German finance minister’s comments on the economic outlook chime with IMF views and Stewart Wood’s tweets reveal more about the double game being played by the Labour Party
As so often happens nowadays I first heard the news on Twitter. Evidently the German finance minister had made some kind of big statement on the economy.
As is also often the case with Twitter the exact nature of the news was obscure. Two of my left wing contacts had retweeted a tweet from @StewartWood, someone who I had not heard of, which said the following: “Germany’s Finance Minister coins “EGKA” (es gibt keine Alternative). You know you’re losing the argument when you say there’s no alternative.”
Clearly there is a limit to what can be said in 140 characters but several things could be discerned from the tweet. Wolfgang Schäuble had said something akin to Margaret Thatcher’s favourite dictum that “There Is No Alternative” – which also became known by the acronym TINA. (Indeed Norman St-John-Stevas, a leading Tory “wet”, nicknamed Thatcher “Tina”).
As for Stewart Wood he was clearly a Liverpool supporter as his tweet was illustrated with a red Liverpool Football Club crest with the words “This is Anfield” on it. He also disagreed with whatever point Schäuble was making.
A click on Stewart Wood’s profile revealed more: “Shadow Cabinet Minister, Labour peer & adviser to Ed Miliband, Fellow of Magdalen College Oxford, Jethro Tull & alt-country aficionado, lifelong Liverpool fan.”
So not only did he have questionable taste in football and music but he was a leading, although unelected, Labour Party hack. A further internet search revealed his official title as “Baron Wood of Anfield”.
This close affiliation with the Labour Party raised an immediate problem with his tweet. When Thatcher frequently raised TINA in the 1970s and 1980s Labour lost the argument.
New Labour replaced Old as the party came to accept her dictum that there is no alternative to the market. In other words that socialism, at least in the sense of a non-capitalist economy, was unviable.
As for Schäuble’s comment it turned out that he had made it at a debate in Tokyo during the International Monetary Fund and World Bank annual conference. He had appeared alongside Christine Lagarde, the IMF managing director, and others in a BBC World Service discussion on “rescuing the global economy”.
What he actually said on the programme, in his German-accented English, was that: “There is no alternative to reduce in the medium term too high sovereign debt”. This is completely in line with the mainstream IMF view as expressed in its most recent World Economic Outlook.
Indeed Lord Wood of Anfield should have recognised it from closer to home. It is essentially what Ed Balls, the shadow chancellor, said in his speech to the most recent Labour party conference: “Before the next election – when we know the circumstances we will face – we will set out for our manifesto tough new fiscal rules to get our country’s current budget back to balance and national debt on a downward path.”
As is often the case Labour seems to be playing a double game. It tries to give the impression to voters that it is opposed to austerity while reassuring others, particularly in business and the City, that it favours cuts.
The difference is essentially over timing. Both the UK and German governments favour a slightly earlier squeeze while the Obama administration and Britain’s Labour opposition prefer to postpone it a little.
This distinction also came out at the BBC IMF debate when Lagarde argued that bringing down debt was more of a marathon than a sprint. Schäuble agreed but countered that even in a marathon it is a bad idea to start off by heading in the wrong direction.
In fact there is a big problem with the idea of TINA but it is not the one that Wood points out. To understand its true significance it is necessary to look back to the time when Thatcher was using it.
The point of TINA was to assert that there was no alternative to the market economy. Conservatives were pushing it strongly at a time that both the Soviet bloc and Old Labour were struggling to survive. It was not long before both collapsed.
Few will mourn the passing of the Soviet Union or Old Labour. But the victory of TINA had a paradoxical effect that is seldom recognised.
The old debate between supporters of capitalism and socialism at least had the virtue of forcing discussion of broader economic issues. It means, for instance, that there were heated discussions on how best to organise production and to generate economic growth. The level of debate among politicians and academics was raised as they had to find answers to difficult questions posed by their opponents.
Contemporary debate in contrast trends to be superficial. It focuses much more on how to fine-tune demand in the economy through monetary and fiscal policy. Pundits and politicians frequently call for more economic confidence without considering why it is so low at present.
There can be no return to the days of the Cold War nor would it be desirable in any case. But a new debate about how to build a more productive economy, one where there are genuine alternatives, would be a welcome step forward.