Monday 30 January 2012

The Police are still in the dock!

South Wales Police still has a case to answer. And it is a horrific one at that. In 1988 a local Prostitute Lynette White was murdered in Cardiff. The police arrested three innocent men who were subsequently convicted of her murder with the help of false evidence and wrong testimonies by witnesses. The three men always maintained their innocence and were freed on appeal two years later. 
DNA evidence led the police to the real murderer about 20 years later. The police who originally investigated the crime in 1988 recently found themselves in the dock for a shocking miscarriage of justice that they had probably contributed to by failing to meet professional standards and procedures, by allegedly falsifying testimonies and evidence. 
The Crown Prosecution Service however had to drop the case last year against these police officers because crucial evidence against them had ‘disappeared’. The CPS admitted that the evidence had been destroyed. The judge had no choice but to instruct the jury to acquit the police officers. 
Now, only two months later, during an investigation of the Independent Police Commission, those same documents, thought to have been shredded, have re-surfaced mysteriously. Since all police officers have been acquitted, it will be difficult to bring the same case against them again. In other words, they are off the hook. 
The Observer wrote in its editorial on Sunday that South Wales police has a record of ‘shockingly high numbers of miscarriages of justice on its patch’, including high profile wrongful convictions over the last 20 years. 
Over the years, South Wales police have often failed to serve its communities well. Many commentators believe the force had a striking number of corrupt and incompetent officers in its ranks which led to failed prosecutions or wrongful convictions of innocent people. This has to change. The disappearance of the evidence which led to the collapse of the trial against the police officers investigating the Lynette White case needs explaining. How could the files ‘temporarily’ disappear? Why did the CPS think the evidence was shredded? What does South Wales Police and the CPS know about the ‘temporary disappearance’ of vital evidence in this case which helped the police officers to walk away from court? 
Only an independent inquiry can get to the bottom of this. The Welsh Government should demand one. It wants to have authority over the Welsh Police Forces soon. They can prove that they are worthy of having this additional power by demanding an independent inquiry from Central Government. Clearing up the rotten practices which seemed to exist at the South Wales Police for decades now is the first step towards restoring faith in Welsh Police. Nothing less will do. 

Sunday 29 January 2012

Real jobs for young people!

Youth unemployment in Spain has hit 51% amongst those aged 16-24. Greece and Italy equally record unprecedented rates of unemployed young people, and in Britain the number of people out of work in the same age group has hit a 16 year high with about 1 million young people looking for jobs. 
Everyone agrees that the picture is dire and action is required urgently. What is hotly debated though is HOW to bring about an improvement on the job market for, what some observers are already calling, the ‘lost generation’? 
The newly selected candidate of the Socialist Party for the presidential elections in Spring in France, Francois Hollande thinks he knows the answer. He wants to create jobs in the state sector by funding 150 000 new jobs through more borrowing. 
Is Hollande right? Can youth unemployment be solved by creating jobs through government diktat in the state sector? 
The countries hit worst by youth unemployment are traditionally countries that lack open labour markets. Observers agree that Italy has one of the least transparent labour markets in the developed world, where access to jobs depends on who you know rather than what you know. i.e. skills. Spain and France are similar in this respect. Job applications are often not advertised publicly at all. Nepotism is widespread in both countries which is often exacerbated by the fact that the gross of jobs in France and Italy are located in small to medium sized family firms. In many of these companies, personal loyalty is often valued over and above skills and abilities.
On top of this, there is a serious lack of employable skills since the education systems of many countries in the West have failed to create strong and effective links with local companies throughout the last two decades. The result is a large number of young people who either lack fair access to a transparent and open labour market, or lack the necessary skills to be employed. 
Now, given the need for structural reforms, does Hollande’s determination to create 150000 jobs for young people in the state sector strike one as a long term solution to the problem of youth unemployment? I doubt it. What it threatens to do is to expand an already overstretched state sector (in France currently a staggering 54% of GDP), while at the same time increasing the indebtedness of France and its exposure to the volatile financial markets. Once financing France’s budget deficit will become even more difficult, the French government will have to shed the very jobs that it created to alleviate youth unemployment. As a consequence, France will be back to square one.
What is needed instead are reforms of employment regulations, creating the flexibility for companies to take on young people, improved transparency in, and access to, the labour market, and improvements in the quality of education to ensure young people have skills that are needed in the economy. 
These changes require a concerted effort between educators, legislators and entrepreneurs. It may be hard way, but easy solutions, proposed by politicians for the sake of winning elections, are bound to backfire. Instead of phantom jobs, France needs serious reforms.

