Policy Exchange Report ‘Cities Unlimited’, 13 August 2008
If councils believe that many of the people in their area will have better life chances elsewhere, they should be allowed to assist in national job searches.
They could identify areas that are either short of labour in general, or of particular types of labour, and invite firms from those areas to visit them for job fairs. They could fund visits to other places, so that local people could get a better sense of what opportunities are available elsewhere. Such places could be within easy commuting distance, or further afield, that would imply migration.
Sunderland could offer free metro passes to people taking up work or looking for work in Newcastle. Easington could offer people help in relocating to Eastleigh. (p52).
David Cameron on Policy Exchange Report ‘Cities Unlimited’, 13 August 2008:
This report has got nothing to do with the Conservative Party, this is an independent think tank, it has charitable status, I think this report is complete rubbish.
Daily Telegraph’s Iain Duncan Smith interview 26 June 2010
Mr Duncan Smith, the MP for Lord Tebbit’s former parliamentary seat of Chingford, disclosed that ministers were drawing up plans to encourage jobless people living in council houses to move out of unemployment black spots to homes in other areas, perhaps hundreds of miles away…..
“We have to look at how we get that portability, so that people can be more flexible, can look for work, can take the risk to do it.”
It is understood that the Coalition is looking at ways to provide incentives for workers to move to areas where there are jobs…
But as well as incentives, there will be tough action to cut welfare bills which may prove controversial. Mr Duncan Smith, who is responsible for finding £11 billion of the extra £32 billion in savings earmarked by the Chancellor, disclosed details of moves to tackle “under occupation” of large council homes….
Is moving people hundreds of people miles in search of work, under threat of homelessness, ‘barmy rubbish’ now, Cameron?
Or is it just plain old ‘daft’?
I refer to my earlier post (no 1 in this series of five, if I get round to them all).
So if, as I said in part 1, demonstrating on a mass scale, and defending the public sector ideal, are not effective as resistance, what should we do?
First (and the subject of this post) the broad argument about why cuts are simply not necessary needs to be developed.
Yes, I know this sounds like it’s drifting straight back into the ‘this isn’t really action at all’ vacuity that I started off by criticising in part 1, but it does remain important that the more specific actions I’ll come to are ‘offered’ within the framework of a political economy argument that is wholly different from the half-baked one the mainstream left is currently offering, and thereby stands a better chance of being seen as different by the public.
This is not just about claiming the right language to set out our case, as analysed well by Paul Sagar. That’s important, but more important is the materiality of that argument.
Essentially, we need to escape the constraints of pro-capitalist (and pre-financial capitalism) Keynesianism. We need to challenge the fundamentals of the right’s argument about the need to cut spending.
At the moment, all the mainstream left appears able to do is to say that we should cut less now because it will threaten economic recovery, while accepting that we need to reduce the deficit over time.
The main focus at the moment is on how unemployment will rise if demand is taken out of the economy too quickly, rather than on challenging why demand needs to be taken out of the economy at all, and why we should tolerate any unemployment at all (for those who want to work).
This Keynesian standard is credible enough in itself, but what the mainstream left is currently therefore offering by using it is just a different timetable for cuts and retrenchment of the state. No wonder the public aren’t buying that argument; it just seems weak when compared to the Coalition’s narrative of determination to ‘sort out’ Labour’s ‘disastrous’ management of the economy. Yes, the left knows that’s crap, but that doesn’t mean it’s not selling very well.
Fortunately, there is a ready made alternative economic model for the left to sell. It comes in easy to understand chunks of meaty goodness, and it’s utterly, utterly different from the fare being offered by Cameron and Co, because it comes without any cuts at all.
The model repudiates the whole notion that fiscal deficit is bad, on the basis that a sovereign state with its own currency simply has no fiscal limits; it only has resource limits. It repudiates the ‘commonsense’ notion that running a country is like running a household, where revenue must always be higher than outgoings.
It does so clearly, and it does so convincingly for anyone who you can get to listen. This is not just because the logic is simple enough, but because it is correct.
This is the clearest shortest exposition of that model (with a nice line in counter-hegemoinc discourse thrown in) that I have seen:
Responsible fiscal practice
Now at the risk of repeating myself a million times, this is the macroeconomic sequence that defines responsible fiscal policy practice. This is basic macroeconomics and the debt-deficit-hyperinflation hyperventilating neo-liberal terrorists seem unable to grasp it:
1. The sovereign government, which is not revenue-constrained because it issues the currency, has a responsibility for seeing that the workforce is fully employed.
2. Full employment means less than 2 per cent unemployment, zero underemployment and zero hidden unemployment.
3. The sovereign government can purchase any real good or service that is available for sale in the market at any time. It never has to finance this spending unlike a household which uses the currency issued by the sovereign government. The household always has to finance its spending (as do state and local governments in a federal system).
