You can't trust Labour on the economy (Part 2)

One of the most often repeated claims you will hear from Conservative party supporters is that you can't trust Labour on the economy. It is a message that has been repeatedly pushed by large parts of the media for many years. In fact, it has been heard so often it sometimes seems like it as is obvious as gravity, Liverpool football club struggling against smaller teams or that you can't get a decent cup of tea in a coffee bar. If you missed the first half of this blog, it might be worth visiting ( http://unexpectedsocialist.blogspot.co.uk/2016/01/you-cant-trust-labour-on-economy.html ) - although I am not guaranteeing it is worth visiting. In that I set out 3 major tests of whether an economy is working - a good economy would be one where: 

1. any growth in the economy benefits those who work for it;
2. it provides opportunities for everyone to participate and add to the economy whilst;
3. providing a reasonable level of protection from external shocks to the national economy and individual shocks through changes in circumstance

I also asked how we could know if we could trust a party to deliver either of those. To be as fair as possible, I have split this down into 3 governments we can compare - that of the previous New Labour administration, that of the current coalition & Tory government, and a future potential Corbyn government.

So going back to our central question - are the Conservatives any better than New Labour at getting people to participate in the economy? And would Corbyn be any better than that? 

Looking at the immediate headline statistics this seems obvious and clear cut. We are told every month now that employment figures are at a record high, unemployment at a record low. Obviously, the Tories win this hands down. But it doesn't take much scratching of the surface to get below that and see that it is not quite as it seems. 

The headline rate is shockingly good - 74.4% employment rate. This means that 74.4% of the people who could work are either employed or self employed. This is the highest since records of this sort began. Under the last Labour government, just before the global economic crash in 2008, the best they achieved was 73.0%. 

That 74.4% equates to (between 16 and 64) 30.67 million people either working or self employed. For the New Labour government, at it's highest point, this was 29.06 million. So there are 1.6 million more people employed compared to eight and a half years ago. But just being employed is not the entire picture. What is also important is how much you are earning for that employment. Because it is this - your income - that determines how much you can participate in the economy. In that case, we are doing slightly worse. In fact, average earnings (which excludes self employed people) are down by 3%. So more people are working, but earning less than before. 

What is causing this? Well, whilst it is hard to reach a really strong conclusion, there are some really good candidates for part of the explanation.

Firstly, the national minimum wage has not increased quickly enough. This had slowed down until then Chancellor George Osborne made some moves to re-dress the imbalance he had caused. Secondly, almost the entire public sector has had pay freezes or raises limited to 1% for 7 years. The public sector workers are carrying the rest of us through austerity. Third, there are more immigrants now in the country - willing to work for much lower wages - potentially around 800,000 in that period. Finally however, and this seems to have had the biggest effect, is the rise of the zero hours contract. 

Since the last Labour government 700,000 new jobs have been created where those people have no guarantee week to week, day to day, hour to hour. The number has gone from 200,000 to 900,000. What was once a flexible way for employers and employees to work where this arrangement suited both parties has become the standard operating model for hundreds of employers. The coalition and tory government have done nothing to stop this. If you aren't on one of those contracts - just imagine what that is like. You never know if you are going to eat or pay bills - and you can't work anywhere else. It is as close to modern day slavery as most of us will ever get. 

So whilst employment has gone up far fewer people are actually able to participate in the economy in a meaningful way. We all on average have less to contribute with. And the increase in employment figures can almost entirely be matched to inwards net immigration and zero hours contracts. So whilst we had increasing spending power and jobs under the Blair / Brown governments, we have not seen this under a tory government. But what would we see under a Corbyn government?

Well, that is hard to say. If we believe the promises made as part of his election campaign, there would be increases in the minimum wage, an end to zero hours contracts, pay rises for the public sector and real genuine investment by the government in major infrastructure projects - and the aim would be to increase employment rates through this. Of course the challenge for any future Corbyn government will be how to pay for these. This ties in to managing to deliver without destroying the economy and leaving it protected from shocks - but that will be part 3 of this blog.

All we need now is Spandau Ballet

              I am sat writing this the evening before the first full budget of our 2nd Tory chancellor of the last 20 years, Philip Hammond MP. We have now had a full 6 years of Tory chancellors - even if for 5 of those they were supported in Parliament by a weak and ineffective coalition partner in the Lib Dems. So, it is probably worth looking at how well those Tory chancellors and governments have done for us. By us, I mean the great British working classes. I include in that those of us lucky enough to be working, and those of us who for whatever reason can't or aren't working at the moment. It is also right and fair to measure those chancellors against what they set out as their own priorities. After all, it is not fair to only measure them against things they never promised to do.

              Like most economists (and other political writers) it would be really easy for me to fall into jargon and measures that most people don't understand. Who really feels GDP, deficit, debt ratios? Whilst I want to steer clear of these as much as possible - they are necessary to consider. Mainly because these were the measures which George Osborne and then Philip Hammond have measured themselves against. But there are other measures that they feed into - and these do matter. These are how well-off we as individuals feel, and the future prospects for the economy. As well as these, there are other factors that matter - how well funded and effective our public services are; how much tax we pay and how many of us are in gainful employment.

              Coming into power in 2010 was never going to be easy for any government. The world was still reeling from a financial crisis, caused by global banks, that was as severe as The Great Depression. This was impacting pretty much every country - though some worse than others. In the UK because we had bailed out the banks here we had a massive public sector debt (the amount the government owes) that had risen from under 40% to around 65% a the time of the General Election. This was the worst of all worlds - it was driven by an increasing amount of debt from bailing out the banks, a shrinking economy and a growing deficit. The deficit or surplus is the difference between how much the government is earning (basically through taxation) compared to how much it spends (on services for the people). 

