As an Orange Book adhering Lib Dem, a big highlight of the reign of Clegg & Cable was a very simple, yet very effective thing – that our economic policy was clear, empathised, and well known. We knew where we stood, we knew where we were going, and quite frankly, the economic policy that we pushed in the coalition, reflected that fact. The Liberal Democrats were a party that knew how to manage an economy.
So, looking back at that highlight, I fear that, something may have been rather overlooked this campaign; our economic plan. Indeed, more importantly, what exactly it is. I mean, obviously we have one. In fact, according to Oxford Economics, we have the best one. So, for me, the question is simple – why aren’t we making a big deal out of it?
It is very clear to me, and to many people up and down the country, that the Liberal plan for our economy is worlds ahead of the Labour or Conservative ones. We have a plan for proper growth, for sustainable development environmentally, for treating small businesses with the high regard they deserve, and for ensuring that our spending plans are sensible, and above all else, fair. Yet, when we are covered in the media, very little focus is put upon this. It seems insane to me that we aren’t inundating the whole nation with the fact that when push comes to shove, we could, will, and can, make people better off. In fact, those in the whole bottom half of our income demography would be faring far better if we were the government.
We know from experts from just about every direction that Lib Dem economic policy is excellent. It is rational, it is well thought out, it balances unions and businesses, individuals and corporations, consumers and producers, and just about everything else. The only problem with it, is that people don’t seem to know it. We’ve made a big deal of Brexit, and rightly so. We’ve made a big deal of the health service, and again, rightly so. I say that it’s time we give our economic policy the time that it thoroughly deserves.
Many say that elections are ultimately won on economic policies. I think it’s about time that we inundate the nation with our own.
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78 Comments
The title of this article encapsulates a significant problem in the Lib Dem campaign. Why on earth would somebody in a political party need to suggest “We need to tell people about our economic policy“? Surely that should be a given.
The first sentence then goes on to demonstrate why this is a problem for the party. “As an Orange Book adhering Lib Dem, a big highlight of the reign of Clegg & Cable was a very simple, yet very effective thing – that our economic policy was clear, empathised, and well known.” Does the party (did it ever, really?) have a consensus on its economic policy, let alone one which is “clear, empathised, and well known”? Based upon the emotive reactions I see to the phrase “Orange Book” on this site, I suspect not.
My impression is that the priority has been to rebuild the party around anti-Brexit unity at the expense of communicating a clear Lib Dem vision which might fracture that unity in other policy areas, not least on economic policy, the size of the state, etc. The risk is that this approach might have driven away Brexit-supporting Lib Dems while being less of a vote-winner than was hoped, leaving the party looking directionless and vulnerable.
“We know from experts from just about every direction that Lib Dem economic policy is excellent. ”
@Contributor 2017
You are certainly right in saying that hardly anyone knows much about it. You may also be right that Lib Dem economic policy is excellent. However, as the Lib Dems had a hand in raising VAT to 20%, when the economy was in deep recession and needed the stimulus of a decrease, then I have my doubts.
And to think that this was from the party of Keynes!
You should beware of “experts”. The Queen famously asked the “experts” at the LSE why they hadn’t seen the GFC coming and why they hadn’t advised Governments to change course. The highly qualified professors at the LSE shrugged their shoulders, looked at each other and muttered something to the effect that they didn’t know.
What these experts know very well, but don’t want anyone else to, is that it is just about impossible for Governments in the UK to balance their budgets and that they’ll only create a recession if they try. Simply, if the UK as whole runs a current account deficit, the external deficit in trade, then someone in the UK has to support that deficit by borrowing. Government has to do the most borrowing. Pushing the onus on to the private sector, as has happened recently, simply creates a bubble in asset prices which creates the inevitability of another crash in the future.
If the Queen then pays another visit to the LSE, asks the same question, will she get the same answer? The Met Office learned from its mistakes when it failed to forecast a hurricane in the 80’s. That’s how science should work. It doesn’t seem to, though, in the economics profession.
@Peter Martin
“However, as the Lib Dems had a hand in raising VAT to 20%, when the economy was in deep recession and needed the stimulus of a decrease, then I have my doubts.”
I have my doubts about what you are saying, too.
Tell me, Peter, when exactly did the UK come out of this deep recession that you think we were experiencing in 2010?
@Peter – we borrowed £500bn during the coalition – waht was that if not a Kenysian stimulus
Please may we have three short sentences on Lib Dem economic policy to display how brilliant it is?
We need to be telling people about lots of things. Trouble is, they’re not listening. And ‘economic policy’ must be the biggest turn-off there is for most people. Not to mention the fact that every party claims to have the best economic policy, and few are in a position to judge. No, I think we are quite right to be concentrating on by far the most important economic, security, and social issue of our time – our relations from now on with the European Union.
As a wavering voter, rather than a member, I would agree with the thrust of this, but why, oh why mention the Orange Book. Rightly or wrongly it has become divisive and you perhaps ensured that some would disagree without moving beyond the first sentence.
I don’t know how many listened to Tim on Radio 5 this morning, but I did and he came across 100 times better than either leader last night if you listened to the substance. He answered the questions asked, apart from the silly ones designed to bring his personal faith into the debate. In that sense he was better than Clegg or Cable during the coalition years who were much more like typical politicians.
People talk about Corbyn being a different type of politician, he simply is not. He evades and ignores and is the perpetrator of the biggest con in recent political history.
Have the Lib Dems got my vote yet – almost certainly. More should be done about proclaiming the economic policy but mainly we need more straight answers to straightforward questions.
Agree we do need a strong statement from Tim on the economy and that we would not blow the gains of the last 7 years like Labour and the Conservatives seem hell bent on doing and that we will invest the countries future with retained access to the single market and the customs union so important to an exporting nation.
http://www.libdems.org.uk/investing_in_the_future_tim_farron_s_economic_speech
Well, we need such a speech before the GE
Also, I’d like to see Libdems reveal a short summary version of a specific industrial strategy, not just economic policy as a whole.
