Why is Labour so timid?

It’s all very well for Ed Balls to announce that the next Labour government will be ‘ruthless and disciplined’ over public spending and will carry through a zero-based spending review to justify every pound spent.   Of course that’s right since nobody in their right mind can believe that the Tory spending cuts can be reversed just like that in an economy still being dragged down by prolonged recession.   But that’s not the real point.   The real question is, if Labour inherits a budget deficit as large as or even larger than today’s (which is quite likely), how would a new Labour government deal with it?   Would it make further cuts a’ la Osborne, or would it adopt a wholly different strategy?   If the latter, a major jobs and growth strategy as I hope, it needs to be proclaimed out loud, not whispered furtively behind cupped hands.   Nothing would do more for Labour’s popularity than to promote loud and clear that the cuts strategy, including cut less far less fast, had ignominiously failed and would be unequivocally replaced by a growth strategy.

So why is Labour so equally feeble on banking reform?   Even the IMF is asserting that virtually nothing has changed since the 2008 crash to prevent another full-scale global banking crisis, so why is Labour silent on remedial action?   Vickers’ proposal that investment banks should be separated from retail banks by ‘Chinese walls’ is a fudge, and supporting it as an adequate  response as Labour does is a cop-out which  no-one in the City believes will work.   Nothing has been done about banks that are ‘too big to fail’ and would therefore require another bail-out a second time round.   Nothing has been done about derivatives that were at the heart of the global breakdown in 2008-9.   Nothing has been done about the banks’ predilection for property (rather than industrial investment), offshore speculation and industrial-scale tax avoidance which are currently bleeding Britain dry.   Why is Labour silent?

Then there’s the whole question of re-balancing the economy and Osborne’s ‘march of the makers’ which would be comic is it wasn’t so disastrous.   Today it was announced that Britain has just suffered its worst ever current account deficit in the second quarter of this year, and is on target this year for the biggest deficit in traded goods ever which is likely to exceed £120bn, or 8.3% of GDP.   This makes a mockery of Tory industrial policy (it doesn’t have any), and shows that financial services can now cover less than half of the deficit in goods.   It makes crystal clear that Britain has no sustainable future except via a massive revival of UK manufacturing industry.   Why isn’t Labour shouting this from the roof-tops?


2 thoughts on “Why is Labour so timid?

  1. Well in the end Labour has to sell it’s self to the Public and it whether you trust the leader, it’s not the party anymore. Thatcher was a one man band, so was Blair, Brown tried to change it failed because he was not TV presentable. Sadly nor is Miliband, says a lot.

    But Miliband is hoping the Tories will be so bad that people will vote for him so he has to say little, in the hope people will turn against Cameron.

    I cannot for the life of me see Labour winning, Scotland looks to be dead for labour, Wales may well see labour going back into coalition, and England I think will vote Tory, three or four terms out of power is more then likely, because I do not trust labour.

    Middle class hard working is the Labour mantra, and sadly labour is the one who made their lives sh*t.

  2. I have been studying the work of Michael Hudson and Steve Keen, and the work of Positive Money.

    The fact that governments, people and business have debts that have gone beyond our ability to pay is causing debt deflation and stagnation. Michael Hudson and Steve Keen recommend a debt jubilee. I agree that the exponentially growing debt is the problem – it extracts too much of our economic surplus in repayments plus compound interest. It is impossible to pay off. Hudson says “debts that can’t be paid won’t be.” Debt jubilees have been used in history to save economies from collapse, he sights, including after the second world war when debt to the Nazis was cancelled.
    The banks should be stopped from creating credit according to Richard Werner, if they continue to blow up house price bubbles instead of lending to industry.
    Keynsian stimulus is the proven method to get the peoples economy working again. But even this is going to cause more debt under the present mad system. Debt write offs and monetary reform would enable Keynesian stimulus without debt. It would also make dealing with tax avoidance more effective because taxes could be spent on services -not debts.

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