Why is Labour picking the wrong fights?

by Ray_North on January 18, 2012

I can understand what Ed Balls was trying to say.
I think.
I can understand what Ed Miliband is trying to say.
Sort of.

Balls’ decision to renege on a Labour promise to oppose the cuts in public sector pay, was justified by him on the grounds that in the current climate of cuts to public services and rising unemployment, pay rises may not be the best way of spending tax payers money. Ok, although, of course, there is a good Keynesian argument for putting a few quid in people’s pockets to stimulate demand, I can see Ed Balls’ point.

Miliband’s argument is more difficult to fathom. Seemingly, Ed Miliband is accepting that Labour will not be making any spending pledges and accept that cuts are necessary, because when they win the next general election we’ll still be in the pickle we are in now.

Both arguments display a shocking lack of political foresight and instinct. Neither argument will see any kind of improvement in Labour’s current poll ratings or reassure those of us on the left that Labour are anywhere near to articulating the concerns of the people.

With regard to public sector pay – I am fairly confident that many people in the public sector would be prepared to accept a pay freeze or even a cut, indeed, many people have already accepted such a thing. But, when those same, usually poorly paid, workers look up and see those in the private sector or in the banking and finance industries still taking up massive pay rises and bonuses, then meekly accepting a pay cut leaves a bitter taste.

Just as galling is the fact that as low paid workers are being asked to take pay cuts – the energy companies and the oil magnates are still charging massively inflated prices – which, in the case, of the oil companies is actually at odds with the laws of supply and demand.

Whilst Ed Miliband’s sudden bewildering and befuddled embrace of the coalition’s economic policy still misses the most important point – that is, that the immediate health of our economy will depend upon whether we can stimulate some growth, not on whether we can pursue some futile obsession to reduce borrowing; an argument that Labour seemed to get, and which is now being accepted by, amazingly, the credit agencies who demanded austerity in the first place.

In his conference speech, Ed Milliband, spoke coherently (if not persuasively) about the failures of capitalism – if Labour maintains its desire to pursue a programme that will lead to a ‘fairer capitalism,’ then, now is not the time to pick a fight with the public sector workers; nor is it the time to engage in a spot of public sector worker or union bashing; nor is it time to bow down to the argument in relation to austerity.

Instead, Labour needs to maintain the pressure on the banks and keep reminding those on the right of the inherent unfairness of cutting the pay of the lowest workers whilst doing nothing to curb the pay of the highest; and, it must continue to make the argument, that austerity isn’t working and won’t work whilst the economy continues to be sucked dry of any stimulus or growth.

{ 5 comments… read them below or add one }

George_East January 18, 2012 at 8:37 pm

Labour’s new strategy absolutely beggars belief given that unemployment has today hit its highest level since January 1996, and even more terrifyingly youth unemployment hit a record 22.3%. Unemployment was coming down when this government took office – it is a direct consequence of its austerity measures that it is now soaring. Labour now has precisely nothing to say on unemployment because it tacitly endorses every Coalition spending cut.

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Eddie Kaye January 19, 2012 at 12:31 am

There seems to be a consensus of totally missing the point. It is not the amount spent from the public purse, it is where it goes. Austerity (if it is not a dirty word) can be carried out by making sure that every penny of Treasury money is accountable and wisely invested. This can be done without cutting frontline services from law and order, local services, education, healthcare and the like. One London council (which one escapes me) agree to forgo niceties like free parking, take a pay freeze etc over cutting frontline services. I have no problem with saving the country money.

Where I do have a problem is waste , and the fact that certain ‘interests’ are being ring-fenced for exemption. I am no economist, but I realise that less money in people’s pocket (by lower wages, stealth taxation and exploitative ‘rip-off Britain’ charges on everything from parking to your vital utilities) means less demand, therefore less supply, therefore stagnated growth. It is not rocket science.

