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Labour’s response to economic crisis is all wrong


10:40 am - February 23rd 2009

by Sunny Hundal    


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Northern RockEffectively dealing with the economic crisis is Labour’s last hope for re-election. So it’s rather bizarre that though Brown has recruited apparatchiks obsessed about honing the New Labour message, the response so far has been all over the place.

The polls show people want left-wing economic policies; they have no problems with bank nationalisations; they don’t trust the Tories on dealing with the crisis; and they gave Brown a chance once the economy nose-dived.

But the response has been all over the place. People aren’t obsessed about bank bonuses as much as they are about jobs. Jobs. They want to hear you talk about what will create jobs, New Labour, not what you’re doing about bank bonuses. And yet Brown keeps talking about banks.

John Prescott too keeps talking about bank bonuses. Mandelson should have slapped that populist and useless campaign down because it is a sideshow and a distraction.

Let’s be clear about one thing. While I’m tempted by Aaron’s view that people should just ‘suck it up’ because recessions are inevitable, this crash has just started. It will not only get more painful, but has the potential to seriously devastate millions of lives in Britain alone unless action is taken. It could also bankrupt our economy if we get caught in a vicious downward deflationary and debt spiral.

The Obama campaign in contrast has launched a website to talk about how his stimulus package is working through the economy and keeps saying how many jobs he hopes to save/create through the package (2.5m). I am yet unaware of any major announcements by this government to re-inforce the same message.

It was initially about the VAT cut (widely derided, quite rightly), then the Pound falling and now about bank bonuses. What the hell is Mandelson doing?

I also want to slap down the notion that the major dividing line between the Tories and Labour is still about who cares more about equality. It isn’t, thanks to Cameron’s rebranding exercise – it is very much is the economy and their approach to dealing with the financial crisis. Talking endlessly about equality, as political positioning, has gotten them nowhere in the last few years. Neither have their half-hearted policies. In contrast, it was the economy that produced the huge poll swings for the first time.

So Labour needs a strong plan and message about job creation; there’s no bigger concern on the minds of voters. On that I agree with Jon Cruddas MP’s analysis.

Where I disagree is his general set of recommendations about the economy. If the left is to develop a response to the crisis, we must first identify properly where the faults in the system lie. Just saying capitalism has failed (not Cruddas’ mantra), a vacuous soundbite that currently dominates the frontpage of New Statesman, is not good enough. (I’ll explore this more soon, but in the meantime this video below is excellent).

In the meantime, anyone who thinks Labour can ignore the economy and go back to traditional messages to win the election is seriously deluding themselves.


The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

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About the author
Sunny Hundal is editor of LC. Also: on Twitter, at Pickled Politics and Guardian CIF.
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Story Filed Under: Blog ,Economy ,Labour party ,Westminster

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Reader comments


Sunny Obamah is pushing through tax cuts and paying back debt . Is his wrong ?
The state , as you know cannot create jobs it can only remove money from those who can which is exactly what Labour have done for ten years. As far as bankrupting the economy is concerned as you have done nothing but suggest it gets further and further into debt I am amazed you recognise the possibility.

Sunny

Interested if slightly surprised to hear that Labour has talked endlessly about equality in the last few years: “Talking endlessly about equality, as political positioning, has gotten them nowhere in the last few years”. Where and when? Could you cite perhaps one major Blair and one major Brown speech on that theme?

Not necessarily saying it is the answer, but I doubt your account that it is what we have been doing for several years. (I think the ability to refer to equality at all did return sometime around 2005-6-7 but I think it has been very far indeed from front and centre). There have been policies which are somewhat more redistributionist than many people realise, but any argument for them has been rather muted.

Hattersley gave an account of this in his speech to us on Saturday
http://fabians.org.uk/index.php/20090220794/Events/Speeches/Roy-Hattersley-speech.html

Am not quite sure who and what this is arguing against – but part of it involves you on Liberal Conspiracy challenging Gordon Brown from his right!

When you say jobs should be more salient about bank bonuses, are you really saying the government should have had no position on bank bonuses? Governments have to have more than one position and argument.

What is the evidence that people are not concerned by bonuses?

There is a good deal of (polling and deliberative) evidence that people are concerned about bonuses: both because they see them as a contributory factor in the current crisis, and because they offend people’s sense of fair rules as well as of fair rewards. There is strong support for a series of different approaches on bonuses.

