Should we believe Cameron’s friends?


by Ellie Mae    
October 21, 2010 at 2:28 pm

In a moment of New Labour-bashing whimsy, Cameron seemed to justify the spending cuts by condemning the opposition’s original plan as ‘not good enough.’ To ratify his assertion, he quickly reeled off a list of organisations who apparently think the same: Bank of England, CBI, OECD, and the IMF.

I can’t help but feel that Cameron’s argument is nothing short of an extravaganza of disingenuousness, and the infuriation I felt as a result was only compounded by the fact that it went completely unchallenged.

So let’s do this.

The Bank of England
In the spirit of fairness, the apparent motivation behind these cuts, we’ll start with the easy one. Boradly speaking, the Bank of England is in favour of the coalition’s spending cuts. However, its support has mainly come in the form of gushing statements from Chairman Mervyn King.

Ask the Bank’s Monetary policy committee and you might get something different: in August its inflation report warned of ‘some dampening effects on demand‘ as a result of fiscal consolidation. And in a monetary policy roundtable discussion, leading City and academic economists reprimanded the Bank for being ‘too nonchalant’ in the face of cuts. An unnamed economist at the roundtable questioned the Bank’s methods, stating that the OECD and IMF used models which predicted effects that were ‘just awful, much bigger than anything Mervyn would say.’ Fancy that.

CBI
It is true that the CBI was not amused by the suggestion that Labour’s budget might result in tax increases. Little surprise really, given that its board consists mainly of company directors. In fact, the Vice President of the CBI is current Chairman of British Airways Martin Broughton, which might explain its aversion to increases on fuel and air passenger duty.

Even so, the CBI doesn’t seem to have said that Labour’s plan isn’t good enough. In March, CBI Chairman Richard Lambert wrote to Alistair Darling, stating that “a detailed plan for delivering fiscal consolidation remains the key to addressing concerns about the UK’s public finances, and to supporting the macroeconomic recovery,” but that’s about it.

Hardly a damning judgment, especially as he also conceded that the threat to the government’s credit rating was ‘not serious.’

Not only that, the CBI seems to be similarly ominous about the coalition’s plans. Whilst generally (and unsurprisingly) favouring cuts over tax rises, the CBI stated in September that ‘the planned cuts to net public sector investment are a concern,’ and urged the government to return capital spending to its original levels as soon as possible.

OECD
Ah the halcyon days of 2009, when wearing harem pants still made you an individual, and the Parisian-based OECD was telling us that cuts are the way forward. In June of that year, the OECD argued that ‘experience in other countries suggests that a focus on expenditure cuts, rather than revenue raising, is associated with more successful consolidations, particularly when coupled with explicit expenditure rules.’ This was, of course, a month before the OECD urged Ireland to carry out an almighty slashing, and we all know how that turned out.

Unfortunately for Cam, it is now 2010, and fashion is a fickle mistress. In September, the OECD decided to follow the growing trend of austerity angst, and swiftly cut its growth forecasts. Although the institution said its forecasts were not necessarily a signal of another downturn, it warned that ‘additional monetary stimulus might be warranted… where public finances permit, planned fiscal consolidation could be delayed.’.

Funnily enough, the OECD did not explicitly criticise or praise the spending plan of either New Labour or the coalition.

IMF
When it comes to fickle mistresses, the IMF is the biggest strumpet of them all. Seemingly unable to settle on an economic stance, the IMF recently tempted Ireland to the rocks by suggesting swingeing cuts in response to choppy economic conditions.

On this side of the Irish Sea, our Chancellor received a ‘boost’ in September when the IMF praised his own fiscal policy as ‘strong, credible, and essential.’

Regrettably for George Osborne however, the IMF resumed foreboding a month later, urging Osborne to cease cutting in the event of a slowdown – advice which would seem to run contrary to Osborne’s insistence that, when it comes to his fiscal policy, ‘there is no Plan B.’

Oliver Blanchard, chief economic counsellor the the IMF, caused further upset when he admitted that his previous praise had been ‘generic,’ adding that they applied to ‘all advanced economies, not just the UK.’ Curiously, in July the IMF seemed to support New Labour’s spending plan, stating that cutting too soon could lead to a double-dip.

Since the coalition came into power, I’ve become depressingly accustomed to its impulsive and groundless policy-making.

