Miliband needs to avoid being caught in a Greek pincer

Miliband needs to avoid being caught in a Greek pincer

David Herdson’s Saturday column

Every Labour government ends up running out of money, though not all go to the trouble of leaving a note to their successor to say so. That they do so is not exactly a feature of left-of-centre politics but it’s not far off: a belief in a big state and increased protection for low-income and vulnerable groups inevitably means lots more spending and because of the protests that would come as a result, a structural deficit builds as taxes don’t go up sufficiently to pay for it. (Of course, right-of-centre governments can make the same mistake from the opposite side by cutting taxes excessively but that’s a point for another day).

There is, consequently, a tension in any left-of-centre party seeking government between on the one hand, appearing competence and capable so as to reassure financial markets and centrist floating voters, and on the other, building the new Jerusalem, inspiring the movement and delivering the goods for their electoral coalition.

Nowhere is there a better example of this than in Greece. There, for about thirty years, the political scene was dominated by two parties: the centre-right New Democracy and the centre-left Pasok. Once the party stopped in 2008, however, Pasok had to choose between their policies and economic reality. They chose – under extremely heavy pressure from the EU and IMF – economic reality; a move that did not go down well with the Greek voters in general and the Pasok supporters in particular. From a combined share of more than 85% in 2007, the duopoly slumped to just 32% in May 2012. Pasok’s vote was 44% in 2009; it’s currently running at 4-5%. In UK terms they’ve gone from more popular than Blair’s Labour to about half the support of Clegg’s Lib Dems in less than six years.

While Pasok opted to move to the centre, the space they created on the denialist left has been filled by Syriza, who if the polls are right and there’s no late swing, will win the election next week, perhaps with an overall majority. Put simply, the Pasok politicians might have recognised reality but their erstwhile supporters haven’t.

Would any of this matter for Britain even if Syriza were to win? Yes, it would. Apart from the havoc that would likely result Greece and to a lesser extent the Eurozone and wider EU, it would rearrange the priorities of what the media and, resultantly, the public think important and put Labour on the spot about their own spending and taxation plans.

Eds Miliband and Balls are well aware that Britain’s left-of-centre voters, not unlike Greece’s (though not perhaps to the same extent), have similarly unrealistic expectations about what is possible. Austerity might be a constraint rather than a government lifestyle choice but it has been one of the main drivers of voters from the Lib Dems to Labour. As a result, for at least the last year, they’ve been trying to simultaneously appear to have Pasok-light fiscal rectitude while engaging in Syriza-light populist campaigning, depending on the intended audience. The problem is that while all parts of Labour’s coalition finds one of those positions attractive, few find both of them so and some find the apparent contradiction disingenuous. However, neither can be dropped without upset too many voters.

Miliband may yet get lucky and see New Democracy elected. If not, avoiding being caught in the Greek pincer will become far harder, as evidence of what happens if you start off your government by running out of money. After all, it’s not the issues that are seen as important now that matter; it’s those that’ll be seen as important in three and a half months that count.

David Herdson

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