Balls's smart new dividing line with Osborne: a recovery for the few or one for the many?

With the return of the economy to growth, the shadow chancellor seeks to shift the terms of the debate in Labour's favour.

This week's GDP figures (released on Thursday) will further cheer Tory spirits, with the economy thought to have grown by around 0.6% in the second quarter. It may have been three years in coming, but finally, it seems, the recovery has begun.

For Labour, the return of growth represents a political challenge. While welcoming the positive figures, it must avoid letting George Osborne off the hook for what remains the slowest recovery for more than 100 years. In his pre-emptive response in today's Guardian, Ed Balls attempts to perform this balancing act, describing any growth as "both welcome and hugely overdue". In order to make up the ground the UK has lost since 2010, he notes, the economy would need to grow by 1.3% a quarter for the next two years. 

It was Balls who, almost alone among the political class, warned that premature tax rises and spending cuts could strangle growth in his 2010 Bloomberg speech. But as he conceded in another recent speech, the last thing the public "want to hear from any politician is 'we told you so'". Labour must avoid making the error of attempting to re-run the 2010 election and of seeking to prove a counter-factual: that growth would have been stronger had the last government remained in power. 

Mindful of this, Balls wisely uses the piece to stake out a new dividing line with Osborne. The question now is less whether we have a recovery or not (although, as he rightly points, no one should repeat the error of taking growth for granted) but what kind of recovery we have. Is it one for the few or one for the many? While bank bonuses rose to £4bn in April as high-earners deferred their payouts in order to take advantage of the reduction in the top rate of tax from 50p to 45p, real wages are still falling and are forecast to do so until at least 2015. The next election could be the first in modern history that sees the majority of voters worse off at the end of the parliament than they were at the start. 

It's a smart line of attack, which is why it's encouraging that Labour seems intent on developing it. Balls announces that later this week he will launch a transatlantic commission on "inclusive prosperity" with Larry Summers, his former Harvard tutor and Bill Clinton's former Treasury secretary, to "investigate what reforms our countries need to generate more high-wage jobs for the future".

Many on the left have criticised Summers for his role in the 1990s financial deregulation that paved the way for the crash (for which he has since apologised), but he has consistently been on the right side of the austerity vs. stimulus debate, memorably declaring in April 2011: "I find the idea of an expansionary fiscal contraction in the context of the world in which we now live to be every bit as oxymoronic as it sounds. And I think the consequences are likely to be very serious for the countries involved."

He added of Britain: "I have always been a believer in being an empiricist about my convictions. So I would be happy to say that if Britain enjoys a boom over the next two years, coming from increased confidence I would be required to quite radically rethink my view as to how the macro economy operates…and be quite contrite about the seriousness of the misjudgements that I’m making. Those of you who know me can make a judgement about how big a risk I would take of putting myself in a position of great contrition and you might therefore conclude that I’m fairly confident that this experiment is not going to work out well." Unfortunately for the UK, Summers was entirely right in his assessment.

But while Balls and his fellow Keynesians lost the debate in 2010, they could yet win it in 2015. In that task, Summers will prove a valuable ally. 

George Osborne and Ed Balls attend the State Opening of Parliament on May 8, 2013 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Donald Trump ushers in a new era of kakistocracy: government by the worst people

Trump will lead the whitest, most male cabinet in memory – a bizarre melange of the unqualified and the unhinged.

“What fills me with doubt and dismay is the degradation of the moral tone,” wrote the American poet James Russell Lowell in 1876, in a letter to his fellow poet Joel Benton. “Is it or is it not a result of democracy? Is ours a ‘government of the people by the people for the people’, or a kakistocracy rather, for the benefit of knaves at the cost of fools?”

Is there a better, more apt description of the incoming Trump administration than “kakistocracy”, which translates from the Greek literally as government by the worst people? The new US president, as Barack Obama remarked on the campaign trail, is “uniquely unqualified” to be commander-in-chief. There is no historical analogy for a President Trump. He combines in a single person some of the worst qualities of some of the worst US presidents: the Donald makes Nixon look honest, Clinton look chaste, Bush look smart.

