Running the national economy is like driving in a motor race. Except that you are four inches tall. You don’t know where you are and you don’t have a map. There are lots of pedals, but you don’t know what they are supposed to do. When you press them, they sometimes make the car lurch around unpredictably, sometimes just blow out air or wipe the windows. The other drivers don’t agree on the rules. Some of them seem to be playing Grand Theft Auto.
Oh, and by the way, a couple of other guys are fighting you for a share of the controls. And just one more thing – You are on the stage, with an audience of sixty million! Fortunately, perhaps, most of them can’t be bothered to watch.
So what sort of game is this? Can we look at it objectively, as a game theorist would do, and work out how best to play it?
Well, first of all, playing it straight is obviously a mug’s game. The chances of genuinely sorting out the economy by making the right move, at the right time, for the right reasons, look pretty slim. How often has anyone really done that, and made it up onto the victor’s podium? Not since Roosevelt…
Playing to the gallery looks a much smarter idea. There are loads of simple crowd-pleasing manoeuvres you can try. Like revving wildly and making a big noise; or deflating your opponent’s tyres; or, purloining the winning post and erecting it alongside your car….!
Now kiddies, let’s watch as today’s racing politicos put these clever ideas into practice. When Brown says “I am applying Keynesian economics to create a fiscal stimulus”, he knows it sounds more prime-ministerial than “Gosh, we’re skint, can anyone lend me a quid?” When Brown calls for “globally coordinated economic policies”, it sounds better than saying “I am standing in deep doo-doo. Please join me so that I won’t look so conspicuous!”
While Brown struggles to scrub himself clean, Osborne dishes more dirt. “I fear a run on the pound” can be translated as “I hope Gordon’s going to trip up, especially when I stick my foot out.” Whereas “We cannot promise tax cuts in the current economic climate” means “We’re going to sit on the fence, and blame Gordon for putting us there!”
To be serious though, Labour do have a viable strategy to garner good publicity out of economic mayhem. Equally, the Tories realise that it is crucial for them to scupper it. The Achilles heel, for both of these strategies, is that they are so strongly partisan. So, our opportunity is to be the people who tell it like it is, who say things which the independent commentators won’t rubbish, and who gain public trust and respect. That is what Vince does so well.
Crucially, Labour and the Tories also understand the vital need to look deeply serious, to pretend to a depth of expertise they do not have, and to seem to empathise with a worried public. How do we rate?
Well, our tax cuts for the less well off are certainly popular. So is getting tough with rich bankers. But we fall short, I suggest, on three counts.
We are over-complicated. We have two intertwined stories involving tax switches and expenditure switches, and we have rushed to provide an unnecessary piece of quantification – the famous £20bn of government waste – which everyone knows was just plucked out of the air. Let’s hope we don’t dig this hole even deeper when we try to specify the waste.
We sneer too often. Look at Clegg’s recent PMQ jibe at Brown for taking “credit for a bank rescue plan that he copied.” Except that Brown (who bought banks) didn’t copy Paulson (who bought up debt). Many commentators gave Brown credit for the better plan. Does Clegg suggest Brown should have told them they’d got it wrong?
Finally, in place of empathy for the victims of recession, too often we just blow our own trumpet. Hard. “Consistently ahead of the curve” and that sort of thing.
Barack Obama showed us how to be positive without resorting to empty bombast. When he says “Yes We Can”, he brings everyone inside the word “We”. Obama represents the new politics – cool, positive, unifying. We have to get away from being the old politics – divisive, self-absorbed, over-combative, and under-supported.
* David Allen has been a Liberal Democrat member for 27 years, and was until recently chairman of the Rushcliffe Local Party.
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17 Comments
“We are over-complicated. We have two intertwined stories involving tax switches and expenditure switches …”
Don’t forget the other two stories – abolition of council tax and its replacement with a local income tax (which implies a rise in income tax similar in size to the 4p cut, if I remember correctly), and now short-term borrowing to fund capital expenditure, which has apparently been conjured up over the last couple of weeks.
Surprisingly, there seems to be the prospect of a clear difference developing between the government and the official opposition – tax cuts for the low-paid funded by short-term borrowing on the one hand, and opposition to the same on the other, coupled with warnings of a future Labour tax bombshell to pay for it, with Tory cuts in (projected) public spending as the alternative.
