Must democratically-run political parties be lousy at elections?

Three weeks after Theresa May announced a snap General Election in the UK, the Conservative dominance shows no sign of abating. Mrs May looks as if she will achieve a majority for her party of between 150 to 200, with over 400 seats, compared to about 150 for Labour.  Tory success is primarily a product of Labour failure. That poses some challenging questions for how you run a political party.

That prediction of Conservative success is somewhat higher than many are making. It reflects two things. First the Conservatives have stamped on Ukip and picked up the lion’s share of their votes, taking their overall vote share up to about 45% or more, their best since the 1990s, and presenting all the opposition parties with a formidable challenge. The second thing is an analysis by Alistair Meeks of, which shows particular difficulties for Labour in a swathe of seats that voted Leave in the EU referendum. Meanwhile the Lib Dems have lost some of their early momentum, and my prediction for them of 20 seats counts as optimistic in the current betting market.

Part of the Tory success is the result of ruthless competence in the art of electioneering, led by their strategist Lynton Crosby. A compelling national message, based on Mrs May’s personal brand, is crushing all before it. Labour is chaotic and confused by comparison, and the Lib Dems’ lack of media weight is telling. Rage over Brexit appears to have limited appeal – though an attempt by the Lib Dems to broaden the message into NHS funding is a valiant attempt to broaden out. The Lib Dems’ best hope is to exploit the inevitability of a Tory landslide, concerns about Tory policy and Labour’s hopelessness into a vote for an alternative. That may yet happen.

For now I am interested in something else. Labour is clearly the principal author of its own demise, after they elected a clearly inadequate leader in Jeremy Corbyn. This immediately punctured their chances; the party then fluffed the EU referendum, letting Leave win by a narrow margin. That gave Mrs May her chance to put the boot in. But how did Labour get into this mess? The answer is “democracy”. The party opened up its methods of choosing its leader, and then its policy making processes. This led to record numbers of people joining the party, and taking part in selecting their leader. Contrast this with the Conservatives. Mrs May won selection by systematically destroying each of her opponents before the party’s weak democratic procedures could get involved at all. Meanwhile the process of creating Tory policy is completely dictatorial.

Which leads to a thought: internal party democracy is toxic for political parties’ electoral success. Labour’s troubles started with their selection of Ed Miliband as leader in 2010, in the most open selection process until then. Mr Miliband was responsible for a series of catastrophic misjudgements, including the further opening up of the party’s leadership selection process. Mr Miliband looked inwards for salvation; he thought he could win simply by picking up Lib Dem voters disillusioned with the coalition government, and by stoking up his political base. This had the virtue of avoiding hard choices within Labour’s ranks, and of rallying behind the left’s supposedly superior “values”. These are the sorts of mistakes that leaders make when they think that appealing to their own supporters is more important than challenging political opponents. Mr Corbyn is repeating this strategy in a ghastly death-spiral.

We might also reflect that something similar is happening in France. The two established political parties, the Socialists and the Republicans, opened up their leadership selection processes, and were then both knocked out of the race for president by one party leader who challenged her own party to make it more electorally appealing, and another who simply created a new political party in his own image. Internal party democracy is not real democracy at all. It is about building up appeal amongst the like-minded, and not about appealing to the sceptics. Labour may have involved record numbers of people in its processes, but they are numbered in hundreds of thousands, and not millions.

It is worth casting a glance over to the USA at this point. Their internal party politics is clearly highly democratic, and challengers to the system from outside the established parties fail to get going. But they have a state-sponsored system of primaries not tied to party membership that brings in millions of people who aren’t necessarily loyal to the parties’ core values. Donald Trump succeeded by involving formerly Democratic working class voters.

This poses an interesting challenge to the Liberal Democrats, my political party. Time an again I hear activists praising its democratic processes, and asking for these processes to be given even more say over policy. This, of course, helps draw in new members and keep them. As a member of this political party you aren’t just treated as cannon fodder, as you are in the Tories, but you are given a say. And as the party struggles to build a core vote, it naturally tends to look inward, or at least towards the like-minded.

