Seumas Milne's Blog, page 14

Forbes calls Vladimir Putin the world's most powerful person. Don't be deluded | Seumas Milne

Putin is claimed by Forbes magazine to be more powerful than Obama. It's fantasy – the US remains overwhelmingly dominant

The US corporate media is in a panic about declining American power. The list-loving business magazine Forbes – whose slogan is "the capitalist tool" – has named Vladimir Putin the world's most powerful person. Barack Obama, leader of the self-proclaimed "greatest nation on earth", has been demoted to a humiliating number two.

The downgrade seems to be punishment for the US president's flip-flopping over Syria and the Republican-orchestrated government debt ceiling shutdown. But it also reflects US elite breast-beating about economic failure, the rise of China and a loss of global swagger since the Bush years. The likes of Forbes are delighted to have the chance to brand Obama a lame duck.

David Cameron should consider himself lucky to have made it to number 11 – even if that's below Michael Duke, the chief executive of Wal-Mart, and King Abdullah of Saudi Arabia. But the idea that Putin is now more powerful than Obama – or Russia than the US – is beyond absurd.

It's true that Putin – or rather his foreign minister Sergei Lavrov – played a blinder in September by seizing the initiative on Syria and turning the threat of a US attack on Damascus into a UN agreement on chemical weapons. That has made the outright collapse of Russia's Syrian ally less likely. And yes, he cocked a snook at the US by giving asylum to the NSA whistleblower Edward Snowden.

Far more importantly, in the past decade the US suffered a strategic defeat in Iraq and Afghanistan, demonstrating the limits of US power to impose its will on people prepared to fight back. Combined with the crash of 2008, which accelerated relative western decline, that marked the end of the unipolar world. But all that happened under George Bush – and was symbolised by Putin's successful defiance of US threats in the Russian-Georgian war more than five years ago.

Bush may have destroyed the myth of invincibility of the world's first truly global empire – but empire it remains. The US continues to be overwhelmingly the most powerful state in the world, militarily and economically. Its "defence" spending is larger than that of the next dozen states combined. It has bases and forces stationed in a majority of countries of the world – and continues to use them without restraint, from Libya to Pakistan. By contrast, Russia has one military facility outside the former Soviet Union, in Syria.

A New York Times interview with Obama's national security adviser Susan Rice last week has fed the idea that the US is somehow withdrawing from the Middle East as part of its "pivot" to Asia. It isn't. The administration is instead focusing its interventions more directly on Israel, Iran and Syria. Its network of Gulf military bases is in fact being strengthened.

The past 10 years have seen crucial global shifts which will certainly shape this century: the end of the US new world order, the crisis of the western economic model, the breakneck development of China and the progressive tide in Latin America. But none of that should blind us to the reality of continued US global dominance – or confuse the sway of the US president with the leader of a resurgent regional power.

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The grip of privatisation on our vital services has to be broken | Seumas Milne

From Ineos to energy, powerful interests are driving a 30-year failed experiment. Utilities belong in public hands

Any doubts about who really controls Britain should have now been dispelled. Any thought that the financial crisis might have broken the neoliberal spell, rebalanced the economy or chastened the deregulators and privatisers can be safely dismissed. October has been the month when the monopolies, City hedge funds and foreign-owned cartels put the record straight. It's they who are calling the shots.

In the past week, a Swiss-based tax exile announced the closure of the Grangemouth petrochemicals plant, a crucial slice of industrial Scotland, after provoking a dispute with his workforce. Threatened with the loss of 800 jobs, they signed up for cuts in real pay and pensions.

Naturally, the employer claimed to be losing money (despite having made £1.7bn last year), while the media blamed the union. In fact it was a textbook lockout and display of corporate power by Britain's largest private company – a strategic and once publicly owned complex supplying 85% of Scotland's petrol, left to be run on the whim of a billionaire.

But that is mere bagatelle compared with the defiance of the energy privateers. Ever since Ed Miliband forced electricity and gas profiteering into political focus by pledging a price freeze, the monopolists have outdone themselves. Squealing that such interference threatened power cuts, one after another has taken the opportunity to jack up prices still further.

Four of the "big six" cartel, which controls 98% of electricity supply, have now increased prices by over 9% – blaming green levies and global costs – while wholesale prices have risen 1.7% in the past year and profit per "customer" has doubled.

Thousands of old people will certainly die this winter as a result of the corporate stitch-up that is called a regulated market – designed in large part by the same John Major who last week called for the introduction of a windfall tax on energy profits.

Meanwhile, David Cameron's coalition has signed a private finance initiative-style deal with one of the cartel, EDF, and two Chinese companies – all three state-owned, but by other states – to build a new nuclear reactor which will guarantee electricity prices at almost double their current level for the next 35 years.

As if all that wasn't grotesque enough, most of profitable Royal Mail has now been privatised by the supposedly dissident Vince Cable. The current loss to the "taxpayer" from selling shares below their market value is upwards of £1.3bn – more than the government's entire planned savings from benefit cuts in 2013-14. And its biggest shareholder is now the hedge fund TCI.

Within days, the Co-operative Bank had also fallen prey to US hedge funds, as Conservative ministers put out to tender the country's most successful rail service, the publicly owned east coast mainline. Never mind its reliability, value-for-money, popularity and the £208m dividend payment to the public purse. Privatisation dogma is undisturbed by evidence.