@ Simon Shaw, @Simon McGrath
The size of the deficit isn’t necessarily a sign of a stimulus. A stimulus would do just that. Stimulate the economy. A well functioning economy increases the Government’s revenue. The government deficit equals, to the penny, everyone else’s surplus or savings. So when the economy slumps, everyone becomes apprehensive and saves rather than invests in productive enterprises.
The UK economy hasn’t fully recovered from the 2008 GFC. It’s an even worse story in the EU. It is this economic failure which has ultimately led to Brexit. There can be little doubt there would have been a comfortable majority for Remain had we had a poll prior to the 2008 crash.
http://www.economicshelp.org/wp-content/uploads/2015/09/real-gdp-trend-actual.jpg
Peter Martin – As I said before, Libdem needs to turn to an export-led strategy, with a range of export promotion policies, even if they can be mercantilist. I mean, something like this:
“We will give more backing to exports using the Export Credit Guarantee Department and the Aid and Trade Provision (funded from the DTI) more effectively than the present Government has done in recent years because of its ambivalent attitude towards public sector support. We will press the European Community to take stern action against dumping.” (Libdem manifesto 1987).
We can do similar things with British Business Bank.
Besides, we need to develop a strong regional industrial supply chains to reduce the reliance on imports and increase the percentage of domestically produced components and inputs. For example, only 40% of inputs for British car industry are domestic, which is too low. British firms can only capture full profit from export with a strong domestic supply chains. Besides, we can also invest to develop strong supporting industries for green energy revolution.
Not to mention that, the majority of studies on international trade had shown that exporters normally have higher productivity, especially those who export to high-income countries. And I personally believe in an export-led strategy because of this.
Overall, we should focus on cutting trade deficit if we want to reduce debt in the long run.
The report on the Oxford Consultants which showed the LibDem policies projected growth as 0.9% ahead of Labour’s, who were in turn 1% ahead of the Tory policy outcomes, appeared in The Guardian/Observer business pages yesterday (sunday).
I cut and pasted some highlights in various paper comments and it received quite a few recommends:
https://www.theguardian.com/business/2017/may/28/far-from-strong-and-stable-mays-economic-plan-is-weak-and-unstable
A lot more should have been made of it, as Corbyn is presently stealing all the limelight and LibDem voters have been lost to Labour over the campaign:
“…consultancy firm Oxford Economics put the economic plans of the three main parties through its model it concluded that the continuation of austerity under the Conservatives would lead to stable although unspectacular growth averaging 1.9% a year over the course of the next parliament.
By contrast, the consultancy noted that “the more expansionary policies proposed by Labour and the Liberal Democrats would offer better outcomes in terms of GDP growth and allow monetary policy to be normalised sooner, without putting the public finances under strain.” More specifically, the economy would be 1.9% bigger under the Lib Dem plans and 1% bigger under Labour’s plans than under the Conservative plans.”
What we need is a single, simple Policy that distinguishes us from Tories & Labour & then we need to keep repeating it at every opportunity. It doesnt matter if its a good policy as long as it sounds good.
A Penny for The NHS might be it but whatever it is we have to decide now & then bang on about it.
Lib Dems are happy to promote liberal social policies but embarrassed to promote liberal economic policies.
This seems to be the influence of the Leader and the influx of former Labour supporters.
The party is in danger of becoming Labour Lite, a position already occupied by the majority of Labour MPs.
@paul barker “A Penny for The NHS”
I think this has similar strengths and weaknesses to banging on about Brexit.
In many ways it is better: it is a simple message which is less divisive and contentious.
However, it still papers over the cracks on economic policy: how should the penny be spent?, how should the NHS be organised?, what should be the balance between private and public provision?, etc. Answering those questions would distinguish Lib Dems from other parties but might also distinguish one Lib Dem from another.
Anyone can achieve growth by borrowing and spending more. The question is whether you can afford to pay for it all afterwards.
@ Peter Martin. The 20% VAT rate helped significantly in reducing the deficit at a time when it was enormous. What other taxes would you have increased to make up for not raising VAT? Or would you just have let the deficit rip and hang the consequences?
I still support the Lib Dems on economic policy, where they are consistently the sanest, most rational of the parties. It’s just on Europe where they’ve gone hideously adrift.
@ Venetia,
“And ‘economic policy’ must be the biggest turn-off there is for most people.”
I know you are right. It does turn people off. However it is such an important subject and shapes the course of world events. I’ve already argued that Brexit is the result of the failures of Governments here and in the EU to deal with economic problems post the 2008 GFC. Then there was the failure worldwide to prevent it happening in the first place.
I’d argue that WW2 was caused by the economic failures the 30’s. Germany in the early 30’s saw unemployment rates approaching 30% as the Great Depression bit ever deeper. So we can hardly be surprised that history followed the path it did.
We can all understand why the idea of European Union is attractive. But it has to be an EU that works for everyone in the EU. Even more so now that the EU has a common currency, it means getting the right economic framework in place. We need to discuss why what we have isn’t working, and what needs to change to make it work.
And we can’t do that if people don’t want to know. So how to stop them being “turned off”? I don’t have an answer to that.
Can someone advise me, are we involved in this election? Surely we can get into the media somewhere. I have never known us to be either so silent or so ignored. Any wonder we are seemingly doing so poorly.
@RC
” The 20% VAT rate helped significantly in reducing the deficit at a time when it was enormous. ”
Some right wing economists, like Arthur Laffer, would argue that raising tax rates actually lowers the revenue raised. They are probably right but maybe not for the right reasons. Nevertheless when President Reagan listened to Arthur Laffer the US economy did remarkably well.
Most people have a problem when they think in terms that Government needs to raise taxes to have money to spend. It’s at all like that. Government spends first and taxes later to create a demand for the currency. In other words the Government is a currency issuer. It has to be in deficit otherwise it hasn’t issued anything.
