Clegg, alias Osborne in sheep’s clothing, tries to pretend he’s sorry about tuition fees (though actually he isn’t, he’s only sorry about having made a commitment which it turned out politically inconvenient to keep to), but his speech yesterday showed not a scintilla of contrition about what he should really be apologising about, namely supporting the coalition hook, line and sinker on the economy and thus allowing Osborne’s disastrous austerity policies to go through. Either he has no understanding of, or no interest in, economics or he will do nothing to compromise his grip on office, or quite likely both. It is finally consigning the LibDem party to irrelevance if, as he indicated yesterday, he goes all the way with the current austerity (and presumably the intensification of it with the proposed extra £10-14bn cuts to benefits) on the grounds that there is no alternative. It reveals yet again that the right wing of the Tory party, the Orange Group in the LibDems (to which Clegg belongs) and the Blairite wing of the Labour party are in their different ways all one party.
The central dividing line in British politics today lies in the handling of the recession. The Osbornites, the Cleggites and the Blairites all believe that the right response is fiscal toughness, being prepared to ‘take hard decisions in hard times’, getting the deficit down at any cost as a preparation for renewed growth. It isn’t just that this has caused enormous impoverishment – from job losses, pay freezes, spending cuts, and a bonfire of benefits – nor even that it’s one class dumping on another, it’s simply that it’s downright wrong. The purveyors of this conventional wisdom are stuck with growth that is negative, demand that is shrinking, and – to cap it all – a deficit that is actually growing.
It is incredible that almost the whole political class, with the honourable exception of Vince Cable, continues to charge like some herd of Gadarene swine over the cliff into deepening recession. If the fall in tax receipts, fuelled by shrinking incomes, exceeds the cutback in the deficit, the recession can only get deeper and last longer. If the cross-party conventional wisdom continues to believe that supply-side adjustments can trigger growth, when the huge void in demand is so manifestly the central problem, Britain is, unnecessarily, condemned to unremitting austerity for a very long time.
Like Sherlock Holmes’ dog that didn’t bark in the night, the disregard of the obvious solution is almost unbearable. Instead of generating another £50bn of quantitative easing to feed the banks which don’t lend on, the printed money should be used for direct investment and job creation in manufacturing (houses, infrastructure, green economy). Instead of hitting the poor with further massive cuts, the mega-rich should be taxed on their gains in the last ten years to provide the jobs to drive real growth. Instead of pretending that any further borrowing is out of the question, with a base rate of just 0.5% a £30bn investment fund could be raised for a mere £150m, a sum that could be repaid three times over once the block on growth was broken.