Aside from the merits of the policy argument, I am sure they would have got murdered on LC and everywhere else had the government been the only people seemingly unable to say something about this. You want Mandelson to slap down the Prescott campaign. Why should he? Had he done so, you and others would have said ‘new labour still does not realise the world has changed’. You would have said, I think, ‘look how afraid they are to take positions and pick fights’ and ‘look at how Obama is prepared to speak about what he thinks is right and wrong, and to act on it’ and why can’t we learn something from that. And why can even David Cameron outflank the government on this, etc, etc, etc

And you might have said, at least it would help to create a climate at last in which neoliberal arguments and assuptions do not go unchallenged.

But, when they do a little bit of that, you want less of it! Really? I fail to see why your argument for greater focus on jobs requires this odd argument about city bonuses.

has anybody at all said “labour should ignore the economy and go back to traditional messages” – who? where? why? a lot of straw men flying about here.

5. Alisdair Cameron

@ Sunder. When you question New labour on equality, you brought to mind the pointed (but to me accurate) comments by Philip Collins (the one who used to wroite speeches for Blair, not the baldy drummer/singer/tax-exile) in the Times the other week:

But that invitation to be heard was declined. You can find the reason why in Gordon Brown’s preface to the reprint of Anthony Crosland’s The Future of Socialism. Here, in an aside, you see politics defined by striking a pose rather than stating a belief. When Mr Brown commends Crosland’s idea of equality, he does so on the grounds that it provides the Labour Party with its main dividing line from the Conservatives. He doesn’t like equality because it’s a good idea. He doesn’t like it because it’s right. He likes it because it’s politically useful.

Unsurprising that Brown has been going on about greedy bankers. Of course making it an issue about individuals and their personal characteristics is a good way of avoiding 10 years of neglect, or any deper questions about the impact of unregulated capitalism.

Hi Sunder: Where and when? Could you cite perhaps one major Blair and one major Brown speech on that theme?

I think the discussion (and attempt) to reduce child poverty, which Brown made central to his agenda, is also about reducing economic inequality, no?
I agree that the government is afraid to make the case for it, but they do dress it up in other ways.

When you say jobs should be more salient about bank bonuses, are you really saying the government should have had no position on bank bonuses? Governments have to have more than one position and argument.

I’m saying the discussion on bank bonuses has dominated the response to the financial crisis. This isn’t helping because whereas most people think those bonuses are wrong – they are not the main concern. Besides, in a decade or two when bonuses return to stratospheric levels, then all these statements will look foolish.

You want Mandelson to slap down the Prescott campaign. Why should he? Had he done so, you and others would have said ‘new labour still does not realise the world has changed’.

I wouldn’t have… I think the campaign was populist and possibly had value – but from a New Labour perspective it sends out mixed messages. The government’s focus and talk should be all about creating and protecting jobs. That’s it. Nothing else. Otherwise the message is mixed.

Am not quite sure who and what this is arguing against – but part of it involves you on Liberal Conspiracy challenging Gordon Brown from his right!

Well I’m partly challenging the party to come out with a narrative that says something about the economic situation and how we got here. The focus on bank bonuses is a sideshow because it says nothing about how we got here or what’s the longer way out.

I’m also partly challenging people such as Philip Colins (mentioned above, did you read his article?). He said that too – that Labour shouldn’t bother with the economy and go back to traditional messages.

Well I’m partly challenging the party to come out with a narrative that says something about the economic situation and how we got here.

Good luck with that.

Obama may be able to do that as the new broom.

But how can Brown possibly do so?

and they gave Brown a chance once the economy nose-dived

Did they? They gave him a chance in the early stages of the *banking* crisis, before the scale of the recession was clear. But now the economy *has* nose dived they are no longer listening, are they?

I note with interest that Newmania is attempting to stir things up over at Iain Dales with regard to Aaron’s previous post…

10. Mike Killingworth

I agree that Labour doesn’t have a narrative: it seems to me that Mandelson is as exhausted as anyone else in the Government. To expect them to re-create or re-invent themselves at this stage is to howl at the moon.