What the party leadership urgently needs to do is to work out a credible, distinctive and popular answer to the question of where the Lib Dems stand in that argument, that it can project in place of the current mish-mash.
Rooseveldt? Are you kidding? If there is a more textbook example of how using Keynesian principles and political meddling can turn a recession into a decade-long depression I don’t know what it is. It took World War II to dig America out of the mess of the New Deal.
The problem we face is that, just as the other two parties are finally adopting our policy of tax cuts, we have joined them in their policy of bail-outs to failed banks and further inflation to restart the economy. Ergo, everybody is dancing on a pin-head again.
We should have been distinctive by not pandering to the bankers who told us that the world would end if we didn’t let them put their money into the taxpayers’ pockets.
“…hands into the taxpayers’ pockets.”
(An example of how typing in anger can lead to mistakes that totally change the meaning of a sentence!)
The story we have to tell on what economic policy should be now is very good indeed. So is our background on saying what was wrong earlier.
David Allen is right. The effort needed is in simplicating the presentation – tell anyone who wants to tangle with the detail where to look it up, and leave it at that – and letting our natural added empathy come through.
Incidentally. Compass have a good thinkpiece up on what is unfair about Labour’s tax record.
I’ll try and post this comment again ;)…yes I think you are right David and I think this is why while we maybe saying many right things we simply are not getting hardly any credit for it in the polls.
I agree with CCF that there is a clear difference between the two parties and this will make the next election bitter and partisan. Within that we are going to need our own narrative and we cant simply say; ‘Vote Labour or Tory, whats the difference? we are the only fresh thing on the menu’ etc,etc
A. 15% VAT and 15% Income Tax – with starting rate pegged to annual f.t.e. of NMW.
B. 1% Credit Creation Charge on banks (post-crunch!) in lieu of corporation tax.
C. National LVT, precepted by LAs in lieu of Council Tax and Business Rates. (LIT ditched!)
Roosevelt won through propaganda, not through providing a solution.
His policies deepened the recession as well as including policies like propping up big business, trying to destroy small business, sanctioning the killing of trade unionists by the police and restricting strike action and banning free trade unions (whilst ensuring the unions allowed were tame company unions with close ties to management).
He made a situation made bad by the interventionism of Hoover even worse with more interventionism and attempts to micromanage the economy.
It was not however WWII which got the US out of the mess though, that is an application of the broken window fallacy, it was the eventual readjustment of the markets which started before WWII.
As for the main content of the article – yes, our policies are too complicated, probably a side effect of wanting to satisfy all comers (and ending up satisfying nobody).
“As for the main content of the article – yes, our policies are too complicated, probably a side effect of wanting to satisfy all comers (and ending up satisfying nobody).”
I think it’s clear that there’s going to be a bitter battle between Labour and the Conservatives, with the former being attacked for increasing borrowing and the latter for planning public spending cuts.
As a party advocating both increased borrowing and public spending cuts, the Lib Dems seem to have positioned themselves excellently to attract fire from both sides!
Well I tried to demonstrate the farcical side of all this, but clearly I failed. Cameron has now reversed the tax cuts that Brown has not yet implemented! You couldn’t make it up….
I agree that liberal policy is too complicated, but it also lacks credibility, coming from the party that has consistently argued for higher taxes. Indeed the liberal party still argues for higher taxes – but only for the rich – like firemen and head teachers.
And the liberal party will never be cool like Obama; indeed, even Obama will not be cool like Obama for very much longer.
Ps when Clegg accused Brown of copying his bank bailout plan, he was referring to Swedish action on bank reconstruction in the 1990s not Hank Paulson.
“What the party leadership urgently needs to do is to work out a credible, distinctive and popular answer to the question of where the Lib Dems stand in that argument, that it can project in place of the current mish-mash.”
Well, Nick Clegg has fired a shot across the Tory bows:
Nick Clegg, the Liberal Democrat leader, said the Conservatives’ announcement was “economic madness”. He added: “David Cameron has learnt nothing. It’s exactly what the Conservatives did in the 1980s. To simply slash public spending when we are heading into a recession – there’s no case for it whatsoever.”
That’s good as far as it goes, but obviously Clegg needs to be crystal clear how the Lib Dems’ proposals for cuts in public spending differ from the Tories’ plans. That’s tricky, as we have no idea what the Tories’ plans are – or what the Lib Dems’ plans are.
