David Clark has replied to my reply to his reply about Fiscal Conservatism and in the Black Labour. These things can rapidly get unwieldy, so I apologise for the length of this reply. We may be reaching the point that the only way to settle this beef is through a poorly attended speaker meeting.
David Clark's latest post bases his case that I cannot be a "True Fiscal Conservative" on the fact that a google search reveals that fiscal conservatism is an American term used mostly about American Republicans.
I don't quite know what to do with this pearl of information.
Perhaps I should show it to Kevin Rudd, who based his 2007 election on being a Fiscal Conservative. Or to former Swedish Finance minister Goran Persson, who famously said "If in debt, you are not free" when launching a major fiscal consolidation from the left.
Or to Paul Martin, Canada's liberal finance Minister and Prime Minister? Or how about Thomas Sargent, who might know something about it, being the trifecta of being a self described fiscal conservative, a US Democrat, and a Nobel Prize winner in Economics?
Sadly, none of these people are Orrin Hatch, so presumably they don't count. For David the Slim Shady argument is what matters. Orrin Hatch is the real Fiscal Conservative, the rest of us are just imitators. Well, if that's the case, then perhaps the Social Democratic Federation of 1881 are the only true Social Democrats and the rest of us can go hang.
When I gave vent to this point on twitter, David asked for an alternative definition. Handily, we give one in the first paragraph of our paper. It may not be perfect, but hey, why not start with what we wrote?
"Fiscal Conservatism" we say "simply means that those from whom the state borrows can have absolute confidence that it will meet its obligations to repay, come what may. This means adopting an approach which is careful, risk averse, and cautious".
Now perhaps this is an unastisfactory definition. Perhaps we should expand Goran Persson to say "If in debt, you are not free, so states should only create debt when there are clear benefits, and should reduce debt when they prosper and should always err on the side of caution".
Surely, whatever the inadequacies of our definition and whatever better definitions others can come up with, this is a more useful approach than treating Orrin Hatch as the lodestone to whom all with iron in their fiscal soul must be attracted to?
A large part of our paper makes the argument that the division David repeatedly makes between Keynesianism and Fiscal Conservatism is a false one.
Yet instead of engaging with this point, David simply repeatedly responds that it cannot be true. He says: "You cannot be both a fiscal conservative and a Keynesian any more than you can be both a Marxist-Leninist and an Anglican vicar". Why? Because Orrin Hatch might growl.
Well, OK. Fine. If you and Orrin say so.
Next, David asks why we don't describe ourselves as "True Keynesians". But we do, David, we do. In our paper we specifically said effective Keynesianism requires fiscal conservatism. We simply don't agree that the two concepts are locked in a combat to the death.
Can you sense my frustration with the circularity of this argument? We are not Fiscal conservatives, says David, because Fiscal Conservatives do not believe the things people like us believe in. If they do believe in them, they are still not Fiscal Conservatives, even if they take a conservative, cautious approach to the public finances, reduce deficits, pay down debt and do not engage in excessive spending in good years. Rudd, Persson, Martin, and all the rest? Just a pose.
This frustration boils over when we move from the definitional debate to the actual one.
First David attacks our suggestion that one option for a future fiscal target might be returning the budget to balance at the end of a concrete timetable as a dangerous lunacy akin to aligning fiscal policy with sun spots*.
Then, a mere two paragraphs later, he commends Francois Hollande for proposing to return the French budget to balance by the extremely concrete target of 2017 because "he can be reasonably sure that France will be at a very different point of the economic cycle".
If being "reasonably sure" that at a concrete point in the future you will "be at a different point in the economic cycle" is the test, I suggest any fiscal policy will pass it with flying colours?
As we said in our paper, I said in my post, and I say again here, there is scope for debate about what the best precise rule might be. You don't get to be soulless technocrats without wanting that sort of debate.
One option is a concrete timescale, with a clear budget balance position attached to a fixed date, as we and Francois Hollande (with David's clear approval) have proposed. This has the benefit of being a hard commitment and retaining total political control of the budget process, but has the weakness of being inflexible.
