These are strange days indeed. Before the weekend the Torygraph reported Ken Livingstone as criticising Gordon Brown for "borrowing £20 billion a year at the height of the boom in the first decade of this century in order to avoid having to increase taxes, because he wanted to increase public spending". Speaking at a "Labour Assembly Against Austerity" Mr Livingstone described this as "an act of cowardice".
Before one raises a hallelujah for the sinner that repenteth and so on, it's worth pointing out a) that Livingstone blames the Tories too for excessive borrowing, b) that he would like Labour to put up taxes to fill the gap and c) his figures are wrong - actually during the height of the boom Brown borrowed about £40 billion (plus or minus a few billion) for five successive years.
I realise that this is a old tune now, but it's one I never mind playing: the new Keynesians who wanted Osborne to reflate the economy by increasing borrowing (before Osborne proved them wrong) are merely Keynesians-lite - they were silent when Brown passed up the opportunity to swallow the hard part of the great man's prescription - run a surplus during the good times. I don't remember Owen Jones and his ilk shouting for higher taxes or lower public spending then.
When the Blair government briefly balanced the books at the beginning of the first term it was because Labour had pledged to stick to Tory spending plans in an effort to avoid a repeat of the "Labour's tax bombshell" headlines said to have done for John Smith in 1992. Otherwise Brown defiantly ran a counter-cyclical deficit, promising that he had done away with Tory boom and bust.
Nevertheless I think Livingstone's outburst is good news, because it may be a sign of increasing focus on the issue that matters, namely, what sort of public services can we afford with the tax take which the public is willing to bear? He is also correct that borrowing to consume is inherently dubious because it is living today off our children's future income.
There is a delusion on the Left to the effect that Britain's fiscal gap can be closed solely by taxing the rich more. They're wrong. Firstly, there aren't enough rich people. Secondly, when you put marginal tax rates up the rich call their accountants, arrange their affairs differently or go elsewhere. As it happens the richest 1% in the UK currently pay nearly 30% of all income tax; in the late 70's when marginal rates were nearer 90% the figure was about 11%.
Livingstone is right that we can have whatever public services we want, but the reality is that it isn't just the rich who will have to pay more tax, but the rest of us as well.
