Economical with the truth?

The agenda for this year’s Liberal Democrat Spring Conference carries the strapline Stronger economy, Fairer society. Given the parlous state of UK plc, and the deeply inequitable impacts of the Coalition austerity policy, the strapline touches on two of the biggest issues of the day. So the unwary among us might think that the discussion would have the economy somewhere near the top of the agenda.

Nothing could be further from the truth. In fact, the cynic might suggest there was strong circumstantial evidence to the contrary. The party leadership is doing as much as it can to avoid giving an airing to the issue of the direction of economic policy.

6162309761_6e59bfde6d_nFirst, Vince Cable has not been given the opportunity to speak to Conference as a whole. Instead, he found himself on a less high profile platform: speaking to a Friday evening fringe meeting organised by the Social Liberal Forum. The meeting nonetheless attracted an audience of a couple of hundred delegates. [Read more...]

Economics Emperor: absence of clothes increasingly suspected

In the period since the 2007 Financial Crisis “economics” has played an increasingly high profile role in shaping policy. The austerity policies implemented in many western countries, with significant negative impacts upon citizens’ well-being and the social fabric, come with the endorsement of many economists as the correct medicine to deal with our economic maladies.

Yet, over the same period, the claims of the discipline of economics to any privileged insight into the workings of the economy and society have come under greater critical scrutiny than at any point over the last forty years. The sense of disillusionment with the value of mainstream economic approaches has undoubtedly grown. The empire may be crumbling.

3970883891_4dc50c44f1_nThe latest instalment in this saga is the publication this week of an IMF working paper by Blanchard and Leigh in which they elaborate upon, and test the robustness of, a conclusion first reported briefly in the IMF’s World Economic Outlook back in October 2012. The conclusion is that the economists have got it wrong again. Specifically, forecasts of the impacts of rapid and aggressive austerity policies on economic growth were substantially understated. Austerity has had a much more negative effect upon countries’ economies than had been anticipated. This may not, perhaps, come as a huge shock to anyone else. [Read more...]

The Tie That Binds

[Originally posted at Dale&Co, 22/07/12]

Last week’s reversal over Lords reform may turn out to be key moment in the life of the Coalition. In retrospect it may appear the point at which it all started to unravel. It was swiftly followed by another Cameron-Clegg relaunch, but that didn’t convince too many people that everything in the garden is rosy. Differences between the parties become ever clearer – witness George Osborne putting the kibosh on Ed Davey’s plans for renewable energy – even without the parties adopting a conscious strategy of differentiation.

But at least there’s the deficit reduction plan. In the national interest the Liberal Democrats put aside their own more cautious and contextually-sensitive plan for deficit reduction in order to form a coalition with the Conservatives. While everything else may seem to be rapidly fraying at the edges, the commitment to bringing down the deficit remains the tie that binds the parties together.

It is therefore rather unfortunate that the plan isn’t working terribly well. [Read more...]

Do we need to reinvent the wheel on housing finance?

[Originally posted at the Guardian Housing Network, 18/12/11]

If the government finally accepts that fiscal consolidation, even when coupled with quantitative easing, is not a policy that can deliver adequate economic growth, what might a credible plan B look like? A recent report for Shelter made the case for investment in housing as a key component of an alternative. The report focuses primarily upon using construction as part of a short-term stimulus package, but it also recognises that housing investment has a longer term impact on economic growth. [Read more...]

Oh, what is the point?

[Originally posted at Liberal Democrat Voice, 03/12/11, where it was 2nd most read post of the week]

Having followed the Chancellor’s Autumn Statement and then watched Danny Alexander interviewed on Newsnight on Tuesday I have to say my initial reaction was “oh, what is the point?”. That was a reaction to both substance and process.

The Chancellor’s Autumn Statement, as the IFS analysis demonstrates, hits the poorest hardest and those on middle and higher incomes less hard. Most would call that regressive. I’m sure some bright spark can come up with an argument that if you look at the data from a different direction – on the basis of expenditure not income, for example – then it isn’t regressive at all. Be that as it may, how can it be a just strategy to uprate out-of-work benefits by freezing child tax credits – thereby moving a further 100,000 children into poverty – while leaving the tax burden on higher income households largely untouched? It conflicts directly with Government commitments to reward those contributing actively to society because it weakens work incentives. I’m glad that the Coalition catchphrase – “we’re all in this together” – seems to have been retired. We so palpably aren’t. [Read more...]