But to succeed the party has to broaden its appeal to beyond the like-minded to voters who are sceptical of the party, and will never be very loyal to it. As the party tries to hold and win seats in a general election, it is getting a taste of how hard this is. Still, the party is what it is. The members and activists will have to take on the challenge of broadening the party’s appeal themselves, and choose leaders and policies that will fulfil that aim. Since inclusivity is one of the core liberal values that the party treasures, that might help. What the party must avoid is the trap that Labour members have fallen into: the feeling that like-minded people are natural majority, and that elections can be won by motivating this group rather than challenging it.

That’s for the future. Meanwhile the catastrophe that is engulfing the Labour Party should be  warning to all political activists.

21 thoughts on “Must democratically-run political parties be lousy at elections?”

  1. “For now I am interested in something else. Labour is clearly the principal author of its own demise, after they elected a clearly inadequate leader in Jeremy Corbyn”

    But who would have been any better? As you say yourself, Labour has particular problems with Leave voting constituencies. Jeremy Corbyn’s challengers and rivals are all very pro-EU. So who would do any better than Jeremy than keeping constituencies like Stoke-on-Trent in the Labour fold?

    And then there is the no small matter of Labour’s near wipeout in Scotland in 2015. How many seats was that worth? How’s Jeremy Corbyn to blame for that?

    I don’t believe you can analyse the problems of the UK centre-left in isolation. We need to look at what’s happened elsewhere in the EU. Its pretty much the same story of decline and loss of influence everywhere. The French socialists weren’t capable of anything better than providing a fringe candidate in last week’s Presidential election. And this at a time when the French economy is in recession, unemployment is high and the Socialist left should be leading the challenge to the status quo.

    Except they aren’t. They are so pro-EU that they’ve chosen to defend the indefensible. So is it any wonder they’ve lost much of their working class support?

    1. I am following an recent article by Andrew Rawnsley:

      I honestly think if the members had chosen Yvette Cooper in 2015, they would now be harrying a collapsing Tory government under David Cameron, after securing a narrow victory for Remain in the referendum. And though Ms Cooper may not be dynamite, she’s as least as good as Theresa May. And she is more likely to have promoted the innovative economic thinking Labour badly needs.

      1. It’s possible that the referendum result would have been different with Ms Cooper. But we really don’t know. Maybe the flap of a butterfly’s wings in the Amazon would have had the same effect?

        But really does it matter? Surely Remainers weren’t relying on Jeremy Corbyn last June? If their case was good enough why would they have had to?

        I’m interested to know what Ms Cooper’s track record is on “innovative economic thinking”. Maybe I missed it but all I can remember is her calling out JC when he was talking about things like People’s QE. This was when JC was in his innovative phase.

        The other is all apple pie stuff. Like we need a strong economy to pay for the social program. We need to build more houses. We need more training and more education for a higher tech economy etc etc. The sort of stuff Labour politicians have been saying for years. I’m not saying I particularly disagree with that but its all very bland and nothing new at all.

        She was also against JC’s call to renationalise the railways and other utilities. Why? If we want a mixed economy we have to have a mix of private and public. This was all consensus politics at one time.

        1. Yes it’s all pretty speculative on my part, about whether a more vigorous line from the Labour leadership would have tipped the balance in the referendum, or whether Ms Cooper would have been able to develop and sell and more innovative economic policy. She is a trained economist, though, and it takes trained economists to embrace that kind of innovation. You could have a sensible conversation with her in a way you couldn’t with Jeremy Corbyn or Ed Miliband (or George Osborne Theresa May, Nick Clegg, etc). And there is a political necessity for Labour to break out of the Tory straitjacket to spend more on public services – so she would have had the incentive.

          And yes Labour’s current policies are mostly samey and harmless. But in modern politics its not policy platforms, it’s competence. The Tories don’t have to explain their policies because there is a perceived competence gap. That would be much narrower with Cooper, and with a following wind, even reversed.

          Pie in the sky? Maybe. But the I really don’t hold with the historical inevitability of Labour’s predicament. Better choices and a slightly better play of the dice and it would be the Tories on the ropes, not Labour. The question is why the Labour membership are consistently making such poor choices.

          1. I’m trying to stay out of any disagreements we might have on politics and concentrate on economics. I don’t particularly care whether David Miliband or Ms Cooper is of the left or of the right. Once we figure out how the economy works we can work out what’s possible from both a left and right perspective.