Saturday 28 January 2012

On class

The concept I have struggled most in my academic life is class. Not that I have felt I should join demonstrators on the streets tomorrow. Rather, I have never quite understood the concept itself. Definitions are plenty if you only look for them. Marx himself had a complex notion of class, extending the concept beyond income and societal positions to his idea of group consciousness. Given this diversity of approaches, class may not be a suitable topic for a blog but since it has reared its (ugly) head again in recent debates on equality I might just give it a try. 
Let us start with the most common definition of class: a social division determined by income or resources. There can be no doubt that class in this sense is still very much with us. Equality of opportunity was supposed to reduce class divisions, and some progress has undoubtedly been made in this respect. Young people growing up today can become doctors or university professors with salaries in the top 5% income group. In other words, there is no professional area that is categorically barred to anyone because of ethic origin, religious affiliation or anything else that used to hold people back in life. 
This does not mean however that all is well. Equality of opportunity itself is still limited in the sense that if you go to a school with poor teaching and few resources you have to work much harder than somebody attending a school which has the best teachers in the land. The principle itself, however, that people have to make their own way in the world must be the correct one. This idea of course should also apply to those who are born into rich and resourceful families. This is the flipside of equality of opportunity which often receives less attention. In essence it may justify higher inheritance tax than we currently have; something that is fiercely resisted by all who ever built up a little something to pass it on to their children. 
So does this mean that class divisions will always be with us? I grew up in a society where some signs of class, such as ostentatious riches, were not on display. That did not mean however that classes did not exist. On the contrary, access to education, careers and opportunities were severely restricted to those ‘worthy’ in a socialist society. So, the mechanisms that created class divisions were out of your hands, and in the control of a small political elite. Far from making everybody equal, it achieved a breathtaking degree of inequality and injustice. So much for Marx’s notion of overcoming class divisions in the brave new world of socialism. 
Yet, although socialism failed to eliminate class divisions, liberal societies do not much better on this. Social mobility, the extent to which people born into lower income groups of society can rise in the ranks, is in decline across the Western World. Moreover, it is far from clear what the best vehicle for social mobility is. Some commentators favour selective education, others talk about more general access to social, political and economic resources. 
I guess there is no simple answer since success in life is an individual project; in which some will fail, others will succeed. And I doubt that we can eradicate all inequalities that we encounter in our quest for a more just society. At the end of the day, all we can do is to support each other to provide a more level playing field. That may not be enough for all, but perhaps it works for an ever increasing number of people to achieve their dreams. This way, class may still be with us, but become more a reminder of our aspirations rather than a barrier to our dreams. 

