Sunday, 15 January 2012

Some Brief Notes on the Fabian New Year Conference 2012

First up it was a great event with strong attendance and many excellent speakers. Front line Labour speakers including Ed Balls, Chuka Umunna and Rachel Reeves were present to defend and explain the Opposition's stance on the economy, and this became the dominant theme of the day. The conversation ranged from feminism, fairness and class to detailed discussions of Britain's competitive advantages and possible industrial policies, but returned again and again to the question of Labour's position as the day wore on.

The Opening Act

Ed Balls gave an excellent speech, perhaps softening the impression given elsewhere about Labour's stance on austerity and invoking Keynes and his legacy repeatedly. It was a long speech though, there was plenty of time to go into detail about economics and history and still circle back to Labour's position. The speech was good, but the tone of the speech simply does not and cannot match the language we hear from Labour on a day-to-day basis; whatever Ed Balls thinks or believes, it does nothing to assuage legitimate fears many of us have about where this is going.

Which brings me to my disappointment with Chuka Umunna, whom I have often praised in the past. He's often one of Labour's better broadcast speakers and I guess the infighting within Labour is a source of great frustration to him, because on Saturday he really let it show and consequently felt more abrasive than persuasive. He defended the party line aggressively but did little to answer the criticisms leveled at it.

The main argument against Labour is that it is failing-- whatever its core beliefs-- to act as a responsible opposition. Despite protesting that the cuts are wrong it has never presented a clear and unambiguous alternative, instead it has hedged, trying to capture an elusive concept of 'fiscal credibility', whose definition has arisen through the Government's persistent effort and success in hammering in the profligacy narrative. Of course it isn't purely a fiction, and it is powerfully and pervasively imprinted on the political consciousness at the moment, but if Labour believes its own statements on the economics, the next several years of Government policy will give them plenty of chances to assert their own narrative. If they have one.

Of course the deficit needs to come down, but private debt is far more worrying at the present. If unemployment and real wage decline continues households will not only spend less, they will default more. The UK is more exposed than most to this problem, and Labour should not be arguing about whether they'll have to accept cuts in 2015. We are barely into 2012. To spend your time talking about accepting the cuts in the future, however reluctantly is both unnecessary and foolish.

The public tend to regard Labour as equivocal, trying to have it both ways, and the Tories have been extremely effective at stating that Labour opposes all cuts. In the meantime, Labour's spokespersons are often confronted by the media with the fact that the Government is not cutting spending, but borrowing more, and all too often they fail to explain this in a way the average person will understand. Instead the impression is one of obfuscation. There is nothing Labour needs more right now than a clear, well defined, well voiced alternative vision for the economy.

An unpopular argument made now, and made repeatedly will bear fruit as the factual consequences of the Government's policy surface. Without a clear alternative choice, the country is stuck on this path, and whether the Government succeeds or fails, Labour will at best be ignored unless it is able to distinguish itself clearly and absolutely. Cutting the deficit must be secondary-- and resultant from good economic policy, it must not by itself be the policy. Fiscal credibility will be defined in the minds of the public by results. That is a legitimate criticism, and noone making it wants to wound the Labour party. But it is a democratic party, and these arguments will not go away.

Later That Day

Moving swiftly along, I want to give an overview of some significant arguments I heard come out of the event.  I'm afraid I'll skip or skim some wonderful contributions, but it was an eight hour long event and speech was dense and continuous, I can only encourage anyone who is able to attend future events. After the opening segments the conference gave way to breakouts, two groups of four parallel panels held in different rooms at the same time.

The first I went to was on inequality and class, but class definitely dominated the discussion. Here was an enjoyable, nuanced departure from the political wrangling of the morning, with talk of working class identity, the role of education and pecuniary inequality, whether we unconsciously discriminate against certain accents and ways of speaking and many other topics. The panel and its audience questioned the move towards middle class identity, even as real incomes have declined in the lower half of the population, and the difference in what we aspire to in a consumerist age.

On the whole there wasn't much room for disagreement, but it was absolutely the epitome of the Fabian society, a deeply academic discussion of something which is utterly real-world, and which all-too-often goes undiscussed in the public discourse. You often hear criticism of the abstract, but it helps to form the mental framework which we carry with us when tackle the practical questions of policy, and improving the society we live in, and that's exactly what this was, an examination of how we understand these issues.

The second of the two sessions I went to was focused on what Britain is good at, what we do well, be it financial services or pharmaceuticals. This was a little more combative, with back and forths on the question of 'picking winners' which were both civil in conduct and enlightening. As well as the historical argument concerning the wealth of critical inventions, projects and successes the State has made possible over the centuries there was a more immediate argument here. Sometimes the winners are pretty evident, and while you won't always get everything right, that's no reason to give up.

The key industry being discussed in this context was, perhaps unsurprisingly, green technology. This isn't just a question of carbon based fuels running out, or of burgeoning demand, but of simple questions of efficiency and productivity. If a company, a factory or a household can use 50% as much energy, they not only contribute to tackling climate change, they save a lot of money. With energy bills at unaffordable levels for most voters right now, this is hardly an abstract question.

I would add to this one note of my own: Path dependency also speaks in favour of this. If the infrastructure is in place and the industry is well established it will be cheaper to operate, cheaper to innovate and easier to get private money to invest in it. The economies of scale, the development of local talent and resources are all vital, government aid can make or break an industry, and sticking by an established one which already has these advantages is not merely conservative, but potentially a huge waste of an opportunity.

Finally I want to mention that immigration and the role of brain drain came up in this discussion, and the Government's policies were strongly criticised for their impact on the development of foreign-born talent. Equally, note was made of the fact that unrestricted immigration is simply not practical or desirable on a small island with limited public service capacity in any given moment. The emphasis was primarily on skilled labour.

Parting Words

Another really big feature of the day, which came up in Ed Balls's speech, and several times in the latter half of the day, was that of a national investment bank, intended to use the near zero interest rates available to government to invest in infrastructure projects, and similar arrangements for SMEs. Bearing in mind that loans are currently very hard for small enterprises to get, and almost invariably more expensive and difficult in any environment it's easy to see the virtue of sidestepping capitalism in this area.

This is intended to boost lacklustre British investment, improve infrastructure and economic efficiency, make life easier for commuters, and hopefully, develop a reliable return on the money drawn down, thus reducing its footprint on public finances. A similar suggestion was made by Ken livingstone later in the day, when he put it to the Fabians that state pension money, and indeed, private pension money could be used in such a way, with the goal being government underwriting, greater safety for reasonable returns. This would substitute for the way private pensions are, lamentably, managed at present.

Ken was on very strong form here railing against Boris, ebullient and affable as ever. An upcoming race, one not dominated entirely by Labour infighting or the economy, was not on reflection a bad note to end the day on. It is easy to find the present political situation depressing, but, thankfully, a wonderful conference came to a rousing conclusion.

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