A joint statement from David Cameron, Ed Miliband and Nick Clegg (in my dreams)
These are tough times for our country and its people. After the shock of the global crisis and the scale of public debt which followed in its wake, it would have been hard enough in a benign global context to get our own economy moving, but now the perilous situation in Europe makes it much harder. Although the recent fall in unemployment is welcome, the combination of low salary increases and rising costs for essentials such as fuel, food and transport mean we are seeing a continuation of several years of falling living standards, something which tends to impact most on the least well-off in our community. And we are still relatively early in the process of reducing the public sector deficit.
This crisis is not just economic it is also political. Across Europe there is a trend towards more extreme parties advocating quick but unrealistic fixes to problems of public finance and economic competitiveness which require patience and long term adjustment. As we have seen, markets often react badly to political instability, worsening the situation and threatening to create a vicious cycle.
Here in the UK there are genuine differences between the Government and the Opposition about how we got to where we are and what to do about it. These debates are a healthy part of democratic debate and will continue, however, as the leaders of the three largest Westminster Parties we believe it is the occasion to put our differences to one side to agree an immediate policy response to the situation in which the country finds itself. More importantly, we are coming together in the hope that our example can encourage others in our nation to respond.
Fostering growth
We, together with our respective economic spokespeople, are working on an action plan to give an immediate boost to our economy. On the one hand, this means the Coalition is recognising the need to respond to the economic crisis, on the other, it means the Opposition underlining its short and long term commitment to addressing the UK’s public finance deficit.
In essence, our package combines a cross Party commitment to bring down the deficit year on year and to aim for fiscal balance by 2017/8 with an agreement to a substantial and immediate increase in capital spending, focused on housing and infrastructure. The injection of capital aims to boost the economy as well as addressing housing need and infrastructure priorities, while the cross Party agreement to a tough programme of deficit reduction signals to the market the strength of political will to tackle the underlying fiscal challenge.
As a token of its commitment the Opposition have indicated a willingness to allow its own fiscal plans to be reviewed and publicly assessed by the independent Office of Budgetary Responsibility in light of its commitment to deficit reduction. As a token of its commitment to national unity the Coalition have agree to work with the Opposition leader and Shadow Chancellor to agree the make-up of the capital investment package we will be announcing in the next few days.
Working together
In working together at this time the Party leaders hope also to mobilise the wider efforts of the British people. Whilst regulation and taxes play their part, we believe that much can be done on the basis of national commitment to tackling these issues together. In this regard we are calling on banks to step up efforts to make funds available to business for investment and growth. We are also calling on those many corporations with substantial reserves to be imaginative and bold in seeking to invest in new activity within their own firm and in promising new businesses in their own and other sectors.
Recognising the experience of other countries – such as Germany and Sweden – we are also calling on employers, employees and employee organisations to work together to try to ensure the minimum loss of jobs and the maximum creation of jobs. Within the constraints of fiscal policy we are open to suggestions from social partners as to shifts in policy which could assist strategies of employment maximisation.
More broadly, at a time when local authorities and other public agencies face difficult funding decisions, we call on citizens to recognise the vital role we can all play in making public investment go further and in strengthening community life; whether through supporting our local school or hospital, being a community volunteer or a caring neighbour. It is through tapping into the resilience and generosity of our citizens that this can be a time of renewal as well as challenge.
Celebration with purpose
The next few months will be a time of great celebration and pride for our country. We will be the centre of world attention with both the celebration of the Queen’s Diamond Jubilee and the Olympics and Para-Olympics.
In making this unprecedented joint statement it is our hope that this time of celebration and excitement can also be a moment of renewal in which we tap into the deep well of goodwill, creativity and resilience which is at the heart of our national character.
Leading up to the next general election in three years’ time we and our parties will offer different ideas of what is best for our country, indeed the Opposition and the Coalition continue to have very different views on many current policy issues. But as leaders we all three share a conviction that we can and should seek to contest the next general election against the backdrop of a country which feels confidence and hope for the future.
PS By the way, as part of our commitment to courage and good causes we are all donating £10 to Matthew Taylor’s mountain marathon appeal on behalf of that great institution the RSA. After all if an old timer like him can run 30 miles up a mountain carrying a full back pack then surely anything is possible.
