Peter Hain’s article in today’s Guardian reads like loony left bingo. Apparently focusing on the deficit is a “suffocating neoliberal orthodoxy” created by “the Mail, Telegraph and Murdoch stables”, and of course the Tories will take “public spending back to levels not seen since the 1930s when there was no NHS or decent state school system”. Hain insists “the deficit debate is a trap” and argues “Labour needs to learn to love spending again”:
“Labour will prioritise reviving Britain’s failing recovery by scrapping austerity… We urgently need (as some economists argue) £30bn a year for two years of extra capital investment in infrastructure, housebuilding, education, skills and low-carbon industries. This would rapidly expand the economy and cut the budget deficit by boosting tax revenues as people earn and spend more, working hours rise, and fewer families need to look to the state for support.
Yes, the shock headlines would announce: “Higher Labour borrowing early in the next parliament”. But higher public spending and borrowing on capital investment today means lower borrowing tomorrow with the economy growing and tax revenues rising.”
Best of all, Hain accuses Blairites and Tories of subscribing to “Alice in Wonderland economics”. Says the spending-addicted debt junkie…