Wednesday 25 January 2012

Why banking bonuses are only a sideshow for ordinary people

The bonus season is almost upon us and the politicians are sharpening their rhetorical tools. It sometimes seems that they cant wait to criticise the bankers, as if all the ills this country suffers from would magically disappear as soon as bankers accepted smaller pay packages. 
I argued before that this represents a curious distortion of reality and that it borders on irresponsibility by the political class to maintain the illusion that banker’s bonuses are the root of all evil. 
While you may think it immoral to give away millions of pounds to a director of a company which teeters on the brink of bankruptcy or to an investment banker, it is hardly something that makes a difference to the lives of the poorest in this country. 
Looking at the banking sector, what affects people’s lives is not whether or not a banker goes home with obscene bonuses, but rather what fees and charges banks levy on ordinary people when they go over their overdraft or use a temporary loan facility. 
Just think about the numbers: Barclays Bank charges £22 per 5 working days for any amount above the agreed overdraft. If you have paid for a package of chewing gum in the store, which may cost you less than a quid, and it pushes you over your overdraft, you may face a bill of up to £88 per month. 
If I am not mistaken, that could easily be more than a 4,000% interest! While politicians think they have to respond to the (justifiably) outraged public about high board room pay and bankers’ bonuses, they have consistently neglected the real issues that would make a difference to ordinary people: charging structure of banks for ordinary customers! 
Anyone heard anything constructive about this issue recently from our political class? I didn’t think so. After all, bank charges only hit the poorest of the poor who cannot make their monthly wages stretch to the next pay day. But as politician know very well, they are rarely the ones who shout loudest. 

Monday 23 January 2012

How to reform welfare

The government has announced today that, if the Lords pass amendments to the welfare reform bill currently going through parliament, they will send the bill straight back to the Lords without making any changes. In other words, the government is digging in its heels. In media interviews Ian Duncan Smith, the Work and Pensions Secretary and ministers displayed an unprecedented amount of confidence over the weekend that they will get their way. Judged by the outpour of criticisms in the past couple of weeks from disability rights organisations and other charities, the government’s certainty that they will get their way is simply astonishing. What happened?
A couple of things have happened. First, Britain has seen a gradual but steady shift of opinion from the left who would think of benefits as a way to alleviate deprivation and address inequalities, to the right, who see benefits as a safety net when anything else has failed. 
On top of that, Conservatives, in particular Ian Duncan Smith, has used a reform strategy that is nothing short of smart. If you remember, after his failed leadership of the Conservative Party, IDS became the chairman of the Social Justice think tank, which set about to investigate in detail the issues around poverty, worklessness and benefits. 
His hard work on analysing the complexities around worklessness has led to the formulation of a radically different approach to the ‘get on yer bike’ call by previous Conservative governments. 
IDS’s welfare reform has some interesting political tactics. First, present the issue of welfare reform as one that centres on the interests of those on benefits. The debate about the deleterious effects of worklessness on families and children is typical for this strategy. 
Second, never use immoderate language but acknowledge the complexity of the issue and the personal dimensions of worklessness. This ties in with a public recognition that moving people from unemployment into jobs requires personalised support. 
Third, and most plausibly, make an argument about the link between work and the level of benefits as an incentive to work or stay on the dole. IDS has throughout the debate stuck to these parameters of the strategy. 
All this means that there are precious few serious politicians or political commentators who argue that things should stay as they are. Apart from left doomsayers, such as Polly Toynbee, there seems to be a broad consensus in the population that the cap on benefits is the right thing to do. 
Most interestingly, as the latest polling suggests, there is even a large majority amongst Labour supporters who think that the government is justified in pushing for a benefits cap of £26,000. The poll results also suggests that there is a sizable minority amongst Labour supporters who would like to see this limit to be LOWER than the government wants it to be. 
In addition, the welfare reforms have benefitted from the fact that the Labour party has tried too in its last years in government to reform the benefits system and that there is a broad consensus that the benefits system is hideously complicated which invites fraud and error on a large scale. 
The previous Work and Pensions secretary James Purnell (Labour) probably doesn’t believe his eyes. I am pretty convinced that his proposals (had he been allowed by Gordon Brown) wouldn’t have looked much different to those of the current government. 
All in all, this means at least one thing: welfare reform is a win win for the government. That is why IDS can afford to bat away any calls for changing this legislation that may crop up in the Lords this afternoon. Whatever happens in the upper house, he will get his bill through. He knows that the British public supports him. 

