Desperate times call for …

October 12, 2011 by
Filed under: Credit crunch, Politics 


The shocking unemployment statistics demand a proper response from our political class but will we see it?

Largely because the media exploit any such admission, politicians are loath to admit that their judgements are often fine and that all significant policy decisions involve risks and downsides as well as benefits. As a former Government advisor and a long time policy wonk I know that any honest evaluation of a policy decision involves weighing up good and bad points; if there was a policy out there that had only benefits it would have been identified and implemented a long time ago.

Today the Government is blaming the global financial crisis for the unemployment statistics while Labour (a cogent but slightly too cheerful Liam Byrne) is calling on George Osborne to adopt the Opposition’s five point recovery plan. Both Parties claim their approach is entirely right and the other side’s totally wrong. Neither claim is true. More importantly, neither offers any comfort to the almost one in five 16-24 year olds now out of work.

In such extreme circumstances it is worth the thought experiment of exploring the what the political parties might do now if they genuinely put the public interest first.

In economic terms, there is little question the Coalition could press its foot less hard on the austerity pedal and put more money into jobs, wages and purses without being grossly irresponsible. This seems to be the majority view of economists, and even international bodies like the IMF are warning that austerity could be self-defeating.  But the Government is also right when it says that credibility is important in volatile markets. An apparent fiscal u-turn in the UK could be portrayed as panic or the beginning of a bigger political capitulation and this could lead, among other things, to an increase in the interest we have to pay on our national borrowing.

In this equation, politics matter. The recent gridlock in America had a direct impact on the country’s economic rating and on the markets. So, if the Coalition and Labour were to agree a package which combined a short term injection of public funding with a cross-party agreement to stick to a now slightly extended period of fiscal balancing it could powerfully reassure markets that the UK isn’t about to give up the ghost on getting the finances under control.  The Coalition is the elected Government so it would be its prerogative to determine the content of the growth package, but Labour could show statesmanship (which surely wouldn’t do Ed Miliband’s credibility any harm) by supporting the general thrust of the package and being measured in its criticisms and alternatives.

The Osborne phrase ‘We’re all in this together’ is now used exclusively to taunt the Coalition, but if the political class were able to up their game and collaborate it might take on a new resonance. In such a context part of a growth plan could be to call on business, employee organisations and ordinary citizens to make their contribution to getting us through these dark hours. In the year after the credit crunch there were many examples of employees taking voluntary pay cuts or agreeing work sharing schemes.

This morning an academic on Radio 4 called for more workers to offer to reduce their hours to create more jobs. A growth plan could include temporary regulations to enable employees to take a fixed term reduction in their hours in the context of an agreement by the employer to maintain the organisation’s wage bill but allocate the released hours and costs to create new jobs. Even if such measures were marginal in their impact they would at least lift the national mood out of the terrible despond in which it is now mired.

Like any competitive activity, the problem of changing political conventions lies in who goes first. For the Government to ask the Opposition to enter into talks might look like weakness and, anyway, as I said, the Coalition is the elected administration. So, my bold – and no doubt naïve and doomed – appeal for a cross party strategy to offer hope to the nation’s jobless – would have to start with Labour.

How about changing the current party line – which is to demand the Government adopt Labour’s five point plan – and instead offer to enter into genuine talks with the Coalition about a national recovery plan. The Coalition would probably scoff but the voters, at least, might appreciate it.

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7 Comments on Desperate times call for …

  1. Tom Brookes on Wed, 12th Oct 2011 4:05 pm
  2. Maybe I’m being a touch idealistic here Matthew, but I’m in my second year of Politics at university and I sincerely hope that if I manage to get involved with the business of parliament and government that I don’t immediately forget everything I learn. You see… wonderful though your thought experiment is, that’s actually… how Parliament’s supposed to work; isn’t it? Dialectic & such.
    Not parties bumping heads & vehemently disagreeing like there’s an election tomorrow, but acting on reason and factual evidence in the best interests of the nation. Perhaps if the parties are incapable of this most basic of democratic functioning it is they which require reform.
    Here’s my thought experiment – what if, instead of standing resolutely for a party line, all parties were disbanded & politics being a field of factual, evidence based ideas being debated by independent politicians, who could act (far more) freely in terms of rationality and conscience – elections could still be held in the same manner, MP’s, Parliament etc – but it would be vastly more representative. Oh in this scenario campaign funding would be considered charity, & come from an entirely independent body allocating each candidate the same amount. Then it’s the quality of the ideas, not the razzle dazzle. I don’t know that an overarching executive government would even be necessary in such circumstances. Of course this is almost like imagining an alternate reality… or is that just cynicism; & should we be striving to make politics something better, something by and for citizens – something which, I believe, it can be with enough of that bloody elusive political will.

