Thursday, 18 February 2021

Burying Corbynism

Keir Starmer's economy speech then. It's fair to say it wasn't overwhelming, and few but the usual loyalists gave it a buoyant reception. The left, as you might have guessed, weren't full of praise. But neither were the centrist hacks. On this James Ball offered an infrequent insight, noting Dear Keir was acting as if he was in government not opposition, and this is fatal. A rare confluence of opinion between him and the left he affects to despise.

I'm not going to go through all the criticisms as they're ten-a-penny on Twitter. There are three aspects worth noting. The first was the eye-catching original policy (albeit half-inched from Thatcherite think tank, the Centre for Policy Studies). I.e. The Covid recovery bonds. The plan proposes to raise billions from voluntary subscriptions to go into community investment. In practice, one would assume rebuilding local infrastructure and public services gutted by Tory cuts is where this money is destined. The bonds themselves would be long maturing, and are designed to soak up the savings large numbers of (mainly middle class) people have built up over the course of the pandemic.

This might be too vague to capture the public imagination, but in principle it is a sound policy. For middle class people, there's the promise for a better return on their savings than the negligible fractional interest bank deposits currently attract, and with a preponderance of profitible opportunities for investment unlikely in the immediate future, the bond scheme might appeal to those uninterested in tying their savings up in strings-attached investment vehicles and ISAs. Second, it ties these investments into the health of the public realm and community building. In other words, it offers a secure and stable alternative to the usual form of petty middle class investment. I.e. Property. Given the political toxins our ageing cohorts of property owners have showered on us this last decade, this is designed to move the locus of material interest away from individuated petit bourgeois landlordism to building up what the centrist wonks call the foundational economy. In other words, by socialising the investment behaviour of millions the hope is they see their economic interests tied up with the general interest. Hey presto, the selfishness and scapegoating that have powered the Tories in recent decades is gradually engineered out of the voting population. Including among those who might otherwise be predisposed toward them.

I've said my positive piece, what about the rest? Offering support to business is nothing new, and comrades will recall John McDonnell often spoke of policies appealing to its better nature. As a centrist, of course Keir Starmer is going to say positive things about business. And this about sums up the tone of the pitch. This wasn't aimed at winning back leftists or, for that matter, those drifting to other parties. This was, just like the patriotism stuff, calibrated at wooing sections of small business, soft Labour/soft Tory swing voters of means, and the odd home-owning former Labour voter who went Tory in 2019. It sounded plodding and boring because the "SLT" believe this is what these people want. By avoiding public spending commitments and offering a prospectus that, at first glance, is little different to the new Tory statism, let's just say the horses are in their stables and all is calm. If the aim was to offer a vision of a better Britain to a narrow demographic, then this is exactly what Keir achieved. No one's frightened. No one's gnashing their teeth.

At the same time this is a step back from Corbynism. Indeed, it constitutes a break with it. Starmerism as a political current is virtually indistinguishable from Fabianism. This is a politics in which popular participation is entirely a matter of voting for a Labour government, and then the Keirists are left to their difficult business of introducing the right policies for everyone's betterment. As such it tends toward centralisation and authoritarianism, a point celebrated by useful idiots and dim bulbs craving preferment. On paper, when the full Starmerist programme emerges blinking into the light it's going to involve industrial activism on state's part, more investment in public services, the integration of health and social care, the abolition of tuition fees, and quite a few things you might find in Labour's last two manifestos. What, however, will be conspicuous by its absence is democratisation.

Central to the Corbynist programme was what our much-missed comrade Ed Rooksby referred to as structural reforms. Whereas Keir's policies are about making British capitalism fairer and more functional, Corbynism wanted to use the levers of the state to introduce democratic decision-making where it is anathema to capitalist relations of production: in the workplace. The discussions around and positions taken on alternative models of ownership, democratic nationalisation of the utilities and rail, and the break up and socialisation of the media were about empowering workers, of creating a toehold from which the democratisation of economics could flow and with it a fundamental challenge to capital. This radical content of Corbynism is not just absent from Starmerism, it is entirely alien to the Fabian tradition itself.

We now know a little bit more about Starmerism today than we did yesterday. It is capable of taking on new, interesting, and innovative policy ideas. But strategically, this was no departure from what we've seen up until now and was, explicitly, a divorce from the Corbynism it happily gestured to a year ago. Yes, this is better than the Tories. But so, as a general rule, are the programmes put out by the Liberal Democrats. Try as he might, he cannot avoid the issue. Keir Starmer either locates Labour in the interests of the rising generation and sticks up for its core vote, as Corbynism partially managed, or he loses. The political calculus is that simple.

