fell 111,000 on the quarter, while private-sector jobs were up 41,000 on the quarter.

Let me repeat for the umpteenth time: Greece and Italy are stuck in monetary union and cannot depreciate their currency or do more quantitative easing. There has already been a collapse in confidence, from the moment this government took office, and bond yields are as low as they are because the markets believe the growth prospects of the UK economy have been so decimated by the wilfully inept austerity package that interest rates will have to remain at 1 per cent or lower for many years. Note also that when the US debt was downgraded by S&P, bond yields fell, and are much lower than in the UK. Osborne is for the birds.

The quote that made me LOL was this one: "Government helping business to help business. That is our agenda. It's an agenda for jobs. For business. For growth." The reality is, it's an agenda for no growth and no jobs.

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

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Labour's establishment suspects a Momentum conspiracy - they're right

Bernie Sanders-style organisers are determined to rewire the party's machine.  

If you wanted to understand the basic dynamics of this year’s Labour leadership contest, Brighton and Hove District Labour Party is a good microcosm. On Saturday 9 July, a day before Angela Eagle was to announce her leadership bid, hundreds of members flooded into its AGM. Despite the room having a capacity of over 250, the meeting had to be held in three batches, with members forming an orderly queue. The result of the massive turnout was clear in political terms – pro-Corbyn candidates won every position on the local executive committee. 

Many in the room hailed the turnout and the result. But others claimed that some in the crowd had engaged in abuse and harassment.The national party decided that, rather than first investigate individuals, it would suspend Brighton and Hove. Add this to the national ban on local meetings and events during the leadership election, and it is easy to see why Labour seems to have an uneasy relationship with mass politics. To put it a less neutral way, the party machine is in a state of open warfare against Corbyn and his supporters.

Brighton and Hove illustrates how local activists have continued to organise – in an even more innovative and effective way than before. On Thursday 21 July, the week following the CLP’s suspension, the local Momentum group organised a mass meeting. More than 200 people showed up, with the mood defiant and pumped up.  Rather than listen to speeches, the room then became a road test for a new "campaign meetup", a more modestly titled version of the "barnstorms" used by the Bernie Sanders campaign. Activists broke up into small groups to discuss the strategy of the campaign and then even smaller groups to organise action on a very local level. By the end of the night, 20 phonebanking sessions had been planned at a branch level over the following week. 

In the past, organising inside the Labour Party was seen as a slightly cloak and dagger affair. When the Labour Party bureaucracy expelled leftwing activists in past decades, many on went further underground, organising in semi-secrecy. Now, Momentum is doing the exact opposite. 

The emphasis of the Corbyn campaign is on making its strategy, volunteer hubs and events listings as open and accessible as possible. Interactive maps will allow local activists to advertise hundreds of events, and then contact people in their area. When they gather to phonebank in they will be using a custom-built web app which will enable tens of thousands of callers to ring hundreds of thousands of numbers, from wherever they are.

As Momentum has learned to its cost, there is a trade-off between a campaign’s openness and its ability to stage manage events. But in the new politics of the Labour party, in which both the numbers of interested people and the capacity to connect with them directly are increasing exponentially, there is simply no contest. In order to win the next general election, Labour will have to master these tactics on a much bigger scale. The leadership election is the road test. 

Even many moderates seem to accept that the days of simply triangulating towards the centre and getting cozy with the Murdoch press are over. Labour needs to reach people and communities directly with an ambitious digital strategy and an army of self-organising activists. It is this kind of mass politics that delivered a "no" vote in Greece’s referendum on the terms of the Eurozone bailout last summer – defying pretty much the whole of the media, business and political establishment. 

The problem for Corbyn's challenger, Owen Smith, is that many of his backers have an open problem with this type of mass politics. Rather than investigate allegations of abuse, they have supported the suspension of CLPs. Rather than seeing the heightened emotions that come with mass mobilisations as side-effects which needs to be controlled, they have sought to joins unconnected acts of harassment, in order to smear Jeremy Corbyn. The MP Ben Bradshaw has even seemed to accuse Momentum of organising a conspiracy to physically attack Labour MPs.

The real conspiracy is much bigger than that. Hundreds of thousands of people are arriving, enthusiastic and determined, into the Labour party. These people, and their ability to convince the communities of which they are a part, threaten Britain’s political equilibrium, both the Conservatives and the Labour establishment. When the greatest hope for Labour becomes your greatest nightmare, you have good call to feel alarmed.