A Fabian Conference, just before the crash

Reminding me of my blog, a few days ago, noting that there are still problems over the 2008 economic collapse, it is useful to go through the flyer for the 2007 Fabian Society Annual Conference. Somehow there was plenty of stuff which has net been recycled to the bin, and every so often I had an instinct that ephemera might well be useful many years on.

Please remember that back in January 2007 (almost exactly eight years ago), Gordon Brown had been ousted out of Tony Blair, from his premiership. On the front cover of the leaflet, we has an image of blue sky, green fields, and trees in the distance, just like in the current poster, proudly advertised by David Cameron for the Tories, much mocked by his opponents. The main difference would seem to be that in 2007, there was no road going though the greenery, while in 2015, there was a road running through the middle.

Well, I guess all politicians copy roughly the same ideas.

Going through the text, rather than the images, the Fabians note that, in the next decade,

"In 2007, Britain will have a new Prime Minister. But how should the political and policy agenda change?" Join us to kick-start the new political year. Over 40 leading speakers and more than 700 delegates will b4egin the next decade debates that Britain needs. We will ask how progressives can set the political agenda, and debate what fresh approaches to inequality, education, the environment, democracy and foreign policy should be involved."

It is all completely laughable, especially what was going to happen next. Looking through this, I feel mightily relieved that I had got away from the Labour party many years previously.

There was one massive gap in the Fabian analysis, in that there was no mention of the economy. Absolutely nothing. No one seemed to bother about the thought that the British economy was becoming seriously unstable. It is of course possible that some of the delegates, and maybe even the occasional politician, might have had the inkling that the economy was on the tip of the upswing, and from then on, it was all going to go into decline. Even the Conservatives, at this stage, did not grasp the problems until after the crash, and so after early 2008, they needed to cobble up a few ideas to try to give an unsatisfactory interpretation of what was going on.

Looking at the main policy for discussion at the annual Fabian Conference, we had, in the morning, "Philosophy after Blair" (yawn!), "Battleground 2009" (but of of course Labour was in such a mess, that they needed to delay for another year, until there was going to be some sort of reprieve), "Left outside" (possibly vaguely interesting), "The media and Progressive Politics" (meaning what?) and Divided by Difference". In the afternoon, Life Chances, Environment, Education, Democracy, and The World After Bush.

But where was the economy, stupid?

There are some in the Labour party who have not been stupid:

Some material to go through, both for myself and for readers.

http://www.theguardian.com/politics/2008/aug/30/alistairdarling.economy

This year's Fabian New Year's Conference will be held next week. I shall not be interested myself.

I need to remind myself though that while I will almost certainly vote for Labour in May, I have no great expectation that Labour will handle things well.

The usual excuse these days is that no-one could possibly have foreseen what was about to happen, just before the crash. It seems much more the case that Labour deliberately ignored all the warning signs.

Can't see that the Conservatives have been doing well, or will be able to do well if they get in after May this year.

Grim reminders of 2007 and beyond

There is still a big problem for electability for Labour, and it cannot be swept away. However badly the Conservatives have done in handling the economy, the fact remains that millions upon millions of voters still remember the horrendous crash in the economy when Gordon Bown was Prime Minister. People still remember that it was Gordon Brown previously claimed that he had ended boom and bust in the economy.

Probably Labour did the best that they could, when trying to deal with the crisis, once it had already happened, but the question is how well Labour, and indeed the Treasury, or the Bank of England, had foreseen the problems in advance.

It has taken several years to try to open up the lid of what was going on.

http://www.theguardian.com/business/2015/jan/07/revealed-bank-england-disarray-financial-crisis

I am in no way in a position of knowing in detail what was going on in the Bank of England, or indeed in the Treasury. What I am more directly concerned with was what was going on with the politicians, and in particular how knowledgeable people in New Labour about the macroeconomics of Britain.

It does not need all that much insight of economic history, and you can achieve much in reading books in a good academic library, to know that:

• There are booms and busts, fast growths and deep recessions, over the years
• Every time there is a bust, it comes about as a big surprise
• Every time there appears to be any period of strong and seemingly stable growth, things bounce back, with a deep crash.

To add to this, and after the time when I was plodding away at the libraries, we can add that every time there had been a deep recession, followed by long and serious growth, there was going to be plenty of people high up to be able to say with confidence that the economic problem had finally be solved. If people do think like that, the likely result is that the resulting problem would be unnecessarily severe, not least because people in charge will never have not bothered to set up any sense of cautiousness.

In my naive days of studying in the eighties, I had over-optimistically believed that people will have learnt from the 1970s and 1980s, and would have worked out ways of sorted out some of the worst problems of cutting out the ups and downs of the economy. It turned out precisely the opposite. The optimistic upswings through much of the eighties (after the early 1980s slump) and the 1990s and 2000s (it goes on and on, a "long boom") meant that, in particular, in the British context, things would do no wrong. Meanwhile, across the Channel, there was plenty more extreme optimism that Europe was secure, with might growth and unending prosperity, as long as the Euro was going to be set up. And so long as there were long and complicated rules to set up the Euro, to make sure that the Euro was going to remain to be prosperous, always passed on the assumption that there was never going to be a recession. The usual problem arises. If you assume that there was never going to be a recession, when the recession arises, it is going to and up disastrously worse.

Ed Balls, the main intellectual architect of New Labour's economic theory, has understandably gone much more cautious, but possibly excessively so. If the byword is "austerity", then we can never get us out of austerity. The problem though is that we are unlikely to return to the earlier long boom, from the War to the mid 1960s, as in the western world (in Europe at least), it is infeasible to assume that there is ever going to be 3+% growth without difficulty, indefinitely. Other countries, other parts of the world, people with lower incomes, will gradually catch up. It will be a very, very long time before China or India, or of course many others, will finally catch up with the west, and for as long as this process will take place, it is difficult to imagine western economies will become more prosperous. A gloomy prospect, I have to admit, but perhaps not so bad in Asia.

The problem is that while we may well be in the process of a zero-growth economy, and while at a pinch this may be tolerable, the way things are set up under the Conservatives, there is a strong intention that there will be growth among the more prosperous, while the rest of us will be struggling with the diminishing number of crumbs.

Few of us will believe George Osborne's predictions that after a brief spell of austerity, there will be a bright future in Britain.