But then privatised water companies are planning to increase prices by 40% by 2020; Simon Stevens, an executive for the US private health firm UnitedHealth, now bidding for NHS contracts, has been put in charge of the NHS in England; and the security firms, G4S and Serco, are allowed to bid for a share of the probation service despite fraud investigations into existing deals.

It should be obvious that powerful interests are driving what is by any objective measure a failed 30-year experiment – but which transfers income and wealth from workforce, public and state to the corporate sector. In the case of privatised utilities, that is the extraction of shareholder value on a vast scale from a captive public.

What's needed from utilities are security of supply, operation in the public interest, long-term planning and cost effectiveness without profiteering. The existing privatised utilities have failed on all counts.

The case for public ownership of basic utilities and services – including electricity, gas, water and communications infrastructure – is overwhelming. It's also supported by a large majority of the country's voters. But it's taboo in the political mainstream.

Given the unhinged media response even to Miliband's call for an energy price freeze, perhaps that's not surprising. His party is arguing for tougher regulation of the energy market. That's welcome, but it's not going to solve the problems created by allowing private companies to profit from natural monopolies.

You can't control what you don't own. Regulators become the prisoners of the regulated. And as the liberal Joseph Chamberlain demonstrated in 19th century Birmingham, publicly owned utilities can be a valuable source of non-tax public income too.

Labour's refusal to commit so far even to bring back rail franchises into public ownership as they come up for renewal – which would cost nothing – shows the problem is political, not practical. Why, you might wonder, is it acceptable to hand basic services to state-owned companies, so long as they're owned by foreign states?

The answer is because it's a commercial relationship, not one of democratic accountability. There are any number of models of social ownership, including local and mutual, that could bring Britain's utilities back into the public realm. In energy, for example, it could start with a single firm or power generation alone.

However, the costs of privatisation have created a powerful counter-momentum in Europe (and even more so in Latin America) to bring services, resources and utilities back into the public sector: water in France, power in Germany, and transport in Britain (Newcastle is currently attempting to take back bus routes). In September, the people of Hamburg voted to bring back the power supply into municipal ownership. Berlin is set to follow suit this coming Sunday.

Privatisation is a failed and corrosive model. In Britain, it has combined with a determination to put up any asset up for sale to hollow out the country's industrial base to disastrous effect. If Britain is to have a sustained recovery, it needs a genuinely mixed economy. The political and corporate elite have run out of excuses.

Twitter: @seumasmilne

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It's the spies, not the leaks, that threaten our security | Seumas Milne

The NSA-GCHQ machine is about global power, not protecting its citizens. US and British intelligence still fuel the terror threat

The war on terror has been a boon to the British intelligence services. After decades in which they became notorious for "counter-subversion" operations against political activists and trade unionists, colluding with death squads in Northern Ireland and helping the US to overthrow elected governments around the world, the spooks have at last had a chance to play the good guys.

Instead of the seedy anti-democratic gang that plotted against a Labour prime minister, they can claim to be the first line of defence against indiscriminate attacks on the streets of Britain. MI5 has well over doubled in size in the past 10 years. Glamorised beyond parody in TV dramas such as Spooks, the spying agencies' uncheckable pronouncements about their exploits and supposed triumphs are routinely relayed by the media as fact. The same has been true in the US, but on a far larger canvas.

So faced with the avalanche of leaks from the National Security Agency and GCHQ about the epic scale of their blanket electronic surveillance, both at home and abroad, the masters of Anglo-American espionage have played the "national security" card for all it's worth. The revelations of NSA contractor Edward Snowden in the Guardian have been a "gift" to terrorists, the head of MI5 Andrew Parker claimed, eagerly supported by the prime minister. The leaks were the "most catastrophic loss to British intelligence ever", insisted David Omand, the former head of GCHQ. They were cheered on by the trusties of the British press – a fertile recruiting ground for British intelligence and the CIA over many years. National security has been imperilled, they all warned, as Tory demands for the Guardian to be prosecuted have grown.

In reality, national security is a catchphrase so elastic as to be meaningless. As MI5 helpfully explains, government policy is "not to define the term, in order to retain the flexibility ... to adapt to changing circumstances" – in other words, political expediency.

If it simply meant protecting citizens from bombs on buses and trains, of course, most people would sign up for that. But as the Snowden leaks have moved from capability to content, it's been driven home that much of what NSA and GCHQ (virtually one organisation) are up to has nothing to do with terrorism or security at all, but, as might be expected, the exercise of naked state power to gain political and economic advantage.

In the past few days the French have discovered (courtesy of Le Monde) that the NSA harvested 70m digital communications in France in one month, with special focus on French-American telecoms firm Alcatel-Lucent, while the Mexicans have learned (via Der Spiegel) that their president's emails were hacked into by US intelligence to "plan international investments" and strengthen US diplomatic leverage.

Something similar happened to Brazil's president Dilma Rousseff, just as world leaders were targeted at the G20, while India and Germany were among other countries treated to the full electronic harvest treatment. Terrorism was clearly well down the priority list.

The protests of French and other western governments, which of course have their own, less effective espionage capability and collude with the US across the board, are largely for public consumption. France was among several European states that cravenly bowed to US pressure to force the Bolivian president Evo Morales's aircraft to land this summer, in a hamfisted attempt to kidnap the elusive whistleblower Snowden.