Understanding this makes economics so much simpler. The Government has only to fine tune the economy to keep it ticking along. If we have a trillion dollar economy there needs to be a trillion dollars of spending to keep it going. If everyone else is spending too much the Govt has to spend less, or tax more, to prevent inflation. And vice versa if everyone is spending too little.
Deficits and exchange rates will always take care of themselves in a correctly functioning economy.
@David Evershed. Depends whether the ‘Liberal’ economic policies you want to promote are those of nineteenth century Gladstone or those of twentieth century Liberalism based upon Lloyd George, Keynes and Beveridge. I will happily promote the latter and indeed have during my 34 years as a member including 23 years holding elected public office, 9 of them as an MP.
What is strange here is that Contributor 2017 wishes to bind Cable to Clegg. This in fact mirrors what happened in 2010 before the Manchester (or first) PM’s Debate. Until then the ‘Leader’s (Election ) Tour had Clegg and Cable sharing the bus and going everywhere like con-joined twins.
Immediately following the Manchester Debate with it’s ‘I agree with Nick’ mantra, Cable was dropped from the Leader’s Tour. Clegg flew solo. This exclusion of Cable continued into the Coalition arrangements. Cable was not given an economic portfolio. Laws was. Cable was not given a seat in the Quad, even when the Quad expanded to 6 members. Our economic team was Clegg, Alexander and Laws.
They, like Osborne and and his SpAd Harrison were “Austerians” believing in expansionary deficit reductions following the theories of Alberto Alesina – see this paper http://www.nber.org/chapters/c11970.pdf
The first two years of Coalition were a disaster for the economy. If in 210 you’d been a New Keynsian, you would have argued that front loading austerity as the 2010 emergency and 2011 and 2012 budgets sought to to do was an error of judgement.
If you were a (market) monetarist as I am you would have said that monetary policy in 2010 was too tight and that the Coalition budgets actually destroyed money and reduced the velocity of exchange without sufficient offsetting by the Bank of England.
After this election I suspect Clegg will go one way and Cable another. I think we can guess which way Contributor 2017 will go.
What we need is a policy thats simple enough for an 8 Year Old to get with very little explanation. Thats how Labour have confounded expectations – with a handful of simple, simplistic policies that sound good. This is an Election not an Academic Debate.
If we pick one simple policy & go on about it that might cut through & shift a few votes.
@ John,
“Overall, we should focus on cutting trade deficit if we want to reduce debt in the long run.”
Yes. That’s right. Trade deficits means that money leaves the country to pay for net imports. This has to be replenished in the economy by Government deficit spending.
So there are two economically valid approaches. If we are worried about Govt deficits we have to close the trade gap and this will mean have a lower pound.
Or we can take a more relaxed approach to trade deficits, have a higher pound, but then say the Government’s deficit has to be what it has to be to keep the economy going.
Unfortunately the current conventional economic wisdom is that trade deficits don’t much matter. It didn’t used to be like that. The monthly trade figures were featured on the nightly news at one time. On the other hand the current conventional economic wisdom is also that Govt deficits do matter a lot.
Put the two together and they don’t make any sense at all and that’s why we have the problems we do.
Paul,
“……. Liberalism based upon Lloyd George, Keynes and Beveridge. I will happily promote the latter and indeed have during my 34 years as a member including 23 years holding elected public office, 9 of them as an MP.”
We have a national debt of £1.73 trillion and a deficit of £68 billion but it does you great credit to admit you have had something to do with it.
Lesser politicians resort to blaming “other factors”.
Well done.
@paul barker “What we need is a policy thats simple enough for an 8 Year Old to get with very little explanation.”
Unfortunately though, compared to the crude simplifications of the left and the right, the usual Lib Dem approach is best summed up in the title of Ben Goldacre’s excellent book, “I Think You’ll Find It’s a Bit More Complicated Than That“!
Sadly, I suspect that it is too late in this election to have anything other than an inoffensive vanilla national message that does not contradict any localised messages that might have been tailored to specific conditions in target seats (e.g. Norman Lamb and Paddy Ashdown downplaying the importance of Brexit on the doorstep in their Brexit-supporting areas).
Subsequently though I think the party needs to present itself much better as a political party with a distinctive vision for the country or it might as well just give up. Simply opposing this that and the other from the major parties is likely to be a fruitless exercise.
My suggestion would be to wrap up every policy in the trappings of the Preamble to the party’s constitution, e.g. we commend such-and-such a policy because Lib Dems believe no-one shall be enslaved by poverty/ignorance/conformity (delete as appropriate). It’s not a panacea: for example, some might argue that comprehensive schools enslave by conformity while I would argue the opposite. But it might at least allow a collection of policies to look like a coherent political identity.
John Litter – If Libdem plan includes export oriented policies that aim to reduce structural trade deficit, the gap will not be just 1.9 percent points.
Peter Martin – accepting high trade deficit has become a status quo. Libdem need to update their economic policies to take the deficit into account, which means taking a very different path.
I don’t believe Labour. Look at their records we can easily see that their “industrial strategy” was just propping up failing industries using anti-competitive measures. British Leyland was a typical Labour policy.
Very much agree that economic ( and health ) need to be spoken about more. But I think it’s too late now. Initially, the problem was that the party focused on an anti-Brexit message and that made it seem that they were telling the electorate they were wrong. That was hardly a message that was likely to be received well and the failure to recognise this is why heads will have to roll after the vote. However, I think that the problem over the last week or so has been the party’s appalling media coverage. I’m not sure why this is and the party itself is probably not at fault for this. It could of course be shades of 1970 – when Lib Dem candidates forsake media appearances because they were penned in their constituencies fighting for their seats. Or it could be an unfair judgement by media organisations that the party this time has little to say.
I suspect the way things have turned out, Norman Lamb would have done well in front of the cameras as he is so good on health etc, but of course he has not been seen much. Anyway, at least this election will establish that Theresa May has weaknesses, even if she romps home, as I think she will. Going forward, you will need to focus on the Tories, not on Brexit, or Corbyn.
