The lackluster leader of Labour, Ed Miliband, delivered a speech yesterday to the people's organisation London Citizens. It was billed as his nth relaunch, and he focused mainly on how his party would work to create a "New Reality" for Britain. This UK would be based on fairness and it would be one where vested interests are tackled head on so that the proceeds of growth are not just accumulated by those at the top, but also by low earners and the so-called squeezed middle. In what has unfortunately become his trade mark style of bland delivery with little substantive content, Mr Miliband also argued that the Coalition had failed by its own measure of getting rid of the deficit over this parliament, and that it was doing too little to stimulate growth while also cutting too much government spending. He accused the government of "shrugging its shoulders" while the UK's economic predicament deteriorated further, which, he argued, was the direct the result of their failed policies.
Hero or zero?
Ed painted a picture where David Cameron and the government were of the opinion that "fairness is a luxury you can't afford in tough times", while Labour would instead be "fighting for fairness", "fighting for justice", and "taking on vested interests." This was Labour as Superhero, dressed in tight red spandex, fighting for you, me and everyone - that is, as long as we fit into his particular concept of fairness.
Granted, there are few successes that the Coalition can boast about, the notable exceptions being Michael Gove's work in delivering choice and freedom to the education system, and George Osborne's sweet talking of the credit rating agencies into letting the UK keep it's AAA status - as a result of which his government is able to borrow with historically low interest rates. The latter in particular is a nothing less than a coup, considering that, in reality, he's spending and borrowing more than the Labour government did before him (although had Labour's Alistair Darling, or, heavens forbid, Ed Balls become Chancellor, the profligacy would most likely have been far worse).
But the Tories in particular, for all their failings - of which there are many - have actually come to love Ed as a result of his inability to convert the unpopularity of the Coalition's cuts into more Labour voters. Some Tories have even said that he's the "gift that keeps on giving", and that the most important thing for the Tories next election campaign is that Ed remains the Labour leader. Labour's woes under his leadership have also not been helped by the seemingly unending barrage of embarrassments from within the party, with a few own goals thrown in for good measure.
How will Ed save the UK?
Policy-wise there was little meat on Labour's policy bones. Ed said that he wanted to begin by "patching up the unfairness of the old economy" by taxing bankers' bonuses and using the proceeds to help those out of work. Noble idea, but it doesn't take into account how banks have already begun switching their remuneration policies from big bonuses to salary increases and other benefits in order to sidestep such money raising measures from HMRC.
His government would also undertake a review of "corporate short termism." As an example of this modern malaise he gave us the Quarterly Review, but he then failed to elucidate what the problem was - should they be annual, then? Or should companies only make Five Year Plans? - nor did he provide any clues as to how this "problem" would be solved.
He then advocated a policy whereby seekers of council housing would be bumped up the list if they were actively engaged in helping their communities. This is fair enough, but what exactly constituted "helping the community" was left to the imagination.
There were, however, some good ideas as well: Labour would set new rules to promote long term and fair wealth creation by looking at plans for a British investment bank to help small business grow - better that than ever more QE. They would also legislate so that government procurement contracts would only go to companies that provide apprenticeships, thus safeguarding jobs for the next generation. And a Labour government would make sure that energy companies give all pensioners over 75 the cheapest tariff - and if you don't, he said, we'll legislate to make sure it happens.
Ed went to great lengths to emphasise that if his party were in government, he would make choices that favour the hard working majority, over those - by implication skiving wasters - who earn enough to pay the 50p tax rate, which, he said, should stay in place.
But a good example his distinctive brand of what we could paradoxically call "Targeted Fairness" was that everyone in the country must pay for improvements on train lines in remote areas, rather than those who actually use the service and will therefore benefit from the upgrade. So Ed's is a fairness that espouses the rights of a "1%" over the "99%", in that the few would profit on the backs of the many.
So, that's how he'll create fairness. Where the money will come from is a mystery as he didn't say, other than the aforementioned bonus tax.
