A great piece from the nobel prize winning economist Paul Krugman on Jeremy Corbyn and the fortunes of the Labour party.
Jeremy Corbyn, a long-time leftist dissident, has won a stunning victory in the contest for leadership of Britain’s Labour Party. Political pundits say that this means doom for Labour’s electoral prospects; they could be right, although I’m not the only person wondering why commentators who completely failed to predict the Corbyn phenomenon have so much confidence in their analyses of what it means.
But I won’t try to get into that game. What I want to do instead is talk about one crucial piece of background to the Corbyn surge — the implosion of Labour’s moderates. On economic policy, in particular, the striking thing about the leadership contest was that every candidate other than Mr. Corbyn essentially supported the Conservative government’s austerity policies.
Worse, they all implicitly accepted the bogus justification for those policies, in effect pleading guilty to policy crimes that Labour did not, in fact, commit. If you want a U.S. analogy, it’s as if all the leading candidates for the Democratic nomination in 2004 had gone around declaring, “We were weak on national security, and 9/11 was our fault.” Would we have been surprised if Democratic primary voters had turned to a candidate who rejected that canard, whatever other views he or she held?
In the British case, the false accusations against Labour involve fiscal policy, specifically claims that the Labour governments that ruled Britain from 1997 to 2010 spent far beyond their means, creating a deficit and debt crisis that caused the broader economic crisis. The fiscal crisis, in turn, supposedly left no alternative to severe cuts in spending, especially spending that helps the poor.
These claims have, one must admit, been picked up and echoed by almost all British news media. It’s not just that the media have failed to subject Conservative claims to hard scrutiny, they have reported them as facts. It has been an amazing thing to watch — because every piece of this conventional narrative is completely false.
Was the last Labour government fiscally irresponsible? Britain had a modest budget deficit on the eve of the economic crisis of 2008, but as a share of G.D.P. it wasn’t very high – about the same, as it turns out, as the U.S. budget deficit at the same time. British government debt was lower, as a share of G.D.P., than it had been when Labour took office a decade earlier, and was lower than in any other major advanced economy except Canada.
It’s now sometimes claimed that the true fiscal position was much worse than the deficit numbers indicated, because the British economy was inflated by an unsustainable bubble that boosted revenues. But nobody claimed that at the time. On the contrary, independent assessments, for example by the International Monetary Fund, suggested that it might be a good idea to trim the deficit a bit, but saw no sign of a government living wildly beyond its means.
It’s true that British deficits soared after 2008, but that was a result of the crisis, not a cause. Debt is also up, but it’s still well below levels that have prevailed for much of Britain’s modern history. And there has never been any hint that investors, as opposed to politicians, were worried about Britain’s solvency: interest rates on British debt have stayed very low. This means both that the supposed fiscal crisis never created any actual economic problem, and that there was never any need for a sharp turn to austerity.
In short, the whole narrative about Labour’s culpability for the economic crisis and the urgency of austerity is nonsense. But it is nonsense that was consistently reported by British media as fact. And all of Mr. Corbyn’s rivals for Labour leadership bought fully into that conventional nonsense, in effect accepting the Conservative case that their party did a terrible job of managing the economy, which simply isn’t true. So as I said, Mr. Corbyn’s triumph isn’t that surprising given the determination of moderate Labour politicians to accept false claims about past malfeasance.
This still leaves the question of why Labour’s moderates have been so hapless. Consider the contrast with the United States, where deficit scolds dominated Beltway discourse in 2010-2011 but never managed to dictate the terms of political debate, and where mainstream Democrats no longer sound like Republicans-lite. Part of the answer is that the U.S. news media haven’t been as committed to fiscal fantasies, although that just pushes the question back a step.
Beyond that, however, Labour’s political establishment seems to lack all conviction, for reasons I don’t fully understand. And this means that the Corbyn upset isn’t about a sudden left turn on the part of Labour supporters. It’s mainly about the strange, sad moral and intellectual collapse of Labour moderates.