Too old to rock and roll?
After spending a couple of days in Holland I’m feeling a bit flat, and that’s not just a pathetic geographical pun. I spoke on Monday evening to De Publieke Zaak a really impressive Dutch organisation which combines a mission to promote new debate and dialogue with a variety of projects aimed at challenging and supporting young people in deprived areas (although the Dutch definition of deprivation is a good deal less hard-core than Britain’s).
As anyone who ploughed through Monday’s epic post will know, I used the speech for another iteration of the 21st century enlightenment thesis. The speech went fine. An incredibly impressive audience (all of whom, of course, spoke perfect English) reacted thoughtfully and asked relevant and challenging questions.
Yet still, I couldn’t throw off the questions that nag away at me. Is the speech any more than a rag bag of the obvious reflections and unrealistic entreaties? And, what am I hoping to achieve by telling people my worldview? I’m not a bishop or a politician of even someone who has done important original research of my own. I suspect deep down I harbour the hope that at the end of the speech the audience will rise up and carry me shoulder high into the street proclaiming that at last they know the way forward. That’s about as likely as me being chosen as the next West Brom manager.
While in this reflective mood I get an email from Dr Linda East, who is based in the School of Nursing at Queens Medical Centre Nottingham and is also one of my closest and longest-standing friends. She tells me that based on a short conversation we had a few days ago she has developed a new typology (see below) which enables her to frame her thinking about the relationship between policy on health and sustainability. Actually all I did was listen to Linda and make a few suggestions but it is gratifying to think that an idea of mine is being used to frame her thinking and engage her students.
Two by two matrixes always make me think of that old blog favourite, cultural theory, and actually it maps on quite well. The medical model equates to a ‘fatalistic’ way of thinking (sickness is fate, leave it to the doctor), public health is the hierarchical perspective (experts telling us how to live better), self-help is the individualistic perspective and sustainability is the ‘egalitarian’ (a focus on solidarity and consciousness raising). I suspect Linda – who is very green – wants everyone to ascend the top right corner so I did remind her that cultural theorists encourage clumsy solutions which seek to engage each model of change
Put these two things together and I have a new personal metaphor. When it comes to ideas I am that bit of the space rocket that gets the thing off the ground and into the air (I think it’s called the propulsion system) and then drops off before falling back to earth. My dream is to land on the moon but I never get higher than the clouds. I guess that’s fine. We all have our small part to play in making the world a better place.
The only problem is I’m getting older all the time and somehow the idea of being a middle aged propulsion system isn’t very inspiring.
Enlightenment marathon (version 2)
In recent days I have been asking people to sponsor my crazy mountain marathon in Scotland in early June. I am incredibly grateful to those people – especially a very generous RSA Trustee – who have helped me get so close to my target of two thousand pounds toward the Great Room refurbishment. But to prove the dictum, ‘give him an inch and he’ll take a mile’, I am today making an even bolder request. How about reading my longest blog post ever? It is the final draft of a speech I am delivering to a Dutch think tank tonight. Most of it is a reprise of my 21st Century Enlightenment lecture in 2010 but I am always trying to inch these ideas forward and would love to know what readers think of the latest iteration….
I am excited to be giving this talk in a country that was the cradle of the Enlightenment. Although there were many different versions of the enlightenment as a movement, it had at its core three values; autonomy, universalism and humanism or freedom, justice and progress as we might refer to them today. Part of my argument is that we should question our modern interpretation of these values. But it is also apt to be here because the Dutch Golden Age vividly demonstrated the possibility of human imaginations and capabilities taking a leap forward. I believe that now may be time for another important advance in human development.
Necessity, insight and idealism shaped the Golden Age. In the face of the threat of Spanish imperialism and from the sea – not to mention fire and plague – a small emerging country needed to both a sense of national mission and to identify and exploit its distinctive potential in a fast changing world. It goes without saying that the enlightenment was a time of insight in which new ideas changed attitudes and new attitudes cleared the ground for further insight. The early Dutch state gave refuge to Galileo, a man whose scientific insights were seen quite rightly as a profound threat to religious doctrine. And the open inquiring culture of the nation then gave rise to a spirit of invention and ambition. And, as well as necessity and insight, the enlightenment was also a time of idealism, in particular a belief in reason and the possibility of man-made progress.
