The left hated Thatcher because she thrashed them

Margaret Thatcher, 1925 – 2013

On Gee Street in London there is a Stafford Cripps House named after the post war Labour Chancellor. In Fulham there is also a Stafford Cripps House which contains a Clement Atlee Court named after his boss. In East London there is the Kier Hardie Estate, named after the first Independent Labour MP. In Clapton there is a Nye Bevan Estate named after the former Labour minister.

So I was baffled when, today, my various inboxes, feeds, and walls were swamped by left wing friends asking how bothered I was by the passing of Margaret Thatcher. One or two seemed rather put out when I responded that I wasn’t massively. As someone who could be considered a ‘Thatcherite’ I believe in the individual not an individual. I’ll leave the veneration of Dear Leaders to the left with their crumbling municipal buildings.

At 87 Margaret Thatcher lived a long life. Insofar as we can tell about the private life of this most resolutely political of people it was also a rather happy one. The daughter of a provincial, middle class shopkeeper, born during the Depression, she went to Oxford, became a chemist, and then became a lawyer. Elected to Parliament in 1959 after a decade of trying she rose against incredible odds to become the first female leader of a major British political party in 1975 and Britain’s first female Prime Minister in 1979. She was accompanied every step of the way by her beloved husband Denis.

Her period in office was marked by internal division and conflict of a degree not seen under any other prime minister of the century. Thatcher took on the Labour Party (three times), the Argentines, the National Union of Mineworkers, and crushed them all. By the time Thatcher left office even the Soviet Union and its miserable communism were history.

But in 1988 Thatcher gave her famous Bruges Speech in which she stated “We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level with a European super-state exercising a new dominance from Brussels.” For the European federalists, including many in the Conservative Party close to Thatcher’s predecessor Ted Heath who had never forgiven the grocers daughter for beating the grocer, this was a step too far.

In 1990 Thatcher was finally brought down, not by a bunch of troublemakers rioting in Trafalgar Square, but by her own Europhile backbenchers, angered by her refusal to sign up to a single European currency. History has proved Thatcher emphatically right.

She brooded on this betrayal in retirement but, judging by her memoirs, she was fully aware of just what she had helped achieve, even if she was typically modest about it. She had taken Britain from an increasingly chaotic, sclerotic, and socialist place, to a place which was on the up again. Internationally she had restored some of Britain’s old standing and seen off the communist threat.

Both in Britain and abroad, with the help of her great ally Ronald Reagan among others, she had shown that the inevitable, onward march of socialism was nothing of the kind.

And, perhaps most uncomfortably for her detractors, she was popular and remains so. She won three elections on the trot. In 2011 a YouGov poll for The Sunday Times placed her firmly at the top of a list of post-war British prime ministers with a whopping 27 percent, more even than Winston Churchill.

The sainted Clement Atlee, architect of the welfare state, nationaliser of industries, and namesake of a court in Fulham, limped home with just 5 percent of the vote behind Tony Blair and, mysteriously, Harold Wilson. The much-vaunted street parties celebrating her demise might be rather more thinly attended than the guests have convinced themselves.

Those who profess to hate Thatcher have committed the error of taking something they believe (or claim to, I’m not convinced many of them are actually serious), repeating it loudly and often to other people who also believe it, and assuming from this fusillade of confirmation that everyone else thinks it as well.

These people can often give you a list of reasons they hate Thatcher, lists which are often so suspiciously similar that you have to question how many are the product of original thought and how many are just being parroted to feign an opinion. Most of them, from the mass unemployment to her supposed destruction of Britain’s industry, are easily dealt with.

But the truth is that she would have been disliked intensely no matter what she did. Owen Jones wrote recently that “Thatcher hate is not kneejerk anti-Toryism, after all, there will be no champagne corks popping when John Major dies, and there was no bunting on display to celebrate the deaths of Ted Heath, Alec Douglas-Home, Harold Macmillan or Anthony Eden.”

But remember that in 1948 Nye Bevan, one of the most venerated and overrated figures in British political history, said, “No amount of cajolery, and no attempts at ethical or social  seduction, can eradicate from my heart a deep burning hatred for the Tory Party.  So far as I am concerned they are lower than vermin.”

