There are people out there who harbour hopes that a future
Labour government under Ed Miliband would be a radical administration that
responds to ordinary people’s aspirations. Dream on.
What is made clearer each time Miliband or shadow chancellor
Ed Balls speaks is that they accept lock, stock and barrel that the first
priority will be to reduce the public spending deficit. If elected, Labour
would carry on where the Tories leave off.
That was the hardly-disguised implication of Miliband’s
speech yesterday at the stock exchange where Labour came down in favour of what
is known as “predistribution”. You read that right, not redistribution but
predistribution.
"The redistribution of the last Labour government
relied on revenue, at least in part, which the next Labour government will not
enjoy," Miliband told
his audience ."The option of simply increasing tax credits, for
example, in the way we did before will not be open to us … fiscal circumstances
will make it harder not easier."
Now, in the dim and distant past, Labour was in principle in
favour of redistribution. In fact, that was the raison d’être of voting for
Labour in the first place. By way of taxation, housing, education and
state-owned utilities, the inequality/wealth gap would at least be held in
check, if not narrowed
That philosophy went out of the window in the 1990s, when
New Labour came into existence. As Miliband said: “In the 1990s New Labour
rightly embraced markets, most famously in our change to Clause 4. The party
embraced the creativity of capitalism.”
In came the love for deregulated market capitalism and
so-called trickle-down economics. Except the trickle became a tide heading in
the opposite direction. Inequality grew as the better off increased their share
of wealth. One report
published just before the last general election concluded: “Households in the
top tenth have total wealth (including private pension rights) almost 100 times
those at the cut-off for the bottom tenth.”
Millions were condemned to low wage, unskilled jobs as the
corporations moved skilled manufacturing jobs to Asia .
House prices soared out of the reach of most people, while rents in private and
social sectors became unaffordable on wages alone. Many households were forced
to live in permanent debt, and still do.
Neither the minimum wage – which you cannot live on – nor
tax credits made a substantial difference. But even those measures are being
abandoned by Miliband in favour of predistribution, a term coined by political
economist Jacob S.
Hacker who has advised the Democratic Party in the US
So what does it mean? It is little more than encouraging
capitalism to be more “responsible”. As Miliband told his audience: “"Predistribution
is about saying, 'We cannot allow ourselves to be stuck with permanently being
a low-wage economy and hope that through taxes and benefits we can make up the
shortfall. It's not just, nor does it enable us to pay our way in the world. Our
aim must be to transform our economy so it is a much higher skill, much higher
wage economy.”
And, pray, who is to achieve this laudable aim? Not the
government, not the state. Yes, you’ve guessed it, the employers! Miliband
claimed that “the move towards a more responsible capitalism is actually being
led by many business people”, by companies who know that firms “flourish best
when rewards are fairly shared”.
This will come as news to the vast majority of workers, who
real incomes have fallen sharply since the economic and financial crisis broke
five years ago (with much worse to come at the end of this year when food, fuel
and transport costs soar).
Just in case his audience was in any doubt, Miliband finished
his speech by declaring: “And I believe creating this responsible capitalism
will be better for our country. A responsible capitalism is a resilient
capitalism.” Vote for that? You are joking!
Paul Feldman
Communications editor
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