Tuesday, 27 January 2009

Drifting down and down

In the dying days of the last Conservative government I remember two major concerns being expressed regularly by people I met. One was that the government had just been in power for too long and it was time for a change. The other was that they had run out of ideas. The first is, I suspect, a very British thing: "take it in turn children, let everyone have a go on the see-saw". In order for a child to be able to take his turn he has to be around when it's seat-swapping time and so it is in politics. It was probably time for a change in 1992 but no other children appeared remotely suitable so Mr Major carried on for another five years. The second is more interesting to me because it certainly matches the situation we have in this country today and the situation seen in America under the recently departed President Bush.

Running out of ideas is an inevitable consequence of having to run for election on a platform of policies. Almost all governments have done everything they set out to do by the time they have served about eight years. Maybe it was beneficial, maybe it wasn't, but it was their agenda and they exhausted it. Any new major policy moves necessarily require them to reverse something they staked their reputation on in the past and, as such, they are politically impossible. Even if the Prime Minister and cabinet have the strength to say "we're sorry, we introduced it in good faith believing it would work, but we were wrong, it hasn't worked and so now we will change it", their judgment is undermined. Fewer and fewer people will believe they can get it right a second time having spent years formulating their initial policy and then millions of pounds putting it into effect. In the world of practical politics, reversing a long-standing bad policy can only be done effectively following a change of government.

When you combine the political difficulty of reversing a failed policy with a stubborn refusal to admit it has failed, you get to the position this country is in today. The government simply does not have an agenda for the future other than to carry on as before. This was part of the problem for John Major's government in the late 1990s. Although they eventually got the economy onto its strongest footing since the war, in social policy they were stuck in a rut. Having introduced needless additional bureaucracy into the health and education systems they seemed unable to remove it, leading to too little of the budget being spent on improving patient care and schools. By 1997 they had had their chance and, despite making vast improvements to the country as a whole, there did not appear to be a new agenda for the future. New policies were little more than gimmicks, just as we are seeing today - doing things for the sake of appearing busy.

There is another aspect to stale government and that is the sense of aimless drift, the sense that the government is no longer in control of events but is being led by events. No doubt even new governments are led by events far more than they appear to be because they are not hampered by an established position and can make changes to their plans before they implement them. It is put down to policy development rather than policy change. Once put into effect, however, their position is established and any further change reeks of indecision and bad judgment. In the early years this is much easier than when they have been in power for a decade because they still carry goodwill and can argue the policy is still under development. As I mentioned above, once the reversal of policy becomes politically impossible the whole process of government drifts and leadership can no longer be portrayed.

This does not need to be so in all areas, however. It seems to me that economic and social policy are subject to different political pressures. Social policy is more concerned with value judgments than hard facts. It is based on ideals more than practicalities, which tends to result in overstatements and false assertions of certainty. When they do not bring about the promised result not just the judgment of the government comes into question but its whole philosophy. There is virtually no scope for admitting failure and reversing what has been done, instead bad policies are reinforced by more laws trying to force the pace and more money is pumped into the same black hole with promises that it will work if given enough time and cash.

Economic policy is far more fluid because the government has no option but to change course and introduce new measures when things change. The cost of not doing so is immediate and can be devastating so there is scope for practicalities to override stubborn idealism. Although the Major government appeared very stale it was still able to charter a course for the economy that was hugely successful. Of course they had no option but to make radical changes following the disaster of joining the European Exchange Rate Mechanism in 1990 and having to leave it in 1992. No one could doubt that they had a strong economic strategy despite being in a state of terminal decay through staleness in other areas.

What is so extraordinary about current events is that the government appears to have no economic strategy despite facing ruinous economic conditions. They tell us to save and spend at the same time, they tell the banks to lend and not lend at the same time, they want to keep house prices high but without the 100% no-questions-asked mortgages that caused excessive prices. On every major aspect of the recession they are putting forward mutually inconsistent arguments and backing each of them with money they don't have. There is no sign of a coherent strategy or, in truth, even an incoherent one; there is just no strategy at all.

President Bush was not just discredited by the folly and cost of Iraq and held responsible for the collapse of banks. For several years his administration lacked direction. Although he secured reelection in 2004 that seems to me to have had more to do with continued goodwill following the New York bombings and a pitifully weak opponent in John Kerry than it did any substantive strength in the Bush Presidency itself. There was no evident strategy left in his administration on any major policy field by the end of 2006.

Having no economic strategy during a recession is a dangerous thing. I have severe doubts that governments can affect the length or depth of a recession to any significant degree by direct action. Even if their attempts to cushion the effect of recession by mis-named "stimuli" have the desired effect it is impossible to judge whether the long-term cost of such measures outweighs the short-term benefit. What government can do is something every good manager can do, it can give leadership and instill confidence. Appearing to have no plan and to be reacting to events rather than influencing them makes those who (rightly or wrongly) look to you for leadership to feel cast adrift. A lack of confidence in the economy is exacerbated by a lack of confidence in those charged with improving matters because it has the knock-on effect of making people even more wary of spending or investing and so recovery is delayed. If today's announcement about motor manufacturing (about which more later) is anything to go by the lack of strategy is not likely to change.


Mark Wadsworth said...

"I have severe doubts that governments can affect the length or depth of a recession to any significant degree by direct action."

Beyond providing a basic framework of law and order and welfare provision, governments only ever make things worse. They cannot actively 'shorten' a recession, they can only extend it into a depression, the best way to get it over with is to Do Nothing, let the bubble collapse as quickly as possible, pick ourselves up again, learn some lessons and start again.

Anonymous said...

is´nt it time for the dum diddly_dido hinterwalder to seize the fucking oportunity to sieze his land back and fucking make the island empire?????
with the woman i love?
we are a brutal people!
run by fools!
oi plod! soldiers know?

Anonymous said...

I agree with Mark, let the resession take its course, simply chucking money at is is only going to lead to higher taxes in the long run, and for what ?

TheFatBigot said...

As you know Mr W, I have some sympathy with the idea of government spending being able to cushion the blow.

You are I both argue for tax reductions. Were they to happen now (yes, let's dream for a moment) one consequence would be that some people would spend some of the additional cash. And one consequence of that is that some businesses would keep afloat rather than sink and some employees would be retained rather than laid-off.

If, as I believe is the case, spending by individuals can reduce the depth and length of recession, so spending by government must be capable of doing the same.

The big difference between individuals spending and government spending is that we will always pick winners. By definition they are winners - we have chosen to pay them because they provide what we want and need. Government might pick a winner by chance, far more likely that will pick losers in order to buy votes in marginal constituencies.

Rob said...

Given that government policies and ideas are invariably disastrous, perhaps the party with no ideas would form the ideal government?

In the spirit of Lord Liverpool's "Ministry of all the talents" we could name it "Ministry of least harm".

Idle Pen Pusher said...

"What is so extraordinary about current events is that the government appears to have no economic strategy despite facing ruinous economic conditions."

Wouldn't it be bliss if they didn't have a strategy? It strikes me not only do they do indeed have a strategy, but they have several...

Anonymous said...

I'd immediately vote for any party whose manifesto was, "We're not going to do anything, in fact, we're going to bin most of the stuff set in motion by previous governments. Our stated policy is to fling bureaucrats and quangocrats out on their arses, to stop interfering and stop making promises your money must pay for."

Then I woke up and it was time to go to work.

Mr said...

Toad Stomper - try http://www.lpuk.org/ (site is down at the minute but should be back up again at some point.