I’m proud to be a “deficit denier”

The Tories have no empirical or historical basis for their hysteria over the debt.

I've spent the past year on this blog mocking and riling so-called climate-change sceptics or "deniers", so I'm amused to find myself for the first time included in a different list of "deniers". According to the Prime Minister, those of us on who are critical of his government's austerity measures, and prefer to delay spending cuts and tax rises, are "deficit deniers". Hilarious.

Let me be clear: I'd much rather be a so-called deficit denier than succumb, as the Tories and their allies in the media and the business world have, to "deficit hysteria". Those of us who oppose the coalition's fiscal sadism do not deny the existence of this country's largest Budget deficit since the war, nor do we pretend that cuts will never come. We prefer, however, to contextualise the deficit and to point out that, for example:

  1. the national debt as a proportion of GDP is much lower than at other periods in our recent history,
  2. the national debt as a proportion of GDP is lower in the UK than in the United States, Japan, Italy and other industrialised nations,
  3. the UK and Greek economies are not at all comparable,
  4. deep and early spending cuts don't guarantee the retention of our much-lauded triple-A credit rating,
  5. the deficit is a result of a collapse in tax revenues after a recession caused by the bankers, rather than Labour's "profligacy", and
  6. the best route out of debt and deficit is economic growth and fiscal stimulus rather than Hooverite cuts and premature fiscal consolidation.

This last point is perhaps the most important. I'm amazed that some senior Labour Party figures seem to have bought in to this Tory narrative of the deficit and the importance of deficit reduction.

The shadow industry secretary, Pat McFadden, said in a speech this morning that Labour's current opposition to cuts risks exposing the party to accusations by voters of "wishing the problem away".

Peter Mandelson says in his new memoir that the party's biggest mistake in its final years in office was "allowing ourselves to be characterised as indifferent to the deficit or in denial about the consequences as to what was happening in our public finances".

This is a load of rubbish. Labour figures should be at the forefront of explaining the importance of deficits in rescuing fragile economies from double-dip recessions. Labour figures should be, as David Miliband has said, making the "moral" case for deficits. Labour figures should be excavating their copies of J M Keynes's General Theory of Employment, Interest and Money.

As the economists Ann Pettifor and Victoria Chick argue, in a brilliant contribution on the Bloomberg website:

It may seem obvious that if you want to cut debt, you cut expenditure, but Keynes showed that the government finances were very different from a household budget. For him, macroeconomic outcomes were often the reverse of outcomes based on microeconomic reasoning.

Keynes was instrumental in the development of national accounts, which give us the opportunity to test his conclusions. Combining the official estimates with British economist Charles Feinstein's invaluable historical estimates permits an analysis of the impacts of fiscal policy over the past century.

They point out that there are "eight episodes over which changes in the public debt (as a percentage of gross domestic product) can be compared with those in public expenditure" and they report that "the results stand wholly opposed to the conventional wisdom". As Pettifor and Chick write:

Comparing for each episode the average annual change in the public debt as a share of GDP and the average annual growth in government expenditure in cash terms, we have results that are perhaps even more remarkable than Keynes might have imagined. There is a very strong relationship between changes in government expenditure and the public debt.

But, outside the two world wars, the relationship goes in the opposite direction to that predicted by most commentators: increases in public expenditure are associated with reductions in public debt. Very roughly, so long as there is unemployment, for every percentage rise in government expenditure, the public debt falls by half a per cent, and vice versa. This is very compelling evidence in favour of Keynes's insights.

Even Simon Jenkins -- no friend of Gordon Brown or Alistair Darling! -- argues in today's Guardian::

Worst of all for Osborne is that, were it not for the continued rise in public spending, Britain would still be in recession. The ONS was quoted today on the crucial role of government spending in the first three months of this year in underpinning the economy. Private wages have been falling by 1.9 per cent and state wages rising by 3.6 per cent. Osborne is right to assert that this dependency on government is unwise and unstable. But it is one thing to accuse the patient of being a drug addict, quite another to send him cold turkey overnight.

Everyone professes not to want a double-dip recession, yet every bit of news, from home and abroad, suggests that this is now a real prospect.

