Her Majesty’s Loyal Opposition should officially and unequivocally object, to everything, even good ideas, loudly and often

I don’t think Labour really know that the game has changed. We will have an election in 2015 and there is very little chance of one before that. The move to fixed term parliaments means that Ed Miliband et al find themselves in a totally different position to someone like Cameron circa 2005 or Blair in 1994.

In 2005 Cameron suspected the next election wouldn’t be for five years – and he turned out to be right. But he nearly had to fight an election in 2007 against a newly inaugurated Brown. This is something he had to expect and prepare for from the day he was elected Tory Leader, because we all knew some sort of hand over from Blair to Brown was imminent and that this may have been followed by an election.

This meant that Cameron spent a lot time and effort trying to appear electable, trying to appear “in-touch” by visiting the arctic, liberal by hugging hoodies and as a better heir to Blair than Brown could ever be. All this was essential when Labour could have called an ambush election at any point.

Tean Miliband seems to be employing a similar tactic. Liam Byrne is fighting to appear tough on benefits claimants, Ed Balls is trying to sound more fiscally conservative, even Diane Abbott is doing her best to swiftly cover up her gaffes. The commetariat are also playing along, they want to know if he is too ugly to be prime minister etc. Cameron moved left while Ed is moving right.

All of this is stupid. As Sunny has been documenting, not only is nuance from Labour Wonks confusing the public, those who aren’t confused couldn’t care less anyway. I have a better plan for Ed, to be in operation for the next three years or so, or at least until a year before the election date. Her Majesty’s Loyal Opposition should officially and unequivocally object, to everything, even good ideas, loudly and often.

First of all, this is essential to good governance. A noisy opposition ensures that a Government has to advance the strongest arguments for its policies and ensure the sharpest execution for fear of being lambasted. If all Tory mistakes are leapt on with gay abandon then the Tories will make sure they screw up less. Remember the incorrect list of schools Gove released last year? That is what happens when people are not terrified of screwing up.

Even where this policy would be a trap it is good policy. For example, Miliband will gain almost no votes by opposing capping benefits at £26,000, but he won’t lose any votes either because, and this is important, nobody is voting until 2015.

Any damage supporting bad policies or opposing bad policy while in opposition can be shrugged off because the opposition won’t have done anything because they can’t. Wrong calls can be disowned and vote winning stances embraced as manifesto fodder. A manifesto which won’t need to be published until 2015 because, I repeat, that is when the next election will be. Plus, by being the voice of opposition Labour would be able to build an activist base which will be important in getting out the vote and campaigning come election time.

By playing the old game, where an opposition has to be constantly on the alert for an election Labour are strengthening the Tories, and doing damage to people’s lives. They need to shape up and realise the rules have changed.


Printing money is okay, we do it all the time!

A lot of people get very worried by printing money. We can trace this line of thought back to the great political economists of the nineteenth century like JS Mill, but it finds itself common on the left and right these days.

You can print yourself into hyperinflation, or even accelerating inflation which can eat into living standards and cloud relative prices. But you can find yourself in deflation by failing to print enough. It is this second problem we have been closer to.

It is sad that people need reminding that hyperinflation impoverished Germany but it was relatively mild reflation which pushed them towards fascism. It seems sensible to me to fear deflation more than inflation. Better yet to find the happy medium, where the economy operates at its potential without prices rising too quickly or people being left on the scrap heap of unemployment.

Unfortunately I don’t know where to get the data for the UK, the UK National Statistics website is a joke, but here is some data for the US showing the potential for disconnect between money and prices.

For two decades, money increases along with economic activity, prices increase more slowly (i.e. we got richer). We reach 2008 and the monetary base explodes but prices do not. In fact, prices fall slightly just as the monetary base grows at over 100% a year.

What does this tell us? It tells us that simplistic talk about “fake credit”, “titanic disasters” or “defy[ing] economic gravity” is very wide of the mark indeed.

Quantitative Easing causes a lot of confusion. Normally a central bank promises to print as much money as is necessary to pin short term interest rates at a level predicted to produce stable prices and full output.

Around the world, our last crisis was so severe that short term interest rates went to zero and stayed there. The central bank’s method for controlling prices and output was suddenly impotent.

QE is an extension of this normal promise to print and spend to long term debt because rates on short term debt have already been pushed as low as it is possible to go.

QE is far from ideal, in fact it is the least a central bank can do once rates hit zero. But it is the only option currently on the table because many people currently resist a central bank even doing this minimum because they seem not to care about unemployment.

If you support more active policy to help people then it has to be both through QE and after QE. Only by supporting a suboptimal policy will the space ever open up for something more efficient for boosting growth but that is less popular with central banking’s elite.