Of Course We Can Afford It!

Many people are sceptical of the 2019 Labour Manifesto – can we afford it? Where’s the magic money tree?

It’s actually eminently affordable, and would make the economy better for years to come. Here’s how.

It really isn’t that expensive, seriously.

Here’s a graph from The Times (hardly a radical publication!)

Labour manifesto cost graph

Many estimations of the upfront costs are inflated or decontextualised to seem scarier. A few more percent of GDP spent on long-needed investment hardly threatens cataclysm, so stop raving about Venezuela.

We can’t afford to not do this stuff.

Is the economy really working right now? Who for?

Food banks have gone from virtually unknown to a regular feature of life. We have high in-work poverty. Child homelessness has soared by 80%. There are schools asking parents for basic supplies.

I could go on and on. Austerity continues to have a savage toll. It’s not a coincidence that so many things are at a record worst. This didn’t just happen, it was done by the Conservatives (and Lib Dems). It is unnecessary, outrageous, and unforgivable.

Isn’t it curious that when ‘we’ had to tighten our belt, that meant telling an emaciated man to find work but didn’t mean doing anything to slightly inconvenience billionaires?

If we have any pretensions of being a civilised society, we must invest in vital services and support secure work with a living wage. We are supposedly one of the wealthiest nations. We shouldn’t have food banks.

Suppose all this had happened under a Corbyn government. Would you then be talking about ‘socialist bread lines’? Think about that very seriously.

Prof Mariana Mazzucatto says:

[O]verall, the economy is not growing through investment, but private debt-fuelled consumption, putting the ratio of private debt to disposable income back at the level it was before the crisis. And that, not public debt, caused it.

Investment generates returns.

Many sources will compare merely an expected cost (likely an inflated figure) of policies with expected revenue from tax changes. This is tipping the scale – the whole point of investments is to generate some return, whether through savings downstream or growth.

Comparing the economy to household spending – a simple money in, money out – is stupid for many reasons, one of them being that households don’t tend to invest money to gain new income. But this is one of the things public spending should be about (with public welfare being another critical, tragically sidelined priority).

It’s still a flawed analogy, but compare the economy to a business instead. If you run a struggling business, is the only option you have to reduce outgoings? Do you fire all your staff and sell all the chairs? No!

Prof Simon Wren-Lewis concludes:

[A] Labour government implementing all or the major part of this manifesto will mean the economy as a whole will end a decade of low output and wage growth that has stifled UK innovation and productivity growth.

We should ignore the tired old discourse about whether we can pay for it, and focus on the benefits each individual spending increase or investment project might bring, and on the revitalisation of the economy that this manifesto will generate.

And do you realise how wasteful privately owned energy, water, etc is? Nationalising these oligopolies away pays for itself.

Based on intensive empirical research, this paper shows that public ownership of utilities would result in annual savings of just under £8bn – so nationalisation would pay for itself in less than seven years[.]

But the 1970s!’

For heaven’s sake, the 1970s had a specific, complex international context – the fall of Bretton Woods, the OPEC oil embargo… unless you’re prepared to go into the weeds of all this, you simply don’t have an argument. What you have is a tired scare story about the past, when nurses are resorting to food banks today.

A more apt comparison for Labour’s plans would be the modern social democracies – which, far from rerunning the Winter of Discontent, are doing better than us on most meaningful metrics. Many other decent countries have elements of key Labour policies.

Even within the UK, compare Preston’s in-sourcing success to Tory councils almost going bankrupt!

But New Labour ruined the economy!’

1 – This isn’t them any more, thank heavens!

2 – The Tories have had power for a while now – and everything is crumbling.

Ok though, let’s talk about the crash.

Loathe as I am to defend Blair or Brown, let’s acknowledge that the crash was an international crisis that began with US mortgage markets. It would have been difficult to entirely insulate the UK.

Having said that, one of the many big mistakes they made was failing to properly regulate the financial sector. Everybody knows this.

Would the Tories have done it? We know not – if nothing else, they’ve had the reins for a while now and haven’t done so!

As for the ‘no money left’ note: do people not understand what a dark joke is? This is a tradition among leaving ministers.

The only previous example of a similar note being made public came in 1964, when Conservative chancellor of the Exchequer Reginald Maudling left a message in his Whitehall office after being forced out by election defeat, telling his Labour replacement James Callaghan: “Good luck, old cock…. Sorry to leave it in such a mess.”

The problem wasn’t ‘spending too much’ (see the social democracies again), the problem was unstable finance and asset price inflation led growth – which only Labour will finally get us out of by investing in the real economy. Reforms such as a financial transactions tax (disincentivising speculative high-frequency trading in favour of real investments) will help fight the exact issues that burst in 2008.

But Dianne Abbott!’

One MP flubbing an interview once is relevant to a manifesto how?

Phillip Hammond got the cost of HS2 wrong by £20bn in an interview. That by itself surely isn’t enough to completely disregard Hammond or the Tories, is it?

(Let’s not pretend we don’t all know exactly what the double standard is about.)

I’ll tell you something that is relevant to a manifesto, though. The entire conservative party wants to convince you that 20,000 is a higher number than 21,732. Is this what credibility looks like?

(Any Tory MPs reading: if you’re confused about how numbers work, here’s a tip from Big Shaq.)

If the manifesto really is so unaffordable, make honest arguments.

If there are good arguments to be made, why not make them instead of setting up a fake ‘labour manifesto’ website to mislead people?

Temporarily rebranding their press account as an independent fact checker, doctoring a video of Keir Starmer… if our policy is so bad, why resort to desperate underhand tricks?

All the right seems to have is falsehood, easily debunkable canards, and hysterical comparisons to Stalin at the prospect of making corporation tax what it was in 2010. I’m simply not seeing much of real substance.

It seems like what scares leading Tories and their friends isn’t the prospect of Labour ‘trashing the economy’, but changing who it works for. It’s great for them if landlords charge exorbitant rents, bosses pay a pittance to zero-hour workers subsidised by insufficient benefits, and the profits all stack up in tax havens. And if they’ve conned you into agreeing with them, they’re laughing all the way to the Caymans.

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