Brown and the danger of defensive protectionism…

Over at Brassneck I argue that there is a dearth of serious thinking (Burke’s Corner being a credible exception to that rule) on the Tory side of the house about an international crisis that’s well in train and shattering not simply the UK government’s expectations, but some of the incredibly narrow terms of debate popular on the British right. The messagespace like below is worth hitting the link below and picking up the WSJ’s interview with Gordon Brown, who alone amongst world leaders seems capable of speaking cogently and coherently (and God help us, wittily) on the subject…

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  • Greenflag

    Thanks Mick an excellent summation by Mr Brown on why the world economy is where it is and showing a possible exit from the downward spiral .

    ‘and shattering not simply the UK government’s expectations, but some of the incredibly narrow terms of debate popular on the British right. ‘

    It’s not just the British ‘right’ that is having it’s assumptions shattered .

    However the fact that Brown and Obama and many others are coming to a consensus is a positive and we should see more of this as we progress through the summer .

    I’m not hearing any ‘solutions ‘ from the right bar the modern equivalent of the laissez faire of the mid 19th century when the answer to the Irish famine was to let the people starve as that was clearly nature’s intent and to keep exporting corn to the already well fed on the larger island .

    In todays world the equivalent would be -let the banks collapse throw 12 million people out of their homes (USA )-reduce social welfare and leave the poor immigrants and the poor indigenous to fight it out over any scraps that are left .
    Meanwhile it’s okay to pay out millions of dollars in bonuses to the criminals who ‘legally’ by a few clicks on their mouses ? (mice ?) have looted the pension funds , savings and jobs of tens of millions of people around the world. The only thing left for the neo conservative right in the USA to loot is Social Security and Medicare benefits . Some are already on the march to extract the last few drops of ‘life’ left in the emisserated ‘american middle class’

    If that is all the ‘right ‘ can come up with as a solution I have some news for them . Communism can be made to work albeit temporarily .

    BTW Brown is not alone in his clarity . Obama ,Merkel and Sarcozy in their own ways have been just as clear . Your impression of Brown’s clarity might just be familiarity dressed up as local bias .

  • frustrated democrat

    Mick

    I fear you are hearing what you want to hear.

    Consider these facts

    The total debt of the UK government, including banks, PFI’s, Pension shortfalls etc. etc.) is about is about £3 trillion (excluding personal debt) that equates to about £100,000 per employee in the UK. If we use £25,000 as the average wage and 66% as the tax take from individuals, then the tax burder per employee is about £65,000 or 17 years to repay and that is on top of the annual spend to run the country. So we are looking at 35 years to repay or much, much higher taxes

    So on the basis of what we have spent already it will take our grandchildren to repay the debt.

    What right do we have to spend more money and lumber future generations with more of our debts so we can live better now?

  • frustrated democrat

    Mick

    I just found this link via Iain Dale – well worth watching for why Brown is wrong

    http://www.youtube.com/watch?v=94lW6Y4tBXs

  • Just to link what Frustrated Democrat said about debt to the topic of deflation, back in November 2008, David Cameron made a specific reference to the Japanese experience

    http://www.conservatives.com/News/Speeches/2008/11/David_Cameron_The_choice_on_borrowing.aspx

    when he talked about the uselessness of the attempts to stimulate the economy by fiscal relaxation which results in no achievement except making the burden of debt much greater for future generations.

    The simple approach of the Government to combating deflation is to print more money (increase the money supply). That is what the Government is doing right now but I do not think it is enough. I have also argued that they need to combat property/asset deflation.

    http://torystoryni.wordpress.com/2009/02/26/action-is-need…erty-deflationaction-is-needed-by-the-government-to-prevent-property-deflation/

  • Mick Fealty

    Good party political spake from Dan, but if you follow the logic of my argument on Brassneck, you’ll see I cover that problem in the first sentence.

    The UK cannot afford to take a practical lead; but the truth is much wider than the UK’s bust budget.

