So I’ve been reading Clausewitz. In the original German. It took me months – *humblebrag*. Anyway, if the government were to fall next week, what should Ed Miliband do right now?
It seems to me that quite a lot of thought is going into the long term. There’s a complex of ideas around changing the structure of the economy and particularly of some bits of finance, summarised (by me) as the radical consensus, by Chris Dillow as supply-side socialism, and not really summarised into anything by Ed Miliband yet.
But you’ve got to get to the long term. All the planning about sparks and regional policy is going to take a long time, and a great deal of administrative grip and focus, to deliver. For some time, I’ve not been worrying much about whether the Tories will lose when the general election comes. I’ve been worrying about the Zapatero/Hollande scenario; Labour wins but gets boxed in by the powers that be. Another scenario is the Obama scenario; it just takes too long, the Tories rally and adopt a strategy of total rejectionism.
The concepts from Clausewitz that are relevant here are successive and concentric action, and the more famous concentration in space and time. According to Clausewitz, strategy consists in choosing successive actions that lead to the achievement of an aim (Ziel). The selection of the aim is determined by the purpose (Zweck), which is always fundamentally political. Actions that are concentric in space – or in function – tend to support each other and to lead to greater concentration of strength, while eccentric ones tend to disperse it.
Our scenario is as follows; there is some sort of sudden crisis. The government falls and parliament remains hung for the time being. The Lib Dems are shaky and flaky, but the powers-that-be are very much in place. The danger is that commitments will be entered into, and opportunities missed, that will Zap us into Hollandaise sauce down the track.
In this situation, it is necessary to choose policy options that can be implemented quickly, ideally before the election, and that support and create future options rather than closing them off.
I would argue that there are perhaps three. The first is the macro-economy. If, for example, a Labour government sticks it out to the recess and comes back for a mandate in a few months’ time, and the economy is visibly improving, this will make everything else enormously easier. And even George Osborne concedes that there is a huge opportunity here. From the ‘Tater:
At the Treasury’s pre-Budget meeting at Dorneywood, he was much taken by presentations which suggested that a normal recovery would start in the summer.
Those close to Osborne also cite Treasury numbers which indicate that the economy is in better shape than the headline numbers suggest. If you strip out North Sea oil and gas and financial services, there was no double-dip recession. Indeed, with these two sectors taken out, the economy has being growing at between 1 and 2 per cent for the past two years.
Well, if you strip out all the bad stuff, of course it looks better. And the appeal to Friedman Units deserves all the contempt it gets. But there is more of a point here than you might think. Oil & gas and the City are not the only problem sectors. The labour/consumer sector and construction are awful as well. This, however, implies that other sectors (business services, automotive) are doing much better. There is scope for recovery if we stop kicking ourselves in the balls.
Also, there is probably more emerging consensus for a Keynesian response than there was even in 2008-2009. Here’s Bloomberg, Jon Portes of NIESR, and the plain people of Britain, who now like policies more if you associate them with Ed Balls than with George Osborne.
There is a tide in the affairs of men and all that. And if there were to be a fresh tide of flight capital out of the Eurozone, I think it would be better in gilts than puffing up the banks or chasing London property prices.
Keynes was joking about burying money and digging it up, of course. Everyone loves “infrastructure”, and I am convinced that much of the problem with the austerity programme was that it hit capital investment so hard. However, big infrastructure projects take a long old time to get going.
I therefore propose that any stimulus be targeted on housing. Housing is a highly salient issue, a relatively quick-starting form of investment, one that gets to the pocket of the electorate. And of course there is the coming LHA cuts/Bedroom Tax crisis. As we all remember from June 2010, declaring a crisis is a powerful political tool. If you agree with Daniel Davies and myself, housing policy may even have been the key issue in the British economy since the 1980s.
Council house building would be good, but it’s still slow. On the other hand, because it’s decentralised, it can start quicker. (Getrennt marschieren, vereint schlagen.) The Simple Plan could start much faster, and wouldn’t necessarily need much additional central government borrowing. Neither, though, would need an act of parliament.
And even UKIP have some good ideas sometimes. Here’s Nigel Farage arguing that the Bank of England should move to a dual mandate, like the US Federal Reserve’s, which would require it to target employment (or growth) as well as inflation. Section 11 of the Bank of England Act 1998 states that the Bank’s objectives are:
- to pursue price stability
- subject to that, to support the economic policy of HMG, including its objectives for growth and employment
Section 12 states that the Treasury can define what price stability is, i.e. the inflation target, and what the policy is by sending the Bank a letter. If the letter included buying £100bn worth of new housing bonds, as the CEO of Greggs suggests, well, that’s better than a pasty tax.
And finally, I feel that only fools would go for an election post-Leveson without getting the Leveson proposals passed. We should pass them. Not only that, we should direct the Office of Fair Trading to carry out a wideranging competition review of the media, and GCHQ’s Communications-Electronics Security Group to audit the mobile networks’ lawful interception logs.
None of this is long-term. It shouldn’t be. But the point is to use successive, mutually supporting actions to advance aims that lead to our political purposes.