Reflections on the start and end of a dead month in UK politics - and economics

My official excuse for not posting for almost the whole month is that nothing really happened this month - at least in UK politics. (US politics was of course quite different - but hopefully I'll get a bit more time to blog on that after the Republican convention next week).

At the start of the month, Dave-2 (Miliband) appeared to be testing the waters for a move against the PM; those waters are probably still being tested as I write this. A putsch in the autumn seems a distinct possibility. Brown seems to be doing his best Leonid Brezhnev impression; I figure Gordon is a particular fan of the later Brezhnev, where the Soviet leader had been certified brain dead but was being wheeled out at public holidays and international summits anyway. A bit like the mid-seventies Elvis Presley, or Bono today. The problem is, Brezhnev didn't have the difficulties of the electorate to contend with; whereas Gordon, in about 18 months, does. Someone will surely slip him the (metaphorical) sleeping pills well before that date.

At the end of the month, Alistair Darling has been spotted drinking deep in the waters of economic gloom; some great comments by him in a Guardian interview reported in the news yesterday. Voters are "pissed off" - OK, so it's hardly post-watershed stuff (even though yesterday's Daily Mail bleeped out the word 'pissed' - how anal do they think their readers are?) but it's not the kind of language we've associated with Darling in the past. And the economic crisis is 'the worst for 60 years'.

This kind of statement gets batted about a hell of a lot at the moment and I wonder if the people making it - politicians, economists in the media, anybody fronting a property market programme like Location, Location Location or Property Ladder or any of the other crap - have really thought about what they're saying. In the early 80s unemployment went up to 3 million and we had negative growth for at least 2 years - probably 3. Is it really going to be that bad? Worse than the early Thatcher years? Do any of the people making the statement really remember those years? Or have they just watched Ashes To Ashes on the TV recently?

I would have to say the jury is still very much out on how bad this economic slowdown is going to be. A house price crash would actually help a hell of a lot of people in the UK - all the poor f***ers who have been renting or living with their parents for seven or eight years because they couldn't afford a house. Most of the recent opinion poll research on this shows that a large proportion of people actually want prices to fall. I think it's called 'bursting the bubble' or a 'market correction', depending on who you talk to. There was no way the economy could have continued with house prices rising at the rate they were in the early 2000s. The question, of course, is how big the knock-on from this correction will be to the rest of the economy. And no-one really has any good estimates of that.

I need to start running some more in-depth economic analysis, either on this blog or a parallel site, to debunk a lot of crap that is flying around at the moment. But the one thing I would say most of all is, DO NOT believe anyone who says that interest rates have to rise to head off a huge inflationary threat. Believe Bank of England Monetary Policy Committee economist David Blanchflower. Like Ben Bernanke in the States, he says interest rates have to fall to stave off recessionary pressure, and the inflationary 'spike' will be short-lived. He's right, and the rest of the MPC are misguided. The other guys aren't necessarily 'wrong' in formal terms, as they are acting on a crazy remit of controlling inflation no matter what (that's the target they were given by New Labour in 1997) but, like the early 80s, there is a danger that an obsession with inflation will inflict huge and unnecessary damage to the economy through high interest rates. Bernanke understands this and has cut rates really aggressively; the latest US output figures show a rebound to positive growth, although it's unlikely this strong growth will last once the temporary bosst from the latest round of unsustainable Bush tax cuts works its way through the system. Still, the US is in better shape than if it had whacked up interest rates, for sure.

In short, we're headed for a recession but it's not clear to me - yet - that it's gonna be a really bad recession. I think the current hysteria runs the risk of turning a slowdown into a slump. Whilst I wouldn't accuse Alastair Darling of hysteria per se (on the face of it a less hysterical-looking person would be hard to find), I think he should highlight on what basis he's saying things are the worst they've been for 60 years. A volte-face of such magnitude, coming out with a statement like that after a year of denying the problems, seems irresponsible in the current climate of fear and apprehension.

No-one really knows what the hell's going on, so what's your best move? Hal's advice: avoid the bullshitters (I'll tell you more about who they are over the course of the next few weeks) and read people like Blanchflower and New York Times columnist Paul Krugman. (I've just spent 30 minutes or so reading Krugman's columns and blog and they really are excellent - some of the best analysis of the US economy you'll read from a centre-left perspective. Very accessible to non-specialists, too.) These guys are still a little mainstream for my liking but they are still streets ahead of most 'orthodox' economists plying their trade these days - including, it seems, most of the UK Monetary Policy Committee.