This evening I want to suggest that once again these ingredients – necessity, insight and idealism – could coalesce to shape what might be called a 21st century enlightenment.
Necessity, so it is said, is the mother of invention. Is there today a necessity for change? There are two answers to this question which cannot be lightly rejected. The first, cogently articulated by Matt Ridley in his book ‘The Rational Optimist’ is simply ‘no’. He celebrates a world where people live longer healthier lives than ever before, where global absolute poverty rates have halved in a generation, where citizens in the rich world enjoy experiences and opportunities unimaginable to their parents let alone grandparents. The average supermarket shopper today can buy better food than the Queen of England would have been served fifty years ago. For Ridley free markets, technological innovation and human ingenuity will solve tomorrow’s problems just as they solved yesterday’s, and this incudes environmental challenges.
On the opposite side is the argument that climate change, resource depletion and wider damage to the eco-system demand immediate and drastic changes in our attitudes and lifestyles.
If the optimists are right we can sit back and enjoy the journey, if the worst case environmental scenarios are accurate then change is likely to be extreme and perilous. But between free market optimism and apocalyptical prediction, I want to make a more modest suggestion; the existence and widening of a gap. This lies between the aspirations most of us have for the kind of world we want to live in, and in which we want our children and grandchildren to grow up, and the future we seem likely to create if we rely on current ways of thinking and behaving. I call this the social aspiration gap.
Let me identify some dimensions of that gap. Take jobs. Over and again in every nation, surveys have found that paid employment is a critical factor not only for people’s finances but also for their self esteem and wider well-being. As the worlds’s population grows we need to be creating something like three billion formal jobs yet the current total is something around one point two billion. Mass unemployment – particularly among the young – now seems endemic in many parts of Europe
What about heath and old age? Putting aside the absence of adequate provision in the developing world, in rich countries the costs of health care as populations age is putting an ever greater burden on public finances and the economy more widely. We all want to enjoy dignity and care when we become old and frail but in a country as rich as the United Kingdom this is denied to many and with years of public sector austerity to come the situation is deteriorating.
Despite the genuine progress made in countries like the Netherlands we are still in the rich world impacting the environment in a way, which were it to be copied by the developing world, would be completely unsustainable.
We want to live in societies which combine freedom and tolerance with shared values and norms and a genuine opportunity for all to succeed. At its most simple we want to live good lives, but in the rich world there has been a facturing of the relationship between prosperity and well-being and surveys show populations ever more pessimistic about the social future.
There are many things which could help to close the gap between aspiration and current trajectory but, surely, one must be change in the ways we, the people, think and act. This can be described in different ways, and the analysis will differ from country to country, but in essence we need citizens better to align aspirations and actions in three domains, the political, the personal and the social.
One thing about which most people seem to agree – it is certainly something which tends to unite the extreme left and right – is that the problem of politics is one of leadership, or its absence. In a sense this is true, but I think it is more accurate to say the problem now is one of followership. Having been encouraged to think of politics as a form of consumerism, we demand what we want – even though what we want can be incoherent and impossible – and then became enraged when we don’t get it.
The UK’s leading opinion pollster has summed this up neatly; ‘what the British people want is simple’ he says ‘they want Scandinavian welfare on American tax rates’. Tax and spend is not the only example. Polls in the UK also show people want power devolved but are also indignant when service standards differ from place to place, that we accuse the state of interfering too much in our lives but the moment anything goes wrong our first inclination is to demand the government does something about it. We condemn politicians for failing to address the long term yet demand that they meet our demands in the short term.
Closing the social aspiration gap requires a political discourse through which we engage with the kind of choices that have to be made on our behalf and also appeciate the degree to which the choices available to leaders depend upon our own willingness to be responsible. For example if policy makers face a trade off point between economic growth and environmental sustainability, where exactly that point falls will depend on the choices we make as citizens and consumers.