            Ms Cooper may well be a trained economist but is what she’s been taught correct? The evidence of malfunctioning economies all over the Eurozone and elsewhere in the world, including the UK,should lead us to strongly suspect that it isn’t.

            I’m a Physicist/Engineer by my own training. If there’s one thing I do think I’m fairly good at its figuring out how things work. Give me a circuit diagram and I can work out what everything does. Possibly with a bit of help from the right people etc.

            I’ve had some help from the right people in economics too and I do think I do have a good handle on how currencies and economies work. They don’t work like most people think they work, and they don’t work like I used to think they did. When the penny dropped it was a real Aha! moment.

            For example, what on earth were the powers-that-be in the EU thinking about when they introduced a common currency with only a set of rules and a central bank to hold it all together? How stupid was that? It is they who have wrecked the dream of a united Europe. It’s nothing to do with Jeremy Corbyn or even Marine le Pen. If they’d come up with a working system or even been sufficiently cautious to progress ultra slowly they could have easily have proved the Eurosceptics all wrong.

          2. I think the issue here is that you are treating economics as a problem in engineering, and trained economists don’t. They treat it much more as a science where so much is unknown that the main mission is to discover more about how it works. “Ms Cooper may well be a trained economist but is what she’s been taught correct?” is therefore a bit of a nonsense. A decent economics training does not teach things in such a black and white way. They will teach models, like IS-LM, but not in a way that says “this is the truth”. What economics lecturers really want to do is break down the normal intuitions and get students to think about the subject more flexibly, albeit with quite a bit of gratuitous mathematics. I have been told by people who work in public policy that trained economists aren’t the problem – they understand the limitations and insights of their discipline – but the all the others that take undigested chunks of economics as fixed truths.
            And as for the EU and the euro, I find it quite easy to see what people were thinking and why they supported the project – even with a decent understanding of economics. (I actually went through an exercise of working that out while I was doing my economics degree – the only nation whose motivation I did not quite understand was Germany – ironically the only country that seemed to fully understand its implications for running their own economy). But the reasons why it failed (if it has…) have more to do with the fact that the south Europeans were trying to avoid tough economic decisions, and hoping that the system would lead to a system of subsidy from the north – and the northern Europeans wanted the southerners to take on a particular series of economic reforms to create economies in their own image. The southern economies were already in quite a bit of trouble before the Euro, and those same tensions would have persisted without it. I don’t think a better organised Euro would have solved that problem. I think without the Euro Italy, Greece, etc would have slid into hyperinflation and the European project would look just as fractured as it is now. Corbyn and le Pen are symptoms of a deeper failure, not the cause of the problem, I would agree.

          3. I still don’t understand the thought patterns involved here.

            For example: ” the northern Europeans wanted the southerners to take on a particular series of economic reforms to create economies in their own image. ”

            Nothing wrong with sensible reforms of course. But the Northern European economies survive in the EZ by running a surplus. So how can anyone with any intelligence think that everyone can run a surplus?

            What reforms are going to make this possible?

            And “the south Europeans were trying to avoid tough economic decisions”

            Probably they were. It isn’t just the South Europeans though. Finland and France are having their own problems too. And Ireland was hit hard after the GFC.

            If we consider a country with a trillion euro p.a. GDP economy then it needs a trillion euros of spending to keep it going. Or a bit more if we want some growth and say 2% inflation.

            Say the Govt share of the economy is 40%. They’ll spend 400 billion. Everyone else, including overseas trading partners, has to then spend 600 billion. But how can any EZ govt control this? If everyone else is spending too much then the economy will be growing like crazy and there may even be an inflation problem. Just like happened in Ireland with talk of the Celtic Tiger etc.

            Govt revenues will be high so they think they’ve lots of money to spend too which only makes the problem worse. This is all allowable under the terms of the SGP.

            Then something like the GFC happens. Everyone else stops spending so much. Govt taxation revenue collapses. The Govt can’t deficit easily spend in a counter-cyclical way to keep the wheels turning. That’s against the rules. So the economy collapses too. A one trillion euro economy becomes an 800 billion euro economy.

