Must-Read: John van Reenan: Corbyn and the Political Economy of Nostalgia

Must-Read: John van Reenan: Corbyn and the Political Economy of Nostalgia: “There is a deep ambivalence in the party over the New Labour years…

…On the economic side, the 1997-2008 period was one of strong economic performance… rooted in both improved productivity and higher employment rates… reducing the power of monopolies (like the 2002 Enterprise Act), ensuring flexible labour markets (such as Labour’s New Deal for Young Unemployed and Job Centre Plus), boosting years in education, and supporting innovation (e.g. increases in the Science budget)…. Inequality [had] shot up… in the 1980s, yet from the mid-1990s the income differences between the top and bottom 10% narrowed … due to policies such as the introduction of the first national minimum wage in 1999 and generous increases in benefits and tax credits especially for working families. Increased spending on health and schools also disproportionately benefited the least well off. These reductions in the inequality amongst the vast majority if people are overlooked by many in Labour’s left who focus obsessively on the top 1%, whose share of income did indeed rise under Labour….

Without doubt, Labour’s biggest economic policy failing was poor financial regulation… [part of] a worldwide collective failure…. The period since 2008 has been an unhappy time…. The disastrous decision to accelerate austerity in 2010 under the Coalition, especially the 40% cut in public investment, unnecessarily prolonged the pain. Labour was ineffective in attacking the government’s austerity record. The fact that in hindsight slightly larger budget surpluses should have been run during the pre-crisis period has been turned into the mantra of Labour’s “out of control” public spending both causing the crisis and being the reason for accelerated fiscal consolidation…. Part of the problem was that Labour was reluctant to highlight its rather sensible pledge[s]….

Instead of being proud to say that public investment should not be included in plans for eliminating the deficit as capital spending has a longer term return than current spending, it prevaricated out of fear of looking fiscally irresponsible. New Labour’s sheepishness in defending its record had allowed the Corbynistas to make all the running…. Voting for Corbyn is gesture politics. It makes many on the left feel good about themselves and avoids the painful task of re-thinking policies and reconnecting beyond the base to the rest of the electorate. It is a howl for the past rather than a serious fight for the future.