             So whichever Chancellor came in had to do one (or all) of 3 things - grow the economy, reduce the deficit and / or reduce the overall debt the government had. The prevailing idea from George Osborne (and presumably supported at that point by the public) was to reduce the deficit, within 5 years, and thereby start to pay down the debt levels. Surely we could return to surplus? After all, we had run a surplus for the overwhelming majority of the Blair years, after the deficit laden years of the Thatcher government. This therefore gave rise to the austerity agenda - the aim being to reduce how much the government spent to get in line with what they earned. 

             But the Tories also inherited a number of other problems and benefits at that time. For example, we had an NHS that was the best in the world, as proven by a number of international comparative studies. This was not only in terms of the service provided, but also how much it cost to provide. Gone were the days of waiting on trolleys in corridors. We had improved standards across schools. Whilst not all of the policies used were particularly popular, they were, mostly, working. Sure Start and EMA were supported by all parties as right and necessary because of the benefits to social well-being. The unemployment rate however had taken a marked increase - meaning fewer people were working - whilst this had stayed stable around the 5% mark for the majority of the Blair years this shot up as a result of the global banking crisis to 7.5%. This had been a massive improvement - during the Thatcher years it had been between 7.5% and 10% for almost the entire period. 

            So across those areas, how have the Tories done? Well, let's look at deficit and debt reduction, unemployment, amount we pay in tax, and those services mentioned above one at a time. 

Debt & Deficit

Since 2010, the debt as a share of GDP (the most reliable measure) has increased from 65% to 85%. In money terms, these 6 years have added £1trillion of debt. That is debt which our government must now pay back. More worryingly, the deficit is still at 3%. We were meant to be rid of both of those things by now. In fact, neither has been delivered on. We are worse off than we were. 

Unemployment

Here, it appears, we have good news. The unemployment rate has seen a steady downward trend. It has moved from a recent high of 8.5% to 4.8%. We should all be celebrating, shouldn't we? Well, it isn't quite so rosy. 700,000 of those new jobs are zero hours contracts. That is 700,000 people who don't know if they will have work from one day to the next. We may as well go back to the days of the Labour exchange. Workers earnings have not increased - which you would expect from high employment. More people can say they have a job, but more than ever don't have enough money coming in to actually survive. So we must remain cautious if we want to say this is good news.

Taxation

The level of government taxation - ie how much they take out of the economy each year to pay for public services has now increased back to levels last seen in 1986. So whilst they have spectacularly failed to reduce the deficit, they have done that whilst taking more of your money from you. Not only that, but the source of that tax has become far less friendly for you. Much less is being taken from big businesses and wealthy individuals. Instead, more tax is being taken from your wallet, by way of increases in VAT and Insurance Premium Tax. They have openly and actively taken from the poor to give to the rich. A true reverse Robin Hood. 

Public services

Well, Sure Start and EMA didn't survive the first year under the Tories. Our health service is once again falling apart. This winter we had the worst performance during the winter since we started measuring such things. Junior doctors went out on strike - previously unheard of. In education there are experts, councillors (of all parties), headteachers and MPs screaming at the government to address the lack of funding. What it the response of the current government? To instead set aside money for their pet project of grammar schools and free schools. Just consider that, any extra money they find is not going to your child's school - but to open a new one that you have no say over. Teachers are leaving the profession in droves, and recruitment of new ones is drying up. We are back to poor services where only the wealthy will be okay. 

                  So, it is amazing that we find ourselves here again. A government that can't get spending under control, where services are so poor they are a laughing stock, where only the wealthy are benefitting. Things haven't been this bad across so many measures since the early 1980s. Some would argue that there are other similarities - for example a Labour leader who is painted as a dangerous leftie by the media and who doesn't seem either willing or able to shake off the tag. What is worrying is that against this backdrop the Tories are still enjoying electoral success. This really should be a wake up call and warning to the Labour Party. The question is whether they are listening - or repeating the internal fights of the 1980s. Only time will tell. The problem is, how much of a country will we have left at the end of it?

Step right up, now everyone’s a winner, bargains galore.

Thank goodness for Donald Trump and Boris Johnson. There was I, worried that leaving the European Union might in some way be bad for our economy, workers’ rights and public sector, when they come along and show me that everything is going to be OK. Of course it is not just the US. Apparently, countries are queueing up to do trade deals with us. We now thankfully have some greater clarity on what Theresa May plans for her brexit strategy. So, what can we take from her announcement yesterday? And how bright is the future looking for us? Can we get ready for a massive influx of trade we don’t currently have? Is the prospect of a Global Britain better than the prospect of a “Shared Britain” (now removed) or a “Red, White and Blue Brexit” (now removed) or is it just another meaningless slogan?

Really, we need to understand from the speech what we are potentially losing compared to what we might gain. That is the only way we can judge whether we are looking at a net positive or a net negative. This was the most important speech that the Prime Minister has given since we voted for her to be our leader. Only joking of course, we live in a parliamentary democracy where elected representatives are chosen and entrusted to make our decisions for us. Well apart from THAT decision obviously. So, the most important speech since her party voted for her to be party leader and therefore Prime Minister. Only joking, there was no vote for her. So, the most important speech she has given since 35,000 in the borough of Maidenhead voted for her (that’s right Americans, you think you have problems).

I am going to focus purely on the aspects relating to trade and the economy. There was actually some good stuff in there, relating to how the process will run, and also massively important areas around immigration and nationality, borders and governance. But that will have to be part of another blog. So what did we learn? Well the key points were these:

·         All existing rules and regulations of the EU will become British Law and workers’ rights will be protected, then will “keep pace with the changing Labour Market”

·         We will leave the single market, and the customs union then “pursue a bold and ambitious Free Trade Agreement” with the EU

·         We might pay to be a part of “specific European programmes”

·         If we don’t get the deal we want with the EU, we will trade with them without a trade agreement

·         We will seek out new trade deals with other partners that we don’t currently have in place

Keeping existing rules and regulations, and workers protections

                So, depending on your point of view, keeping existing safety and consumer laws is a good thing or a bad thing. It will mean that we can continue to export to mainland Europe because our goods and services will be comparable. But it might also mean that we are held to a higher level of regulation than say US or Chinese manufacturers. Therefore, this could make our products uncompetitive on a global market. So this really depends on whether we get a trade agreement with the EU.

