With Laura Kuenssberg once again taking the weekend off, we were treated to a Sunday with… show hosted by Victoria Derbyshire. Her guests included one Keir Starmer – leader of the Labour Party and purveyor of a ‘business first’ political approach. In their interview, Derbyshire highlighted one of the issues with Starmer’s agenda:
Keir Starmer says Labour will fund our public services through growing the economy. As Victoria Derbyshire points out, this means that if the necessary growth isn't achieved, there will be no extra money for public services. #BBCLauraK pic.twitter.com/dDjE1ED1rK
— Saul Staniforth (@SaulStaniforth) October 8, 2023
On the show, Starmer was shown a word cloud covering what people think he stands for:
— Adam Bienkov (@AdamBienkov) October 8, 2023
While it’s funny that most people think he stands for “nothing”, it really isn’t true. Starmer stands for corporate interests, and Derbyshire’s questioning helped highlight that.
Referring to a pledge to not borrow money to fund the NHS, Derbyshire said:
as you’ve just said this morning a number of times, ‘the way to fund the public services is through growth’. If you don’t get that growth, that means there will be no money – extra money – for public services, correct?
Starmer – who’s looking increasingly like a wax puppet of himself – responded:
I’m confident we can get the growth… we have worked through a plan that tells you how we’re going to get the growth; the people that we need; the skills that we need – we’ve set out a policy on skills just this morning to get the skills in the right area.
After repeating the word ‘skills’ over and over, he highlighted:
the partnership with business – this is crucial – this will not be state-controlled; it won’t be pure free markets – it will be a partnership with business.
Starmer smirked when he said “this will not be state-controlled” as if the issue in Britain is that the government has too much control over its brief. For reference, you know the HS2 project in which we’re building half a stretch of railway over several decades? That’s the result of the government essentially just leaving the process up to hundreds of private companies. This is what China has achieved in considerably less time:
China's High-Speed Railway map 2008 vs 2020.
As transport infrastructure crumbles in the US and Britain following decades of neo-liberalism China is home to the world's largest network of high-speed rail as a result of decades of socialist policies driven by state investment. pic.twitter.com/kimqzKV0lf
— Fiona Edwards (@Fio_edwards) October 6, 2023
Opinions will differ around HS2 and the socialist credentials of China, but one thing is certain – China’s refusal to become subservient to business interests means it can actually get things done. Copying everything China does would be a bad idea (imagine Starmer with the unfettered power of Xi Jinping), but clearly businesses shouldn’t be partners in the running of a country.
After Starmer waffled on about the importance of business some more, Derbyshire said:
Let me come back to my question if I may. If you don’t get that growth, that means there’ll be no extra money for public services – yes?
Starmer once again assured her of his ‘confidence’. An exasperated Derbyshire eventually said:
Confident? That’s like crossing your fingers.
Starmer’s approach has problems beyond the wishy-washiness, however. Specifically, his agenda makes two key assumptions – both of which have been proven repeatedly wrong throughout history (including very recent history):
- Funding public services is a drain on the economy.
- The economy is a measure of how well the country is doing.
Let’s look at both now.
Are public services a drain on the economy?
The act of de-funding public services to benefit the economy is called austerity. Austerity doesn’t work. How do we know it doesn’t work? Because whenever we implement it, it doesn’t work. As Raoul Martinez wrote for Novara Media in 2017:
When the [2010 Conservative-Liberal Democrat] Coalition came to power, neither history nor mainstream economic theory provided any support for the claim that cuts were the only way to reduce the deﬁcit. Cutting spending in a recession has been tried many times and – without exception – failed. For instance, in the aftermath of the First World War, the US, Britain, Sweden, Germany, Japan and France all adopted austerity policies with devastating impacts on their economies. President Herbert Hoover’s austerity response to the 1929 economic crash was followed by the Great Depression.
The historical failure of austerity as a response to economic crises resulted in a widespread consensus among academic economists that, since recessions are caused by a reduction in demand (and when there is no room to offset cuts by reducing interest rates), cutting spending only makes the situation worse. The textbook response to economic downturns, as any student of the subject knows, is to increase spending. By spending more in the short term, a government can reduce public debt faster because smart spending creates jobs, increases tax revenues and releases more people more quickly from dependency on the state.
However, as governments began to embrace austerity, a handful of economists produced research telling them exactly what they wanted to hear.
The first thing I’d say is don’t make the mistake we made in 2010 after the financial crash, which was to think that the way through this is to go for austerity and really severe cuts to public services.
That was a complete mistake in my view, it stripped away our public services, stripped away our local authorities and what they could do, increased inequality massively.
He also said (emphasis added):
I think not only did that create a lot of inequality and make inequality a lot worse for people, it also didn’t allow the economy to recover and put us in a bad position for this pandemic.
He additionally said this – showing that he knows his current arguments about economic balance are drivel:
The old argument that you need to balance the books as quickly as possible just isn’t right anymore.
Starmer knows that not funding services directly will be worse for the country. So, what changed? Well, for a start the amount of money coming into Labour from big business has rocketed, as reported by openDemocracy. And, as it turns out, businesses can do very well even when a country is failing.
Does the economy measure how well a country is doing?
If you watch, read, or listen to the news, you’ll know that ‘gross domestic product’ (GDP) is used as a measure of how well the country is doing. But does it measure how well the country is doing, or does it actually show how well the rich are doing?
Between 2010 and 2019, GDP went up every year. Do you know what else went up?
- Child poverty.
- Child deprivation.
- In-work poverty.
- The number of foodbanks.
- Pensioner poverty.
- Disability poverty.
You know what went down?
- Disposable income.
So if the economy went up but overall poverty increased, who benefitted? The New Economics Foundation reported some startling figures on that in 2022:
Importantly, you can see that while most people in the UK suffered through austerity, the wealthy enjoyed pretty much constant growth:
And how much wealth do they possess exactly? Enough to solve all our current problems and then some:
Crucially, the New Economics Foundation highlights that GDP has become increasingly detached from the material conditions of regular people:
So, if the economy primarily benefits the rich and funding public services will boost the economy, why wouldn’t Starmer just fund them if he is indeed in the pocket of these people? Because there’s something else you need to bear in mind. The wealthy did so well under austerity because it was used as cover to transfer the public good into the hands of the private few. As Labour List wrote of a 2016 Tory budget:
The Budget contained spending cuts amounting to £9.6bn over the life of the parliament including cuts to the most vulnerable – although Osborne was subsequently forced to perform a u-turn on disability cuts.
At the same time the was a £3.3bn net giveaway in tax cuts for businesses. The actual content of austerity could not be clearer. It is in reality a transfer of incomes from poor to rich and from ordinary people and workers to business.
Starmer is clearly angling for the same sort of transfer now. The economy – i.e. businesses and the rich – must come first, and once they’re satisfied, the rest of us will get a taste. It’s ‘trickle-down economics‘ essentially, but as we all know – wealth doesn’t drip down; it gushes up.
Coming after several austerity-pushing Conservative government’s, Starmer’s mission is clearly to normalise this as the default political position. In other words, Business First Britain will be here for the foreseeable future if Labour wins the next election.
Featured image via BBC – screengrab
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