But it is the scale and reach of the NSA-GCHQ operation – and the effective global empire it is used to police – that sets it apart. And when it comes to terrorism, the evidence is that the US and British intelligence agencies are fuelling it as much as fighting it.

Take drone attacks, which are Obama's weapon of choice in the new phase of the war on terror. They are reckoned to have killed up to 3,613 (926 of them civilians, including 200 children) in Pakistan alone. Amnesty International this week argued that US officials should stand trial over evidence of war crimes in the Pakistan drone campaign. Human Rights Watch has made a similar case over the slaughter in Yemen.

The drone war is run by the CIA and US military. But, as the Snowden leaks confirm (this time in the Washington Post), the NSA is intimately involved in what are often anything but "targeted killings" – as is GCHQ, now facing legal action in London over war crimes brought by the son of a Pakistani victim of a 2011 drone attack. Drones have, as the New York Times put it, "replaced Guantánamo as the recruiting tool of choice for militants", cited as justification by jihadists for attacks on western cities.

The same goes for the role of US and British intelligence, serviced by the NSA and GCHQ, in a decade of torture and state kidnapping. As the evidence of MI5 and MI6 complicity with CIA black sites, "extraordinary rendition", waterboarding and genital mutilation has built up – from Bagram to Guantánamo, Pakistan to Morocco – court case has followed police investigation. You might call it a recruitment "gift" to al-Qaida. But neither the agencies nor the politicians supposed to supervise them have yet been held to account.

Meanwhile, despite its multiple failures, the war on terror keeps expanding, spreading terror as it goes. The new front is Africa, where the US military is now involved in 49 out of 54 states. Two years after what was supposed to have been a successful intervention in Libya, the country is again on the brink of a new civil war, its prime minister begging to be rescued from the backlash over another US kidnapping.

It's a democratic necessity that the Snowden leaks are used to bring some genuine accountability to the NSA-GCHQ machine and its lawless industrial-scale espionage. But to frame the controversy as a trade-off between security and privacy misses the wider picture. The main western intelligence agencies are instruments of global dominance, whose role in the rest of the world has a direct impact on their own citizens. It's not the revelations that threaten our security, but the agencies and their political masters themselves.

Twitter: @SeumasMilne

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Cameron and Miliband: the stampede for a phoney centre ground is now over | Seumas Milne

Cameron is moving to the right. Miliband is breaking with a failed consensus. That can only be good for democracy

Whatever happened to compassionate Conservatism? Banished to the outer fringes of David Cameron's universe, to judge from the Tory conference in Manchester. "Hug a hoodie" and "vote blue, go green" are distant memories. Ukip's Nigel Farage and Cameron's Australian lobbyist and chief dog-whistler Lynton Crosby are driving the Tories ever further to the right.

Five more years of austerity in the cause of a budget surplus; another fuel tax freeze; a marriage tax allowance that benefits less than a third of married couples; more failed US-style workfare for the long-term jobless, undercutting the employed with pay rates of £2 an hour; abolition of the Human Rights Act; and deportation of foreign criminals without appeal.

It's a package as retro as the tweeds, Thatcher memorabilia and "Beware the socialist serpent" postcards on sale in the conference exhibition hall. But with Farage's nationalists ("Give us back our country," he bellowed to a packed town hall on Monday) threatening to overrun the Conservative heartlands in next year's European elections, the "modernisers" have been dumped or marginalised.

Instead, Owen Paterson, the environment secretary, has been hailing the "advantages" of climate change. Cameron has made his peace with his rightwing rival Boris Johnson, paving the way for the London mayor's return to parliament. There are even some on the Tory right who say privately that they would prefer another coalition with the Liberal Democrats to outright victory, for fear of an untrammelled rightward lurch.

That is of course the mirror image of what the Tories and their media allies accused Ed Miliband of doing last week when he unveiled plans to freeze energy bills and bring in new compulsory purchase powers for speculators who refuse to release land for housebuilding.

"Red Ed" hadn't just lurched left, it was claimed, and abandoned the "centre ground". He was "reviving 1970s socialism", unleashing "class warfare" and a "Stalinist land grab" worthy of the war against the kulaks, even "hurtling in the direction of Marxist Robert Mugabe". The energy monopolies howled that investment would collapse and the lights go out if they weren't allowed to charge whatever they wanted, even for 20 months.

In the real world, Miliband's programme has more in common with US anti-trust progressivism of the early 20th century than 1970s socialism. But it's a measure of how narrow the terms of political trade have become. If the reaction to a historically modest social democratic package is as extreme as this, what would it be to the more far-reaching policies needed to rebuild Britain's economy and public realm?

In the event, the attacks came unstuck. Polling showed Miliband's policies had popular support across the board. In fact, the majority of voters want to go further than Labour and renationalise the energy giants, along with rail and the Royal Mail. Most people thought the companies were bluffing about power cuts and investment.

So the political and media attack switched to Miliband's dangerous "populism". The air in Manchester is still thick with talk of Marxism, but the penny has dropped that policies which break, even gingerly, with the 30-year political consensus and challenge corporate greed and immunity may attract mass support. Both Cameron and his education secretary, Michael Gove, have started to backpedal on the energy price freeze.

