Balls’ unwillingness to compromise over economically unsound policies that makes him a prime candidate for the most influential left-wing thinker of the year.
By Nasra Hussein, intern at the Fabian Society
In drawing the appropriate parallels between 1930s depression and today’s economic turmoil Ed Balls has provided a compelling argument against the austerity experiment.
While some within the Labour movement itself have conceded to coalition cuts, it is Balls’ unwillingness to compromise over economically unsound policies that makes him a prime candidate for the most influential left-wing thinker of the year.
If the economic downturn has in fact promoted “the return of the master” in Keynes, in boldly calling for nuanced fiscal reductions, Balls’ resistant stance to public sector cuts will be vindicated.
Although Osborne may point to falling gilt yields as an appraisal of his austerity dominated policies and a reflection of Britain’s status as a “safe haven”, what they more likely to represent is a fall in investor confidence and hindrance to UK growth – a warning though unheeded, offered by Balls.
As made clear by growth economists such as Robert Solow and Paul Romer, essential for growth is technological advancement and the acquisition of human capital, with investment the channel though which this can be achieved.
However, with business investment falling by 3.2 per cent in the first quarter of this year, and recent reassessments projecting a fall in overall growth from 2.5 to nearer 2 per cent in 2012, it is self-evident that current economic policy has done little to reassure the private sector.
In these uncertain times fiscal intervention remains an indispensible tool for government, yet it appears that while Balls has always been considerate of the stifling effects of fiscal austerity, the IMF have only recently conceded to Plan B, and Osborne is yet to see the light.
While Balls has continually advocated fiscal intervention similar in message to that supported by Nobel Laureates, the likes of Paul Krugman and Joseph Stiglitz – the data suggests that Osborne has instead executed the same reactionary policies that have defined the Great Depression.
For Balls’ foresight into the economic issues of the day he is looked to as a leader of the centre-left movement, and should be considered the most influential left-wing thinker of the year.Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.