Does economics matter enough to those in politics?
In some senses, and right now more than ever, it is clear that it does. Across Europe, there are examples of populist politicians rising in response to austerity. There is – for at least parts of the population – a deep sense of unfairness about our post-crash world.
This Wednesday – 16 September – was the anniversary of Black Wednesday. Some of us recall events in 1992 pretty clearly. Interest rates leaped and leaped again, and I certainly remember the aftermath: families forced to move in with grandparents as they defaulted on mortgages, and thousands of redundancies. There was a sense for those of us in the north that the Tories were perennially looking the other way as we were first in and last out of recession.
But for those who don’t remember it well, it’s worth looking back. Events in financial markets reversed the political reality for the residents of both Number 10 and Number 11 Downing Street. In May 1992, the Tories won election victory against the odds. Labour were defeated despite poll leads and the prevailing narrative. My party was shaken to its core and you might have drawn the conclusion Conservative governments were utterly unassailable.
And then the markets intervened, tearing down the central pillar of the government’s policy for economic stability. By 16 September, a government that started on a high looked like a disaster in office. Broken and battered by traders, John Major limped on, to electoral humiliation in 1997.
In considering the anniversary of Black Wednesday, I was prompted to think about these points where economic factors collide head-on with politics.
In normal times, outside of Parliamentary set pieces like the budget, the minutiae of economic detail goes largely unnoticed by those in and around the Palace of Westminster. Each quarter, growth, unemployment and maybe manufacturing output is reported on and remarked upon, but rarely are the underlying foundations the top subject for discussion. More likely, the usual suspects repeat their Key Messages and their Top Lines and any hidden problems risk being overlooked until it is too late.
Now, the Tories are currently crowing about their economic success but they should remember their own past: all was well until the boom time gave way to bust. And Black Wednesday shattered their reputation. And without a doubt, my party is yet to properly rebuild after catastrophic events of 2008.
Because, when crisis or recession hits, all of a sudden, those in politics jump to attention. A bubble bursts, and folk are there wondering how it ever could have got this way.
Some of this, I think, is due to poor lines of communication and different perspectives between politics and economics. Economics is data heavy, whilst politics is all about words and how it sounds. It’s facts versus emotions, if you like. And on both sides there is a tendency to talk in code. This perpetuates a culture of ‘insiders’, whereby only those able to speak the language can be considered experts. And to everyone else, the reasons why people act as they do can seem opaque.
I used to think it was – in the main – those in politics that failed to understand economics, but recently I have felt it be the reverse also.
Economists complain about politicians being unable to correct the public when they in the economic establishment believes the public want irrational or inconsistent things. We saw this in the recent debate about budget surpluses.
Yet what you learn in politics is that in the short term at least you rarely can correct the public without sounding like you are trying to lecture them. And politicians aren’t there to lecture the public, we are there to listen to them. My constituents didn’t elect me to get a lesson from me. I am here to serve them.
In the end though, I think these factors can result in insufficient interest in our long term economic health. Which matters because there are some troubling facts about our country’s economy that we need to grasp.
Firstly, we have not made up all the economic ground lost post global financial crash. This recovery is taking a very long time to get us back to where we were.
Nor is progress even across regions. To give one example, in the year to June 2015, the UK employment rate grew by 0.7 points. But in the north east, it actually fell by 0.7 points. Over time this will be very damaging for that part of our country. Gaps are opening up once more between regions, exacerbating the pressure on London, which must be reversed.
Despite the rhetoric of the current Chancellor, parts of our country are not getting the correct investments to build for the future, and our banking system is still being skewed towards powerful interests rather than the real economy.
Further, we need to understand current micro-economic changes much better than we do. The Tories now say they want to make work pay, but have done the precise opposite in their fiscal manoeuvres that slash support for those at the lower end of the income distribution.
How will this affect families and individuals who may have little control about the hours they work, or no cover for their caring responsibilities even if they could get more hours? How will these micro-decisions affect localities where low pay and deprivation clusters?
And, with some urgency, we need to know what progressive answers can, eventually, put all of this right.
Technological change has also always offered the hope of using the world’s resources in a more sustainable or productive way. But equally, it brings with it the potential to harden the inequality of skills that governs who can make the most of the opportunity technology brings. This must not be allowed to continue, and we should plan for the future of our industries not just protect the way things have gone to date.
These facts, this data, matters. It matters to us in Labour and progressive politics not just because it is the underpinning of all other possible change that we have a stable, growing economy. It matters also because each percentage point in the employment rate represents a real person in a real family, who will either be able to make the best of life or they won’t.
It matters because the dignity of being able to look after yourself, your family, (and your friends and neighbours getting on too) is, at heart, the basis for the pride we take in being a decent and fair country in the UK.
People can be put off by economic debate because of the plethora of graphs and charts, or over-use of technical terms. But it is not, of course, for the sake of lines on a graph that we must get our economy in a better shape.
It is for an end to poverty and inequality. It is for our parents and grandparents to have a dignified retirement. And for each child in each family to feel like they are worth something to their country.
This week I left Labour’s Treasury front bench team. I will miss working with our brilliant economic staff, and also my wonderful fellow team members Chris Leslie, Shabana Mahmood, Catherine McKinnell and Barbara Keeley. And I wish our new shadow Treasury team well. I’ll be there supporting them as they oppose, and hold the government to account.
However, I return to the back benches with no intention of leaving behind the serious economic challenges our country faces. In fact I want to think even more about them.
I want to know much more about every part of our economy, and to think about and write about how we can create a genuinely progressive economy. We need a proper alternative to austerity – one that is both ambitious in scale and practical in application.
We need to see our economy from the point of view of each person, and think harder about how working life will change in the future. It is not good enough to rail against lost elections, and rant about our frustration with those who do not see the world in the same light as us.
We need an economic project worth fighting for, and that will persuade millions to vote for it. Nothing less will do.