He is not a popular man, a person who reminds the economically worn British about another era: the era of New Labour, where the swagger and self-confidence beamed with an almost reckless indifference. Ed Balls, Britain’s opposition financial spokesman, feels that the knives of financial cutting are not merely being applied too deeply, but too quickly. This is the age of the manic belt-tighteners, the addictive slashers and miniscule growth.
Balls, in short, is firmly against austerity, a measure he sees as replicating the mistakes made in the 1930s during the Great Depression. Austerity measures have the effect of not merely forcing the frugal and pinched to the fore, but also shattering confidence in investing. Why bother placing money in a system that discourages its spread and circulation? ‘The world must learn the lessons of the 30s. There is no credibility [in] piling austerity on austerity, tax rise on tax rise, cut upon cut in the eventual hope that it will work when the evidence is pointing the other way.’
The issue, he seems to be saying, is that there is simply no growth to begin with, an economy that is stagnating, even petrifying. Rush to the economic solutions of John Maynard Keynes and find the almost canonical statement: ‘The boom, not the slump, is the right time for austerity at the Treasury.’
What then, to do? The platform has been set in Liverpool, where Labour is having its party conference. Balls has certainly attempted to be frank in the hope of wooing voters. Labour, he claimed, alienated the electorate on the issue of the economy. Fiscal rules needed to be adhered to, presided over with forensic care by the Office for Budget Responsibility.
Economic stimulus might be termed the shock and awe doctrine of the finance markets, the massive retaliation of treasuries the world over. The followers of the stimulus formula have tended to be more shocked of late, and taken refuge from the bad economic weather, largely because they have beaten by the slashers and the austerity nerds. The Balls formula is this: The long road will be paved with good measures of fiscal discipline, but the short term will involve a needed injection of stimulus measures (The New Statesman, Sep 26).
The shadow chancellor has accused Britain’s coalition government of an austerity obsession, and promised to reverse the rise in the Value Added Tax (17.5 percent to 20 percent in January), and repeat this year’s bankers’ bonus tax. He is also proposing a one-year national insurance holiday for small businesses taking on new workers as a fillet for growth. A few figures are bandied about: the money gathered from the new revenue would guarantee 100,000 jobs for the young and enable the construction of 25,000 affordable homes (Guardian, Sep 27). This might be mere astrology, but it sounds appealing.
There is little reason, however, to embrace Balls as an altruistic high priest of Labour. The Labour conference has, overall, produced some rather naff statements suggesting that it will try to get stricter, social policy and all, to be more appealing. Trash, for instance, the jobless in terms of social housing. Gut the spongers, the social parasites who do not value work. The Labour leader Ed Milliband has decided to lean on a particular crutch that has an eerily Cameronian centre of gravity.
Labour will side with those law-biding citizens who are out there, lurking in the British electorate, the ‘people who don’t hack phones, loot shops, fiddle expenses or earn huge salaries’. There is a populist slant to this. Milliband hopes to convey the message that wealth is not the creative monopoly of a money-mad elite, but the preserve of ‘every man and woman who goes out to work.’ Labour will keep an eye on those vicious asset-strippers, from all walks of life. A policy allocating social housing will be based on ‘whether the recipients are working, whether they look after their property and are good neighbours.’
In the end, much of this may well be stifling hot air, even if the strategy of Chancellor George Osborne is in tatters. (Consider his recent announcement that the government will have to borrow an extra £46 billion.) ‘No matter how much we dislike particular Tory spending cuts or tax rises’, claims Balls, ‘we cannot make promises now to reverse them’ (Guardian, Sep 27). The union movement smells something cooking in Labour’s fetid ranks, and is not pleased. David Prentis of Unison, Britain’s largest public sector trade union, senses a battle to be taken to the ‘powerful and the privileged’. Let it begin.