But what really frustrates me is Cameron’s ability to justify his government’s actions through offhand factual nuggets that go completely unscrutinised.


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About the author
Ellie Mae is an occasional contributor. She is co-editor of New Left Project. She is on Twitter and blogs here.
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Reader comments


“[...] was only compounded by the fact that it went completely unchallenged.”

Well ‘ang about. Didn’t Alan Johnson make very similar points in his CSR response? Though I agree that these facts’n'figures should be more widely known; too often people just think “oh well the IMF said so so it must be true” etc.

Johnson made similar points – he said those organisations had approved Ireland’s spending plan right before Ireland slid back into recession. Johnson implied that the CBI et al HAD been unequivocally supportive of coalition fiscal policy and they were wrong. When in fact, those organisations have not been unequivocally supportive of the govt’s spending plan – Cameron and Osborne were twisting the facts yesterday.

And that’s what frustrates me – the disingenuousness is easy to prove, but I just don’t feel anyone does it to the extent that it needs to be done. It is frustrating beyond measure that Cameron can stand in the House of Commons and twist the truth and get away with it.

Regrettably for George Osborne however, the IMF resumed foreboding a month later, urging Osborne to cease cutting in the event of a slowdown – advice which would seem to run contrary to Osborne’s insistence that, when it comes to his fiscal policy, ‘there is no Plan B.’

Osborne: “The right hon. Gentleman [Johnson] keeps talking about a plan B, but he has not even got a plan A.” – Hansard (via TheyWorkForYou)

Where is Johnson’s / Labour’s plan?

(also it seemed to me that Johnson conflated debt with deficit)

“Where is Johnson’s / Labour’s plan?”

As you well know, the plan was, and is, simply to cut the deficit over a longer time period and involve more emphasis on tax rises and growth as well as cuts.

Anyone who listens to anything the IMF have to say should be certified. Although they do write nice reports about 18 months after an event explaining how it happened. Even then they are invariably wrong.

Mervyn ‘acronym’ King is second only to Montagu Norman as the worst governor in the history of the Bank. He constantly intrudes on fiscal policy which has nothing to do with him. The fact that you know his opinion on consolidation before it was announced is a case in point. Any opinion whether it is right or wrong thing to do should be kept private. He effectively called Nick Clegg a liar a few weeks after the election. Clegg said Governor King told him the weekend after the election that they had to cut quickly and that is why the LibDems changed their stance. Governor King said no such conversation with that content took place.

The alleged Osborne/King pact compromises the independence of the Bank. Although loose monetary is the correct policy an independent central bank should not be promising that to the government. Mr Osborne needed to know that the Bank will maintain a loose monetary policy for an extended period of time (2012?) otherwise his hands were more tied. Acronym had no right to give him it as monetary policy is not decided only by him. Arise Sir Acronym before the end of the parliament.

The CBI hates tax rises period. Mr Osborne is giving them plenty over the next two years. They will hate him by 2013.

OECD. What is their opinion this week as it is certain to be different from last week?

Planeshift,

As you well know, the plan was, and is, simply to cut the deficit over a longer time period and involve more emphasis on tax rises and growth as well as cuts.

With respect, that’s not so much a plan as a vague synopsis.

5.

Totally, but most people just believe them. Not many people examine things as meticulously as you.

3&4

I agree with both of you – NL does have a plan, but it needs to be hammered home now. I’m no NL fan, but there needs to be a demonstrable alternative.

No, of course we shouldn’t believe him or his friends.

There are of course many ways to skin a cat. Just as there were many different ways to address the problems that faced the country in 1979 other than Thatcherism, there are alternatives to the path being taken by the coalition.

The “true believers” will of course insist there is no alternative; they even seem to have convinced their LD partners in the coalition that this is the case.

We should however be under no illusion: the CSR is ideologically driven, and could be little else. The party in power calls the shots, and given the pre-election narrative, it is difficult to see how New Labour’s response (in the unfortunate event they had been elected) would have been different in anything but degree.

Naturally the Tories will protect their own and avoid rasing taxes as far as possible. The “fairness” smokescreen is so transparent I’m surprised so few people laugh when they talk about it. They KNOW their measures hit the poor hardest, and would prefer that to be the case than having to increase taxes on the rich.