In the next few weeks and months Dutch political parties will choose their leaders for the forthcoming election. An attribute we tend to prize in politicians is their ability to convince the public they can meet their demands and solve their problems. Today, instead, we need the opposite; the ability to persuade people that their demands are often unreasonable and that we must find ways together of solving our own problems.
Which takes me to the need for more personally responsible and resourceful citizens. With the funds available to the state limited and with demands on the public purse rising, and in a world where change becomes faster and competition more intense, we simply have to accept greater responsibility for meeting our own needs and building our own capabilities. This means looking after our health, renewing our education and skills throughout life, saving for our retirement. It means being more entrepreneurial, more risk taking. Greater resourcefulness may require a different mindset. There is much discussion around the world about the capabilities we should now be teaching children, for example, instead of educating young people to fit in to a job that already exists we may need to prepare them for a world in which they have to create and recreate their own job.
And in the social domain we need a citizenry that sees civic engagement, volunteering, philanthropy, or simply being a good neighbor – as an inherent part of living a proper adult life. The state and the market will not suffice, we must release the hidden wealth of sociability, solidarity and compassion. At the same time as geographical mobility and changes in family structure are creating an epidemic of isolation and loneliness, more and more evidence underlines the importance of face to face social networks as a source of resilience and opportunity for the individual and the community.
By now you may be asking: so what? If people were better the world would be better; is this anything more than a pious truism? Perhaps the reason something can appear self-evident but yet rarely articulated is that this perspective runs counter to two powerful intellectual perspectives in contemporary political thought, perspectives which also permeate everyday discourse. From a leftist viewpoint a focus on citizens obscures the determining effect of deeper social structure. It runs the risk of blaming the victims of alienation, powerlessness and injustice for their plight. From a free market perspective, the attempt to change people is in danger of legitimising social engineering when all this is needed is for the hidden hand of the market to transform individual utility maxmisation into progress.
Free market thought is underpinned by a simple and mythical theory of human decision-making. Debunking this theory brings me to the second condition for a new enlightenment; insight. The idea of a social aspiration gap suggests a number of areas for new thinking ranging from the way we do politics, to how we educate children to the design of public services and institutions – the kind of questions the RSA explores in its research and development - but running beneath these inquiries is a deeper set of questions; about what makes human beings think and act as we do.
As I have said the model of human behaviour which has come to dominate public discourse and the assumptions of policy makers, especially in the US and UK is that of free market economics. Human beings are seen as rational, perfectly informed and utility maximizing. As an heuristic this idea may have its uses, but as a description of who we are and how we decide it is widely inaccurate. We are often not rational, we are rarely if ever perfectly informed, nor, unless one uses an entirely circular defintion, do we appear to we maximise our utility.
From a variety of disciplines but particularly behavioural economics and social psychology, there is ever more evidence of the complexity of our nature. And what behavioural economists and social psychologists observe in real life and research studies, neuroscientists can correlate with brain activity and evolutionary psychologists can in part explain from deductions about human development. As Daniel Dennett has said we are trying to navigate a fast changing modern world with a prehistorically evolved brain.
Here are some examples of how badly we fit the model of homo economicus:
When it comes to decisions including financial decisions we are driven by what Keynes called our animal spirits. This kind of herd mentality was displayed before the credit crunch but it is endemic in modern markets, something we should have learnt from the experience of 17th century traders in Tulip bulbs.
Reseach shows that our process for making moral judgements seems primarily to involve reason providing a rationale for our instinctive, unthinking response. As Robert Heinlien said ‘man is a rationalizing animal not a rational one’
Generally, the friends we have appear to make more differences to our behaviour than the individual resolutions we make. And by the way the number of active friends our brains can handle may have been set by evolution at the Dunbar number of around 150.
We tend systematically to exaggerate our own virtues and abilities, the vast majority of us think we are above average drivers, we over-estimate the amount go money we give to charity.When bad things happen to us we instinctively blame misfortune but when others suffer setbacks we find reasons in their character.
So bad are we at acting today in accord with our wishes for tomorrow that StickK, a successful web-site in America, helps people keep to commitments like giving up smoking or completing a book by pledging money to their least favourite cause immediately payable if they break their resolution. Apparently the George W Bush memorial library has been the biggest beneficiary of this scheme.
