The Burner Episode #226: Labour Pains + Food Crisis

Aaron Bastani asks: where on earth is Labour going on economic policy? Can it avoid fighting the last war? Plus, James Butler asks: are we facing a food crisis? Why?

Transcript

Good morning, this is The Burner. I’m James Butler and it is Wednesday April 28, 2020. We are still in lockdown.

Boris Johnson is back. The prime minister emerged from his own lockdown yesterday having now recovered from the coronavirus infection, which saw him admitted to intensive care at St Thomas’.

Johnson took to the lectern outside Downing Street yesterday. Probably the last day he could do so before the rain sets in for the next 10 days or so, to declare that the fight was not yet over against the virus and exhorted us all to keep up our observation of the lockdown and of physical distancing. He declared that the virus was “like a mugger” and that we shouldn’t expect a sudden Nirvana where all the lockdown damages would be lifted all at once. The clearest indication we’ve had yet that we should expect a new normal –that phrase, of course, a favourite of Dominic Raab’s. A new normal with measures in place for a significant length of time, as we seek to avoid a second peak in infections and surge on NHS capacity.

The nation’s press, as you might expect, when panting after Boris’s sub-Churchillian performance, hitting as it did all the notes of the nation’s preferred cliché.

Not satisfied with the illusion, some even rifled through their store of world war soundbites with The Times’s political editor declaring it was not the beginning of the end, but the end of the beginning. But it’s perhaps more useful is that it does indicate that Johnson is at least a little resistant to the demand – largely conjured by the owners of the major papers and their economic priorities – that Britain should kick its economy back into order and get everyone back to work.

But that tension is certainly there around the cabinet table, and the splitting priorities will continue to drive politics at the highest level, especially as questions emerge over the true nature, extent and effectiveness of the economic support and as these questions begin to bite as the lockdown wears on.

But where is the Labour Party? And I don’t just mean in terms of visibility in opposition – though that would be nice – but in terms of where it thinks the country should go or where the real risks are in its economic response? Here’s Aaron Bastani.

 

Aaron Bastani, contributing editor at Novara Media and author of Fully Automated Luxury Communism

AB: Hello, and a very good morning to you all. Thank you, James, for continuing to inform and entertain in your typically indefatigable way. Moving to a daily podcast has been no mean feat for both yourself and Novara Media. And can I say you’ve done it with real aplomb?

Two stories came to my attention over the last few days.

One is [about] a longer-term issue for the Labour Party and how – other than [with] the Corbyn leadership – it [has] never really had a position on deficits or the changed economic context since the 2008 crisis. If you want to govern and actually be in power, rather than simply hold office, that’s inadequate.

The second story focuses on how Labour is playing the issue of rent suspensions in the context of the coronavirus. Unlike deficits in a post-JFC vision for the economy, or rather the absence of it, what we’re seeing here, I suspect, are short term political missteps rather than a broader generational failure.

In any case, both stories expose issues that the left will have to grapple with over the coming months and years.

Firstly, deficits. The debate in Westminster is already turning to eye-watering deficits, despite the fact we still have no idea precisely how much dealing with the coronavirus will actually cost the Exchequer.

This brief excerpt is from Radio 4’s Westminster Hour on Sunday evening:

Jo Coburn: … particularly towards the lockdown, you talked about the economy. What’s your sense about where Tory MP’s are?

Interviewee: Well, I think there are growing and growing concerns about the length of the lockdown, particularly after Chris Whitty, the chief medical officer, said it could be carrying on for the next calendar year. That’s when you really started to hear the disquiet coming from the Conservative backbenchers, but ministers as well. And, of course, we’ve had a story today about Tory donors urging the government to look at the economic damage that this is doing and look to trying to ease the lockdown as soon as possible. You also have the former chancellor Philip Hammond saying “we can’t wait until the vaccine, we have to start trying to lift the measures before that for the sake of the economy”. Government borrowing is up to its highest levels in peacetime history, and that really doesn’t sit comfortably with anyone but particularly not Conservative MPs. And then of course you have the office for budget responsibility predicting the cost of the following scheme to be £42bn, and that’s before the extension was announced. So, these are absolutely eye-watering figures. They’re a concern for everyone, not just for politicians. But there is a particular division in the Conservative party that will [probably] be Boris Johnson’s biggest concern when he starts work tomorrow morning.

