Riot Shields, Voodoo Economics

Friday 30th April 2010

I think that the upcoming election has the potential to be a really significant moment for our political history. For a whole host of reasons, we look set for a hung parliament. If that happens, then there’s a real chance that we could finally get electoral reform, which would significantly change the political landscape in Britain.

If you ask me (and you’re reading my blog, so I’ll assume you are), this can only be a good thing. I think that a lot of people are fed up with the way things are. Numerous scandals have shaped the perception not just of the governing party, but of the entire system. In the past, I think that people fed up of Labour would’ve voted for the Conservatives. But now people seem to look at the opposition party and see more of the same, despite the “change” narrative that the Tories have been trying to desperately to create. People want change, but they seem to have woken up to the fact that the Conservatives can’t deliver it.

Whatever happens, it seems extremely unlikely that Labour can win this. Which I also think is a magnificently good thing, because I think that the last decade has shown that a Labour government is a very bad thing indeed. To understand why I say this, you have to look beyond their rhetoric (“A Future Fair For All”. Isn’t a future that is fair, by definition fair for all? Because if it isn’t fair for all, then it isn’t fair) and focus on their record. I don’t really believe that you can focus too much on their policies, because experience has shown us that they don’t always stick to their policies…

One of the main reasons I dislike Labour is for the damaging restrictions they have placed on civil liberties. For instance the Regulation of Investigatory Powers (RIP) Act. As a result of this law, the government has the right to snoop on, well, anything really. And they have the right to demand that you unencrypt any encrypted information, or even to simply pass over the keys. Or, there’s anti-terrorism legislation, which allows them to indefinitely detain foreign nationals in the UK – without trial – if they are suspected of being a threat to national security. But it’s much better for British citizens, because we can only be  locked up for 28 days (although Labour wanted it to be much longer than that initially). Other gems include the DNA database which contains data of completely innocent people who have never been accused of crimes (I think this was declared illegal by the European Court of Human Rights, but of course the data hasn’t been taken off the database yet), the proposal of ID cards, and of course the Digital Economy Act, which I shall revisit later.

I hope I don’t need to explain why any of these are Bad Things. To be perfectly honest, I am quite at a loss as to how anyone can support a party who has eroded civil liberties in this way. In my opinion, even if I agreed 100% with everything else that a party proposed, if they also supported this sort of attack on the liberty of individuals then I could never support them; I fully agree with Benjamin Franklin that “they who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety“.

Another reason why I think it would be undesirable for Labour to win the election is because of their poor economic record. Now I don’t deny that we have had good years – low unemployment, relatively high levels of income etc. But in the first half of the 2000s we were living in a global boom. Britain has a fairly strong underlying economy (i.e. good access to resources, and a relatively skilled population), so I think it would’ve taken a complete moron to make things worse during the good years! But looking at it like that masks a few problems. Because in the last few years the global economy has obviously had some difficulties, and the British economy has suffered as a part of that. Now, just as I would argue that Labour can’t take all the credit for the good years, they certainly can’t take all the blame for the downturn of the last few years – it’s a global market and our economy is vulnerable to problems in others, and no government can really stop that. But Labour can take some of the blame for making it worse.

In the years prior to the downturn, Brown was chancellor. During his time in that job he continually spent more money than the treasury took in tax; he took on a lot of debt and built up a large deficit (as an aside, much of the reason for this spend was pure politics; it makes the Labour government look good if they can announce lots of spending on hospitals and schools and things like that). Now, running up some debt isn’t necessarily a bad thing. Of course it’s a bit of a con, because for absolutely anyone the result of borrowing money means that you have less money to spend in future (governments can raise taxes, but taxes are generally a thing to be avoided where possible), but I accept that this sometimes can be desirable.

The problem is when the deficit is too large. And by spending too much in the boom years, Brown set the stage for a very large deficit indeed. Because when the downturn did come along, the right thing for the government to do was to spend some money to help the economy – “some ol’ fashioned Keynesianism” as Andy put it on a comment on one of his recent blogs. In a downturn there is a good argument for runing up a deficit in the public finances because by spending money the government can help the economy to recover more quickly and with fewer adverse consequences (i.e. lower unemployment) by replacing at least some of the demand which has disappeared due to the recession. It’s better to have a recovering economy and a certain level of public debt, instead of flatlining economy with no debt.

