Corbyn Mania reaches Bradford

Being naive and overcome by madness, I naturally jumped at the chance to see Jeremy Corbyn speak in Bradford, the place I currently call home. The venue was the Karmand Centre on Barkerend Road. Perhaps anticipating a large turnout following a well attended event in Norwich the night before, the event was moved outside onto the adjacent cricket pitch. This was a good idea as I would estimate that between 600 and 800 people turned up. This is pretty impressive for a political meeting in Bradford. I reckon it’s more than George Galloway managed to pull in at his victory rally in 2012. This was the scene an hour before the event. There were already quite a few people there:

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I was there pretty early and managed to snaffle some free Corbyn merchandise in the shape of this beer mat:

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I wondered aloud on Twitter if Liz Kendall had her own merchandise and someone replied that her beer mat instead crosses out the word socialist and doesn’t include beer.

Anyway, Corbyn was about 40 minutes late. As he walked to the stage he received a spontaneous standing ovation. Surrounded by photographers and goons from the local Labour Party, it must feel a bit surreal to a man who has been an MP for over 30 years without anyone outside his constituency ever really noticing until now. He must be getting used to it though as this was apparently the 43rd event of this kind he had held, with many more to follow.

Before Corbyn spoke though, there were speeches from a number of people, with mixed results. A lady from the GMB union gave an impassioned ( but rather shrill I thought) speech against austerity and the local MP Imran Hussain spoke in his own unique style. If you haven’t heard him speak before, watch this. He shouts really loudly and talks. In really. Short. Sentences. It’s appalling! Not my cup of tea, but then he was one of the Labour MPs to vote against the Welfare Reform Bill (along with Corbyn), so what do I know? The standout speech was given by new Leeds MP Richard Burgon, not someone I know much about but his speech was rabble-rousing, funny and – unlike Imran – brief. Someone to look out for in the future I suspect.

Corbyn’s speech followed Imran’s and I suspect it’s very similar to the one he has given daily for the last 6 weeks. In the US, it’s called a stump speech and it was rather good. Corbyn is not an orator like a Galloway or a Livingstone, but he comes across as relaxed, impassioned and at times light hearted. He has some clear messages that will have rather broad appeal. When talking about tax avoidance he contrasted large multinationals with small businesses who pay their tax struggling to compete on an unlevel playing field. I think this is smart as it appeals to people’s sense of fairness.

He struck a very collaborative tone throughout the speech. It’s clear this is not a man who has ever aspired to lead, and probably still doesn’t really want to, but he is passionate about his ideas, and wants his ‘movement’ (as he calls it) and his ideas to have their chance. This represents a real change from the norm as for at least the last 20 years, politics has revolved around the cult of the leader. Since Blair and his ‘presidential’ style of leadership, a lot of focus has been placed on the man at the top and whether they are ‘prime ministerial’ enough. This is something Ed Miliband struggled with. He didn’t really know what what he wanted to be, and when he decided, asking the rhetorical question “Am I tough enuss?“, it was far too late. It will be interesting to see (if Corbyn wins) how people will react to a leader who wants to take a consensus approach to leadership. Corbyn also seems genuine about wanting the input of the party membership and the broader labour movement in thinking about the policy and direction of the party. Expect some changes to Labour Party conferences I would think.

I think there were a couple of areas where Corbyn will face problems if he does win, which came out in the speech. He spent quite a long time on foreign policy issues, which is obviously his passion. This raises two issues. The first is that while these issues are top priorities for the young (they certainly were for me when I was younger), they are a bit abstract to most voters. Foreign policy is – to me – not something to grab a lot of people who aren’t already positively disposed towards Corbyn and his ideas. His views on foreign policy, while perfectly defensible in my view if granted sufficient time, if not given sufficient time (as will almost certainly be the case), will be easy to caricature as being ‘friendly with terrorists’ or some other nonsense.

