Those of you who follow this blog will have waded through 000’s of words on the National Insurance cut, and the efficiency savings (I won’t bother linking).   What I failed to say early enough was that this is chickenfeed compared to the issues at stake.   Consider: the row about an NI threshold change – a penny on the rate! – and the savings to fund it – are actually about a smaller amount of money than just turned up when Darling found that he was borrowing £11bn less than expected.   In other words, they are drawing dividing lines within the margins for error.

It is also worth observing that we have not just had a fiscal crisis, but a profoundly troubling economic crisis.  Will Hutton scores some valuable points in today’s Observer Column,  arguing that there are far bigger issues to do with our capacity to grow in future*.  This election ought to be  the perfect opportunity to air these issues – to give them the future ‘manifesto mandate’  to say “we warned you” – even if the warning is only about questions and not answers (see Rawnsley about the (non)importance of manifestos).

Compare to what the Irish have had to go through.  Such a comparison highlights that both Labour and the Tories are backing the same horse; a gradual rebalancing.

So what do we get?  Rows about £150.  This is what Parris calls the Tories’ Trump card – £150 per year (note: not week, thanks Alex below)! Either as a reward for keeping a wife at home (well done you!) or if you fall into the right band for the NI threshold change.  Wow.  It’s not exactly Marx versus Hayek.   As Hopi writes (see link above) of the marriage policy, “this is a bad policy, but in its defence it’s also a pretty inconsequential one. This £150 tax allowance is another example of the recent Tory trend for policies that are not so much talismanic as metaphysical.”

Some might argue that the fiscal situation has squeezed all possible life out of economic debates.  The next Perm Sec of the Treasury will have to strain every sinew to  hit the targets that either Darling or Osborne or Cable wants to set for future Budgets.  Unless you are one of those Tory expats droning on about how obvious and easy cutting spending is, you may have noticed that this pace of cutting has never been achieved short of a general demobilization.   I have certainly been in this camp at times: going on about the war on arithmetic from those denying the need for any spending restraint at all.  And I can understand the political logic that goes against making your plans specific.  This is why the differences are so small; as James writes, ‘perceptions are so much more important than policies’.

The other reason is that the election campaign has been going on since September, and the first right-wiggle of the Tories’ left-right-left approach to the fiscal deficit.  The blaze of PR around their election plans is unlikely to add much more fuel to a debate that has been going on for months anyway – one explanation for why all the fuss I missed in the last week has not shifted the polls from their margins for error either.

So.  It is my job to write about the economics issues thrown up by this once-a-generation election.  And so far there are none that are worth talking about – just a few pounds per week gestures, special interest pleadings from various groups, and spin spin spin.  In 2 years’ time there will be some real gnashing of teeth about this conspiracy of dullness and silence.  For now, there is just dullness.

*I can’t be bothered to start with you Nef-ites who think you are making such a useful or interesting or original point in claiming that we need to find some post-growth future.  Try telling it to the bondholders, for now, then come over here.

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7 thoughts on “The economy is a big issue – yet the politicians are squabbling within the margins for error.

  1. Very well said. Same thing on our side of the pond. Politicians politic. They do not address actual needs.

    For example, this healthcare reform act that has torn our country assunder looks at spending about $150 billion a year once it gets going, 40% of which is offset by other spending cuts. So, let’s say means net new spending of $100 billion per year. Well, we already spend $3.5 trillion per year.

    This is the bill that is going to bankrupt America? I don’t think so. This is the bill that is going to save America? I don’t think so. As you say, politicians squabbling withn the margins for error to score political points. Not to solve real problems.

  2. All 3 parties are essentially one three headed organism agreeing on the importance of destroying the country & economy & disagreeing on only tiny cosmetic details. I’m glad you are moving to recognise this. There is no real reason why we do not have a growth rate at least matching China’s & we would have were it not for these thieves.

  3. Jon Sopel was getting close to that line of argument with Cable today on the Politics Show, and made some headway in making Cable concede that there wasn’t a huge difference between all three parties. He did give some relatively honest answers about services being cut, though.
    Trouble is, with everybody saying “pick me because I’m the best tinkerer at the margins” the more turned off even intelligent people will become with the whole process. Many in the blogosphere from both left and right will be sceptical about any of these non-radical alternatives’ ability to make any difference. This week’s Spectator cover implores us to vote Tory to sve the country or some such nonsense, but I just don’t believe there will be any significant change, or at least certainly not in any macroeconomic sense. Forget the Great Ignored, I’m in danger of becoming a great ignorer.

  4. Agree wholeheartedly with what you say, but didn’t the Tories try to push the responsible line with their ‘age of austerity’ message? It is Labour’s dishonesty – coupled with an incompetent media – which made that an unsustainable strategy.

    And yes I understand the difference between cutting now and cutting later (though it is much rarer to hear specific proposals about how we will know when ‘later’ has come and how to avoid it accidentally becoming ‘too late’). But the Tory line was always modest cuts now to show bondholders we are serious, with bigger cuts later. The result of the failure of that strategy is a total divorce between the political debate and reality.

  5. It’s actually only £150 a year not per week btw.

    On NI, the FT said what you just said a few days ago:

    This policy does signal that the Conservatives would balance the budget by cutting spending a little more and raising taxes a little less than a Labour government would. That is something worth discussing. The policy also shows that the Tories are less worried by the deficit than they were. Why else would they have used their first spending cuts to prevent a tax rise?

    But the Conservatives, absurdly, have chosen to argue that the NICs rise has a unique ability to crush any recovery. A horde of businessmen came out to agree, saying that the tax (that they would pay directly) was more harmful to economic recovery than a public spending cut (that they would only feel indirectly).

    In truth, the full NICs rise would cost jobs. But so would any other tax rise. And so would a cut to spending. This fiscal policy switch is basically deficit-neutral and, in any case, a £6bn policy is not going to ruin or make the recovery. Indeed, between December and last month, the UK changed its estimate for the size of the deficit for the past year by £11bn. This debate is about a quantity of money that the Treasury has recently found trouble even noticing.

    The parties are dwelling on minutiae in order to avoid addressing the grand problems. This is as much a distraction strategy as wheeling out celebrity endorsements. It might be that the electorate is in denial and unwilling to face up to the choices before it. Politicians can hardly be blamed for noting that the voters rarely reward tellers of hard truths. But this time the politicians really must try. They need to start talking more about the wood and stop obsessing over the trees.

    http://www.ft.com/cms/s/0/ebd5ab36-4405-11df-9235-00144feab49a.html

    But quite frankly I’m sick of hearing about NI after all the self-important pontificating by the commentariat like Nick Robinson, and if I hear about this tax one more time I may throw my laptop out the window and go find Roosevelt’s “big stick”.

    1. Thanks for that – corrected! And that FT editorial, I was searching for it, while kids danced around my computer.

      This post of mine does not make an original point: it is a bit like the campaign itself. How ironic…

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