Change of heart not wrong
An embarrassing u-turn by John McDonnell, the shadow chancellor, on Osborne’s fiscal charter was clumsy politics but good economics.
It made good headlines in the Tory press and upset some of his own party’s right wing some of whom defied the Labour whip and abstained.
Certainly a sign that Corbyn’s hold on his party is fragile indeed. In organizational terms he has got to get a grip, if he’s to succeed as leader.
McDonnell’s own goal became the story and not the successful outing Corbyn had in Prime Ministers Question where he again wrong footed Cameron and many thought he bested him.
McDonnell was wrong to agree to back Osborne in the first place, he is now right and eventually the Parliamentary Labour party will see that its economic policy has now more coherence.
An Alice in Wonder charter
What the House of Commons passed was a law that enshrines another period of severe austerity in the short term and then future governments are committed to a crazy fiscal rule.
Labour will eventually bless McDonnell’s change of heart.
The gimmick, and political gimmick it is, of a Fiscal charter will hurt many. It’s the reason the government will make substantial cuts to tax credits for millions of poorer working people, making their already difficult lives substantially harder.
The fiscal policy and fiscal rules it introduces are a nonsense. You’d think that when labour and borrowing is cheap that would be the very time to make public investment.
No, dear me no. In this Mad Hatter Charter that sensible approach is stopped. Despite it being a near universal view among economists that now is the time for higher public investment.
If the Charter passes into law it will bring debt down ridiculously fast. Resulting in the current working generation been heavily penalized. Fiscal austerity when interest rates are very low is never a good idea.
Media obsessed by bubble rather than people
But none of this was reported on in either the written or broadcasting press. They spend most of its time talking about U-turn. No mention of the complete lack of economic support for this charter.
Millions are going to be hurt because of the policy and all the media report is one man changing his mind. Is Labour’s embarrassment more important than the millions of ordinary people that loose out on their tax credits? It would appear so.