Permanent austerity?

In the New Statesman this week, former member of Blair's inner circle Alan Milburn comes over a bit Fukuyama-like and predicts:

"Austerity is the new normal. It is not a temporary phenomenon. It will become permanent. Fiscal conservatism is the order of the day."

See the way he emphasises his point using short sentences? It's classic Blair era communication training; used to signify authority, gravitas and confidence. The less generous among you might dismiss this Dalek-like grammar as pompous, hubristic and rhetorical. It is. There is a new consensus. Milburn is part of it. It is permanently wrong.

However it is powerful, and unites the Tories, the Orange Book Lib Dems and the New Labour factions. Under the not-quite-leadership of Ed Miliband, Labour has at times seemed to embrace this consensus, but at other times hinted at breaking away from it.

There is a macroeconomic context to it though. Milburn explains this is terms no less likely to make you want to smack him in the face:

"The truth is this: the era of big public spending is over ... The implications for public spending of a more constrained fiscal environment are threefold. First, governments will be forced to choose between spending programmes as well as within them. Second, they will have to think in a new way about how to get better value from existing programmes. And third, Europe's largely tentative efforts to reform welfare and public-service provision will have to move up a gear"

There is no alternative. But why? Milburn doesn't say. But the reason is the unspoken consensus: that rather than find a new economic structure we must slash wages in a race to the bottom to compete with the autocratic union-busting state capitalism of China.

So inequality is here to stay, even if Milburn laments it "How to address growing inequality?" briefly, before moving swiftly on to more important questions, like "How to create wealth and reward it?"

The question of how to create wealth is an interesting one. Banks do it by issuing credit (making loans) on which they charge interest. Now maybe if the state did that? For instance China's post-economic stimulus meant an expansion of public bank credit going to companies set up by local governments to help fund infrastructure investment. Combining economic controls with trade union rights, civil liberties and democracy is no contradiction - despite the fact both China and the UK fail to do it.

But what Milburn wants to debate is not whether we can control credit or our currency, or redistribute the wealth we all create. No, Milburn's article is about how to privatise the NHS as a solution.

There is an Alternative!