Why I’m voting Labour and you should too

Posted on June 8, 2017

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Vote Labour

 

In September 2008, the British financial system was on the verge of collapse. I’m talking actual collapse. Like, most of the major UK banks declaring bankruptcy, credit-starved businesses quickly following suit, supply chains fragmenting, money not coming out of ATMs. And who knows what else… Forced nationalisation of the entire banking system? Of food production? Mass rationing? Basically the kind of scenario we’ve only seen in the rich world during wartime and the Great Depression.

The financial crisis arrived in Britain from the US property market. There, credit had plugged a growing gap between stagnant wages and rising house prices. Banks made a fortune out of this through clever risk-pooling strategies, though in the end though these turned out to be incredibly stupid. “Sub-prime” mortgage holders began to default on their loans and no one could tell which pools were safe and which were toxic. With no one willing to provide credit, the entire system effectively suffered a seizure.

Although there were some structural similarities, the same crisis could not have originated in the UK. There was a similarly growing gap between incomes and rising living costs, but a residual social housing sector and government-provided tax credits housing benefit meant that low earners were neither tempted into unsustainable mortgages nor thrown out into the street. But the New Labour governments of Blair and Brown had allowed the British economy to become one of the most financialised in the rich world. This meant it was particularly vulnerable to contagion from the US crash.

Luckily the dystopian scenario of total collapse was averted by a huge government rescue package, which in the UK had to be disproportionately large. It is difficult to calculate the true cost of this intervention. It combined a mixture of loans and guarantees to banks, as well as a major fiscal stimulus to keep the economy churning. It certainly ran into the hundreds of billions of pounds. The public debt ballooned overnight.

We have been paying for this disastrous event ever since. But if you had just followed mainstream British politics over the intervening 9 years you would never know it. The structural crisis of hyper-financialised capitalism has been rarely mentioned in political debate. Instead a series of other issues have, one after the other, taken centre stage.

The immediate political fallout of the crisis was, quite frankly, ridiculous. In 2007 Conservative leader David Cameron and shadow chancellor George Osborne had matched Labour’s spending commitments. However, following the bailouts they began to talk about the debt and the structural deficit – that is, the gap between money going out and money coming in, which had automatically risen in response to increased unemployment and strain on services. They claimed the debt and deficit were the cause, rather than the result of the crisis.

THIS WAS A LIE.

Prior to the crash public spending as a proportion of GDP was around 40% – well within historic norms and much lower than several other countries that were less seriously affected by the crisis.

Around the time of the 2010 election, as the Eurozone began to tank, Osborne claimed that if the deficit wasn’t rapidly brought under control Britain was on the verge of becoming the next Greece.

THIS WAS A LIE.

The UK was not a part of the Eurozone and so its central bank could use various tools to stabilise its bond markets and prevent the debt from growing exponentially.

What Cameron and Osborne’s LIES were in fact doing was preparing public opinion for a radical austerity programme. As they entered coalition with a pliant Liberal Democrat Party after 2010, they promised to wipe out the deficit within five years, mainly through huge cuts to public spending. They knew the public would be resistant to such a plan, and so mobilised a series of arguments (spoiler alert: LIES) to make their case.

They promoted the idea that the public finances were like a household budget, and that if you “maxed out the credit card”, as the previous Labour government had supposedly done, you had to suffer until you had paid it off.

THIS WAS A LIE

A government is nothing like a household. Its job is not to limit spending to a specific amount at a given moment, but to spend in ways that will sustain positive forms of economic activity over the long term. That means spending on education, on healthcare, on infrastructure, and on social security, all of which have huge and enduring multiplier effects. This applies even – perhaps especially – when the economy in struggling and the private sector refuses to invest. Government debt, sustained by taxation, is invariably more trustworthy and serviceable than private sector debt. It is the economic generator of last resort.

Instead, the austerity of the coalition years sucked life out of the economy. It managed, erratically, to squeeze out some spurts of growth by pumping up asset bubbles with Quantitative Easing – Osborne’s own “magic money tree” – though only at the cost of aggravating a long-standing housing crisis. It also held down unemployment, but only by systematically attacking the working and living standards of the population. People were either pushed into shitty, casual jobs at places like Sports Direct or self-employment, or had their public-sector jobs steadily downgraded. Only Greece has seen a worse decline in real wages since 2007. No major advanced economy has seen such weak productivity growth. 

Despite all of these attempts to cut its way to growth and deficit reduction, the Treasury’s growth projections consistently failed to materialise and the eradication of the deficit disappeared further and further into the future. Meanwhile, the cuts began to take a major toll on frontline services. Knowing that public opinion might turn against them, the Conservatives needed another line of attack, so they began to blame “scroungers”. These were the feckless poor who sat around all day enjoying a life of luxury at huge public expense, while honest “strivers” went out to work.

THIS WAS A LIE.