                More worryingly, is the specific language used around workers’ rights. This should be a massive big warning sign to everybody who is employed in the UK. Over the last 6 years the Tories (and their coalition partners) have overseen the stripping away of workers’ rights, and have resisted every opportunity to improve them. For example, even at the height of the furore over zero hours contracts, the government did nothing. Coupled with that our rights to strike have been eroded, weakening our bargaining power with companies. And senior members of the government are openly talking about banning the use of strikes across industries.

                Mrs May could have said that workers’ rights would be improved upon, or strengthened. But the language is purposefully specific. “Keeping pace with the changing Labour Market”. Well, if we look at how the Labour market is changing, more people are being put in to roles where their employers can pretend they are self-employed; employers can give up any sort of responsibility through the “gig” economy; zero hours contracts will become more prevalent; trade unions will be downgraded and weakened at every turn; pensions agreements will no longer be stuck to by employers whilst taxpayers bail out pensions funds. Basically, if you are employed, then this is the start of a bonfire of what rights you currently have. If you are applauding this speech, you are either an employer yourself, or not paying attention. Perhaps somebody could remind me, when we voted for the UK to leave the European Union, where we also voted to give up our working rights to Sir Philip Green and Mike Ashley? I obviously ticked that box without realising.

Leaving the Single Market and Customs Union, getting a trade deal with Europe instead, paying for access

                It is probably worth, as a starting point, understanding what our trade deal within Europe currently means. Firstly, it is worth stating that it is probably the most comprehensive, invasive and wide-ranging multi-lateral trade agreement in the world. It includes everything from free trade (meaning we trade our goods free from tariffs being applied by other countries), customs union (meaning we all apply the same tariffs to goods coming from outside our deal), free movement (of services, capital and resource ie people) and a level of political union too. It covers almost every aspect of trade and commerce, industry and services, import and export. The effort to split ourselves out from it is on a scale unprecedented and untried. It is not simply rhetoric to say it is of the scale that countries leaving the USSR and Eastern-bloc felt during the early 90s.

                So we would be leaving, with great difficulty and cost a free-trading bloc of 450 million people in 27 states (once you take us out of the official figures). It has GDP of US$13tn (again once you take us away from the published figures). It is 41km away from us at the closest point. Those are the really key considerations in any trading deal we want to do: how many individual consumers are there, how wealthy is it, how far away is it, and what tariffs would we expect. It is worth also stating that given the depth and breadth of the negotiations that will be needed, this will (you would hope) require a great deal of considered and careful negotiation. We currently have no experience of trade negotiations, given that we haven’t had to for about 40 years. It seems a reasonable assumption that what experience we can muster together will be focussed on this deal. Two years of effort to LEAVE that free trade deal.

                Of course, it is possible that we could end up with an even better trade deal. However, it is highly improbably. By its very nature, if we are choosing to say to a trading bloc that have grown together “we want to trade with you, but don’t wish to pay in to your structural costs” then it is only reasonable to assume we will get a worse deal than full membership. Even Theresa May accepts that. Hence why the Prime Minister and others have been warming us up to the idea that we will still have to pay something to continue to trade freely in certain markets. I think it is fair to assume this will include the Motor industry (if not, then what the hell have we promised Nissan?) and financial services (given it is our biggest single industry). Of course, that gives us the question of what will the cost be? How much will we have to pay for access? Not only that, does it mean any industry which isn’t beloved of the Tories (Steel, manufacturing, non-financial services) should now expect tariffs to start to affect their business. So there we have it, a deal where we still pay in (when it suits the Tories) and everybody else has their business negatively impacted.

                Not only that, but what if we start imposing our own tariffs on European goods? Well, that will lead to massive instantaneous inflation, whilst at the same time our economy is getting worse. We had this in the 1970s – and the term which was coined was stagflation – a stagnant economy whilst prices rise. It was a horrific time. If you are too young to remember it be grateful, then ask somebody who was around how it felt.

No deal is better than a bad deal, trade deals with other parties

                Of course, we could choose to have no trade deal at all with Europe. However, just the most cursory glance at this shows how completely stupid and damaging this would be. This would mean that we would immediately start trading with ALL of the European Union at WTO Tariff rates. In effect every single item that we export to Europe would immediately be less competitive, and therefore we would either have to sell less OR sell them more cheaply. The idea that no deal is better than a bad deal is complete hogwash – and everybody knows it. God even to export Oxygen to the EU we would have to pay a tariff of 5% - and they breath the bloody stuff (yes, I know, thanks). So this idea that we will go with No Deal is never going to happen. Besides which, in all honesty both parties want to get a deal. It is in their interest as well. It is entirely a PM trying to sound tough for the UKIP-leaning voters in her own party. It is simply within our interest to achieve some deal with Europe (popn 450m, GDP US$13tn, dist 40km) – and it is theirs to do a deal with us (popn 65m, GDP US$3tn, dist 40km).

