The political debate in the UK is now all about the size of the state. A recession kicked off by the greed and risk taking of the bankers and financiers has been allowed to flip into a war between the parties about how much public services can and should be cut as we look down the long road to an election that’s probably not going to happen until May.
In the fever pitch of press conferences and document publishing both sides are now engaged in, any notion of a rational debate seems to have gone out of the window. The Tories want to cut this year and cut big. Labour seems to be split between the Chancellor, Alistair Darling, and the Business secretary, Peter Mandelson, saying we have to specify some cuts now to look credible and Gordon Brown and the Education Secretary, Ed Balls, still painting it as investment versus cuts. What is required is a patient explanation of sensible Keynesian politics.
This is because government borrowing is where you would expect it to be at this point in the cycle. As tax receipts go down and benefit payments go up, Britain is bound to be running a deficit. The government should be arguing that it makes no sense to be cutting public spending now. As most quick public spending cuts involve jobs, this is where we should look. Let’s take someone currently earning £25,000 in the public sector. At the moment they do a worthwhile job in a school or a hospital and repay the Treasury about £9,000 a year in taxes. If they are thrown into unemployment then they stop doing a useful job for society and cost other taxpayers around £12,000 a year in benefits to keep them idle. Where is the sense in that, and why isn’t a Labour government making that argument more forcefully? Of course, the deficit needs to be balanced over the cycle and will be as Treasury income rises and the cost of the dole queues goes down.
The problem is the Tories don’t think many public sector jobs are worthwhile and, once again, unemployment is a price worth paying to roll back the frontiers of the state. Meanwhile, Labour is unwilling to make a clear and obvious case for Keynesian demand management in case is scares the horse of Middle England. But even if Labour wins the debate and the election, its strategy for the reforming the state is now incredibly weak.
Over the last 12 years it has tried a mix of markets and targets in a way that grafted the old style bureaucratic socialism of the post-war years on to Thatcherism. People who worked in the public sector could not be trusted to think and act for themselves as paternalism was mixed with a nasty right-wing suspicion that everyone is out to maximise their own utility; there was no such thing as a public service ethos. People would be made to perform more efficiently, which is all that matters in a global economy, by being forced to raise their game through dictate or competition. Both may have a limited place, but as a twin strategy they can be deadly. An over-reliance on targets has been tried and, as we know, didn’t work. It was called the Soviet Union. But an over-reliance on markets just exacerbates the very inequalities in society the public sector is supposed to close. Some are always better placed to make the right choices than others.
The revival of the Left in Britain and across Europe rests on the re-invention of the state as a site for democracy, participation and empowerment. The case is both instrumental and intrinsic. Instrumental, because by far the greatest efficiencies and high quality levels of service will come from workers able and willing to reform the service themselves – working with users as they co-produce health and education services. But intrinsically this is right as the public service grows as a space in which the values of the Left resonate: equality, solidarity and liberty. In a reformed public sector we are equal citizens. In such a position, where people are treated with respect and it becomes ‘their state’, we are much more likely to support the levels of taxation necessary to get us through the kind of recession we are currently experiencing. For the moment we know not what to do – but much more work needs to go into how the state can innovate, be motivated and held to account through voice rather than old loyalties or exit. But at least we are starting in the right place.