4. The non-government sector typically decides (in aggregate) to save a propoportion of the income that is flowing to it. This desire to save motivates spending decisions which result in the flow of spending being less than the income produced. If nothing else happened then firms would reduce output and income would fall (as would employment) and households would find they were unable to achieve their desired saving ratio.
5. The government sector must in this situation fill the spending gap left by the non-government sector’s decision to withdraw some spending (in relation to its income). If the government does increase its net contribution to spending (that is, run a budget deficit) up to the point that total spending now equals total income then firms will realise their planned output sales and retain current employment levels.
6. The government sector’s net position (spending minus revenue) is the mirror image of the non-government’s net position. So a government surplus is equal $-for-$, cent-for-cent to a non-government deficit and vice versa. So if the non-government sector is in surplus (a net saving position) then income adjustments will render the government sector in deficit whether it plans to be in that state or not. If income is falling in fhe face of rising saving behaviour of the non-government sector and that spending gap is not filled by government net spending then the budget deficit will rise (as income adjustments cause tax revenue to fall and welfare payments to rise). You end up with a deficit but the economy is at a much less satisfactory position than would have been the case if the government had have “financed” the non-government saving desire in the first place and kept employment levels high.
So a responsible government will attempt to maintain spending levels sufficient to fill any saving.
Other excellent expositions of the same argument are here (including useful commentary on Greece and the Eurozone), and – from the man who has done most to turn heads towards this new model (Warren B Mosler) here. A rebuttal of the immediate argument against the model – that it necessarily induces high inflation - is presented here.
This model presented by Mosler and his colleagues is not, I hasten to add, a leftwing model.
It has nothing to say about the distribution of benefits in such a model, and nothing to say about the democratic control of the state’s sovereign authority over its currency. It is simply an accurate description of the way a fiat currency works, and of the illogic that lies behind the self-imposed constraints of both monetarist and Keynesian economists (though not the post-Keynesian economist John Kenneth Galbraith).
But the technocratic features of the alternative model are, for the time being at least, arguably its biggest selling point. Leftie/green works like this from Mary Mellor (see also article here), cover a lot of the same ground around the principles of the shift from commodity currency to fiat currency, and the way in which money has essentially been privatised over the last 30 years by banks’ ability to create it (in the form of credit) from thin air, while the state remains the unwilling but compliant guarantor.
The problem is that they are necessarily a good deal less accessible than the simple descriptions of Mosler and co of money as ‘voucher’ from the state, fiscal deficit as the ONLY way to drive a tax system, and the unerring logic of the potential to use the state’s (logically unconstrained) fiscal deficit to match any demand gap at any time.
This, I contend then, is the radical (perhaps because it is actually so unradical in class power terms) economic argument that the left needs to be both shouting from the rooftops and drawing into all its sites of resistance against cuts (see further posts).
This model, which our Labour leadership candidates (link to radical post) should be scrabbling to be the first to present as their ‘vision’. For those in the Labour party it is the alternative argument that we should be demanding these leadership candidates get a handle on, and which they should be using their undoubted rhetorical skills to get over to the public.
As the real resistance to cuts does develop, this must be the clear rationale for saying ‘no cuts are necessary’, and for calling out the Coalition on their ‘there is no alternative’ narrative.
Perhaps (as an aside that I may or may not follow up in later posts) those leadership candidates might look to the tactics employed by the climate change denial lobby to first cast doubt on the ‘official’ version of economic history and practice, and then promote the ‘real’ view. The difference in this case would be that the real is actually real.
At the moment the false narrative of Conservative ‘household’ economics is winning, because the mainstream left’s narrative is both confused and too similar to the right. It does not have to be that way.
In the next section I’ll look at what ‘legalistic’ tactics might be available to the left in the battle against the cuts (and for solidarity), including how our old friend the Powers of General Competence might just be subverted for the greater good.
I made the complaint in March 2010 and reconfirmed in May 2010 after the election. It concerned statements made by Mr Field about his willingness to work with any new Conservative government. My main contention was that in making such statements Mr Field was effectively condoning a Labour party defeat in the general election, and making plans for the period afterwards. In so doing, I suggested that he was making life for his party very difficult to campaign for him while remaining within the Labour party’s rules.
The response dismisses my complaint. It defends firstly Mr Field on the basis of his track record of interest in poverty issues; I fail to see any relevance in Mr Field’s previous record to the matter in hand.
The response then goes on to say that his work on an all-party group is acceptable, and not unusual. Finally, his public press statements are found to be acceptable. No point of comparison with other disciplinary cases involving members’ press statements was offered.
That concludes this matter for now. I have no desire to become obsessive on this single issue.
I am disappointed in the response received but believe there is a more general issue at stake around the way in which political discipline is maintained in all parts of the party, including the PLP, while leaving room for open discussion, creativity and speed of action where necessary.