AB: Before I dive into [why] I disagree with the framing of this conversation, it’s important to say there are observations made here which are entirely incontrovertible.

The first is that Britain is heading for its biggest peacetime deficit effort as a result of the coronavirus. Before the virus, the deficit – how much more is being spent by the government [than what] is being brought in through revenues, principally taxation – was set to be around 2% of GDP. Now that figure is expected to be around 15%, partly as a result of historic downturn (meaning less tax income is raised), partly because of extraordinary state measures like the government’s furlough scheme – anticipated to cost somewhere between £40bn and £50bn. That means that Britain’s debt to GDP ratio will likely pass 100% in the next year or two – something touted by David Cameron and George Osborne ahead of the 2010 general election as equivalent [an] economic Armageddon.

It is ironic, then, that [it] is the Tory Party who are in charge when such measures are put in place, given [that] the driving animus behind their administrations for much of the last decade was deficit elimination. The deficits we’re now confronted with look set to be far in excess of anything seen in the aftermath of the 2008 crisis.

What’s more, the prospect of any returns of growth, and therefore rising tax revenues, also seem set to be considerably worse than 12 years ago. We have an outstanding piece on this up over on Novara Media, written by the former economic advisor of John McDonnell, James Meadway. It’s titled “Don’t Fight the Last War: Why the Left Needs to Look Beyond Austerity“. It comes much recommended.

James is right, I think, to argue that the next political confrontation won’t be about cuts or no cuts, austerity or not, [but] rather [about] the foundations in which the economy is built and whether the reconfiguration it will inevitably undergo as a result of the coronavirus can be undertaken in a progressive way.

And yet, this seems to somewhat ignore the role of deficit reduction in right-wing ideology. For decades, fiscal realism has been a way of diverting the social surplus from the many to the few. Austerity was a license for privatization, but also outsourcing; tax cuts for the very wealthy, but tax increases on things like VAT. It was fundamentally about reordering society in the interests of the economic elite and did so with a very simple compelling message: “we can’t afford these nice things that you like anymore”.

This will partially return, once the final cost of the coronavirus is evident. That said, precisely how is unclear because with debt piled on not only sovereign states but households and businesses too, the state will likely have to kickstart the economy through some kind of stimulus. The state de-leveraging at the very moment everyone else is in historically high levels of debt, and [at a time when] consumer demand is low, will, in all probability, lead to an economic depression.

It’s important to say this is a global issue. According to the IMF, the debt ratio of the average advanced economy will exceed 120% next year. In the US, the debt to GDP ratio may soon surpass that scene at the end of the Second World War.

There is an alternative path, of course, on which was sadly avoided in the aftermath of the 2009 crisis. That would mean using prolonged state spending to kickstart demand and solve the major social issues confronting us in the years ahead – from rough sleeping, health and equality and unaffordable housing to dealing with an aging population and climate change. This would also concurrently allow households and businesses to de-leverage instead, while minimising a range of social crises both present and future.

At the same time, inflation should be a target – probably somewhere between 4% and 5%. Why? Because as it happened in the 1950s and 1960s, this is the most socially just way of winding down historically high levels of debt. Doing this, of course, is more easily said than done.

Despite hundreds of billions of extra-liquidity being injected into the financial system in recent months, and trillions since 2008, inflation has remained relatively low, if still often above any wage increases. Indeed, the more concerning spectre for most analysts isn’t hyperinflation, predicted by many with the arrival of quantitative easing more than a decade ago, but it’s opposite: deflation.

But why? Well, one answer is that the destruction of collective wage bargaining over the preceding 30 years, has left no real mechanism by which working people can keep their existing share of aggregate output. This shrinking, which it continues to do, combined with the austerity of budget cuts, is a major reason why – on a per capita basis – Britain has seen little to no economic growth since the financial crisis.

As the economic historian Adam Tooze says, the problem wasn’t necessarily 2008 – the year the crisis erupted with the collapse of Lehman Brothers, the swallowing of Merrill Lynch and the part nationalisation of insurance giant AIG – but 2010, the year that the political response to it was decided.