@Palehorse. Normally I don’t reply to those who hide behind anonymous names but your comment is so ridiculous I can’t resist.
The National Debt and Deficit alike were nothing out of the ordinary until the rampant financial institutions, milking their customers for all that greed could secure, crashed various Western economies but in particular the USA and the UK in 2008. The need to bale out banks that ‘were too big to be allowed to fail’ is what first added many Billions to the deficit. The subsequent, deepest and longest depression since the South Sea Bubble of the eighteenth century, is what then made things worse due to falling tax revenues, increased benefit payments and depressed consumer demand.
Keynesian (new or old) economic stimulation then began to redress the balance here and in the USA under Obama. In the UK unfortunately some ‘Liberal Economics’ of a different kind was tried for a couple of years after 2010 and set recovery back somewhat.
I don’t see anything in this article that would help me explain to a floating voter why we are the best party on economics. The article seems to be 90% fluff and 10% “these experts say we are great”. All parties will tell you their economic policy is fair, socially just, rational etc. All parties have “experts” and nice charts and graphs to show you. Nobody actually believes voting for one party or another will make “everyone better off”. They want to know who you will give to and who you will take from.
I’m automatically concerned when anyone says they are an “orange booker”, it seems like a euphemism for “young conservative” these days.
I think the biggest blunder in this campaign was telling people that the best we can hope for is to be in opposition. Waste you vote on us because we are going to lose this election. Whichever head came up with that one needs separated from his/her body. Why should people listen to us, we are going to lose.
Contributor 2017
As an Orange Book adhering Lib Dem,
What do you mean by that?
Those of us who have use terms like “Orange Booker” to describe the economic right-wing of our party are often told we are wrong to do that. We are told that the Orange Book was a collection of essays expressing a variety of different views and ideas, and it is quite incorrect to suppose it was a coherent effort to push the party to towards making free market economics the core of its policy.
The historical position of the Liberal Party was pragmatic on free market economics: accepting it had an important role, but also accepting that it was not always the best way to run everything. Those who claim free market economics are what the party was all about in the 19th century have a somewhat selective view of what it actually was about, a bit like “fundamentalists” in other areas, who pick out bits of history and literature that support their modern ideology, and ignore the rest. In any case, the Liberal Party split in the first half of the 20th century, with half of it merging with the Conservatives, meaning what remained was that section most critical of standard right-wing economics.
Since 1979, simplistic free market theory has been political orthodoxy, what all governments have pushed. I don’t think it has worked for everyone quite as those who have pushed it claimed it would, and to quite a large extent the Leave vote in the referendum was a protest against it. Isn’t it something we should be questioning, or should we just be saying “we too” to this orthodoxy?
One of the interesting things about the Oxford Economics analysis is that the National Debt as a ratio to the economy under us and the Conservatives is nearly the same, but the economy by 2022 has grown by 1.9% more under us than the Conservatives.
Unfortunately they don’t give forecasts for unemployment. It is the Labour Party’s commitment to achieving full employment that I particularly like and their acceptance that we will import less people once we have left the EU.
In 2010 we had an economic policy between the Conservative and Labour ones and once in government we implemented the Conservative one, which was why there was little economic growth in the early years of the coalition and then once we had stopped implementing their policy we signed up to the idea there was no change in economic policy. Therefore politically we were a complete failure! It was the “Orange Bookers” who were keenest in dropping our economic policy and implementing the Conservative one.
With reference to the changes in tax and benefit, while our plans are the least worse they still inflict a 3% cut to the poorest; over a 1% cut to the next poorest and about 0.75% cut to the third poorest; rising thereafter to the sixth poorest who get nearly a 1% cut and then dipping again to the eighth poorest or second richest whose cut is about 0.75% and then rising again.
The problem with our economic policy is there is no headline feature as there is with the Labour one. We are not reversing the growth in economic inequalities, we are just not as bad as the others. We are reserving 75% of the Tory cuts to welfare, but it doesn’t grab the headlines because it isn’t 100%.
I think our main economic driver should be running the economy, tax and spend policies to reduce economic inequalities that are clearly noticeable over a five year Parliament.
For those feeling gloomy, there is a sliver of good news in that our Polling Average withj “Britain Elects” has actually gone up marginally in the last 3 days while UKIP & The Greens continue to be squeezed.
Teresa May has re-affirmed that she believes a “No Deal” result is better than a “Bad Deal” result. Has no economist tried to estimate the cost to UK of “No Deal”? Could it possibly be less than £250Bn? Is this not something that ought to be discussed? At this point there seems to be some doubt about her ability to secure a “Good deal” whatever that might be?
@paul barker “our Polling Average withj “Britain Elects” has actually gone up marginally”
Apparently the Times is reporting, based upon Yougov polling, that the Conservatives might lose their majority!!
=> Con 310, Lab 257, SNP 50, NI 18, LD 10, PC 3, Green 1, Other 1
(https://twitter.com/samcoatestimes/status/869662208892030976)
A pinch of salt is required!
The problem with Yougovs prediction is that it implies an Election turnout of around 80% instead of the usual high sixties. I would love that to be true but I am deeply sceptical. It all depends on whether you take the way voters say they will behave (voting) or their past behaviour (not voting). Thats why the different Polls say such different things this time, no herding this year.
For similar reasons I am sceptical about Yougovs estimate of 10 MPs for us.
Both main parties are ‘misleading the public over their tax plans’, according to the Institute for Fiscal Studies on Friday. Labour’s plans are seen as unrealistic, while the Tories’ proposals for five more years of austerity are impractical. With only a week to go before the election, these are statements we surely should be spreading in local publicity, along with the useful facts Contributor 2017 has cited to show that our economic plan is the best.
We have to hone our messages now. And it’s not much use concentrating on saving the NHS or our schools if those themes are hogged by Labour.