Friday 20 January 2012

The blind spot in Marx's notion of capitalism

The most fascinating aspect of the current debate about capitalism is the general lack of ideas about any alternative. I have previously in this blog talked about why this may be the case. However, one interesting detail of the debate has so far escaped my attention. It is the view that, as Tristam Hunt pointed out in a Newsnight debate, 'capitalism can never be moral'. 
There is no doubt that this a widespread view amongst socialists. Capitalism, they maintain, is all about the generation of profit. Whether this happens within a tightly regulated environment and whether or not tax revenue from profits are used to alleviate some of the ills of capitalism, does not alter the fundamentally amoral quality of the capitalist market system, so the story goes. 
Although we often speak of the failure of the vision of Marxism, the paradox is that this opinion, that capitalism is fundamentally amoral, echoes Marx' view. In a sense then, even those who defend capitalism yet concur that capitalism is amoral express nothing less than a Marxian view. 
The curious result is that the debate about capitalism is actually fought on a premise that is profoundly Marxist, and, so I would say, profoundly false. 
How did Marx arrive at the thesis that capitalism is amoral? Famously, he turned Hegel upside down, or, as he said himself, 'turned Hegel's view from standing on its head back to its feet again'. What did he do? 
Marx argued that there is a clear distinction between the economic sphere (the substructure of society) and its social and political dimensions (the superstructure). The former, so he maintained, determined the nature of the latter. He endorsed nothing short of economic determinism. The separation between these two spheres allowed him to extricate the questions of morality and ethics from the actual moral constitution of societies. In essence, he superimposed on his economic and political analysis a simplistic moral framework that rested on the notions of exploitation (immoral) and equality (moral). How did this represent a change to Hegel's notion of society? 
Hegel's notion of society offered a far more complex and sophisticated account than Marx's. For Hegel, morality was an aspect of human interaction which manifested itself in the development of human freedom. One critical aspect of personal freedom, according to Hegel, was to engage in economic exchanges, or what he called 'civil society'. 
So, in contrast to Marx, entering an economic relationship with somebody to exchange goods represents a fundamental aspect of being free. Today we would say, the market therefore presents people with the opportunity to realise their personal freedom in society. Capitalism hence is an essential expression of personal freedom. As we engage with others in economic activities, we not only manifest the extent of our personal freedom, but also establish the ethical quality of society. Capitalism is moral, as long as it permits us to engage freely in economic exchanges. 
This demonstrates how much we have accepted an arguably skewed picture of capitalism that originates in Marx's analysis, rather than in Hegel's liberalism. We should always bear in mind, that Marx never accepted the economy as an arena of personal freedom. How wrong he was. 

Sunday 15 January 2012

Are Germans racist?

