Today the TUC is orchestrating a big demo in London against the cuts. Yesterday the Labour party hosted a “People’s Policy Forum” on the cuts. The focus of both events is anger. The idea that the cuts are unnecessary is actively promoted; all that’s needed is for the rich to pay their due in taxes. The Economist’s Bagehot gives an excellent description of Labour’s forum. The anger is palpable, but where will it all lead?
The Guardian’s Polly Toynbee thinks this will be a turning point, leading to the complete rejection of government policy by the majority of British people. After all, the cuts have hardly started to bite yet. An alternative view is that the anger will transmute into depression, in the classic pattern of grief. And from the depression will come a new consensus about the role of the state in our society.
I am reminded of a change management course I went to as a manager. I was taught that any serious change initiative had to go through four phases: denial (a muted initial reaction as people think the change applies to somebody else), anger (the moment when indivuals realise that the change really does affect them), chaos (the dysfunctional early phases of change) and finally renewal (you finally start to make headway). It is a mistake to think you can jump straight into the renewal stage. Anger is a good sign, because it means you have got beyond denial; and, indeed, it may even help to provoke it a bit (though be careful, as this may prolong the chaos phase). The art of change management is to get through denial quickly, and manage the anger and chaos phases as well as you can. Having to put through a number of change programmes myself, I found this advice very helpful. I would add that it is usually a good idea to take the time let the anger burn out before attempting anything complicated; that way the chaos phase is shorter and less damaging. The fact that the anger is burning bright now is not an unhelpful sign for the government.
The problem for the cuts-deniers is that there is no way out. Taxes on the rich have already been jacked up to beyond the point of sustainability (the 50p tax rate, capital gains tax, reforming pension taxes, the banks tax). It is absurd to think that we can pull in much more from clamping down on tax evasion; if it was that easy, Gordon Brown would have done it ages ago. Jacking up corporation tax will do nothing for jobs. The Keynesian argument may bring in Nobel prizewinners, but it doesn’t offer much comfort either. This runs that if the impact of the cuts is slowed down, the level of unemployment in the transitional period will be less, and this in turn will be less wasteful to the economy as a whole. The same cuts have to be made, only more slowly. Unless a private sector renaissance comes to the rescue, in which case extra taxes come in, which will stop the need for some of the cuts. That seems completely infeasible. It is a wonderful irony that those fighting the cuts are largely anti-capitalist, and yet only capitalism can save them. The fact is that either the “squeezed middle” gets squeezed even harder for more taxes, or the public sector has to suffer some fairly drastic cuts.
And here’s the political problem for Labour. To turf out the government they need the squeezed middle and the outraged public sector workers to gang up – but their interests are opposed. Nothing will stop the cuts. Not even a shock Labour victory in an unscheduled election later this year. The anger has to turn to depression.
And it is not a given that this will rebound on the two governing parties. For most voters, the world won’t end. Labour’s credibility problem will be cruelly exposed in any election campaign. If they want to restore the cuts, they will have to answer who is paying? If they don’t, they will be saying that the coalition was right all along. If the economy flags, as it well might, and the government doesn’t manage to cut the deficit as much as it plans, Labour’s dilemma will be all the more acute. They might be able to say “told you so”, but they won’t be able to restore the cuts.
Labour are trying to recreate the anger of the 1980s against Margaret Thatcher’s government. But this government is nothing like so reckless. Unemployment is still much lower – there no swathes of closed factories and coal mines. And Mrs Thatcher won.
Final para – indeed; the Thatcher era cuts tended to be centred in a few places, so e.g. mining towns were hit badly and other areas fairly unscathed. Whereas a pattern of cuts at every town hall spreads the pain pretty evenly: on the one hand meaning that there are people feeling hurt everywhere, but on the other hand not leaving anywhere an economic wasteland in the way the coalfields were.
Though that may make the next election harder for the Tories (and indeed Liberals) than 1983 / 1987 were for the Conservatives. The cuts are also hitting Gold and Blue seats, where in the 80s it was more concentrated in Red areas. Thatcher could afford to lose every single Tory vote in the Yorkshire and South Wales coalfields. But the coalition has accepted pain in their own areas too – a much more mature, responsible approach to politics, but one that confuses voters such as those in Sheffield who are used to sectionalist politics and thus the idea that having the local MP in the government means preferential treatment, who can’t get their heads around making a fair and balanced decision on Forgemasters.
Change management offers tactics for (as smoothly as possible) enforcing top down decision making, which is fine for companies which typically have a strictly enforced hierarchy. Despite a resistant to change, employees are generally expected to follow their employer’s decisions and directions, they get paid for doing it. However this is not how democracy is supposed to work, the fact it is being talked about in this manner is a sign that our democracy is broken, are we electing representatives or choosing our boss? The mainstream media seems to have gone in to full swing to convince people the cuts are necessary and inevitable. The alternative, “actively promoted” view, being an extremely marginal one in mainstream media.
One of the things which annoys me most about all the talk is that I’m finding it practically impossible to find out even the most basic facts, both sides in the debate are effectively saying “we’ve worked it out, trust us”. I want to be in a position to make up my own mind and I think I’m not alone in this desire. For other issues that interest me I’m quite accustomed to doing my own research and coming to my own conclusions but this one seems intentionally obfuscated in ludicrously complex theories and almost religious beliefs in things like monetarism. I read stories for example about Barclays (notice the factor of 10 typo) and ask myself is that representative of the percentage tax big companies and super rich individuals tend to pay? I can’t find out but my assumption is it’s difficult to discover because it is representative, obviously unpopular so hidden. People get angry when they read this kind of story next to stories about cuts, I’m more concerned that my research went nowhere and think that points to a more serious systemic problem.
My intention when evoking the ideas of change management was more in understanding the emotions involved. If change affects people adversely, no amount of persuasive argument will stop the anger, in politics as well as management. I must admit that I have not really explained why I think that fairly drastic cuts are unavoidable. Personally I think that the most basic of the facts (especially the size of the expenditure and tax relative to the total economy) are quite accessible. There is an intractable economic argument at the centre of it about how fast the cuts should be implemented, with respectable arguments on both sides – and this is much more difficult to get to the bottom of. But if you go to the right sort of newspapers the arguments become a lot clearer (the FT and Economist are both good, even if you disagree with conclusions offered – and are free if the near-religious positions you mention). Mostly I think it is question of people not wanting to engage than politicians obscuring things – though politicians are always advised to keep arguments short and simple since they get slaughtered if they try making more complicated arguments,
I think that the tax take of the very rich (and companies) is not all that important when considering the services we can afford (as opposed to equity). We are in danger if we rely too much on a few rich people to fund everything – because our fortunes become too closely tied to theirs – that’s a lot of the reason we are in this mess in the first place – we were too dependent on tax from banks, bankers and big property transactions. No wonder they could persuade the government of the need for light touch regulation! It is quite chilling to see how dependent we still are on the very rich – from memory I need to be able lay my hands on the numbers.