Strange Case of the People’s Pantomime

John Rentoul

panto 300x202 Strange Case of the Peoples PantomimeYesterday could have been a memorable day, when two rival political gatherings advertised different views of how Labour should fight the next election. But Ed Miliband in his speech to the party’s National Policy Forum in Birmingham finessed the sellout, and the roar of leftist fury from the People’s Assembly in London sounded like a harmless pantomime. (Photoshop of Owen Jones by General Boles.)

I have written about the Labour leadership’s burial of John Maynard Keynes in The Independent on Sunday today. So far, Ed Miliband and Ed Balls are still trying to have it both ways. They say Labour won’t promise to increase what Miliband calls “day-to-day spending” in the first year of a Labour government. They are, however, reserving the option of promising more capital spending, as Balls made admirably clear in an interview with Sophie Raworth on BBC1 this morning.

I should elaborate on my prediction in the column that this promise will be dropped before the election. There are two reasons for this.

1. It is politically dangerous. Labour can sloganise about “borrowing to invest” all they like, but going into an election promising to borrow more, at a time when the economy is growing, is not going to work.

2. It could be expensive. Even with real interest rates at today’s low levels, the cost of government debt interest is already more than the entire Ministry of Defence budget. As my esteemed colleague Hamish McRae has written today, interest rates are on their way back to normal levels. Borrowing more might have been right over the past three years; it is likely to be the wrong policy after 2015.

Of course, none of this says anything about what will happen after the first 11 months of the new government, the fiscal year 2015-16, which is the year for which George Osborne will announce departmental spending plans on Wednesday.

Beyond 2015-16, the Labour Party hides behind the zero-based review of spending that it says it would carry out in government, although it will promise, at the election, a target for reducing the overall deficit over the following years.

Against such important questions, yesterday’s People’s Assembly was an utter irrelevance.

Further reading: Ed Balls speech at Reuters, 3 June; Stephen Twigg speech, 17 June.

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  • Pacificweather

    Mine said the same but, unfortunately, over the years, I have ignored her advice and, when rationing ended, the portion size increased. However, I remained slim for another 30 years until ignoring her advice finally started to catch up with me.

    Attlee was the victim of our post code democracy as Margaret Thatcher was the beneficiary. Perhaps the aspect of Attlee that Ed Balls aspires to is his 49.7% of the vote in 1945. Aspiring to be a Prime Minister that few remember is a strange way to set a narrative for the policies he wants (fears he has) to follow.

  • Pacificweather

    Well John, as JMK was cremated, it will be difficult to bury him which is a good thing as Keynes argued that aggregate demand determined the overall level of economic activity, and that inadequate aggregate demand could lead to prolonged periods of high unemployment.   Is that not what we are seeing at the moment?

    According to Keynesian economics, state intervention was necessary to moderate “boom and bust” cycles of economic activity.  Is that not what Gordon Brown failed to do?

    News of his burial is somewhat premature.

  • weejonnie

    Yes – but most people have a repayment engine in place to pay back the loan – those who haven’t are in serious trouble – haven’t you read the news.

  • greggf

    JMK died in April 1946 after what appears to be a recantation of his theories Pacific.

    I would give a link except that the Indy is very iffy about them, but “Wiki -The World Bank, the IMF….” might get he detail.
    Anyway I include a quotation from one just before JMK’s death:-

    “Over lunch at the Bank of England, Keynes tells Henry Clay of his hopes that Adam Smith’s ‘invisible hand’ can help Britain out of the economic hole it is in:

    “I find myself more and more relying for a solution of our problems on the invisible hand which I tried to eject from economic thinking twenty years ago.”

  • Pacificweather

    He had had a severe heart attack, so much so that he died 10 days later. I doubt he was feeling on top of the world. At a time like that we all want an invisible hand to save ourselves and our country but their are no invisible hands, Smithsonian or otherwise. To allow one sentence taken out of context after a world war and at the end of a man’s life to negate the work of a lifetime is not only unfair but foolish. We have seen the evidence that his ideas had more merit than many who came before and after him. Let’s go with the evidence and acknowledge he was a great economist and public servant of historical significance who will not be “buried” at the behest of politicians or journalists.

  • Pacificweather

    Only if he could raise his salary as easy as the Chancellor can raise taxes and cut spending as easy as saying “cancel Trident”.

  • Pacificweather

    Then Labour spent 10 years creating Academy schools to replace them. Does that mean they have paid their dues for their regressive politics of the past?

    Not forgetting that Margaret Thatcher supported the policy and holds the record for closing or merging the most grammar schools, including the one my wife attended.

  • greggf

    Quite right Pacific, who are we to re-interpret what he really meant in his dying days.

  • greggf

    “Then Labour spent 10 years creating Academy schools….”

    It might indicate that Labour re-assessed the value of such education Pacific. It’s perhaps too early to tell if the grip the more exclusive Public Schools have on British politics etc., may be loosened.

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