He adds:

Why the west's economic leaders seem so trapped in a pre-Keynesian time warp is intellectually intriguing. An answer recently given by the economist Paul Krugman in the New York Times is that they care more about their "institutional credibility" in financial markets than about refloating a depressed economy. They are like statesmen who prefer to rattle sabres than avert war.

Another answer, closer to home, is that politicians seek to curry favour from their immediate circle. In the crises of the 1960s and 1970s, Britain's rulers spent their time with trade unionists and businessmen. They neglected the "supply side" and generated raging inflation. Now they associate with bankers obsessed with the security of bonds, and therefore with budgetary asceticism. In this respect, Osborne is no different from Darling. Both ignore Keynes's simple insight that businessmen will not invest and the economy will not grow if there is no consumer demand for products.

Hear, hear!

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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Let's face it: supporting Spurs is basically a form of charity

Now, for my biggest donation yet . . .

I gazed in awe at the new stadium, the future home of Spurs, wondering where my treasures will go. It is going to be one of the architectural wonders of the modern world (football stadia division), yet at the same time it seems ancient, archaic, a Roman ruin, very much like an amphitheatre I once saw in Croatia. It’s at the stage in a new construction when you can see all the bones and none of the flesh, with huge tiers soaring up into the sky. You can’t tell if it’s going or coming, a past perfect ruin or a perfect future model.

It has been so annoying at White Hart Lane this past year or so, having to walk round walkways and under awnings and dodge fences and hoardings, losing all sense of direction. Millions of pounds were being poured into what appeared to be a hole in the ground. The new stadium will replace part of one end of the present one, which was built in 1898. It has been hard not to be unaware of what’s going on, continually asking ourselves, as we take our seats: did the earth move for you?

Now, at long last, you can see what will be there, when it emerges from the scaffolding in another year. Awesome, of course. And, har, har, it will hold more people than Arsenal’s new home by 1,000 (61,000, as opposed to the puny Emirates, with only 60,000). At each home game, I am thinking about the future, wondering how my treasures will fare: will they be happy there?

No, I don’t mean Harry Kane, Danny Rose and Kyle Walker – local as well as national treasures. Not many Prem teams these days can boast quite as many English persons in their ranks. I mean my treasures, stuff wot I have been collecting these past 50 years.

About ten years ago, I went to a shareholders’ meeting at White Hart Lane when the embryonic plans for the new stadium were being announced. I stood up when questions were called for and asked the chairman, Daniel Levy, about having a museum in the new stadium. I told him that Man United had made £1m the previous year from their museum. Surely Spurs should make room for one in the brave new mega-stadium – to show off our long and proud history, delight the fans and all those interested in football history and make a few bob.

He mumbled something – fluent enough, as he did go to Cambridge – but gave nothing away, like the PM caught at Prime Minister’s Questions with an unexpected question.

But now it is going to happen. The people who are designing the museum are coming from Manchester to look at my treasures. They asked for a list but I said, “No chance.” I must have 2,000 items of Spurs memorabilia. I could be dead by the time I finish listing them. They’ll have to see them, in the flesh, and then they’ll be free to take away whatever they might consider worth having in the new museum.

I’m awfully kind that way, partly because I have always looked on supporting Spurs as a form of charity. You don’t expect any reward. Nor could you expect a great deal of pleasure, these past few decades, and certainly not the other day at Liverpool when they were shite. But you do want to help them, poor things.

I have been downsizing since my wife died, and since we sold our Loweswater house, and I’m now clearing out some of my treasures. I’ve donated a very rare Wordsworth book to Dove Cottage, five letters from Beatrix Potter to the Armitt Library in Ambleside, and handwritten Beatles lyrics to the British Library. If Beckham and I don’t get a knighthood in the next honours list, I will be spitting.

My Spurs stuff includes programmes going back to 1910, plus recent stuff like the Opus book, that monster publication, about the size of a black cab. Limited editions cost £8,000 a copy in 2007. I got mine free, as I did the introduction and loaned them photographs. I will be glad to get rid of it. It’s blocking the light in my room.

Perhaps, depending on what they want, and they might take nothing, I will ask for a small pourboire in return. Two free tickets in the new stadium. For life. Or longer . . . 

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 16 February 2017 issue of the New Statesman, The New Times