And, as Stanley Milgram and Philip Zimbardo vividly demonstrated, in the right circumstances even the most humane person can easily be persauded to behave like a sadist.
The list of ways we don’t conform to free market’s theories model of homo economicus goes on and on. But two key, related, points stand out. Human behaviour is considerably more instinctive and more social than it feels to us or that modern culture encourages us to believe. This does not require us to abandon the idea of consciousness nor deny the uniqueness that lies in the human species capacity to think about thinking and to make meaning. But individual consciousness is an emergent capacity of a species that is instinctive and social. Plato talked about the wild horse of emotion and the wise charioteer of reason but it is more accurate to see our conscious will as the rider of an instinctive elephant, its choice of route across the jungle highly influenced by the paths laid down by social habits, norms and clues.
New thinking about human nature has important implications for political thought. The challenge to free market individualism is pretty obvious but there are questions too for a liberal left which has tended to view traditon and convention as holding us back.
An important analysis is offered by the economic historian Avner Offer in his book ‘The Challenge of Affluence’. Offer explores that recent fracturing, I described earlier, of the relationship between rising prosperity and well-being in the UK and USA. Why is it that being richer isn’t any more a guarantee of being happier? Offer argues that since the enlightenment, society has developed norms, institutions and processes which help to protect us from some of the cognitive frailties I described earlier, and in particularly our tendency towards self centeredness and short termism. He calls these social inventions ‘commitment devices’ and we could include in them marriage, loyalty to church, trade union or civic association, and norms and rules limiting debt and credit. But as affluence increased in the post war decades and the shrill ideology of consumer capitalism became more dominant we come to see these devices as mere constraints on having what we want and having it now (which, by the way, the economics profession is helpfully telling us will lead to the greater good).
New thinking about human nature has important implications for politics. To an open minded right of centre thinker, a more instinctive and social model of human behavior makes it harder to ignore the impact of social arrangements on individual resilience, opportunity and well-being. To an open minded thinker on the left it leads perhaps to a greater respect for tradition, for social norms, for the importance of values of restraint and even deference.
But these are responses to the way we are now. If necessity says we must change and insight challenges us to develop different models of change, idealism lies in the conviction that human beings can achieve both a higher level of social functioning and greater individual fulfillment.
Perhaps we should see the world today, and the sense that we may lack the tools to solve some of our most pressing problems, as marking a stage between the conditions in which we evolved and the capabilities to which we might aspire.
We evolved in conditions of stable and unchanging social organization in which simple structures of authority and decision making authority. We aspire to wise and responsible self-government yet now find ourselves unwilling to be governed but not yet able to govern ourselves.
We evolved in conditions of homogeneity only knowing people exactly like ourselves and generally responding with suspicion and hostility towards those we did not know. We aspire to live in a world where each person is accorded the same worth and where freedom and pluralism are underpinned by a framework of shared values and mutual respect. Yet now we find – and this is a point I hardly need to make to this audience – that issues of identity, nationalism and conflicting world views are febrile and intractable while our increasing global interdependency has yet to be reflecting in anything resembling global citizenship.
And we evolved in a subsistence economy, where – if we were fortunate – we had what we needed but very little more. We aspire to live in a world where we can live the good life, having in and around us those things which provide the soundest basis for fulfilment and wellbeing. Yet now in the rich world we suffer from various forms of over-consumption. In the memorable phrase of Tim Jackson ‘we spend money we don’t have on things we don’t need to make impressions that don’t last on people we don’t care about’.
Kant suggested that the enlightenment was the moment when the human race entered adulthood. But then we look around today’s world and particularly full of change, confusion, self obsession, resentment sometimes it feels we are stuck in the stage of late adolescence. Whether we grow up depends on many things – some of them perhaps not within our control – but history shows that ideas and their social expression in culture matter. When it comes to the values that might guide us to greater maturity, a starting point is those which were the well spring of the enlightnment.
