John McDonnell gets a blasting from the FT ('Labour left floundering over economic policy') for Labour's chaotic policy turnabout but gives helpful hints of what might have been if JM had been better informed.
George Osborne made an attempt this week to bind every future government to its Fiscal Charter (balanced budgets). As the FT points out the Brits do not do such things. 'Declaratory laws' have no place and besides Mr Osborne himself rubbished a Labour attempt at the very same thing in Labour's 2010 Fiscal Responsibility Bill: 'vacuous and irrelevant' he said then. What's different with yours now, George? The FT says that John McDonnell's description of the Fiscal Charter as a 'stunt' is accurate, being just another trap for Labour to encounter. All this works for the Osborne austerity view whilst the public are generally oblivious to the truth that the government's accounts are not the same as household's accounts as Lord Turner said recently :
'...the very essence of the insight of macroeconomics is that governments and states are not the sum of households. In the personal household economy, books have to be balanced, but the state economy is different.'
It is not that George Osborne himself does not understand an alternative to austerity such as the Quantatitive Easing for the People that Jeremy Corbyn now wants. Back is 2013 he quite understood that austerity is not the only way:
' It is theoretically possible for monetary authorities to finance fiscal deficits through the creation of money. This would allow governments to increase spending or reduce taxation without raising corresponding finance from the private sector.'
So we have a party following a Chancellor with an 'austerity' policy that seem merely set up to wrong-foot the opposition regardless of the damage it might cause to our economy or the possibilities it might exclude.
Mr Osborne is probably knowingly stretching his apparent belief in the austerity imperative as long as it discomforts Labour. Sooner or later he will decide, as the FT suggests, that a political judgement must be made rather than an economic necessity followed and his outlook will change - even with a cunning plan? Perhaps he will then begin to monetise the deficit as Lord Turner suggested in 2013. This might then 'achieve' his Fiscal Charter rules because creating government money that does not need to be paid back would be excluded from the deficit calculations!
Meanwhile we are being led on a false trail of needless hardship where the benefits of deficit financing are being ignored. Perhaps some Tories will be bold enough to develop insight? Or will Labour actually get their act together? The debate must be opened out and not delayed just for the benefit of the Conservative political purpose of annihilating Labour.
George Osborne made an attempt this week to bind every future government to its Fiscal Charter (balanced budgets). As the FT points out the Brits do not do such things. 'Declaratory laws' have no place and besides Mr Osborne himself rubbished a Labour attempt at the very same thing in Labour's 2010 Fiscal Responsibility Bill: 'vacuous and irrelevant' he said then. What's different with yours now, George? The FT says that John McDonnell's description of the Fiscal Charter as a 'stunt' is accurate, being just another trap for Labour to encounter. All this works for the Osborne austerity view whilst the public are generally oblivious to the truth that the government's accounts are not the same as household's accounts as Lord Turner said recently :
'...the very essence of the insight of macroeconomics is that governments and states are not the sum of households. In the personal household economy, books have to be balanced, but the state economy is different.'
It is not that George Osborne himself does not understand an alternative to austerity such as the Quantatitive Easing for the People that Jeremy Corbyn now wants. Back is 2013 he quite understood that austerity is not the only way:
' It is theoretically possible for monetary authorities to finance fiscal deficits through the creation of money. This would allow governments to increase spending or reduce taxation without raising corresponding finance from the private sector.'
So we have a party following a Chancellor with an 'austerity' policy that seem merely set up to wrong-foot the opposition regardless of the damage it might cause to our economy or the possibilities it might exclude.
Mr Osborne is probably knowingly stretching his apparent belief in the austerity imperative as long as it discomforts Labour. Sooner or later he will decide, as the FT suggests, that a political judgement must be made rather than an economic necessity followed and his outlook will change - even with a cunning plan? Perhaps he will then begin to monetise the deficit as Lord Turner suggested in 2013. This might then 'achieve' his Fiscal Charter rules because creating government money that does not need to be paid back would be excluded from the deficit calculations!
Meanwhile we are being led on a false trail of needless hardship where the benefits of deficit financing are being ignored. Perhaps some Tories will be bold enough to develop insight? Or will Labour actually get their act together? The debate must be opened out and not delayed just for the benefit of the Conservative political purpose of annihilating Labour.
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