Remember also that Bevan didn’t say that about a Conservative Party containing right wing ideologues like Thatcher, Norman Tebbit, or Keith Joseph. He said it about a Conservative Party which contained such Keynesian, welfare-state-loving, consensus-supporting politicians as Harold Macmillan, R. A. Butler, and Alec Douglas-Home.

The left disliked Thatcher because she was a Conservative. It hated her because she thrashed them.

Margaret Thatcher is one of only two British prime ministers to coin an ‘ism’ and unlike the other, Blairism, Thatcherism actually meant something. This is why whether alive or dead she will live on. Her ‘ism’ will be a much more permanent monument than the grey, decayed concrete boxes named after various Labour no marks.

This article originally appeared at The Commentator

Is the Conservatives’ economic trump card warranted?

Let’s roll

It is part of Conservative Party mythology that it is repeatedly elected to clean up Labour’s economic messes. Indeed, 1931, 1951, 1979, and 2010 saw Labour bequeath the Conservatives a steaming pile to deal with. The only possible exception was 1970 when, following the calamitous sterling devaluation of 1967, Roy Jenkins wielded the austerity axe and got the British government’s finances into something approaching order.

Yet, truthfully, Britain has been plagued with economic mismanagement from both sides of the Commons and Labour could make much the same complaint of the Conservatives.

In 1929 Ramsay MacDonald’s Labour took over an economy wrecked by the attempt of Stanley Baldwin’s Conservative government to peg sterling to gold at pre-World War One parity. In both 1964 and 1974 Harold Wilson inherited the messy aftermath of pre-election booms engineered by Conservative chancellors Reg Maudling and Anthony Barber respectively. In 1987 the Conservatives inherited the messy aftermath of a pre-election boom they themselves engineered.

The Conservatives’ playing of their economic competence trump card always required a fair bit of bluff.

Recent developments suggest that George Osborne might think of delving into the same old bag of Conservative chancellors’ tricks as Maudling, Barber and Lawson. This government has nailed itself to the mast of the economy. Put simply, if the economy is growing healthily come 2015 the Conservatives will win. If not they are toast.

So far it’s not looking good. News that GDP contracted by 0.3 percent in the fourth quarter of 2013 meant that the UK economy continues to flat line. This is nothing to do with so called ‘austerity’ but the entirely predictable and unavoidable consequence of a massively indebted economy trying to reduce its indebtedness.

Either way, whether the dreaded ‘triple dip’ is avoided or not, it is looking increasingly unlikely that GDP growth in 2015 will be of the magnitude necessary to bring re-election.

So with 2015 approaching, Cameron and Osborne might come to look favourably on incoming Bank of England governor Mark Carney consummating his flirtation with Nominal GDP Targeting (NGDPT).

NGDPT starts from the observation that money supply targets proved a poor rudder for monetary policy due to problems of defining the money supply and changes in velocity, and inflation targeting proved unable to prevent asset price inflation. With NGDPT the idea is that the central bank sets a path for nominal GDP growth and manipulates the money supply sufficiently to achieve it.

So, if it’s decided that nominal GDP should grow by 5 percent a year, and nominal GDP looks to be increasing above that rate, the monetary authority engages in the sale of securities so as to suck money out of the economy to get nominal GDP growth back on target.

Likewise, if nominal GDP was growing at a rate below 5 percent, the situation we are currently in, the monetary authority engages in the purchase of securities so as to pump money into the economy and get nominal GDP growth back on target.

NGDPT and the market monetarists who propose it have faith in the power of monetary policy. Austrian liquidation or Keynesian liquidity traps can be blasted out of existence with a sufficient charge of base money. Or, as Ben Bernanke put it in one of market monetarism’s foundational statements:

“the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.”

You can see the attraction of all this to Cameron and Osborne but will they be allowed to get away with it? The mass production of sterling dictated by NGDPT in our current predicament would, in theory, have the effect of reducing sterling’s value on the exchange markets which will make imports into Britain more expensive and Britain’s exports to everywhere else cheaper.

In practice this is exactly what has been happening. The massive expansion of its balance sheet by the Bank of England has seen sterling crash by 15 percent since 2008 which has propped up British exports (it is this avenue which wasn’t open to Ireland).