On Brexit, will our leaders please home in on what it will mean to remain in the EU’s internal market and why May’s policy is wrong. We need much more clarity on this – what we want from Brexit if it has to happen. At the same time, let us stress that though we believe the people should have the final say on the negotiated deal, it’s up to them whether they ultimately want another referendum.
Katherine Pindar – you say that Labour’s manifesto is not realistic. In what way? LibDems have claimed that their manifesto is fully costed. Yet half of the spending depends on borrowing to bridge the spending gap.
I am curious as to why borrowing by LibDems can be described as ‘fully costed’ yet borrowing by Labour makes their plans unrealistic.
@ Katherine Pindar
“On Brexit, will our leaders please home in on what it will mean to remain in the EU’s internal market and …”
I hope no one takes your advice. Our poll rating fell when we went on and on about Brexit, the campaign has moved on from this and we have to move with it. Our small increase in the polls might well be because we are discussing other things – dementia tax, school meals, NHS.
Perhaps we should be talking about ending the freeze on benefits and emphasis this means in work benefits. In Labour’s manifesto they haven’t done this, even if Jeremy Corbyn seems to get confused about it and thinks he has £2 billion allocated for it. Stopping the benefit freeze according to the IFS costs £3.3 billion and the reserving of all the Universal Credit cuts £3 billion (https://www.ifs.org.uk/uploads/Presentations/Rob%20Joyce%2C%202017%20General%20Election%2C%20manifesto%20analysis.pdf).
The main reason to be sceptical of the Yougov estimate for us is that it appears to be based on Uniform National Swing.
Strongly agree with this article. Bizarrely, the vacant space in British politics now is for a party with sensible, business-friendly, economically liberal policies that will promote growth and prosperity while tackling market failures and taking care of those who need help.
The public isn’t ready to listen on Brexit and there’s no point trying to compete with Corbyn’s Labour on spending promises. Lack of a clear economic message has really hurt in this election, but forging a reputation for economic competence and sense will offer great opportunities in the years ahead.
@ Katharine Pindar,
If the Lib Dems want a distinctive economic policy then they need to ignore Right Wing groups like the IFS and get back to Keynesian economics. Keynes was “your guy”!
Richard Murphy asks the questions: “…why is the IFS peddling bad economics?” ” And why isn’t the media asking that question of them?”
We know why the media aren’t asking those questions. But there’s nothing to stop Lib Dems !
http://www.taxresearch.org.uk/Blog/2017/02/07/the-ifs-is-taking-nonsense-there-is-no-need-for-a-balanced-budget/
@Alex Macfie – it is certainly true that uniform swing has not historically been a good basis on which to determine Lib Dem MPs. If you take the 2010 results and apply uniform swing based on the actual polling percentages in 2015 then the Lib Dems would have had zero MPs.
A reasonable approximation to the actual 2015 result (of course there will always be local factors) can be obtained by assuming a 6% tactical switch from the third-placed party in LD-held seats.
This is pretty consistent with the findings made during the 2015 GE that a “constituency specific question” in seats with strong LD support produced about a 10% increase in LD support versus a generic voting intention question. http://blogs.lse.ac.uk/politicsandpolicy/thinking-specifically-about-your-own-constituency/
But how that plays out in the current situation – where there is little LD incumbency, a return to two-party politics (Con+Lab is now routinely 80% or higher in polls) and a sense of jeopardy about the election outcome – is not at all clear.
@ Michael BG,
“I hope no one takes your advice. Our poll rating fell when we went on and on about Brexit”
Yep. The feedback that I’m getting is that the electorate have had enough of the Brexit Leave/Remain arguments. They want this election to be about other things. Mainly other things even.
Lib Dems might disagree. But it’s the electorate who does the voting. Very few are Lib Dem party members.
Some of us struggle to decide between Orange Book and Keynesian economics.
I suggest it is more important to emphasise fairness as an aim in our implementation of our economic policies. E.g- advocating profit sharing for all employees not just senior staff. A taxation regime that rewards enterprise and outcome but not so to indecently widen the gap between rich and poor
RBH – I hope that your “economically liberal policies” are not those from the Orange Book, which should have been in the dustbin by now. Discard all kinds of right-wing economics and go back to Keynes are what LibDems must do now.
There are many other ways to try to be business-friendly.
– First, Libdem needs to turn to an export-led strategy, with a range of export promotion policies, even if they can be mercantilist. I mean, something like this:
“We will give more backing to exports using the Export Credit Guarantee Department and the Aid and Trade Provision (funded from the DTI) more effectively than the present Government has done in recent years because of its ambivalent attitude towards public sector support. We will press the European Community to take stern action against dumping.” (Libdem manifesto 1987).
– We need to develop a strong regional industrial supply chains to reduce the reliance on imports and increase the percentage of domestically produced components and inputs. For example, only 40% of inputs for British car industry are domestic, which is too low. British firms can only capture full profit from export with a strong domestic supply chains. Besides, we can also invest to develop strong supporting industries for green energy revolution. You know, foreign manufacturers would be less likely to move away if they can source the inputs they want in the UK.
Actually, En Marche has loads of sensible economic policies that LibDems can copy from.
Michael BG – Well,
Michael BG – I mean it’s hard to get full employment if we want to maximize the adoption of automated technology.
This whole for or against the orange book is getting nonsensical, if it were not for the fact some thrive on it, to the detriment of harmony in our party and democracy at large !
A democratic party must be a versatile one or it is a sect !
No book should be put in the dustbin unless it is one alien to our views , even then worth reading.
I know people who condemn that book , who have never read it at all !
It is time to stop banging on about bins , and recognise the sense in recycling !
Yes, Keynes, yes Cable, yes and very much so …Mill !
We need to do as the article says , trumpet our philosophy , but make it more radical , and popular without populist !
That means free and fair trade , you should not mention one without the other !