Only a couple of weeks ago, two killers of Stephen Lawrence have been given life sentences (with a minimum of 12 and 14 years) in a British court. The reaction of the UK media was mainly one of relief. After two failed prosecutions and a public inquiry which characterised the police as institutionally racist, these sentences have been welcomed by most observers as a sign that justice can be done. 
At the time the jury decided, I was in Berlin, Germany. Although Germany has fewer black people than the UK, there is a substantial minority of Turkish people living in the country. They have migrated to Germany during the 1950s and 1960s as Germany needed cheap labour to help in the Wirtschaftswunder. The legacy of socialist fraternity between the former East Germany and Vietnam and some African states also means that thousands of citizens from the Far East and Angola, Tanzania and Mocambique were stranded in Germany after re-unification. Some of them decided to stay. So, despite never having had an overseas empire, Germany has quite a few people of outside origin who have settled for generations now in the country. 
Yet, Germany still clings to a ‘genetic’ definition of German citizenship. Despite the cautious reforms under Otto Schily, it is still fiendishly difficult to become a German citizen, even if you have been born in Germany, went to German school, speak German as your first language and never been to any other place in the world other than what you consider your home town such as Berlin. (Incidentally it is also extremely difficult to adopt another citizenship if you are German but live somewhere else.)
On the other hand, German authorities have long upheld the claim that people with German ‘ancestry’ in Russia, Romania, Ukraine or anywhere else in the world, have German citizenship by right of birth. The implausible consequence of that is that somebody who was born and has lived in Germany all her life but has, say parents from Vietnam or Mocambique, is denied German citizenship, while somebody who has never been to Germany and lives in Ukraine is considered a German citizen. 
While some of this ostensible nonsense has come under criticism in Germany, overall it has fostered a climate where anybody who is not white and German ‘by blood’ is often considered a foreigner. Over decades this legal situation has cemented rather than mitigated the dividing lines between ‘us Germans’ and ‘them’. 
Last year, the former Social Democratic Finance Senator of Berlin, Thilo Sarrazin, has played into these anxieties of ‘being flooded by foreigners’. He argued that (statistically) pupils of Turkish origin have lower intelligence than German pupils and, since the Turkish community in Berlin has higher fertility rates, the ‘real Germans’ are in danger of being swept aside by those Turkish pupils and hence decrease Germany’s competitiveness in the world by dint of their lower intelligence. 
While he was justifiably sacked from his job over this racist nonsense, this is only the nasty tip of the iceberg. The fact is that many Germans struggle with the notion that somebody can be black or Asian and German at the same time. 
The most typical German racism anyone might experience in cosmopolitan towns such as Cologne or Berlin is patronising in nature. It is sustained by the articulation of a continuing dividing line between who is (or can be) German and who is not. This goes hand in hand with more vicious overt racist language which is deemed by many Germans acceptable or harmless. The word ‘negro’ or ‘coloured’ has until recently been widespread even in highbrow German media such as the Frankfurter Allgemeine Zeitung, referring to black people. 
When asked about whether or not they think that there are racist undertones in this type of language Germans tend to look bewildered and confused. The latest example of this confusion happened only last week at a respectable Berlin theatre where the director (allegedly) couldn’t find a black German actor to play a part in an American play. The theatre found a solution though. It hired a white actor who then painted his face black in the tradition of the minstrel shows in the US of the deep south during times of slavery. 
As the media storm broke out, the director said he was utterly perplexed by the debate. As far as he knew, ‘we have always painted the faces of white actors black for black roles’. Any questions? 

Saturday 14 January 2012

HS2 and double speak

The government has finally made a decision on HS2. After some amendments to the original proposal the Transport Secretary Justine Greening has committed the government to build a highspeed line to Birmingham in the first phase, with a possible extension to Manchester, Leeds, and, eventually Glasgow and Edinburgh. 
I should say at the outset that I am broadly in favour of investing in a high speed train network in the UK, as long as the new lines remain affordable. The ICE in Germany is a good example. You can get a ticket from Cologne to Berlin for about 30 Euros if you book early. On top of that, the ICE runs to Paris, into Austrian and Switzerland and therefore creates important links with other national rail networks. 
What I deplore however is the double speak that comes with some arguments we hear from politicians. On Question Time, Justine Greening tried to make the case that the money for the new HS2 does not represent additional tax payers money since, wait for it, ‘the budget line will simply be transferred from CrossRail in 2015’. Paddy Ashdown then peddled the same nonsense shortly afterwards, saying HS2 will be financed by transferring the CrossRail budget once it is completed. 
I am not sure how many people understand the phrase ‘transferring the budget line’ but I have to say I initially struggled with it. Once I thought about it, however, the sheer magnitude of verbal obfuscation dawned on me. 
So, let’s look at this in detail. There is a capital budget at the Department for Transport which is currently used for CrossRail, say for the sake of argument, 4 billion annually (this is not the real figure). Once CrossRail is completed, the following year, another 4 billion which may have been spent on CrossRail, will now be spent on HS2. 
Sounds clear? Not to me! Who says that there is a natural right by which these moneys belong to the Department for Transport? If I am not mistaken, these are tax moneys and once a capital project has been completed there is no reason why the department for transport should simply cast around for another big project to spend the money on again. What about saving it for a change? What about returning it to the tax payer through cutting income tax for some at the bottom of society? 
Greening and Ashdown’s remarks reveal a remarkable arrogance of government. Once budgets have been set for a government department, not a penny will ever be returned, nor will a department voluntarily reduce its own budget line. For government spending, the only way is up! 
I deplore this politician’s speak. Why not say that following CrossRail, another big capital investment is needed and the Department of Transport will hence continue to have similar capital spending as before? Why not be straightforward with the British public about it? 
To be clear, I am generally in favour of HS2. I just wish our politicians would not try to hide behind Orwellian double speak when they have to defend difficult decisions. 