Trump began his tenure as president-elect in November by agreeing to pay out $25m to settle fraud claims brought against the now defunct Trump University by dozens of former students; he began the new year being deposed as part of his lawsuit against a celebrity chef. On 10 January, the Federal Election Commission sent the Trump campaign a 250-page letter outlining a series of potentially illegal campaign contributions. A day later, the head of the non-partisan US Office of Government Ethics slammed Trump’s plan to step back from running his businesses as “meaningless from a conflict-of-interest perspective”.

It cannot be repeated often enough: none of this is normal. There is no precedent for such behaviour, and while kakistocracy may be a term unfamiliar to most of us, this is what it looks like. Forget 1876: be prepared for four years of epic misgovernance and brazen corruption. Despite claiming in his convention speech, “I alone can fix it,” the former reality TV star won’t be governing on his own. He will be in charge of the richest, whitest, most male cabinet in living memory; a bizarre melange of the unqualified and the unhinged.

There has been much discussion about the lack of experience of many of Trump’s appointees (think of the incoming secretary of state, Rex Tillerson, who has no background in diplomacy or foreign affairs) and their alleged bigotry (the Alabama senator Jeff Sessions, denied a role as a federal judge in the 1980s following claims of racial discrimination, is on course to be confirmed as attorney general). Yet what should equally worry the average American is that Trump has picked people who, in the words of the historian Meg Jacobs, “are downright hostile to the mission of the agency they are appointed to run”. With their new Republican president’s blessing, they want to roll back support for the poorest, most vulnerable members of society and don’t give a damn how much damage they do in the process.

Take Scott Pruitt, the Oklahoma attorney general selected to head the Environmental Protection Agency (EPA). Pruitt describes himself on his LinkedIn page as “a leading advocate against the EPA’s activist agenda” and has claimed that the debate over climate change is “far from settled”.

The former neurosurgeon Ben Carson is Trump’s pick for housing and urban development, a department with a $49bn budget that helps low-income families own homes and pay the rent. Carson has no background in housing policy, is an anti-welfare ideologue and ruled himself out of a cabinet job shortly after the election. “Dr Carson feels he has no government experience,” his spokesman said at the time. “He’s never run a federal agency. The last thing he would want to do was take a position that could cripple the presidency.”

The fast-food mogul Andrew Puzder, who was tapped to run the department of labour, doesn’t like . . . well . . . labour. He prefers robots, telling Business Insider in March 2016: “They’re always polite . . . They never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex or race discrimination case.”

The billionaire Republican donor Betsy DeVos, nominated to run the department of education, did not attend state school and neither did any of her four children. She has never been a teacher, has no background in education and is a champion of school vouchers and privatisation. To quote the education historian Diane Ravitch: “If confirmed, DeVos will be the first education secretary who is actively hostile to public education.”

The former Texas governor Rick Perry, nominated for the role of energy secretary by Trump, promised to abolish the department that he has been asked to run while trying to secure his party’s presidential nomination in 2011. Compare and contrast Perry, who has an undergraduate degree in animal science but failed a chemistry course in college, with his two predecessors under President Obama: Dr Ernest Moniz, the former head of MIT’s physics department, and Dr Steven Chu, a Nobel Prize-winning physicist from Berkeley. In many ways, Perry, who spent the latter half of 2016 as a contestant on Dancing with the Stars, is the ultimate kakistocratic appointment.

“Do Trump’s cabinet picks want to run the government – or dismantle it?” asked a headline in the Chicago Tribune in December. That’s one rather polite way of putting it. Another would be to note, as the Online Etymology Dictionary does, that kakistocracy comes from kakistos, the Greek word for “worst”, which is a superlative of kakos, or “bad”, which “is related to the general Indo-European word for ‘defecate’”.

Mehdi Hasan has rejoined the New Statesman as a contributing editor and will write a fortnightly column on US politics

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.

This article first appeared in the 19 January 2016 issue of the New Statesman, The Trump era