The argument is simple: the voters don't like what they perceive as reckless borrowing. So stop talking Keynesian and get on with the cuts.
As Jenni Russell put it in the Evening Standard today:
Instead of expecting voters to understand Labour's thinking, and being bewildered when they don't, they suggest that Labour must move to where the voters are. That means embracing the need for austerity, balanced budgets and carefully targeted spending.Sorry, but this is pernicious nonsense. The critical question now facing Labour, Britain, Europe is not how to woo Daily Mail readers to vote Labour in Britain but how to woo the Germans off the hard-line monetary and fiscal conservatism that has so far prevented them from doing the necessary to prevent meltdown of the euro -- and how to woo the French off their Gaullist high-horse posturing about how the nation-state is all that really matters. The priority is to make Keynesian thinking about the economy (in other words, spending to counter the effects of slump) part of the common sense of our age, even for Germans, and to counter nationalist and xenophobic thinking everywhere.
The Eurozone crisis demands that the Germans compromise on their balanced-budgets-uber-alles ideology, which is now utterly at odds with what the world needs, however honourable the reasons for which it was adopted. They need to OK Eurobonds.
But that's not all. The citizens of Europe need:
- France to abandon its Europe des patries stance, particularly on national sovereignty over the economy – that's what fiscal union means. Gaullism is dead. It would be good if the French Socialist Party could stop squawking opportunistically on this, because it knows the score even though there's an election coming up in which the far-right threatens ... Really, the French have to concede on democratising supranational EU institutions, which means giving the European Parliament control over the Commission and lots of what is currently done by the Council of Ministers.
- Germany to agree to an expansionist redistributive Keynesian regime for the new European fiscal union that it is currently proposing, and the whole show to be made democratically accountable to the European Parliament. A federal Europe, with a democratic federal government that is anything but fiscally conservative.
And, according to the best-placed commentators, we've got four days for the French and the Germans to reach a deal. Right now we need the ghosts of Ramsay MacDonald and Philip Snowden that haunt In the Black Labour like we need a small outbreak of the Black Death.