But if you devalue to boost your exports of goods and services, any increase in those exports is matched by a reduction in someone else’s. This is why the competitive devaluations of the 1930s, as countries scrambled for a share of diminishing world trade, became known as ‘beggar they neighbour’.

And it looks unlikely that our neighbours are going to let themselves be beggared by Britain’s NGDPT. The Federal Reserve continues to buy $85 billion of bonds each month. In Japan Shinzo Abe is pushing an inflation target of 2 percent in a bid to boost its flagging exports. This will come at the expense of German exports which might cause policymakers in Berlin look more kindly on François Hollande’s calls for a devaluation of the euro. The race is on to see who beggars who first.

This article originally appeared at The Commentator

Labour and the welfare bill

…and I’ve got some magic beans to go with that

Last week Britain’s coalition government, a bunch of “ideologically-crazed demagogues”, launched a “brutal assault” on “the poor”. Or so said Owen Jones. So what form did this heinous act of heartless, senseless barbarity take? It voted to increase some benefits at the rate that earnings increase rather than at the (sometimes higher) rate that prices increase.

That’s it.

The hysterical tone in which much of the left conducts debate in this country is crippling our ability to have a serious discussion about how to bring under control a government debt which is set to have risen by 60 percent by the end of this parliament even after so called ‘austerity’. Eminently sensible measures on Housing Benefit or legal aid have brought predictions of a “final solution” or the end of justice in Britain.

The simple, central fact of British political life is that the government’s debt is rocketing by £326 million every single day. If even reasonable changes to Housing Benefit, legal aid, or welfare, which consumes one third of all British government spending, generate such apoplectic fury from the left, how on earth are we supposed to make even a start on tackling our out of control debt? It’s a serious question. Too serious, it appears, for the likes of Owen Jones.

But what was Labour up to while the coalition was engaged in this Blitzkrieg on the poor? It was making impassioned speeches and voting for benefits to increase faster than the wages which pay for them.

In truth the divide between those who pay for and those who receive benefits is no longer as clear as it once was. We have always had universal benefits paid to even the rich, hence the spectacle of a journalist from a family on a six-figure income wailing about having her Child Benefit taken away.

But besides that we have another toxic legacy of Gordon Brown. During Labour’s time in office he erected a thicket of benefits so baffling, vast, and labyrinthine that much of the country ended up snared in it. Ever greater numbers of people in work started to receive welfare and, bizarrely, Labour regard this as an achievement.

The thinking behind it was cynical. Like some mob boss in Vegas putting everyone on the payroll so no one would ever grass him up to the Feds, Brown reasoned that if he could play sugar daddy to a sufficiently large section of the British public by showering them with benefits they would never vote him out of office. It’s why the number of British households receiving more in benefits than they paid in taxes rose from 43.8 percent in 2000/2001 to 48 percent in 2007/2008. That, you’ll remember, was a period of economic growth.

Compare the essential fiscal promises of the two parties. The Conservatives say ‘Vote for us and you can keep what you earn’; Labour says ‘Vote for us and we’ll take money off someone else and give it to you’

Labour, quite simply, would cease to have any point if it wasn’t for the confiscation of wealth and its redistribution to its supporters. Thus we had the nauseating spectacle of David Miliband, who earned £125,000 for 15 days work as a director of Sunderland, accusing the welfare bill of being “rancid” as he argued for people on an average wage of £26,500 to pay more than the £3,100 per year they already do towards welfare.

Two-time Labour Prime Minister Harold Wilson once said that “The Labour Party is a moral crusade or it is nothing.” It is now worse than nothing. It is a cynical, vote-buying machine, funded with other people’s money. That’s what they trooped through the lobbies for last week.

This article originally appeared at The Commentator

2015: Time for Cameron to ‘hug a Ukipper’?

The Battle for Britain

In 2005 the Conservative party crashed to its third defeat at the hands of Tony Blair’s Labour. Michael Howard delayed his resignation to give the Conservatives time to reflect on how they had reached this sorry state and ponder what they should do about it.

Looking back to their last days in power before the 1997 election defeat Conservatives saw three factors at play. First, was their bitter civil war over the European Union; second, the steady stream of sleaze scandals; and third, general public boredom with a Conservative government which had been around since 1979.

