Could the German economic model be Ed Miliband’s ‘big idea’?


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 – and not least because the German economic model is everything that successive British Government, especially Conservative ones, has shied well away from.

Instead from Margaret Thatcher onward, the British political class have opted for the de-regulated, free market model favoured by the United States. This is a model that has seen those employed in manufacturing industry drop from 50% thirty years ago to 15% 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 owed much, more recently, to Alan Greenspan and his weird nostrums about ‘endogenous growth’. More significantly this model, the 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 Anglo American free market model now expects that zero hour contracts, cheap labour and the marketisation of virtually all that remains in the public sector will provide – along with house prices, the basis for an economic recovery. Which explains why a few modest green shoots, emerging from the ashes of austerity have been heralded with varying degrees of over exuberant nonsense from much of the media.

The German economic model, which David Cameron pretends to admire offers a completely different way of running an economy, and it is one, if Ed Miliband is looking for some big ideas at the recommendation of Andy Burnham, should be taking a good hard look at. Germany is the third largest economy in the world, and although standards of living have been affected by Anglo American induced austerity, it’s solid productive, exporting, manufacturing core provides apprenticeships, skills 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 high in Germany, the gap between rich and poor is not as pronounced and there is no drive to flog off public assets. 80% of cars driven on German roads are made in Germany by world beating German firms. In Germany, large regional banks invest in industry. Those banks have largely avoided the rot at the core of the Anglo American banking system.

It is staggering that Messrs Cameron and Osborne are accorded any accolades for economic competence after what they have managed to preside over. But the problem has been partly of Labour’s making. Labour’s front bench has been poor in defending the case for spending, or for reminding voters that had Gordon Brown and Alastair Darling not intervened as they did in the middle of the financial meltdown and nationalised the banks, the cash machines would have been running on empty. And in the time that has passed since, Labour’s message that it wouldn’t be ‘cutting so hard and fast’, smacked of a partial acceptance of the Tory scorched earth economic policy. So far Labour has been too timid and defensive. Too often, most notably over accepting Tory spending plans, and being bounced into potentially wrecking the party’s relations with the unions, Labour’s defensiveness has been turned into a dangerous introspection.

Now we face a General Election where Messrs Cameron and Osborne already believe they are set to ‘glide to victory’ and 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 over arching questions of our time; do Britons want to stay the course with Cameron and his US style race to the bottom? Do millions of working people really want a future of zero hours, no collective bargaining, short-term, low paid contract work? Or do they want a system that owes more to the German economic model, where there are real jobs, proper rights at work and decent pay, drawn up with the full involvement of the trade unions?

Put like this, there is a very real choice at stake, and one which could galvanise millions of people facing a future of low pay, no rights or no work in the brave new world of neo-liberalism favoured by Cameron and Osborne.

So why not use next spring’s planned Special Conference, to roll out Labour’s vision of a future linked to the social democratic model that has worked for Germany and for other European countries, and use that as the Springboard for the European elections? 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.

So what is it to be? Neo liberal America or social democratic Germany? Take your pick.

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