The idealogical stand point of the cuts (and making them popular (or is that populist) through the usual Daily Mail bollocks is to cut the state. The right would have us believe that all the millions unemployed are ‘layabout dole scum’ who roll out of bed just in time for Jeremy Kyle, pop down the Job Centre to sign on, back home via the offy for a night in front of the knock off dvd – obviously this is pure propaganda. By creating this myth, the Government can produce legislation that in a nutshell is absolutely scandalous – taking away disabled carers, money from people with terminal illnesses.

I said it before recently, where Labour is failing is in its inability to oppose the Government (surely their main function as Her Majesty’s Most Loyal Opposition). They need to do something, or there is very little point in voting for them. A better statesman than either of the two Eds would have realised that by now, and taken a constructive argument forward to the country.

Oh, and just because I haven’t mentioned it for a few weeks – spending a ruddy fortune on the largest prison population in UK history is not helping either. Soz, I had to bring it up.

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George_East January 19, 2012 at 11:30 am

Eddie, I agree that where the money is spent matters in that it is better to spend money on things that are likely to have a long term return (infrastructure projects, the schools building programme etc) than more wasteful things.
However where we are now is that we need to get more demand into the economy however that is achieved (so in that sense any spending is likely to be ‘good’ spending) – if it consists (in one of Keynes famous thought experiments) of the government burying money in glass jars in disused mine shafts and then paying people to dig it up, then so be it. Indeed to give the Daily Mail readership a heart attack by increasing benefit levels would be one of the easiest and most effective ways of increasing demand in the economy – as those who have the least are most likely to spend it.
Couldn’t agree more with your last paragaph though – paying vast sums of money to keep drug addicts in prison is about as wasteful as it gets.

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Eddie Kaye January 19, 2012 at 1:18 pm

The general injustice of our penal system aside (I have waxed lyrical about it ad infenitum on here), the sheer expense of it is astounding. Added to the average £50,000 + per prisoner per year, the total failure in terms of rehabilitation creates more crime. Perhaps if the tabloids had a blanket ban imposed on the phrase ‘spared jail’ and the like, and had to put ‘judge saves us £50K by NOT sending this person to prison for not sending their kid to school/ not paying their council tax/ flounting the smoking ban’ we might see a bit more positivity to prison reform.

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Phil C. January 21, 2012 at 4:36 pm

@ Ray North,

Why is Labour picking the wrong fights?
There are grounds for suspecting that Ed Balls is seeking to provoke the more left-wing Unions into disaffiliation. Ed M may be being isolated and by-passed in this regard.
Balls himself has been keen to smooth things over with the Liberals/ Orange Bookers in recent months.
There is disconcerting evidence that the behind-the-scenes machinations are a continuation of Peter Mandelson’s failed attempt in May 2010 to forge a merger between Labour’s right wing and the Liberal Democrats. Since Christmas, Mandelson’s Policy Network think-tank has been putting out the message that the LP must embrace austerity and cuts to public services, esp health, welfare and pensions. A few Blairite MPs – Murphy, Twigg and Byrne – have been outspoken in seeking to force the LP into embracing the Tory-Lib Dem austerity agenda… allegedly for “credibility”.
It seems that the dream of Peter Mandelson is to have a cosy two-party system where the two managerial neoliberal parties of govt are the Tories and a new centre-right Lib-Lab party… with the Left being excluded and marginalised.
Mandelson and others seem to have a fixed belief that left-of-centre voters would vote for a Lib-Lab party as preferable to the Tories, and the “the Left have nowhere to go” thinking indicates Mandelson et al believe that any new workers’ party formed would be as doomed to failure as the previous attempts (Scargill’s Socialist Labour, the SWP, Respect etc).
As conspiracy theories go, this one has a lot of circumstantial evidence to support it. Therefore, imho, we should keep an open mind and be vigilant.

It’s crucially important that the Unions remain members of the Labour Party and fight against the Blairites. Funnily enough, before the startling interventions of the two Eds, Richard Murphy had written a great blog-post about the urgent need for Ed M to fight against the Blairites for everyone’s sake.

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