It's likely to be a temporary reprieve. The repulsive attack by the Daily Mail in recent days on the Labour leader's father, the socialist academic Ralph Miliband, as a "man who hated Britain" and had an "evil" legacy – this from a paper that supported the Nazis in the 1930s, about a Jewish refugee who fought them in the British navy – is surely a taste of poison to come.

Cameron and George Osborne have already been panicked on to Labour's territory, rustling up a fuel tax freeze and bringing forward their own sub-prime mortgage subsidy scheme. But whatever the prime minister says in his conference speech about "capitalist excess", there will be no challenge to the corporate interests that are the Tory bedrock.

As the reality of his government's policies are played out in growing hunger among schoolchildren, spreading cuts and charges in the health service, payday loans and food banks, it's hard to see how the promise of 10 years of austerity will propel the Tories back to power, even sweetened by bank-share-funded tax cuts and a pre-election housing bubble.

But whoever wins the next general election, it's now clear it won't be from the fabled "centre ground". For three decades politicians and pundits have decreed that electoral success can only be achieved on the basis of an establishment corporate orthodoxy they decreed to be "the centre".

Public opinion has long been well to the left of it on privatisation, taxation and regulation, and arguably to the right of it on immigration. But the crisis has cut the ground from beneath it. Miliband may not have lurched left, but he's begun to break with that failed consensus. Cameron is heading rightwards. Nick Clegg claims to be in the centre, but in terms of public opinion he's nowhere near it. Whatever the politicians say, the stampede for the centre ground is over – which can only be a boon for democracy.

Twitter: @SeumasMilne

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Ed Miliband's critics' real fear is that he will win the election | Seumas Milne

Labour's leader is starting to shape a new social democratic programme. But if he bows to austerity it will be suffocated

If political success were measured in conference speeches, Ed Miliband would be on the home straight. He may not be a Churchillian orator. But he's now delivered three years of noteless performances that have recast discredited New Labour politics and broken with failed economic orthodoxy.

Today in Brighton he fleshed out his attacks on "predatory capitalism" and the "race to the bottom" with a string of signature commitments: a freeze in electricity prices, breakup of the energy monopolies, abolition of the bedroom tax, a tougher minimum wage, 200,000 new homes a year by 2020, extra childcare and a switch of tax cuts from big to small businesses.

The aim was to challenge the corrosive conviction that politics can make no difference to the living standards crisis presided over by David Cameron – the man Miliband damned as "strong at standing up to the weak but weak when it comes to standing up to the strong".

The Conservative media needed little encouragement from Miliband's claim that he was "bringing back socialism" to howl with outrage at the prospect of controls on rogue landlords, property developers and exploitative employers. The private energy cartel immediately threatened that a price freeze would lead to blackouts.

All this follows a gathering press onslaught against Miliband. The Labour leader is relentlessly cast as a geeky loser. But the real problem seems not to be his personal and political weaknesses, but the possibility – if not likelihood, on the basis of current polling – that he might actually win the next election. Media attacks had already reached fever pitch over the toxic confessions of industrial-scale personal smearing of Gordon Brown's enemies by his one-time spin doctor, Damian McBride.

Anyone who followed the antics of either the Blairite or Brownite wings of New Labour (or who even just watched The Thick of It) would know that hand-to-hand character assassination was the stock in trade of two factions separated far more by style and ambition than political substance.

But that wasn't Miliband's game. In any case, hyper-spinning was far from the worst of New Labour's sins, which ran from the embrace of City deregulation and privatisation to illegal wars. And despite Miliband's crab-like attempts to move beyond it, New Labour lives on, in both its Blairite and Brownite incarnations.

Take Ed Balls's speech on Monday, which was strikingly reminiscent of classic Brown – from his pledge to use a higher bank levy to fund childcare to his "iron" commitments to match George Osborne's 2015-16 current spending limits. Balls even managed to win a smattering of applause for a promise to use the proceeds from selling RBS and Lloyds to pay down debt – or privatisating banks to appease the bond markets, in other words.

But that wasn't the mood of Labour's delegates, better reflected in the standing ovation given to the Unite leader, Len McCluskey, when he called on the party to stand up for organised labour – or their overwhelming vote for the lifting of the public sector pay cap (which is backed by Balls and Miliband in their effort to win fiscal credibility).

The shadow chancellor's conversion from Keynesian champion to stern austerian, even while the economy is operating far below capacity and investment is flat on its back, is fraught with dangers for Labour's prospects, both before and after the election. If he is drawn by the Tories into making still more far-reaching commitments to cuts and caps – while resisting, for example, the chance to use the part-nationalised banks to drive investment and growth – it would threaten the very commitments on the cost of living and housing Miliband made today.

Economic credibility can only be gained in the eyes of Labour's opponents to the extent that its policies match the coalition's. But most voters still oppose the scale and speed of cuts and, as former Conservative vice-chairman Lord Ashcroft's polling shows, Labour leads the Tories on the economy and jobs in marginal seats by 44% to 33%.

Part of the perception of Miliband as weak has been about Labour's lack of clear policy alternatives. But it also reflects the weight he has given to party unity at the expense of clarity and political allies. Now he has the chance to use his shadow cabinet reshuffle to ditch the disloyal and put his stamp on a team that should already be gearing up for an early election.

