Tuesday, 15 July 2014

The 'Cost Of Living Crisis' - What Miliband Doesn't Want You To Know

With the recently announced improved state of the British economy, the reliably terrific Jeremy Paxman, in one of his last great moments on Newsnight, gave Labour's Shadow Treasury MP Shabana Mahmood a bit of a grilling on how her party can keep attacking the Tories in light of these evident improvements. Her answer resembled those popular soundbites we hear from Ed Miliband, Ed Balls and Rachel Reeves about how the current improvement is not enough because there is still a 'Cost of living crisis' being felt by many poor working and non-working families. Ed Miliband, in particular, is continually talking about a 'Cost of living crisis' - he's using it as his tactic to attain popularity in the lead up to next year's general election, claiming himself to be the only leader that understands the situation of "Ordinary, hard-working families" (another popular soundbite).

Now while I have no wish to deny that there are many people struggling in Britain, and too many still falling on hard times, I've no idea what a cost of living crisis actually is in terms of a political statement. But then I'm in good company because neither does Ed Miliband. I know what it means for people to struggle to pay bills and be short of cash, but that doesn't give any clear exhibition of what a 'Cost of living crisis’ is, or why that should be a justifiable attack on the Conservatives. I suspect Ed Miliband isn't really that bothered about what the term actually means - he uses it as a pre-election tool because he knows it makes him sound empathetic and caring and in touch with the people.

But even if we give Ed Miliband the benefit of the doubt and accept that he does care and is concerned - it's not doing his political credibility much good trying to criticise the government in one of their sunnier moments with impetuous allusions to a so-called 'crisis' that no one can really define. That is, because the term is so evidentially ambiguous, no one would be able to tell what constitutes a 'cost of living crisis', nor could they tell when such a crisis could be claimed to be over or still apparent, or much less what caused it in the first place, and what caused it to be over. The danger, however well-meaning, is that instead of good policies, politicians end up relying on ambiguously defined popularity-winning appeals that they can keep in their political artillery and use whenever they want.

What does it mean for the cost of living crisis to be over? That's a question I'd like to see Ed Miliband answer. He would no doubt reel out some demagogic rhetoric about "Every family in the UK having enough food to eat and enough money to pay their bills", but that's far too complex and subjective and ambiguous to be used in any meaningful way. As an illustration, consider two similar memes that have made it into common parlance - 'the war on terror' and 'the war on drugs'. These terms are metaphorical abstractions that convey a sentiment, but there is no clear demarcation line to tell us that the war on terror is over or that the war on drugs has been won. Those terms carry no power beyond analogising a conveyance of popular feeling, which is that fundamentalist Muslims are bad and dangerous, and that drug use has dire consequences for many.

Suppose (heaven forbid!) Ed Miliband is Prime Minister next year and declares a 'War on the Cost of Living Crisis", he would no more be able to tell us what it means or when it could be construed as being won than George Bush or Barak Obama could on the so-called 'War on Terror'. I don't mean that these terms are entirely without utility - but it is very evident that such terms are too low-resolution to be used pugnaciously against the current government in the way that Ed Miliband keeps doing.

Ed Miliband also makes his case by conveniently leaving out half the picture. He complains that prices are going up more than wages, but fails to allow for the fact that a steadiness is wage rates is what is helping the employment levels. Quite why increased prices are a valid criticism of the government is beyond me, as prices are not dictated by governments. And he also ought to know that wages aren't the only factor in people's well-being - the key is income on the whole, and wages are only a constituent part of income.

Unless Ed Miliband doesn't know the facts of the British economy, it would appear he's disingenuously capitalising on the current national mood rather than on empirical evidence. According to the IFS, disposable income (which includes not just wages, of course, but interest on savings, benefits, share-profits, etc.) has been steadily rising faster than inflation. Yet whenever I debate the British economy with people, or see members of the public being interviewed on TV, the overwhelming majority believe that prices are continually growing faster than incomes. The data shows otherwise.

Miliband is using fanciful emotional propaganda to convince struggling people that Labour-driven regulation in wages and prices can ameliorate the ‘cost of living crisis’. The real truth is twofold. In the first place, Labour’s proposed intervention would have the complete opposite effect to their aims. It would slow down the recovery, not enhance it. And in the second place, if Miliband wants to have a more candid look at why the cost of living has been a strain for many, he should look not towards George Osborne but back to the financial crisis of 2008 and the concomitant Blair/Brown period in which Britain's position changed relative to what it was in global terms. The well-document sterling devaluation meant that your £1 bought less than it used to. When that happens nominal growth falls behind with inflation, which causes incomes to fall more than in other parts of the world. Now there is global connectivity in economies, with mass importation and exportation conditioning so much, a strain was inevitably placed on the UK living standards, and it was under Blair and Brown’s watch that it happened.

By all means let's encourage politicians to lock into their powers of sympathy; let's consider policy improvements - and let's be paragons of positive social change. But the crass distortions we are seeing from Labour in an attempt to obtain a majority in next year’s general election are most unwelcome.

* Photo courtesy of The Daily Telegraph