The Economics of Chris Leslie (and others)

So just when you couldn’t get any angrier with your own political party, the so-called “Labour” Party, the dummy Shadow Chancellor, a chap going by the name of Chris Who-ja-ma-Flip, writes an article somewhere demonstrating that he knows fuck-all about economics.

Now, I want to point out that I’ve just used an expletive there. In doing so, I’ve just broken a small promise to myself to behave. I mean, after decades voting Labour but being an award-winning disappointment as an activist, I join the party (again) and go public with it on Twitter. And starting a blog and trying to write some hefty articles demonstrating – hem, hem – the sort of erudition that befits a history PhD student of, shall we say, a ripe age, I said to myself, “Now, Geedon, don’t do what you always do and mouth off like a bloke down the pub who’s had one too many pints of Carlsberg.” But no, in blog post #5 I go and call Chris Leslie – that’s his name – fucking useless.

 This done, I want to explain myself and put up circumstances often called, extenuating. You see, unlike our esteemed – Shadow-Osborne, magnificently appointed by Harriet Harman, I’ve actually read some economics. Or, if I’ve wronged him there, unlike our S-D, Chris Leslie, who like me has read some economics I actually understand the subject. In case you’re not in the picture, Chris has criticised, nay accused leadership candidate Jeremy Corbyn of offering to the people of Britain an economic strategy (if elected) that would cause an outbreak of even greater poverty for children (and others not rich enough to defend themselves) via chronic inflation and soaring interest rates.

 What is Jeremy suggesting? you ask. According to Chris, he is suggesting that if given power by the people, he will use a tool called “quantative easing” – something known as “printing money, a gimmick only desperate, mad and clueless politicians pull in countries not as great as ours” until George Osborne was advised to use it to get Britain out of recession in 2012 (and did). He may also have generalized Jeremy’s economic strategy as “pie in the sky” or “a stupid thing only dreamed up by romantic nutters who believe that dreams really do come true”, something like that.

 On two fronts, Leslie proved himself an embarrassment to the party. Firstly, he insulted a leadership candidate in the manner of a brat not able to get his own way. Secondly, he tried to portray a fellow Labour MP as stupid. Thirdly, he deliberately mis-represented the strategy for propaganda purposes. Fourthly, he showed, as stated above, complete ignorance in his supposed area of expertise.

It is the fourth of these which I want to focus on here, and go on to explain how damaging this is for Labour.

First, a confession. The economics I have I learned, after A level, from reading books so I could teach the subject at secondary school. And for the last 20+ years I have, like all good citizens, read my Wills Keegan and Hutton in the Guardian and Observer, and taken an interest in other articles various on the subject. More recently I have taken some interest in a bloke called Maynard Keynes via Skidelsky’s three volume biography, and read a fair amount of two extremely authoritative economists, the Americans Paul Krugman and Joe Stiglitz. Anyone can do this. What this gives you is an understanding of how  economies work and economic history to spot a useless Chancellor from a good one, and to know the difference between economic strategies that fail from those which work.

So I know that Chris Leslie is talking out of his hat.  Worse than that.

Firstly, quantative easing, feeding a largish amount of money into the banking system to lend money desperately needed by businesses to start and develop, with beneficial knock-on effects on earning and spending, is a perfectly orthodox policy for an economy like ours. If done properly (which, as I understand it, by the way, Osborne failed to do, most of the cash ending up in the hands of banks and staying there). It is hardly a controversial policy, and one that won’t generate inflation in an economy as unproductive and stagnant as ours.

Secondly, what Leslie also doesn’t like is a British government borrowing money to create wealth via infrastructure projects (roads, house-building, rail networks and the like) and any other feeding of finance to a range of organizations which result in a more productive, higher earning and spending and profit producing economy. While we’re here we might make the point that education would be a part of this, where a higher skilled and better educated workforce bring about higher quality goods and services (from the ideas and design stages forward) which sell better abroad, generating income for individual, company and country alike. Even if you’ve never studied economics, you’re probably ahead of the next bit: the result that as well as raising average income, it cuts the hell off the unemployment figures and drastically reduces the benefit bill.

