Editorial
When America sneezes, Blair's spin doctors are no use at all
SOME of Tony Blair's top spin doctors have made their diagnosis of Al Gore's failure to win the US election, and concluded that it does not automatically question a walk-over Labour win at the next election here.
One of Gore's cardinal errors, according to these readers of entrails, was that his eagerness to distance himself from Clinton and his sleaze-ridden presidency meant that he was not able to cash in on the boom economy which had prevailed in the US throughout the eight years of Clinton's administration.
That could never be a problem here, Blair was reassured, because New Labour's stewardship of the capitalist economy is one of their proudest achievements.
But even as these sage words were being written by a high priest of the dark arts, the very economic assumptions on which they were based were being undermined - both in the USA, and to a certain extent in Britain, too.
Even before the protracted saga of the Florida recounts had been concluded, with a panel of five reactionary judges solemnly installing the man with fewest votes as the next President, sharp-eyed observers had spotted that the US economic miracle was coming apart at the seams.
Economic output in the final quarter of 2000 was only half that of the previous quarter;
The much-vaunted Nasdaq share index for hi-tech industries was in steep decline, losing 29% of its value over the whole year, and dragging much of Wall Street with it.
Consumer confidence was plunging, after years in which consumer spending has been rising faster than personal income.
Savings as a percent of income had effectively collapsed, declining from almost 5% in 1998 to zero at the end of 2000.
Retail sales were falling back, car production and house construction falling, and "dot.com" companies dying or teetering on the edge of collapse.
Corporate profits were flat, and the number of companies defaulting on bonds was almost four times the 1996 level.
It hadn't really suited anyone to point this out until after the election was over. Gore and the Democrats wanted to let the "feelgood" factor swing voters towards them, while Bush would have been eagerly promoting his call for $1.3 trillion in tax cuts whatever the state of the economy.
Since the new year began, we have seen the first signs of an open acknowledgement of these problems. The Nasdaq continued downwards, to reach half its value in March 2000.
As discussion developed on the danger of a new recession, a highly publicised half percent cut in the Federal Reserve interest rate triggered at least a momentary euphoria among nervous stock brokers around the world.
President-elect George 'Dubya' Bush has been quick to wheel back out his all-purpose call for tax cuts as a means to save the situation, but lingering doubts remain over whether there is any way to avert a slow-down or even a slump in the US economy.
Nor is it just the trendy internet firms and hi-tech companies that are feeling the pinch. In the USA a tide of redundancies, cutbacks and bankruptcies is affecting old-fashioned manufacturing and other industries: cars, steel, construction, railways and retail chains.
Six months ago, virtually nobody had seen this coming: now, as Time magazine points out, "the boom's gone on so long, we've forgotten what a recession looks like". And nobody knows whether the corrective cut in interest rate will do the trick, or whether Bush has been doomed to serve the first years of his presidency in a recession.
So what has all this to do with Blair and Britain? Geographically, it may be an island, but the British economy is dependent upon world events.
Many of the factors that have hit the USA are also problems here. The British stock market closed last year ten percent lower than it began for the first time in a decade, dragged down by collapsing new technology and internet stocks. Dot.com firms are going bust, and even British Telecom is struggling to divest itself of a mountain of debts.
But manufacturing industry is also in another sharp decline here, with a pattern not dissimilar to the USA: cars and steel are shedding jobs, along with another old fashioned industry, textiles.
A standstill in the British economy would throw a spanner in the works of Gordon Brown's carefully stage-managed pre-election spending spree on health, education, and other voter-friendly measures.
Unfortunately there is another common factor on each side of the Atlantic: both the British New Labour government and the new US president and his right wing team are wedded to the neo-liberal agenda.
Whatever the economic illness, their answer is another dose of free market capitalism, deregulation, privatisation and a reduction in welfare spending.
As we have seen before, this type of treatment can eventually produce at least the semblance of a recovery - but only at the expense of the jobs and living standards of working people.
Labour's first years in office, like the Clinton administration in the USA, have seen the gap between rich and poor actually widen even during "good times".
The US crisis should remind us that the system itself is anarchic and unstable. It can only maintain profits through the exploitation of the world's working class, kept in check as they are by right wing union leaders and lack of any serious alternative political leadership.
The need for a class struggle left wing in the unions, and a fighting socialist left to challenge the politics of neo-liberalism has never been more urgent.