America, which ran a stimulus program under Obama, fared slightly better seeing three things that Britain did not over the subsequent period… namely, rising wages, productivity and growth per capita. And yet, the stimulus – for political reasons – was still nowhere near big enough. Indeed, Obama’s national economics counsel, by all accounts, wanted something twice the size of what it would eventually get. America could have decarbonised, built world-class infrastructure and got inflation up enough to actually reduce its national debt pile – something which is still increasing. Although, it’s important to say [that] this matters significantly less for the country which has the global reserve currency, the dollar. In any case, it did none of these things, with [the number of] those on food stamps remaining high and home ownership still far below where it was before the crisis by 2016. As we now know, that opened the door to Donald Trump.

Right now, the Labour shadow team is saying nothing on a stimulus, inflation or deficits. Starmer himself is a lawyer, rather than someone with a background in political economy. Other than Anneliese Dodds, it is unclear where leadership on the issue will come from among their new frontbench.

Furthermore, his embryonic policy team hold relatively orthodox views on these things. Simply saying we were wrong on austerity after 2010 isn’t really a meaningful response to the challenge of a 15% deficit in 2021.

For any failings of the Corbyn era, the policy team behind it was rock solid: from Andrew Fisher, Corbyn’s policy chief, to John McDonnell and his own team, there was a formidable background on issues of political economy. Despite four years out from the limelight, it strikes me as strange that the Party’s soft left – now in charge – don’t seem to have the much thinking on this vital issue. It certainly isn’t too late, however. And I suggest now is the time for a crash course.

Labour’s new policy on renters

Last Wednesday, Labour confirmed that they had watered down their position on renter’s rights during the coronavirus. Their previous policy position under the Jeremy Corbyn had been that rent payments should be suspended for those adversely affected by the crisis. In other words, renters –the demographic most likely to vote for Labour who had taken a financial hit because the crisis – would not have to pay rent for the occupation of their home for its duration.

This has now changed from suspension to deferment, with Starmer’s team calling upon the government to “legislate for a further manageable period for renters to pay back deferred rent”. This is a significant backward step. On March 14, as it became increasingly clear that [a] lockdown was eminent, Corbyn called on the government to, among other things, insure “rent deferrals and mortgage holiday so that landlords cannot evict tenants and mortgage companies cannot take action against homeowners”.

Now that sounds like the new policy, it does. Except four days later, on March 18, that was changed when Corbyn wrote a letter to the prime minister demanding a fresh vote on the legislation every six months, a guarantee on jobs, income sick pay, increase universal credits, rent suspension for those affected and a six month ban on evictions. On the same day Corbyn wrote that letter, [the] then shadown chancellor to John McDonnell wrote on Twitter how new government measures where inadequate and said: “This approach could lumber tenants with a mountain of debt. At best, this policy risks only deferring evictions. The government should cover rent for those who lose income due to coronavirus.”

That conclusion was in line with the report he commissioned, which was published at the end of March. A report which included the following lines: “Where necessary rent payments should be suspended for a three-month period to enable people to feed themselves and their loved ones, and to avoid driving people into destitution; at a time of widespread job losses and wage cuts of at least 20%, it is not unreasonable for landlords – many benefiting from a mortgage holiday – to prepare for small declines in their regular income.”

Compare those words to what Sienna Rodgers from Labourlist was told on Wednesday as to the new position: “Labour believe that alongside a halt to evictions, the government should enable the suspension of rental payments during this period where people are struggling to keep up, and legislate for a further, manageable period for renters to pay back deferred rent.”

It should be relatively obvious that many millions of people will struggle to pay their rent given present conditions. Furthermore, a situation where this is merely deferred, and whereby they pay off thousands of pounds at a later date, seems outright delusional. This will be another debt on not just poor households but those people, namely renters, who most likely to vote for Labour. So, from the perspective of political expediency, let alone social justice or just decency, it makes absolutely no sense.

In late 2016 it was reported that around 16 million people had less than a hundred pounds savings. Clearly, these would be the people most disadvantaged by the present crisis. How does the new Labour front team propose they pay any accumulated debt back in the future? Furthermore, given any end to the lockdown will happen in the context of a major economic downturn. This seems a very unwise decision and something that party’s leadership needs to re-examine… Fast.

JB: My thanks to Aaron for that and for those kind words about this strange daily audio odyssey that we’re on together.

