When the leadership campaign began, I knew one thing – I definitely wouldn’t be voting for Ed Balls. Now, having read his speech at Bloomberg this week and analysed the reaction (in particular from the Financial Times), I am starting to think he offers the most coherent response to the most important issue of this parliament – the spending cuts.
Ed laid out a Keynesian vision for growth, which as I’ve argued again and again, is the only genuine way to reduce the deficit without causing serious and lasting structural damage to the economy which could last a generation.Some commentators have suggested that Balls is taking a risky approach by nailing colours to a mast which may prove to be unfounded. I don’t accept this.
I don’t think the thrust of Ed Balls’ argument is “take my approach or face calamity”. He has laid out a viable and impressive alternative economic vision which has the weight of history behind it and allows for a more socially responsible approach to the deficit. What Labour does with Balls’ analysis is what’s important. It is not necessary to use the politics (or economics) of fear which has driven the coalition’s public approach to the deficit. With a reasoned and supported economic argument behind him, Balls has opened the door to new way of challenging the cuts agenda.
The media has bought wholesale the need for cuts to reduce the deficit and the question now is where the pain should fall. Balls is tackling the premise behind this. Labour can never win public support if they simply challenge where the cuts should happen – they will appear sniping and incoherent. An alternative (quasi-Keynesian) vision for economic recovery based on investment, fair tax rises and, yes, some spending cuts gives Labour a platform to challenge the underlying assumption which currently gives the coalition the opportunity to ideologically cut at will.
In the end, it doesn’t matter whether the worst downside of the austerity drive comes to pass, with Balls’ vision, there exists an alternative idea to hold up to people and say “Even though we avoided a violent double-dip, we could have tackled the deficit in a much fairer way.” There is nothing at all wrong in basing Labour’s approach on Balls’ view, because it has intellectual weight regardless of the outcome of the coalition’s actions. Put simply, the recovery is not black and white and even if the coalition don’t fail utterly, a viable alternative can retain credibility. I think the risk to Labour is in failing to have an economic vision which underpins Labour’s opposition, rather than worrying about being notionally “wrong”.
For this reason, with my ballot still uncast, I find my pen hovering above Ed Balls’ name for the first time. It’s not something I thought would happen, but if nothing else, it’s proved the value of the context in drawing out what’s important in our new leader.