It's becoming fashionable for Miliband's critics – among them the New Labour architect Peter Mandelson – to argue that the Labour leader was among those who misread the political impact of the crash of 2008 and wrongly thought it would lead to a shift to the left.

In fact, the electoral pattern since the fall of Lehman Brothers five years ago has overwhelmingly been the defeat of incumbents, whether nominally of left or right. That has been the case in 29 of 35 elections in Europe – and in terms of party, that's also what happened when Barack Obama was elected president in the US. In Latin America, by contrast, more radical leftwing incumbents have been repeatedly re-elected.

What is true is that left-of-centre parties which fail to recognise, as Miliband has done, that the "free market" model of the past 30 years is bust have paid the electoral price. The question now is whether the Labour leader is able to turn that understanding into a viable social democratic programme for a new era.

Twitter: @SeumasMilne

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If this is economic success for Britain, what would failure look like? | Seumas Milne

Lib Dems and Tories both claim the upturn as a vindication, but growth means nothing if living standards are in freefall

Any thought that David Cameron's coalition might one day be derailed by a Liberal Democrat revolt should be put to bed for good. Activists at the party's conference in Glasgow this week might have railed at the "evil" bedroom tax as angry tenants protested outside. Vince Cable may have hammed up his differences with Nick Clegg and denounced his Tory cabinet colleagues as "callous" and "blinkered".

But Clegg's praetorian guard swatted it all away. The Lib Dem leader's small-state Orange Book faction is in undisputed control. What is still a democratic gathering voted to endorse George Osborne's economic strategy, backed Trident, and even made its peace with the student tuition fees the party came to power pledged to abolish. For all the talk of differentiation and coalition with Labour, Clegg and Cameron are indisputably in this together.

The Lib Dems must not let the Tories "hoover up all the credit for economic recovery", the deputy prime minister told delegates who wanted a modest loosening of the fiscal straitjacket. Now the British economy had started to grow, the coalition had been "vindicated", the standard bearer of the Lib Dem left Tim Farron insisted, echoing Osborne's claims last week to have won the argument on austerity.

It's a measure of how detached politicians are from the people they're supposed to represent that such claims can be made with a straight face. The idea that two quarters of growth after three years of austerity-induced stagnation and continuously falling living standards, in an economy that's still 3% smaller than in 2008 – and lumbered with a far larger deficit than forecast as a result – can be considered vindication is truly bizarre.

But the coalition is determined to capitalise on the upturn with plans for yet more privatisation of the wreckage of the British economy. Fresh from announcing the spectacularly unpopular selloff of the profitable Royal Mail (an Orange Book policy), Osborne has now begun the reprivatisation of Lloyds, whose part-nationalisation with RBS five years ago helped prevent the collapse of the financial sector.

If the chancellor is confident of continued growth, he'd raise more by waiting for the price of the bank's shares to increase further. But he's far more interested in the symbolic value of the sale and the £3.3bn he can pocket ahead of the general election. This is a nakedly political sale in the interests of the Tory party and the City institutions that will profit from it.

Instead of putting these banking behemoths back into the hands of the people who came close to destroying them and the wider economy, they'd be far better used as a motor of investment and growth. But this government (and its predecessor) has insisted on running them at arm's length to be fattened up for sale for reasons of ideological dogma.

The absurd result is that, far from being an engine of recovery, the part-nationalised Lloyds and RBS have been a net drag on lending to households and businesses (to the tune of £5.4bn and £6.7bn in the past year). Even Skipton Building Society has made a bigger contribution to supporting the economy than the 81% publicly owned RBS.

That is especially damaging because the slump in private investment has been at the heart of the crisis from the start. Instead of filling that gap with public investment – which the coalition government has cut in half – Osborne has tried to kickstart the economy by pumping up housing credit with his Funding for Lending and Help to Buy mortgage schemes.

It's the worst kind of stimulus because it's unsustainable, regionally skewed and does nothing to rebuild or rebalance the economy. In fact it's a return to the very conditions that paved the way for the crash. Which is why we're already seeing the start of a housing bubble in London and the south-east and an army of estate agents is on the march.

Ironically, given Osborne's claims of vindication, the evidence is that increased government spending over the past year – itself the result of the failure of his plan A and stalled deficit reduction – has in fact boosted growth. But in any case, the argument was not that the economy would never expand again under austerity. It was that austerity would choke and delay recovery, at huge social and economic cost.

Which is exactly what has happened. A rise in GDP figures is meaningless to the majority of people when average real wages are £1,500 lower than in 2010 (while the wealth of the richest has increased by £35bn in a year), public services and benefits are being cut and low-paid, insecure jobs becoming the norm. The inflation rate is now running at more than two and a half times that of average wage increases. Even if real incomes flicker up before the election, Osborne and Clegg will struggle to convince people that the longest fall in living standards since the 19th century is any kind of vindication.

Five years ago this month the collapse of Lehman Brothers engulfed the western world in its deepest economic crisis since the 1930s – along with the model of capitalism that reigned supreme for a generation. Britain's government is trying to restore it at the expense of the majority and failing in its own terms. If Labour is to offer a real alternative at its own conference next week, it has to come up with some convincing answers about how to go beyond that failed model – and turn round the crisis of living standards in the process.