Described usually as “reflating the economy”, this stuff goes, traditionally with the Labour Party, the Liberals, SDP and now Liberal Democrats, and the Conservative Party in the 1950s and early 1960s. It was Thatcher, inspired by right-wing economists such as Hayek and Friedman, who chucked the idea in the bin, because, handled ineffectively by both Labour and Conservative governments in the 6os and 70s, it seemed to be inflationary – a disaster for rich people with money stashed away – and smelled too much of socialism; which was odd because the originator of reflationary policy was the pro-capitalism and Liberal, Maynard Keynes. However, Thatcher was a regressive Conservative, for all the talk of her being a radical since she got into her stride in 1980. Which meant that she was more than partial to the idea of countries minimising borrowing (in addition to believing this was inflationary) and instead, trying to get government accounts in balance and keeping them there.

Balanced budgets. Or even better, surpluses, more money coming into UK PLC than goes out. Bad economics which you’ll have heard a lot about this recently, yes?

We’re now getting back to the present – or coming forward, rather. Jeremy Corbyn likes Keynesian reflation. So do I. Why? It’s great for the economy and it’s great for people. As stated, carried out properly, or even half-well, it will provide jobs and higher wages for a great many folk. It will cause a great many businesses to make profits or not go bust. Profit, if invested, generates more employment because companies like expanding. It’s the nature of capitalism. The desire to make more profit. Which Keynes said was fine. And right this second, who am I to argue with Maynard? I also like it because the economists I trust and rely on like it: notably Krugman, Stiglitz, Hutton and Keegan, and plenty of other economists I haven’t found the time to read. So what I think here really doesn’t matter. To me, it’s not I who possesses knowledge of economics: it’s these people: I just use it.

Now – are they people left wing? No. If I had to characterize them as anything, I’d say they were centrists. Krugman calls himself a “liberal”, which in USA terms doesn’t make him a radical. What they all seem to be is something I’m learning to be: an empiricist. Which means they approach their subject evidence first. In other words, they don’t usually – or don’t like to – start with a proposition or conclusion and try to prove it finding evidence which fits, however badly; instead they study the evidence, in this case what happens in and to the world’s economies and try to draw conclusions, solve problems, find answers to the questions they identify as important. So if Krugman tells me that the deficits that countries like the UK and the USA were running even after tipping hundreds of billions of pounds and dollars into the banking system to save it in 2008-9 were not a problem, I believe him. Not least because, to give but one example, if you read him you will find that historically, the proportional of the debt we owed relative to the wealth we generated was not at all high.

In Britain, we were in a true mountain of debt after both World Wars. But, because of our earning capacity, our potential productiveness, even with our industries in decline and having other severe structural difficulties, this was not a catastrophe. Eventually, our economies recovered, and the Chancellors of these times, dim though they were, certainly until the Attlee government, did not need to make vast cuts in public expenditure. They did after the First World War, but not because they said the country was bankrupt and had to save it from oblivion, as Osborne did in 2010. The Chancellors of those times did cut because they’d all been taught that when there is a fall in government income – and there was, in 1920 after a brief boom, the answer was to keep “the books” in balance and avoid debt. So they cut wages, and departmental spending, and raised taxes; which resulted in a worse recession. What you did next was wait for the recession to pass, like a storm. And eventually, each time, it did. But in our case, because of the disastrous fact that the industries which made our industrial wealth (cotton, coal, ships and iron & steel) were in decline, overtaken by our competitors, the general picture remained bleak until we decided we had to arm ourselves against Hitler, which accidentally reflated the economy with good results, superficially anyway.

Chris Leslie should know all this but doesn’t show any sign of so doing. In fact, Leslie is doing a good impression of a famous previous Labour Chancellor, one Philip Snowden, who held the post in the Ramsay MacDonald government of 1924 and of the second Labour government of 1929 to 1931. Snowden, unfortunately, was an idiot, wedded to the orthodox economic beliefs of the Conservatives and their economists and bankers and civil servants at the Treasury. It was balanced budgets in bad times every time. At all costs. It was Keynes who managed, in the 1930s, to change tack. He proved to himself that borrowing money in bad times to put wasted, unused economic resources (stuff, people, brains, ambition) to use would not result in inflation. He thought it possible in the long run, if things didn’t go so well, but as he said to the Treasury officials who drove him bonkers with their thick-headed obstinacy, “in the long run we’re all dead, so let’s get to it!” With millions on the dole, miserable, and businessmen suffering too, miserable, he thought it immoral not to borrow, reflate and pay back the debt when government income rises as it must.

Chris Leslie does not appear to be a Keynesian. But he should be. And so should every single Labour MP, councillor and mayor. To not be one makes them, you, maybe, if you’re reading this, an imbecile with an extremely large ‘F’ in the front. For it’s not as if you need to have read a shit-load of economics to know this stuff.