I plan to vote Labour thanks to the electoral situation in my constituency, but I’m in agreement that the Liberal Democrats overarching economic strategy is the best, and that their economic policies are the most sensible on the whole. I’m unsurprised that Oxford Economics have found that the Liberal Democrats would do the most to grow the economy.
I do agree with one of the comments here that most Labour MPs would feel very comfortable in the Liberal Democrats, and vice-versa. The 2015 Labour and Lib Dem manifestos were extremely similar, in my view.
Even now, the overarching economic strategies are essentially identical (and correct): eliminating the deficit on day-to-day spending, leaving room to borrow to invest, reducing the debt-to-GDP ratio and making exceptions during a period of recession. The only thing I’d say is that I trust the Liberal Democrats – with their commitment to fiscal discipline – to ensure that the investment in, for instance, infrastructure projects is well-targeted.
What does differentiate the Liberal Democrats from Labour, especially now that Corbyn is in power, is indeed the commitment to fiscal discipline and market-based solutions: the Liberal Democrats oppose renationalisation and scrapping tuition fees, for instance.
So, at the moment, I think that the Liberal Democrats have positioned themselves very well. More commitment to fiscal discipline and the market than Labour, but supporting well-funded public services and investment in the economy in the spirit of Keynes, as opposed to the traditional ideological commitment to the free-market in the Conservative Party.
And, if Mayism means that the Conservatives are becoming more committed to government intervention in the economy (restricting immigration, for instance), less committed to free trade (like Labour, under Corbyn) and more socially conservative, then the dividing line between the Liberal Democrats and the Conservatives is even clearer.
@ John,
” I mean it’s hard to get full employment if we want to maximize the adoption of automated technology.”
Like it or not, we are going to get more automated technology so we’ll have to work out how we use it to best advantage. If we need fewer people to make things or work as bank tellers, or whatever, we can have more people teaching in schools or working in hospitals.
We can move to a 4 day working week. It’s all possible. We just need to think in terms of how the market can work for the benefit of everyone, rather than the few who might wish to control it.
@ John
“go back to Keynes are what LibDems must do now.
“it’s hard to get full employment if we want to maximize the adoption of automated technology.”
You are advocating Keynesian economics which aims to achieve full employment!
If we had full employment and there was no great migration of people to the UK to work, then companies would need to invest to increase productivity and part of this will mean more “automated technology”. I think there will always be a need for some jobs to be done by humans. Therefore full employment and more automation are not mutually exclusive.
Hello, people. Having been out till after 9 pm in the evening canvass for Tim in Kendal, I haven’t time for much detail here. But I want to say this.
1. There is a General Election in a week, and we have therefore to be concise and pointed in our statements, whether local or national. Dave Orbison, it is the IFS and not me suggesting Labour pledges are not realistic – tax hikes aimed at top earners and businesses may not raise anything like the £48.6bn claimed, they say.
2. It seems to me absurd to back off from Brexit when we have the only realistic and feasible plan, whereas Theresa May is bringing it up exposes her own fantastic position. Our Brexit stance can be a strength, if we have the courage to explain it. I agree with the stance which Peter Watson advocated – to say, if Brexit has to happen, which most people now seem to accept, this is the negotiating position we would take.
As to poll forecasts, the last one I saw , Michael BG (and I’m still Katharine with an ‘a’ please) was us down at 8%, without mentioning Brexit. Just how would you get the national attention we need now, Michael?
I’d love to engage further with this, but I’ll be off to Kendal, 60 miles away, in the morning again. St Ives was a welcome relief!
@ Katharine Pindar
Sorry about the “e”.
The issues we could push are – 1p on Income Tax for NHS and Social Care, reversing the benefits freeze especially for in work benefits while attacking the Tories on the dementia tax and free school meals.
It might even be possible to state we would grow the economy by nearly 2% compared to the Conservatives while nearly matching their budget surplus in 2022.
@John
If Keynesian means macroeconomic policies to support full employment, including fiscal stimulus when demand is weak, then I’m all in favour. (Nb that is not the same as a big state.)
Keynes had no time for mercantilism. It makes everybody poorer. But the mercantilism of other countries, notably Germany, is a big problem. I think it’d be economically correct, politically sound and in a fine liberal tradition to tackle dumping and countries that deliberately suppress demand at home to sustain huge trade surpluses.
Michael BG – Agree with your idea of promoting Oxford Economics’ study. We must put it on our website and Facebook page.
For me, the final goal of state intervention is more about infrastructure and research investments, as well as supporting businesses to raise productivity rather than providing full employment. Adopting labour intensive methods can reduce unemployment figures, but cannot improve productivity.
RBH – But we need to reduce trade deficit. It’s the only way to reduce debt in the long run (you know that we have to borrow to balance the current account deficit). Besides, most studies found that firms that actively engage in export trade normally have higher productivity, especially those export to high-income countries.
Keynes support mercantilism: John Maynard Keynes argued that encouraging production was just as important as encouraging consumption, and he favoured the “new mercantilism”. Keynes also noted that in the early modern period the focus on the bullion supplies was reasonable. In an era before paper money, an increase in bullion was one of the few ways to increase the money supply. Keynes said mercantilist policies generally improved both domestic and foreign investment—domestic because the policies lowered the domestic rate of interest, and investment by foreigners by tending to create a favorable balance of trade.
Keynes and other economists of the 20th century also realized that the balance of payments is an important concern. Keynes also supported government intervention in the economy as necessity, as did mercantilism.
@ Thomas @ RBH @John,
RBH is right. Keynes had no time for mercantilism. His proposals at the Bretton Woods Conference, which set the economic agenda for the postwar period, were aimed at all countries balancing their trade within certain limits. Unfortunately the US political leadership at the time didn’t agree and they were rejected.
Mercantilism may same rather a dry topic to most. But, if anyone is interested in the EU – and I would imagine most Lib Dems might be – then it is an essential topic. I would argue that German ( and to a lesser extent Dutch) mercantilism is responsible for most of the present problems the EU has brought upon itself, including Brexit.
