‘In the Black Labour’ and budget deficits

Hopi Sen insists that In the Black Labour (ITBL) is a Keynsian project. He explains that “fiscal conservatism does not entail short-term fiscal stupidity” and compares ITBL’s publication now to writing a paper in the winter telling people to prepare for spring.

The message is that once the need for fiscal stimulus has passed, the principles of ITBL – not running a budget deficit – can be enshrined through the proposed measures; though not before. For as long as a stimulus is needed, it should be applied.

This seems like a reasonable position. But there is a problem: when will the need for fiscal stimulus pass?

Mainstream predictions now suggest that the economy will be facing a Japan-style lost decade.

If you have an hour, Richard Koo, Chief Economist at the Nomura Research Institute, explains the causes of the eastern economy’s prolonged period of stagnation very well.

In very basic terms, what happened in Japan was that a huge build up of private sector debt has had to be paid down by firms who had borrowed to invest, but not seen adequate initial returns on their investment.

This has meant that now even for firms turning a profit, any surplus generated does not get reinvested into expansion, but rather goes into paying down that existing debt.

Here is a graph of Japan’s debts: private in blue, public in black.

You can see firms paying down their debt. But you can also see public debt increasing.

Why this happens is simple if we remember that:

GDP = C + I + G + (X-M)

Because firms are paying down their debt, investment (I) is low. Consumer spending (C) is unlikely to be making up this gap when everyone is trying to pay down their credit cards with stagnant wages. And the balance of trade (X-M) is less likely to be moving in a positive direction if domestic investment is low.

So state spending (G) makes up the output gap in order to keep GDP positive, avoiding a recession. It’s worth noting that between the years 1995-2002 Japan’s annualised growth rate was as low as 1.2% which means it would have have been routinely negative without the extra public spending, which increased by more than that amount each year. And so the black line on the graph above soars – in fact, Japan’s public debt to GDP ratio outstripped that of all other nations before the crisis hit in 2008:

 Deutsche Bank has even forecast Japanese public debt reaching 300% of GDP by 2020.

And the thing is, when economists say that the UK is in for a lost decade, they don’t just mean in terms of symptoms. The same things are happening here.

The UK now has more private sector debt as a % of its GDP than Japan:

 

And as a result of that, UK investment – here measured in gross fixed capital formation – has declined as a proportion of GDP since the recession and stubbornly refused to come back up.

How does this relate to ITBL?

In short, it may sound alright in principle to be talking about “preparing for spring”. But spring might be a much longer way off than the authors of ITBL seem to think.

The lessons learned from Japan suggest that consistently high budget deficits might be the only policy tool we have to prevent a decade of stagnation turning into a decade of recession  – a tool to fill the output gap while our private sector pays down its debt.

This suggests that deficits might need to be a fairly permanent feature of the UK’s economy for some time to come.

Of course, Hopi and Anthony could merely respond that if that’s when spring comes, that’s when spring comes, and that ITBL will still be valuable then.

But if spring is at best two elections away, is it really sensible to be talking about building the Labour Party around it now?

The Labour Right and welfare reform: living in the past

This morning on LabourList Owen Jones tore Liam Byrne MP to shreds over welfare reform. Byrne had argued that the “evil of idleness”, reinforced by the welfare state, was to blame for high unemployment.

He suggested that the way to correct this would be to punish those who rejected work, and have the government take steps to place them with training or employment.

Owen’s deconstruction was compelling. But I’ll add something else: this is not a new idea. Labour already pursued such a policy in 1998. Then, it was referred to as the “New Deal”.

The New Deal’s architects successfully identified a new problem for the welfare state as it existed – that full employment, which Britain had enjoyed since 1945, was dead. The neoliberal reforms of the 80s had ended the period of low unemployment in favour of a ‘flexible labour market’.

(source: House of Commons Library)

Like Byrne today, the Labour ministers at the time hypothesised that the welfare system was now getting the way of people finding employment.

Labour’s new policy introduced two core changes. The first was the ability to withdraw benefits from those who “refused reasonable employment.” And the second was introduction of training schemes and placements to try and help the unemployed become more suitable for employment.

In both cases the onus of reforms was on the unemployed individual – either the lazy individual or the unprepared-for-the-new-economy individual. Depending on what their problem was the policy would either stop rewarding them for their laziness, or give them the tools they needed to compete in the new economy.

And as the Labour manifestos of 1997, 2001 and 2005 pledged, Labour would restore full employment – not by providing jobs, but by fixing the problems of the lazy, or unprepared individual.