Twitter: @SeumasMilne

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Politics Weekly podcast: Lib Dem conference preview

The Liberal Democrat conference in Glasgow could be a lively one. Nick Clegg's intention to embrace nuclear power, tuition fees and fracking represents a move to the centre for the party. Will anyone in Glasgow agree with Nick?

Joining Hugh Muir to discuss the week's political action: Guardian columnists Anne Perkins and Seumas Milne, Liberal Democrat Voice editor Stephen Tall, plus the secretary of Ethnic Minority Liberal Democrats, Lester Holloway.

Also this week: after four days of the TUC in Brighton, what's the future for the union movement? Is it curtains for the unions and the Labour Party? Or will the two sides reach a deal?

Plus, as Boris Johnson tells a political rival to "get stuffed", we ask when are tetchy or harassed politicians entitled to hit back?

Leave your thoughts below.

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Labour's links with the unions are its greatest asset | Seumas Milne

The TUC speaks for mainstream Britain. The sooner Miliband digs himself out of this hole, the better for his party

You'd hardly know from the way it's reported, but the Trades Union Congress this week is by far the most representative of the political conferences taking place this month. The press has been full of its standard Alice in Wonderland routine of union "barons" and "bosses" and their "crippling" and "sinister" threats. But more than any of the main parties' stage-managed jamborees, the union conference actually looks and sounds like Britain.

In a country where 60% of the population regard themselves as working class, the unions give a voice to the majority largely missing from the political mainstream. And the things they're talking about are the things that matter for most of Britain: falling living standards in a country where George Osborne claims to have won the economic argument; the explosion of payday loans and rampant job insecurity; the desperate shortage of affordable housing and scandal of privatised social care.

Instead of the professional mannequins who will dominate the party conferences, it's the people at the sharp end who've been having their say: construction workers who have just won a battle against union blacklisting on the Crossrail project; outsourced council care workers on zero-hours contracts penalised if they spend more than 15 minutes with each client; North Sea oil workers who opt for Norwegian rigs to avoid the low-paid, deregulated British sector.

And the policies backed by the TUC this week – from public ownership of rail and progressive taxation to a crash housebuilding programme and strong rights at work – both reflect public opinion and fill a gap in the opposition left by Labour's timidity.

So when Ed Miliband yesterday defended six million trade unionists from David Cameron's slur that they are a "threat to our economy" and promised legislation to crack down on zero-hours contracts, he was connecting with mainstream Britain. But that was inevitably drowned out by the backwash of a week's fevered controversy about Labour's links with the unions.

It was clear from the moment of Miliband's leadership election victory courtesy of tens of thousands of trade unionists' votes in 2010 that the union card would be played mercilessly against him – as a leader in the pocket of union "paymasters" – by the Conservatives and their media friends.

Never mind that real union influence on Labour policy remains marginal (how else can you explain the party's barely hedged commitment to Osborne's 2015-16 spending limits and 1% public sector pay cap?), or that union cash is far and away the cleanest and most accountable in British politics.

The pressure on Miliband to pick a fight with the unions, including from Labour's Blairite rump, was unrelenting. So when a local row erupted about supposed union vote-rigging in the parliamentary selection in Falkirk, the Labour leader obliged. What had taken place was "hateful", he declared. Unite officials were duly suspended, the police called in and Miliband announced plans for trade unionists to sign up individually rather than as part of a collective affiliation with the party.

But Falkirk was not what it seemed. The police dropped the case. Labour's internal report was flimsy, and didn't bear a moment's legal scrutiny. So last week the party was forced to exonerate Unite and reinstate its officials. But Miliband has stuck to his scheme – and with it the prospect of losing 90% of the party's affiliation income, as few union levy-payers have shown much enthusiasm for joining Labour as individuals.

To emphasise the point, the GMB general union announced it would be cutting its annual fees by over £1m. The dire financial implications for Labour – without any deal on spending caps with the Conservatives – are clear enough. The expectation is that Miliband is hoping to bring in state funding after the election to compensate, with all that would mean in terms of entrenching existing political structures.

But it's very far from being all about money. The union-Labour relationship is first and foremost a collective political one – and collectivism is in trade unionism's DNA. Getting more of the three million shop workers, nurses, lorry drivers and others who pay the political levy involved would be a boon for Labour, but if it were in place of the collective relationship, that link would quickly unravel.

Which is of course exactly what the Tories and their media allies want – Murdoch's Times yesterday demanded Miliband end the union "grip" on all levels of the party. Whatever the Labour leader does to "reform" the link, it will never satisfy his tormentors. The only way to face them down is to champion the relationship with the largest democratic organisations in the country and turn his fire on the Tories' corporate and City backers, who are of course under no obligation to opt in or out of anything.

Miliband's self-inflicted wound now threatens to dominate Labour politics until the special conference he's called next spring. That would be a calamitous own goal in the runup to an election. There are multiple compromises that could be reached which would combine greater individual rights for affiliated union members while maintaining the unions' collective role (two of the largest unions, Unison and the GMB, both already have a Labour opt-in element for their members). There's no reason why a basic agreement couldn't be reached in the next few weeks. The alternative could be eventual rupture.

It would certainly help in the meantime if Labour's leaders were to embrace some of the policies proposed by the new TUC general secretary Frances O'Grady on Monday: full employment and a cast-iron jobs guarantee for the young, for instance, a million new council and affordable homes, fair pay agreements negotiated by new wages councils, an end to health, social care and education privatisation, and national childcare and employment rights.