EU countries are either relatively successful and mercantilistic, or they are in deep recession. The German imposed rules of the SGP which apply to all EU countries except the UK dictate that. Either way the EU isn’t a good market for UK exports. Those countries which are in deep recession naturally have high rates of unemployment. Naturally, unemployed workers will move in search of employment. And there’s nothing wrong with that. We can’t have any quarrel with anyone who has to move in search of a job. But that’s not the way everyone sees it. We ignore those alternative viewpoints at our peril.
Fair points, Michael BG responding to me, thanks. And I can’t pretend competence to join in people’s economic arguments above. But on Brexit, two new points occur, and the subject is in the mainstream again, which demands IMO a firm response from us.
1. Citizens’ rights should indeed be upheld, whether those from the other countries settled here (as Labour are now defending) or of British people living abroad in the EU. But it has just been pointed out that unless healthcare remains cheaply available to retired British people in those countries, they will come home for treatment, and cost the NHS vast extra sums as a result. We must surely demand retention of those rights, both for the sake of our retirees abroad, and for the sake of the embattled NHS.
2. Apparently we are leaking support from young voters, who are turning to Labour because of their support for the abolition of tuition fees (however impractical that may be). Surely this is where we point out, as Tim has done so strongly in the past, that it is for the sake of our children’s future that we should remain in the EU, so that they can continue freely to work and live in other EU countries. This is more important in the long term than the student fees issue, and it was the youth vote that was strongest for Remain, presumably for the sake of retaining that freedom.
@ Katharine,
“And I can’t pretend competence to join in people’s economic arguments above”
This reminds me of when I was helping my daughter with her maths homework. She somehow convinced herself she couldn’t understand it when, in reality, she was more than capable.
Mercantilism means running a large trade surplus just for the sake of it. When gold was involved in international trade it perhaps might have made some sense. Mercantilist countries could stockpile large quantities of gold. Now they just stockpile other countries’ IOUs. Mainly US Treasury bonds or UK Gilts.
If a country stockpiles UK Gilts, it follows that our Government has to assume that debt. The total debt is just the sum of all previous deficits. So it doesn’t make any sense to say, as I understand Lib Dem economic policy to be, that it doesn’t much matter if the UK has a high trade deficit but it does matter if the Budget deficit gets too high.
The BIG problem with the EU at present is that there is no legal way for a deficit country to correct its trade imbalance, if it is part of the eurozone or if its currency is pegged to the euro, without throwing its economy into severe recession.
It is possible for the UK to correct its trade by devaluing the pound, or leaving the EU, but those are not Lib Dem policies either.
So something has to give somewhere! If the EU is to have any future at all the problem of trade imbalances has to be fixed and soon.
Lorenzo Cherin
This whole for or against the orange book is getting nonsensical, if it were not for the fact some thrive on it, to the detriment of harmony in our party and democracy at large !
A democratic party must be a versatile one or it is a sect !
The Orange Book is seen as the prime element in the shift of our party to the economic right. I am sorry that Contributor 2017 has not had the courtesy to reply to my query to him on this issue. I think it is very rude to put up an article and then not reply to people who ask questions about it. But he seems to be agreeing with this point, though in a way that supports that move rather than opposes it.
Part of the issue was that this was NOT done democratically. Clegg was extremely biased when leader towards appointing people who supported this shift to the right, and being dismissive of those who opposed it. The Coalition was used to firm up the shift, with those at the top of the party and responsible for its national image pushing a line that made us seem far more supportive of what the Coalition was doing than was the reality for most party members, and doing very little to point out that actually it was a compromise which due to the balance between the parties was much more towards the Conservatives’ ideal than the LibDems’.
Those who pushed the party that way suggested there was some big pool of new voters who would come our way because of it. Well, where are they? Our party now seems to be seen as a party of the wealthy business elite. It is very far from how it was seen when I joined it and was active in it, when it was seen as a party on the side of the people against elitist attitudes.
It seems those who pushed our party that way have no sense of humility or democracy or political balance, since I don’t think I’ve heard any one of them accept that perhaps it was not a good idea. Nor do I see any of them attempting to think properly about it in a balanced way, which would involve understanding why simplistic free market economics might not be delivering quite the real freedom to everyone that it propagandists claim it does.
@Matthew Huntbach
I am disappointed that Contributor 2017 has not had the courtesy to engage with the comments made on his article. It is a good thing I am not in control of this website because I would not allow anyone to have more than two articles posted on it if they did not engage with the comments section (including MPs and Lords).
@ Michael BG Maybe you hadn’t noticed, freedom of speech includes the right to remain silent.
Mathew Huntbach
So good to see your comments, and your need for responses. Unfortunately you insulted me some time ago on this subject, offended me , and I am not easily offended, not because what you said was offensive or rude , and not meant as that, because it was untrue and said in a very mean and bitter way.
You did not get back to me at all as a result of my response , which was ignored, I did not feel keen to discuss in a thread such as this one with you on these issues.
Yet because you are a thinking man and one of sensitivity I shall.
I do not like that you said I am blinkered in my support of the very types of free market , as you put it, laissez faire , as I would , economics, and subsequently, accused me of being far right !
Irony is I am on the whole in the centre, the radical centre , yet on economics am on the centre left !
There is some merit in what you write about these issues.
I prefer to not see the book or those you mention in a one sided way.
All of us are of different opinions. I disagree with Tim Farron on free movement, from left of him, I on the whole place the important need on uniting families with connections, often from outside Europe, was against the income threshold for spouses , and think we should train young people here for skills gaps,
I am a Liberal , a social Liberal and social democrat !!!
I am only right wing on locking up hardened criminals , murderers and rapists! Even there , just as much tough left wing as right wing in effect !!!
Matthew – Yeah, actually, the majority of LibDem Leadership under Clegg were right-wing Orange Bookers, while there should have been a balance between two groups.