Monday 9 January 2012

Why the Euro is not dead (yet)

As with so many things in life, your own experience gives shape to what you know and what you see, yet often only at the exclusion of other viewpoints. So it is with the British debate on the Euro. The currency that celebrates its decennial this January is thought to be doomed by most British observers. For them, the only question worth answering is when the final collapse will happen and whether or not it will drag the entire European project with it. 
You only have to take a flight to Berlin, as I did over the Christmas holidays, and pick up some German papers to understand how alien this view is to German opinion-makers. Believe it or not, German newspapers and journals thought they had genuine reason to celebrate the birth of the common European currency ten years ago. 
And, contrary to British public opinion, they might just have cause for celebration. Despite all nay-sayers, the Euro is for all intents and purposes actually doing very well. Especially so for German purposes one might add. In terms of stability, the Euro is more stable than the Deutschmark, with ten year inflationary rates of less than 2% (the rate for the Deutschmark was more than 5%). Even more importantly for the export orientated industry in Germany, it remains a comparatively weak currency which boost German growth to an extent not experienced since the 1970s. 
It is these undoubted advantages of the currency to the German economy that many British commentators fail to factor into their calculations of impending gloom. The Euro is not only a political project, it is also one that has produced unprecedented growth rates in Germany at a time of shrinking manufacturing output for the rest of Europe and struggling industries across the Western world in areas where Chinese producers offer more competitive conditions. 
Whether the critics of the Euro like it or not, it is most likely to survive as long as the German people take a rational view of the enormous benefits that the common currency has brought. And for those who harbour some nostalgia for the Deutschmark, help is afoot: there are still about 13 billion Deutschmark in circulation in Germany. If you like you can even pay at high street shops in Berlin with the old currency which is still legal tender. 

Saturday 7 January 2012

Why Simon Jenkins is wrong

There are issues that defy ideological categorisations and hence present a particular problem for political parties and governments. One such issue is assisted suicide. In Britain the law is vague at best on what constitutes assistant suicide and, more recently, the director of prosecutions has tried to clarify the conditions under which the CPS would or would not pursue cases in court. A recent report has stirred the debate once more in the New Year. A commission funded by supporters of assisted suicide has asked the government to look at introducing legislation to enable doctors and medical staff to help people die in certain circumstances. The report is careful in spelling out the strict conditions under which assisted suicide should be legal, and where support should be provided. 
Clearly this is an emotive issue. It is also a matter which cannot be considered in isolation from other areas such as quality of end of life care, and how we treat and talk about people who are vulnerable and rely on help and support from others. It also seems clear that there is a need for some legislation, given that a two tier system has effectively established itself with those who can afford it traveling to Switzerland, and those who cannot remaining in often inadequate palliative care. 
This however does not mean that the outcome should necessarily be legalisation of assisted suicide. The issue is complicated by the fact that assistance to die would naturally be provided by the NHS, i.e. a tax funded public body. In other words, since suicide itself is legal in the UK, the debate revolves around not suicide, but the nature and provision of assistance and whether or not the state may have a duty in this area. 
Simon Jenkins came down on the side of supporters of assisted suicide in a piece in the Guardian recently. However I take issue with the line of argument he presented. Here is what he said: 
‘The state is already preoccupied with trying to stop individuals doing what they wish - always “in their own interest”. It daily increases control on how they work, play, eat, drink, smoke, drive and learn.... The modern individual is regarded by the law as first and foremost a possession of the state, the purest form of communism.’ (you can read his article HERE
He goes on to say that ‘an adult’s freedom of decision over his or her own body should trump any claim from the state.’ 
I find this line of logic confusing to say the least. As mentioned before, suicide is legal in the UK. What is not legalised is to assist somebody to take their life. The object of prosecution is assistance, not suicide. At the heart of the issue is not the help spouses give to their loved ones who want to die (the director of prosecution has refrained from pursuing these particular cases for a long time now) but whether or not NHS doctors should provide the medical assistance and resources to end one’s life. In essence, then, if Simon Jenkins is against the state regulating every aspect of somebody’s life, he should oppose legislation about assisted suicide as well. 
The insidious nature of communism is not demonstrated through abundance of legislation, but in control of people’s lives through universal provision of state services. I think the expression is: from cradle to grave and it is exactly this type of universal provision which assisted suicide would contribute to. 
Jenkins’ suggestion that the government’s failure to legislate in this area is denying people the freedom of decision over their body is misleading at best. They can take their own life at any time without breaking the law. What campaigners for assisted suicide want to achieve is that the state provides the means to kill yourself. 
It is this obfuscation of the real issue that sometimes infuriates opponents of the assisted suicide campaign. As Jenkins calls on the government to draw a line in the sand, he should stop blowing sand into our eyes. 

