Paul Krugman, the Nobel prizewinning economist, pinpoints the great mystery of the past five years of British politics and this election campaign, in a Guardian article, headed The austerity delusion, today. He writes:
It has been astonishing, from a US perspective, to witness the limpness of Labour’s response to the austerity push. Britain’s opposition has been amazingly willing to accept claims that budget deficits are the biggest economic issue facing the nation, and has made hardly any effort to challenge the extremely dubious proposition that fiscal policy under Blair and Brown was deeply irresponsible – or even the nonsensical proposition that this supposed fiscal irresponsibility caused the crisis of 2008-2009.
Why this weakness? In part it may reflect the fact that the crisis occurred on Labour’s watch; American liberals should count themselves fortunate that Lehman Brothers didn’t fall a year later, with Democrats holding the White House. More broadly, the whole European centre-left seems stuck in a kind of reflexive cringe, unable to stand up for its own ideas. In this respect Britain seems much closer to Europe than it is to America.
This quote is towards the end of the long – nearly five-and-a-half thousand words – read which is closely argued and academic in tone, with charts.
While Krugman’s analysis is convincing and his general view that austerity is not the way out of the financial crisis is supported by the majority of economists, he fails to present his argument in a way which will enthuse the man (or woman) on the Manchester Metrolink.
Confronted with a controversial economic issue someone in a group will eventually come out with the old saw, “If you lay all the economist in the world end to end, they will never reach a conclusion.” It is too easy to dismiss the argument of an economist.
Supporters of the small state, the real motivation for austerity according to Krugman and many others, will often describe the banking crisis as a “market malfunction”, as if it was akin to a “wardrobe malfunction” which exposes a celebrity nipple.
Why Labour has been so ineffective in confronting Osborne and his policies is a puzzle. I suspect it is because they have treated it as an economic argument rather than the vision of the sort of country we want to live in.
The success of the SNP, the Greens and Plaid Cymru has been largely because they have a vision which is not that of Osborne and Cameron. They want to expand the state, not contract it and are not ashamed to say so.
The effort of reading Krugman’s long read before voting is worth it.