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The Corbyn Conundrum

‘I voted for Jeremy Corbyn because the system is rotten and needs shaking up’. So said a multi-millionaire Labour Party city acquaintance to me. And so came further proof of the bewildering range and diversity of people putting their cross for the political outsider. Given the stunning victory of Jeremy Corbyn we need to recognise that he is on to something.

It is part of a pattern of the anti-politics trend which we are seeing globally where the spoils go to those who convey a simple message. In Corbyn’s case the message was anti-austerity.

His success leaves much for mainstream politicians to ponder. In doing so great humility is required. Millions of people in Europe and elsewhere rightly feel that the current economic order is not serving their interests. Hence Syriza in Greece, Podemos in Spain, Le Pen in France, Beppe Grillo’s Five Star movement in Italy, Trump in America, and dare I say, SNP in Scotland. The key is to change the nonsense on deficits and a perpetual balanced budget that the chancellor and others come out with. We need to give serious consideration to the development of a positive narrative of why running a deficit now holds the key to future growth. In 2009 the USA was running a deficit, yet today, its economy is growing more than that of any European country which runs a surplus. Indeed, we do not need to go back too far, just to World War Two, we in Britain had debt of 250 per cent, but at that time we created the NHS, a new welfare state and a Conservative government in the early 1950s built over 300,000 houses in a year – a record that still stands.

Given that many of us are in the wrong side of the argument from the anti-politics voices, we need to recalibrate and expand our thinking. Yes, businesses are wealth-creators, but success rests on different strands. We need a fusion of business, the state and the working population to create wealth. The role of the state is important. For instance, Google and Apple were worthy recipients of state funding. Google was given a grant by the US National Science Foundation which allowed it to discover its own algorithm. Without that funding Google wouldn’t have achieved the success it has today. So let us eliminate the obsession that the sole economic problem is the budget deficit.

The main obstacles are productivity levels, poor performance of manufacturing industry, a lack of capital investment and the resulting balance of payment deficit. We need a new politics, but above all we need a new mindset. If we are to understand, and then empathise with the society to which Corbyn and others have successfully reached out, a change of thinking is imperative.

 

Lord McFall of Alcluith

John McFall was the Member of Parliament for Dumbarton (1987-2005) and then Dumbartonshire West (2005-2010), chairing the House of Commons Treasury Select Committee from 2001 until 2010. Ennobled on his retirement from the Commons, he is now Senior Deputy Speaker in the House of Lords where he also chairs the Liaison Committee and the Procedure and Privileges Committee. He was co-author for Politeia of Banking on Recovery: Towards an accountable, stable financial sector (2016) and The Financial Sector and the UK Economy: The Danger of Over-Regulation (2013).

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