It is almost incredible that after failure upon failure the monetarists have still not yet been run out of town. Even after the decisive anti-austerity presidential election in France a week ago, the ejection of all austerity-accommodating parties in Greece, and now the drubbing of the German Conservatives in North-Rhine Westphalia, it seems the best we can hope for from the Hollande-Merkel clash is a growth pact to run alongside an un-renegotiated fiscal austerity pact – a classic EU fudge since the former is not possible without a substantial easing of the latter.
It almost defies belief that after every monetarist project has run into the ground – Fisher’s quantity theory of money, Friedman’s ‘natural’ rate of unemployment, Thatcher’s financial deregulation, Blair’s privatisation of services, Brown’s PFI, and now Osborne’s oxymoronic expansionary fiscal contraction – instead of being shamed by their successive humiliations, they still return to the charge with yet another canard. This time it’s supply-side reforms, code for yet further cuts in labour rights.
The Treasury was at it again, following up the Queen’s Speech with the spin that it was about growth. Yet the only item remotely relevant about supporting businesses was the proposal to make it easier for firms to get rid of employees. In other words the monetarists’ latest wheeze for boosting growth comes down to cutting workers’ protections against unfair dismissal! The sheer effrontery and inanity of such an idea takes some beating. But instead of being hounded out with derision, the monetarists are still clinging on with arguments that are palpably ridiculous.
When is the Labour Party in the UK, and the Left throughout Europe, going to go on the offensive with a few central facts? The huge goverment borrowing of the last 4 years has nothing to do with social-democratic spending sprees – the budget deficit was 3% of GDP in 2007 and only rose to 11.6% in 2010 for three reasons: the abrupt drop in tax receipts as a result of the sharp recession, the big rise in benefit payments from the large increase in unemployment, and of course the cost of the bank bailouts.
The next facts are that only a boost in public capital spending (initially on infrastructure and housebuilding) will give the private sector the confidence in future growth to be willing to invest. If it is left to the private sector alone to initiate the growth, they will only do it at knock-down, recession bombed-out prices that have cut a swathe through the asset values of British industry and commerce – a price that non-one in their right mind (except the monetarists) should be prepared to pay. The Left has the answers and all the evidence behind them; the Right is utterly bereft and skint of ideas. Why don’t we go on the attack?