It wasn't us, guv, honest
But what made for truly interesting listening came from Ed The Historical Revisionist. According to him, the crisis that got the UK into its current state of high unemployment and near zero growth came from abroad, like an overwhelming global storm which even the UK was unable withstand. In stark contrast, however, he placed all the responsibility for the UK's continued economic hardship squarely on the shoulders of the Coalition government. A textbook case of what cognitive psychologists would call Actor Observer Bias - and the rest of us would call bull###t.
But Ed still managed to keep a straight face when he promised that Labour would not shirk away from "using the power of the government", and that Labour wouldn't cut the deficit as fast the Coalition, but would do so in a more balanced way - which translates roughly into "I would just borrow more than they are borrowing."
Hardly surprising, that. After all, he was part of the government that presided over a decade long splurge in public spending - one of the main reasons for the economy's current ills and uncompetitive state - paid by a) borrowing, b) the sale of gold reserves at the bottom of the market, c) using up the North Sea oil reserves, d) increases in tax revenue from the real estate bubble and e) the rise of the financial sector, both of which were the direct result of Labour policy decisions. (See the graph below from this excellent overview of the New Labour economy.)
Ed also accused the current government of having failed by their own standards because they promised to eliminate the deficit over this parliament (but not the debt, mind you, as that wouldn't even be touched). It wasn't to be, however, and, as the Chancellor admitted in his Autumn Statement, the government would have to borrow an extra 111 billion. And according to Ed's speech the figure now stood at 158 billion. (The Coalition's spin on why they needed to borrow more than first thought was that they just hadn't realised earlier how bad a state the economy was actually in. Well, it's of little use complaining now, Georgie Boy: you screwed up your figures or were naive when forecasting, or both, so your bad and your responsibility, simple as that.)
And while admitting that there has been an ongoing economic crisis, in Ed's world it's a crisis of the free market, where our governments apparently played no role. What an incredibly lazy analysis this is considering the sovereign debt crisis that is crippling Western governments and which has even lead to the overthrow of two European governments (so far).
Less honest reflection in favour of more cowardly deflection
But at least he knows how to dodge questions from the press and how to deflect blame - thus proving his credentials as a politician. According to Ed, "its the result of the [current] government not being able to get rid of the deficit over this parliament that we will inherit one." Well, putting aside his admirable optimism, what a porky-pie that was! After all, the government that counted Ed Miliband as a Cabinet Minister was the one that overspent and overextended the country's credit card, without putting anything aside for a rainy day (like a real Keynesian would have done), while making the economy less competitive and less effective even when the going was good!
Also, when asked about the note "there's no money left", and why has he only now, 18 months later, come to the realisation that, actually, there really is no money left, Ed parroted the same line again, that "Remember what this government said? They said we are going to clear the deficit over this parliament - now what's happened is that they've failed. They've lost the argument, and now we're going to have to win it. We will clear the deficit in our next government." Words are cheap, Mr Miliband - but why should we trust the party that racked up the underlying debt in the first place?
Another questioner asked that, while you say you will take on the energy companies, as Energy Secretary in the previous government, why did you not do so then? Ed's reply left the whole question unanswered: "we clearly didn't do enough. We didn't do enough. But I'm not here to defend everything the last Labour government did. We weren't strong enough taking on vested interests, but it's part of the recognition about how the world has changed that we now need to take action." Oh, OK, then. Times have changed - so no need to take any responsibility over the "last government" in which you happened to hold office.
One thing Ed got right, though, was that Labour are much closer to where the people are. This is no doubt true, but it's mostly so because they set in place a client welfare state and presided over a huge increase of people on the public payroll - the price of which is a deformed economy, the deficit and the huge mountain of debt underneath it, which we and our children will be paying off for a long, long time to come.
But that's no longer Labour's fault, apparently, because they're offering a "New Reality", based on not taking responsibility and planning to do the same thing again, only this time with a new outfit, and expecting different results.
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