And the government isn’t playing fair – apparently it has its own plans for savings (who would have thought it?):
Yesterday ministers identified Whitehall efficiency savings of a few billion pounds on top of the £30bn already in the pipeline over the next three years. The Chancellor, Alistair Darling, is expected to announce on Monday that the savings will be used to limit the increase in borrowing.
So Clegg had also better be clear how the Lib Dems’ plans differ from Labour’s plans. That’s tricky, as we have no idea what the Labours’ plans are – or what the Lib Dems’ plans are.
My head hurts …
Another new policy.
Clegg apparently still wants the government somehow to force the banks to lend more. (I’m still not clear exactly how the government’s supposed to do that, but still …)
Otherwise the government should consider lending directly to industry, either through the Post Office and/or larger local authorities, or by creating a new state-run bank, perhaps by combining Northern Rock and Bradford and Bingley. If so, he suggests freeing those banks of their high-risk debt (somehow).
What ever the rights and wrongs “a penny for education” and a “50p top rate” were simple and understandable and had natural constituiencies. What ever the rights and wrongs of current policy I’m an anorak and i think its confused, contradictory and unexplainable. Is it any wonder that 3 of the 5 national BPC pollsters have us on 12% ?
CCF:
Nick Clegg said “To simply slash public spending when we are heading into a recession – there’s no case for it whatsoever.”
I think he’s really grasped the point at last. Whatever one might think about rolling back the state, this is not the time.
Let’s suppose that our heroic Treasury team, aided and abetted by our Thatcherite fringe, have finally stumbled across an obscure Government department called DPPCTW – the Department of Pen Pushers and Complete Time Wasters – who occupy a massive cavern somewhere around Whitehall and deliver absolutely nothing of any value to man or beast. We close them all down and save £20bn, right?
Well, wrong, actually. Because that will swell the unemployment figures. They will stop spending, drive countless paper suppliers and coffee houses into bankruptcy, generally turn recession into slump. Bad idea!
We could happily sack them all in boom times. Then, private companies would recruit and retrain the beggars. But not now.
We could, of course, offer them a chance to seek work on more useful activities, in line with Lib Dem priorities, could we not? That would avoid a recessionary impact, and it would mean we could do all sorts of good things like putting more police on the streets, insulating houses, etc etc. That would, of course, mean redirecting the £20bn, not saving it.
So we shan’t be wanting to make a big fuss about even more tax cuts, when we announce our detailed plans for the £20bn, will we now?
Here’s a piece by Nick Clegg in the Daily Telegraph:
http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/11/21/do2101.xml
He finally seems to have worked out a fairly coherent line, based on the old plan for a 4p cut in income tax, together with support for increased borrowing to fund capital spending (but not tax cuts). Thankfully, there’s no mention of the £20bn spending cuts, or the possibility of additional tax cuts. Let’s hope it lasts.
The one thing that still doesn’t really hang together is the criticism of the government for funding tax cuts by spending, which people will have to “pay back” in the future. The trouble is, they would equally have to “pay back” Lib Dem borrowing for capital spending.
And that would be spending by government, which rather flies in the face of the recent “People know better than the government what to spend their money on” tendency. Not that there’s anything wrong with that …
@CAA
“What ever the rights and wrongs “a penny for education” and a “50p top rate” were simple and understandable and had natural constituiencies.”
I guess they were, but one shouldn’t select policies purely on the basis of how easy to understand they are. That’s populism. The challenge (currently being only partially met) is to have the policy that’s right and find a way of explaining it.
Anyway, those policies came out of the era when a lack of public spending was the problem. It isn’t the problem now. Labour have thrown gobs of money at everything in a very centralised way, and the extent to which it works and doesn’t work stands revealed. Why should we be reverting to solving a problem that’s already been solved?
Actually, I am quite interested in the idea of a 50p rate, but only if it goes hand in hand with our present policy of raising the thresholds and reducing the bands further down. As a standalone it was pure gesture politics.
“Anyway, those policies came out of the era when a lack of public spending was the problem. It isn’t the problem now. Labour have thrown gobs of money at everything in a very centralised way, and the extent to which it works and doesn’t work stands revealed. Why should we be reverting to solving a problem that’s already been solved?”
I must admit I hadn’t realised there was no longer any shortage of money in the public services. My fault for being out of touch, I suppose. No wonder people are so impatient with my silly ideas.