    But, and here’s the scary bit, the international money markets are screwed (that’s nothing to the havoc a collapsed nuclear power and climate change gathering pace are likely to wreak on the ).

    And yet we get nothing from the Tories but homespun stories about how Labour didn’t mend the roof when the sun shines. Brown may well be wrong. But there is a big difference between saying he’s wrong and showing us another way through. The sustained silence on the latter is, frankly, somewhat unnerving.

    The Reform think tank got it just about right before Christmas. The stupid cuts in the last recession in the early 90s made Brown’s stupid spending genuinely popular in the early naughties.

  • frustrated democrat

    Mick

    Not knowing the right answer doesn’t mean that you don’t know the wrong one.

    Leaving future generations in such debt to save ourselves cannot be the right answer. We made the mess we need to sort it out whichever way we can without passing the cost on.

  • Mick Fealty

    Yes, but knowing for certain what the wrong answer is (when you patently cannot know what it is for certain) is just as worrying. I only hope the apparent vacuum at the heart of the Tory offence here is just that: apparent and not real!

  • Mick Fealty

    Here’s my finish from Brassneck:

    …the Tories, who had matters well planned for a domestic post bureaucratic revolution, would do well to begin investing heavily in boning up on the one subject it has thus far ignored for being too unpredictable: foreign affairs. And to do so now, whilst the UK still has considerable influence within its overseas networks.

    This is a moment in history where there are no domestic policies that are not first conditioned by a country’s response to external pressures. Far from winning the argument on the recession, the Opposition (and likely next Government) has barely begun to recognise the scale and implications of the problem.

    And it’s a moment when the UK needs the Conservative Party to weigh in as something considerably more than the ‘Stupid Party’ of classic caricature…

  • Mick Fealty

    As for future debt I buy that, sort of. Or I will buy it when you or someone else can tell me how we get out of this particular hole without the kind of debt that was exponentially incurred in trying to sort the mess the lightly regulated markets got themselves twisted in!!

    In short, Brown is right about the systemic nature of the problem and that saving nations will now have to spend their accumulated riches if the system is not to collapse, and the need to define new and widely acceptable global standards for market regulation. Even if it cannot save him at the next election.

    Now I know for a fact there are prominent members of the Tory parliamentary party who have a good working understanding of these problems. The trouble is they do not seem to be being heard.

    It would be better if, as a party, they were to able hit the ground running and pick up the multilateral momentum Brown has got started.

    At the very least it would provide more reassurance than this regressive display of playground politics we’re being treated to now.

  • frustrated democrat

    Mick

    I think everyone is aware of the magnitude of the problem and its spread around the world.

    We are also aware that spending our way out of recession is passing the parcel on, you can see where we are so far in my post above. We have sold the family jewels and mortgaged the estate to the hilt and left the repayments to the heirs.

    We need to cut expenditure now and drastically, the current Conservatives may not agree with me on this but without applying the ‘Micawber principle’ to the UK’s finances means we are continuing to live way above our means.

    It is time to face up to the real problems within the UK and not talk exclusively about the world’s problems as though our serious internal problems don’t exist – one example is the pensions shortfall in public pensions whuch is a time bomb wating to explode, another is the growth of the civil service over the past 30 years.

    We have to reduce the cost of running the UK and stop putting money we don’t have on double 00.

  • Mick Fealty

    Cuts are a given. So are rising taxes, though you’ve not heard about that. The size of the hole is bleedin’ obvious. But check out that ‘danger of thrift’ Analysis programme I link on Brassneck…

    If, unlike me, you managed to buy an iPod before the recession, it’s good value as a podcast…

    Night…

  • DC

    Mick what you have is a David Cameron that belongs in the 90s, he is good for when the times are good like Blair, but 10 years of Blair wasn’t good enough.

    I remember a copy of Marxism Today that came out of hibernation and published a title re Tony Blair: The Great Moving Nowhere Show. Moving nowhere is fine if the current position is fine.