  3. Tom Brookes on Wed, 12th Oct 2011 4:06 pm
  4. Maybe I’m being a touch idealistic here Matthew, but I’m in my second year of Politics at university and I sincerely hope that if I manage to get involved with the business of parliament and government that I don’t immediately forget everything I learn. You see… wonderful though your thought experiment is, that’s actually… how Parliament’s supposed to work; isn’t it? Dialectic & such.
    Not parties bumping heads & vehemently disagreeing like there’s an election tomorrow, but acting on reason and factual evidence in the best interests of the nation. Perhaps if the parties are incapable of this most basic of democratic functioning it is they which require reform.
    Here’s my thought experiment – what if, instead of standing resolutely for a party line, all parties were disbanded & politics became a field of factual, evidence based ideas being debated by independent politicians, who could act (far more) freely in terms of rationality and conscience – elections could still be held in the same manner, MP’s, Parliament etc – but it would be vastly more representative. Oh in this scenario campaign funding would be considered charity, & come from an entirely independent body allocating each candidate the same amount. Then it’s the quality of the ideas, not the razzle dazzle. I don’t know that an overarching executive government would even be necessary in such circumstances. Of course this is almost like imagining an alternate reality… or is that just cynicism; & should we be striving to make politics something better, something by and for citizens – something which, I believe, it can be with enough of that bloody elusive political will.

  5. Jules on Thu, 13th Oct 2011 6:17 am
  6. Why does the Coalition need to work with Labour on this?

    If the government is worried about saving face with the markets, while also adding a bit more stimulus to the job market, then it should launch more stimulus initiatives but without branding it ‘plan B’. Just call it something else and pretend it was always part of your plan. The markets wont care that much, i dont think.

    You could even do it through the ministry of education, if its particularly targeted at 16-25 year olds. call it an educational initiative rather than an economic one.

    For example, couldnt the government create a voucher scheme for young people to get training? enable them to get training in whatever they want – computing or whatever. im not sure it would stimulate the economy hugely, but at least it would make the young unemployed feel that something was being done for them. you could finance the scheme through a bank tax!

  7. Bernard Mason on Thu, 13th Oct 2011 9:30 am
  8. Matthew, a ‘nit picking point”. You say that the coalition is an elected government.

    In view of the diametrically opposed ideological and manifesto differences of the two parties before the election, neither of whom gained a majority vote, is this strictly true?

    As a lifelong proponent of coalition politics, I have found its reality to be a salutary (and disappointing) lesson.

    In a national emergency, would not a national government made up of all the parties rather than a private cabal of two such apparently opposed groups of politicians carry more credibility?

  9. Peter M C Jones, Harrow on Thu, 13th Oct 2011 3:11 pm
  10. We need the well off to do something more than pay taxes.

    We need philanthropic action of the sort last seen in Victorian times to put job seekers in front of employers, where employers are looking for talent, but also need to equip the workforce and potential workforce with modern day skills the economy needs to move forward.

    If the well off stop thinking about lining their own pockets first and foremost, and visibly try to make a difference and help those who really need help, then this country would rediscover the wonderful war spirit, where we “all mucked in together”.

    Sadly, our political leaders are too concerned with the fiscal debt issues to think about how we might trade our way, and therefore employ our way, out of this crisis.

  11. Indy Neogy on Thu, 13th Oct 2011 5:43 pm
  12. There is often a question of balancing competing risks – but it’s not enough to assert that and it’s certainly not appropriate to claim that all risks are equal.

    There is plenty of historical evidence that for countries at the zero-interest rate boundary who have their own currency, the largest risk is of stagnation and recession. Throw in the fact that most of UK government debt is long-dated – we don’t have an immediate borrowing emergency.

    Thus, it’s not at all appropriate to pretend that inaction is justified due to fears about interest rates. It’s an ideological assessment not borne out by facts or evidence. And you need to ask yourself why you place that ideology above the facts and the evidence.

  13. Bernard Mason on Sat, 15th Oct 2011 9:11 pm
  14. Rereading this blog, I realized why I have such a sense of deja vu.

    As young doctors, our professor of obstetrics told us the parable of the dangerous obstetrician. This was a rigid thinker, who, having once decided to apply the forceps, found it psychologically impossible to take them off to perform the safer course of a caesarian section. He always delivered a baby —– almost always damaged.—– often dead.

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