But our problem is that we already had a lot of public debt. We already had a large deficit. Which means that now, we’re a bit screwed. Because whatever happens, public expenditure has got to be lowered, or taxes raised (and I think the idea is that it’s better for public expenditure to drop, rather than to raise taxes). I think that every party acknowledges this even if they are rather quiet about how they would achieve it, so it’s rather unfair to criticise any of them for saying it. The key thing to me isn’t that the parties say that cuts need to be made. The key point is that the reason these cuts need to be so drastic is because of the irresponsible spending of the Labour government over the last decade or so.

Gordon Brown as chancellor said in 2004 that “I want us to do even more to encourage the risk takers”. He boasted of his “light-touch” when it came to regulating the banks. Well, the banking crisis in 2007 which precipitated the whole downturn was caused (in part) by banks engaging in risky deals, as well as by under-regulation of the banks. The two things that Brown encouraged during his chancellorship! Do we really want someone with such economic acumen to continue to be Prime Minister of the country? Especially at a time when it would be desirable to re-shape our banking system to make it more robust, less prone to catastrophes like this, and to lessen the vulnerability of ordinary consumers and businesses to the effects of bank failures?

During the last debate, I found it telling the way that Brown continually referred to tax cuts as “taking money out of the economy”. Now, just stop and think about this. If you earn money, then you pay a certain amount in tax. And what do you do with the rest of it? Well, you either spend it for things you want or need, or you put it in the bank and save it (and the bank then gives it to other people in the form of loans). To put it simply, this is the economy. The economy is you and me going to the shops and buying things. If lots of people buy things, we have a strong economy and we get richer. If people don’t buy as much, we have a less strong economy and we can get poorer (a recession, in other words). When Gordon Brown says that the Conservatives want to “take money out of the economy”, he actually means that they want to take money out of government. They still want to reduce the deficit, but they believe that it is better for individuals and businesses – you and me, in other words – to have money rather than for the government to have it. Whether this is a good or bad thing is an argument for a different post. Suffice it to say that, in my opinion, the implicit idea in Brown’s statist viewpoint that “government knows best” is extremely undesirable. I accept that there is a need for taxes (as there is a need for government), but I think it’s better for everyone if that government is less paternalistic and therefore less expensive, and I believe that individuals – as well as the economy – are better off if taxes are lower.

As an aside, Labour’s tax policy has hardly been “fair for all”. Over the last 13 years, the outcome of policies like the removal of the 10p tax band and the refusal to increase the personal allowance in line with inflation is that the poorer members of society pay proportionately more tax than the richer ones. Fair?

Anyway, I’ve stated my opinion on the Labour party’s statist attitudes, but do they actually work? Well, over the years that schools and the NHS have been centrally-managed by government, the results haven’t exactly painted a rosy picture. The NHS has apparently got better, but given the massive amount of investment that it’s seen during the last decade or so (and that’s obviously to be applauded, to a point), it would be bizarre if it didn’t improve. And it’s questionable whether the improvements have been in proportion to the spend. Certainly, there seems to be a layer of bureaucracy in the NHS which must be incredibly costly, as well as impede the ability of the service to function effectively.

In my opinion, the picture is more clear-cut when educaton is considered. Despite a heavy amount of government involvement (6 education acts in 13 years!), standards seem to have fallen. I heard a teacher being interviewed not long ago and she was asked what government could do to make things better. Her response was for them to “stop changing things”. She said that schools would take a year or so to get used to the new systems and whatnot implemented by the government, only for them to be completely changed again after a relatively short period of time. With this level of instability in the system, it’s perhaps not surprising that things haven’t got better. Additionally, the system seems to be more unequal now than it was before Labour came to power; children from better-off families do better compared to children from poorer families, than they did before. I would argue that this is a by-product of the inherent inflexibility of the Labour “system”. So it certainly seems quite clear to me that Labour’s brand of statism just doesn’t work, despite their best intentions.

Don’t just take my word for this. Lucy is much more informed about education matters than I am, and she made the point much more elegantly than me on a recent post on her blog: “Teachers up and down the country have been wringing their hands over the past thirteen years of heightened pressure, targets, and interference from a government that essentially hasn’t trusted them to do their job properly”. If only the “light touch” used with the banks that Brown was so boastful of was used here – they got it all the wrong way round!

I mentioned the Digital Economy Act earlier and said I’d come back to it. For me, it’s emblematic of everything that is wrong with Labour (and to an extent the Conservatives, to be fair). I was disgusted at the fact that this was passed. Not just because it’s a bad law (which it definitely is), but for the way it passed. For starters, the bill was influenced by certain record labels. It is in their interest to get a law like the Digital Economy Act passed because it helps them cling to an outdated business model which makes them shedloads of money. To spell it out, it’s not in the interest of consumers, or even artists. It’s purely to benefit a bunch of very rich people who want to retain the business model which made them so very rich. Their money bought them power, and I can’t support a government that let itself be swayed by the smell of money.

