David Cameron is the new Ramsay MacDonald

At last nights tenth Aneurin Bevan Society lecture, Ed Balls likened David Cameron's economic policy to former Labour then national government PM Ramsay MacDonald. Piling austerity measures onto a struggling economy stifled and lengthened recovery from depression then and threatens to do so again.

Cameron won't end up with the same fate as MacDonald, hated for history by almost all in his party. At the moment Cameron is only riled by some of his party but not to the extent that MacDonald is by Labour people.

Balls suggested that the binding nature of the Tory Lib Dem coalition agreement, that prioritises deficit reduction over all else, is creating an inflexibility stopping the government from being able to change path. Further, their ideological attachment to shrinking the state means that whatever the economic indicators tell us, the coalition won't change policy.

Politically, Balls said, the Tories are fuelling cynicism and pessimism because they tell us that there is no alternative to their chosen path. That means we should accept that stagnation, falling living standards and rising unemployment are an unavoidable medicine we all have to endure.

If people believe there to be no alternative to their lives getting worse thanks to government policy that will only turn them away from politics. What is the point in voting if it doesn't achieve anything?

Progress of UK recessions

It doesn't have to be like that, argued Balls. Government is capable of making people's lives easier and managing the deficit at the same time. This is the Labour alternative.

The chart above shows the UK economy improving until the middle of 2010 when the Tories got in. Since then growth has been non existent. Without people in jobs, shopping, paying taxes and contributing to GDP as unemployment rises the deficit will get bigger, as demonstrated by the extra £46bn of borrowing under the Cameron-Osborne axis. This is simply because former tax payers and shoppers are now being paid benefits and are not paying tax or creating anything for the economy. Simple stuff.

Bevan understood that nothing was possible without power. Balls gets that too. He needs to get his message across to the country to ensure voters get it.

Can a recession ever be a good thing? Richard Bacon show discussion

Yesterday Andrew Lansley, Tory Health Spokesman, was forced to withdraw a blog entry stating that "Interestingly on many counts, recession can be good for us. People tend to smoke less, drink less alcohol, eat less rich food and spend time at home with their families." Last night I spoke from the panel on Richard Bacon's BBC Radio Five Live show about this. Saying recession is a bad thing. David Kuo said it can be.

Lansley was both misguided and insensitive. It shows that many of the Tories haven't changed. At the 1997 election the Tories said of the harsh economic climate a few years earlier "yes it hurt, yes it worked." Their premise is that job losses are a price worth paying for a stronger economy. Kou agreed, saying that many jobs are worthless. I disagree.

Our economy is based on work providing enough to pay for our living costs. Without that most people's lifestyles will fall apart. We saw in the 1980s that many families and whole parts of Britain never recovered from the closure of industry.

I accept that many people naively thought the economy, house prices and the stock market would grow continuously. This is clearly not the case. However, a recession will be bad for families, under financial pressure and facing the threat of losing their homes and jobs.

The side effect of recession is poverty, often higher crime, family breakdown, higher alcoholism and drug taking.

Of course there will be some positive side effects of recession. People will become more frugal, use less energy and waste less. This is a good thing. However, this is a nasty lesson to learn and one most people would rather avoid. I'd like to have the same discussion in a year's time and see whether the callers to the show still agreed that recession would be OK, once they'd had to suffer the effects.

You can listen again to the show here and clicking on Wednesday.