The vampires are now running the blood-bank, and only now will the scale of Labour’s catastrophic error of judgement become fully apparent
The most prescient signal that Labour have reverted to a tragicomic comfort zone is the announcement of John McDonnell as Shadow Chancellor. Brushing aside his stated desire to go back in time and murder the late Baroness Thatcher, it’s his self-professed ‘hobby’ of overthrowing capitalism which principally interests me.
It isn’t everyday you can find someone further to the radical left than Jeremy Corbyn inside Her Majesty’s loyal house of Commons; but McDonnell is that man. His hobbies include “overthrowing capitalism”, and his policy agenda (such as there is one) aims to engage in ‘Peoples Quantitative Easing’ (PQE)
What PQE effectively means is the mass printing of money to ‘pay’ for infrastructure works; rather than to support the financial sector & help support share prices. Now what are the principle problems with this? To start, it would irrevocably undermine the Bank of England (BoE) independence. That independence is one of the key ‘New Labour’ legacies which should (and indeed does) command cross-party support & respect. It took critical economic decisions out of the shenanigans of shoddy democratic policy-making (and spinning). The key problem with PQE is that it ignores the fact that it compels our central bank to do stuff which simply isn’t it’s job. If you need to raise funds to afford major infrastructural works (say building new rail lines, or major expansion of social housing construction) governments issue bonds, or seek to raise it via raising conventional taxes (or unconventional ones for that matter). Professor Tom Yates explains how PQE would confine to history our new era of very low inflation. Why does Tom Yates views matter? Well he was a high level economics advisor to the BoE. He is a man who knows more about what he’s talking about that the erstwhile ideologue McDonnell.
Make no mistake PQE would end the BoE independence. It would politicise one more critical economic decisions regarding the setting of interest rates etc. And it would return us to an era of ‘stop, go’ pseudonomics with all the consequences of inflationary & deflationary budgets. Bottom line: it would be ruinous to the finances of every household in Britain.
Corbyn’s team makes much of a supposed inherent popularity in being ‘anti-austerity’ (basically opposing the idea that you don’t spend money you don’t actually have). Yet if we search across Europe it is hard to find a single successful anti-austerity movement.
In Greece Syriza is split, and heading to a crushing electoral defeat. It promised to ‘end austerity’, return to an era of spending recklessly & non-collection of taxes. It promised its voters they could have their cake & eat it. They could have a huge, ever growing, public sector economy, continue to raise crushing debts on the international markets, and never ever have the debtors call the loans in. In short, it was exposed for what it really was: a populist lie. Empty platitudes are only effective if they remain untried, untested; where anyone can read whatever they want into them. Once they’re tested their game is up.
What about Spain? A Podemos…they’re already in electoral decline in the opinion polls as Spain returns to growth, and the tough decision of the last few years begin; painfully slowly albeit; to bear fruit. Spaniards know not to throw away the painful lesson. They’re not heading in their droves to elect a far left ‘anti-austerity’ populist movement to power.
Bottom Line: Corbyn is betting on a populist, platitutde ridden ‘anti-austerity movement’ carrying him over the GE2020 finishling line. It won’t, the British people have voted twice now for a pro-austerity party. 2010 & 2015 happened folks, and Labour has never recovered its ‘economic credibility’ ratings with the public; even after it’s leftward drift under Miliband & Balls. Indeed Balls even lost his constituency remember!
The Conservatives have little to worry about, so long as they keep their tone right. Deal with Corbyn & his team head on by focusing on their lunatic policies like PQE, and ‘anti-austerity’. Spell out the problems, errors & likely consequences if their ‘policies’ ever held sway in Her Majesty’s United Kingdom