            This is all just arithmetic. Its not at all difficult to see why what has happened has happened. There’s nothing the Irish government or any other government could have done differently and stayed within the rules.

            So the reforms that are needed aren’t just at national level. They are in the way the euro itself is structured. So everyone in the EU, and not just the poorer countries in the south, needs to make some tough economic decisions and fix the problem before the whole EU project falls apart. Who is avoiding those tough decisions now?

            Why have supposedly intelligent people allowed this all to happen in the first place?

          4. The answer to your final question is because they are focusing on the short-term and hoping that longer term things will sort themselves out. And for various reasons they find alternative approaches unattractive. This is just normal politics. If you apply a bit of effort, trying to get into this sort of political mindset, you can see how they get into this sort of mess!
            On the broader issues, this is what I think. For some reason the northerners (by which I mean mainly Germany, but with sympathy from the Netherlands and Austria) have a blind spot on surpluses. I have not quite got to the bottom of why this is. I don’t think surpluses are necessary for their survival, but there are clear political advantages. They don’t understand that they are either exporting problems, or it is incumbent on them to effectively forgive a large part of their surplus because there is no good way of getting their money back.
            What they can hide behind, though, are problems in the southern countries (I nearly wrote “deficit”, but actually they don’t have deficits at the moment). These are problems of lack of productivity (Italy) and insider/outsider inequality (France) – which boil down to poor regulation, tax structures, etc (the neoliberal critique has a lot of validity here, even if it is played out in other countries). The Germans thought that the discipline of the Euro would force these countries to address these problems – but they haven’t. If anything it has been the opposite.
            You give a nice and succinct critique of macroeconomic management in the Eurozone. I am tempted to try and put together some counterarguments, but these are more along the lines that things would have been just as bad for most of them outside. But you describe well the problem that the Eurozone governments have to fix somehow – more attention to current account imbalances, more fiscal restraint in booming economies, more fiscal latitude in recession economies.

          5. Yes it is interesting that Greece doesn’t run an external deficit at the moment. It did at one time but not now. It’s not going to be possible to extract euros ad-infinitum from Greece.

            This is my explanation of why that is. We can show from the sectoral balances that:

            Govt Deficit = Savings of Private Sector + External Deficit.

            So if Govt cuts its spending and raises taxes slightly, at the same time as nothing else changes in the economy the deficit will also remain unchanged. But the assumption of ‘nothing else changing’ isn’t going to be valid for very long.

            The economy will move into recession. So, when levels of unemployment, underemployment and low wage jobs are high, everyone is less able to save money and also less able to afford imports. So both the external deficit and the govt’s deficit will close.

            So arithmetically you could argue the system self regulates. But it’s not a good way of regulation. In addition, debts remain the same as they were previously, but now everyone’s income, including the Govt’s is less. Everyone is more in debt than they were before which is a further drag on the economy.

            You argue that countries like Italy, Greece and Spain need to address their structural problems, improve efficiencies etc, but they are in an economic straightjacket. They can’t do anything meaningful. The populations are resentful so they won’t want to co-operate. The problems of tax collection just get worse rather than improve.

          6. Alas I am afraid that this is rather a good summary of what is happening in Greece. It doesn’t help that the government is not really interested in meaningful reform, but this does not look like the right way of trying to make progress. We can’t take any comfort from the fact that the deficit is cut – it is for the wrong reasons.

          7. ” they are focusing on the short-term and hoping that longer term things will sort themselves out.”

            Maybe there should have been some engineers involved in setting up the currency. This sort of lack-a-daisical approach is definitely not allowed.

            Everyone has to be aware of Murphy’s law which is that if anything can go wrong. It will!

          8. Alas that is democracy at work – though the record of autocrats is no better. But putting technicians in charge has been tried with the central bankers, and that is not so happy either. I suppose what we want is central bankers with the sweep and authority of Greenspan, but who realise that fiscal policy is the key to stimulating demand and not creating private debt.

          9. I’m not making the argument that we should reduce the level of democracy and replace politicians with technocrats.

            Just the opposite really. The problems in the EU are caused by the technocrats. Except they are malfunctioning technocrats.

            If I design an antenna ( I used to do that sort of thing BTW) then whoever buys it expects it to work as described on the spec sheet. They don’t care about whatever qualifications I might have.