Unemployment benefit constituted a tiny amount of the national budget. In any case, most people receiving welfare support were employed, but simply in jobs that didn’t pay enough to live on. Or they were disabled. These people were systematically impoverished by the cuts, and publicly humiliated by new workfare schemes and, sometimes deadly, “work capability assessments”. From being practically non-existent in 2008, today there are over 2,000 food banks operating in the UK.

It may have failed economically, even on its own terms, but austerity was always more a political project than an economic one. In the long term it aimed to permanently shrink the British state. In the short term it sought to trap the opposition into accepting this logic. And in this sense, it worked. Against his better judgment, and despite challenging especially predatory sectors of the economy (energy and rail companies, zero-hour employers, landlords, the press), “soft Left” Labour leader Ed Miliband refused to contest the Conservatives’ central narrative about Labour’s overspending, and triangulated in response to their attacks on welfare recipients. He was fighting with one hand voluntarily tied behind his back.

In the absence of effective left-wing opposition to the coalition’s economic disaster, this instead came, in a roundabout way, from the right. Mid-parliament, the anti-EU and anti-immigrant UK Independence Party began to surge in the polls. Terrified of losing votes and MPs, Cameron was bullied into offering a referendum on Britain’s membership of the European Union. He thus gambled the future of the country for the sake of internal party management. He also began to parrot UKIP’s anti-immigration rhetoric, reproducing tropes about immigrants stealing jobs and sucking up benefits.

THESE WERE LIES.

Immigrants have an overwhelmingly positive effect on the economy, doing crucial jobs and disproportionately contributing to the tax base. Nonetheless, the damage had been done.

Cameron got lucky on the 2014 Scottish referendum, and even luckier in the 2015 general election. But in 2016 his luck ran out. Many voters were looking around for someone to blame for austerity, and they had been conditioned by years of relentless media LIES about the EU and immigrants. The Leave campaign LIED through its teeth, but then again so did Remain. The whole thing became an ugly mud-slinging match, where no-one believed anything and everyone simply voted on emotion. In the end, a narrow majority of the electorate voted to leave the EU. The “modernisers”, Cameron and Osborne were out. And a new nativist Tory-UKIP hybrid, coalescing around Theresa May, was in.

During May’s year in power the lies have come thick and fast.

She claimed that Britain would quickly achieve improved trade deals with the EU and with other major economies.

THIS WAS A LIE.

The task will be fiendishly difficult and is probably beyond the capacity of the civil service and the government’s sorry looking “Brexit team”.

She claimed the “saboteurs” of parliament were blocking her Brexit plans.

LIE.

MPs voted through Article 50 with very little opposition, terrified of being accused of resisting the “will of the people”.

She said on multiple occasions that she wanted to provide stability and that the last thing the country needed was another election.

LIE.

In mid-April she called a snap election. She believed that with a 20+ point advantage in the polls she would win at a stroll. And at least that way she would secure a strong mandate for the inevitable failure to come.

I will not even go into the SUCCESSIVE LIES of her dreadful campaign.

 

All in all, the story of our political class since before 2008 is one of relentless and spectacular failures. And it is a story of deep dishonesty about the underlying causes of those failures. Let’s call this what it is: an economic system that does not work – that cannot work – for most people, and a political system that does all it can to prevent us from changing that.

And yet over the past two years, something has been growing in the darkness. Sick of austerity, and disgusted by the scapegoating of immigrants and the poor, a growing number of people have been demanding something different. Since 2015, the Labour Party membership has more than trebled, making it Europe’s largest social democratic party. And it has elected as its leader Jeremy Corbyn, a veteran backbencher who, almost alone, stuck to his principles during the long years of New Labour hegemony.

Corbyn is not perfect. There are points on which I disagree with him. At times over the past two years I have thought his leadership looked fundamentally incompetent. But I have no doubt that he is as sincere and principled as he seems. (He has been my local MP for my entire life, and I have honestly never heard a bad word said about him). And, as the Party’s manifesto shows, he has the beginnings – though only the beginnings – of what could be a genuinely transformative programme.

But here’s the most important thing: it’s not even about Corbyn. He is just a temporary place holder for something much deeper.

Really, it’s about us.

It’s about the (re)emergence of an active and informed public that will no longer put up with an economic system that clearly doesn’t work.

That will reject the unspoken rules of establishment politics and media, where lies go unchallenged. 

That will resist the supposed inevitability of social inequality and deepening prejudice.

That will allow itself to believe that something better is possible.

I dearly hope I’m wrong, but I expect the Conservatives to win a comfortable majority tomorrow. I don’t think we’ve yet turned the corner on that front. But even so, it won’t feel like a defeat. This government has no answers to the real problems we face. And the last few weeks have shown that when it inevitably fails there will be an active, energised mass ready to hold them – and the Labour opposition, whoever is leading it – to account.

This campaign has made me believe, for maybe the first time, that genuine, radical political change during my lifetime is possible. I don’t know if and when this will bear fruit, but just that feeling of possibility is exhilarating.

Whatever happens today, this is only the beginning.

 

Now go and vote Labour!

 

 

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