But the policy failed dramatically. Labour’s reforms never returned unemployment figures anywhere near their social democratic low. The closest they got was to bring the figure down to what it was in the late 1970s, when this poster brought Margaret Thatcher to power:

Here are the unemployment figures for 1980 to 2011:

The withdrawal of benefits from the unemployed succeeded in decoupling the claimant count from the actual unemployed figure – leaving many people unemployed but unable to receive subsistence benefits because they no longer qualified for them.

But as the above graph shows, despite the extension of the policy to all adults from 2002 unemployment was roughly flat from the turn of the century until the 2008 recession – when it rocketed.

The New Deal was a well-conceived and well-intentioned policy – in 1998. But it misunderstood the causes of the problem it sought to address, assuming that the unemployment was caused by individual failings of workers rather than the simple fact that there were not enough jobs to go around.

Three successive Labour majority governments enthusiastically pursued what Byrne is suggesting as a priority, to no avail. We have nothing but evidence that there are fundamental problems with their hypothesis about what causes unemployment.

And yet we get this old, out of date idea from the man in charge of Labour’s policy review – well over a decade behind the evidence.

Letter to the chair of the Lib Dem backbench health policy committee

The government’s latest move towards privatising the NHS is a proposal to let hospitals raise half of their income from performing private operations.

There’s a lot wrong with this.

I have written a letter to the chair of the Liberal Democrat backbench health policy committee – John Pugh MP. I’m publishing it here in full because it explains why this is a terrible idea.

Dear Mr Pugh

I am writing to you with respect to your role as the chair of the Liberal Democrats’ backbench health policy committee.

It was recently reported in the news that the coalition government is planning to lift the cap the on private income earnable by hospitals to 49% of their total income.

If this change goes ahead it is likely that hospitals, strapped for cash, will take this offer up with some vigor in order to increase their income in the face of cuts from state funding.

I would urge you to please reject these proposals outright, and to ensure that they do not see the light of day. They would be a complete disaster for the NHS.

I say this not only because I feel uneasy about the increasing role for the private sector in the NHS, but because there are sound economic arguments that suggest that such a move will undermine the quality of care for the rest of patients.

If hospitals gain a significant proportion of their income from private patients, they will be incentivised to invest in healthcare capital goods – equipment, training, specialists, etc – that is demanded by private patients.

As you will be well aware, the sort of operations demanded by private patients are generally of a completely different sort from those demanded by the majority of the health service.

This change will absolutely produce a complete misallocation of healthcare resources within the NHS, to the detriment of the sorts of operations, care and procedures that the majority have, and in favour of the profit making operations that tend to performed privately.

The Conservatives will be well aware of this – but they do not care because they instinctively believe that the market is the best way to allocate capital resources. Whether or not we believe that is true in the case of healthcare, the vast majority of people do not have a presence in the private market for healthcare. (and nor do they wish to) Their needs would not be represented by allocating capital through market mechanisms.

If we were ever to try give everyone such a stake, the only logical conclusion of these reforms is complete privatisation and marketisation of the National Health Service.

The proposals are absolutely strikingly similar to what has been inflicted on Britain’s universities, where institutions have been allowed to raise revenue from international students and private business research ventures. This has led to universities spending significant amounts of money on catering to the needs to international students and private business, to the detriment of the ordinary students. If these proposals become law, NHS will undergo the same treatment, as hospitals increasingly become geared around the needs of private patients.

I would appreciate a response on this issue, and urge you to reject the entire health bill. It is becoming evident at every turn that whatever tinkering goes on at the edges, it is still fundamentally a project for the Conservatives to privatise the NHS. As soon as one aspect is defeated by the Liberal Democrats, a new one quickly appears in its place.

Please reject the bill in its entirety.

Yours faithfully,

Five arguments for economic democracy

Peter Tatchell argues over at Compass that the Left, and Labour, should make economic democracy its new focus. I agree. In this post I’m going to flesh out some reasons why this is a good idea, and in my next post I’ll look at some concrete ideas as to what economic democracy, industrial democracy, workplace democracy, or workers’ control and ownership could look like in practice.

The failure of regulation

The regulatory system takes the idea that firms will want to do bad things that harm society, and tries to solve it by developing a set of external rules to govern their actions.

During the economic crisis, this system failed. There is strong evidence both ways to suggest that it failed because of regulatory capture, or simply because of the shortcomings of regulators themselves when pitted against the most highly remunerated and motivated workers on the planet.

