Tuesday, 27 September 2016

Labour's Economic Policy - Purblind Illiteracy

Let's be fair - John McDonnell, like his friend and leader, does a very good impression of being a genial, open-minded and reasonable man. Just take a look at his interviews. When he is asked an awkward question about some inconvenient snippet from the past, or some of his unfortunate associations, or anything really that he has said or done before last September and he smiles indulgently. If it is a particularly awkward question he even giggles coquettishly like a schoolgirl caught fancying a boy.

Unfortunately however McDonnell and Chauncey cannot help themselves. They have spent too many years preaching to the converted and are finding the transition to being proper politicians rather than rabble rousing zealots too difficult. And so their real opinions and intentions keep intruding.

Yesterday Chauncey's chief consigliere, Seumas Milne surreptitiously changed the speech of Clive Lewis who is ostensibly in charge of shadow defence policy. Lewis knew nothing of this before he actually gave the speech. It's quite a comic image when you think about it as shadow ministers are told what to say right up until the last minute. If Lewis had done a comic double take and his eyes had popped out of his head cartoon style it would have surprised nobody. This is Chauncey's Labour. It's how we are all feeling.

Now he has his second mandate Chauncey and friends say that policy is what they say it is. Or what they can make people say. If only they could have got Hilary Benn to make that speech to parliament via autocue history might have been different.

And they feel emboldened to use the S word. Yes, socialism is back. But this is socialism red in tooth and claw. This is full on socialism. This is the sort of socialism that keeps destroying jobs, ingraining uncompetitiveness and hands power back to politicians and unions. It is a recipe for the very kind of decline that Britain suffered in the post war period up to 1979, saw nationalised industries have to be subsidised by the taxpayer and unions hold the country to ransom for ever more outrageous pay rises.

McDonnell yesterday spoke about entrepreneurialism. But what he is proposing would destroy any hope of entrepreneurialism in the country and drive it abroad. McDonnell is proposing a top down approach to how business is run and even how businesses are created. He is seriously telling us that Labour, the party that cannot even conduct a reshuffle of its shadow cabinet, should be responsible for choosing where money is invested and what businesses to back. He is seriously telling us that he should be allowed to choose what businesses exist based on how 'socially useful' they are. Socially useful? Defined how? By whom? Chauncey and co fetishise manufacturing and coal mining. But are they socially useful? Surely not if you believe in the environmentalist creed. What about businesses that build our naval ships or warplanes? Socially useful? What about Rolls Royce that builds aircraft engines and turbines for ships? Socially useful?

The bankruptcy of these claims is illustrated beautifully by McDonnell's promise to ban all fracking in Britain. Now whatever you may think of fracking (this blogger wholeheartedly supports it, probably because I am an evil Tory I expect) but it can easily be argued that it is in fact socially useful. Fracking would provide us with cheap, reliable and domestically sourced energy. It would enable us to generate electricity cheaply and thus mean that the poorest in the country, those most disadvantaged by the fuel poverty of recent years caused in part by higher costs but also by political posturing, would benefit. Now that, by an definition, has to be socially useful doesn't it?

And Britain is now a post manufacturing economy. It is time that politicians of the left accepted this new reality. We simply cannot compete with the rest of the world on making some manufactured good. It is economic nonsense to suggest that we can. Indeed importing such goods from lower cost countries around the world is more efficient. It actually makes us richer and not poorer. Those who complain that Britain doesn't make things anymore are guilty of the most outdated and unsophisticated dogma.

But even if trying to recreate Britain as an industrial country was a good idea and viable, the worst way of doing it would be by government fiat. It's not as if we have not tried this before. The nationalised industries of the post war era were a disaster. They were businesses that required taxpayer subsidy.

This is precisely why a market is the best way to drive these sort of decisions. Because no one man or woman or bearded socialist with a messiah complex gets to decide what is and is not 'socially useful.' Businesses are created and if they have a product or service that people want to buy then they succeed and even thrive. In the end, if they are successful enough, they get to employ lots of people and create lots of revenues for politicians to spend and often waste as civil servants prove that they are incapable of controlling costs. The other way just sees those politicians waste money at both ends of the scale and bankrupt the country.

