Tagged with Deficit

John McDonnell’s very political economics

John McDonnell addressing the LRC Conference 2012What have they been putting in John McDonnell’s coffee? According to some, John’s embrace of fiscal responsibility, tight spending, and deficit reduction is a surrender to “the capitalist parasites“. And proving you cannot please some people no matter what you say, there have been criticisms from the right of the party arguing that his economics are the same kind that were rejected last year and in 2010.

I don’t know if the memory-loss associated with politics is a recent thing brought by social media churn, or is something deeply structural. But there wasn’t a great deal John said in his speech on Friday that hadn’t already been trailed previously. A good deal of this was mentioned in his first conference address as shadow chancellor. As the Tories have successfully managed to identify economic competency with the project of deficit reduction in the minds of a plurality of the electorate, John’s speech then – and now – signals his willingness to fight them on their own turf. In this he’s aided by the self-described “political genius” George Osborne’s inability to meet his own targets, and absurd, dogmatic desire to pull public spending out of the economy, which will only thwart his ambition in the long run. Continue reading →

Memo to Jeremy & John: it’s the country’s deficit that matters, not the government’s

Corbynomics1A major factor in Jeremy Corbyn’s appeal to voters in the recent leadership election – and potentially to the wider electorate as well – was his brave assertion that austerity was the wrong response to recession and was doing absolutely avoidable damage to both economic performance and social cohesion.

That assertion not only gave fresh hope to millions dispirited at being told that “there is no alternative” but also opened up a long-overdue debate that brings the Labour party within touching distance of a newly emerging economic policy consensus and that could be of great value both to the party and to the country’s economic fortunes.

All the more surprising then that both Corbyn and his Shadow Chancellor, John McDonnell, are still apparently in thrall to a key element in neo-classical orthodoxy. They have found it necessary to commit to reducing “the deficit” and to producing a budget surplus by 2019. Continue reading →

Escaping “Stockholm syndrom – Stop fessing up to errors Labour didn’t make

Fire_escape_tube_-_NARA_-_285282Mr Osborne’s most striking political achievement, with the connivance of the economics profession and media, is to reframe the debate about the most severe crisis in living memory away from finance and towards the welfare state – identified as causal of the crisis.

In reframing the debate he has succeeded in ‘capturing’ some of his opponents and convincing them of his framing and narrative. He has done so by accusing Labour of reckless management of state finances.

Now Labour, egged on as it was under Gordon Brown by orthodox economists in both the Treasury and academia, does share responsibility for ‘light touch regulation’ of the City. But in no way can the Labour government be found guilty of “overspending”. The opposite is true. Continue reading →

Too left wing? Corbyn concedes too much on public spending – trade deficit matters more


Corbyn on redHow Left wing is Jeremy Corbyn? If anything, argues Bryan Gould, Corbyn’s economic platform concedes too much on the government deficit – it is the balance of payments deficit which should be our main focus

As the warnings about a Corbyn leadership become more and more hysterical, we need to ask – just how left-wing is Jeremy Corbyn? His critics may not like him much, and may doubt his appeal to the wider electorate, but there seems little in the policy stance he has adopted to warrant such extreme alarm.

The fears voiced by his critics seem to depend for substance entirely on the critics themselves. Their warnings are likely to become self-fulfilling prophecies if we do not pause for a moment to examine what Corbyn and his supporters are actually saying. Writing in the Guardian, his ally, John McDonnell – presumably speaking with the authority of his leader – quite reasonably set out the substance of a Corbyn economic policy. So, how irresponsible and terrifying is it? Continue reading →

Would a Rachel Reeves budget yesterday have been much different?

ReevesAhead of yesterday’s budget, in which George Osborne laid out £12bn of welfare cuts, a continued squeeze on public sector pay, the abolition of student maintenance grants and higher tuition fees, Labour’s ‘opposition’ front benchers went out of their way to agree with Osborne’s narrative of austerity.

Still reeling from the General Election, or now simply given psephological cover for her views, Reeves said that Labour should set a date for getting national debt back to 40% of GDP, the level it was at before the 2007 financial crisis. It is currently double that amount, meaning the Shadow Work and Pensions Secretary is advocating huge cuts, and fast. Given that she is being touted as a potential Shadow Chancellor should Andy Burnham win, this should worry those of us in the party concerned with austerity and poverty.  Continue reading →