The Chancellor gives a huge pre-election bribe
to the moderately wealthy over 65s, and describes the fact that everyone who
can is trying to get hold of the bribe (and completely overwhelming the NS&I
as a result) as a great success. [1] Chris Dillow describes this as corruption. To their credit,
right wing think tanks have also condemned it for what it is. But the
Chancellor says this is all part of his economic plan.
I suspect the penny is beginning to drop in mediamacro. This
was supposed to be a government where deficit reduction was the overriding
priority. It was of such importance that it was worth the risk (which
materialised) of delaying the recovery until 2013 to achieve. Hard, sometimes
painful choices had to be made to achieve the goal of reducing the deficit. A
Chancellor who was prepared to do unpopular things for the greater good. The
essence of responsibility.
Unless you were a top rate tax payer, of course. Or, following the
Prime Minister’s conference speech last year, a moderately well
off taxpayer. And now if you are moderately well off and over 65. Penny
dropped? But this last example also tells mediamacro a difficult truth. Its
modus operandi is that it can rely on the opposition to expose such things, but
Labour appears to have been silent on this.
Obviously, because these kind of bribes work because those that receive it are
thankful and the much larger number who pay for it are not so fussed. [2] So it
needs to seek out those who will call a spade a spade. It has a responsibility
to do so. This time it could use right wing think tanks. Next time it may have
to resort to economists who write blogs.
Chris Giles, economics editor of the FT, wrote an interesting opinion piece a few days ago. It appears at first
sight to be an attack on Labour’s record in opposition. But it ends with “the
intriguing thing about Mr Miliband’s Labour party is that its broad economic
prospectus for the 2015 general election is perfectly sensible.” In contrast
“the Tories’ plans appear ideological and border on calamitous for many public
services.” If you want more detail on this, see my debate with Oliver Kamm in Prospect magazine.
So his article is a form of puzzle: how did responsible Tories and reckless
Labour change places?
One possibility, of course, is that there never was a puzzle.
Chris lists many alleged failings by Labour, but a lot look superficial and
presentational to me. Furthermore (and I know Chris will not want to admit
this) when Ed Balls said Osborne was cutting too far too fast, he was right. In
particular, public investment (school repairs, flood prevention) was cut immediately when there was no need to do
so to meet the coalition's fiscal rules. Those who think it had to be done to
appease the market should reflect on the fact that Britain lost its AAA rating because of weak growth, and
pretty well everyone thinks that public investment has the largest GDP
multiplier.
It is the media’s responsibility, which Chris for his part has grudgingly fulfilled, to point out - one way or another - who has the more responsible
macroeconomic plan post 2015. The opposition will not make that case, because it
has become terrified of being labelled spendthrift. Yet it is hard to find a
macroeconomist who does not think Labour has the better macro policy from 2015,
whatever their views about 2010 austerity. A responsible media needs to get
this point across, just as it needs to point out pre-election bribes.
[1] Once upon a time NS&I was just a way that the government
could sell its debt to ordinary people at slightly below market rates because
it was safer than banks. However after the financial crisis, when it became
clear how risky banks were, the government seems to have contracted the range of products that NS&I
sell, I guess because of lobbying by these same banks. Once you could buy
indexed linked assets from NS&I - no longer. Now it has become a vehicle for
giving bribes to selected groups of savers.
[2] This is the ‘common pool problem’, one of the reasons
economists give to explain deficit bias, which is of course being irresponsible about
the deficit.