Even if it could be proven that the CSR would be better being implemented more slowly, with greater emphasis on taxes than cuts…. the Tories wouldn’t listen, because that isn’t what they want to hear.

Ellie,

I’m no NL fan, but there needs to be a demonstrable alternative.

That’s my point (and position); the coalition has a 106 page document you can find within seconds of searching, but Labour has a couple of details in a lengthy attack speech that isn’t immediately obviously linked from the party’s homepage and about a side of A4 on Securing the Economic Recovery (which doesn’t ‘feel’ very recent -just a hunch).

We’re told that There Is No Alternative is a lie but if there is little or no evidence of an alternative it is going to be difficult to persuade people that there is an alternative.

8 Ellie Mae

I thought (or at least fervently hoped) New Labour was suposed to be dead!?

Do we need to start sharpening some stakes…?

10

“We’re told that There Is No Alternative is a lie but if there is little or no evidence of an alternative it is going to be difficult to persuade people that there is an alternative.”

Just how credulous do you think people are?

Of course it would be nice if Labour had a bright, shiny, detailed policy already prepared (though even I would have to say they might need some time to respond given the CSR has only just hit them)….. but it’s hardly likely that those who have doubts about the content and implementation will assume there is no alternative just because Labour don’t have 150 pages in instant response.

People don’t have to be experts in economics to know in general whether they “feel” the balance of the cuts is about right, or too severe, or not severe enough. No doubt in the months ahead we will be hearing a lot more from people attempting to justify all three views.

Even if you believed it was the right thing to do and there really was no alternative the sight and sounds of the Tory benches joyfully cheering was pretty obnoxious. Just subdued silence would have been appropriate. I doubt many LibDem supporters would have enjoyed seeing their MPs surrounded by baying gleeful Tories. I voted for the LibDem candidate who won the seat at the last election mainly because she was the most liberal candidate. I know she would have hated it.

Galen10,

Just how credulous do you think people are?

I think lots of people are very credulous.

Of course it would be nice if Labour had a bright, shiny, detailed policy already prepared (though even I would have to say they might need some time to respond given the CSR has only just hit them)

Why do they need to know what the CSR says in order to prepare an alternative?

I’d say there was actually a convincing case to be made that all Labour have to do is outline general principles and a few specifics. After that detailed plans become counter productive – spending cuts inevitably involve losers. The art of opposition is different to that of government, and in 4/5 years the UK will be a different place – therefore making commitments to reverse this or that now are pointless.

Remember, Cameron’s lead in the polls prior to the election went down as soon as his policies were announced.

Fair point Planeshift.

13

” I voted for the LibDem candidate who won the seat at the last election mainly because she was the most liberal candidate. I know she would have hated it.”

Perhaps you could invite her to say so in public… or even to vote against the measures?

Assuming she has any shame of course…..

14

“Why do they need to know what the CSR says in order to prepare an alternative?”

They could have an alternative prepared as planetshift says @15. It would seem sensible however to be able to “fettle” the response with respect to the measures actually announced, no?

I have no great hopes that Labour would come up with something radical or progressive of course, but (much as I have no time for them) I think your criticism is unrealistic.

The general public (including the credulous ones) will be able to repent their recent decision at leisure over the coming few years.

@Galen10

“be able to repent their recent decision at leisure”

what recent decision? there’s no mandate for these cuts. the LDs campaigned against the Tory policy..

19

There is a mandate for the cuts, because both the Tories and New Labour were going to do much the same, and the LD’s have signally failed to live up to their promises, or to act as an effective brake on the Tories doing more or less what they wanted.

You would only have been able to argue there was no mandate if the Tory party had said they would do something totally different.

Even if you aregue that the electorate “voted” for a hung parliament, once the LD’s had sold their sould to the devil, there isn’t much more to do but hope for the coalition to fracture under the weight of it’s own absurdity….. (tho I’m pretty sure LD MP’s and members don’t have the balls to press the nuclear button now: either they actually believe in what they are doing, or think doing the right thing would lead to electoral oblivion).

There is a mandate for the cuts, because both the Tories and New Labour were going to do much the same

Wait, wait, wait… Are you saying that if all political parties are agreed on something, then since one of them must end up in government, that policy necessarily has a mandate, even though (and, in fact, because) the electorate weren’t presented with a viable alternative at any point? Seriously?

