Who really has "no credibility" in the Labour leadership debate?

In this article I'm going to look at some comments from the Blairite leadership candidate Yvette Cooper and Jack "cash for access" Straw slamming Jeremy Corbyn's economic policies with far more vitriol than they have ever used to describe George Osborne's ideologically driven austerity con.

Jack Straw

I'm not sure why the mainstream media are so keen to give Jack Straw such a big platform to spit his anti-Corbyn bile given that he was caught out with his corrupt "cash for access" scam just six months previously. I really don't believe that a disgraced influence pedlar like Jack Straw deserves to oxygen of publicity, but I do think it's worth noting that his accusation that Jeremy Corbyn;s economic policies are "economically illiterate" illustrate exactly where his ideological allegiances lie.

We never heard Jack Straw speaking out in such strong terms against the economic illiteracy of George Osborne's ideological austerity con, despite the fact that Osborne blatantly missed all of the hubristic economic projections he made in 2010; created more new public debt in just five years than every Labour government in history combined; oversaw the longest sustained decline in wages since records began; lost the UK's AAA credit ratings for the first time since the 1970s; caused the slowest post-crisis recovery in British history; and had his ideological austerity agenda criticised as harmful to the UK economy by a clear majority of trained economists.

Despite all of this economic ammunition the likes of Jack Straw had to fire at George Osborne before the General Election they remained resolutely silent, yet as soon as someone dares propose an alternative to George Osborne's ideological austerity agenda, they clamour to spit as much furious bile as possible at him, even though he's a member of the same political party they are!

The venomous rhetoric Jack Straw has reserved for Jeremy Corbyn makes it absolutely clear where his ideological allegiances lie. Not only is the man a disgrace for selling political influence, he's also an ideological blood brother to the Tory party, and an opponent of the massive grass roots movement within the Labour Party to return it to it's social democratic principles.

Yvette Cooper

Yvette Cooper slammed Jeremy Corbyn's economic policies as "not credible" during a speech in Manchester in which she spent far more time attacking her leadership rival than actually detailing her own policies.

If we look a little closer at the arguments she used to criticise Jeremy Corbyn's plan to use money creation in order to fund large public infrastructure projects (Direct Quantitative Easing) it's quite easy to see who is lacking economic credibility, or even any kind of political nous.

Here's the pseudo-economic babble she came out with to attack the idea that newly created money should be invested in infrastructure and services rather than propping up failed banks and enriching the tiny super-rich minority as the original £375 billion in QE was:

"Quantitative Easing to pay for infrastructure now the economy is growing is really bad economics ... QE was a special measure when the economy collapsed, liquidity dried up, interest rates fell as low as they could go. But printing money year after year to pay for things you can't afford doesn't work ... History shows it hits your currency, hits investment, pushes up inflation and makes it harder not easier to get ... sustainable growth."

There are so many things wrong with this garbled pseudo-economic spiel I'm going to have to resort to bullet points to get through it all:

• To hear a potential Labour Party leader repeating the Tory propaganda about how brilliantly the UK economy is recovering is bizarre. Instead of reinforcing the Tory narrative that everything is going great in order to attack a member of her own party, perhaps she might be better off pointing out that the UK is still enduring the slowest post-crisis recovery in history, and that GDP per capita (the amount of economic activity per person in the UK) is still significantly below the pre-crisis level.

• The idea that the original £375 billion in QE was a good and necessary thing is laughable, especially since the Bank of England's own research concluded that 40% of the benefit went to the 5% of wealthiest households. To hear a potential future Labour Party leader slamming a money creation scheme to improve infrastructure and services and defending a money creation scheme that handed £150 billion directly to Britain's wealthiest families is sickening stuff.