Penurious progressives

There will no doubt be much soul-searching at this week’s Labour party conference. There will no doubt continue to be subtle – and not so subtle – attempts to distance the party from the legacy of the Brown government and its cataclysmic electoral implosion. Without, of course, suggesting that it is therefore inappropriate for some of Brown’s closest associates to be leading the party to a bright new dawn, whether red, blue or purple.

The biggest issue on the agenda is the party’s stance on the economy. How can it regain credibility for its stewardship of the economy, given the perception among much of the electorate – successfully promulgated by the Coalition – that the poor state of the public finances in 2010 was almost entirely attributable to Labour’s uncontrolled largesse with other people’s money? Personally, I don’t buy the narrative that it was all Labour’s fault. But it doesn’t matter whether it is accurate or not. It is the one that the party will have to neutralise if it wants another sniff of power any time soon.

Yet, there is a different way of thinking about the problem. And it perhaps highlights the scale of the challenge the party faces. [Read more...]

The riots and the return to the big picture

Last week’s riots were shocking. The effect upon the many communities, families and individuals affected was undoubtedly profound. They have prompted plenty of soul searching and a wide range of diagnoses. If we are optimistic we should hope that they act as a catalyst for addressing problems of urban Britain that have been developing over many years.

The riots have not shown the political classes in a great light. There was the slow response from the Government – was this really a situation sufficiently serious to justify curtailing our vacations? There was the muddle over who has shaped policing strategy, leading to a potentially damaging war of words between the Government and senior police officers. And there is the extraordinary range of illiberal and disproportionate measures that David Cameron has seen fit to propose in response to the crisis. He seemed intent on manufacturing a full blown moral panic in order to take a worryingly authoritarian turn. Liberal Democrat MPs are clearly very uneasy at the way in which Mr Cameron has changed his tune from those far off days of compassionate Conservatism.

The riots have pushed just about everything else to the back of the news agenda for the last week. That is deeply unfortunate for at least two  reasons associated with this period of momentous – indeed unprecedented – economic turmoil. [Read more...]

Democratic deficits

Liberal democracy faces profound challenges. Radically different future trajectories present themselves. We are living through momentous times.

In Britain the media has spent the last fortnight preoccupied with the Hackgate scandal. Incremental, and ongoing, revelations have exposed the inner workings of the nexus between Westminster politicians and the tabloid media. What we witness is the political class showing an alarming level of deference to powerful economic interests. The alleged intimate connection between sections of the Metropolitan police and the tabloids raises equally urgent questions about the prevailing culture and ethics at the heart of a core social institution.

The British media has been preoccupied with this evolving soap opera involving many of its own. And the scandal has certainly opened up a welcome window of opportunity to reform relationships vital to a healthy democracy. But events unwinding elsewhere are likely to play a bigger role in shaping economic and political trajectories in the short and medium term. [Read more...]

Osbornomics – the path to enlightenment

Is a major change in policy thinking imminent? Will Hutton’s piece in Sunday’s Observer focused on the question of quite what the Labour party stands for. It is relatively clear what it is against, but its positive project is rather less obvious. And it needs such a project if it is going to counteract Conservative economic strategy. In the course of his discussion, Hutton argues that we can expect a change in the Coalition’s approach to deficit reduction some time soon and the recent less than congratulatory OECD report on UK policy is evidence in support of the case: [Read more...]

Monbiot’s tax take and the embedding of plutocracy: an urgent concern for Liberal Democrats

Featured on Liberal Democrat VoiceWe are, it would appear, reaching a political watershed. There is perhaps a small window of opportunity to step back and consider where we think the country is heading. Then it could be too late. I was planning to post in response to George Monbiot’s article in today’s Guardian. But his post, coupled with other developments, raises some profound issues.

Monbiot’s article gives his take on the implications of proposals for what might, at first sight, appear technical changes to corporate taxation. But he argues plausibly – if rather hyperbolically – that the changes represent  a major concession to the self-interest of multinational corporations. The net result of the changes will be to allow corporations – and banks in particular – to reduce their liability for UK tax considerably. And this is occurring, of course, at the same time as David Cameron is notably prominent in the media saying that the Government is committed to doing precisely the opposite – making sure that banks pay their share in order to help rebuild the economy. [Read more...]