Thread by @AndrewPRLevi

.@UKLabour’s making a huge error with its @RachelReevesMP & @Keir_Starmer line on “fiscal responsibility” & “Brexit’s over”.

It won’t win them power. If it did, it’d destroy them in office.

@AngelaRayner’s closer to the mark, but not much, with her attacks. Here’s why. A 🧵 /1.

“Fiscal responsibility” is code for limiting government spending to the amount collected in tax. Perhaps supplemented by a small, strictly limited percentage of government bond sales aka “borrowing”. /2.

The assumption’s that anything else would cause (a) inflation, (b) excessive interest costs/ inter-generational burden to “pay back the debt”. Both assumptions are false. There’s a third assumption among some: they know (a) & (b) are false, but think voters won’t understand. /3.

Government budget deficits - not balancing spending with revenues - are inflationary (aka bad) if the economy’s productive resources are over-stretched. If the economy’s operating below capacity, not only aren’t they bad, they’re necessary - if the economy’s to flourish. /4.

Trying to balance the government budget when the economy’s running below the capacity of its productive resources throttles it, impoverishes much of the population, damages essential services, & undermines the country’s ability to protect its security & health. /5.

We’ve known all this for a century. And our understanding has been further developed in the last several decades. Yet @UKLabour deny it.

The country desperately needs all the things outlined above. So-called “fiscal responsibility” cannot & will not deliver them. /6.

The UK economy (forget the short term, unprecedented Covid hit - a distinct issue) has been running below the capacity of its resources for decades. It needs permanent deficit spending. /7.

Except: Brexit has systemically wrecked supply chains & cut off labour supply. What does that mean? The country’s effective resources have been shrunk. Suddenly, the non-inflationary deficit spending we need to make the country prosperous & secure, is no longer possible. /8.

We’re faced with a choice between (a) deficit spending, stoking excessive inflation, or (b) avoiding inflation, by austerity & probable recession. “Stagflation” at best. /9.

But, wait: Brexit, the cause of that devil-&-deep-blue-sea problem, is a policy error. Like Robert Mugabe’s destruction of Zimbabwe’s agriculture. Not an external shock, like 1970s oil prices, or war destruction & foreign reparations which hammered the Weimar Republic. /10.

It can be reversed. It obviously must be reversed.

Specifically, the Johnson Brexit, which rips the UK out of the EU customs union & single market.

Or we’re sunk. /11.

Labour is trapping itself, therefore, into a fiscal & budgetary policy position which will badly hurt the country. Including, however much redistributive taxation they realistically try to implement, the most vulnerable & the middle classes. It doesn’t need to be that way. /12.

So why is it doing so?

🔘 fear of losing votes by promising to reverse Brexit

🔘 fear of losing votes by promising to deficit spend

Both these positions are based on a view that voters won’t understand the truth. Because they’re too dumb. And the media make them dumber. /13.

That assumes, of course, that the politicians taking these positions are themselves able to understand the truth. I’m going to make that assumption.

Which leaves us with this: they’re frightened of the political consequences of telling the truth. That’s a massive problem. /14.

Not only does it mean they won’t campaign on policies which will help the country, they actively campaign on policies which will damage it. Believing they can get into power. Then, they either implement damaging policies. Or break their commitments. And voters’ trust. /15.

Tony Blair’s often held up as an example: get into power first, do good stuff later. There’s something in that. But 1997 was nothing like 2021. This is an emergency. The only way out of which is to reverse a disastrous policy choice & pursue sustained, high deficit spending. /16.

This slightly dry language isn’t intended for the campaign trail. But the same honesty that it represents very much is. /17.

How about:

🔘We’re the patriotic alternative: standing up for our security, prosperity & well-being
🔘 The economy’s hammered, the poorest & middle class hurt, by austerity & the Johnson Brexit
🔘We’ll reverse both: raise living standards & protect you & the planet /18.

“Oh”, I hear you cry, “what about immigration?”

What about it indeed?

🔘Free movement for all of you, across our continent, will be restored
🔘We’ll welcome European citizens to the UK on the same basis. Like the UK did highly successfully for decades /19.

🔘We’ll enforce high standards for workers: pay, conditions, recognition & development of skills - like Germany & many other countries do

It’s time to tell the truth.

Time’s fast running out. This isn’t business as usual. It isn’t even 2008.

Speak up. Speak clearly. /20. End

P.S. As @APHClarkson has pointed out, “free movement” (see above) should read “freedom of movement”. An important political point, given the way UK political discourse has gone over the last several years!