13 comments:

Alan Story said...

Very limited press coverage of this supposed BIG SPEECH.

+++++++++++++++++++++++++++

Just imagine the press and public response if Starmer had said something exciting and transformative:

I support proportional representation.

Boffy said...

Long dated bond prices are falling sharply across the globe, and are going to fall even more sharply as borrowing and inflation rises sharply in the weeks ahead. Anyone with savings would be an idiot to be throwing it away into a low fixed coupon that ties up your money for years at the current time.

When the idiocy of lockdowns ends, spending is going to surge, and any of that saving is going to get spent on consumption anyway. All evidence shows that the splurge in spending together with the huge amounts of liquidity being pumped into finance large amounts also of government spending is going to see money profits rise sharply. There are huge areas of potential high profit investments available, and as the economy surges in the second half of the year that's going to expand further.

The demand for capital to finance that expansion, the demand for money to finance government spending - let alone the trillions its going to shell out in bail-outs to core industries undermined by the lock outs - means interest rates and inflation rising sharply, causing all those bond prices and other asset prices to crash. So anyone daft enough to put money into such a long dated bond will not only see the coupon on it dwarfed by rising rates, but they will see the value of their capital disappear also.

A look at this month's PSBR shows where this is headed.

Phil said...

It doesn't tie up money though. You can exit from the bond at any point.

It's all a bit moot as this isn't about to be introduced in the March budget.

Anonymous said...

"When the idiocy of lockdowns ends,"

There is only one idiot Boffy and its you.

Graham said...

I don't understand why the recovery bond was the only concrete proposal in his speach.
Apart from the difficulty in setting an interest rate that would attract investors when low rates mean goverments already have access to virtually unliited borrowing, who is this meant to appeal to ?
Is this Starmer still trying to prove he his a safe pair of hands ?

After all the build up an unimpressive and unmotivating speach.

Blissex said...

«I don't understand why the recovery bond was the only concrete proposal in his speach.
Apart from the difficulty in setting an interest rate that would attract investors when low rates mean goverments already have access to virtually unliited borrowing, who is this meant to appeal to ?»

These are just the New New Labour edition of George Osborne's tory pensioner bonds. They are supposed to tell toy pensioners that Keir Starmer cares about them ("here are a few hundred quid each of gift redistributed from poorer people"), and deluded northerners that a dedicated bond issue would be for their regions.

The overall story is that a contraction of supply because of shutting down some industries because of COVID is not deflationary like a recession but inflationary, and the unspent money should be taxed, but the goal of both parties is to pander to upper-middle class voters (in the case of the Conservatives because that's their base, in the case of New New Labour because that's what their want their base to be).

Blissex said...

«the bond scheme might appeal to those uninterested in tying their savings up in strings-attached investment vehicles and ISAs. Second, it ties these investments into the health of the public realm and community building. In other words, it offers a secure and stable alternative to the usual form of petty middle class investment. I.e. Property.»

But affluent middle class people invest in property not because it is property, but because the rate of return, thanks to leverage (5% with Help-To-Buy), is 50-70% net APR. That is the greatest "economic invention" of the 20th century: not even cocaine smuggling or the oilfields of Arabia have such huge compound rates of return. And the political beauty of it is that it is entirely redistributive from poorer people who have no political power (and currently thanks to Keir Starmer no representation).

The usual claim that the people of the UK are uniquely obsessed with owning their own homes is just pious cant, they just want to own a deed that gushes immense profits.

Boffy said...

"It doesn't tie up money though. You can exit from the bond at any point."

That's true of all bonds. You can always sell them in the secondary market. The point is that, as a result of rising interest rates the capitalised value of the bond falls. So, yes, you can sell it but only for a fraction of what you paid for it, giving you a big capital loss.

You can avoid that capital loss by holding to maturity, when you get back he face value of the bond, but by that time inflation has reduced its real value to near zero, and in the meantime, the fixed coupon on the bond means that the yield on it remains negligible whilst you could have been using that money elsewhere to obtain the now much higher rates of interest, or better still could have been using it productively producing even higher rates of profit.

Blissex said...

«something exciting and transformative: I support proportional representation.»

