At the RSA last week Alan Johnson gave his second speech on the economy, the deficit, and the direction of policy – both Coalition and Labour. He travelled under the banner “Beyond fiscal fables and Greek myths” (available via @LabourList). This event got rather lost in the fallout from the tuition fee protests and IDS’s proposed welfare reforms. That is unfortunate because there was plenty in the speech that was interesting.
First, Johnson has clearly been doing some background reading of that economics primer he mentioned when he took up his current role, or at the very least he’s being better briefed. The economic content of the speech was rather more plausible than some of his previous pronouncements on the topic.
Second, the speech signalled a willingness to acknowledge that Labour got some important things wrong in its management of the economy. Although, in my view, he was still soft-pedalling a bit. His points about the narrowing of the tax base under Labour are well-made. The result of Labour’s policy was a tax base with an unbalanced structure – the Government relied too heavily on the City and housing market transaction taxes as major sources of revenue. And that is the case even though we might argue that the City, at least, was nonetheless under-taxed. Yet, Johnson glosses over quite how far the current structural deficit is a product of changes to the tax regime that Labour made during the good times.
When Johnson moves on to the substance of the cuts he doesn’t do a lot more than restate the Labour position – that the plan formulated by Alistair Darling to deal with the deficit was proportionate and the Coalition approach is unnecessarily severe, with consequences that are going to be significantly negative for many households and the longer-term health of the economy.
So far, so conventional. But the interesting thing, for me at least, was Johnson’s explicit engagement with political narrative. The speech has a vaguely post-structuralist sensibility that you don’t often find in the cut and thrust of practical politics.
Johnson noted that George Osborne has stated that “to govern is to choose” and yet the Coalition have adopted, to quote Johnson, “a policy of pretending they have no choice in order to try to evade responsibility for the one they’ve made”. The Coalition has gone for a simple narrative: after years of Labour fiscally mismanagement harsh measures are needed – “After a decade of debt and reckless spending we’ve take our country back from the brink of bankruptcy”. The Government has constructed the UK situation as being analogous to that faced by Greece – which undoubtedly faced the need for urgent action – and argued for correspondingly swift and severe action. The “Greek Myth” in Johnson’s view “is meant to justify abrogating election pledges on everything from VAT to child benefit”. But, Johnson argues, “we cannot allow fiscal fables and Greek Myths to provide the context for this vital debate”.
This has got to be the right starting point for debate. Although Johnson then rather overplays the defence of Labour’s fiscal record, he is right to point out that going into 2007 the UK was not in terrible fiscal shape and that it was the credit crunch and the global recession – during which fiscal stabilisers automatically kick in – which played a major role in shaping the situation in 2010. Osborne’s claim that the country is on the brink of bankruptcy is barely credible – if that were the case then, on the relevant measures, it has been on the edge of bankruptcy for most of the last two centuries. The analogy with Greece is equally ill-judged. The Greek fiscal situation was different in almost every meaningful respect to that of the UK. The Irish, Spanish and Portuguese economies, which were also vulnerable, are also distinct from the UK economy, and not only because of their membership of the Euro.
No one can, or should, argue with the brute logic of compound interest. So something needed to be done to address the fiscal deficit. But no mainstream political party was arguing anything different in 2010. The key battleground was over the timing and the targeting of cuts. And the manufacturing of a crisis served the purposes of those who sought deep cuts for their own reasons.
The strategy of claiming “there is no alternative” in order to justify an unpalatable course of action is, of course, most strongly associated with Margaret Thatcher, the lady who was emphatically not for turning. But it is not a strategy that is the preserve of the political Right. Blair and Brown used it very effectively to shape Labour economic policy as a response to an external and unmanageable process of globalisation (for those who are able to access it, Watson and Hay, 2003, discuss this in detail). But Johnson recognises it for what it is. While there are some brute facts in social and political life they are rarely unambiguous in their implications – someone has to provide an interpretation of both their meaning and their implications for action. And that is a social process open to manipulation and contestation.
The Coalition will refer to the need to reassure markets, credit rating agencies and international organisations as a trigger for swift action. But delivering such reassurance is much to do with providing a plausible narrative and establishing an ethos of responsible stewardship. Securing such approval is not something that requires the application of some precise formula leading to a given level of fiscal consolidation. Even when a government secures approval from such quarters it cannot be taken as an indication that economic strategies are sound. To do so assumes that open economy macroeconomics is a precise science. Which it emphatically is not. No one knows precisely how these cuts will play out. And anyone who tells you they do know does not understand how loose and mutable many macroeconomic relationships are. Not only that, but the Government is tied to seeking approval from organisations that are not known for their sagacity or consistency, as Ireland is now finding to its cost.
