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Friday, 16 August 2013 00:00

Britain needs to stop slavishly copying the US

by Mark Seddon

Labour could learn from an economy that protects its industrial strength

David Cameron was recently filmed lecturing a group of manufacturing workers with the inimical advice that "frankly, we have to be more Germanic in our work practices."

That was pretty rich coming from an old Etonian who, like George Osborne, has never had a proper job in his life.

But it set me thinking, not least because the German economic model is everything that successive British governments, especially Conservative ones, have shied well away from.

From Margaret Thatcher onwards the British political class has opted for the deregulated, free market model favoured by the United States.

This is a model that has seen those employed in manufacturing industries drop from 50 per cent of the workforce 30 years ago to 15 per cent today.

It is a model that has favoured the financial sector, dot-com booms and a reliance on property prices to provide economic growth.

It has owed much, more recently, to US Federal Reserve chairman Alan Greenspan and his weird nostrums about "endogenous growth."

More significantly this "Anglo-American" model has been directly responsible for the banking crash, a grotesque and growing disparity in incomes and in Britain the second-biggest fall in living standards in Europe.

The free-market model now expects that zero-hours contracts, cheap labour and the markestisation of virtually all that remains in the public sector will provide an economic recovery - along with the usual faith in house prices rising.

All this explains why a few modest green shoots emerging from the ashes of austerity have been heralded with so much over-exuberant nonsense in the media.

The German economic model which Cameron claims to admire is different.

Germany is the fourth-largest economy in the world, and although standards of living have been affected by its new enthusiasm for austerity, its solid productive, exporting, manufacturing core provides apprenticeships and well-paid jobs.

The trade unions are part and parcel of the successful German economic model, a fact that owes something to some of the post-war British architects of West German economic planning.

Employment levels remain higher in Germany, the gap between rich and poor is smaller than in Britain and there is no drive to flog off public assets.

Eighty per cent of the cars driven on German roads are made in Germany. Its large regional banks invest in its own industries.

These banks have largely avoided the rot at the core of the Anglo-US banking system.

It is staggering that Messrs Cameron and Osborne are accorded any accolades for economic competence at all after the disaster they are presiding over.

But the problem is partly of Labour's making.

Labour's front bench has been poor in defending the case for spending, or on reminding voters that had the last Labour government not intervened and partly nationalised the banks the cash machines would have run dry.

In the time since Labour's message that it would not cut "so hard and fast" has smacked of acceptance of the Tory scorched-earth economic policy.

So far Labour has been too timid and defensive. Too often, most notably by accepting Tory spending plans and being bounced into potentially wrecking the party's relationship with the trade unions, Labour's defensiveness has been turned into a dangerous introspection.

Now we face a general election in which Cameron and Osborne already believe they can "glide to victory" on a simple message - who do you trust to manage Britain's economic recovery?

Ed Miliband cannot allow the media and the Tories to dictate this agenda.

Instead he needs to frame it as one of the big, overarching questions of our time - do Britons want to stay the course with Cameron and his race to the bottom?

Do millions of working people really want a future of zero-hours employment, no collective bargaining and short-term, low-paid contract work?

Or do they want a system that resembles Germany's more - where there are real jobs, proper rights at work and decent pay, drawn up with the full involvement of trade unions?

Put like this there is a very real choice at stake - one which could galvanise millions of people facing a future of work on low wages with no rights or no work at all in the brave new world of neoliberalism.

So why not use next spring's planned special conference to roll out Labour's vision of a future of a social-democratic model?

Andy Burnham is right - Labour needs some big ideas, and most certainly not the introspection gifted us by Cameron over the party's historic and vitally important links to the trade union movement.

What's it to be? The neoliberal US or social-democratic Germany?

Take your pick.

Mark Seddon is a former editor of Tribune and on Labour's NEC. This article appeared on Labourlist.org

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