Paul Krugman said Labour was "weak". Source: Getty Images
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Mehdi Hasan interviews Paul Krugman: Labour is "weak" in its opposition to cuts

The Nobel economist is scathing in his criticism of the two Eds.

In person, Paul Krugman is short, shy and quiet. But the Nobel Prize-winning economist and New York Times columnist isn’t afraid to hurl verbal hand grenades at his opponents – as I discovered to my amusement when I caught up with him on a visit to London this past week.

Krugman, who was in town to plug his new book End This Depression Now!, struggled to find anything positive to say about the EU’s leaders, President Barack Obama or the Israeli government. But it was the Princeton University professor’s comments about the Labour Party that stood out for me.

He was scathingly critical of Labour’s “weak” opposition to the Conservative-led coalition’s spending cuts. “Certainly, economically, they’re too cautious,” he said, dismissing the party’s plan to halve the deficit over four years.

His comments will make uneasy reading for the two Eds, Balls and Miliband, who are petrified of being tagged as “deficit deniers” by their right-wing critics. Under pressure from the Blairites inside the party, they have been trying to find the right balance between opposing the coalition’s austerity measures in the short run and supporting deficit reduction and cuts in the long run.

Krugman seemed to have little sympathy for them: Labour’s position on austerity, he told me, “has been a kind of ‘We’re like them but only less so’. And it does come across as fairly weak.” He continued: “It does seem odd that when you ask me: ‘Where is the really effective intellectual opposition coming from?’, it seems to be think-tank people and journalists. The opposition is Martin Wolf [of the Financial Times], Jonathan Portes [of the National Institute for Economic and Social Research], Simon Wren-Lewis [of Oxford University], David Blanchflower [of the New Statesman] and me.”

That, he said, is a “sad commentary” on the state of Her Majesty’s Opposition.

To add insult to injury, the Nobel laureate had high praise and much sympathy for Miliband’s predecessor, the much-maligned Gordon Brown. “He has been treated unfairly by history,” he said. “Yes, [Brown] made mistakes, but he is a much better guy than his current reputation suggests.”

I asked Krugman if he stood by his now-famous October 2008 description of the former prime minister as the leader who “saved the world financial system”. The economist nodded furiously. “Yes, he took the lead on the financial rescue which did save the world,” he told me. Without [Brown’s leadership], things would have been much, much worse. He was a smart guy.”

Krugman, a long-standing critic of the European single currency, was also keen to remind me how it was Brown who, as chancellor of the exchequer during the late 1990s, “kept Britain out of the euro. It would be a catastrophe here if Britain were in the euro.”

My full interview with the professor will appear in the New Statesman later this year.

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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The three avoidable mistakes that Theresa May has made in the Brexit negotiations

She ignored the official Leave campaign, and many Remainers, in pursuing Brexit in the way she has.

We shouldn’t have triggered Article 50 at all before agreeing an exit deal

When John Kerr, the British diplomat who drafted Article 50 wrote it, he believed it would only be used by “a dictatorial regime” that, having had its right to vote on EU decisions suspended “would then, in high dudgeon, want to storm out”.

The process was designed to maximise the leverage of the remaining members of the bloc and disadvantage the departing state. At one stage, it was envisaged that any country not ratifying the Lisbon Treaty would be expelled under the process – Article 50 is not intended to get “the best Brexit deal” or anything like it.

Contrary to Theresa May’s expectation that she would be able to talk to individual member states, Article 50 is designed to ensure that agreement is reached “de vous, chez vous, mais sans vous” – “about you, in your own home, but without you”, as I wrote before the referendum result.

There is absolutely no reason for a departing nation to use Article 50 before agreement has largely been reached. A full member of the European Union obviously has more leverage than one that is two years away from falling out without a deal. There is no reason to trigger Article 50 until you’re good and ready, and the United Kingdom’s negotiating team is clearly very far from either being “good” or “ready”.

As Dominic Cummings, formerly of Vote Leave, said during the campaign: “No one in their right mind would begin a legally defined two-year maximum period to conduct negotiations before they actually knew, roughly speaking, what the process was going to yield…that would be like putting a gun in your mouth and pulling the trigger.”

If we were going to trigger Article 50, we shouldn’t have triggered it when we did

As I wrote before Theresa May triggered Article 50 in March, 2017 is very probably the worst year you could pick to start leaving the European Union. Elections across member states meant the bloc was in a state of flux, and those elections were always going to eat into the time. 

May has got lucky in that the French elections didn’t result in a tricky “co-habitation” between a president of one party and a legislature dominated by another, as Emmanuel Macron won the presidency and a majority for his new party, République en Marche.

It also looks likely that Angela Merkel will clearly win the German elections, meaning that there won’t be a prolonged absence of the German government after the vote in September.

But if the British government was determined to put the gun in its own mouth and pull the trigger, it should have waited until after the German elections to do so.

The government should have made a unilateral offer on the rights of EU citizens living in the United Kingdom right away

The rights of the three million people from the European Union in the United Kingdom were a political sweet spot for Britain. We don’t have the ability to enforce a cut-off date until we leave the European Union, it wouldn’t be right to uproot three million people who have made their lives here, there is no political will to do so – more than 80 per cent of the public and a majority of MPs of all parties want to guarantee the rights of EU citizens – and as a result there is no plausible leverage to be had by suggesting we wouldn’t protect their rights.

If May had, the day she became PM, made a unilateral guarantee and brought forward legislation guaranteeing these rights, it would have bought Britain considerable goodwill – as opposed to the exercise of fictional leverage.

Although Britain’s refusal to accept the EU’s proposal on mutually shared rights has worried many EU citizens, the reality is that, because British public opinion – and the mood among MPs – is so sharply in favour of their right to remain, no one buys that the government won’t do it. So it doesn’t buy any leverage – while an early guarantee in July of last year would have bought Britain credit.

But at least the government hasn’t behaved foolishly about money

Despite the pressure on wages caused by the fall in the value of the pound and the slowdown in growth, the United Kingdom is still a large and growing economy that is perfectly well-placed to buy the access it needs to the single market, provided that it doesn’t throw its toys out of the pram over paying for its pre-agreed liabilities, and continuing to pay for the parts of EU membership Britain wants to retain, such as cross-border policing activity and research.

So there’s that at least.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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