But instead of trying to limit firms’ behaviour, an alternative approach might be to get them to want to do different things.

If a firm is currently a genius psychopath with no regard for anything but shareholder value, instead of trying to force it to obey laws it doesn’t want to obey, we might try to give it a new personality instead.

Particular forms of economic democracy might be able to work towards this end, by introducing considerations into a firm’s deliberating process other than just shareholder value. In economic terms this means reducing a firm’s propensity to want to generate negative externalities, rather than restricting its freedom of action.

It makes sense politically

The Conservatives have spent the last few years talking up co-operatives, gushing all over John Lewis, and have just given all public sector workers the option of turning their schools, clinics or other public service organisation into an employee owned co-operative.

This is an ugly parody of Labour’s 1983 pledge to “give new rights to workers to convert their firms into co-operatives” that hides what is effectively an attempt at mass privatisation behind the language of egalitarianism. The effect of this policy will probably be similar to the effect of Right to Buy – state assets sold off at knock-down prices would quickly be bought up and consolidated into the hands of a few monopolists.

But were Labour to make their 1983 pledge today, it would be very difficult to see how the Conservatives could criticise it without appearing hugely hypocritical. If anything it would emphasise their disdain for public services by refusing to consider them on an equal footing with private businesses; at the very least it would rob them of some of their “progressive” spiel about co-operatives and the Big Society.

If Labour wanted the opportunity to do something radical without actually sticking their neck out, economic democracy would be a great place to start.

No longer a choice between democracy and decentralisation

One of the main arguments for public ownership is one of democratic accountability. Private-sector firms are currently only accountable at an executive level to their shareholders, and sometimes in an indirect way their consumers, whereas nationalised industries are accountable to the state, which is in theory broadly democratic.

But if firms could be made accountable to society through a system of economic democracy, then nationalisation would no longer be necessary for all people to have some stake in the direction of industry.

This isn’t to denigrate public ownership – many things may simply still work better under state control– the railways, utilities, banks, etc. But the choice between public and private could be based solely on utility rather than with the added complication public ownership being practically required for democracy.

Most of the big decisions are already made outside the state

This is more true than at any time since the Second World War – we have multinational corporations bigger in GDP terms than entire countries. We have the simultaneously absurd yet run-of-the-mill state of affairs of “Belgian” bank Dexia having an asset worth 150% of the GDP of that country.

Though the response to the economic crisis may have bought about a recent increase in state intervention, this is supposed to be an aberration in our economic system rather than “business as usual”.

If you accept the principle of a democratic society, this is worrying, because currently the only part of our society that is really democratic is the state. This may have been fine under social democracy, when states controlled significant parts of society, but now the global field of power is more complicated.

One alternative to bringing things back under the control of the state – which has it’s own problems – would be to make those corporate institutions which now make the decisions themselves more democratic.

It might improve productivity

The overwhelming proportion of productivity improvements in UK industry come from firms entering and exiting the market place rather than incumbents improving productivity. This is an indication of organisational stupidity – firms being unable to learn – which is a problem.

Chris Dillow outlines some of the reasons behind this, but chief amongst them is that within firms, there’s no mechanism for feeding back or translating individuals’ learning into the organisation as a whole.

This is because hierarchies are notoriously bad at picking up on tacit, dispersed knowledge. On the other hand, one of the strengths of democracy is as a keen aggregator of fragmentary information. Curing or ameliorating organisational stupidity would have a positive effect on the production process.

Another good reason to think that democracy might help solve this problem is from our experience with a broadly democratic state. Thinking of the state like a large firm, it’s interesting to see what a huge effect a wholesale, sweeping change of management can have on the effect of services it provides. Just ask anyone who used public services under Thatcher and then again 20 years later.

–

Next: What could economic democracy actually mean in practice?

The media and #occupylsx

Paul Sagar points out that one of the reasons why people might find it difficult to identify with the cause of #occupylsx camp is because of its prolonged nature:

Of my friend’s text, however, what really stands out is his closing line: “It’s been two weeks though, who has that much time?”

When I used to box at a gym in Southport, a post-training discussion once turned to the TV series Big Brother. The general conclusion was that not only were all the contestants freaks, but they were Not Like Ordinary People. Why? Precisely because they could swan off for 10 weeks without worrying about work. For most in the discussion, that was enough to discredit each and every contestant. The BB housemates weren’t from the real world. The world where kids and mortgages ruled out such summer sojourns. And that bred both a fairly obvious contempt, but also an underlying if mild resentment.