                What about other deals? We are told by Boris Johnson that countries are “queueing up” to do a trade deal with us. Well, the first consideration is – why aren’t we trading with them currently? If these countries are so desperate to get a trade deal with us, why is that? Well, we already do trade with many of them. But it is at a lower level than perhaps we could. Therefore, any belief that this will lead to a massive influx of NEW trade is again erroneous. What it will do is make trade easier and therefore give some lift to our global trade levels. It might also (if we remove import tariffs) lead to consumers paying less for certain goods. It is way beyond me to be able to state with any certainty what scale the impact would be. But it would need to be very high indeed to offset any major losses of trade with the EU. I am going to leave the US to one side for a moment, but still, let’s pick out some of the options which do look like “live picks” ie countries that are talking about trading with us:

Country	Population	Size of economy	Distance	Comments
EU	450m	US$13.1tn	41km
Iceland	0.3m	US$0.016tn	1,894km
India	1,300m	US$8.72tn	7,194km
New Zealand	4.7m	US$0.174tn	18,500km
Australia	24m	US$1.2tn	17,000km
Canada	36m	US$1.5tn	5,700km
Ghana	27m	US$0.121bn	4,800km
Mexico	120m	US$2.2tn	9,000km
South Korea	50m	US$1.4tn	9,000km
Total	1,562m	US$15.3tn	9,136km average

                So, if the worst happened and we stopped all trade with the EU (which no-one is suggesting, to replace it we would need to trade with these 8 separate economies to get a trading block of the same size. Ignoring the fact that on average that would mean sending goods 45 times further on average to sell them.

                To put it another way, our trade with the EU accounts for 45% of our exports. If we lost a quarter of that export trade – on our doorstep – we would need to boost our sales internationally to non-EU countries by 11%. Unfortunately, our trade with international neighbours is already at record levels for us. What else are we going to sell – at a competitive price after sending it an extra 9,100 km? The very desperately sad thing is, we are already a successful trading nation. Is it really possible that not being part of a customs union with the EU is going to boost our trading with every we currently trade with across the board by over 10% BEFORE the end of the current deal with the EU in 2 years’ time?

                Who is going to negotiate these trade deals? Everyone with experience or knowledge will be working on the EU deal? Or should we leave that to Boris “let’s joke about the Nazis” Johnson? Genuinely? Of course, we have the trade deal to look forward to with the US. After all, we have been promised a trade deal by the President-Elect, a man who never goes back on what he says. Well, he has already threatened to pull out of NAFTA (a free trade deal), and put 35% import tariffs on goods from China and Mexico – 2 of their biggest trading partners and very strong economies. If Donald Trump is looking to trade on those terms with others, why would we believe we would get anything more beneficial?

Everything’s rosy

                There is no hard evidence to say that is all impossible. It may well be that against all odds the government manage to deliver. But for that to happen we would need a massive turnaround in fortunes, in abilities, in industry, in trade patterns and in the views of our own government. At the same time we would need the EU to be kind to us in any future trade deal. Put quite simply, the potential risks are much greater than the opportunities at the moment. I would love to be wrong about this – and I am often wrong. But I see no analysis which suggests anything other than this stark conclusion – by leaving the single market we are throwing away access to a strong market on a really good deal for the possibility of access to less accessible markets, with less good deals. This can only be bad for our economy. 52.1% of people voted for Brexit. But how many voted for an almost certain worsening of our economy, job losses, rights and protection losses, uncertainty and a weaker economy?

Another Leadership Election

Sad that we are at this point really. I think it is pretty clear that nobody wants to be at this point. The membership of the Labour party certainly don't. The PLP certainly don't - hence their aborted coup. Jeremy Corbyn himself seems not to either. But, we find ourselves at one of the most monumental points in national history looking inwards at what sort of party we want to be. It seems to be what we do. Apart from a few years from 1994 onwards when the party was gripped tightly and controlled centrally. But even that left a lot of people unhappy. 

Of course, after the abortive attempt by Angela Eagle to take power from Jeremy Corbyn we are now left with a straight two way fight. Clearly, this shows that the PLP have learned from last year when 3 candidates occupied the right of the party leaving just one left winger. So we all have a couple of decisions to make: what sort of party do we want, and what sort of government do we want to offer the electorate when the next General Election is called. But both of those are tied up into – who do we want to lead the party. (Before I write this, I would like to silently thank a new friend of mine who has helped me work through my own thoughts on this point. I would probably give him joint credit for the piece – but given that anyone who puts the head above the parapet in the Labour Party at the moment is liable to have it hacked off. So I will claim all of these views as my own.)

For me, what sort of party do we want is the first question we should ask. I only recently joined the Labour Party. Not because of some late awakening. But because I didn’t feel either the need to join until we lost the last general election AND because I never felt until then that the Labour party really addressed my left of centre views for most of my adult life. Certainly, during 1997 and 2010 the Labour government did a lot of good things. We shouldn’t deny that – Sure Start centres, increased funding of the NHS, a buoyant economy.

But equally, they committed some really grievous sins during that time. Public sector reform in NHS and education through marketization, burdening the country with huge PFI debts, overseas wars, failing to really understand and control what was driving the buoyancy in the economy. They become too close to big businesses who told them “Don’t worry, we know what’s right for the country, we’ll help you free of charge with policy decisions”. For this reason they didn’t see the global economic collapse of 2008 coming towards them. Mind you, very few did. What is genuinely sad is that many of them still don’t accept the things they got wrong.

Part of the reason that the party went in this direction was the absolute belief amongst many in the government that we had to go this was to stay in power. That the only way to win votes was to buy in to this. I wonder how true that is. How many voters really sat at home thinking “well, I’d vote for them, but only if they introduce an element of competition into our school system”? Sadly, the party was so well controlled that a lot of dissent from members and a minority of MPs was drowned out – not allowed to be heard. We were sold Blairism as a way of stopping the Tories being in power. And found ourselves wearing their clothes.

I don’t want to be that sort of party. I don’t want to be with a party that will sell its founding and basic principles for a taste of power. I want to be in a party that holds its socialist principles dearly. But we must be willing to make some sacrifices to the gods of necessity. And we must have being able to implement our policies as a fundamental goal. This means a party that wants to be in power. It must be a party that never forgets what we are here to achieve for those who most need us in society.