21

The electorate were given a viable alternative in as a much as they could have elected the LD’s to power if they so chose, but they didn’t did they?

We all knew cuts were coming, all that was at stake was how the salami was going to be sliced. You and I might not like the outcome much, but the fact remains that our system means that the Tories do have a mandate. The fact that no viable alternative was offered doesn’t ipso facto mean there is no mandate.

Galen10

they have to earn their right to lose the ‘new.’

also I would say necessity and necessity alone should be the only mandate for the cuts.

@ 23

Yes, based on the wider needs of whole UK. That means being mindful of the most vulnerable to real hardship. Real Liberals are very conscious of this.

The electorate were given a viable alternative in as a much as they could have elected the LD’s to power if they so chose, but they didn’t did they?

After umpteen decades of gerrymandering by both Tories and Labour, and given the way the media treated the LDs prior to the election, this is only true in the most abstract and theoretical sense. The reality is that it was always going to come down to either Tories or Labour as the largest single party and everybody in the country knew it. The LDs were not “viable” in the sense of “having a snowball’s chance in Hell of actually winning a majority”, which is what “viable” means in our current electoral system.

Next you’ll be telling me that people vote rationally…

In that case, Dunc, whether there is a mandate for cuts seems moot.

Well, sure, it’s moot in that it doesn’t actually make any practical difference, but there’s a big difference between “we’re going to fuck you whether you like it or not” and “you were offered a real choice and you asked for it good and hard”. Why bother claiming that there was a mandate otherwise?

@20

Well just to choose one example: both coalition parties campaigned to keep child benefit as it is/was. People would’ve weighed that up in their minds when voting – but now it is to be stopped (tho’ not for families who could collectively earn up to £86K).
The Tories did not win an outright majority therefore have no mandate for deep and speedy cuts – that is an ideological stance that they choose to take. The LDs are there to prop up the government (to give the “markets” confidence) but explicitly campaigned against deep and speedy cuts, which is why lots of folk voted for them – no mandate there.
I’m not saying there should be no cuts, or that all of the cuts are wrong, or even that the CSR as a whole package is wrong (protecting schools, NHS, aid budget – all v good things) – but the particular cuts that the Tories are making are too deep and too fast. The public sector is being double-decimated (insofar as “decimated” means a 10% reduction, and the cuts are 20%) and as the Tory guy on QT last night said he’s expecting the private sector to come along and fill the gap. Well it won’t. The magic free-market fairy is still exhausted after the self-abuse of the financial crisis and needs time to recover.

Dunc,

Why bother claiming that there was a mandate otherwise?

I suppose it’s because at least 88.1% of voters (57.4% of the electorate) voted for parties that promised to make (broadly speaking) cuts, that some people think there is a mandate for cuts.

I agree with your point @21, btw. I’m just saying what “mandate” appears to mean to people.

21 Dunc & 29 ukliberty

However much it might stick in our throats, the logic of our system is exactly that. The fact that both Coalition partners campaigned on one set of policies, then do something different once in power isn’t something you can do much about given the way the system works.

People don’t vote on the basis of single issues, and as ukliberty pointed out all 3 parties had accepted the general thrust that large cuts would be necessary.

Once in power, there is little the electorate can do to stop the Coalition totally reversing part or all of the platform they campaigned on short of civil disobedience, revolutionary overthrow, or kicking them out at the next available opportunity.

Of course, in the case of the Coalition, the next available opportunity could be much earlier if enough LD’s decide the game isn’t worth the candle.


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    Should we believe Cameron's friends? http://bit.ly/cwkjXA

  2. Ellie Mae

    RT @libcon: Should we believe Cameron's friends? http://bit.ly/cwkjXA <<< me latest. Blame Sunny if the editing's bad

  3. Pucci Dellanno

    RT @libcon: Should we believe Cameron's friends? http://bit.ly/cwkjXA

  4. Rajeev Trikha

    Should we believe Cameron’s friends? http://t.co/wxDlkyx via @libcon – also throw in Stiglitz, Krugman & Pissarides against the cuts too.





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  • Abusive, sarcastic or silly comments may be deleted.
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  • Please familiarise yourself with our comments policy.

 
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