What should Labour be talking about?

The Labour Party is a joke at the moment. The Corbyn side seems to be trying to steal the Green Party’s manifesto at the moment with it’s talk of basic income guarantees and “Democracy Days“. Meanwhile, the rest of the Parliamentary Labour Party seems focused on ensuring it performs terribly in the May elections, with a side project of campaigning to stay in the EU. Neither side seems interested in winning round voters to their way of thinking. Here’s what I would do if I were Labour.

Most people either actively despise politicians or have no interest in it whatsoever. Someone who seems different to the norm and has a fresh approach could re-capture some of those people turned off by politics. Labour politicians should have embraced this opportunity, but instead they squandered it with petty squabbling. At the same time though, you don’t want to scare people off. The media will try and do that, but helping them to do that is not smart. You have to go to where people are before you can take them to where you want to go.

With that in mind, here’s where I think most people ‘are’ on some issues:

  1. Immigration. People don’t really care about whether immigration is good or bad for the economy. They see the impact on their local area, or areas nearby and dislike the change this represents. Humans have evolved to be wary of outsiders and I don’t see this changing any time soon.
  2. It’s normal for humans to compare themselves to those around them and to feel envy and resentment to those they feel don’t deserve what they have or are getting something without working for it. This is why cuts to social security generally have the support of the majority, but why cuts to working tax credits specifically are not popular.
  3. Most people’s resentment about perceived unfairness can be quite easily channeled towards those at the bottom. Everyone can think of examples from their own communities where people seem to be getting ‘something for nothing’. People also resent those at the top seemingly taking the piss.

You may not agree with those descriptions of where people are, but assuming they are true, what policies would flow from them?

  1. No party can do anything on immigration while a member of the EU. Personally, I can’t see why a party seeking to represent working people can support our continuing membership of the EU. In an ideal world, Corbyn’s Labour Party would be campaigning to leave. They could then advocate for a points-based immigration system, while continuing to talk up the contribution skilled migrants make to our country. Realistically though, this was never going to happen. The modern Labour Party is as pro-EU as the top of the Tory Party. What can they do now they have decided to remain in the EU whatever the terms? Answers on a postcard please.
  2. Labour should adopt a position that anyone with the ability to work should work. They should scrap all welfare to work programmes and instead introduce guaranteed jobs paid at a living wage for all who find themselves unemployed and unable to find alternative work. Anyone unable to work should be give generous and unconditional support for as long as they need it, with the assurance that when they feel able to do any type of work, a job can be tailor made to suit them.
  3. Our economy is far too reliant on the finance sector and the very wealthy extracting money from the economy through unproductive investments like property. Labour should pledge to put a stop to this by increasing taxation significantly on those unproductive areas of the economy, while reducing tax on productive investments which have a positive impact on the economy.

Those are just three areas then, a fair immigration system, focus on employment guarantees rather than traditional social security, and – as Keynes might say – on euthanising the rentiers. I don’t see much prospect of any of these things becoming Labour policy, but all those 3 areas would have popular appeal in my view. What other areas could they focus on?


8 thoughts on “What should Labour be talking about?

  1. “Labour should pledge to put a stop to this by increasing taxation significantly on those unproductive areas of the economy”

    I’d go further. Just ban it.

    I don’t buy this “nudge” stuff. That just sounds like it was designed to give maximum pleasure to those who enjoy mind games with minimal real world impact.

    For example there is no social benefit what so ever from regulated banks lending money to other parts of the finance sector. And likely an impact of the stability of the currency rates from allowing it. If the finance sector wants money, it can raise equity to play casino games. So regulated banks should simply be banned from providing liquidity to the finance sector. Let the finance sector work with positive cash buffers, and leave the overdrafts for the real economy.

    1. Hi Neil

      Adressing these often highly inflationary sub-sectors with regulatory or fiscal policy would also make it easier to argue for Overt Monetary Financing, because the logical corrolary of OMF (a permanent zero-interest rate policy by the Central Bank) would be easier to justify if we didn’t “need” higher interest rates to slow down activity (via discouraging credit creation) in the housing and financial sectors during economic expansions. Of course, those who follow MMT know that fiscl policy is in general preferable to interest rate manipulation (with its uncertain and blunt impact) for controlling employment and inflation, but convincing others would probably be easer if we didn’t keep seeing inflationary tendencies in “leading” sectors long before aggregate demand reached economy-wide full-employment levels.