            So it is with the voters. They want something that will work in their interests and works as promised it will by politicians. There is always the problem, though, that their interests aren’t perceived by the PTB , or the ruling class in Marxist terminology, to be quite the same. Tony Benn used to make the point that democracy was more important than socialism. He’s right about that. But in a way democracy is socialism.

            If the EU was more democratic then the Greek people would have had the power to say in 2015 that they weren’t putting up with a failed system any longer. There would have been no threats to kick them out of the EU. They wouldn’t have had their money frozen in their bank accounts. The problems would be rectified. They don’t have to be “paid for” by anyone else in other EU countries. Fixing the Greek economy doesn’t mean everyone else is going to be worse off. It’s in everyone’s interest , or maybe nearly everyone’s, that the Greek economy works well.

            The PTB do know how to win popular support when they need it. I don’t believe the problems we are having in the EU, now, would be occurring if the Eastern communist bloc was still functioning. When it was they had to show that theirs was a superior system. Which it can be. But they don’t have to show that any longer.

          10. I don’t agree at all. Politicians always try to pass the blame on to the technocrats, and I think you’ve fallen for it. If it had been up to the technocrats Greece would not have been let in to the Euro (and probably not Italy either). And I’m sure they would have forgiven a lot of the Greek debt too – that’s what the IMF recommends after all. I’m sure the ECB would buy more Greek debt as part of QE if the Germans would let them.
            The problem is the politicians in Germany, Netherlands and other northern democracies, and their electorates. They don’t want to give the Greeks an inch, since they consider that “unfair”. I’ve always thought that the leftist critique of the Greek fiasco as being undemocratic to be rather revealing. Making free with other people’s money is a democratic right, apparently!
            Admittedly there is also a certain sect of Brussels politician who wants to exploit events to secure more power for the Brussels institutions – but I would not confer the title of technocrat on them. And they are political appointments from the member states. You could argue that the EU was in fact more democratic that the UK, where a minority of voters can create an elective dictatorship with relatively few formal constraints. Ask the people of South Wales whether they think Mrs Thatcher was democratic…
            All of which leaves a deeper problem that a technical fix will not solve. The peoples of northern Europe need to reach a more mature understanding of their interests, and that their own country’s bankers are as much to blame as anybody else. That’s a long way off.

          11. Although I’m not usually short of answers when it comes to analysing these kinds of problems there is one question that does genuinely flummox me. This is whether the technocrats, as you call them, genuinely don’t know what kind of mistakes they are making (in which case they aren’t really technocrats) or whether they do what they do for nefarious reasons.

            My son, who is of more Marxist inclination to myself, gets somewhat annoyed when I try to explain why the EZ has the problems it does. He knows because he lives there. He’s quite convinced that the ruling class knows how it all works really but, as they are a bunch of evil people, they deliberately want to clobber the working class and ordinary people as much as possible.

            I really just don’t know. But your phrase “Making free with other people’s money is a democratic right” is indicative of someone who doesn’t really know how economies have to work. So I tend towards the “not really knowing” theory.

            In a common currency zone, there is no such thing as “other people’s money” in this sense. It’s nothing to do with socialism either. It has to work just the same way in the USA too. Money naturally gravitates towards the wealthy areas. That’s why they are wealthy. But any government, if it is doing its job properly, has to act to make it flow the other way too. So money flows into New Jersey (the wealthiest US State) and the US government has to net tax it there and net spend it in Mississippi (the poorest state).

            It’s the same in the UK and Northern Ireland. Money is net spent in NI and net taxed in London and the S.E. of England. Its no good wingeing that the money belongs to London. No it doesn’t. Unless London wants to declare itself independent and go it alone, it can’t consider that its good fortune is its to keep!

            For one thing it can’t all be spent in London and the SE. It would cause too much inflation. But it can be spent in NI. It is simply just then bringing into use resources which would otherwise go to waste.