But to do that we need to live by the old Socrates quote “The only way to live with honour in this world is to be in all things that which you appear to be”. So if we want to be a party that can push policies that stand up for fairness, for social justice, for democracy and for equality of all people we have to be all of those things internally. That means that we can’t be seen as a PLP that will ignore the choice of their members. One where there is no whiff of racism or sexism or any other discrimination. And one where we can have open, honest and passionate discourse without trying to silence those with whom we disagree. My worry is that over the current debate we have lost many of those things.

This is a charge that can be levelled at both wings of the party and a number of various groups. But for me the behaviour of many in the PLP has been simply unconscionable.

I am not in the parliamentary Labour party. I am not an insider who sees how things are working in Westminster. I can only pick up what we see and hear from the reports and media. That puts me in the same boat as the overwhelming majority of Labour members. We can not know what happens on a daily basis there. I watch Jeremy Corbyn sit on interview shows and say that he is willing to speak to MPs. Then MPs – including many who seemed initially supportive – tell tales of not being able to reach him. Meanwhile MPs talk of policy hold ups, press gaffes and dithering over decisions. But some of those MPs have had a goal of removing Jeremy Corbyn since it became obvious he would win the leadership election. But we can’t point that accusation at everybody. I do not believe it is possible that 150 Labour MPs have been secretly conspiring for the last year for this to happen. It simply doesn’t pass the bullshit test.

So we are left with a seemingly unsquare-able circle. Either Jeremy Corbyn is a habitual and well practiced liar who can make whole swathes of the party believe what is patently untrue. Or the Labour Party is full of two faced backstabbers who are lying to our faces. Or maybe a third option – which is that the problems are not with Jeremy Corbyn himself, but rather with the team around him. But ultimately, the man who picks the team must bear that responsibility. Therefore, I would suggest that if Jeremy Corbyn does win this election, he needs to consider a real rapprochement with the Party. Not just inviting them back in, but making some of the changes being asked for, including reviewing his personal team. That also means he must reach out further than his core supporters. Whilst rallies are amazing spectacles, he is only reaching those people who would follow him anyway.

So if that is the sort of party I want (and I believe for the most part we are that party, even if we forget it sometimes), what sort of government should we offer the electorate? I think quite clearly the history of the last election is that we need to offer an alternative to the tories. Wearing their policies but trying to look as if we are slightly nicer clearly doesn’t work. So, we do need to offer social democratic policies – ones that we believe in. There is clear support already for many of the things that Corbyn has said. But there has been too little meat on the bones. We need clear, well argued policies that relate to the problems people in the country have. Whilst issues such as Trident, Palestine, Globalisation are important, they are not the issues which people feel in their every day lives. This is not the time to fight the fights that we lost within the party a generation ago.

Our focus should be on poverty, living standards, injustice, social inequality and aspirations. Our leader should not be so naïve as to repeatedly work on to the end of “rope a dope” tactics in TV interviews on topics and arguments well versed for 40 years. The agenda must be set by the Labour Party – this is what we are offering the electorate. It is different and better than the opposition. We also need to re-frame the conversation away from talking about the tories as our enemy. We have lost votes to UKIP and the SNP. We should be talking much more, at all levels in the party about our real enemies – inequality, poor corporate  behaviour, injustice, lack of opportunity. They should ALWAYS be the enemies we call out. Not a feud with a particular party. A large number of those people who voted to leave Europe did so out of a sense of anger that whilst we are constantly told how much better off we are, large swathes of the country don’t feel that way. Imagine what we could achieve if we tapped into that anger and said to those people “let us be your voice”. Or we can go back to being angry with media bias and focussing our energy on that.

Well, almost 1600 words and no mention of who I will be voting for. So I want a party that holds its socialist principles dear, but one that wants to be in power to deliver policies based on them. A party that is open, democratic and welcoming to all. We should offer a government to people that doesn’t just look like another load of middle aged men in nice suits offering platitudes whilst helping the rich stay rich. Fairness, social justice, democracy and reducing inequality – with a chance of implementing those.

It is for those reasons that I will not be voting for Owen Smith. Two big things stand out for me.

Firstly, if we want to let people know that we are serious about listening to them, and addressing what they need instead of simply being part of a machine they are angry with, we have to stick with something different. If we want to show that we believe in democracy and the votes and views of individuals we can’t allow career politicians in London to decide who is the leader of a party which is meant to stand up for those without power. Those eligible to vote in the election have chosen once Jeremy Corbyn. They need to know that the choice rests with the membership, not the elite.

Secondly, I am not convinced that he is truly for the policies he is currently espousing – or that he can differentiate the party sufficiently from the tories. My worry is truly that come the next election he would have moved away from the “left” and back to the new centre – which is further right-wing than it has ever been in history. Could he deliver a government? Potentially. Could Owen Smith deliver the sort of policies that the Labour party wants to see? I don’t believe he has that in him.

So I will be supporting Jeremy Corbyn this leadership election. Not because I necessarily believe that he is the best possible leader for the Labour Party. More that he is a better choice than Owen Smith. But also, to send a message to the PLP – this is the party of the members, fighting all the ills that people in society face. Not a plaything that is there to keep you employed.

          

The greatest trick the devil ever pulled

               I am of a certain age where there are some films that absolutely define me. Most people could guess my age pretty accurately, given that my favourite films include Pulp Fiction, Fight Club, Jerry Maguire, Top Gun, Die Hard and The Usual Suspects. In the last of those there is a brilliant line delivered by Kevin Spacey as Verbal Kint – “The greatest trick the devil ever pulled was convincing the world he doesn’t exist” (If you are a young person, I would suggest watching that movie straight away, along with Fight Club).