Leftist activists might endorse OLX with passion. Many of them are out there right now, proudly taking part, braced against the cold by the sincerity of their views. But activists should remember that goldfish bowls create visual distortions, in both directions. And like it or not, dissimilarity quickly breeds contempt.

This sounds fairly convincing.** Most people would find it exceedingly difficult to leave their families and jobs and live in a tent in Central London for weeks at a time. And coverage from the gutter press has made its angle to discredit the camp a peppering of references to “anti-capitalist thugs” and imagery of creepy looking masked men. They’re a “pot smoking rabble“, not People Like Us(™). As Lacan would say, they are The Other.

But Paul’s comments also reminded me of the press’s coverage last week of empty tents. On Tuesday the Telegraph and a Tory councillor snorted that:

It would appear most of the protesters are heading home to sleep in their own beds at night rather than staying onsite.

On Monday the revelation was described as a “charade” and pressure was growing on the church and other authorities to evict the camp.

“It is like a phantom camp – a big charade,” said Matthew Richardson, a Corporation of London councillor, who is calling for action to be taken.

“It just shows that most of the people don’t have the courage of their convictions and are here just to make trouble and leaving your tent here overnight is a good way to do that.”

Or as the Press Association newswire put it:

Protesters camped outside St Paul’s Cathedral in London are going home at night to get ready for work and look after their families

You’re damned if you do, etc…

** Though that said, it seems that it’s completely outweighed by the fact that most people agree with the aims of the protest. ICM’s latest polling shows 53% agree with the statement “the protesters are right to call time on a system that puts people before profit” compared to only 38% who say they are naive.

Market metaphors, unemployment and ideology

Tim Worstall attacks Compass’s Plan B for the economy, particularly the suggestion that the government increase welfare payments to alleviate poverty and increase demand:

“We’re going to cut unemployment by subsidising unemployment more. Ignorance of the basic causality here seems to be an essential doesn’t it? If you subsidise something you get more of it.”

Although Tim seems to miss the point slightly, he raises an interesting question. That is, to what extent is the market metaphor applicable to unemployment?

The implication of what Tim says – that raising benefits is like a subsidy to unemployment – is that unemployment is a sort of “good” that is purchased by people depending on whether it is the most rational thing for them to buy.

There are a few good reasons to think that it really isn’t a good way of thinking about unemployment at all:

Firstly, empirical historical data suggests there’s a lot more going on than people making the rational choice to be unemployed. The graph of unemployment in the 20th Century looks like this:

If Tim is right to treat unemployment like a good receiving a subsidy, the key dates we should see unemployment rise are in 1911, with the introduction of National Insurance by Lloyd-George, in 1942, with the introduction of Beveridge’s Social Insurance and Allied Services, and in 1948, with the creation of the post-war social democratic settlement at the passing of the National Assistance Act. These would all have been massive subsidies to unemployment.

Furthermore, you might expect unemployment to fall sharply for roughly a decade following 1979, as Thatcher refused to increase benefits to keep up with inflation.

But at all the relevant points, the opposite actually seems to be true. Unemployment actually falls sharply when you’d expect it to rise, and rise sharply when you’d expect it to fall. Furthermore, the 1945 to 1979 period, where welfare payments were historically the highest, also has the lowest unemployment rate. No correlation emerges, and any impact seems to be completely negligible.

Another reason to doubt the claim is that unemployment is quite an unpopular pastime. According to research by Ipsos MORI, a majority of those in employment said that they would suffer a loss of confidence from losing their job – this amounts to a psychological and social hit on top of a financial one and is consistent with the idea that people simply do not want to be unemployed – even if this is financially irrational. There are a few reasons for this, the strongest non-financial one being that society exists. Being unemployed is generally seen as a bad thing, and something to be avoided; it can make you a social pariah, and also can also simply be boring.

This all points to a fairly obvious fact to anyone who has ever been unemployed: that it is rarely a choice. Hence why unemployment rises in recessions, and falls in the good times. For the market/good metaphor to be applicable to something, it has to be a choice – otherwise the metaphor breaks down.

But it’s not just unemployment: there’s good evidence to suggest that the market metaphor breaks down more often than is generally recognised, even with commodities. Take UK bus deregulation:

“Competition had arrived. And it arrived in style. The bus wars began. New operators in an area began targeting established routes, running their services five minutes before the incumbant operator. Buses would end up racing each other down the road, attempting to get to the busiest bus stops first.”

