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.