Last month Miliband again showed that he is prepared to take decisions which challenge genuinely powerful and vested interests when he played a key role in the defeat of David Cameron over the prime minister's rush to war against Syria. But as the hostility in Bournemouth today to what O'Grady called "a vanilla version of austerity" demonstrated, he's yet to convince Labour's prepared for the scale of change that the new economic model he's called for demands. He could start to do that at Labour's own conference in Brighton later this month. As he said himself yesterday, the stakes could not be higher.

Twitter: @SeumasMilne

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An attack on Syria will only spread the war and killing | Seumas Milne

Instead of removing the chemical weapon threat, another western assault on the Arab world risks escalation and backlash

All the signs are they're going to do it again. The attack on Syria now being planned by the US and its allies will be the ninth direct western military intervention in an Arab or Muslim country in 15 years. Depending how you cut the cake, the looming bombardment follows onslaughts on Sudan, Afghanistan, Iraq, Libya and Mali, as well as a string of murderous drone assaults on Yemen, Somalia and Pakistan.

The two former colonial powers that carved up the Middle East between them, Britain and France, are as ever chafing for a slice of the action as the US assembles yet another "coalition of the willing". And as in Iraq and Sudan (where President Clinton ordered an attack on a pharmaceuticals factory in retaliation for an al-Qaida bombing), intelligence about weapons of mass destruction is once again at the centre of the case being made for a western missile strike.

In both Iraq and Sudan, the intelligence was of course wrong. But once again, UN weapons inspectors are struggling to investigate WMD claims while the US and its friends have already declared them "undeniable". Once again they are planning to bypass the UN security council. Once again, they are dressing up military action as humanitarian, while failing to win the support of their own people.

The trigger for the buildup to a new intervention – what appears to have been a chemical weapons attack on the Damascus suburb of Ghouta – certainly has the hallmarks of a horrific atrocity. Hundreds, mostly civilians, are reported killed and many more wounded, their suffering caught on stomach-churning videos.

But so far no reliable evidence whatever has been produced to confirm even what chemical might have been used, let alone who delivered it. The western powers and their allies, including the Syrian rebels, insist the Syrian army was responsible. The Damascus government and its international backers, Russia and Iran, blame the rebels.

The regime, which has large stockpiles of chemical weapons, undoubtedly has the capability and the ruthlessness. But it's hard to see a rational motivation. Its forces have been gaining ground in recent months and the US has repeatedly stated that chemical weapons use is a "red line" for escalation.

For the same reason, the rebel camp (and its regional sponsors), which has been trying to engineer a western intervention in the Libya-Kosovo mould for the past two years to tip the military balance, clearly has an interest in that red line being crossed.

Three months ago, the UN Syria human rights commission member Carla Del Ponte said there were "strong concrete suspicions" that rebel fighters had used the nerve gas sarin, and Turkish security forces were reported soon afterwards to have seized sarin from al-Qaida-linked al-Nusra Front units heading into Syria.

The arms proliferation expert, Paul Schulte, of King's College London, believes rebel responsibility "can't be ruled out", even if the "balance of probability" points to the regime or a rogue military commander. Either way, whatever Colin Powell-style evidence is produced this week, it's highly unlikely to be definitive.

But that won't hold back the western powers from the chance to increase their leverage in Syria's grisly struggle for power. A comparison of their response to the Ghouta killings with this month's massacres of anti-coup protesters in Egypt gives a measure of how far humanitarianism rules the day.

The Syrian atrocity, where the death toll has been reported by opposition-linked sources at 322 but is likely to rise, was damned as a "moral obscenity" by US secretary of state John Kerry. The killings in Egypt, the vast majority of them of civilians, have been estimated at 1,295 over two days. But Barack Obama said the US wasn't "taking sides", while Kerry earlier claimed the army was "restoring democracy".

In reality, western and Gulf regime intervention in Syria has been growing since the early days of what began as a popular uprising against an autocratic regime but has long since morphed into a sectarian and regional proxy war, estimated to have killed over 100,000, balkanised the country and turned more than a million people into refugees.

Now covert support has become open military backing for a rebel movement split into over 1,000 groups and increasingly dominated by jihadist fighters, as atrocities have multiplied on all sides. While the focus has been on Ghouta this week, rebels have been ethnically cleansing tens of thousands of Kurds from north east Syria across the border into Iraq.

Until now, the western camp has been prepared to bleed Syria while Obama has resisted pressure for what he last week called more "difficult, costly interventions that actually breed more resentment". Now the risk to US red line credibility seems to have tipped him over to back a direct military attack.

But even if it turns out that regime forces were responsible for Ghouta, that's unlikely to hold them to account or remove the risk from chemical weapons. More effective would be an extension of the weapons inspectors' mandate to secure chemical dumps, backed by a united security council, rather than moral grandstanding by governments that have dumped depleted uranium, white phosphorus and Agent Orange around the region and beyond.

In any case, chemical weapons are far from being the greatest threat to Syria's people. That is the war itself and the death and destruction that has engulfed the country. If the US, British and French governments were genuinely interested in bringing it to an end – instead of exploiting it to weaken Iran – they would be using their leverage with the rebels and their sponsors to achieve a ceasefire and a negotiated political settlement.

