French double dip recession challenges social liberals

News that France has returned recession poses problems for those - like the Social Liberal Forum (SLF) and indeed Ed Balls - who believe that government action can create economic demand (and jobs).

That such an explicity interventionist government as that of Francois Hollande is unable to stem the tide of Eurozone recession is surely evidence that in such a globalised world - where multinational corporations are bigger than many economies - the power of governments to change much (at least in the short term) seems pretty limited.

And that is also the failure of the SLF and others who call for plan Bs (or Cs or whatevers).  By failing to recognise the limits of government and putting too much trust into a 'benign' state they perpetuate remote  bureaucracies, overweening and overeaching politicians and allow the state to centralise economic and other power in too few hands.

In the end economics - like politics - is about people and how they interact with others.  And so Liberals should look for a new economic strategy - one that truly understands the limits of state action and the importance of people. 

A good place to start might be David Boyle who seems to be streets ahead of the SLF in defining a new liberal ecomomics - fit for the reality of the 21st century - and not simply a rehash of the failed post war certainties of the SLF and Ed Balls.

David Boyle sums up my thoughts on the NHS bill

In a superb article on Lib Dem Voice, David Boyle (a former editor of Liberal News), outlines why liberals should support the Health and Social Care Bill.

The fundamental problem with much of the party's thinking over the last 20 years has been a kneejerk support for producer interests and a failure to accept the state can be just as venal and incompetent as the private sector. Sadly it's the thinking that drives Liberal Left and much of the Social Liberal Forum's policy making.

What matters to liberals surely is the quality, efficiency and costs of public services - not who provides them?

Economically illiterate, politically naive and fundamentally irrresponsible...

...that's my view of the 10 Liberal Democrats who put their name to a Guardian letter supporting the frankly bonkers Compass think tank's 'plan B'.

The plan is crazy - calling for a UK tobin tax on banking transactions. It also calls for rises in benefits to help those on 'low and middle incomes' and additional quantitative easing (presumably on top of that just announced by the Bank of England). And finally for an end to all public spending cuts and job losses. And the report is unspecific about how much this would cost - but presumably it would be a lot more than the additional tax revenues (if any) so created.

Liberals shouldn't be arguing for a welfare state so bloated it encompasses those on middle incomes - nor for a tax that without coordinated international action is guaranteed to send the finance sector offshore.

And as for the idea that the public sector has contracted over the past year - today's growth figures reveal the government and other services sector grew by 0.5% in Q3 of 2011. Full details can be found here. In fact over the next four years government spending is set to rise by £40bn.

And by going public in the way they have the 10 Lib Dems have allowed themselves to become Labour's patsies and have given the media the opportunity to embarrass the party and create division where none exist. Some of the 10 ought to know better whereas Linda Jack and Richard Grayson have form.

The irony is that the 10 are some of those who have argued for a looser 'supply and confidence' arrangement instead of full blown coalition with the Conservatives. Under these circumstances the party would have been expected to support a Tory only budget - rather than one with strong Lib Dem strands running through it.

Labour hypocrisy on 10p tax rise revealed

The Telegraph has exposed Labour's hypocrisy when they abolished the starting 10p rate of tax in 2007. At the time Labour denied the move would disproportionately hit the poorest - but the papers show Labour, including Gordon Brown and Ed Balls, knew full well that their move would harm the very poorest and benefit the very rich. But they went ahead anyway. The killer graphic is here:

But this was not an aberration. Under Blair/Brown the gap between rich and poor rose faster than under Thatcher. They declared it was their intention to abolish child poverty, but the pledge (like so many others) crashed and burned.

So I find it strange there are still some misguided souls in the Lib Dems who think the Labour party is in some way 'progressive' or indeed 'radical' and it is the party's duty to work only with Labour in some sort of left alliance of the deluded.

So when Richard Grayson and Linda Jack report back to the Social Liberal Forum next weekend on their talks with Ed Balls and Liam Byrne (among others) I hope they are laughed out of the hall. I'd guess they won't be because the SLF, sadly, has a blind spot to evidence that disproves their rose tinted world view of Labour. Their knee jerk reactionism to all things Conservative prevents them taking the pragmatic and balanced position of pursuing political goals that actually can be delivered by the Lib Dems in government.

By 2015 when no-one will be paying any tax on incomes less than £10,000 it will do more for helping those at the bottom end of the pay scale than anything Labour ever did and it will have been done because the Lib Dems are working with the Conservatves - not Labour.