Tuesday, 18 March 2008

The Politics of Economics

While some Conservative activists might have hoped that the ICM poll in the Guardian showing their Party 13% ahead of Labour would receive more coverage this morning, the news was dominated by the global financial turmoil. Frankly, some of last night's coverage bordered on the sensationalist and apocalyptic.

Today, as might have been expected, the FTSE100 index has rebounded more than 190 points while the Dow Jones is up over 290 points. Of course, the Tuesday rally is nowhere near as newsworthy as the Monday slump while falls in the gold and oil prices are much less interesting than the rises above $1,000 an ounce and $110 a barrel respectively.

In many ways, yesterday's coverage represented the media talking the economy into recession, instilling fear and uncertainty into millions of people and creating a self-fulfilling prophecy of reduced economic activity and recession. That was also irresponsible.

Now, I'm no naive optimist - the collapse of Bear Stearns is serious and we all have a right to be concerned if the stupidity of the banking sector comes back to bite us all. Douglas Moffatt made the not unreasonable observation on Sky News that since the average debt per household (excluding mortgages) was £21k, it might not be a bad idea for people to start reducing that burden first.

It's also fair to say that while inflation is officially 2.5%, many believe the true figure to be much higher given rises in energy costs in particular. On the larger scale, it was inevitable that as China reached a point where its people started wanting the better things in life (and the money to pay for them) we would all come to see the end of the era of cheap energy and cheap goods. China has also begun the economic exploitation of the last cheap market, Africa, and while that may bring a short period of improvement, it won't last forever.

Structurally and mentally, we may have to adjust to a future with more inflation than we have been used to and less access to credit than we have been used to. That might seem like austerity to many but it is manageable even though collectively and individually, we may have to curb our materialism a wee bit.

It is perhaps this sense of insecurity and uncertainty that is behind the apparent shift in political fortunes. Labour is seen as the party of the days of plenty while the Conservatives are, rightly or wrongly, perceived as more in tune with a change in personal expectations and aspirations. The problem is, as the weekend's events showed, that David Cameron seems not to have the slightest idea of how to manage this "new economy". There is a clear call for spending cuts and indeed tax cuts but Cameron is offering neither.

As a liberal, I often see Labour and Conservative as two sides of the same coin. Both parties are natural centralisers and both want to tell people how to live their lives. As a liberal, the new economic realities dictate that individuals need to have a maximum of available income in order to reduce levels of personal debt. We need no lessons in economic mismanagement from a Government which was squandered up to £43 billion and we need no lessons in economic mismanagement from a Party which threw away £13 billion of reserves in a single day and which is seemingly committed to maintaining the high-spending folly of Labour.

It is really time to ask the question - what's the point of voting Tory next time ? Nothing will change or improve - it is the electoral equivalent of moving the deckchairs on the Titanic. Cameron is a boy sent on a man's errand - he can smile and is doubtless wonderful company but that doesn't make him fit to run the country.

It will be a damning epitaph for Gordon Brown if his greatest achievement turns out to be to make people want to vote for David Cameron.

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