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British Labour Party rejects Evolution, endorses Creationism

Misplaced policy and macroeconomic priorities are leading the Labour party down an erroneous path of deficit reduction.

Last Modified: 09 Jul 2013 08:05
Dean Baker

Dean Baker is a US macroeconomist and co-founder of the Centre for Economic and Policy Research.
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"Party leader Ed Miliband announced that if the Labour Party regains power in 2015, it will offset any spending increases with cuts elsewhere in the budget...Committing the party to slow growth and high unemployment." writes Baker [AP]

We all know that the British Labour Party is led by highly educated, highly intelligent people, which is why it would be surprising if they rejecetd a well-established truth like the theory of evolution. Tantamount to such an intellectual absurdity is their recent rejection of accecpted, conventional economic theory.

At the party’s National Policy Forum, party leader Ed Miliband announced that if the Labour Party regains power in 2015, it will offset any spending increases with cuts elsewhere in the budget. This means the Labour Party will not raise the deficit.

This is an incredible pledge, since it commits the Labour Party to slow growth and high unemployment. The main problem for the economy in the United Kingdom now and for the foreseeable future is a lack of demand. In this context, government deficits are good. Larger deficits are better; they mean more spending on goods and services, therefore more demand and more jobs. Alternatively, lower taxes leaves more money in people’s pockets, which they can then spend.

There are clearly times when government deficits will be pulling resources away from the private sector, but that is not the case now. There is no mechanism through which cuts in government demand can be translated into increased demand from the private sector. If anyone doubted this fact, the Cameron government has helped to further establish its truth with its deficit-cutting policy of the last three years.

In more ordinary times we would expect the large shortfall in demand to lead to lower interest rates, which would then spark increased investment and consumption. However short-term interest rates in the UK have been near zero for years and long-term rates have been at historic lows. The economy has already seen whatever boost from low interest rates it could plausibly hope to see.

So what exactly is supposed to offset the fall in demand created by deficit reduction? Mr. Cameron apparently believed in the confidence fairy: that lower budget deficits by themselves would inspire business to invest more.

The confidence fairy hasn’t shown up in the last three years and the UK economy remains mired in stagnation and recession. So why do the leaders of the Labour Party pledge themselves to more of the same?

There are two explanations. First in the UK, as in the US, the rich and powerful have not been especially bothered by the weak economy. Profit shares are at or near record highs; the stock market has been soaring. In other words, what seems to be the problem?

The folks on top are not anxious to see policies that might boost employment, raise wages, and possibly even (horrors) lower profit. In short, this is old-fashioned class war and the Labour Party, ostensibly the party of the British working class, has thrown in with the other side.

The other explanation is that many people across the political spectrum believe in the virtues of balanced budgets. This isn’t because they want to make the rich richer, but they accept the old bromides from their parents and grandparents about not being able to spend more than we earn. After all, we know this is true for us as individuals; why shouldn’t it be true for governments as well?

The Labour Party leaders, like their counterparts in the United States, would probably tell us all privately that they understand economics and the need for additional spending to boost the economy, but they just can’t say that publicly or the voters will kill them. A lot of polling data make this claim seem dubious. People in the US always tell pollsters they care more about jobs than deficits. Furthermore, because of the atrocious quality of budget reporting no one has any clue how large the deficit is anyhow. That would seem to suggest the jobs strategy would be a political winner.

Last month the Supreme Court ruled that same sex couple had the same right to get married as heterosexual couples. This was a historic decision.

Just a quarter century ago, allowing same sex couples to marry would have been seen as an extreme position. A politician could accurately say  that they would be killed politically if they openly supported same sex marriage.

In that context, it is understandable that politicians in the 1980s would not publicly advocate what was then considered an extreme position. But  if they did believe in equality, we would not expect to see them arguing the opposite position making statement about the sanctity of heterosexual marriage. Rather we would expect them to see them push the envelope as to what is politically acceptable so that they or their successors would be in a position to argue more clearly for equality. 

This pushing of the envelope on gay-lesbian rights is what moved the ball so that a conservative dominated Supreme Court could now declare bans on same sex marriage unconstitutional. We have the right to expect the same from politicians who claim to be committed to ensuring that working people in the United Kingdom and the United States enjoy their share of the gains from economic growth. Pledges from politicians to curtail deficits in this context deserve the same sort of derision that commitments to the sanctity of heterosexual marriage did back in the 1980s and 1990s. The people who make such commitments deserve the public’s contempt.  


Dean Baker is a US macroeconomist and co-founder of the Centre for Economic and Policy Research.

Follow him on Twitter: @DeanBaker13

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The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.

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