    Blair was a respone to ruff Thatcherism and the off-putting rough and tumble macho Toryism of the late 90s – with all the backstabbing.

    Cameron is just another Blair, and 10 years of Blair wasn’t good enough, it was nice-making-people-feel-better stuff, which is okay when the economic framework seems to be perfect, but I can’t help but think that Cameron is out of his depth.

    Dare I say it, but perhaps it is time for a bit of ideology to enter the fray and less pragmatism that is all about diverting negative media attention from one party onto another, etc. Or should I say the noughties are a time for less Peter Mandelism re media manipulation and spin and a time for more well-developed thought, which might prove to be unpopular but important.

  • Greenflag

    frustrated democrat ,

    ‘Leaving future generations in such debt to save ourselves cannot be the right answer. We made the mess we need to sort it out whichever way we can without passing the cost on.’

    Sounds fine in theory but if we can’t save ourselves there won’t be any future generation to save either or worth saving .

    As to ‘we made this mess ‘ Speak for yourself;)
    This mess was a long time coming . The list of those ‘responsible ‘ would be a long one but close to the top would be

    a) the ‘unregulated ‘ shadow banking institutions mainly in the USA and the UK .

    b) the development of sophisticated financial engineering tools in Wall St and the City and around the world which enabled the shadow banking sector to create a very sharp edged financial boomerang which after a decade or so has returned to ‘decapitate’ Wall St and the entire world economy .

    c) the confluence of all the above under a neo conservative administration in the USA and a ‘lazy fare’ administration under Blair .

    d) Governments ‘pretending ‘ that all was well for so long that they never bothered to check their own pretense

    As to how to exit this recession and avoid a major depression it seems that there is no ‘ideological ‘ tailor made strategy for these ‘globalised ‘ times . How can you get people to ‘spend’ their way of a recession when people all over the Western world know that their ‘overspending ‘ is what helped to deliver the recession in the first place ?

    This is the ‘long bridge ‘ which Obama and Brown have to cross while persuading the Germans and French that it’s possible and is the only hope to averting a world wide depression which would spark political turmoil -wars -famines etc.

    Can it work ? The Chinese ,Japanese , Koreans , Germans (yes even Irish prior to PB (property bubble ) days have/had a predeliction to save not spend . At a time when retirement funds have evaporated , shares plummetted in value and housing equity gone negative or cut in half or more ,tens of millions of people’s faith in the future has taken a beating .

    So it’ll be fixing the banks – new regulations /overhaul of the entire shadow banking sector – new financial powers for the Federal Goverment and the British and other Treasuries together with a reviving stockmarket and upswing in economic activity . All of this will probably not happen in a timely enough fashion to save Gordon Brown -but as Mick points out above the ‘opposition ‘ just expect to walk in because ? well because they are there ?

    Could be a risky strategy for Cameron particularly if Obama and the other leaders ‘efforts ‘ begin to bear fruit by the end of this year which I confidently expect .

    DC ,

    ‘Blair was a respone to ruff Thatcherism and the off-putting rough and tumble macho Toryism of the late 90s – with all the backstabbing.’

    And don’t forget that ruff Thatcherism was also a response. A response to the mayhem of mid seventies Britain with its numerous strikes , mountains of rubbish in the streets and coal miners reportedly planning ‘red’ revolution.

  • frustrated democrat

    Greenflag

    Everyone who has a vote is reponsible we either took part in the voting system to elect a government or didn’t bother to vote – so no one can say ‘it wasn’t me guv’.

    Swingeing cuts now will benefit our grandchildren, it may damage us in the mean time as our standards decline, but we will reduce the debt burden for the next generations just as the environmentalist believe we are storing up massive problems for the future with climate change. There is no difference, it is up to us to meet our liabilites not pass them on which is what is happening now.

    I find it incredible that the link in my post (at 3) has generated almost 750,000 viewings in just over a day with the MSM ignoring it – I wonder why? It is very interesting in what it says about Brown