          12. It’s a mistake to consider them as a monolithic group, I think. There’s a lot in what your son says (though I wouldn’t put his political spin on it!). I think a lot of EZ advocates see it as a neoliberal project to promote a market-based economy with a smaller role for government. They would justify this as a way of raising productivity and living standards and moving on in a world of changing technologies, rather than robbing the working class, of course. There are lot of closet Thatcherites in the EU elites. I think they see a central challenge in many countries is breaking down vested interests that are getting in the way of free trade, creating privileged elites (including working class insiders in protected jobs) at the expense of general wellbeing.

            And as for “other people’s money”, I think you are muddling things. If you are suggesting that demand in Greece is being suppressed due to a lack of currency, and that easing that suppression would not cost countries outside Greece anything, you would have a point. But the fear in Germany is that this is just camouflage for a resource transfer – that instead of creating jobs for poor Greeks, the money will be spent by the already rich on safari holidays and importing BMWs they can’t actually pay for in the long run. Or, to use a common metaphor, they are filling a bucket with a massive hole in it. There is very little faith that the Greek governing elite really has the interests of the Greek nation at heart. With some reason. So Germans think they would be taxed to pay for a corrupt elite – and to be told that this is democracy is not persuasive.

            I’m not sure I understand your analysis about “other people’s money” not being an issue in a currency zone. If London sends net tax pounds to NI that is a political decision based on a sense of national responsibility and solidarity – the taxes could be spent on something else which provides Londoners with more direct benefit. And I’m not sure if NJ sends anything very much to Mississippi except hurricane relief, and that will happen less under the Republicans. These political are choices made by the states that are transferring the resources – and “other people’s money” is exactly how it is seen. Fiscal transfers need a political basis in a sense of shared interests and solidarity. That is what the Eurozone lacks – and the Greeks didn’t help things by taking everybody for a ride before the crash. Why would you trust not to try the same thing again. So much easier than trying to raise productivity.

          13. But there has to be a system of fiscal transfers in any currency union. If we look at the USA’s unemployment rate by state we see:


            I’m sure I remember looking up that NJ was the richest state. I’d have to check on that again! But nevertheless the difference in rates of unemployment isn’t as great as it is in the EZ. There is a common system of taxation at Federal level and unemployment pay comes from the Federal government. So the automatic stabilisers are at work there.

            I would argue that probably the fiscal transfers should be higher than they are in the USA. The same argument applies in the UK too re Northern Ireland. We can’t say that Northern Irish people should be condemned to high levels of unemployment because we can’t trust the Stormont Government not to keep British taxpayers money out of the hands of the IRA or UDA/UDV. That was the mistake made in the 60’s. High unemployment helped fuel the troubles.

            Sure, I can understand that German people might be worried about money ending up in the hands of the Mafia or some corrupt Greek bureaucrat. But that was a reason for Germany not to join the currency union rather than keep Greece and Italy out.

            I think the Germans knew what they were doing. They’ve always liked the idea of having a weak currency to help boost their exports. If the euro zone had excluded the weaker economies the euro would have been stronger on the forex markets. That isn’t what German exporters want!

          14. I have to confess to flying a bit blind on fiscal transfers in the US. My understanding is that the relative scale of the fiscal take in the US is not high by developed country standards, and a lot of it goes in defence (though bases may be located in poorer regions) – and that much of the social safety net was in state hands. And the relative evenness of unemployment is often attributed to labour mobility. There is labour mobility in the EU, but it seems to be pool of mobile workers next to a majority of relatively static ones. Not many unemployed workers in the Welsh valleys think of going to Germany for work. Also with high levels of job protection in the EU, moving into a decent job (as opposed to a low paid temp one) is much harder.

            Funnily enough, I think you are applying too much hindsight to about the Germans’ entry into the Euro. The German politicians never put it to the public vote, and it was not a popular policy; in a referendum they might well have lost. At the time the DM was riding high, following the huge fiscal expansion that followed the absorption of the DDR (another example of loose fiscal policy causing currency to appreciate…). On entry the German economy was uncompetitive (by their standards). They then went through a radical (and neoliberal inspired) reform programme, which duly reduced unit labour costs and gave them a “real” devaluation. No other country followed their example. That, of course, is part of the German folk memory. “When we were facing rising unemployment and un-competitiveness, we undertook labour reforms, and look at where we are now! Why can’t others do the same?” What they don’t understand is that their banks stoked up the crisis by lending out their surplus and that German taxpayer funding is only at stake because the government bailed out the foolish German banks that lent so much money to bad credit risks. If the Greek government had not found borrowing so cheap and easy, perhaps they would have applied the brakes sooner.