Autonomy, that each individual should have the freedom to develop their own life (and their own relationship with God) was a revolutionary idea with revolutionary consequences. But in modern culture too often freedom is equated with mere possessive individualism. Instead, reflecting on our human nature, we need a richer idea of autonomy, one which is both self aware – in that it is a state not given to us but that must be earned through reflection and restraint – and socially embedded – in that genuine autonomy is a characteristic of a society not simply an attribute of individual.
Universalism, the idea that all human beings should be accorded dignity and respect, was not of course really universal at all in the 17th century, not if you were poor, not if you were woman and brutally so if you were not European. But since then the rise and rise of human rights – although far from complete – has been perhaps the enlightenment’s proudest legacy. But while the rights project has advanced, have we left human emotion behind, making a proejct of liberation easy to characature as a cage of political corectness? Remember, our evolution bequeaths us a tendency to find difference threatening. So the question how we live together in our communities, in our nations, in a shrinking world of depleted natural resources is not an easy one to answer, particularly as we become less obedient to the paternalism of a well-meaning elite.
The question for the future is not so much the rights of man as the cohesion of humanity. What are the competencies, institutions and frameworks which will provide the foundation of respect and reciprocity necessary for us not just to survive but to thrive in our growing interdependency? To take just one aspect of this challenge, how can we move beyond religious sectarianism and strident atheism to a deeper understanding of the spiritual dimension of life, one which allows those of different faiths and none to focus on what unites rather than divides them?
And finally humanism. The idea that human beings should arrange society in the way that maximises their wellbeing rather than according to the dictates of tradition or scripture. In the face of necessity and with insight into our human nature, can we create a space beyond the logic of markets, science and bureaucracy, a space to develop vivid, concrete and mobilising ideas of what the good society might be and what might be involved for all of us in moving toward it?
Perhaps the economic crisis will pass and health economic growth will return bringing with it full employment and expanding social provision. Perhaps climate change is an exaggerated threat and can be solved with a technological fix. Perhaps conflict betwen identities and beliefs will subside to a grudging stalemate. But perhaps not.
Perhaps a better future now relies on us becoming the people we need to be to create the future we say we want. Perhaps in this quest we can be guided by a more subtle, concrete and modest account of who we are as a species. And perhaps necessity and insight can be joined by idealism.
We have come a long way since the Dutch golden age heralded the emergence of a new world view. But there is further we must go and some of it in new directions. For surely the very essence of progessivsm lies in the conviction that the greatest chapters of the story of human development have yet to be written.
No pain, no gain
Controversy has been sparked by Health Secretary Andrew Lansley’s decision yesterday not to publish the official internal risk assessment for the NHS reforms. His explanation is cogent, making the case to retain ‘a safe space where officials are able to give ministers full and frank advice in developing policies and programmes’. When Labour spokesperson Andy Burnham says ‘this disgraceful decision is a cover up of epic proportions’ we must, assume, first, he has forgotten that the Labour Government of which he was part would never have dreamt of publishing something so dangerous and, second, he has fully consulted his shadow cabinet colleagues – particularly Mr Balls and shadow defence secretary Jim Murphy – about this radical commitment to treat departmental policy development as a totally open book if and when Labour returns to office.
But while understanding the reasons for Mr Lansley’s decision in practice I think it is wrong in principle. Of course, were the risk assessment published it would lead to a slew of alarmist headlines. By definition risk assessments are there to interrogate worst cases; for example the RSA’s includes fire and flooding as well as IT melt-down or a sudden drop in Fellowship recruitment.
When I was in Downing Street we took it for granted that when an evaluation of Government policy was, say, 80% positive it would be the other fifth which would be the story. In news coverage of the risk assessment, the detailed metrics of the Departmental evaluation would be ignored or come well down a news story highlighting all the terrible things that could conceivably go wrong with the reforms. (By the way, as Ben Goldacre’s deconstruction of cancer scare stories vividly underlines, the problem of proportionality in risk reporting isn’t just one for politicians.)
However, there are two principles which outweigh my natural sympathy for ministers and officials and scepticism about the press. First, the simple question of public accountability; if ministers are taking big risks with our money and our services and if open government means anything, surely we deserve and need to know about it? By all means ministers can tell us why they disagree with the assessment or why they think the risk worth taking, but to supress the assessment itself is hard to justify and will simply lead people to assume the worst.
