The second most important elections for Britain took place
this week. Bill Clinton won the American Presidency and, understandably, much
of the British Labour Party is very pleased. His success proves that
incompetent right-wing governments elected on free-enterprise, family-values
tickets can be beaten.
But euphoria is not in order. Mr Clinton's programme for
the United States is better than George Bush's but by no means an adequate
answer to the seriousness of his country's economic and social crisis. He is
likely to be as bad as his predecessors for the people who are most directly
affected by American foreign policy. He is radically pro-Israeli and shows no
sign of deviation from establishment wisdom on Latin America or the poor
countries of the Pacific basin. Apart from boosting the morale of European
social democrats, his effects this side of the Atlantic will be minimal unless
he starts a trade war or brings the boys back home.
Put bluntly, the US does not matter as much to Europe as it
once did. If America's are the second most important elections for Britain,
the most important are Germany's - and the last ones, two years ago, were lost
by the Social Democrats. After that, Helmut Kohl's ill-conceived programme for
German unification plunged the whole continent into recession. Mr Clinton has
the power to make matters worse but is most likely to have no impact on
Europe's economic predicament.
What will make a difference is the response of European
Community governments to the current mess. An immediate co-ordinated reflation
of the EC economy is urgently needed, followed by rapid development of the
democratically accountable EC institutions required to pursue
employment-oriented macro-economic policies.
It is this message that Labour must press home at its
European conference this weekend. After this week's (necessary) attempt to
give John Major a bloody nose in the Maastricht "paving debate" in
the House of Commons, which was still going on as Tribune went to press, the
party must reassert its pro-European credentials and make clear its commitment
to the process of European economic and political union laid out in the
Maastricht treaty. Maastricht may not be perfect but the alternative, no
progress at all towards European union, is even worse.
For too long, Labour has fudged its way through European
policy, carefully avoiding mention of "federalism" and assuring us
all that it believes Westminster to be where the most important decisions about
Britain's future should be made. The party must show how it wants Europe to
evolve after Maastricht, in particular how it would like to see the EC's
"democratic deficit" addressed.
"Giving the principle of subsidiarity real force",
"strengthening the appropriate powers of the European Parliament",
"making the Commission more accountable" and "ensuring that the
Council of Ministers is more open", the main proposals in the policy
document passed at last month's Labour conference, are not enough. Labour
should embrace the idea of an EC in which an executive drawn from and
answerable to the European Parliament takes control of macro-economic policy
and sets a "level playing field" for social and environmental standards.
If that is "federalism", so be it.
Hitting the poor is
no way out of recession
Westminster is buzzing with rumours that the government's
brave new economic policy will have three key elements: increases in several of
the supposedly index-linked welfare benefits well below the rate of inflation;
a public-sector wage-freeze or something very close to it; and increases in
public works programmes. In other words, spending on infrastructure will be
paid for by some of the poorest in our society.
If this is indeed the government's plan, it is not only
immoral: it also flies in the face of economic rationality. Keeping increases
in benefits and public sector wages below the rate of inflation will cut the
living standards of those who can least afford it: most public-sector workers
are extremely low-paid. Worse, inflation is set to rise from now until this
time next year because of the devaluation of the pound.
There is a morally preferable way which also makes economic
sense: increasing taxes for those who can afford to pay rather than cutting
real wages and benefits for those who cannot.
Poor people tend to spend rather than save their money and
to buy goods produced domestically rather than imports. Taxing the better off
will have a less harmful effect on the level of demand in the economy than
reducing the spending power of the poor. The Tories are clearly less concerned
with growth than with not hurting their friends.
