How the British left went bust
James Forsyth 5:29pm
Nick Cohen’s essay in The Observer Review is written with his trademark honesty and passion and is essential reading. Here’s the crux of his argument:
“the paradox of the 1997 Labour government was that it was at once a left- and a right-wing administration. It wanted a huge public works programme. It aimed to redistribute enormous amounts of wealth. To achieve both these desirable goals, it made a bargain with the markets. All right, the political left said, we will accept extremes of wealth we once denounced as obscene. With the City accounting for a fifth of the British economy, we will embrace your speculators and not drive them overseas with tough regulation. If the authorities overseeing the Wall Street markets or the Frankfurt bourse become too inquisitive, capital will always be able to find a sanctuary from scrutiny here. Nor will we restrict the operations of financial services even though they are entrapping our supporters in levels of debt that the puritan in us finds frightening. We will concede all this if in return you will give us the tax revenues that will allow us to build the new schools and hospitals, and increase the incomes of our struggling constituents. For all its virtuous intentions, the political left was living off the proceeds of loose financial morals. Prostituting itself, to be blunt.”
Obviously I come from a different political place than Nick but I think his argument is pretty solid. There’s little doubt that the government, unable or unwilling to address the problems affecting the rest of the British economy, indulged in regulatory and taxation arbitrage to keep and bring business to the City: look at how Brown was perfectly prepared to accept non-doms while the number of people being hit by the top rate of tax nearly doubled during his stint at the Treasury.
Where I would disagree with Nick—apart from on the desirability of increased state spending—is that I think the bargain was made with big business not the market. As the third runway at Heathrow debate has shown, is pro-business not pro-market.
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seb
January 25th, 2009 6:20pm Report this commentThat this would be the case was made clear to us by Labour itself when Princess Tony ascended the throne in 1997 with
the suddenly business-friendly Kirkcaldy Autist as the real power in the kingdom. The left has prostituted itself, as Cohen says, but the point is, surely, that the vast amounts of expenditure have either made matters worse - the Welfare Client population of Britain is larger than ever and even less employable - or they been almost entirely wasted. For example, merely the idea that the government should promise to rebuild EVERY SINGLE school in the UK ought, when it was mooted, to have rung the alarum. What matters is what happens inside schools and hospitals, not the precise date of their construction. Lord Healey's interview [with Simon Heffer] tells you everything you need to know about The Moron and New Labour. The government has twice the number of civil servants it needs, costing an astronomical amount in waste, and The Moron's recent tax change proposal to 'soak the rich' is aimed largely at keeping his core vote while alienating a much larger section of the electorate, the 'British' and the 'Middle England' Brown wants to help. The recall of Mandelson was, probably, ill-judged. That's autism for you, Denis.
That 'the left' dropped its drawers for the City and the financial services is perhaps only historically rivetting. To hand, though, is the immediate catastrophe that TweedleTee and TweedleGee have brought us to through Tax Then Waste. I am sure that New Labour, 'the party of the left', would have done exactly the same regardless of it's tart-client relationship with business.
Short the UK
January 25th, 2009 6:21pm Report this comment"...although Labour responded well to the crash, it cannot escape responsibility for failing to see the crisis coming and may well pay the political price for its failure."
Is he nuts? The ruling elite have made all the wrong moves, hence we are on the edge of bankruptcy. He is not being honest with himself, or he has not studied the Austrian School thoroughly.
I think Matthew Lynn sums up the response:
"In the last few months, the U.K. has been a lesson in how to turn a crisis into a catastrophe. Everyone knew its debt-fuelled, financial-services-dependent economy would need a painful overhaul to develop new industries. Instead, Prime Minister Gordon Brown has embarked on one last borrowing splurge. With the pound already in freefall, the U.K. will run out of money and have to beg the IMF for a bailout." 31/12/09
If the ruling elite had decided to go for an L shaped depression we would have kept "sound" money. Our elite have gone for a mad gamble on the A shape (Argentina) which will lead to a collapsed currency and inflation. We will get inflation + depression = Depflation. This will crucify the general public as we import so much of our goods (food).
I think it is quite clear that New Labour are bankrupting Britain.
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As to America it is ridicoulus to demonise Bush. Many of the architects of the regualtory system in America are in Team Obama: Summers, Rubin, Geithner, and others. Congress with Fannie & Freddie have a lot to answer for.
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In both countries it was a collective failure of the "elite" to sucker the public with cheap money and rising house prices. Bread and circuses.
This is not a market failure, it is a people failure. Boom & Bust. Greed & Fear.
The only sensible econmic group who will us get out of this mess is the Austrian School. They have the theories and the solutions. Do the elite have the cojones to deliver that medicine?
Oh, Vienna!
TGF UKIP
January 25th, 2009 7:33pm Report this commentA fascinating essay, James, which in some ways defines the Tory political task.
As the polls demonstrate, too many ordinary voters accept the spin and choose not to place the requisite amount of blame on Brown.