The model that McDonnell and Chauncey espouse has been tested to destruction around the world countless times and yet still they refuse to see the evidence for what it is. The system we have is not perfect, nobody is pretending that it is. But it is phenomenally successful at the things that socialist countries routinely fail at, namely providing millions of jobs and putting food on the table. Better than that, they have provided for people a lifestyle that is comfortable, leisure filled, well fed and in which our greatest problems are associated with living too well and for too long. It is not socialism that has delivered this, it is capitalism. Capitalism in third world countries has also taken hundreds of millions of people out of absolute poverty.

Which are the countries currently struggling? They are socialist countries, Venezuela being a case in point. The country with the world's greatest proven oil reserves cannot feed its own people and is having to resort to forced labour to get the crops in. Venezuela, it need hardly be pointed out, is a country that the likes of Chauncey and McDonnell used to lionise as a great example of socialism in action. It has, typically, become a nasty, reactionary proto dictatorship. Chauncey and co don't talk about it anymore.

Why does capitalism work and socialism fail repeatedly? Because capitalism does not concentrate power in the hands of a few people who think they know best. Capitalism works because it is organic,  it works because it is driven by people's natural desire to do their best for themselves and for their families. It works because people take risks with their money in the hope of huge reward. If they lose they lose their money and maybe that of investors who knew what they were risking. Capitalism is the most efficient way yet created to apportion risk and to reward enterprise, hard work and inventiveness. And Capitalism, unlike socialism, is not a theory created by some wonkish middle class dreamer with no grasp on reality. Capitalism isn't a theory at all. It is just a word we use to describe the most natural order of things, the way that we tend to organise ourselves in any society. It is natural and effective. It's not a theory, it's just normal.

Capitalism grew organically in most societies around the world once we started organising ourselves in societies and started specialising and offering goods and services to customers instead of being hunter gatherers. Capitalism went from a means of selling excess produce to a means of creating the things that societies need to function in addition to food. Capitalism drives progress. It is efficient and effective. Capitalism was the reason why science and technology were created. The first telescopes, the first medicines, the first steam engines, the first trains, the first microscopes were all created by people wanting to make a fortune. Capitalism drove the modern societies we all take for granted. Capitalism has delivered our modern world of computers, smartphones, the internet and its myriad options of free apps and software giving us everything from maps to a wealth of information available in a fraction of a second. State owned telecoms in this country delivered us six month waiting lists for phones.

And the McDonnell approach, in addition to proposing failure is also proposing eye watering tax rises to fund fantasy economics that would lead inexorably to decline and real austerity. We have not had austerity in any real sense since the last recession. Spending has gone up every year since the Tories came to power in 2010. In the meantime unemployment has fallen and real wages are rising again. But still McDonnell wants to raise the minimum wage to over £10, a policy that would force people out of work. Then he wants to repeal the trade unions legislation which has stopped them from holding the country to ransom - except in the public sector of course.

This is idiocy of the highest order. It is fanaticism. It is ideology with no basis in common sense. This is like the fantasies of politicians, not so much of the 1970s as the 1930s. They seem to think that we can create autarkies, that we can cut ourselves off from the market forces of the entire planet. Were Britain to take the route espoused by the Labour leadership jobs would be destroyed, money would flee the country, investment would halt. In no time at all we would find ourselves in serious fiscal and monetary trouble again and the dole queues growing. Labour have never left office with unemployment lower than when they entered it. Never.

Chauncey and co and their legions of followers carp about the Blair/Brown governments for reasons that can only baffle. Brown as Chancellor was more redistributive than any Chancellor in modern history. They put up taxes hugely. What did we have to show for it? Record levels of borrowing and an economy that had tanked. And since those days the country has been borrowing without end. Borrowing has doubled over the last 6 years as the Cameron administration struggled to get on top of Labour's legacy of profligacy. Yet McDonnell wants to borrow hundreds of billions more and bring an end to austerity that the country has simply not experienced. Spending has been reined in for sure, but we have not had proper austerity. The economic policies we have had have created six years of growth and continually falling unemployment so that we are now at a level that economists would call full employment.

McDonnell and Chauncey would endanger that with their schemes of huge spending and huge taxes. They would bankrupt the country and drive successful people abroad. Back in the 70s we used to worry about the brain drain as smart people left to look for better opportunities. That was driven by socialism. If Chauncey and co ever get into power, they would make Labour of the 1970s look like economic geniuses.

No comments:

Post a Comment

All comments are published at the absolute discretion of the owner of this blog, but there is a general presumption towards publication. This is a free speech blog.