Lorenzo Cherin
So far as I can see, you are an uncritical supporter of the sort of free market economics that used to be associated with Margaret Thatcher, and was opposed within the Conservative Party by those she termed “wets”. That is why to me, you are “far right”. Back in the days when I joined the Liberal Party and first became active in it, support for that sort of economic view would certainly have been seen as “far right”.
If it helps, please note that I regard those political parties sometimes described as “far right” as “centre” on the left-right scale. I believe that the description of them as “far right” was made up by socialists to hide the truth of their origins from socialism.
The point about the Orange Book is that it is seen as a key aspect of the Liberal Democrats moving towards a position that resembles that of Thatcherism when it comes to economics, uncritically accepting the notion that putting everything out on the free market is the way to improve life for everyone. Or, even further than that, suggesting that liberalism is all about passing control of things from democratic government to business. It seems to me that Contributor 2017 was using the term “Orange Book” in just that way.
I have already said that I accept the point that the Orange Book was a mixture of essays, rather than a coherent manifesto. Also, of course there is nothing wrong with people in the party expressing their viewpoint. That includes saying how free market economics can contribute to a more free society, and expressing concern if our party had become too much one which saw state control as the way to run things.
However, when I joined the Liberal Party, its position on these issues was very much a balanced one. No-one then used the term “liberalism” to mean politics centred around support for free market economics, yet now it seems that’s what people think the word means. Back then, the key phrase to define liberalism was “none shall be enslaved by poverty, ignorance or conformity”, so how did it manage to become “keep taxes as low as possible and reduce the role of the state in providing services”?
Mathew Huntbach
I would find people more convincing as Liberals if they said, sorry , I was wrong, or sorry, if I was wrong, or , just , sorry !
You say , as far as you can see, I am an uncritical; supporter of free market economics, and of the , guess what, Thatcher sort !
I marched against Thatcher as Grimond was saying she was doing Liberal things !
Find me one word in support of Thatcherism ie the laissez faire nature of economic policy from me !
Thatcher did do some Liberal things, but you cannot see one word in print from me in favour of Thatcherism of the sort you refer to ! Not a single one !
The rest of what you say is too good on certain aspects of policy and your level of input too intelligent to so completely lack humility .
In saying this above all , I am to the right of the party as I find the left , everywhere and the farther left especially, lacking self criticism.
I do not say it of you . You are a left of centre Liberal and I respect that .
Lorenzo Cherin
Well, ok, can you point me to any comment from you where you are critical of the idea of handing control of providing services to business and accepting that in some cases it is better done through government? Do you think Thatcher was wrong to privatise all the things she did? Do you think the Liberal Democrat leadership was wrong in the Coalition when it gave support to the Conservatives to introduce more market orientation in the NHS?
You are answering me with a very unfortunate response, I am neutral, on all those ,I support what can be good for any situation regardless of public or private .
As a traditional non -economically ideological Liberal on these things, where the market dominates we need more of the government, where the government dominates we need more of the market if it is to break poor monoplistic and unfeeling poor services.
Example, a young woman in the debates yesterday said she waited a year and more to see a counsellor or psychiatrist, it was a criticism of May.
Left say , often, its all the fault of the government, no , wait, of the privatisation, no , wait, which is it ?!
I say , why not give her the money from the state , in her own personal account set up by and funded by the government , or in her own social insurance pot , available to her and her gp , to purchase on a freelance basis, which gps are also, te services of a reasonably priced, locally available , professional.
This would not be my solution if we had massive , investment in the frontline of services rather than cuts and increases in administrators, etc.
I know a lot about the worst and best of the American and European models, with a wife from the US originally, a father from Italy.
My mother in law had a hysterectomy in a cottage clinic, private practice, local to her, in her eighties, no wait, no stress, paid for by medicare , which the late , great president Kennedy , a centrist non economically ideological liberal democrat and Liberal Democrat, started !
The best of both is more than a bread !!
@ David Raw
“@ Michael BG Maybe you hadn’t noticed, freedom of speech includes the right to remain silent.”
This site does not publish all articles it receives. LDV states “We can’t give you a cast-iron promise that if you submit a piece it will be published …” Therefore an argument about freedom of speech is not relevant when discussing the publishing and editing policy of this site. For me this is a site for the discussion of ideas and therefore taking part in that discussion is more important for me than publishing all articles submitted. (Also I did state someone could have their first two articles published if I was in charge of the policy and it was only after their failure to engage that I wouldn’t publish any more of their articles. However if there were circumstances that stopped them from engaging I would give them another chance.) I don’t think this site should be used to push someone’s ideas without that person engaging with those who respond. It should be a two way communication site.
@ Michael BG Well you’ve certainly remained silent as to your identity.
@ Michael BG Just to add to avoid any misunderstanding, I agree with your original post.
@Michael BG “It should be a two way communication site.”
I certainly agree that it is so much better when an author engages with the comments below the article on LDV. I remember being particularly impressed by Ed Davey finding time to do that while he was a Secretary of State.
@ David Raw
It was not clear from your “freedom of speech” post that you agreed with me.
There is no intention to hide my surname Berwick-Gooding behind BG.
(“Michael Berwick-Gooding is a Liberal Democrat member in Basingstoke and has held various party positions at local, regional and English Party level. He posts on this site as Michael BG”. https://www.libdemvoice.org/according-to-article-50-once-it-has-been-triggered-there-is-no-way-back-52440.html)
@ Michael B-G. Thank you, Michael. Appreciated and understood.
Lorenzo Cherin – The “trickle-down”/Washington Consensus neo-liberal Orange Book’s main author was David Laws, who was a far-right by Liberal Democrats standard (even on the right of Nick Clegg, who was a centre-right himself). You must distinguish between social far-right (Le Pen) and economic far-right (Thatcherism). Someone constantly preaches the virtues of “free-market economics” or “trickle down economics” is an economic far-right. The Orange Book’s neo-liberal nature alone was totally unacceptable.