                As a member of the Labour Party, at the moment I feel a great deal of sadness and anger in terms of where my party is. I am at heart an unreconstructed socialist, who has wound his way back here via a variety of other views being tried on for size. The ongoing / stalling / necessary / evil / failed / righteous* (delete as appropriate) coup has really shown the worst of our politics on all sides. What is equally saddening has been that within the Labour Party and the wider bit of society that sees itself as left-leaning we have seen the worst of absolutist thinking and “othering” behaviour. You are either a Corbynista or a Blairite. You are Progress or Momentum. It is black and white, chalk and cheese. For god’s sake whatever you do, pick a side. Certainly you must not see anything in between (don’t worry, I am not going to use the phrase “a third way”). You are either for or against – and that view will completely and entirely colour whether something is acceptable or not – not the act itself.

                It is because of this thinking that I have separately heard a wide variety of possibilities in terms of the underlying cause of the coup in the Labour Party. It is either a right wing coup orchestrated by Portland (http://www.prweek.com/article/1401004/portland-forced-deny-involvement-plot-oust-jeremy-corbyn) on behalf of the permanent political class who rely on voter apathy (http://www.thecanary.co/2016/07/02/the-real-reason-the-permanent-political-class-is-trying-to-topple-jeremy-corbyn/ ). Or alternatively, it is evidence of the party fighting back against an existential threat of Momentum Entryists trying to steal the party (http://uk.businessinsider.com/corbyn-could-split-labour-and-create-a-new-socialist-party-2016-6?r=US&IR=T). When you look at either of these theories they BOTH have an awful lot of “if and then” logic in them.

                The quote from The Usual Suspects comes from an original from Charles Baudelaire. But given the above theories, if either of them prove true, it will certainly need to be changed. So, depending on where you are on that perfect duality where any behaviour is allowed as long as it justifies the ends, you can either have: “The greatest trick the devil ever pulled was after failing to convince 3 MPs involved in the plot to stand aside so there was one candidate standing against Corbyn to not fully engage in the EU referendum; stop the newspapers reporting what Jeremy Corbyn was doing during the referendum campaign; stoke hatred of Jeremy Corbyn by people he works with in the House of Commons; convince almost all of his shadow cabinet to resign in a timed way one after the other (and the press to report it in that order); convince other MPs in the party that it was all his fault; pass a vote of no confidence; but be so incompetent as to botch a leadership challenge by being unclear on what the rules are; to avoid Tony Blair being impeached for war crimes”.

                I am going to go out on a limb here – if you could manage to make 90% of that happen without problem then you would have been able to control the Blairite candidates, and you would have known that you could push through the coup by way of Leadership challenge. Was there anything as disappointing as seeing Neil Kinnock brandishing a print out of the Labour Party rules on the Andrew Marr show saying that Jeremy Corbyn definitely wouldn’t be on the ballot for leader because the rules could stop it? A couple of things show how silly that is – if you know you can get rid of someone through a leadership challenge you go down that route rather than publicly humiliating someone on front of their colleagues. Secondly, sane people do not walk around with a certificate to show they are sane. If you are going on air with a copy of the rules in your pocket, you are not sure the rules really support you. You are using them the same way a drunk uses a lamp post – more for your own support than illumination.

                Oh yes, two possible changes to the quotation. For those of you who are Blairites (and remember – you must be one or the other) “The greatest trick the devil ever pulled was convincing MPs who didn’t support his views to nominate him to get on to the paper; then to have hundreds of thousands of entryists prepared to spring into action and join the Labour Party (myself included); then get them all to vote for him; convince the other contenders to not drop out so their vote was split; hang on to power through both local elections and an EU referendum whilst seizing control of the Labour Party machinery; manufacture outrage within the party to create a split in the party (by way of smearing a PR company with links to Tony Blair) ; in order to get all of those people you have convinced to join the party 12 months earlier to now leave the party and join a newly set up Momentum party; convince the Union Leaders to come with you and bring their members; and on the way get an establishment judge to find that Tony Blair does have a case to answer over the Iraq War; call for and get an impeachment against him; thus destroying the Blairite Labour Party and start afresh with a clean left wing Momentum party”.

                Again, stretching this a bit but maybe there are easier ways to do that. Quite frankly, the thought that a government inquiry into a decision to go to war would ever (or would ever be allowed, take your pick) to find that a Prime Minister of this country had performed in a way that could lead to criminal charges against that PM seems a long way from the truth. If it was going to do that it wouldn’t have been delayed so much. There are not enough people in Politics, irrespective of parties who want to see that happen. I realise that I am making myself a hostage to fortune by calling that before Wednesday. The whole project would be based on the outcome of other things – not a successful strategy usually.

                There is a well-worn approach when considering different theories called Ockham’s razor (or maybe Occam’s Razor depending on your spelling) which isn’t proof of logic of an argument, but is a good starting point – the theory is “Among competing hypotheses, the one with the fewest assumptions should be selected”. In other words – the idea with the fewest parts should be your starting point. Looking at those competing viewpoints above anybody outside of the debate would be forgiven for saying they both smell a bit fishy.

What is interesting is that both sides of the argument are giving the appearance that any means is justified because their ends are just. So Jeremy Corbyn allegedly refusing to take Tom Watson’s calls (although clearly these calls must have come after the Glastonbury weekend), the public defrocking of Jeremy Corbyn in parliament which was only second to Cersei’s walk of shame in its gratuitousness, threats for mandatory reselection and taking legal advice on whether MPs can keep the Labour party name whilst splitting from the leadership are all acceptable weapons. As well as that we have entered a lockdown phase where everything Corbyn has done is right OR everything Corbyn has done is wrong. Whether this is what you think or not, it is how it is playing out in the media. And both sides are looking at their own constituencies as an example of them being right, as if this is a binary decision “we have the members on our side so we must be right – is democracy” versus “we have the voters as well as the party members to think about so we must be right – is democracy”. Yeah, because voting on things democratically has been working out so well for us in the last few weeks.