If the Tories can coherently distill Nick Cohen they should be able to stick it to Brown.
Wilhelm
January 25th, 2009 7:45pm Report this commentNick Cohen says ''Prostituting itself, to be blunt.”
So Gordon Broon is just an old hooker and trollop.
chiel
January 25th, 2009 8:50pm Report this commentSpot on. The end justifies the means in Brown's moral code. Flawed.
Blair-Brown embraced the market and big business. Brown for kudos/dosh. Blair for holidays and contacts for post PM phase.
molesworth 1
January 25th, 2009 9:17pm Report this commentI agree with your last point - what we have 'suffered' is not unrestrained markets, but corporatism.
THX1138
January 25th, 2009 9:33pm Report this commentMatthew Parris has the article of the week in Saturdays Times
http://www.timesonline.co.uk/tol/comment/columnists/matthew_parris/article5576222.ece
The quote of the year so far.
"This recession is not a failure of market economics. It is a reassertion of market economics"
He also said this earlier in the week
"I've never been a Bush supporter and would have voted emphatically for Mr Obama were I able to"
Still the best commentator to write for a British Newspaper & he has a 2hr 30min marathon something a 4 hr runner like me can only dream of.
John Moss
January 25th, 2009 10:10pm Report this commentActually, I think it is us who were being prostituted. They were pimping us and we are the ones who are getting screwed!
TrevorsDen
January 25th, 2009 10:28pm Report this commentComRes 15% Tory lead.
The point about NonDoms getting tax free status whilst ordinary - effectively working class - British workers have been stung by the 40% (+10%NI) tax band is a good one. You should be making the point in BLOCK CAPITALS every week.
I also suggest you start preparing the public for the next Labour initiative (nothing coming from this govt. now can be graced with the name 'policy') which will be to shower billions into marginal Labour constituencies in the guise of protecting 'key industries'.
Casper's Ghost
January 26th, 2009 5:16am Report this commentLabour does as Labour always does...ends in disaster in a manner even the most cursory observor can sit and predict.
Three periods of Labour rule..three periods of total devastation..each time the cords that bind this Island race loosen and fray.......when will we learn?
John Miller
January 26th, 2009 7:24am Report this commentI see from today's Times they are continuing to cancel public works programs (and remember those aircraft carriers?)simply because the money isn't there. The Treasury are "clarifying" the PBR (issued all of 65 days ago) saying that the projects it was referring to were a spot of painting and decorating here and there. What a much more entertaining document it would have been had it contained that sort of language.
Ray
January 26th, 2009 7:47am Report this commentIronically, with Brown's fiscal whoring about to go truly pear-shaped, it looks as if we 'struggling constituents' are not even going to get the new schools and hospitals, nor the 'increased incomes' now either.
Denis Cooper
January 26th, 2009 11:19am Report this commentNothing new here, really.
When Brown embarked upon the "prawn cocktail circuit" in the mid-1990's, that was a clear enough sign that Labour had decided to get into bed with big business.
The substance of the deal has been obvious for years - the Labour party uses governmental power to help big business, and big business uses its financial power to help the Labour party stay in government.
That's why so many of this government's policies have been distorted in the interests of big business, and against the interests of the British people.
Watervole
January 26th, 2009 11:51am Report this commentSpot on - we've been waiting for the media to dare mention this one for some time. This is probably the most right-wing British government since Cromwell. Those who were Labour voters have been abandoned - when they need help most.
Gordon Musgo
January 26th, 2009 1:08pm Report this commentCromwell right wing? Wasn't he a labour hero?
Rare Breed
January 26th, 2009 3:34pm Report this commentWhat a load of ....
They did over regulate/not under regulate. The market was not a "Free Market" it was controlled by govt.s and central banks. If investors could set their own rates by judging their own risk then do you think we would be here???
The market needs to correct itself quickly. The bail out is simply trying to do the impossible by fighting the price mechanism. All it will achieve is to rpolong the misery and people will be out of work for 5-10 years instead of 2 years.
Why are we copying Hoovers failed policies of the 30's depression?
A "fiscal stimulus" has never been effective, ever. Many examples.
If this is "new territory" then why try the thing we know to have failed in the past first? Why not try something that has worked in the past?
America and Europe are doomed. Buy gold now if you have savings because inflation is coming.
Adrian
January 26th, 2009 6:27pm Report this commentSold out by a tin pot dictor who is now saying its not my fault its american bankers whoever I can blame he and the rest of the parasites should be in jail but that doesnt happen in this country he sold our gold robed our pensions and ruined our lives
Chris paul
January 26th, 2009 8:51pm Report this commentDictor? Robed your pensions? Thick or drunk or careless?
John Wright
January 27th, 2009 10:14am Report this commentHow does one get a letter onto this page. I have sent numerous. Were they too offensive, irrelevant etc. I would value some feedback.
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