Miliband’s party should focus on growth and improving living standards for the majority, and not get caught up in the cutsJust before at the end year’s common election, the governor of the Bank of England, Mervyn King, reportedly said the winners would be outside of ability “for a generation” since of the deep cuts to public spending demanded by the financial crisis. Yet Conservative governments – and Conservative-led coalitions with the Liberals – have won elections after presiding over mass unemployment and diminished public services. In the 1930s, the Conservatives led by Stanley Baldwin were electorally dominant in these circumstances. Margaret Thatcher repeated the trick in the 1980s. Ed Miliband knows Labour can’t simply sit back and wait for economic pain to capture its toll on the administration. The Tories are setting an electoral trap for Labour; history can aid Labour to avoid it.Conservative-led governments define economic crises as caused by excessive administration spending rather than lost output and low growth. The familiarity of the 1930s and 1980s suggests that, when the competition between parties revolves encircling who is best at cutting spending, the Conservatives have an advantage. The trap in which David Cameron hopes to catch Labour is the same as Baldwin’s and Thatcher’s: push Labour into an electoral contest focused on cuts alone. A debate about public spending and debt enables the Conservatives to rest their electoral appeal on a claim to relative rather than absolute economic competence. However terrible things get, Cameron hopes to claim they would be worse under Labour.Historically, coalition has been a very useful political strategy. Between the wars, Conservative administration with the participation of Liberal MPs was the norm in British politics. So, also, was the commitment to aggressive programmes of fiscal retrenchment, including major cuts in housing programmes, education and unemployment benefits. Coalition politics insulated the Conservative party from the accusation that their economic policies were unfair or sectional, and allowed them to dress up damaging policies as national imperatives.This political strategy clarifies the administration’s failure to contemplate a more flexible macroeconomic approach in 2011. A carefully targeted, small-term stimulus plot, such as Labour’s five-mark “plot for jobs and growth” or Barack Obama’s American Jobs Act, is needed to stabilise the economy in the face of renewed global uncertainty. However party interest is preventing George Osborne from adopting a plot for jobs and growth: this would undermine the Conservatives’ central political claim that the only measure of governing competence is willingness to implement deep and immediate spending cuts. It would risk a political contest about who is best placed to deliver jobs, growth and fairness – a contest in which Labour has the advantage.If the precedents for the contemporary administration’s political strategy are clear, its success is doubtful. Hardly any are likely to benefit from the administration’s approach. This was not the condition in the 1930s and 1980s. Economic growth in the middle years of both decades averaged more than 3% a year. The 1930s were years of considerable prosperity for the south and the Midlands, as fresh manufacturing industries emerged and an expansion of road and suburban rail networks facilitated a housing boom. Unemployment remained high – above 10% – throughout both decades. However this was allied to low inflation and rising absolute wages for those in employment. Unemployment was also concentrated in particular parts of the nation. Austerity locate in stone a divided United Kingdom in which Conservative or Conservative-led governments prospered since there were more “winners” than “losers”.The difficulty the Conservatives face in repeating the trick is that economic winners will be thin on the ground over the following hardly any years. Unlike today, the recessions that propelled Conservative governments to ability in the 1930s and 1980s were not caused by systemic crises in British banks. Such crises tend to produce extended, slow and anaemic recoveries. There is small scope for the traditional Tory remedy of a housing and credit-based boom. Meanwhile, high commodity prices and a weak pound are leading to imported inflation. The result is an unprecedented squeeze on absolute incomes. This is the cardinal circumstance of contemporary politics, and one likely to leave the electorate hungry for a credible alternative to the coalition’s politics of “There is no alternative.”So the historical record suggests Ed Miliband’s choice to focus on the plight of the “squeezed middle” and demand for a fresh growth imitation for the British economy was the fair political judgment. Labour can sidestep Cameron’s political trap by mounting an electoral appeal based on increasing private-sector growth and improving living standards for the majority, rather than a simple defence of public spending. This would energy the Conservative party away from talking only about cutting public spending and on to the terrain of explaining how growth is to be delivered. A key element of a credible growth strategy will be an active industrial policy. The Conservatives and the Liberal Democrats recognise this. George Osborne has suggested that “credit easing” could be modified to aid SMEs. Vince Cable frequently talks about industrial policy and the demand to “rebalance the economy”. However the coalition struggles to pass from rhetoric to action. In practice, the Conservatives are uncomfortable with the thought of an activist state. They have excellent cause to dread a political contest organised encircling which party can best deliver growth.Just as there are historical precedents for Cameron’s trap, there are also precedents for Labour to escape it. Clement Attlee, Harold Wilson and Tony Blair attacked the Tories’ record of economic stagnation. The 1964 election, with its focus on economic underperformance and relative decline, is particularly resonant, given the likely electoral background in 2015. A patriotic appeal for national growth could highlight the divisiveness and inefficiency of Conservative political economy. Labour succeeds when it convinces the electorate it can deliver efficiency and social justice via successful economic modernisation – in the interests of the many, not the hardly any. With the many likely to have seen small improvement in their living standards by 2015, Labour has that opportunity.LabourConservativesPublic sector cutsFinancial crisisEconomic growth (GDP)Gregg McClymontBen Jacksonguardian.co.uk © 2011 Twitter News and Media Limited or its affiliated companies. All rights reserved. | Employ of this content is subject to our Terms & Conditions | More Feeds
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