Labour’s economic policy is stuck in a Keynesian time warp

From: Gordon Lawrence, Stumperlowe View, Sheffield.

THERE has been a renewed effort, in recent months, on the part of Labour to absolve the Brown administration of any blame for the financial collapse of 2008 in an attempt to restore, in the electorate’s mind, some credibility for its ability to run a successful economy.

David Blunkett, it seems, has joined the bandwagon by trying to allocate the blame solely to the errant bankers (The Yorkshire Post, December 15), and by implication, to exonerate the Labour government from the economic mainstream’s view that Labour was a major culprit in the shambles.

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The Sheffield MP has become, quite deservedly, a distinguished figure on the centre-left, so it is disappointing to see him trying to defend the indefensible.

It was Gordon Brown who told us all that he’d triumphed over boom and bust which gave him the rationale to spend without thought of the morrow. His reputation as a Chancellor reached such heights that you would have thought he’d not 
only invented the wheel but sliced bread as well.

Unfortunately, as the global economy stalled, the UK economy was in a worse position than almost any you could name; the wheels came off and the next government was left with the bread crumbs.

Furthermore, Mr Brown’s Financial Services Authority, that he’d proudly set up, was negligent in failing to rein in the banks’ personal lending and that, coupled with government spending excess, amounted to the largest deficit among the world’s developed economies.

Mr Blunkett also asserts that Labour predicted the coalition’s austerity measures would not be achieved in one Parliament – true – but with the inference that Labour’s expansionary proposals would have had a more successful outcome. Poppycock!

Indeed, Ed Balls and his team confidently and repeatedly predicted Osborne’s austerity programme would result in a treble-dip recession, three million unemployed and glacial growth: all prophecies, in spite of treacherous world conditions, resoundingly wrong. So much for Labour’s understanding of economic management. Stuck in a simple Keynesian time warp, their natural instinct is to spend, tax and regulate, a blueprint implemented by the current François Hollande government with the predictable result that France is being labelled with the not so enviable sobriquet, “sick man of Europe”, its overloaded public sector a ball and chain on economic progress and an open advert not to follow, in the UK, such an ideological route.