We are still sleepwalking to disaster. The fundamentals of our economy are so awful that Brazilianization is a plausible outcome – a couple of million really rich people and the rest of us putting food in our mouths from day to day if we’re lucky. Even if it doesn’t come to that, we’ll go the way of Italy – the incomparable Perry Anderson, that secret national treasure, describes our future only too well in the current London Review of Books (no link because it’s a subscription site). He doesn’t offer Italy as a preview of our fate but I do – and that’s the rosy scenario. Of particular interest is Anderson’s demonstration that the Italian “left” has become as unprincipled and corrupt as its “right”. That of course is a direct consequence of its adoption of neo-liberalism and consequent loss of all moral anchorage.

Either the British people swallow Cameron’s nasty medicine when his turn comes or else the political system will collapse and a strong man will arise from its ruins to administer a double dose.

Just to add more Sunder, I’m not challenging Brown from the right. In fact I think the leftwing response to the crisis has been pretty lame… possibly best encapsulated by Martin Jacques front page piece in the New Statesman. It’s all mostly regurgitated guff. I’ve seen way better analysis in American newspapers and magazines.

My point is, both the left and Labour need a response to the crisis. For the left, there needs to be an intellectual response. Labour needs an intellectual response that then builds into a programme of action.

Already, circumstances have forced Cameron to the left, accepting the need for nationalisation, further state support and cutting bank bonuses. But they’ve avoided forming an intellectual response because they know it will challenge their basic capitalist principles.

Unless the Brown govt comes up with its own response, then it can’t challenge the Tories or force them to follow a left-wing agenda over the long term. That agenda must now be all about creating jobs, not bank bonuses.

Whenever I read Sunny’s articles I’m given to the same conclusion; he’s more interested in presentation than substance. As somebody who is media savvy, he gets exasperrated when labour’s propoganda fall short. Hence, his fascination with Obama’s seemingly successful propoganda tools. Its not the Govt’s policies he’s interested in, its their presentation.

As for the polls showing support for left-wing economic policies, what about the polls showing the public is against mass immigration policies?

We are still sleepwalking to disaster. The fundamentals of our economy are so awful that Brazilianization is a plausible outcome – a couple of million really rich people and the rest of us putting food in our mouths from day to day if we’re lucky.

And the award for ‘craziest scaremongering, given that what will happen is certainly that we’ll have a couple of shitty years and then everything will carry on much as before’ goes to…

14. Mike Killingworth

[13] Well, I could call you names too, but there’s no point…

As I suggested, I think it’s unlikely that things will get as bad as that, but all the signs are that this is not a cyclical trough that we’ll be pulling out of halfway through the next Parliament, but a structural change comparable with the death of mining and manufacturing in the 1970s and 1980s. Only this time it’s white-collar work that will disappear.

The sub-continent (now) and China (soon) will be able to offer workers who are skilled enough to perform pretty much all the white-collar work that doesn’t involve face-to-face contact with the final consumer that is done in this country, and they will accept wages of between one-tenth and one-third of ours. And even a lot of face-to-face stuff can be done over the Web if you try hard enough. That is the reality of globalisation. We compete neither on price nor on quality – the Germans and Scandinavians will always outdo us on the latter.

Living standards are set to drop by 10% to 20% in the next three years. There is no guarantee of a resumption of growth thereafter – as Italy instances. This represents a challenge that the political system has not faced before, even in the 1930s.

Newmania, why do you keep on spelling Obama as ‘Obamah’?

16. dreamingspire

I, too, have recently been thinking about us joining Italy. I’m also aware that for a good number of years Brits who used to be in the public sector here but moved to work for the EU civil service have been regarding our central public administration people as now seriously lacking in the necessary skills for running a country in today’s environment of massively developed communications, both physical and electronic. I encounter that amateurism in areas where I interact with them. Opportunities for improvement created between 1997 and 2004 were, however, squandered by Blair and Brown, and we are reaping the whirlwind now. I’m also personally aware that the USA federal public sector is much more skilled than here, which is why Obama can expect job creation to move more quickly over there.

death of mining and manufacturing in the 1970s and 1980s. Only this time it’s white-collar work that will disappear.

We do, in point of fact, have a manufacturing sector.


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  1. Liberal Conspiracy

    New blog post: Labour’s response to economic crisis is all wrong http://tinyurl.com/b56zxk





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