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Johnson’s spending challenge

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Summary:
The old myth of government finances being like household ones is about to hove back into view. Johnson is promising to increase spending on the NHS, as well as on schools and higher public sector pay, as well as offering a big tax cut. To the question, “how can he afford this?”, Tories reply: It is because we took tough and necessary decisions to cut Labour’s borrowing after 2010 that we can afford to spend more now. In this way, popular spending rises now can be used to defend past austerity. Which poses the question: how can the left combat this?   It’s not good enough to say that it too favours such spending. This risks it looking like an old hipster: “Yeh, I was into fiscal expansion before it was cool.” Yes, we have lots of other arguments. Austerity was never necessary

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The old myth of government finances being like household ones is about to hove back into view. Johnson is promising to increase spending on the NHS, as well as on schools and higher public sector pay, as well as offering a big tax cut. To the question, “how can he afford this?”, Tories reply:

It is because we took tough and necessary decisions to cut Labour’s borrowing after 2010 that we can afford to spend more now.

In this way, popular spending rises now can be used to defend past austerity.

Which poses the question: how can the left combat this?  

It’s not good enough to say that it too favours such spending. This risks it looking like an old hipster: “Yeh, I was into fiscal expansion before it was cool.”

Yes, we have lots of other arguments. Austerity was never necessary because there was never a danger of a sell-off in gilts; the only constraint upon government borrowing is inflation. The only “evidence” that high public debt was a threat to economic growth was a spreadsheet error. The cost of austerity – in terms of thousands of lives lost, increased poverty and despair and lower incomes – were horrendous.

These are all true. And irrelevant. If you don’t believe them now, you never will.

Instead, I’d suggest some other lines of attack.

One is: if the Tories are such good stewards of our money, why is sterling so weak – down over 7% against the euro and 15% against the US$ since 2010? This isn’t a cheap debating point. A weak pound (if sustained) is a sign of a lack of confidence in the UK’s economic prospects. Psnbfc

Secondly, austerity failed by its own standards. It did not reduce borrowing anything like as much as planned. For example in 2010 the OBR forecast that PSNB would be just £20bn by 2015-16. In fact it turned out to be £71.8bn. Over the first five years of austerity the government borrowed £158.9bn more than expected in 2010. A big reason for this, of course, is that in depressing economic activity austerity also cut tax revenues.

Thirdly, austerity was counterproductive and unsustainable. Cutting prison staff looks like a “saving”, until prisoners riot or re-offend upon release because of a lack of rehabilitation. “Savings” on flood defences prove expensive when we need to repair the damage done by flooding. Cuts in psychiatric care and youth services impose extra pressures upon the police. A lack of spending on schools isn’t a saving if parents pay a hidden tax by donating money to schools

Aditya therefore has a point:

Every time Johnson promises some spending, Labour should retort: which are you going to believe, his press releases or the devastation you can see on your high street, at your town hall and local food bank? 

I fear, though, that these replies aren’t good enough. Truth doesn’t always win in the battle of ideas. With a supine media, the Tories can get away with reversing their position on austerity when it suits them.

For me, what this shows is that there should have been, and must always be, much more to leftist economics than mere opposition to austerity and demands for higher public spending. Instead, we need policies and institutions that achieve not only greater equality of income, but of wealth and power too. The Tories might be able to match Labour for public spending, but they will never offer these.

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