In the process of developing his argument, Johnson makes some pithy observations about the position adopted by the opposition during the tail end of the Blair/Brown era. It seems to me fair comment that the era was not characterised by vociferous criticism from the (then) opposition of the strategies being adopted. If what the Government of the day were doing was so irresponsible then it might reasonably be expected that this point was being made rather forcefully at the time. Yet, again, Johnson’s argument is not the whole story. Senior Lib Dems were certainly on record earlier in 2009 stating that there were going to have to be some significant budget cuts in order to consolidate the government’s fiscal position.
One of the most encouraging aspects of the initial days of the Coalition was the claim it represented the dawning of a more mature politics. The first PMQs of the new era was in that sense a breath of fresh air for its measured and mature tone in which the debate was conducted. But it is clear that was more a product of the difficult context at the time than a commitment to more mature debate. One of the depressing things about the Coalition is how short a time it has taken for a wearying tribalism to re-emerge. It didn’t take long for PMQs to revert to the unedifying bearpit we’re used to. Last week’s offering was (let’s hope) the nadir, with the whole discussion of tuition fees moving us forward not a single pace. Sound and fury, but little illumination.
Johnson craftily sought to turn the Coalition’s own metaphor of maturity against it. He argues that “it’s playground economics to work back from [the forecast of a permanent decline in national income of 5% following global recession] in order to claim that in some way spending on health, education and extra police officers caused the global economic tsumani”. Instead “we need a mature debate about our economy: just as the causes of the current global crisis are complex so the solutions must admit to greater complexity … and a consideration of genuine alternatives”.
This is, of course, a rhetorical strategy in its own right. And Johnson doesn’t quite manage to carry it off. He concludes that no significant new economic intelligence arrived during early May that could have changed Nick Clegg’s mind over the speed of reducing the deficit. He argues the point on the basis that Alistair Darling was present at the relevant EU finance ministers meeting. And neither the Tories nor the Lib Dems had access to the relevant information. Rather, “the only thing that changed that weekend was Nick Clegg’s desire for a ministerial car”. It seems to me that the former is right, without having to agree with the latter. That’s just a cheap shot.
Johnson’s speech provides a rich source for reflecting on how political debate is, and could be, conducted in the UK. He sees himself as having “set out the facts and rejected the government’s retelling of history with all its Orwellian overtones”.
In terms of substance, it represents a challenge. He has set out some facts. But they aren’t the only facts. He is certainly right that the government has been seeking to retell history, and that it is possible to reject that retelling. I agree with a lot of what he says, though much of what he says is strongly at odds with the narrative offered by the Coalition.
But then the position he takes is not a million miles away from the position taken by the Lib Dems before the election. If you go back to something like Nick Clegg’s 2009 Demos publication The Liberal Moment you find a much more nuanced and balanced assessment of how the country arrived in its current situation – with due acknowledgement of the global context – than some of the mud-slinging tribalism that has characterises post-election debate. Back in August I posted There’s no pleasure in saying “I told you so” – but does it need saying? on Liberal Democrat Voice. There I argued that nothing had emerged after the election to suggest that the Lib Dem position on economic strategy was wrong, and that how you narrate the economy in itself has consequences for its future trajectory. As we look at the current status of some of the key economic indicators – consumer confidence, house prices, forecasts for unemployment – I’m still not seeing anything to suggest that the Lib Dems were wrong, despite Nick Clegg’s conversion to an alternative view.
At the start of his speech Johnson refers to “the Conservatives and their Stockholm Syndrome Coalition partners”. The analogy with Stockholm Syndrome crossed my mind last weekend. It’s highly evocative. There is always the risk that the more time one spends in the company of a Tory, bombarded by the sorts of anti-liberal nonsense they spout, the more reasonable they might start to appear. One might even become enamoured of their simplistic certainties and overweening sense of entitlement, losing touch with important principles that are completely alien to the conservative sensibility. Is that the situation we find ourselves in? One can only hope not. But the signs aren’t good.
Be that as it may, perhaps we’re moving into an era of a more rhetorically reflexive politics. That would make things interesting, and pleasingly post-modern.
Watson, M and Hay, C. (2003) The Discourse of Globalisation and the Logic of No Alternative: Rendering the Contingent Necessary in the Political Economy of New Labour, Policy and Politics, 31 (3), 289-305.