Labour deficit hawks: Wrong about the economics and the politics

One particular paragraph that stuck out from Larry Elliot’s comment piece in The Guardian today was this:

Politically, a growth-based strategy makes more sense for Labour than a deficit-cutting contest with the Conservatives – provided the economic arguments stack up, which they do. Voters were unimpressed by the argument that Darling was planning slightly less pain than Osborne spread over a longer period. They are likely to be equally unimpressed by Osborne when they find out what he’s got in store for them – and for the British economy.

One of the factors contributing toward Labour’s electoral loss was its failure to articulate a coherent economic alternative to the cuts. The mixed message sent by Brown, who refused to repudiate or endorse Alistair Darling’s now infamous cuts “tougher and deeper than Thatcher” line, and disagreement more generally within the Brownite ranks, coupled with the rightwing, hawkish view of the Blairites (from the Blairite backbenches of the Labour Party, see this, and this from the man himself – granted he wasn’t making any decisions), led to a very confused political line indeed – are the Labour Party for the cuts, or against them? As Elliot points out, the message “we’ll hurt you, but not as much as the other guys” is hardly a vote-winner.

This view is also borne out in the polling data. Support for the Labour Party fell after the announcement of the budget (see here, also) – that is, when Labour stopped defining their economic policy in terms of Tory cuts versus Labour investment, and instead took a move to the right.

Not only is it sound economic sense to embark on a deficit reduction plan with public investment led growth at its heart, it’s also good politics.


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