Another approach might be linking the deficit to the economic cycle, but with more rigorous external enforcement of where the government is headed, as we have also suggested, the Chilean government have enacted and David himself assents to. To make this work, however, you have to commit to giving up a lot of control over your budget. You must, in effect, give someone a veto power over your spending plans.
David is happy with this. So am I. David is also happy with our proposal for spending restraint. He is even happy with the SMF and my proposals for tax increases.
So what is David actually objecting to? For the life of me, I don't know.
It can't even be that he hates the word conservative, because his first post was about how he finds the term increasingly valuable for the left.
The only critique I can see is that after saying that he agrees with us on the need for tougher structural rules on Fiscal policy (while neglecting to propose any) and graciously agreeing with my (or rather, Ian Mulheirn's) suggestions on Tax increases to help close the deficit (while adding none of his own) David says we err by not re-envisioning Capitalism.
In his first post he said the error was that we "say nothing about the need for a different conception of capitalism". In his latest he tells us that there are many different models of Capitalism in existence, and he is right. But politics is not about picking models of capitalism from the rail, and seeing which one fits your ideal society most snugly. You have to have a way of getting there.
Want to create Rhineland Capitalism into the UK? Then you need an industrial policy to deliver it. (You need a hell of a lot more than that, but let's start with the basics) Such a major scale of Industrial policy costs money. We have argued for a switch of resources to support industrial policy, accepting that this will mean tighter constraints in other areas both in taxation and in spending. This is a practical step, one with consequences.
David believes the problem is mainly that the left has lacked the will to take on "entrenched interests" to get our destination. It's always those pesky abstractions that are getting in the way. Yet he doesn't set out how he would raise the funds from these entrenched interests, beyond the proposals we have made. I believe the problem for the left is not that we lack dreams, but that too often we find we are short of shovels to build the path to the promised land.
In his conclusion David says that the difference between us may simply be that he is "no longer willing to settle for a version of progressive politics that turns a blind eye to the country’s real social and economic problems in order to buy off the opposition of wealth and power in the pursuit of short-term electability".
His past psychology aside, this radical intent is undermined by the fact David has spent the previous posts and paragraphs setting out precisely how he agrees with us on fiscal rules, taxation, the need for spending restraint, the need to return the budget to balance a la Hollande and so on. If we are turning a blind eye to things in order to buy off the opposition of the wealthy and powerful, then so is David.
Or perhaps, we aren't motivated by such base concerns, and instead are trying to do as well we can with limited resources, imperfect knowldge and big problems. I supect this is equally true for us and for David, it's just that frustratingly, he just doesn't engage with how he'd do any of this, how much it would cost, what other priorities would suffer in consequence and reserves his anger for telling us he doesn't like the words we use to describe ourselves.
This leads me to a conclusion. Only one of us is fooling themselves into the pleasant belief they are more radical, more edgy, more progressive than they really are. It isn't me.
That he has such a pleasant daydream is David's business. I would not bring it up if I did not fear that such a delusion will lead to complacency in opposition and be self-defeating in government.
*I will pass over what I can only assume is a misreading of our view on Gordon Brown's golden rule. We said:
"The rules adopted by Gordon Brown were sensible in principle, they were too vague and too easily evaded in practice. In particular, linking borrowing and spending directly to the economic cycle – then making the timing of that cycle open to interpretation – was a mistake.
"Instead a future Labour government should commit itself to very clear fiscal targets. The precise nature of such targets is a matter for more detailed debate but one option might be a commitment to deliver a surplus on the public finances towards the end of a concrete timescale such as the lifetime of a single parliament."
In David's hands this becomes
"The first is your suggestion that linking fiscal policy to the economic cycle was “a mistake” and that future Labour governments should instead give “a commitment to deliver a surplus on the public finances towards the end of a concrete timescale such as the lifetime of a single parliament”.
I think the difference between the two points speaks for itself.