Monday, 11 July 2016

The Incredibles

It's been in the headlines ever since the vote for Brexit, but I still don't understand the logic behind the Parliamentary Labour Party's coup to unseat Jeremy Corbyn. Suggestions that he's not "relevant" or "credible" keep getting thrown around, but I'm still failing to see what relevance or credibility the plotters from Labour's Old Guard have brought to the party.

Consider the most important issue facing the party and its leader - the economy, stupid. From 2010, the Conservatives' only response to the post-financial crisis slump has been self-defeating austerity with a side-order of promising to be tough on foreigners and tough on the causes of foreigners. The Labour Old Guard could have come up with something more relevant and credible than that, but all they could manage was to promise austerity lite, plus a mug that promised that they, too, would be tough on the causes of foreigners.

It isn't difficult to see why a watered-down copy of a failing strategy failed miserably. It really wouldn't have been that hard to do something different, like explaining why austerity wouldn't and couldn't work under the circumstances. Never mind making an anti-austerity case to people of voting age, they could have explained it to children. Literally:
Why are debts going up if the policy is "cut, cut, cut"?

Now this is something I just couldn't understand why Labour couldn't articulate. It's not difficult. You could kind of explain it to, as the US would say, to a seventh grader, right? Primary seven,* right? You could do this with a primary seven.

So imagine that the economy is composed of two bits. The debt and the economy that pays for the debt, you with me?

Now let's turn that into a sum. We've all done sums, right? So we'll put the debt on the top, we'll call that the numerator and we'll put the economy on the bottom, we'll call that the denominator.

Now let's call it 100 and 100, so you've got a debt to GDP ratio of 100%.

Now let's assume that 40% of the economy's government spending - which would be true for a developed European economy.

Let's say that you're convinced that the only way in a crisis to improve business expectations is to slash the welfare stare. So you cut government spending by 20%.

Now what just happened to your denominator?

It just went to 80.

So what happens now when you've got 100 over 80?

You've got 120% debt to GDP. Now if everybody's sharing a currency and they're all each other's trading partners and they're all simultaneously trying to save, the only result can be a contraction of the denominator and an increase reciprocally in the numerator.

That's what happened. That's what everybody said would happen. And guess what? That's what happened. It's not a shocker.
From Mark Blyth's talk Geographies of Austerity (video below -  it's a long talk, but the section I've quoted starts at 8' 56"):
So, after losing the election, Labour finally woke up, smelled the coffee and elected a leader with a clear, understandable, anti-austerity message. Then Brexit happened, Ukip and the the Tory Brexiteers went back on their pre-referendum promises within 48 hours, and there were resignations and turmoil in the blue and purple ranks. Oh, and look, the Tories just quietly abandoned their plan to eliminate the deficit with austerity (George Osborne would have you believe that he's abandoned his plans to cut his way to surplus because of the post-Brexit crisis, but that makes no sense at all, given that the whole justification for all the austerity since 2010 was that we had to cut because we'd just had a crisis - if this was true, he'd be announcing that we'd have to cut even harder to claw a way out of this new crisis).

Under these circumstances, "Now would be a good moment to start a civil war in the Party" may go down in history as the worst decision in Labour history since that other screw-up Corbyn wasn't responsible for, "Now would be great time to start a war in Iraq."

*A child of 11.