The cuts haven’t worked; it’s time to challenge austerity more strongly

This week, yet another expert lined up to warn that that cutting public spending at the rate Osborne insists on has contributed directly to a triple dip recession, and has not helped growth in any way.

Among many others, Nobel prize laureates Paul Krugman and Joseph Stiglitz have repeatedly argued that austerity is counter productive to growth, even if we accept – and many don’t – that perpetual ‘growth’ is either realistic or desirable.

Figures released this week by the Treasury show that both government spending and the deficit are on the rise compared to this time last year. In other words, exactly the opposite of what the government said would happen. The conclusion that the austerity program is ideologically driven is getting harder and harder to dismiss.

The idea of an ideologically-driven government is not a problem in itself, provided that a majority agree with the ideology. That is by no means the case with the austerity doctrine – it was presented as a necessary evil, at a time of general panic over the 2008 crisis, and a deeply exhausted Labour opposition. Even in that climate, Cameron and Co. couldn’t get a proper mandate, and events since have done nothing to build confidence that their ideas have any pragmatic foundation at all.

Between now and the next election the burden of proof should shift from the government’s critics to the government themselves. Labour should pursue this more aggressively than they have been doing so far – it’s not enough to dispute some cuts while generally agreeing that deficit reduction is the priority.

Ed Miliband and Ed Balls should spend the next two years wresting the agenda back – they should firstly cast doubts on whether we need to reduce the deficit at all. As Stiglitz and Krugman have argued, growth can be better stimulated by keeping more money in the economy via public spending, which can be offset by progressive taxation measures, such as the Robinhood Tax.

Labour should refuse to engage with the idea of benefit cuts and cuts to public spending, except to ridicule it. Francois Hollande’s socialists recently won a majority in France on just such a platform, and at the time of writing, the markets have not brought fire and brimstone to France.

Labour taking such a sharp step to the left may be against the public mood, and there might be a price to pay in the polls, but with two years until they face election, they can afford to pay that price right now. Also it’s impossible to know how many currently disengaged voters would migrate to Labour if they presented themselves as a properly left-wing alternative.

There will be plenty of time to be centrist when the election comes nearer, and by moving to the left now, they could shift the axis of the whole debate. George Osborne has provided them with the perfect starting point. His austerity measures aren’t working – that’s fact – so it’s on Labour to sketch an alternative.

Originally posted on Liberal Conspiracy on 24 January 2013