Ahhh the usual demented Liberal/"centrist" propaganda, and there are some notes:

* The LibDems themselves have spent the past several years campaigning single mindedly for the EU issue, when they should have campaigned relentlessly against the 2011 referendum result, not the 2016 one. They hoped that Eu membership would be a wedge issue to catapult them into government like with the SNP in Scotland, but even the "magic electoral appeal" of Chuka Umunna himself did not help them.

* The LibDems have refused in advance any coalition with New New Labour, but in case this might happen one of their demands should be PR or a referendum on PR. Why would another party gift this in advance to them instead of using it as a bargaining chip during negotiations?

* Regardless, in 1997 PR was a New Labour manifesto commitment (thanks to the Militant Mandelsoncy), which meant it could have been done without a referendum, yet Tony Blair himself ignored that commitment.

* Anyhow, the usual Liberal/"centrist" dream is that with PR the parties would remain the same, but with a much bigger seat count for the LibDems, and therefore only Con-Lib or Lib-Lab coalitions would be possible, so ensuring that "There Is No Alternative" to socially liberal thatcherism. But most likely all three major parties would split, and as in other northern european places the Liberals would become a tiny player, and mild socialdemocracy Corbyn style would become prevalent in the Commons, followed often by mild conservativism, and occasional "grand coalitions" between the two.

For the latter reason and for reasons of principle I support PR/STV as in √Čire, but the Militant Mandelsoncy dreamers should be careful what they wish for.

Boffy said...

"Apart from the difficulty in setting an interest rate that would attract investors when low rates mean goverments already have access to virtually unliited borrowing, who is this meant to appeal to ?"

All of the government borrowing coming down the road means that the era of cheap borrowing is over for governments in the months ahead. But they still need some form of financial repression to pay for all the debt and destruction that he idiotic lockouts have caused. So what better way than to play on the fear and greed of the uninitiated and tie them in at low yields for long periods of time, allowing the smart money to be putting its money into those areas where money profits will be rising fast, as economies rebound sharply in the second half of 2021.

Its a bit like all those mugs who bought Gamestop Shares a few weeks ago, which made a mint for the initiator of the scam as its price soared, but who themselves lost most of their money when the shares inevitably collapsed again, no doubt long after the initiator had sold their shares. The same is happening with Bitcoin.

The smart money is not going to be buying rapidly collapsing government debt assets as borrowing and inflation surges. They are going to be selling it fast as hey can, probably to central banks who will thereby bail them out. The smart money will wait for asset prices to crash before buying them on the cheap. In the meantime its going to go to real assets or real investment in productive capital, where inflation will produce rising money profits, especially as demand for the output of that capital rises sharply.

Blissex said...

«the recovery bond was the only concrete proposal [...] who is this meant to appeal to ?»
«the New New Labour edition of George Osborne's tory pensioner bonds.»

As to this I am feeling as the time passes agreeing more with our blogger's impression that New New Labour is more shifted towards "Blue Labour" than the original New Labour.
My guess is that even the most deluded and prevaricating agents of the Mandelson Tendency have realized that in the elections in the 2015-2019 period it was the LibDems that were brutally and repeatedly defeated, despite their perfect "centrist"-"Remainer" positions and having big vote attractors like Chuka Umunna himself :-).
As a result they may have decided to change their marketing mix to appear to have more toryism and less whiggism, moving closer to Blue Labour positions.

Anonymous said...

"destruction that the idiotic lockouts have caused. "

The only destruction being caused is by idiots like Boffy.

BCFG said...

"and are going to fall even more sharply as borrowing and inflation rises sharply in the weeks ahead"

I would really caution comrades when listening to the Julia Hartley Brewer/Lawrence Fox/Isabel Oakeshott/Nigel Farage of pseudo left populism, namely Boffy the dumb fuck, a character who believes Covid is no worse than seasonal flu, and thought people were phoning NHS direct to get a few days off sick! I think even Julia Hartley Brewer would stop short of Boffy's kind of right wing cretinism.

But I say comrades should be really cautious of dumb fuck Boffy not simply because of his high rate idiocy in relation to Covid but because he claimed house prices would fall by 60 to 80% and also claimed inflation would massively increase after the financial crisis.

In fact neither of things happened and almost all of Boffy's predictions turned out to be false.

The reason for this is clear and that is because Boffy fetishes money, places ideology above sober analysis and has an inability at self criticism.

He really is a very very dangerous character indeed. They really should bring out a law to stop him peddling his nonsense.