Instead, they seem intent on escalating the war to save Obama's face and tighten their regional grip. It's a dangerous gamble, which British MPs have a responsibility to oppose on Thursday.

Even if the attacks are limited, they will certainly increase the death toll and escalate the war. The risk is that they will invite retaliation by Syria or its allies – including against Israel – draw the US in deeper and spread the conflict. The west can use this crisis to help bring Syria's suffering to an end – or pour yet more petrol on the flames.

Twitter: @SeumasMilne

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A 21st-century Nasser could give the Arab world its voice | Seumas Milne

Egypt's coup makers are phoney nationalists. But the goal of independence and social justice unites people across the region

It's hardly surprising that the uprisings hailed as the Arab spring have long since been seen as having turned to Arab winter. Western intervention left Libya in chaos; Syria and its neighbours have been engulfed in foreign-backed sectarian war; protest is brutally suppressed in Bahrain and other Gulf regimes; Yemen has been corralled into a phoney "transition" as the US wages its never-ending drone war, with 34 killed in the past fortnight alone.

Now the mass Cairo street occupations against last month's ousting of Egypt's first freely elected president wait for another massacre to be unleashed by the leaders of the coup. Only in Tunisia, cradle of the Arab upheavals, is a genuine democratic transition still in play. But now the second political assassination in a year has triggered an Egyptian-style movement demanding parliament's dissolution and the resignation of the Islamist-led government.

Tawakkol Karman, the Yemeni uprising leader denied entry to Egypt last week, warned that the "destruction of Egypt's revolution means death for the Arab spring". Of course, many supporters of the coup, which followed mass demonstrations calling for the end of Mohamed Morsi's year-old presidency, don't regard it as a coup at all, but the army's fulfilment of "the people's will".

That view is echoed by its foreign backers, from Saudi Arabia to the US. John Kerry, the US secretary of state, claimed the Egyptian army – trained and bankrolled by his government to the tune of $1.3bn a year – had been "restoring democracy" by overthrowing the country's democratically elected leader.

There's no doubt the coup had large-scale support (even if polling suggests it has been exaggerated) from an opposition that united right and left, along with supporters of the former Mubarak dictatorship and many who opposed it and want to see more far-reaching change in Egypt.

The latter had plenty of grievances against Morsi and his Muslim Brotherhood-led government: its indulgence of army and police brutality, failure to break with Mubarak's failed neoliberal economic policies, social conservatism, institutional power grabs, inability to build alliances with secular forces and appeasement of US and Israeli power.

But there can be no doubting what has taken place. A leader and movement who won a string of elections and referendums have been removed by force in favour of military placemen. The president has been imprisoned while surreal charges are cooked up – of plotting with the Palestinian group Hamas to escape from one of Mubarak's jails.

Large numbers of Brotherhood activists have been arrested, pro-Morsi media outlets closed and hundreds of protesters killed as resistance to the new regime grows. Meanwhile, the first response of the western-backed Gulf dictatorships that bankrolled the opposition – Saudi Arabia, the UAE and Kuwait – was to offer $12bn in loans. The US, which hedged its bets with Morsi, demonstrated its support for the generals by agreeing to deliver four F-16 fighter jets (and then delayed them in response to the violence).

Israeli leaders took a similar line. The former prime minister Ehud Barak insisted that the coup leader, General Abdel Fatah al-Sisi, deserved "the support of the free world". Which was only remarkable for Barak's frankness, as Sisi's men had got to work without delay to seal Egypt's border with Gaza, destroying 80% of the lifeline tunnels to the Israeli-blockaded Palestinian territory, and co-operate closely with Israel against jihadist groups in Sinai.

Despite all that, there has been a determined drive by Egypt's pro-coup media to present Sisi as an independent, even anti-American, figure. There's even an effort to link him with Gamal Abdel Nasser, Egypt's popular Arab nationalist president of the 50s and 60s.

That's partly because Nasser repressed the then US-backed Muslim Brotherhood (along with communists). But it also reflects the fact that Nasser's reputation as a genuinely independent and progressive leader who stood up to the west and Israel is still strong in Egypt and across the region – and the coup mongers want to use it to give themselves some spurious legitimacy.

The idea that the US-dependent Sisi, whose military hierarchy controls vast commercial interests, is a new Nasser is ludicrous. But the propaganda ploy is revealing. Despite his failings and authoritarianism, Nasser is remembered as a leader who stood for regional unity and independence, economic development and social justice.

Shorn of the authoritarianism and anti-Islamism, those are goals that unite people throughout the region today and fuelled the 2011 uprisings. If Morsi had stood unequivocally for them, he would have attracted powerful support far beyond the Islamist camp, inside and outside Egypt, in the face of a certain backlash.

The Arab world is now riven by the menace of sectarianism and breakup into smaller states. It's afflicted by polarisation between secularism and Islamism, the wealth and influence of reactionary Gulf autocracies and the constant military intervention and presence of western powers.

A democratic 21st-century Nasser, able to straddle the religious and secular camps, could be the unifying force to confront those challenges. What is certain is that Egypt's coup makers haven't settled the country's direction - and the popular movements that erupted two years ago are going to keep on coming, across the region. They are only waiting for effective political expression.

• Twitter: @SeumasMilne

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