… “In 2006 Manchester suffered another one on the lucrative 192 route when operator UK North decided to wade in by adding new services, thus increasing the already frequent service to 12 buses an hour. Stagecoach responded by increasing its own services and adding in its low cost Magic Bus to the route.

The result was so many buses that the local council waded, concerned about safety. Gridlock occurred after Piccadilly Garden bus station couldn’t cope. Buses ended up queuing down the nearby streets, blocking other bus routes and the city’s Metrolink tram system was repeatedly suspended as it simply couldn’t get down the road. Buses that were too long for the relatively small bus station got stuck whilst trying to negotiate corners. The chaos only really ended when UK North’s operating licence was suspended on safety concerns.”

Just as Tim Worstall mistakes unemployment for something bought and sold, the Thatcher Government misunderstood was that buses weren’t really like fruit and veg on a market stall. If you get loads of competing buses on the road at the same time, you don’t get the free market of neoclassical wet dreams: you just get a traffic jam.

This, again, seems like a fairly obvious fact. When looking at a bus, you wouldn’t think “it’s like a market” unless you had some very odd preconceptions about the world. But it is still a mistake that a lot of well-educated and well-renumerated people made. Presumably because they had some very odd preconceptions about the world. Those preconceptions are what we call “ideology.”

The lunacy of cutting or abolishing the minimum wage

A quick economic sketch:

Dr Eamonn Butler, Director of the right-wing think tank The Adam Smith Institute, makes the argument that we should scrap the minimum wage in order to reduce unemployment. Similar calls have come from right-wing Tory MPs. The IEA also unsurprisingly chimes in. With unemployment up again today, it’s likely we’ll hear more of the same from the usual suspects.

The argument behind this is simple enough. Assuming firms have a fixed amount of money to spend on wages, and they could pay some of their workers a lower equilibrium wage (because the current one is held artificially high by the minimum wage floor) they could then hire more workers – thus reducing unemployment.

But Iain Duncan Smith, the Secretary of State for Work and Pensions helpfully points out that the current benefit system leaves you better off out of work that in work. Presumably if people were able to work for below the minimum wage this would be even more true.

So what would the result of scrapping the minimum wage be? Firstly, if Butler is right, those who were currently working at the minimum wage would have lower wages. Secondly, if Duncan-Smith is also right, those who were previously unemployed and were now in work would have less money to spend than they did when they were unemployed – maybe even more-so than if they got a job today, because the minimum wage would have been scrapped.

What is a fall in wages and disposable incomes going to do? Almost certainly cause a fall in effective demand. Which as Duncan Weldon points out, is exactly the problem with the economy at the moment. And of course, unless demand were to pick up, firms are unlikely to start investing that cash they’re sitting on either.

Let’s hope that Butler and Duncan-Smith aren’t both right! As it happens I think Dr Eamonn Butler is probably the most wrong here. Firms aren’t likely to hire more people simply because labour costs have reduced. Firms are already in surplus and are net savers at the moment – they could hire more people if they wanted to. The reason they’re not doing it is because there is no effective demand for their services. And one of the reasons why there is no demand is because real wages are falling…

Why the media is having trouble with the riots

The main theme of broadcasts on every news channel today seems to be “does anybody know why this is happening?”

We’ll all have our own ideas about the causes of the riots. Those on the left are likely to point out that it’s precisely where people have no stake in the society that they’re burning down that this is happening. From the right we’re more likely to hear an emphasis about a lack of personal responsibility and the “innate criminality” of those who live in deprived areas as explanatory factors.

But on the face of it, it really shouldn’t be too difficult to discover what’s going on here. The violence is happening nation-wide, and involves thousands and thousands of people. Precise numbers will be difficult, but there are 16,000 officers on the streets of London, and they always seem to be outnumbered at least three to one. This is hardly the time to invoke a “tiny minority ruining it for everyone else”.

Of course the majority of people in communities affected are rightly absolutely appalled by what’s going on. But it’s pretty clear that there’s something systemic about what’s happening. There’s a whole, substantial and apparently nation-wide layer of society that thinks its okay to burn down bits of where you live.

So you’d think that with so many people involved, perhaps someone from one of these communities would work in the media, and use their experience to have an informed stab at the real causes of what’s going on.

Alas, no. One of the reasons that the media has been so absolutely confused about what’s going on is because next to nobody who works in journalism or television has any first hand experience of the background of this at all.