        2. Just two or three things:

          “the taxes could be spent on something else which provides Londoners with more direct benefit.”

          The economy of London and the SE of England is pretty much at full stretch. So any extra money spent there will just add to inflationary pressures and no-one will be any better off.

          Much better to spend money in somewhere like Middlesbrough or Derry. It won’t cause inflation there!

          ” I think you are applying too much hindsight to about the Germans’ entry into the Euro.”

          That’s possible. But I think you said yourself that they’ve made the euro work for them whereas everyone else has struggled. I think the reforms you mention are known as the Hartz reforms. So maybe they were being a bit smarter and maybe sneakier about that than they were letting on? Of course this only works if one country does it. If Germany holds back wages but France doesn’t then France becomes less competitive. If they both have separate freely floating currencies that all self-regulates but, if they don’t, then France ends up with higher levels of recession and unemployment than Germany.

          So the French now think the Germans have exported their unemployment problem to them! I would say they are right to think that.

          “their banks stoked up the crisis by lending out their surplus and that German taxpayer funding is only at stake because the government bailed out the foolish German banks that lent so much money to bad credit risks. If the Greek government had not found borrowing so cheap and easy, perhaps they would have applied the brakes sooner.”

          It wasn’t so much that the Greek Government borrowed the money. It was mainly the private sector in Greece. Also in Spain, Ireland and Portugal too. The German government did bail out its own banks but then lent on all EU governments to take on the debt.

          They should all have told Angela Merkel and Wolfgang Schauble to go and **** themselves but Germany calls the shots in the EU, so they didn’t!

  2. “Labour’s troubles started with their selection of Ed Miliband as leader in 2010”

    Of course they didn’t! Labour has always had troubles. There’s at least three parties involved in the internal coalition known as the Labour Party. The right like to point to the electoral success of the Blair/Brown years but that all came crashing down after the GFC. That mainly was a US phenomena. But nevertheless Blair and Brown weren’t innocents.

    They had it in their heads that the economy could be controlled simply by adjusting interest rates. That was the basis of Brown’s claim to have eliminated boom and bust. If the economy needed a boost then the supposedly independent BoE could be relied upon to make borrowing cheaper and provide the necessary economic stimulus.

    And it all seemed to be working well with three wins in a row. Except the level of private debt was ever increasing and there had to be a crash at some point. I don’t think we’re done with all that.

    The Labour party will probably always have “troubles” but they can start to minimise them by getting back to Keynesian economics. I just wince whenever I hear John McDonnell talk about how he’s going to bring the budget back to surplus. It’s just not possible right now. It’s hardly ever been in surplus anyway so its not as if there was some golden age when governments made some kind of ‘profit’.

    Labour cannot hope to save the NHS and protect it in perpetuity, nor can it achieve any of its goals as long as Labour agrees with the Tories that the UK Government has no money of its own, that budget deficits mean the UK Government is spending more than its income, that the UK Government spends pounds collected in tax to pay for things, that the UK Government is borrowing money, and that the national debt is a real debt.

    The Tory narrative is totally dishonest and there is no possible way to work within the confines of a dishonest narrative and achieve anything other than Tory-lite.

    1. Of course you are right that the current position is part of a never-ending saga of trouble. But it has the look of doom about it. They have a leader that the public thinks is incapable, and they aren’t even promoting fresh policy thinking or making any other serious political waves. Though other mainstream left parties in Europe are troubled (though remember that Hollande did manage to get elected), Labour’s demise was not inevitable – they have the huge advantage of the British electoral system, with which to crush the likes of Podemos or 5-star, while Ukip was destroying the Tories.

      In 2010 the party had a clear choice between the Milibands. Had they chosen David they would have had a credible and charismatic candidate for PM. Of course he would have to have dealt with a very unhappy party, especially if he didn’t follow his brother’s strategy of papering over the cracks. But the whole fatal business of trying to win over public support by talking to itself started when they picked Ed. And even the other Ed (Balls), also on offer, might well have done something to establish fresh economic thinking.

Comments are closed.