This issue is best addressed by active involvement in or with the National Constitutional C0mmittee, and I will be blogging on that matter shortly.
Here is the letter I wrote to the Ed Balls campaign team about his article ‘Building our Party from the Ground Up’. I’m grateful to Tim Flatman for bringing the article to my attention.
I am the leader of the Labour group on West Lancashire Borough Council, and know a thing or two about local Labour politics. In what was my first year as leader, for example, we gained four council seats, and we defended a 6,000 parliamentary majority comfortably. This note is in a personal capacity.
I read your piece in Labour Values with enough interest to make me want to offer a comment or two. It does not go far enough in setting out how the party needs to be restructured, but at least you are thinking about it, and your assessment of the disaffection on the party of many members, myself included, in respect of the policy process is accurate.
What is slightly disappointing is the early emphasis in your piece on the need for a Labour Party Diversity Fund which will in time ‘make a very real difference to those that need help to stand’ [presumably as candidates for parliament].
Don’t get me wrong, here. I am fully behind greater diversity in parliament, and you are right that this diversity must extend beyond gender, however important that is.
The problem is that by talking up a specific funding mechanism like this you are talking up the primacy of the PLP in the labour movement and its structures. This is not what we should be promoting. What we should be promoting is the opportunity for (a larger, more diverse) membership to be involved in all aspects of the movement. There should be nothing special about the PLP; it should just be part of the whole. A Diversity fund will simply create wider routes to parliamentary elitism, which is precisely what you argue against in much of the rest of your piece.
So forget the Diversity Fund. It’s a distraction from the main job of creating an open and democratic labour movement where all members do actually get a voice. While you set out this ideal in principle, you stop short of what actually needs to be done in practice (though I accept that this is your ‘starter’ paper, and that it is aimed primarily aimed at encouraging feedback (like this?) on precisely this point.
So let me try and help.
There are two main ways in which we can enhance party/movement democracy and thereby increase our activist base. Both are radical but logical steps in power devolution.
First, the financial flows within the party need to be totally reversed. All membership money and donations, barring a very small top slice for absolutely essential national administrative functions, should be distributed to CLPs (and possibly branch level in time) on a pro-rata basis according to membership numbers. The CLPs, thus resourced, will then be open to ‘business plans’ from MPs/PPCs and from regional party structures which they can approve, ask to see amended, or reject as they see fit. In time, all parliamentary monies paid to MPs for running their constituency office should have automatic sequestration by CLPs and this should then be subject to the business planning process. Beyond this, MP salaries might also be taken down the same route (as would councillor allowances), with local decisions made on how much MPs are worth paying (of course, we would expect to see Labour MPs form their own union to negotiate collectively).
When in government, Labour should also consider passing legislation which imposes the same ‘bottom-up’ funding model on all political parties with parliamentary representation in respect of all monies paid by government to parties e.g. Short monies. This funding pro-rata to membership, with memberships of the various parties then having real financial clout, will create a virtuous circle of local input-increased membership of parties-increased local input.
Second, and closely related to the first radical step, the NEC should commence work with trade unions to encourage them to disaffiliate from Labour nationally and to re-affiliate to local parties, with member funding allocated to these local parties on the basis of satisfactory ‘business plans’ (an extension on the way in which unions already fund specific campaigns with MPs). Again, this will enhance local input into decision making and increase union membership in time.
There are more thoughts on the localisation of PPC selection, which you also raise in your piece, here.
ps If you are to be sure of my vote, you will need to evidence development your political economy thinking beyond a narrow Keynesianism towards a more authoritative and distinctive questioning of assumptions about monetary systems and the whole illogic of the concept of fiscal deficit in sovereign states with their own currency, and how you might bring this distinctive narrative to your leadership. I recommend as a starting point these two papers, and my own short article for a more politicized take.
However, your focus on the economic consequences of the coalition budget rather than LibDem treachery (real though that is) and defence of the public sector per se has scored you more ‘points’ with me on this area than other candidates. On this matter I tend to agree with Sunny Hundal at Liberal Conspiracy.
pps. Your points scored on political economy are outweighed currently by your abhorrent take on immigration.
Nick Davies’ book Flat Earth News is a damning indictment of the media – the collapse of journalism in favour of ‘churnalism’, the creeping dangers of corporate PR, the decline of staffing levels and increase in demands for ‘content’ and particularly in the collapse of everything local.
The new Tory-Lib government provides an interesting counterpoint to plans developed under New Labour to challenge this last part. Faced with a serious decline – and resultant bump in unemployment – the National Union of Journalists and other groups lobbied for a trial run of Independently Funded News Consortia.
