From the TUC

Share the pain

27 Mar 2009, by Guest in Economics, International, Politics

The G20 summit will meet in desperate times. Not since the 1930s has the entire world been gripped by deep recession and never before has it faced a threat such as climate change.

In the UK those who lose their jobs and homes as mass unemployment returns face real hardship. This may well be the worst recession to lose your job in for many years. Our increasingly individualistic society means that there are far fewer informal social support systems. Benefits have been set at scrounger-deterrent levels with no pretence that they provide enough on which to live.

People in developing countries, without even our limited safety nets, face even greater catastrophe. Already facing the real effects of climate change, global recession is choking off development as world trade collapses and rich countries turn inwards. The assumption that each year life, at least for most, will get a little better as health and living standards improve no longer applies.

Such unprecedented times demand a new politics. For more than two decades we have lived life based on the last great ideological shift. Thanks to Margaret Thatcher, Ronald Reagan and those Chicago economists, the state and public realm went out of fashion, markets were set free and growing inequality was seen at best as an unfortunate side effect and at worst something to celebrate.

We need an equivalent shift now. This is what the people of the US said when they voted for Obama-style change. This should be no backwards move. Although a return of values such as solidarity, fairness and equality will be at its core, the policy tools that we need in a globalised world facing new problems will be very different.

There is no blueprint. Governments facing this recession cannot know which tools will work best, and cannot simply hope that existing measures will work through. Yes, we need more regulation, but precisely what kind is not obvious. We need a co-ordinated fiscal stimulus, but there is no manual telling us how best to shape it to get the biggest and quickest return. Neither can we simply do the exact opposite of what we have done for two decades. Big country protectionism is still counter-productive. Markets, even if they must be made to serve people, are still a prime source of innovation and prosperity.

If the G20 summit next week ends up an argument simply about the best technical response to the crisis it will have failed. It is unrealistic to expect it to solve all our problems at a stroke. Nor will the leaders attending admit that they mostly bought into the failed consensus that brought about the problems that they must now tackle.

What the summit can do is set out clearly where policy instruments are meant to take us. G20 leaders need to set out that they want to see a different kind of world and that getting there is the best way to counter recession and ensure financial collapse never threatens the world economy again. That needs clear commitments to create jobs, build a low-carbon economy, work to reduce inequality both within and between countries and ensure decent public services for all.

It is this hope that has brought the extraordinary coalition of unions, development groups, environmentalists and faith communities that is organising tomorrow’s Put People First march for jobs, justice and climate in London. Not everyone there will agree on every issue, but just as Obama energised thousands who had simply given up on politics, this is perhaps the first post-recession political event that offers hope. Importantly it is going on outside Westminster, whose debates now look increasingly out of touch.

For just as the economic consensus has broken, so too has UK electoral politics. Voters want action to reduce the gap between rich and poor; they are angry at the tax avoidance of the super-rich and big companies; and they see Sir Fred Goodwin’s pension as symbolic of a much wider malaise. Yet this has no outlet.

Polls show that voters blame the government. That is hardly surprising. They are after all in charge. But it goes deeper, many of Labour’s leading players – even those now valiantly struggling to turn things round – were complicit in constructing the test that said Labour could only govern if it uncritically accepted the 1980s economic consensus.

But the only way that voters can show this in our declining two-party system is to support the opposition. Yet this is a party that said the mortgage market was too regulated just as the sub-prime crisis was brewing. Its flagship spending pledge is an inheritance tax break that would benefit just the top two or three per cent.

Fixing our politics is as challenging as mending the economy. It could go horribly wrong. Recessions can stimulate a nasty nationalism of protection and xenophobia. But there is also cause for hope. Solutions that involve a confidence in using the state, asserting democracy over markets and fighting inequality can only come from progressives to the left of centre.

This recession is too desperate to talk of silver linings, but its very severity must make people question their previous assumptions. Coupled with a new popular movement for progressive change, of which Put People First is part, this could just be the start of a new and confident progressive politics.

Nothing can stop the recession, but we can make sure that its pain is fairly shared, and that we emerge a fairer, greener and more democratic society the other side.

2 Responses to Share the pain

  1. Robert Day
    Apr 1st 2009, 10:38 pm

    What precisely do you mean by ‘sharing the pain’? That’s the mantra that the Right is using to call for public sector pay rises to be frozen instead of increasing at their usual snail’s pace. It’s also likely to be the words used when Gordon, or that nice Mr Cameron, re-launch their attacks on public sector pensions and severance payments. Both show signs of pandering to the belief that everyone in the public sector is a well-paid administrator or mandarin. The truth is very different. I know that public sector pay for the rank-and-file has been screwed down for all of the nearly 30 years I’ve worked in it. It’s either ‘not the right time’ for better pay, or it’s ‘yes, times are better, but we cannot threaten the recovery’. I am sure that we’ll hear these tired old chestnuts trotted out again in the near future.

  2. Nigel Stanley

    Apr 3rd 2009, 5:02 pm

    In a recession the economy as a whole slows down but only by a few per cent. But the pain that causes is not shared across the economy, but concentrated on the unemployed. To say that the pain of a recession should be shared is not to call for public sector pay cuts, but to make that more basic point. Of course those with the broadest backs should pay the most, which is why the TUC has been calling for a fairer tax system where the super-rich pay more, more help for those who lose their jobs and measures to keep people in work.