The second reason goes back to that old RSA favourite ‘the social aspiration gap’. As my regular reader will recall (‘hi mum, lovely to see you the other night, try to not to work so hard’), the idea of the gap is that in certain ways we need to enhance citizen capabilities if we are to create the future most of us say we want. One of those attributes is greater engagement, by which is meant a capacity in citizens to recognise and relate to the difficult choices which need to be made by us and on our behalf.
In the same newspaper in which I read about Mr Lansley’s decision there is a powerful column by Daniel Finklestein. The Executive Editor of the Times expresses his anxiety at the rise of extremist populism across Europe and calls on voters to face up to the necessity of hard choices on the road back to economic stability. But, as he says, to escape the folie a deux of dishonest politicians and an unreasonable public requires a step change in the candour and courage of mainstream leaders; ‘At the last election no party felt able to level with [the voters] about how bad things were, and what would be needed to put things right because they correctly divined that if they tried to do so they would be horribly damaged’.
Which takes us back to Mr Lansley’s dilemma and the case for sharing Governmental dilemmas with the public. Any genuine economic and fiscal risk assessment carried out before the last election would have forced politicians to confront the issues more openly and honestly and would have prepared the voters better for what was ahead.
Medium term pain for long term gain: what’s true for the economy is true also for the quality of dialogue between politicians and citizens.
PS: On the subject of risk, it’s now less than 4 weeks until I try and do a mountain marathon in aid of the RSA Great Room appeal. I haven’t actually done a risk assessment, but on the basis that risk needs to be balanced by gain, all donations gratefully received …
The tragic irony of Plan B
As the astute Will Davies describes here, the last few years have seen a paradox: even though the credit crunch was in many ways an indictment of free market economics – and the orthodox economists who propounded it – the period since has seen this perspective continue to define what is and is not possible in the face of the impact of the crunch. For example, Bank of England Chairman Mervyn King appeared both to admit in his BBC lecture last week that the Bank should have intervened when the markets were overheating, while generally resisting the idea that anything of significance (beyond quantitative easing) can be done now the markets are failing to bring about growth.
It seems that when it comes to market economics, we are like the followers of an end of world cult that was the subject of a famous study by social psychologist Leon Festinger. When the apocalypse predicted by the leader failed to materialize on the appointed day, his followers had to choose between rejecting their previous worldview or finding excuses for the prophecy failing; they overwhelmingly chose the latter.
I am not against economics, indeed I think everyone interested in public policy should have a basic grounding in the subject, but used as the basis for policy advocacy, economic predictions lack reliability, are bound up in disputed social and psychological assumptions and often betray political predispositions. One example lies in what could be termed the tragic irony of plan B.
In the face of last week’s local election drubbing and the resulting soul searching in Government, there is a strengthening case for a little judicious loosening of the binds of austerity. Some additional public sector capital spending plus more comprehensive underwriting of bank loans to SMS might not be a bad start. Such an adjustment would be in keeping with the shift of opinion against pure austerity in Italy, Spain and now France.
The idea that such a loosening would on its own lead to a huge backlash by the markets and spiraling borrowing costs for UK debt seems alarmist given that the markets are continuing to offer cheap loans despite the UK already having substantially overshot the debt levels which George Osborne predicted just two years ago.
But here lies the irony: because, for a variety of non-economic reasons, the markets trust the Chancellor and Prime Minister, the Government could almost certainly adopt a slightly more expansionary strategy without an adverse reaction. In contrast, if the Liberal Democrats switched allegiances tomorrow and an incoming Chancellor Balls was to take the same actions this might be seen as the thin end of the wedge and the markets could punish him.
In other words Balls’ approach may be best but only if it is implemented by Osborne. It is the economic equivalent of the Nixon to China phenomenon in which it is easier for hard liners to compromise than those who are suspected of lacking ideological rigor.
Although it arguably more relevant to public disgruntlement than all the other issues being chucked in the blame frame by anxious Conservatives, there is no sign of the Coalition shifting policy on austerity. But that the success of an economic policy might depend so much on whether the person implementing it is trusted does reinforce the contingent nature of economic prediction.
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