Governments and lawyers have gone on holiday. Investment bankers are heading off somewhere. In a week’s time, France will close down for a month. Nothing much is going on, but what is going on is thoroughly depressing. In the autumn, the world will get back to business, whatever that business is. The next few weeks are a good time for gentle rumination on where we go from here.
Most blogs or articles promote a point of view. Many of mine do. There is nothing wrong with polemicism in principle, if the pieces are well-intentioned and well-informed, and do not rely on casuistry for their effect. But what if one wants to write about subjects about which one feels ill-informed? What if one wants to ask questions to which nobody appears to know the answers? There is nothing wrong with that either. So this is the first of a series of pieces about government, economics and society that will offer no answers, or at least no easy answers, and will attempt to be open-minded and objective.
Except that no one can be entirely objective. I cannot pretend, for example, that I am neutral in the choice between democracy and dictatorship, or in the choice between a free-market economy and a state-dominated economy. This presents the first problem, since the solutions that most immediately occur to the questions I want to ask involve a degree of political and economic coercion that I (and probably most people) would not tolerate.
So I do not start from a blank canvas: life has already slapped on a great deal of paint over the years. I believe in democracy; I believe in free markets; I believe in social liberalism; I believe that governments should ensure that part of the fruits of increased prosperity are spread amongst the most needy sections of the communities they serve. This is hardly exceptional. It puts me within a broad swathe of opinion from centre right to centre left. However, it is precisely this swathe of opinion that finds it hardest to offer effective solutions to today’s problems.
In words attributed to Lord Woodhouselee, a Scottish judge and Professor at Edinburgh University, from about 1800: ‘A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority will always vote for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.’
The question is whether, and how, we can prevent this happening.
In Britain now, there seems to be a near unanimity that our public services are underfunded. Wherever one looks, there are severe problems for which the only solution is more money. It is time, we are told, to end the policy of austerity. But austerity is not a policy, and it is not something that either politicians or the electorate can decide to end. No doubt the Greeks would dearly love to end austerity but, vote how they will, they cannot achieve it.
Austerity is, rather, a reflection of a state of affairs: that the country’s reach exceeds its grasp. We want more, both for ourselves as individuals and for our public services, than our economic performance and our tax revenues have so far been able to deliver. And we want it now, whoever pays for it. We can abolish the word ‘austerity’ if we like, and the government probably soon will, but we cannot abolish the reality it reflects.
This state of mind has now existed for many decades, not only in Britain. When it is exacerbated, as it was in 2008, by a devastating economic collapse, the gap between expectation and reality widens enormously. It would appear that there is a limit to how long an electorate in a democracy is prepared to put up with this. The last recession is over. Let’s spend some money before the next one comes.
Blaming the voters for this attitude is pointless. Voters are quite capable of electing governments that will splurge money they have not got on public services. Besides, we have all been brought up to believe that we are living in a country that, with occasional short exceptions, gets more prosperous each year, and us with it. Now, however, most incomes have been little better than static for a decade and, as inflation starts to rise, many people’s living standards will fall. Of course people are disillusioned.
We are not interested in politicians who say nothing much can be done about this. Or in economists who explain the theories behind it. Or in subsequent historians who may (or may not) describe this as an anomalous period of time. We are not politicians, economists or historians. We are people who happen to be living now. These are the only lives we will have. And we don’t want to spend them thinking that it’s never going to get any better than this, no matter that ‘this’ is vastly better than anything most previous generations knew.
Instead of blaming people for these attitudes, a government can do one of two things. It can educate people so that they have a more realistic appreciation of what is possible. Or it can try to deliver what people want. Hardly ever has a government succeeded with the first approach in peacetime. Margaret Thatcher managed it after 1979, but – for all the mythology that has grown up since – no one can say whether she would have done it without the Falklands War and without Michael Foot. The need to educate remains, but the only compelling teacher is reality, not any government. The need to deliver also remains, but that can end in tears and often has.
We are told constantly that the best means by which a government can spend more is to encourage faster economic growth. Failing that, it can tax more, it can print more money, or it can borrow more. In my blogs in the coming weeks I will examine each one of these options. On all of them, my instincts run with the orthodoxy that they are, respectively, desirable, counter-productive, dangerous and irresponsible. But in that case the only choice is to sit back and hope for economic growth. Which, with Brexit looming, does not look like a very safe bet.
With all the other options, however much one is preconditioned to doubt and reject them, there is enough contrary evidence to approach them with an unjaundiced mind and to ask some questions. Questions that I will not be able to answer, but shall ask nonetheless.