Friday, February 17, 2012

Who was Ramsey McDonald again?

What a mess Labour is creating for itself right now. The latest is this - Labour proposes cutting £6 billion from the transport budget. This is probably about as wrong as it is possible to be, on just about every level.

First, as a piece of political rhetoric it is totally stupid for Labour to play the deficit game. They will never get 'credibility' for proposing cuts, because the Tories are the ones who celebrate slashing state programmes, whilst everyone knows Labour would rather not. So why pretend?

Second, strategically it makes no sense. If the cuts succeed (ie an improbable recovery happens anyway), Labour will gain nothing by saying 'oh we would have done that too'. If the cuts fail (ie the economy continues to stagnate) then what is gained by saying 'oh well, our cuts would have magically produced a different result'?

Third, it is based on a stupid idea - that in a recession you should use the only lever available to cut demand rather than increasing it. It didn't work in the 30s, it isn't working in Greece, it won't work here.

Fourth, if there is one area where increasing public spending would have unambiguously positive results in terms of quality of life, equity and economic growth, it is transport. Britain's transport network is a joke, and a major drag on growth. In a few short years, it will be an economically unsustainable joke, as it is based on wasteful consumption of an increasingly scarce resource that we will be competing for with a billion Chinese.

Please, stop playing this game. If cuts are a success, you lose. If cuts are a failure, you own the failure.