Back To The Thirties, As Britain Makes A Right Turn Towards Depression Disaster – Column 25.4.09

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JOYCE MCMILLAN for The Scotsman 25.4.09
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DON’T LOOK NOW: but as someone with a bit of an interest in the history of the twentieth century, I am beginning to experience a frightening sense of deja vu.   Eighty years ago, after all, both Britain and the United States faced an economic crash as severe as this one; and in both cases, the collapse of a “bubble” in the stock market and the financial sector led rapidly to a sharp and painful decline in real economic activity – to falling prices, failing businesses, and unemployment for millions of previously hard-working citizens.

In the 1930’s, though, the two nations produced very different political responses to the crisis.  America turned sharply to the left, placing its faith in Franklin D. Roosevelt and his interventionist “New Deal”.   Britain, by contrast, moved sharply to the right, and stayed there throughout a grim decade of misery for many, starvation for some, and economic activity so depressed that many industrial areas wore a look of poverty and shabbiness into the early 1960’s.

And now, to my distress, I think I can see the same pattern beginning to emerge again, in the aftermath of Alistair Darling’s frighteningly frail crisis budget.  Following two terms of George W. Bush, America has just moved decisively leftward, electing a new Democratic President who both speaks with tremendous moral authority, and also seems unafraid of massive state intervention designed to keep the American economy moving, to prevent the worst extremes of social damage and division, and to make some structural shifts towards an economy better designed for a 21st century future.

But in Britain – well, just look at the situation in which we find ourselves, as Gordon Brown’s dying government is steadily torn to shreds by a Westminster media village now baying for change.  On one hand, we have a Labour government which has failed, both morally and practically, precisely because it made too deep a compromise with unregulated capital markets.  On the other, we have a Conservative opposition, now almost certain to win the next Westminster election, which is supported, in its bid for power, by a growing roar of right-wing commentary which evidently sees the coming of a new Conservative government under crisis conditions as an opportunity for once again hacking back the British public sector, while leaving high earners, in particular, to dispose of their income as they please.

The self-pitying roar of the media elites when threatened with measures like the new higher tax-rate for those earning more than £150,000 a year is, of course, one of the most unintentionally hilarious features of British public life; it is particularly entertaining to hear them dismissing this measure as an “attack on talent” at precisely the moment when most of Britain’s well-paid boss-class have been revealed as having no talent at all, except for paying themselves excessive sums.   But the influence these people wield in shaping public opinion is not funny; and neither is the fact that they now have their friends in the totally discredited credit-ratings business – the ones who detected nothing wrong with so many failing banks – threatening the whole British people with the loss of our collective triple-A status, unless we elect the kind of government they like.

Now of course, any new government coming to power in Britain over the next 15 months will have to make deep public spending cuts.  But it seems to me a recipe for disaster to have those cuts made by a party, and a rabble of privileged supporters, who are so profoundly historically indifferent to the fact that the arguments against cutting public expenditure at the height of a depression are almost as powerful as those for doing so, from the straight moral argument that it is simply wrong to make the some of the most vulnerable people in our society pay the price of  economic depression, to much more complex arguments about the way in which, in advanced economies, public and private sector investment works together to sustain economic creativity.   But when the Daily Telegraph and the Daily Mail are in full cry for a new age of austerity in the public realm, and low taxes for the suffering rich, then the crucial British swing voter, that unlovely combination of avarice, ignorance and snobbery, is notoriously unable to resist their call.

Except, of course, in Scotland; for if Gordon Brown and Alistair Darling want to survey the whole picture of the ruin they have wrought, then they might as well add, as the cherry on the cake of their misery, the probable wreckage of the Union between Scotland and England.  For deep psychological and cultural reasons, the vast majority of Scots will never take the negative view of public spending so easily embraced by the Telegraph, and so ingrained in the DNA of the Conservative Party south of the border; and for  that reason, when a new Cameron government begins to implement draconian cuts, their actions will, over a few years, almost certainly create unsustainable levels of conflict between Holyrood and Westminster.

Of course, under such difficult economic circumstances, this will not be a particularly happy ending, even for the SNP.   But if the lessons of the 1930’s and 1980’s have been forgotten in the heartlands of British politics, they have not been forgotten in the places, including Scotland, where the decisions made in those years inflicted most pain.  The new generation of Tory opinion-makers in London may be looking forward to a new age of sado-monetarism, in other words.  But now, they embrace that option at the risk of losing Scotland to a resurgent SNP.  And when and if that happens, they are likely to be very angry indeed.  Angry  enough, for instance, to take away Scotland’s chance of a triple-A rating; and to make sure we don’t get it back, for a couple of generations at least.

ENDS ENDS

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