Tax Research UK » Labour did not create the recession.
Tim Worstall needs no help from me in debunking Richard Murphy. He does so patiently, day after day. Today he didn't even need to comment; he just linked to Murphy's student union grade guff. My own comment at Murphy's blog (awaiting moderation at the time of writing) says all I want to add so I reproduce it below:-
You are burning straw men here.
Of course Labour didn’t create the global recession (although they contributed). They did not manage our money properly during the boom; increasing public spending commitments beyond what was sustainable. Nor did they prepare any response for the recession, presumably because they believed their own propaganda that they had abolished economic cycles.
Even Keynes anticipated that the pumps would be primed with money saved during the good times. Labour increased the national debt during good times and had to resort (by their world view) to massive further borrowing for stimulus when bad times came. Personally I would have let the bankrupt banks fall. HSBC, Barclays and Lloyds TSB (had it not crippled itself at Brown’s request by taking on HBOS) could have picked their bones with their receivers and become even stronger. The shareholders of the bad banks would have taken the rap, as they should. Honouring Northern Rock’s deposit guarantees would have cost nothing compared to its bail out, for example.
Even worse than their economic “crime” is their systematic political corruption in building the public payroll to a point where it’s electorally decisive. The government simply can’t take the necessary action now (until our creditors force it). Yesterday’s announcement was largely theatre for those creditors. It involved no real “cuts”. Public spending - and borrowing - continues to rise. Why? Because the coalition parties fear the wrath of state-dependent voters.
As to your last point, no-one can reasonably blame Labour for lack of regulation (as a lawyer doing finance work I assure you there’s a LOT of regulation); but it’s responsible for the incompetent application on its watch of the regulations it had. Writing words down on paper doesn’t solve problems, even when the Queen scribbles the magic spell in Norman French that makes them law. Intelligent application of the rules is what matters.
Labour was not (and never has been) up to the job. They always spend themselves out of office. The Tories are so disliked largely because they are condemned to be the clean up team brought in to sort it all out so that voters can return to their something for nothing delusion and vote Labour again.
So why the title of my post? Because Labour and its camp followers have no intention of addressing the economic issues. Johnson is a perfectly adequate political bruiser for their purposes. After all, the last thing Odd Ed wants is for the villains of the piece to be confronting Gideon at the despatch box. Labour's hands are just too dirty. Therefore it's going to plug the yah-boo line that the Tories enjoy making cuts; that in Johnson's words it's "what many of them came into politics to do." They are going to play the man, not the ball, and for that they don't need any skills.
As, in government, Labour succeeded in breaking our democracy; stacking the electoral cards in its favour by building the public payroll, it will probably work because - nonsense though their denial that the defecit is a problem may be - it's what decisively-large numbers of voters want to hear. That was the thrust of my argument in an heated debate over at James' Higham's place recently. In my opinion it's now the key issue of our political times.