I think that’s absolutely true. It’s entirely right to identify some real policy, and more importantly, political shifts here and worry about their coherence. There’s a real danger of not recognising the way in which the terrain is shifting underneath all our feet. James Meadway’s argument is, of course, very sharp on that.

Maybe there’s, at least, the possibility of something positive here. All the polling and the nature of the crisis maybe suggest to us that the general political attention is not on the Labour Party right now and that, at least for the duration of the sharpest part of the crisis, support for the government is relatively solid. Now, that’s usually a pretty depressing prospect for the opposition, but perhaps it could be looked at as something of a gift.

Now might be the opportunity to look seriously at where the pandemic is taking us and start to set in place the foundations of a really serious response, especially as Aaron suggests, on the economic front. That will perhaps get especially acute as the question of Brexit, which is as ever looming on the horizon, also begins to bite as the country tries to get its recovery going.

I should say, as that clip earlier highlighted, that question does not only concern the Labour Party, there are also significant questions being posed on the Tory benches about how the recovery happens. It would be too much to say, I think, that there’s a serious split in Tory ranks here, but I think it’s at least suggestive that the reflex instinct of the Tory party – austerity – no longer seems immediately credible to a chunk of its MPs. After all, there’s not really that much left for the British state to gut.

Yes… Food

Sudden shortages in the shops were a defining feature of the early phase of the pandemic crisis in Britain. And I note I still can’t find a flour or baking powder anywhere near me, which rather put the brakes on my plans to make Cantucci over the weekend.

In the early days of the crisis, we talked a bit about supply chains and about just-in-time production management; what those things reveal about the way in which we manage something so essential to us all as the supply of food, at least at the point of the final consumer nexus – when you go and buy things in the shops.

Certainly, food has occupied many of us during lockdown. Those who have been able to find flour have been turning out a variety of sourdough and levains, and even simple, perfectly crumbed white breads. Even certain members of the Novara Media family – who’ve mostly avoided delving especially deep into the culinary mysteries – have embarked on a new familiarity with their hobs.

Even though [I’m shunning] the bubbling of sourdough starters [who have] been thrown back on their own resources as sandwich shops and fast food joints close or default to extortionate delivery services during the lockdown, it’s not clear, of course, how many small restaurants, for instance, we’ll make it out the other side.

What if we were to take a couple of steps further back? Last week, I talked a little bit about the impact on dairy farming in the UK; [about] the crash in demand from industrial food production and negative prices as we reached the springtime apex of milk production and the weakness of the economic meshes so far offered to farmers in the United Kingdom. After all, as I said then, you really can’t furlough a cow.

But what about the wider systemic implications? We live, though It’s easy to forget sometimes, in an age of unimaginable abundance in food supply, which would have astonished our ancestors and perhaps even disturbed them a little bit. Perhaps our ancestors on the left would also have despaired that, in an age of abundance, we have still managed to contrive want and a deprivation.

And it’s this that concerns me. The UN’s food and agriculture organization warns that one of the great dangers which faces us as we emerge from the coronavirus period is precisely around food supply. A huge disruption to production means we already see, for instance, strawberry crops in India being fed to cattle because the fruit can’t be transported to urban market centers. Over in Peru, tons of white cocoa are being dumped into landfill because the restaurants and hotels which would normally buy it are closed. Migrant workers, who are relied on to pick crops in developed nations, are stranded or stuck both through closed borders but also fear of contagion.

[The] global picture is mixed; cereal crops for instance are good and production and harvest is up this year, as the stockpiling of cereal crops is significant. But perishables… Well, they perish if they aren’t brought to market. Wheat prices have jumped 8% and rice by 25% compared year on year.

These of course aren’t just bare facts of the world market; they depend also, for instance, on the oil price war when it comes to questions of shipping and political decisions made about what and who gets to move where and when.

The developed world will be the last and the least affected by these shifts, it will hit the poorest globally first, especially if the recovery is attended by the politics of isolation; that’s something that the UN is driving and warning against.

But the current drive to get students and furloughed workers to pick food in Britain is just one small facet of that question, that huge question of global production. And where migrant workers do move and are still working there are serious dangers; migrant food workers in the United States, for instance, [are] often working in casualised, highly exploited situations with minimal labor rights and few protections, are among the most at risk from the coronavirus.