In addition, there is the way the bill was forced through parliament. There was something like 2 hours allocated to go through and debate the bill line-by-line. Purely because Labour wanted it pushed through parliament before it was dissolved, they allocated 2 hours to debate a lengthy and contraversial piece of legislation. In my opinion, that shows the level of contempt in which the public are held by Westminster. Not just by Labour – the Tories were in on it too. The fact that the interests of the wealthy “elite” quite clearly came before those of everyone else is just disgraceful.

Anyway. Those are some (!) of the reasons why I couldn’t support Labour, and why I think you’d have to be a bit mental to do so (granted, some people may have more faith in the state than I do, but emphasis on the word “faith” there – that mindset seems to require one to ignore what we’ve learned from the past 13 years…). I’m not going to write a similar post for the Conservatives because the people who are likely to vote for them are unlikely to be swayed by anything I could say, and besides I don’t think they’d be as damaging as a Labour government would be. I’ve already cast my vote (postal vote) for the Liberal Democrats, and rather than explain why I direct you again to Lucy’s blog, because she’s summed it up rather well (and probably rather more concisely than I would manage).

All that remains to be said is that whether you agree with me or not, as long as you’ve registered in time, have a read through the various manifestoes (and also read a few news sites for some analysis of them – some of the blogs on the BBC site are particularly good) and make sure you go and vote next Thursday!

Posted at 12:54 am | Posted In: Politics Tagged:



Friday 30th April 2010, 12:56 am

This post is rather more verbose than I intended – 2482 words!


Friday 30th April 2010, 1:16 am

In an extremely minimal defence of Brown, I think you were being misled by his poor communication skills; he’s not worried by the Tory NI cut (I cannot stand that “Jobs tax” branding Cameron insists on using) but by the Conservative plans to cut spending immediately rather than next year. I think that the Lib Dems and Labour have called this one right; in the long run, cutting this year or next has little effect, but cutting next year could risk prolonging the recovery, or even causing a mini-recession. I think it’s possibly the only really compelling point he made; that the Tories are taking an unnecessary risk for ideological reasons.

Anyways, doesn’t alter your basic thesis; Brown totally screwed the pooch. Poor bastard had started to believe his own “abolish boom and bust” propaganda.

You’re also right about the state centralisation; I read a rather astute point in the Times or something that the problem with New Labour is that it retains all the worst qualities of old Labour, like centralised state control bullshit, but has largely lost most of the good things, like the commitment to actually help the poor and the working class.


Friday 30th April 2010, 2:26 am

Oh yeah, I agree that Labour and the Liberal Democrats have called it right (well, from what they’ve told us – the article by Stephanie Flanders that I linked to in the post is pretty interesting on this). But his insistence that cutting taxes “takes money out of the economy” is a pretty basic economics fail, for the reasons I gave in the post. I’m not sure it is just down to his poor communication skills, because it’s something I’ve heard before from Labour, or at least from Labour sympathisers. Even if it was just miscommunication, I reckon it’s a slightly telling one (not that anyone will have been massively surprised to learn about Brown’s statist ideology…)


Friday 30th April 2010, 9:16 pm

I cast my vote earlier today.

The entire education curriculum (as far as Primary and Secondary) needs changing. That teacher is right and it’s a complaint of many teachers I’ve talked to…they get used to one new change and a half dozen are shoved their way. As much as I love teaching I don’t look forward to having to constantly adapt to some new policy which will either a) reduce our creative freedom or b) force us into early retirement.


Wednesday 5th May 2010, 1:03 pm

On the contrary, I think that cutting taxes does remove money from the economy. Not the entire percentage of the tax cut, sure, but one of the most common things people do when they have some spare cash is go on holiday, and remove money from the economy. It’s nowhere near as cut-and-dried as Brown made it out to be, but it is definitely an effect.


Wednesday 5th May 2010, 1:38 pm

I don’t really understand your point. You’re saying that if people have money (instead of the government), then they will spend that money and therefore it’s not in the economy? Even if they spend it abroad, that’s still in the economy (especially if they go to Europe), and if it provides people in that country with more money then they might use it to buy our goods and services. And do you think that government never spends money abroad?

In both cases the money is still in the economy, just in different ways. I think it’s better for it to be privately held; I think that for most people, it makes more sense for them to keep the money they earn, rather than to pay taxes and then get some of it back from the government.

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