  2. Hi

    First of all, I’d just like to say that its refreshing to have someone with a good grasp of the Monetary system analysing Labour policy. So much of the existing debate, even in progressive circles, is bound up in discussions of “fiscal space” that ignore the UK’s status as a fiat currency-issuing state operating under flexible exchange rates. Said analyses therefore focus on a “hard” constraint of affordability rather than the actual constraint, which is how much + what mix of aggregate demand can coexist with full employment and relative price stability. I know you didn’t explicitly reference MMT (apart from indirectly via the job guarantee) but I’m sure that knowledge of Modern Money Theory undergirds your argument.

    Secondly, I have this very disconcerting feeling that, while Corbyn might have been open to MMT early on, McDonnell instinctively feels more comfortable with the “don’t worry we’ll close the deficit with growth + tax” argument because of his experience of fiscal policy at local council level, where govt spending IS financially-constrained (i.e. limited by taxation and borrowing). Also, I feel that whatever windows of opportunity for MMT thinking at the top of Labour there may have been initially (admittedly indirectly via the imperfect medium of Richard Murphy’s PQE), the choice of a group of deficit-dove rather than deficit-owl economists as advisors (New “Keynesian” Wren-Lewis + Blanchflower, and Pettifor, who seems to have a love-hate relationship with Modern Money Theory) has locked the leadership’s thinking into the “counter-cyclical spending’s okay because it’ll pay for itself” rather than “spending for full employment is always affordable because the UK never faces solvency constraints” mindset. It’s the difference between “look after unemployment and the budget will look after itself” vs “look after full employment + price stabiltiy regardless of deficit implications because currency issuers can always meet financial commitmments and don’t neeed to issue bonds anyway”. I suspect this lies behind the long-crystalising but only recently explicitly committed-to target of balancing the nat gov budget for current spedning while allowing deficits for capital/investment spending. This may also explain why we’re hearing about proposals for Income guarantees but those for Job guarantees are conspicuous by their absence. Mitchell, Tcherneva etc have shown how Basic income can be made qute compatible with mainstream (mis)understandings of the constraints facing currency-issuing, flexible-exchange rate government fiscal policy. By contrast, a full embrace of the Job guarantee requires and open-ended spending commitmment by the natonal-level government in terms of the number of people potentially being paid the basc wage out of public money, so would only be judged feasible if one understood that the constraints on said govt’s spending are inflationary, rather than “how would you pay for it”.

    Of course, its possible that Corbyn, McDonnell & co do understand MMT but hide it for electoral reasons, however: 1) is that really wise? I know that MMT’s kind of counter-intuitive when you first hear it + isn’t easy to get across in a soundbyte, but do they really think that arguing “of course the govt can run out of money but don’t worry because our measures pay for themselves. Deficits are bad but you can trust us when we say they’ll be temporary” would be an easy sell either? I think they’ll be poratrayed as “loony-leftists” regardless of what they say so they may as well start the long-difficult process of explaining to voters how the Monetary system actually works now, since short-term electoral success could prove elusive either way.

    2) I’m not sure that Corbyn & co actually DO understand MMT. They’re doing a good job of hiding it if they are, and I’m not sure their the kind of politicians who could pretend to believe something if they didn’t very convincingly. As I said, their advisory panel ranges from unaware to janus-faced about the approach. I think the balance of the evidence so far points towards them, unfortunately, leaning towards the new- rather than post-keynesan approach even in terms of their ideal policy intentions. Compare this with someone like Bernie Sanders in the US: even though he also talks about raising taxes to “pay for” his programmes, he rarely mentons the deficit, and I’m pretty sure he’s still being advised by an actual academic working in the MMT school (Stephanie Kelton), so I’m much more ready to believe that he “gets” MMT but isn’t ready (yet) to expose it. I actually feel there’s potentially less “need” for him to talk MMT than Corbyn + McDonnell: the US Democrats are already quite trusted on the economy, so I think Sanders could get away with doing MMT without being seen to do MMT, as it were; the narrative doesn’t requiring re-framing as much with regards to affordablity because the US general public doesn’t associate the Democrats with “irresponsible” economic maangement. For UK Labour, by contrast, the need for re-framing is much greater: I can’t see a Labour-led govt until they solve the “didn’t you spend all the money/how would you pay for it” misperceptions, and I personally believe that this can obly be done long-term via MMT discourse: it won’t be easy, but when its the only viable alternative, easiness doesn’t really come into it.

    These are just my thoughts: I’m no expert on Modern Money Theory, just an interested amateur, as it were.

    1. Pretty much agree.

      The problem we have with Labour, from my conversations, is that the two main factions are either apeing the Green Party or apeing the Tories.

      It’s like they don’t have the guts to put forward a genuinely UK Labour vision.

