I would disagree with his conclusions as to what the UK government 'should' be doing, but apart from that, his reader's letter is an excellent summary of the Indian Bicycle Marketing practised by Tories and Labour in the run up to the General Election.
The clever bit is that under the Home-Owner-Ist consensus, Labour aren't allowed to state the bleedin' obvious, that the 'financial crisis' was caused by unbridled land price speculation and rent seeking (the modest deficits the previous Labour government had been running were very regrettable but not in in themselves fatal), so they engaged in an entirely phoney and fictitious war over who would keep deficits down.
From The Guardian letters:
Labour didn’t lose because it failed to support a New Labour business agenda. It lost because it never nailed the Tory lie that Labour left behind a dreadful economic mess – as though the banks and the international recession had nothing to do with it.
And it never challenged the Tory canard that Labour was profligate, when in fact the Thatcher-Major governments in 10 out of their 18 years ratcheted up deficits bigger than Labour’s in any of its 1997-2008 pre-crash years. That left millions of undecided voters at the end who were sympathetic to Ed Miliband’s positive reform programme, but who, faced with the relentless barrage of negative Tory propaganda about Labour’s economic record, felt they couldn’t risk a vote for Labour.
Miliband was right that the banks, the corporate elite and the media had too much power and had abused it by inflating their own incomes and wealth at the expense of everyone else and by seeking to suppress all those forces, notably the unions, that stood up for the vulnerable and dispossessed. He was right that a deregulated predatory capitalism needed reform.
By contrast the New Labour approach was that big cuts needed to be made to pay off the deficit, but slightly more gently, by cutting less far and less fast. However, that was the worst of all worlds. It implied that Labour accepted the Tory framing of the election that Labour caused the financial crash, that the deficit was the central issue and that deep cuts in pay, benefits and public services were the right way to deal it.
All these claims are fundamentally wrong, The right response, which Labour sadly never argued for, was to use public investment to expand the economy, not shrink it. And by increasing jobs and wages, raise tax receipts so the deficit could be paid off faster. It is tragic that this far better alternative was never argued for.
Michael Meacher MP, Labour, Oldham West and Royton.