• Cooper also claimed that QE was a good thing before because "interest rates were at a historic low", which is odd, because interest rates still remain at the all time record low of 0.5% today. If we just skip past the fact that she's blatantly put the cart before the horse in claiming that low interest rates were a reason for QE rather than an effect of QE, we're left with a rather obvious question: If such a low interest rate (0.5%) was such a good reason for QE back in 2009, why is exactly the same rate now (0.5%) not a good reason for more QE (just this time supplied direct to the economy rather than pumped into insolvent banks)?

• The idea that Quantitative Easing is "printing money" has been debunked so many times it's beyond belief that Cooper is repeating that story again. Only 3% of the money in the UK economy takes the form of notes and coins. Perhaps Cooper is unaware that the vast majority of money in circulation is created out of nothing by private banks and rented out in interest bearing loans, over 60% of which end up funding property speculation and being gambled on the unregulated global derivatives casino. It's astonishing that any politician could attack a public money creation scheme designed to improve infrastructure and services, yet implicitly endorse a private money creation system that is mainly used to inflate vast unsustainable property bubbles and reckless gambling in the shadow banking sector.

• Cooper is also wrong to claim that Corbyn plans to use QE to pay for things we "can't afford". The idea that the UK can't afford modern infrastructure, decent services, high quality education and investment in high-tech industries is completely backwards. What Britain can't afford is to continue our long track record of catastrophic underinvestment in these things. It hardly takes a genius to realise that investment will be far more likely to flow into countries with modern infrastructure, good services and highly skilled workforces, than those which have deliberately curtailed investment in such things as part of an economically illiterate austerity agenda. 

• Another bizarre claim from Cooper is that she has historical evidence to support her assertion that using direct QE to invest in infrastructure and services "hits your currency", "hits investment" and "pushes up inflation". I'm not really sure what historical data she is even alluding to. Perhaps she's just fearmongering by trying to claim that direct QE would turn the UK into the equivalent of Weimar Germeny or Mugabe's Zimbabwe, even though neither of those historical examples of hyperinflation are remotely similar to Corbyn's proposal for direct QE? She certainly can't be alluding to previous examples of orthodox QE, because it's absolutely clear that Japan has not suffered hyperinflation even though it has been doing QE since the 1990s. The UK, US and Eurozone haven't suffered hyperinflation either since they started using QE to prop up their insolvent banks. It seems that Cooper has no actual idea what effect direct QE would have, and is just lashing out in the hope that the public can be fearmongered into believing that it's better off to just leave money creation to the private banks, rather than trying to direct newly created money towards anything economically beneficial.

All in all, Cooper's criticism of direct QE reads like the rambling of someone who is far too wedded to the crony capitalist orthodoxy to even understand the alternative that is being proposed, let alone assemble a coherent critique of it. If anyone's economic policies are "not credible" it's Yvette Cooper's, because she's incapable of seeing the problem that the private banks will never have any interest in using their money creation powers to do what's best for the UK economy as a whole. All they'll ever do is use their money creation powers to chase quick profits with property speculation schemes and gamble on the global derivatives casino, safe in the knowledge that the taxpayer will bail them out again the next time they render themselves insolvent. 

Not only is she incapable of seeing the problem, she's also incapable of offering anything even remotely resembling a coherent critique of Jeremy Corbyn's proposed alternative.

Conclusion

As I've pointed out before the hysterical ranting of the Blairite old guard about the rise of Jeremy Corbyn is spectacularly counter-productive from their perspective, since condemnation from the likes of Tony Blair (warmonger), Jack Straw (discraced "cash for access" scammer), John McTernan (hilariosly incompetent election strategist) and Chuka Umunna (the living embodiment of the self-serving Westminster careerist) sound like ringing endorsements in the ears of millions of people, meaning the more they attack him, the stronger he gets.

The sheer stupidity of sticking with such a counter-productive strategy is bad enough, but the damage that all of these attacks is doing to the credibility of the Labour Party is even worse. It seems as if the Blairites would rather ruin the Labour Party completely than relinquish control of it to a genuine grass roots social democratic movement.

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