Ed Miliband selects Alan Johnson as Shadow Chancellor

The newly elected Labour party leader has made a curious but potentially positive choice for his Shadow Chancellor. He has chosen the former member of Gordon Brown's and Tony Blair's cabinet Alan Johnson who also has a trade union background who had backed his brother David for the leadership. Johnson who is a charming and very experienced Labour politician with a very interesting personal story of overcoming hardship in adolescence due to the loss of his mother when he was 12 has one major drawback with respect to the position. He freely admits he knows little about economics and more particularly even less about macroeconomics and monetary policy. So he had better roll up his sleeves and begin to cram because the issue of cuts, deficits, debts,unemployment exchange rates, interest rates and stimulus are going to dominate debate over the next year.

There  were at least two other candidates who were better qualified for the job, Ed Balls and his wife Yvette Cooper. Both have well developed positions on the deficit question and tend to approach it from a more Keynesian perspective than did the former Chancellor Alistair Darling. They would have been more immediately  in favour of arguing the case against cuts and certainly strongly opposed to premature recovery damaging cuts that the Cameron Osborne Clegg team are proposing. For the moment Johnson backs the more fiscally conservative approach of Alistair Darling who wished to halve the deficit in 4 years. Given the size of the slump and the rise in unemployment this is probably an unrealistic goal which will lead to damaging cuts.

The rationale behind the decision to appoint Johnson probably involves political considerations having to do with satisfying the David Miliband Blairite faction of the party that their role in the next Labour government will still be substantial. It may also involve Ed Miliband not wanting to give Ed Balls who finished third in the contest too strong of a base and to position Labour and  himself toward the centre of the spectrum. We shall see how this works out in the coming months.

In the meantime the Labour leadership should organize a behind the scenes intensive policy review seminar on the issues of unemployment,deficits, debts, the crash and appropriate monetary and fiscal policy and invite a range of some of the best and brightest from the fields of academe to share their views and debate the issues. For Alistair Darling, Alan Johnson, Ed Balls and Yvette Cooper and the others including Ed Miliband it would be a very rewarding experience.