Friday 6 January 2012

The perfect storm for Labour

Ed Miliband had probably other things in mind when he cheered the arrival of 2012. So far the New Year brought nothing but bad news for him. First, Liam Byrne declares that the government's reform of housing benefit may have some merits (read his Guardian article HERE). Then Lord Glasman, a Labour peer and former (occasional) advisor to the Labour leader, says Miliband lacks a narrative and a strategy (you can read it HERE). Finally, even the Guardian abandons its strict loyalty to the Labour message of ‘no cuts’ and questions the credibility of Labour’s long term budgetary policy in several articles. 
While some of Miliband’s supporters try their best to shield the party leader who looks more beleaguered by the day, the real challenge is still in the offing. So far, as the deputy editor from the New Statesman pointed out in a Newnight piece, Ed Balls’ strategy of accusing the government to cut ‘too deep and too fast’ has been the main message. The problem is that Balls’ strategy was predicated on the Darling deficit reduction plan to work, which anticipated to cut half the deficit in four years (to 2015) and too eliminate it by 2019. 
Yet the Darling plan is as dead in the water as any financial projection could ever be that is about two years old. In December, the government announced that, given the threat of another global economic slowdown, the government’s stricter deficit reduction plan has to be revised to, wait for it, a reduction plan that is slower even than Darling’s plan. 
Which means that Labour has lost the wobbly flagpole it wanted to peg its budget plans to. With Darling’s plan gone, it has little to build its economic credibility on. Which brings us back to Ed Miliband and his critics. He is now in an even tighter spot than last year. With no deficit reduction plan and a shadow chancellor determined to ‘spend, spend, spend’, Labour gets ever further from re-gaining some traction with the public in the economic debate. The real challenge however still awaits Miliband and his team. There seems to be a consensus emerging that the discussion around ‘how deep to cut’ is nothing more than a sideshow. 
The more pressing question is how to structure public services in times of lasting austerity. There is no tool in the shadow chancellor’s toolbox that could match tight fiscal conditions. Balls is a Brownite; his understanding of economics is one formed in times of plenty: plenty of tax revenues equals plenty to distribute. This mismatch between Balls’ perspective and the reality of austerity for the next decade spells disaster for the Labour leader. If Miliband does not push Balls to accept the basic parameters of austerity, he will struggle to open up the debate on the things that really matter: how to organise public services more efficiently to prepare them for austere times. 2012 just may be the year the Labour leader encounters the perfect storm. It all depends on his leadership if the Labour ship sinks or stays afloat.