The media has long been a middle class closed shop of people with the independent wealth to support themselves through a number of unpaid internships. This alone acts as a filter to make sure that only the middle classes are represented in any substantial number in the field.

Never mind inequalities in education, which can only get worse as EMA evaporates and anyone who wants a degree will need to get themselves into £30,000-40,000 of debt. Expensive professional qualifications demanded by most employers like the NCTJ and BJTC are extra, costing several thousands of pounds.

You might not ordinarily think that this lack of economic and social diversity in the media is a problem. But the absolutely unenlightening flap the media is in over these riots highlights the problem it causes; a service that is supposed to give us the right information to make decisions about society gives us this information from a very narrow perspective, with practically no knowledge of how vast swathes of the population live.

You might infer that its not surprising that we’ve got to the stage where people have become so detached from our civil society clique that this nightmare has occurred. These people have been excluded from the discussion for a long time now; are we reaping what’s been sown?

But more immediately, those who give us our information also don’t know how to respond to events, other than with complete shock. Whatever fills in the gaps is going to be guesswork at best, and I am worried about the consequences of that.

Nye Bevan on private sector involvement in the NHS

As the coalition government proceeds with it’s privatisation programme of the NHS, the service’s founder has some advice for them. From the inspiring In Place of Fear:

Danger of abuse in the Health Service is always at the point where private commercialism impinges on the Service; where, for example, the optician is paid for the spectacles he himself prescribes, or the dentist gives an unnecessary filling for which he is paid. Abuse occurs where an attempt is made to marry the incompatible principles of private acquisitiveness with a public service.

Does it therefore follow that the solution is to abandon the field to commercialism? Of course not. The solution is to decrease the dependence on private enterprise. The optical service is a case in point. I have been told by ophthalmic surgeons that opticians prescribe spectacles sometimes when they are not really necessary. This, of course, the opticians hotly resent. The opticians protests would carry more weight if they were not also purveyors of spectacles. They thus make a profit out of their own advice and this tends to cast doubt on the advice itself.

This is an obvious defect in the British Health Service as it is now. I never intended it to remain. The present arrangements have always been regarded as temporary, to be replaced.

Sounds like pretty good advice to me.

There’s a good kind of irony in Labour taking the fight to Murdoch

The news that Labour is forcing a vote in parliament to block any takeover of BSkyB by NewsCorp while it is being investigated by the police is definitely welcome.

Though not quite a return to the pre-Blair Labour manifesto calls for a breakup of newspaper monopolies, it is not something I could imagine the Labour Party of three years ago doing. For a political machine that still goes out of its way to shape its policies to appease The Sun, doing something that will undeniably piss off the Great Satan himself is babysteps to a more assertive relationship with the right-wing gutter press.

Many have been quick to point out that Ed Miliband has done something of an about-face here in speaking out as he has done. That much is obvious: there is no doubt that Labour have clearly been in bed with NewsCorp for the last couple of decades. Pre-crisis Miliband seemed to make no effort to break with tradition, and as recently as last month was hobnobbing at parties with Rupert Murdoch. Earlier in the year he wrote a leader for The Sun.

Because it is so obviously a U-turn, it would have been convenient for Labour to play along with the Tories and pretend that this was not a crisis. Not an interview has gone by with a Labour figure during this crisis without them being told that surely they are implicated as much as the Tories are because of their closeness to NewsCorp.

This could have easily just been about the News of the World, rather than the whole organisation. The parties could have had a very cosy, mutually beneficial consensus between them – they’ve done it before and they’ll probably do it again.

But last week the pressure that has been put on Ed Miliband since he became leader reached a crisis point. His bungled response to the June 30th strikes lost him a lot of support with the last people who would probably stand up for him.

Against a background of the constant negative coverage, not least from the Murdoch Press (“Red Ed”) and their Blairite allies within the party, the consensus a week ago was that Miliband was basically finished if he didn’t pull something out of the hat.

He was desperate, saw the opportunity, and he took it. It seems to have paid some cautious dividends.

The irony is that a Labour leader who hadn’t been constantly undermined by the constant drip-drip of negative coverage from the Murdoch press or their Blairite would-be appeasers would probably never have taken the risk in the first place. They might even be desperately playing down the whole affair in the hope that no one would notice they’d appointed a NewsCorp man as their own head of PR. But Ed Miliband isn’t, and it does feel a bit like a comeback.