                What is needed now is calm heads and moving away from that sort of thinking – and pretty quickly. We need to save the Labour party and the ideals it stands for. Unfortunately, that would mean both sides would have to learn and grow up a bit. Let’s get rid of the conspiracy theories, and stick to things that we do know or at least can agree on. There must be some of those mustn’t there? Or are we so far down the rabbit hole we can’t find any common ground.  I have tried to list these in order of increasing contentiousness.

1.       Leaving the EU referendum provides immediate short term risks that the Labour Party needs to be ready for

2.       As a party we are better off together, looking outward rather than fighting ourselves

3.       Our enemies are those who oppose social justice, fairness, workers rights, an end to poverty (look, I am trying to be cool but quite obviously that is code for the Tories and UKIP)

4.       The PLP never wanted Jeremy Corbyn as their leader, and some have openly attacked him, some have been half-hearted and some have supported him

5.       The membership did want him – even without us nasty Entryists, the full members of Labour voted overwhelmingly for Jeremy Corbyn

6.       Having a vote of no confidence in him which carries no constitutional weight whatsoever is a clear indication that you are too nervous to run the gauntlet of a leadership election when that would have been quicker and easier. Stop pretending we are dicks who don’t get that

7.       Jeremy has achieved some things – particularly government u-turns around education cuts; benefit cuts; police funding etc.

8.       Jeremy Corbyn (or possibly the team around him) has made mistakes and what is clear is that something does need to change. Anyone willing to cling to their rationality could see that mentioning ISIS and the state of Israel in the same sentence was going to be a bloody stupid idea

  What isn’t clear is whether the aim of the PLP is to get rid of Jeremy Corbyn (the person / the team) or whether it is to get rid a left wing agenda of policies. This is going to be really crucial in winning many of the party over to looking at a way ahead, potentially without Jeremy Cobryn as leader if that is what it takes. For many people (ie me, and trying to claim the moral high ground) we joined because we were attracted to the agenda rather than necessarily for the person. For those on the Corbyn side it may be time to accept that a new leader is needed – but one who can carry on his views and direction of travel for the party (although let’s be honest, no-one thinks that is Angela Eagle). How we handle this WILL define how we handle the upcoming months and years of turmoil in the country and the next general election. This will therefore help to decide how successful we can be in standing up for the values of the Labour Party. Perhaps, in that we can take something positive from this. It reminds me of my most favourite film quote from Fight Club, delivered by Brad Pitt “How much can you know about yourself if you’ve never been in a fight”.

WARNING! This post contains SPOILERS about what happens after a leave vote

              Or, then again it might not. I say that because nobody actually knows what will happen to the economy if we leave. Nobody can. David Cameron and George Osborne don't. Nigel Farage and Boris Johnson don't either. Nor do Economists for Brexit, the IFS, the WTO or The Economist magazine. Neither do I. But given that the economy is one of the main areas of discussion in the EU referendum debate we can't possibly ignore it. So, before you read any further, there is a massive health warning - any projections which are made OR referenced might be completely wrong. This has been part of the issue that has been turning so many people off from this referendum. The repetition that as soon as one side trot out an indisputable fact, the other side dispute it with their own fact.
              So what can we say about the economy and the impact of leave or remain? Well a really good place to start is to understand some basic ideas which are directly relevant to the question at hand. Let's set out then what the EU is (from a purely economic point of view), where it came from (again from an economic point of view) and what are trade deals, tariffs and the regulations that are often discussed by various commentators on both sides. This might take a while and bore the shit out of you - so if you want to go and get a drink now is the time to do it (I'm certainly having one). This is the explanation nobody else will do - because it is incredibly long and boring. But I think worth getting to the end of. One thing I will try NOT to do is to address any claims or counter claims - there is enough of that round already.
               The EU was originally set up very much as a trading block. The underlying theory of many politicians at the time was simple (and actually pretty true) - that most wars, when you get down to it, are really about access to resources. Those resources might be money, land, water, access or a million others. Given that Europe had spent the best part of a thousand plus years at war, then wouldn't it be better to settle disputes over a negotiation table instead of a bayonet? Therefore a "trading block" was set up relating to Coal and Steel - at the time the 2 key resources you needed to fight a war and also the 2 resources you would be likely to fight over. To avoid using an EU reference, you can find all of that information on wikipedia ( https://en.wikipedia.org/wiki/History_of_the_European_Union ). How would that trading block work? Well, they would work together to decide how much to produce, who to sell it to, at what price and what would be the rules for producing it. The last point is really important. They would also allow the countries in the block to sell to each other without "tariffs" - that is the governments wouldn't add costs to goods coming in from the other countries. To make this fair and achievable, what was very important to the countries involved was that the produce was created in the same way. So, same workers rights, same standards of outputs etc. This was so that no individual country could make more profit by undercutting the others unfairly.
               These are the regulations that are often held up by leave as blockers to British dominance of markets. These hated "regulations" that are thrown around as such a terrible thing include measures to ensure that:

1. What you are buying is actually what you are trying to buy
2. You are not paying too much for products and services
3. When you buy something it wont kill or injure you and your family
4. The people producing goods are not being abused / have employment protections
5. Producing these goods doesn't damage the environment more than it has to
6. There is a standard level of quality for goods that you buy
7. No single organisation or country can run the entire market and abuse a leading market position.

              As a general rule of thumb then, regulations are good for consumers, good for the market, good for workers and costly for businesses, and if it is costly for businesses that increases prices for consumers too. So whenever you hear the term "regulations" - run through that as a checklist and decide if they are things you want or not. Of course part of the problem identified by some on the Leave side is that these regulations attach to all companies whether they trade across Europe of not. I personally quite like the idea of regulations to stop all companies abusing workers and damaging the environment - irrespective of where they trade.

