In his pre-budget report (PBR), British Chancellor Alistair Darling announced a
"fiscal stimulus package" consisting of an extra £21 billion of government
borrowing, predicting that it (new borrowing added to the national debt) would
rise to £118 billion in the next financial year.

The PBR was astute politics from Labour, clearly positioning the party to the
left of the Tories and Liberal Democrats. Without the fiscal stimulus package,
there would be £97 billion of borrowing, so the Tory "do-nothing" proposal is
hardly a solution!

The dire state of the British economy is largely due to the Tories, with it now
mainly dependent on financial services in the City of London (rather a problem
with the weak pound and the City's credibility undermined after the
nationalisation of Northern Rock). The  Tories closed down virtually all the
mines, leaving perfectly good coal in the ground, due to the militancy of the
National Union of Mineworkers which had brought down a previous Tory government.
They decimated manufacturing industry, also motivated by their desire to smash
the trade unions.

Many products can be produced far more cheaply than in Britain by a low-skilled
low-waged workforce in countries like China. The Tories rejected the
high-skilled manufacturing industry option, by undermining wages of researchers
and lecturers in universities; this led to the so-called "brain drain" whereby
many educated people emigrated to countries like the USA motivated by much
higher wages in that country.

One point that could be made in the Tories' favour, however, is the increased
level of collaboration between universities and industry; without it,
discoveries made by university researchers in the UK would be more likely to be
utilised by overseas companies. Personally, I'm in favour of "blue sky research"
(without an end product in mind) and free open source software, but the
artificial intelligence/simulation language SDML that I implemented and helped
design at Manchester Metropolitan University may not have been developed (as
well or at all) if it hadn't been for collaboration with industry. [See
www.socialiststeve.me.uk/sdml.htm; software soon available at www.sdml.org.uk.]

New Labour's strategy is largely based on spin and public relations. Caroline
Lucas MEP pointed out (in the Independent and Guardian) what I thought was
obvious, that cutting VAT from 17.5% to 15%, at a cost of £12.5bn, would mainly
ship money overseas rather than helping the British economy since most consumer
goods on which it is levied are imported. In fact, the pound has fallen
considerably against other currencies since the PBR, due to the dire state of
our economy, so goods will become more expensive rather than cheaper!
Nevertheless, the success or failure of this package will largely be judged on
sales figures of the shops before and after Christmas, and those figures will
either be judged good or not as bad as they would have been without the VAT
reduction.

The way Labour say they will pay for this package with tax rises after the next
general election is astute too. Increasing income tax for those earning over
£150,000 a year (from 40% to 45%) has wrongfooted the Tories, who want to avoid
being seen as the party  of the rich.

According to the Treasury's own figures, this would only raise £1.5 billion, and
some commentators suggest it would raise nothing at all due to wealthy people
employing accountants to avoid paying the tax that they should. The 0.5%
increase in national insurance contributions is just about the minimum that they
could suggest for ordinary people, with Labour saying that only those earning
over £40,000 would pay more due to changes in allowances; it will raise a mere
£5 billion which is chicken feed compared to what is required!

Darling's claim that the books can be balanced by 2015 is laughable, without
some sort of massive reorganisation of the world's economy, on a capitalist if
not socialist basis. If us socialists don't get our act together, there may be a
capitalist solution involving nationalisation of all the banks, closure of tax
havens and an international agreement on harmonisation of tax rates (for the
rich). I believe Hyman Minsky (who predicted the current economic crisis)
proposed something on those lines. Some rich individuals including Bill Gates
and Duncan Ballantyne (of "Dragon's Den" fame) have suggested they will give all
or most of their fortunes to charity, which could enable such an ethical
capitalist solution to work!

A recent opinion poll has put Labour just 1% behind the Tories, which would give
them a 20-seat overall majority in the House of Commons (rather undermining the
argument that we are living in a democratic country methinks). I'd prefer a hung
parliament, with the Liberal Democrats insisting on proportional representation
(preferably by single transferable vote) to get their cooperation.

The New Labour agenda of enshrining capitalism forever by curtailing civil
liberties has not ended, as can be seen by them going ahead with ID cards and by
home secretary Jacqui Smith's dismay at a European court ruling against keeping
the DNA of people not convicted of a crime. There is still a battle to be won
within the Labour Party, however, and its lurch to the left will give 
socialists inside the party renewed hope. It'd be naive to expect to transform
Labour into a socialist party, but we should try our best in that regard with a
sizeable split-off party uniting with far left parties and non-aligned
socialists as a more likely outcome.
 
-- 
Steve Wallis (Manchester, England) 
Preferred email address: revolutionarysocialiststeve@... 
Blogs: http://groups.yahoo.com/group/steve-wallis-socialist-blog, 
http://blog.myspace.com/galaxiasteve 
My socialist website: http://www.socialiststeve.me.uk 
My pages at
Facebook: http://www.facebook.com/profile.php?id=1038291480, MySpace:http://www.\
myspace.com/galaxiasteve and Bebo: 
http://www.bebo.com/SteveW519 
Founder, Ethical Capitalism Network: http://www.ethicalcapitalism.net
Founder, Foundation for Proportional Representation-based
Socialism: http://www.PRsocialism.org 
Founder, Revolutionary Platform Network: http://www.revolutionaryplatform.net 
My revolutionary socialist band,
Galaxia: http://www.galaxiamusic.net,http://www.myspace.com/galaxiamusic, http:/\
/www.facebook.com/pages/Galaxia-a-revolutionary-socialist-band/84310120180, http\
://www.bebo.com/galaxiamusic.
My socialist band, Red
Day: http://www.red-day.net, http://www.myspace.com/reddayband,http://www.facebo\
ok.com/pages/Red-Day/27468311341
Author, "Revolution Destroyed? Have I ensured that a world socialist revolution
will never happen?":http://www.revolutiondestroyed.net
For discussion of the credit crunch, go to 
http://www.revolutionaryplatform.net/forum/index.php?board=156 
For discussion of 9/11 conspiracy theories, go
to http://www.revolutionaryplatform.net/forum/index.php?board=89

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