IFNCs were to be funded in part by the BBC and were designed to pick up the slack in the ‘public broadcasting’ remit left by the decline of regional news through broadcasters holding the ‘channel 3′ license. In short, it was a way to keep local journalism going in a climate where most local radio stations and no few local papers are loss-making, and where national broadcasters are being forced to sacrifice their ‘local’ elements due to costs.
At any rate, the new Culture Secretary, Jeremy Hunt, has scrapped the plan. He would prefer to use the money for the rollout of ‘super-fast broadband’ to rural regions. The manner in which Hunt slapped down the idea was refreshingly blunt.
“Fundamentally, they [IFNC] were about subsidising the existing regional news system in a way that would have blocked the emergence of new and vibrant local media models fit for the digital age.”
”They risked turning a whole generation of media companies into subsidy junkies, focusing all their efforts not on attracting viewers but on persuading ministers and regulators to give them more cash.”
Tory attacks government subsidy plan and defends market shocker. Instead what Hunt would like to do is scrap the regulations on cross-media ownership, in the hope that this will allow local media companies to create new opportunities for revenue, to fund the sort of journalistic services which are being cut.
Concomitantly Nicholas Shott, an investment banker, has been given the remit of working out the commercial viability of this plan. That there are commercial gains to be made remains to be seen, but either way those of us who would like to see a workable model of grassroots media are caught between the devil and the deep blue sea.
Labour’s plans carried the advantage of subsidising companies (the majority of which have only a regional and not a national presence, including some independent TV companies) to the tune of £130 million. These are the same companies which are losing jobs all over the place – and so might see a stay of execution, however brief, for the UK’s regional news provision.
Presumably this is why the NUJ and its parliamentary group (like John McDonnell) had lobbied and defended the IFNC idea. The disadvantage, of course, would be that a lot of this cash would end up trousered as profit by private companies, and as with so many public-private initiatives, cock-ups could be expected all along the way.
Meanwhile Tory plans don’t promise anything when it comes to jobs or regional news provision; they merely expand the current way of doing things by rolling back regulations.
So now loss-making local radio stations (many of which aren’t locally-owned but are playlisted up the yin-yang) can also be (potentially profitable?) local television companies, with their radio services parred down as far as possible to minimise loss whilst maintaining multi-media presence. I’m excited, are you?
I am very concerned that the Grassroots Alliance appears, according to the website, to be supporting Diane Abbott as its preferred leadership candidate. (Update: some clarity on this issue and the relationship between the site and the Allliance constituent members provided below.)
I do not follow, or even understand, all the processes within the Alliance, but I am not aware that there has been any kind of open discussion amongst the Alliance’s contributing organisations about which leadership candidate might be supported as part of the overall ‘slate’, if any.
The LRC (where my individual membership lies) voted to support John McDonnell, via its national committee, but I am not aware that any further meeting has been held following John’s withdrawal (the statement on which, in any case, did not mention Diane Abbott as his preferred ‘successor’).
For my own part, I do not currently consider Diane Abbott to be the most suitable candidate for the support of the Alliance, which has as one of its key areas of work the promotion of democracy within the party.
To date I have not heard or read any statement from Diane Abbott that suggests she takes any great interest in this area; indeed I found a recent email by her, in which she simply says that she ‘is more in touch with the grassroots’ than her rivals, without offering any specific commitment to organisational reform within the party, really quite patronising; she seemed to be suggesting she will use special powers, presumably developed sometime in the 1980s to interpret grassroots sentiment, and that this will be quite sufficient as a mechanism for ensuring that the Labour party gets it right. Doesn’t Silvio Berlusconi also offer that ‘common touch’?
In this respect, I even put both David Miliband, with his promise of some organisational reform (however tokenistic) of the cabinet, ahead of Diane Abbott on my ‘scoresheet’. I may have real doubts about Miliband senior’s ‘community leadership’ initiative (not least as I have tried but failed to get on to it to see what it’s like, and discovered in the process that it may be more handy campaign tool than open programme aimed at real ‘change’), but Miliband is at least trying something new which may have a kernel of usefulness in there somewhere.
More particularly, while I think it stops well short of the radical reversal of power structures that we need, I think Ed Balls has offered the best evidence of thinking through the relevant issues.
In contrast, Diane Abbott appears happy to rely on her reputation as a ‘grassroots’ person, rather than propose anything substantive. That is not good enough to get my vote at this stage, though there is still time for her to win me over, and this poor performance is in addition to disappointing early showings on matters of substantive policy.
I am therefore surprised that Diane Abbott appears, at first sight, to be being awarded the uncritical support of the Alliance, and by extension constituent groups, both in terms of the process for giving that support and the actuality of what she has had to say so far.
ps. Anyone interested that the Alliance’s leaflet promoting its NEC (and NCC) slate gets the name of one its constituent organisations wrong? It’s the Labour Representation Committee, not the Labour Black Representation Committee (bottom of page 2). (Update: some clarity on this issue given below in comments)