This isn’t a new phenomenon. Upton Sinclair, left-wing novelist, wrote a book in 1906 – over a century ago now – called The Jungle. At the time, it shocked US readers at the scale of exploitation in their food supply; especially, as that novel was concerned, in meat-packing plants. The shock and outrage of that have receded but the exploitation remains. Workers in meat production lines, for instance, in the United States work shoulder to shoulder; they often stay in very poorly heated and unsanitary shacks with particle board dividers between the bunks; they have barely functioning bathrooms, portaloos and things like that. Nor are, of course, conditions outside the United States generally that much better. Years ago some of that became visible in the UK with the drowning of Chinese cockle pickers in Morecambe Bay back in 2004.

When we begin to ask why this is so, you might talk about the profit motive among massive food producers. But you also have to start talking about the global economic system itself, where workers in advanced nations almost universally rely on extremely cheap, extremely accessible, often highly processed and calorie-dense food in order to sustain themselves in work. Of course, [they] in turn have very little time to rely or make their food and certainly grow though their food themselves.

This is something the writer Raj Patel has been writing about for years. [He wrote a] brilliant book [called] Stuffed and Starved: The Hidden Battle for the World Food System [about this] – which I think is about a decade old now – and in more recent collaboration with Jason Moore, A History of the World in Seven Cheap Things. You can hear me talk to Raj about that book in an interview from the Novara Media archives. It highlights one essential part of this question, at least for those of us on the left.

As soon as things stop circulating [or] stop moving, the labour and systems of labour involved in giving us things you might otherwise take for granted become suddenly very close and clearly visible. Perhaps one way to look at this is simply to begin asking those questions, as soon as food starts disappearing from our shelves, we should start to ask these questions:

Where does it come from in the first place? What’s involved in putting it there? Who owns food production in the globalised world? Really essential questions. If we’re facing a crisis in food production because of the sudden shock to global circulation, what happens to those at the sharp end as we emerge on the other side. Is the way that we have treated food – just as something that will basically always be there – really sustainable? What would we need to change for that no longer to be the case? And perhaps most disturbing of all, is the way that we eat now – thinking not just of the dazzling array of choices on our supermarket shelves but the work involved in putting it there, where it comes from and the demand for more and more and more variety – connected to the conditions which gave rise to this virus in the first place? Is there therefore more to come?

And, of course, the most important question for the left, how might it be different? Answers to all those questions tomorrow. Sorry just to wet your appetite.

Headlines this morning

Sage meets today amid much controversy over its membership and the attendance of Dominic Cummings at the meetings of that scientific advisory group. That, in turn, will feed into cabinet meetings later this week as the government puts together its exit strategy.

The Times this morning also suggests that Keir Starmer will be meeting with Boris Johnson tomorrow, presumably as the prime minister seeks buy-in of some kind for whatever easing of restrictions he might be contemplating. That, in turn, is a real test of what Starmer’s approach to oposition is – and perhaps really the first really significant test.

But will that easing come soon anyway? That question appears to depend on state capacity to properly run, test and trace facilities. As we’ve noticed throughout the course of this crisis and with the high rates of infection that we are already know out there, [the easing of restrictions] does look very unlikely indeed. I think most likely we’re going to see another renewal of those measures beyond the next review point, which is of course scheduled for May 7.

Later today, Michael Gove appears in the Commons to make a statement where he will be met by his shadow counterpart Rachel Reeves at the dispatch box across from him. Now, [judging from] the last time she was in that position, it’s pretty hard to put even a fact paper between some of her positions and those on the Tory benches. I wonder if anything will have changed.

Last, today Rishi Sunak rejects calls from church leaders to follow the example of Denmark and France to refuse bailouts for tax dodging companies in the United Kingdom. You think that this would be an obvious good, clear policy decision; a sign that we [really] are – to use that horrible phrase, a favourite of David Cameron’s – all in this together. But you cannot serve God and mammon, and the chancellor apparently knows in which side his bread is buttered.

Alright. As I ever, do get in touch [email protected] I really do want to hear from you. Otherwise, stay safe, stay home, wash your hands and don’t be a prick.

That’s it. This is The Burner. I will see you tomorrow.

Bye bye.

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