Dave-2 gears up to making a move - "Hit It"

Unless you are in the political braindeath category (and who can blame you, given the shit we've all had to put up with over the last year, indeed the last thirty years or more?) you won't have missed David Miliband's bid for the leadership of the Labour party. As my previous nickname for Miliband, 'microBlair', is somewhat old hat now, I've switched to 'Dave-2' to distinguish him from everyone's favourite politician 'Dave-1' on the other side of the House.

OK, I'm exaggerating a bit. But only a bit. Can anybody imagine a senior cabinet minister publishing an article calling for a complete overhaul of political strategy - making no reference at all to the current PM - at any point under ANY previous post-war Prime Minister? Excepting the 1975 referendum on EU membership (when collective cabinet reponsibility was suspended) and maybe Geoffrey Howe's resignation speech in the late eighties, I can't think of anything along these lines. This is as near as a direct and open challenge to Prime Ministerial authority as you will ever see in the UK.

Miliband's article was actually bland as hell, really. He's hit on a good strategy of attacking Dave Cameron as 'New Labour Mark 1', ten years too late - which is a line that the government should be pushing a lot more - but he had no positive vision to offer beyond the extremely vague rhetoric of 'giving more power to communities' etc. - which seems to ignore the huge centralising forces of the UK state machine on one hand, and multinational corporations on the other. The aim of 'power to the people' is laudable but you're gonna have to do better than what you've outlined so far to get there, Dave. Maybe worth ringing up Tony Benn or Zac Goldsmith for some sage advice.

But Miliband is out there and on the line - possibly indeed "over the line" and "entering a world of pain", as the hapless bowler did in The Big Lebowski. This is a tough one for Brown. How to respond? Demotion seems most likely, but would make him seem vindictive (which he is) and paranoid (which he is, even more.) Various commentators have come up with reasons for Miliband not to stand in a leadership contest, all of which are pretty spurious to my mind: let's go through them one by one.

• The public doesn't like back-stabbers. Says who? If Gordon Brown is as unpopular as polls suggest, then getting rid of him should help quite a lot - a necessary (though hardly a sufficient) condition for a recovery.
  
• There would need to be an immediate general election if Brown were deposed. Says who? A change of prime minister hasn't precipitated a general election for decades in British politics.
  
• Miliband would lose the next election. Possibly true (even Miliband seems to think so - he says "the odds are stacked against us" in the Guardian article. Where's your fighting spirit, Dave-2?) But as an argument against standing it misses the point. Even if Miliband only gains (say) 5% in the polls, he could make the difference between a crushing, landslide defeat for Labour, and a narrow defeat - or even a hung parliament. That puts Labour in a far better position to beat the Tories next time out, and makes it far less likely that Miliband will be the next William Hague. Even if Labour loses fairly heavily, Miliband will be safe as leader of the opposition as he can very reasonably argue that the defeat isn't his fault.
  

So I would say to Dave-2 "go for it". Even though he is not the best choice to take over from Gordon. The best choice is Alan Johnson - but current reports suggest Alan doesn't want the job. Please reconsider, Al - if John Major could do it for 7 years then surely it can't be that difficult. You'd probably prefer it to being health secretary. Miliband is probably the second best option but he's a long way behind. He looks too nerdy and too out of touch with voters. He might be able to at least beat Cameron on number of seats in an election (given the bias in the system even after boundary changes) but I would not put money on it. I think Johnson is an experienced politician who would see Cameron off fairly easily provided that the voters can see that he's prepared to make genuine policy changes and drop most of the New Labour crap. There is also the small matter of the impending economic collapse, but oddly enough, Johnson might just be able to turn that around in Labour's favour. The Cameron-Osborne team is inexperienced and lacking any real substantive ideas on economic policy. Whereas even now, Labour can make a case that it's done well on the economy overall and that the current slowdown is largely driven by the US. Dave Miliband would be a good choice for Chancellor under a Johnson administration.

This is all still highly speculative, but the post-Brown era is about to come upon us, if we're lucky. And thank f*** for that.