In Indian folklore there’s a tale that goes a little something as follows:
Three blind men are confronted with an obstacle in their path. Stretching out a hand, each grabs a part and describes what’s in front of them. “My word,” says the first man, “we’re faced with some trees – so strong and thick.” Quoth the second man, “You are mistaken, for we face a snake – thin and wriggly.” Disagreeing with them both, the third man says, “You fools! It’s a wall we must scale – the size of a house.” Passing by, a sighted man takes in the scene, and realises the moral of the story – that taking in only a part of the picture, just a leg or a tail, a blind man will fail to grasp that he is confronted with an elephant.
George Osborne, Danny Alexander and Ed Balls – three men who might be the blind men in our story, fumbling around the UK economy and describing what they each see – none of them seeing the bigger picture.
Osborne might seize on GDP growth and feel his strategy of austerity-plus-cheap- money-for-banks is vindicated. Alexander might try to take credit for the million or so private sector jobs created under the Coalition. And Balls might continue to lament the cuts to public services his government somehow found so easy to fund.
All three might have an element of truth, but all three miss the bigger picture. Fuelled by consumer spending, driven not by rising wages but by lower household savings and personal debt, it doesn’t take an elephantine memory to figure out how illusory growth can be. The supposedly buoyant jobs market, with far less unemployment than models predicted, is no fun if you’re one of the million or more people on zero-hours contracts, or can’t afford your rent, or once wider under-employment is taken into account.
As for Labour – if only cutting spending more slowly would in itself solve the underlying economic malaise, the seeds of which were sowed by their laissez-faire light-touch City-driven relaxed-about-inequality administration. ‘Boom Britain‘ seems like an alternative universe to that in which most people live, where the fruits of growth are less and less likely to accrue to them, adding to the State’s responsibility to make up for the labour market’s failings.
The bigger picture here, the elephant in the room, if you will, is that the opportunity to genuinely rebalance the British economy narrows with every small distance travelled on the road back to house price bubbles and cheap credit topping up inadequate wages. The fault lines underpinning the catastrophic financial crisis remain largely unresolved, with the UK’s financial ecosystem still far too concentrated and uncompetitive to encourage investment and spread prosperity. Business investment remains desperately low and monetary policy is disappointingly unambitious. The government’s cloth-eared insistence on balancing its own books by a set date despite persistent imbalance in the wider economy hinders a return to investment-driven, innovative, sustainable growth.
The theory that today’s growth, no matter where it comes from, will trickle down to create tomorrow’s prosperity holds little water. Without a radical reassessment of the nature of ownership, democracy and power in the economy, the solitary swallows of positive data will do little to restore the productive capacity lost since before the financial crash, far less turn into a summer of brighter economic prospects.
For social liberals, one of the only positives to come out of the crash was an opportunity to create a fairer, more sustainable economy. If the blind continue to lead the blind, we’ll find ourselves back where we started in no time.
* Prateek Buch is Director of the Social Liberal Forum and serves on the Liberal Democrat Federal Policy Committee