  3. What Jeremy Corbyn should be asking Cameron is, how can he justify a policy of austerity, at any cost, when the cost means local authorities not being able to house young people coming out of care. These are some of the most vulnerable people in society who are prey to every criminal, pervert and people trafficker out on the streets. Housing is the most serious problem faced by hundreds of thousands of British Citizens. It is a disgrace and affront to civilized society to place unnecessary financial policy above the dire needs of so many fellow members of society. An immediate local authority house building programme must be started NOW! It is a national emergency as well as a way of growing the economy. What we have at the moment is an epidemic of Slum Landlords and Fat Cat construction companies sitting back to create demand so they can cream a massive profit from 1st time buyers.

  4. “People don’t really care about whether immigration is good or bad for the economy. They see the impact on their local area, or areas nearby and dislike the change this represents. Humans have evolved to be wary of outsiders and I don’t see this changing any time soon.”

    BS. Labour along with all parties are pandering to swing middle class older voters. Aka “F*ck You I GOT MINE! I am fully vested!”

    What older *swing* voters want is:

    * Lots of immigration to bring down wages *as long as immigrants live in ghettos paying high rent to slumlords and never show up in public except as deferential wallahs*. The great british middle classes love the reality of cheap hired help, from low-fee polish plumbers to low-wage romanian cleaners as long as they don’t have to share their suburbs with them.

    * Very high welfare for middle class middle aged and older southern voters, both as pensions and high NHS spending, and as Help-To-Buy and other ways to give away Free Money to push up property prices. They also are very happy with hundreds of billions of no-strings-attached welfare money donations to protect the jobs of a dozen thousand splendid people in the City who finance house speculation. They just hate any social insurance payouts however small on the those poorer than themselves or living further north than themselves or younger than themselves.

    Put another way, the great british middle classes hate immigration and welfare *only* when they benefit someone else, and love them very much when they benefit the selfsame great british middle classes.

  5. “Most people’s resentment about perceived unfairness can be quite easily channeled towards those at the bottom. Everyone can think of examples from their own communities where people seem to be getting ‘something for nothing’. ”

    It is not resentment as such. It is spite.

    This is something so completely ridiculous, and the following comments too, that it astonishes even me.

    In the UK there is deep, extensive *right wing* class consciousness, and it it characterized by deep, extensive meanness and divisiveness.

    Do people who comment in this blog ever read the Telegraph and the Mail? They are chock full of class consciousness and class spite.

    Most incumbent south eastern property owner voting tory (either flavour, New Labour or Conservative) has a very high class consciousness, she thinks she is a landlady of the micromanor, thinks she is in the same class as Cameron and the Duke of Westminster.

    Typically she is even more mean spirited and divisive against the poor and disabled and Northern scroungers than Cameron and His Grace may be, and indeed a lot of Conservative politics is to try and catch up with the bottomless spite towards the lower classes of their very class obsessed voters.

    My usual quotes on Sierra Man and the “conservatory building classes”:

    “The problem with Gordon,” a senior minister said to me recently, “is that he doesn’t understand why anyone would ever want to build a conservatory.”
    There is a growing concern in the Government that the Prime Minister is alienating the aspirational middle classes who put Labour into power in 1997 and have kept it there ever since.
    … Although Mr Brown talks a lot about aspiration, he means it in the sense
    that people at the bottom of the pile should be able to get to the middle,
    rather than that those in the middle should aspire to get a little bit further
    towards the top. His preoccupations with child poverty, Africa and banning plastic bags are all very worthy – but they leave the conservatory-building classes thinking: what about us?
    … With the cost of housing, energy, childcare and food going through the roof, people who are relatively well paid can no longer afford to live the way they did even a year ago. As the middle classes book holidays in Torquay rather than Tuscany, drink tap water instead of San Pellegrino and put the conservatory they had been planning to build on hold, they start to question the amount they have to pay to the Government.”

    “I can vividly recall the exact moment that I knew the last election was lost. I was canvassing in the Midlands on an ordinary suburban estate. I met a man polishing his Ford Sierra, self-employed electrician, Dad always voted Labour. He used to vote Labour, he said, but he bought his own home, he had set up his own business, he was doing quite nicely, so he said I’ve become a Tory. He was not rich but he was doing better than he did, and as far as he was concerned, being better off meant being Tory too.
    In that moment the basis of our failure – the reason why a whole generation has grown up under the Tories – became plain to me. You see, people judge us on their instincts about what they believe our instincts to be. And that man polishing his car was clear: his instincts were to get on in life, and he thought our instincts were to stop him.”

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