Sunday, 24 August 2014

Political Myth Busting: The "always cleaning up Labour's messes" narrative

The myth that the Labour party are profligate with public money, and that the Tories go around cleaning up their messes is one of the most pervasive political narratives in the UK. It is thanks to this myth that even after four years of breathtaking economic incompetence from George Osborne, the Tories are still considered more trustworthy on economic issues than Labour by the majority of the public.

Regular readers will know that I am no fan of the New Labour party, however I'm completely sick of listening to delusional Tory tribalists mindlessly churning out their counter-factual "always cleaning up Labour's messes" narratives in order to defend George Osborne's record of economic incompetence, exactly as they have been programmed to do by the mainstream media.

It's not just delusional Tory supporters who repeat this myth either, even high profile Tories love to churn out counter-factual rubbish and outright lies.

Here's an example of George Osborne spreading this narrative from November 2008, before he came to power and proved himself the most incompetent man to serve as Chancellor of the Exchequer in almost 200 years (some feat considering his recent predecessors include Gordon "PFI" Brown and Norman "Black Wednesday" Lamont):
"As has been the case so many times before, it's the next Conservative government that will have to clean up the mess left by a profligate and irresponsible Labour Party. We will have to establish a credible framework for bringing the public finances under control. That means creating a target of a balanced current budget and falling debt at the end of the forecast period, policed by a powerful and independent Office for Budget Responsibility." [source]
In this article I'll first provide evidence to fatally undermine the Tory narrative that they are the party of economic competence in the opening sentence of this quote, before then critiquing the rest of the quote in order to demonstrate George Osborne's appalling economic incompetence.

A quick look at the actual evidence reveals that only two Labour governments have ever left office leaving the national debt higher than it was when they came to power, all of the others have lowered the national debt as a percentage of GDP.

On the two occasions that Labour oversaw increases in the national debt there were the mitigating circumstances of huge global financial crises. The Ramsay MacDonald government of 1929-31 coincided with the Wall Street Crash (they left a 12% increase in the debt to GDP ratio), and the Blair-Brown government of 1997-2010 coincided with the 2008 financial sector insolvency crisis (an 11% increase). The other Labour governments all reduced the scale of the national debt, Clement Attlee's 1945-51 government reduced the national debt by 40% of GDP despite having to rebuild the UK economy from the ruins of the Second World War. Harold Wilson's 1964-70 government reduced the national debt by 27% of GDP and even the Wilson-Callaghan government of 1974-79 managed to reduce the debt by 4% of GDP.

The majority of Labour governments have ended up reducing the national debt, and the two that didn't coincided with the biggest global financial crisis of the 20th Century and the biggest global financial crisis so far in the 21st Century.

In order to put this "cleaning up Labour's mess" narrative to the test, it is useful to look at George Osborne's own record as Chancellor of the Exchequer. In his first 3 years as Chancellor George Osborne managed to add more to the national debt than the supposedly "profligate and irresponsible" Labour party did in the 13 preceding years. In fact, in just 4 years George Osborne has increased the national debt in real terms more than every Labour party chancellor in history combined!

By George Osborne's own estimates, the national debt will have grown by 26% of GDP between 2010 and 2015. In the last 200 years of economic history there have only been three periods of debt accumulation worse than George Osborne's tenure as Chancellor of the Exchequer: The First World War (+110% of GDP), the Second World War (+100% of GDP) and the tenure of Tory Chancellor Nicholas Vansittart 1812-1823 (+64% of GDP).

Not only has George Osborne added more to the national debt than any Labour government in history, he has also spectacularly missed all of his headline economic predictions. By the time the current parliament ends in 2015 Osborne will have borrowed £207 billion more than he claimed he was going to in 2010 in order to make the UK economy £128 billion smaller than he said it was going to be. He has also had the UK stripped of their AAA rating by the Credit Rating Agencies for the first time since the 1970s and overseen the longest sustained decline in wages in economic history.

Returning to George Osborne's 2008 quote we can see just how much of a failure he has been in his own terms. "
We will have to establish a credible framework for bringing the public finances under control. That means creating a target of a balanced current budget and falling debt at the end of the forecast period". the Tories now admit that George Osborne's promises of a balanced budget and falling debt by the end of the 2010-2015 parliament are now impossible pipe dreams.

As for his supposedly "independent" Office for Budget Responsibility, George Osborne's pet economics quango have provided spectacularly inaccurate economic forecasts over and again. They willingly rubber stamped all of George Osborne's ludicrously over-optimistic projections based on his economic fairy stories about how the economy could be saved by drastically cutting expenditure across the board, without bothering to even evaluate the projected returns on investment on the infrastructure projects and services to be culled. One of the first steps for the the new government in 2015 should be to abolish the OBR, or at least rename it more accurately as the Office for Budget Recklessness.

The remarkable thing is that despite George Osborne's abysmal track record of failure, Tory tribalists still wheel out the "always cleaning up Labour's mess" narrative as if increasing the national debt by 11% of GDP in 13 years (as New Labour did) is somehow significantly worse than George Osborne's record of increasing the national debt by 26% in just 5 years.

What is even worse is that the mindless Tory tribalists now have another grotesquely counter-factual narrative about "the economic recovery" to blether on about. They seem intent on talking up the fact that the UK has now recovered to the pre-crisis economic peak, despite the fact that the UK was the last major western economy to do so, and that this so called recovery shows that the UK economy has grown by an aggregate 0% over the last seven years!

The reality is that the GDP of the UK is now pretty much exactly the same as it was just before the economic crisis, however the economy has been massively rebalanced, with a huge increase in the share of the wealth in the hands of the top 0.5%, and a large reduction in the living standards of the majority due to wage repression, severe cuts in in-work benefits, rampant inflation in the costs of transport, fuel, housing and food, and George Osborne's hike in VAT.

The majority of us are significantly worse off after four years of ideological "Osbornomics", the national debt is much higher than Osborne claimed it would be, and the economy is much smaller than he projected it would be. The sad thing is that there will be just as many delusional Tory tribalists hawking their absurd "economic recovery" narratives they've rote learned from the mainstream media as there are credulous Tory supporters invoking the ludicrous "always cleaning up Labour's mess" fairy stories.

The Tory "cleaning up Labour's mess" narrative just doesn't stand up to the evidence, however, when it comes to Tory politics, facts and evidence are much less important than the creation of simplistic narratives to feed to a dumbed-down and credulous public. It doesn't matter what the evidence says, because the typical political tribalist isn't remotely interested in searching out the evidence and fact-checking things. All they require is a nice simplistic narrative that confirms their prejudices, and allows them to go around thinking that they are an expert due to their complete understanding of their simplistic explanation, despite the fact that they know next to nothing about the much more complex reality.
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