Labour should be ashamed of some of the mistakes it made. Its next leader needs a lesson in economics for dummies: here it isby Tim Leunig / September 22, 2010 / Leave a comment
Without a coherent narrative on the economy, Labour’s new leader has no chance of returning the party to power. This, rather than Britain’s place in the world, reform of the NHS, or rethinking immigration, has to be at the core of the next Labour project. We live in an era during which economic inequalities in income and wealth have increased tremendously. The original “new left” view of the economy, first fashioned by Clintonistas such as Robert Reich, argued that we could all benefit from globalisation—provided we improved education so we could all earn our keep. It is fashionable to claim that this approach has failed (see Gavin Kelly and Nick Pearce in Prospect September 2010), but it has not. What failed was its implementation—and patience.
New Labour got some things right. The left does have to embrace globalisation. The biggest beneficiaries of cheap goods from China are the poor, for whom low prices for clothing, toys, electronic goods and so on matter enormously.
But new Labour failed to deliver a good education for those from disadvantaged backgrounds. If your parents are poor, there is every chance your education has left you in a job that qualifies you and your family for tax credits. If the left is serious about reducing inequality, it must be tough on its causes. And that means, as I argued in last month’s column, tackling schools. Labour should be ashamed that a Tory-Lib Dem coalition is delivering on a pupil premium even in a terrible fiscal situation.
Second, we need to be patient. Today, 45 per cent of people go to university but only 30 per cent of the labour force has a degree. Since adult education rarely transforms people’s incomes, creating the perfect education system tomorrow would still mean an unequal society for a generation, because so many adults have already been failed by the system. If we get education right, things can only get better, but will do so only slowly.
Britain is also characterised by huge inequalities in wealth. This reflects not only inequalities in income but the rise in house prices. In the first five years of my married life, we made more money from the rise in value of our small two-bedroomed house in west London than we did from decent careers. Rising house prices left the poor—and the young—slipping further behind. That Britain had its worst-ever bout of house-price inflation…