One of the problems for politicians seeking to apply Keynesian remedies in an economic crisis such as the present one is that the master’s basic proposition about deficit spending seems to run counter to the natural instincts of ordinary people facing a similar crisis in their own domestic affairs.
The classic example of this was supplied by Margaret Thatcher, who learned her economics behind the counter of her father’s corner grocery in 1930s Grantham. Alderman Roberts taught his daughter that, when your takings fail to cover your costs and you start to run into debt, the right thing to do is to tighten your belt and cut spending – even if this means sacking the hired help and doing the work yourself.
So it seemed obvious to the Iron Lady that, when the same situation faced the nation as a whole, the remedy should be the same: apply the axe to the state’s spending until the books return to balance. To her Grantham-trained eye, any other remedy would be morally reprehensible, as well as practically mistaken.
However, in the real world, when all the sensible and prudent Alderman Robertses across the country are cutting their spending and firing the hired help, the immediate consequence is that demand in the economy dries up and commercial activity grinds to a halt. No one has any money to spend in anyone’s grocery, the debt continues to mount and still more hired help is fired.
So what is needed urgently is a big spender who will step in to fill the gap left by all the Alderman Robertses. There is really only one big spender big enough to match up to such an enormous job: the state. And that is exactly what the Labour Government of Gordon Brown and Alistair Darling, together with the Bank of England, have been doing – with some success so far. Happily, so is the United States government, together with most of the governments of the European Union and along the Pacific Rim.
Most politicians across the globe at last seem to grasp that this is the right thing to do. But there are two important exceptions to this near-unanimity. Unfortunately, they happen to be the man who wants and expects to be our next Prime Minister and the man who wants and expects to be our next Chancellor of the Exchequer.
David Cameron and George Osborne may have been educated at Eton and Westminster (Keynes went to Eton, too, by the way, so don’t knock the place), but their outlook seems to be grounded in the biscuit tins and sugar bags of Alderman Roberts’ grocer’s shop, just as firmly as Margaret Thatcher’s was. The consequences could be dire for the rest of us if they get their hands on the levers of power.
Just how dire was already fairly clear before this month, but the full nightmare quality of the risk was finally made plain at last week’s Tory Party conference in Manchester. Osborne’s speech, with its lip-smacking list of targets for the axe, raised the curtain. Cameron’s speech put the full show on the stage.
Listening to him, I was brought up with a jolt by one incredible phrase that encapsulated the falsity of the entire Tory thesis. Correctly identifying the role of the state as the big argument in British politics today, he went on: “Labour say that to solve the country’s problems, we need more government. Don’t they see? It is more government that got us into this mess.”
It is a phrase that might have sprung directly from behind the counter of the Grantham grocery – not just mean-minded and petit bourgeois, but in flat defiance of the lessons of the past 12 months, let alone the past century. Ordinary folk may not fully grasp the subtlety of the Keynesian message, but they sure as hell know it was the bloody bankers who got us into this mess and not the Government.
Cameron’s patent wrongness at last provides real hope for the Labour Party. Labour now has the chance to hang that phrase round Cameron’s neck at every opportunity. One can only pray that Labour MPs will now lift their eyes from their expenses sheets long enough to get on with the job of defending their constituents’ interests.
* * *
Just before the Second World War, Jack Jones and thousands of other brave young Brits travelled secretly to Spain to fight the advance of fascism. They failed – and about a third of them never came home. Jack was badly wounded.
About that time, Lord Rothermere’s Daily Mail was supporting Franco, backing the West’s refusal to sell arms to the democratically-elected government of Spain, endorsing Neville Chamberlain’s appeasement of Hitler and praising Oswald Mosley’s blackshirt thugs. A few years earlier, it had published the forged Zinoviev letter, which brought down the first Labour Government.
Last week, the Mail published a two-page article accusing Jack Jones of being a KGB agent. It was headlined, in enormous type, “Jack the traitor”. With such a record, one wonders at this barefaced effrontery. No wonder Michael Foot still calls the Daily Mail the “Forgers’ Gazette”.
