Gordon Brown: I actually think that the first thing that we’ve got to do as a global community—and I said it this morning and I’ll say it again—is that the reforms of the global financial system are not complete. As far as Britain is concerned, we are dealing with a one-off hit as a result of globalisation.
FN: Let us pause, here, to consider the brazenness. Brown’s policies pumped the UK economy up with the steroids of debt. The banking collapse hit us harder than any country because he took the wildest risks. But, to cover that up, he repeats the claim that he first made in interview with FT a few weeks ago: that this is “one-off” adjustment. Brown never says anything just once – he’s a wee tartan robot, who keeps coming out with the same Brownies, time after time. Rest assured, you’ll hear this “one-off” claim again, from Brown’s mouth or Balls’s, pretty soon.
GB: We’ve just experienced the first crisis of globalisation. It is not the usual type of recession that we’ve had in the past which was inflation-driven. Interest rates had to be high, you couldn’t get out of the recession quickly because your interest rates were still remaining high. We’ve got the chance of going for growth out of this recession because interest rates and inflation are low.
FN: Observe the master of deceit at work. Inflation-induced recessions are relatively easy to fix. We’re now in a debt-induced recession, vastly worse. To fix this requires deleveraging – a painful process which can knock a country out for years, as Japan found in the “lost decade” which followed its 1990 collapse. Yet no-one is pointing this out, so Brown sees his opportunity: to portray this debt-induced recession as somehow more benign because rates are at Japanese levels. He is getting away with economic murder.
GB: Every country has had a build up of debt as result of the recession, no country has been immune from that requirement to add to its debt and every country is going to suffer a one-off rise in their debt levels that has got to be dealt with over the next few years.
FN: Yes, indeed. But let us look at how much these countries increased their debt by. Woooh, wait a minute, I just fell into one of Brown’s “verbal snares”. We’re not talking about a country getting into debt, we’re talking about governments saddling their people with debt. So, again, let us see how much debt the governments of various countries saddled their people with:
GB: I happen to think that our deficit-reduction plan over the first four years of halving the deficit is probably the most ambitious of any of the G7 countries.
FN: Brown has given himself seven years to get the public finances back in balance (he last balanced the government’s books in 2000/01). I know of no country with such a leisurely timetable. Again, observe the power of his spin. When he talks about halving the deficit by 2015/16, this is made out as some great national achievement. The PBR before last said (p190, here) that they would “eliminate the deficit on the current budget by 2015-16”. To downgrade this aim, from abolishing it to halving it, is a deplorable lack of fiscal discipline. But Brown uses rhetoric to suggest the reverse.
I suspect Brown’s aim is to exploit the lack of understanding of “debt” and “deficit” – a notorious blind spot in journalism (the BBC gets the two mixed up all the time). When he says “I’ll halve the deficit in four years” he wants people to hear “I’ll halve the debt in four years”.
The Economist: One criticism that was made of New Labour, as a political philosophy, is that it was a fairweather creed, it was a “have your cake and eat it” form of government in which a booming economy and tax revenues allowed you to…
GB: Hold on. It was the other way round. The criticism that was made of Old Labour was that it couldn’t manage the economy.
FN: And, looking around us, who could say that now, eh?
GB: The recognition that happened after 1997 was that the economic competence with which we manage the economy allowed us to have ten years of low inflation, low interest rates and high levels of growth and employment that weren’t wholly dependent on the financial sector. And then we were hit, like every other country, with a global financial crisis.
FN: Again, amazing. I think Brown’s first step is to convince himself of this bogus narrative, then talk about it matter-of-factly.
GB: Now your assumptions in every question that you’re asking was, did we run too high a level of debt prior to the crisis? The answer is that we ran one of the lowest debt levels of any of the G7 countries.
FN: The Brownie here is to give only one definition of “debt” – that of UK government debt. It was the lowest in the G7 when he entered the Treasury. But his trick was to have households borrow, with artificially low interest rates, which blew an asset bubble. Household debt in Britain, as a ratio of household income, was not just the highest in the G7 but the highest any G7 country has ever seen:
GB: So I think what New Labour has shown is, first of all, you can run an economy based on a strong policy for monetary independence, which was the Bank of England.
FN: Funny he should boast. This was the root cause of the recession: the BoE was told to chase only inflation rates, rendering it blind to the debt bubble and asset price bubble. But Brown, in his analysis now, is also blind. The Tories lost the chance to talk about a debt/credit bubble, so there is no rival analysis out there.
GB: Secondly, you can run a strong economy based on public-private-partnerships and instead of this sterile battle for territory between public and private sectors that we saw for the last fifty years, [we have] public and private sectors working together.
FN: An economy? Brown used PFI to conceal debt – nothing more, nothing less. And it was a means of paying for infrastructure contracts, not of running an economy.
GB: But of course the new lesson that I think everybody’s had to learn from the crisis is that what was implicit about the values that underpin the public and private sectors has got to be made explicit. What I mean by that is the values of enterprise and hard work, of taking responsibility and not taking reckless risks and not acting in an irresponsible way.
FN: Irresponsible way? What, like gearing up the UK economy and disguising it as growth?
GB: These are the values that have got to underlie the banking system as well as the political system. I think what has always been implicit in everything that we talk about as individuals when we have a conversation about the banking system, or the political system, I think it was always understood that when you analysed it you had to have it based on values, on clear principles. Now we’ve had to make it explicit because of the level of irresponsibility that existed both in the banking system and, as we saw at times, with the political expenses crisis in the Parliamentary system.
FN: He personally designed the banking regulatory system. He bears, quite literally, more responsibility for this crash than any other person living in Britain.
The Economist: The question that people ask is: looking at the results you’ve achieved so far in Government, you are asking for a fourth term, which is an enormous thing to ask the British public for. People wonder-without casting any aspersions on your intentions-perhaps the results have not been so stellar to have justified such an extraordinarily long time in office.
GB: I would call this the first election of the global age. I think you are talking about uniquely new problems that governments are having to deal with. If anybody had said in 1997, we are going to create an economy where there were two and a half million more jobs, even after the recession, than there were in 1997, very few people would have believed that We didn’t [dare] to guess that. So there are two and a half million more people in work than in 1997.
FN: Great news for the unemployed of Gdansk. As it stands, there are fewer British-born people employed in the private sector now than when Brown came to power. I will stop here. The Brownies are simply overwhelming. This is, of course, how he operates: he keeps going, lie after lie, Brownie after Brownie, until journalists get bored of contradicting him; so when the campaign is in full flow, he can spout his deceitful nonsense without being contradicted by anyone – not even the Tories. I like to think that the blogosphere will tap into people with greater reserves of energy and perseverance.