The knives are out again for Ed Miliband this morning. But the Labour leader is the least of his party’s problems. Labour has still not come up with answers to the two existential questions facing it, what’s the point of it when there’s no money left to spend and how should it respond to globalisation. I argue in this week’s magazine that until it does, the party will be in a death spiral.
The Labour party has always believed in spending money for the common good. Even Tony Blair’s new Clause IV declared, ‘by the strength of our common endeavour we achieve more than we achieve alone.’
Public spending was the glue that held together the traditional Labour coalition and the New Labour one. Blair himself increased public spending from 40.6 percent of GDP in 1997 to 44.1 percent in 2007—the second largest rise in the OECD in this period. By the time Labour lost power in 2010, 53.4 percent of GDP was being spent by the state.
Now, Miliband might be to the left of Blair and New Labour. But he is having to prepare his party for cuts not spending increases. As he meant to say in his conference speech, ‘There won’t be money to spend after the next election’. So, Miliband is trying to keep the Labour electoral coalition united without the key binding ingredient.
Labour’s next problem is globalisation. Globalisation severely limits governments’ freedom of action. It places huge pressure on them to keep corporate and top tax rates low. This means, as the French experience demonstrates, that socialism in one country isn’t an option anymore.
When François Hollande came to power, Miliband claimed that Hollande would show ‘it doesn’t have to be this way’. But two and a half years on, unemployment in France is up to 10.5 percent, only 12 percent of votes approve of what Hollande is doing and the French economy is barely growing. Most damningly of all for Miliband, Hollande has had to abandon socialism and is instead over-seeing 40 billion euros of tax cuts for business paid for by 50 billions euros worth of cuts in public spending.
Miliband might not be a natural-born leader. But those on the left who think that getting rid of him would solve Labour’s problems are as misguided as those Manchester United fans who believed that simply sacking David Moyes would make the team world beaters again.
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