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David Cameron is planning to restrict Trade Unions ability to donate money to the Labour Party by compelling them to ask members annually whether they want their money to go into the political fund, and thereby (where that union is affiliated) potentially be donated to the Labour Party. Conservative Home is predictably salivating with glee that this could well bankrupt the Labour Party. That aside, what possible objections could any principled person have to asking union members whether they want their union to give money to the Labour Party? Well I have several.

Firstly, unions are campaigning organisations that work for the greater benefit of their members. Some unions (but certainly not all) feel that this campaigning role can be enhanced by giving money to the Labour Party- certainly a Labour government has benefited their members at work directly let alone the myriad improvements to the NHS, schools, and policing that makes life outside of work that much more tolerable. Anyway, I digress. The point I’m trying to make is that people become members of a union because they feel that on balance it will make them better off. If the fact that their union donates money to the Labour Party becomes so intolerable for them, they have two options; leave (and join a union that doesn’t give money to the party) or, given that the trades unions are democratic bodies, stand for election on a platform of disaffiliating from the Labour Party. To say then, as the Tories seem to imply, that the political fund is used against the will of many union members is simply disingenuous.

More broadly, politicians of the right have a penchant for direct democracy when it’s on issues they feel that they can get a knee-jerk response on (Lisbon, capital punishment, etc) but we should see this for the reactionary politics it is. We elect MPs in order to delegate certain responsibilities and allow that person to become better informed on topics than we could become. The whole point of representative democracy is that we pay people to read the green papers, the draft bills, the think tank reports so we don’t have to. Likewise, a Labour government might well be unpopular with certain union members at certain times, leading them to question why it is their subs are funding the party, but union members elect representatives at all levels who have more time to be reflective over the Labour affiliation. To restate an earlier point if they still don’t like it they can either stand in elections themselves, vote for someone who will change the status quo, or join a union that is not affiliated.

The original 10 year consultation period was nothing more than an attempt to reduce the amount of money given to the Labour Party by cashing in on periodic discontentment; reducing it to a year has exactly the intent. How many of those who opt-out opt back in? In the same way that non-unionised employees benefit from the concessions, rights, and improved conditions won and paid for by those in their workplace who are union members, allowing union members to opt out of the political fund has the same effect. It promotes the free-rider. What if I think that Sandra in head office is spending too much time on the phone and not enough time on union business? Can I have an annual ballot on Sandra’s contract? I’ve just purchased something from one of Lord Ashcroft’s firms- can I stipulate on the receipt that he doesn’t use any of the profits to bank-roll the Tories? Or, despite the availability of free schools and hospitals, I make the choice of going private- can I have some of my tax back (hang on a minute, that one actually used to be Tory policy- remind me, who wrote the 2005 manifesto?)?

With this policy then, as with other Tory initiatives from reducing the number of MPs (populist, and benefits the Tories) to equalising constituency sizes,* the Tories are dressing naked opportunism that will gerrymander the political system in their favour, as principled politics. Trades Unions are democratic bodies that campaign for the rights and conditions of their members. Those same members are free to use and participate in that democracy at any time. Failing that, it doesn’t take very long to cancel a direct debit…

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* as an aside, the Electoral Commission already does this. That Labour constituencies have less voters is less because of some vast left-wing conspiracy, but merely because (a) it takes time to redraw boundaries and (b) the broader demographic shift is away from urban (Labour) areas to rural (Tory) areas. However much compensation there is at any given election (and the Tories will make gains based on the new constituency boundaries in place for this year before any change in voting patterns comes into play), this will always be slightly behind the curve of the reality on the ground.

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In the history of the Labour Party, no one is quite as reviled as the ‘turncoat’ PM Ramsay MacDonald. In the face of the Great Depression, rising unemployment, and a growing budget deficit, MacDonald proposed cutting public spending and raising taxes to defend the currency and balance the budget: this saw the collapse of a Labour government (and near destruction of the Parliamentary Labour Party) and in so doing furnished the left with one of it’s most treasured legacies: that it is only through betrayal that socialism has never been realised. Moreover, it explains the psychology of how Labour is responding to the current crisis.

Keynesian economics gained much credence in the wake of what was seen as MacDonald’s austere deflationary programme: thus the idea that ‘something must be done’ in the current crisis is perpetuated. That Keynesian economics (at least as practised) was ultimately proved wrong, that purchasing a little economic stability now stores up huge dislocations later, and that in trying to pump-prime a retail sector bloated will only perpetuate the causes of instability seems beyond the point: the most corrosive element of Keynesian thought to make a comeback is the obsession with the short-term. Rather than focussing on how to keep unemployment low today, the focus should be on what will create the new jobs of tomorrow. UK R&D spending, along with productivity, lags behind other developed countries and it is these that will impede a recovery when it comes.

The most apposite comparison is Germany (which recently dismissed the pre-budget report as irresponsible). In the post-war period Germany focussed on having a stable currency and low inflation. Britain focussed on Keynes instead, and set eye-wateringly low level of unemployment as the primary macroeconomic target. This came at a huge cost in terms of productivity which ultimately led to the collapse of much of UK manufacturing. We are in danger of making the same mistakes now in response to the credit crisis, and though it is painful for a Labour supporter to admit, we may see the destruction of a reputation for economic competence that New Labour worked hard to achieve as a Labour government once again approaches the exit door with high unemployment, a devalued pound, and a budget deficit running out of control.

So, what is to be done? I cannot claim to have any easy answers, but given a historical trade deficit something must be done to return the UK to a position of being a net exporter. We can only finance more debt if there is a prospect that we will, as a nation, have the means to service it. This means supporting innovation, cutting regulation and taxes where necessary, and promoting research and development. It also means updating Britain’s dilapidated transport infrastructure. This however, may all prove to be academic.

The continuing collapse in the value of the pound predates the news that a second bailout may be required for the banking sector. How this bailout is financed is important. It has been calculated that the UK’s external debt is now 400% of GDP so extra borrowing is going to be extremely difficult to finance unless you consider the politically toxic option (for Labour) of going cap-in-hand to the IMF (there is the other option of ‘quantitative easing’: printing new money like wallpaper in laymen’s terms but how this prevents a further slide in the value of the pound is beyond me). So, if the economic situation worsens and more specifically liquidity in the banking system dries up, Labour will be faced with the option of cutting public spending dramatically or bankrupting the country. Faced with that alternative, it might seem that Ramsay MacDonald wasn’t so wrong after all. Would the left admit as much? Of course not. However, it would be a pyrrhic victory for orthodox economics if this came to pass.

Companies want to create a black-list of ‘bad-eggs’ so that they can confer between them over who is unemployable. One thing I’m interested in (if any lawyers out there can answer) is where this sits with data protection laws?