The other area I think Corbyn could tighten up on is economic policy. He briefly mentioned his ‘People’s QE’ idea, name-checking Richard Murphy and Joseph Stiglitz, but at the same time talked about needed to collect more tax to pay for public services. There is an inconsistency to me in understanding that infrastructure can be paid for QE-style on one hand, but on the other arguing that cuts are being made because the rich aren’t paying all their taxes. It leaves him open to the age old stupid question “how are you going to pay for it”. I would have thought he would need some support from academia to back up his anti-austerity stance, something Labour never tried to utilise in the last Parliament.

So that’s my summary of events. Unfortunately there was no time for a Q & A with the public at the end as Corbyn was whisked away to speak to journalists. I still have a couple of reservations about Corbyn, but hope he wins. He has definitely captured something in the public imagination. The audience tonight seemed to me to be very varied. There were sandal-wearing vegan types, quite a few elderly people in wheelchairs and on walking sticks, and a healthy number of people who just seemed to want to see for themselves what Corbyn was all about. Not wanting to be left out, there were also quite a few people trying to flog copies of the Socialist Worker to people at the end. I don’t think they got many bites though!

Win or lose, I hope that the momentum he has built up continues. in some form

Cameron’s speech sends the alittleecon bullshit detector into overdrive

David Cameron gave a speech on the deficit today. Standing in front of this background, he said some shall we say, questionable things:

I’ve heard the tone of his speech described as ‘hyperbole’, but I would go further and say there were a lot of balls out lies in there. His tactics appeared to be what I would call Shappsian, where you just tell intellectually lazy lies in a matter-of-a-fact way in the belief that people are too stupid to see through it.

First, the background, and the strapline “A Britain Living Within Its Means”. By means he’s talking about money, rather than stuff. If he meant the latter it wouldn’t be so bad, just basic common sense. What he actually means is reducing the deficit so spending is equal to or less than taxation. In attempting to achieve this it will mean households – in aggregate – will need to take on more debt than it had when the economy crashed in 2008. The Conservatives have a bloody cheek talking about living within our means.

Cameron also talked about the ‘chaos’ that would result should Labour win the election. His definition of chaos is:

“It’s election year, and the choice is clear: staying on the road to recovery – or choosing the path to ruin. Competence or chaos.

With the other parties, all you get is confusion.

Uncosted plans. The spectre of more debt. The shadow of more taxes on your family, your home, your business.

With the Conservatives, you get the opposite. A strong and competent team, a proven record, and a long-term economic plan that is turning our country around …

We cannot overstate how important this is.

If we fail to meet this national challenge, the writing is on the wall.

More borrowing – and all the extra debt interest that brings, meaning there is less money to spend on schools and hospitals and all the things we value as a country.

More spending, and the higher taxes that will require – hardworking people thumped to pay for Government wastefulness.

And higher interest rates too – punishing homeowners, hurting businesses, losing jobs.

In short, economic chaos.”

Labour have given themselves a bit of wiggle room over their spending, committing only to balancing the ‘current budget’, meaning, they have left scope for higher spending on whatever they want to define as capital spending, but on current plans, there’s little between Labour and Tory over spending. The amount of spurious nonsense you would have to swallow to take Cameron’s assertions at face value are surely too much for most.

Talk of ‘unfunded’ spending is a silly argument in itself. Cameron is saying both that this will mean more borrowing and higher taxes, but if Cameron is right (he’s not), the extra spending would be ‘funded’ either by higher taxes (in which case, in the mainstream view, no extra borrowing), or by extra borrowing (in which case, no extra tax). He can’t have it both ways, and in fact can’t have it either way, because taxes and borrowing are not needed to ‘fund’ spending at all.

Cameron talks of more borrowing leading to more debt interest payments, but as Richard Murphy points out, interest rates on long-term debt have plummeted over the last 10 years, so even if spending did go up, and the deficit was matched by issuing debt, as the older, higher interest debt was refinanced with new low interest debt, debt interest payments may even fall, not rise. A public debt crisis is not on the way whoever wins the election.