So it is a monumental embarrassment to the Labour Party that our Shadow Chancellor, sanctioned by the leader (temporary), should publicly show off their incompetence. But worse, to me, is the fact that in doing this, Leslie brings down on our head the ignominy of parading right-wing policies to the public. A Labour politician, running around Westminster (no doubt in a taxi) handing out right-wing crap: to his own people! 

For here’s the poisonous insult: deficit danger and the need for cuts is fiction invented by right-wing nut jobs. As Krugman is fond of saying (though at the same time utterly exasperated), these people are telling us that everything we have carefully and painstakingly learned in the past sixty years is wrong.

Of course, it is possible that Leslie doesn’t really believe in deficit crises and cuts; that he is using the arguments as a weapon with which to beat down Jeremy Corbyn. To which one can only sigh and say, ‘Is he really that stupid?’ Actually, I don’t think he’s doing this. Which is more worrying.

Let not me single out Chris for the hammering. Those also guilty of not being Keynesians would appear very clearly to be Ed Balls, Yvette Cooper, Andy Burnham and Liz Kendall. And this is terrible. Tragic. Appalling. For this is not about a lack of knowledge of a sometimes, admittedly tricky subject. These people won their way through their own brains and effort (one imagines) to get to an Oxbridge college. On paper they have the intelligence to negotiate all this safely and present to us a sane (never mind “credible”, to use an overused term) economic strategy. Which is a life and death matter. For this is about how we allowed the Conservatives to win power in May and virtually handing their leader the office of Prime Minister in 2020. I wish I had a fiver for every time I’ve thought to myself, in the past five years, “what the f*ck are we doing believing in the deficit being a problem!”; and “why the b*starding fu*k aren’t we arguing for reflating the economy?” “Why are we simply copying the Tories?” I have been angry at levels that can only be described as pathetic. I have been embarrassed like an eight-year old child wearing the wrong clothes to a party, to be a member of a political party that doesn’t accept Keynes’s premises totally and stick to them like slime to a wet rock 24 hours a day, 365 days a year.

Note, then, that under Ed Miliband our economic policies were completely wrong. To talk for one second about the deficit being a serious problem for Britain was to admit you believe that the earth is flat. Or that fairies exist. Or that gravity doesn’t. This is how grave the mistake is. And this is why Paul Krugman, I know for a fact, thinks we have all gone totally mad in this country.  He is of course, not quite correct: we just hear, read and absorb too much Tory propaganda via their own united and unstinting effort, and a media which is Tory inclined and seems to know about as much about economics as Paul Gascoigne. Therefore it is a political crime for three of our four leadership candidates not to have abandoned the deficit stuff and be now talking loudly about reflation. George Osborne – through the media being in cahoots with him, or not having the energy or the brains to understand basic economics – has won one election on the back of a lie of stupendous proportions, in a supposedly sophisticated modern age, and he will win another if he is not challenged totally on this issue.

It is moot, incidentally, whether Osborne and his party actually believe in the deficit myth. Saying he does, lying about Britain being like Greece for the past five years, doesn’t prove it. Paul Krugman, on Newsnight about two years ago fingered two of his supporters, accusing them of using deficit mythology as a front to privatise the state. If so, doesn’t this just make Labour shadow minister and MP crimes all the worse?

So for this reason alone, I rejected the idea of voting for Andy, Yvette or Liz as soon as Jeremy appeared in an outbreak of sanity, of truth, of having the right economic policies. I suppose I would have put my tick against Andy or Yvette if he hadn’t ridden over the hill, but would have done so with a heavy heart and a Polly Toynbee peg over my nose. Jeremy may win the election and if he does, our economic policy will come right again, it will come back from the land of outrageously stupid and it will again be safe to breathe. But if he doesn’t . Oh, Lord above, if he doesn’t, this abscess will remain. And unless the Tory government gets into a fearful mess with the public, and it might, our leader will face Osborne – tipped right now to be next Tory leader – and, with the hurricane wind of the Tory media behind him, (s)he will lose, in all probability.

So if you are reading this and are not voting for Jeremy, I say to you: it is you who are mad, not us. It is you who is intending to vote for a leader who is not credible, for their economic strategy is not credible; worse, they have joined hands with the Tory right and allowed themselves to be pulled down into an abyss. And you do realise, don’t you, that the 2020 election campaign is going to be about the economy? You do?

Well, then.


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