The shadow Chancellor has begun to carve out an ambitious new economic narrative for the Labour partyby Jay Elwes / July 1, 2014 / Leave a comment
Balls’s history lesson was compelling, but there are significant omissions in his analysis.
Ed Balls, the Shadow Chancellor of the Exchequer, spoke at the London Business School on Monday. Entitled “Beyond the Third Way: A new inclusive prosperity for the 21st Century” he gave a speech of no little ambition that set out the challenges faced by both Britain and the global economy.
“This morning I do not intend to talk about the short-term challenges that economic policymakers face here in Britain—the new normal for interest rates, how to boost housing supply, the right pace for deficit reduction,” said Balls. “Instead, I want to stand back and ask what the economic trends we have seen over the last twenty years can teach us about how we should shape our economic policy for the next twenty.”
Balls went back to the Blair / Clinton era, and to the moment when a new settlement between markets and social democratic principles was forged—the Third Way. “My argument,” said Balls, “is that the ‘Third Way’ did not deliver because the world was changing in a more profound way than any of us anticipated.”
Back in the 1990s, said Balls, globalisation was throwing up all sorts of new challenges, especially in trade and workforce skills. But Balls acknowledged that Labour missed three things: first, the growing instability in the financial system; second, the mobility of labour forces; and third, the profound technological changes that were under way. “The result has been, for most developed countries, rising income inequality on a scale not seen since before the First World War,” said Balls.
This is the most critical problem facing…