The final bit of nonsense I wanted to pick up on was Cameron’s assertion that interest rates would rise if Labour won. This is rubbish because interest rates in the wider economy are strongly correlated with the base rate set by the Bank of England. This is 0.5% at the moment, and has been for several years because the economy has been weak, and most economists think low rates stimulate the economy. As the economy recovers, we should expect to see interest rates rise, so if the Conservatives are saying the economy will continue to improve with them but slip into chaos with Labour, we should expect rates to rise with the Tories, but stay the same or fall with Labour. A complete 180 from what Cameron is suggesting. It’s not necessarily bad if rates do start to rise (although it will be for some people). It’s just what’s likely to happen in a recovery.

Not a lot to like then. He is relying on voters being idiots. This is not to say Labour do not makes questionable assertions of their own, but it’s been the Tories who have been straight out of the blocks with the sort of negative, fear-mongering campaign many suspected would be the way things would go. How will Labour respond?

We don’t need to increase taxes to pay for better public services

It’s becoming quite fashionable at the moment to advocate raising existing taxes (or introducing new ones) specifically to ‘pay’ for increased investment in public services, particularly the NHS. A lot of people say they would be quite happy to pay a bit more tax if it meant we can invest what is needed to ensure a world class NHS. This comes on the back of years of talk about our ageing population creating new pressures on the NHS leading to a ‘funding crisis’. The thing is though, we can afford to invest in the NHS and we don’t need to increase taxes to pay for it.

Taxes don’t actually pay for government spending at all. In fact, government spending ensures we have the money to pay tax. The spending comes first. Richard Murphy explains this quite nicely in this blogpost, and I’ve tried to explain it myself here. Taxation has a number of purposes, but paying for public spending ain’t one of them (even though 99% of people think it does).

We will always have the money to pay for extra NHS spending, the question is whether we have the resources. An important part of any health service is obviously going to be the medical personnel, so if we need to increase capacity, the question is are there enough qualified people available to hire, or enough people willing to be trained to do the work? The cost of hiring an extra doctor or nurse, is not the salary cost, it’s the cost to the economy of that person not doing what they would be doing if they weren’t a doctor or nurse.

Similarly with medical facilities and equipment. There is always enough money to purchase those things, but the question is, is using them in the NHS more or less important than what they would otherwise be used for? I would argue that usually, the answer would be more.

I think by floating the idea of increasing taxes to pay for things like the NHS, it allows the fiction of taxes paying for spending to continue. If everything we might want to do to further public purpose is couched in terms of how it will be paid for, it gives the other side the advantage. It’s far better to talk in terms of real resources rather than money. As my fellow MMTer Neil Wilson is fond of saying, it’s time to get real!

Banks, Balls and more Balls

Here’s another roundup to links from the last week. Two nice posts on banks first by Neil Wilson and Frances Coppola:

How banks work

Banks don’t lend out reserves. Nor deposits. And we aren’t “paying banks not to lend”

And on the Central Bank, Richard Murphy writes:

The pretense that we have an independent Bank of England should end

First installment of Balls now. For the last couple of months, there have been signs that the economy is starting to recover. Unemployment in particular has fallen much faster than expected. Despite this though, Ed Miliband has been putting David Cameron under pressure over what he calls the ‘cost of living crisis’. Under pressure from Miliband at PMQs on Wednesday, Cameron said that most people were better off now than in 2010. To back this up, on Thursday, the Treasury cobbled together some ‘evidence’ to support this. Duncan Weldon examines the evidence here:

What to make of the latest claims on living standards

Finally, some more Balls. This time, Ed Balls. He’s making a speech tomorrow about how Labour will reinstate the 50p tax, but he’ll also apparently be explaining his plans for ‘fiscal responsibility’. This is unfortunate as Neil Wilson and Richard Murphy explain:

Ed Balls promises to cause a UK recession by 2020

The incredible Ed Balls