              In very basic economic terms then, the EU has now become a single market where lots of products and services are sold across Europe - with common regulations, but without tariffs being added if they come from within the EU. Tariffs go hand in hand with international trade - so let's look at what they are. Say your country and it's economy is very reliant on the production of "thingies" as an example. You as a government want to make sure that the "thingie" industry is protected. Therefore, what you do is add an import tariff to any "thingies"made overseas being imported - with the aim of making foreign "thingies" more expensive. It is called protectionism. It has existed since the start of international trade. Why wouldn't you do it?

              There are a couple of big problems with protectionism. The first one is quite simple - that protectionism breeds protectionism. Therefore whilst we are trying to protect our engineering industry, France is trying to protect their wine industry. Italy and Germany are trying to protect their car industries. And it goes on, and on, and on. What that means is that we all pay more for our products and services, but also because people don't want to pay higher prices they don't buy, so economies are held back. Secondly, protectionism favours rich countries. After all, if you have more to protect and trade, then you can afford to be tough to other countries with your tariffs ( https://en.wikipedia.org/wiki/Protectionism ). So as part of a global world we screw other people, our own consumers and ultimately our own economy. Again, as a rule of thumb then, tariffs are bad for consumers, bad for the overall economy but potentially good for individual companies in an economy.

                There are other ways of course as well as tariffs that countries can protect their own industries. Nationalised companies obviously have government support so can (generally) borrow money more cheaply. Or Labour costs can be controlled by government to help companies. Or grants, or a variety of other measures and methods that can be used. For example, the recent furore over the death of Tata Steel in the UK is often blamed on cheap imports of Chinese Steel "flooding the market". There is a huge lack of transparency around why the EU didn't stop this. The arguments (depending on which side you are on) are that the EU rules stopped the UK from intervening to help our steel industry OR the EU tried to block the chinese steel (by increasing tariffs) and the UK government stopped them from doing that. Whilst it is unclear what happened in this instance, the EU rules on this are quite clear - we could have increased tariffs at a European level to counter the protectionist measures of the Chinese. What is worth considering is whether the whole EU standing up to China would have more impact than the UK standing up to them on it's own.

             So, a single market, with common regulations and no tariffs, across a regional trading block, with an end consumer base of 500 million people. That is great because it gives companies (particularly international companies that trade across borders) certainty. Set up in Britain and access that market. Sounds pretty sweet. The main problem raised though is that in order to access that market we have to be (currently) a member of the EU. That in itself comes with a few costs. Firstly, the cost of complying with regulations as discussed above. Secondly, we have to pay to be a member of the EU. This is not a small amount of money, and the budget is set in Europe - we don't decide ourselves how much to pay. After rebate (which we do control) we pay £14 billion a year to the EU.                 That sounds like we might just be better off paying the tariffs in the first place. To put it into perspective - that is out of total UK government expenditure of £772 billion. Our payments to the EU (before looking at what they give us back in other ways) equate to 0.5% of the cost of government ( https://en.wikipedia.org/wiki/Government_spending_in_the_United_Kingdom ). So less than half a penny in every pound paid in tax goes to the EU. Finally, there is a cost of being part of the EU when we try to trade with non-EU countries. Because we are members when we trade with other countries without a trade deal the EU makes us apply tariffs. This is why the EU is currently trying to agree trade deals with a range of countries - Canada, the US, China as examples. However, overall tariffs are coming down across the world - in some cases slowly, but in other cases more quickly.
              There do seem to be some other major costs too economically. One of the obvious key ones is that if you are running a business in the UK then because of the close integration of the markets you are potentially not just competing with the business next door - but also the business in Paris, Madrid and Berlin. Is this a bad thing or a good thing? Well, first of all it means that the businesses in Europe are also competing with you - you can enter and sell to their local customers. Competition should also (according to prevailing economic theory) lead to better prices for consumers and a more efficient market, innovation and better products and services. The impact of this will depend on your business - common sense would suggest it is much easier to sell "knowledge" services over a phone line or internet connection. It might be much harder to sell fresh cream cakes.
            Finally then, there is also the concern over free movement of Labour - one of the central tenets of the European model of tariffs and regulations. Now, I have already written a blog about immigration generally ( http://unexpectedsocialist.blogspot.co.uk/2016/06/if-immigration-is-your-answer-someone.html ) and I don't want to revisit a lot of those points. But being part of Europe also requires us to allow workers to seek employment in any other part of the EU without barriers to that. Is this a cost to our economy? At a very basic level it would seem intuitive that having a greater Labour pool would help companies make money. They can drive down wages and salaries by hiring people from lower paid countries to work for them. This could therefore be good for companies (and earn more money for an economy) but bad for employees. It could also transfer funds from wealthier economies to poorer economies - by individuals remitting wages back to their home country. At the same time though, we have more individuals in the country spending their money here, paying taxes here and generally because they are of working age using less public services (remember, we are only talking about working migrants). Unfortunately, I do need to refer to a study here ( http://cep.lse.ac.uk/pubs/download/brexit05.pdf ) that shows that immigrants have NOT reduced wages for the UK population. It is simply a not true assertion. BUT TAKE THAT WITH A PINCH OF SALT.
           Economically then, what is the EU? Well a single trading block that increased potential customers but also potential rivals. A law making body that creates a lot of regulations that apply to all companies irrespective of whether they trade internationally. A body that tries to reduce protectionism and tariffs for the good of the global economy, not just ours. A bloc that negotiates on our behalf with other large economies that sometimes doesn't get the results that we would want. A larger, more competitive market that companies either thrive in or fail in. And one where the free flow of Labour allows people to work across a different range of countries depending on their skills, abilities and needs. This of course sounds rosy, but then again I am for remaining in. The problem is that whether we vote to stay in or vote to leave we are picking winners and losers. Some businesses will benefit from staying in. Some will benefit from losing. What we have to do is decide is whether getting rid of or replacing the things above will benefit US as individuals / companies AND what will be the impact on the overall economy.