But by 2005 most of these issues had gone. Blair had neutered Europe as an issue for the time being by promising a referendum on British membership of the euro. In government, Labour had proved just as sleazy as the Conservatives were. And, after eight years of Labour government, the Conservatives looked ever so slightly fresher.

And still they lost. Even against a Labour government which had bent the facts to send British soldiers into Iraq to remove weapons of mass destruction which weren’t actually there, they had lost. Again the question: why?

A bit of research emerged at around this time which showed that people generally approved of Conservative party policies until they found out they were Conservative party policies. To one group of Bright Young Things this indicated that the problem was one of marketing and the search was on for a salesman. Step forward David Cameron.

Cameron had only been in Parliament for four years before he decided to run for the Party leadership. But he had plenty of political experience; indeed, he had done little else since university. He went straight into a job with the Conservative party. From there he became Director of Corporate Affairs (whatever that is) for a TV company, a role which appears to have involved talking to politicians a lot.

It was this presumed media savvy which won Cameron the leadership in 2005. The party wanted someone to put an acceptable face on apparently popular policies. It didn’t want to be Theresa May’s “nasty party” anymore and Cameron promised to make them “feel good about being Conservatives again”

He and the Cameroons who gathered around him had reached political maturity during Blair’s reign. They had seen how Blair had taken over a party which couldn’t even win an election against John Major in the middle of a recession and comfortably won three elections on the bounce. They believed Blair had managed this by ‘detoxifying’ the Labour brand, by taking on and ridding the party of its madder elements. They determined to do the same for the Conservatives.

On one level this meant delving into Blair’s bag of media tricks. Call Me Dave gave speeches without notes, took his jacket off, went sledging, rolled his sleeves up, hugged hoodies, and at the 2006 party conference he made more wardrobe changes than Elizabeth Taylor in Cleopatra.

But on a deeper level the Cameroons were searching for a ‘Clause IV Moment’, the symbolic point when you tame your extremists and embrace electability. Their calculation was that they could bully and pick fights with their ‘right wing’ and in doing so they would attract support from the fabled ‘centre’. After all, they reasoned, any right wingers who didn’t enjoy being bullied by them had, like Richard Gere, “nowhere else to go”

But there was a problem. By 1994 the Labour left had been so utterly discredited that the original Clause IV Moment was simply an overdue act of euthanasia. In theory, and in practice, during the post war period the left wing orthodoxy of high tax and even higher public spending had been exposed as the economic suicide it remains.

By contrast no such thing happened to the ideas of the Conservative right. Indeed, the last few years have seen one formerly ‘controversial’ view of theirs after another be resoundingly vindicated. Immigration is too high. Government is spending too much. The euro is a disaster.

Ultimately the Cameroon strategy failed. After five years of ‘rebranding’, against one of the most incompetent administrations in history, and in the middle of a recession, in May 2010 the Conservatives failed to win their fourth election in a row.

And those right wingers didn’t just sit around meekly soaking up the punishment Cameron dished out to them in a vain effort to impress the Guardianistas. Lots of them buggered off to UKIP. And how did Cameron, the master political operator (sic), respond? He was gratuitously rude to them. Again. In the Telegraph last week Dan Hodges wrote that come 2015 “the vast bulk of [Ukip’s] remaining support will come home, reluctantly, to David Cameron.” No, it won’t. And why should it if Cameron keeps abusing them to solicit a favourable glance from Polly Toynbee?

Cameron’s support rises when he pursues Conservative policies; the EU veto and welfare reform, for example. Now, I’m no Central Office genius, but perhaps there’s something in this? Perhaps it’s time for Cameron to stop his fruitless flirting with some mythical centre (which is, in reality, just a punji trap with the sharpened heads of George Monbiot and Mehdi Hasan at the bottom) and remember that he’s a Conservative?

The long term Cameroon strategy of replacing the Conservative right with the Labour right will fail. Its hysterical reaction to even the mild fiscal medicine administered by the coalition demonstrates that Cameron will never find enough votes from that quarter to replace the real Conservatives he sent off in Nigel Farage’s direction.

As 2015 approaches Cameron might find he needs to Hug a Ukipper. If he carries on this pathetic baiting they’ll probably tell him to get stuffed.

Richard Cobden’s achievements

Richard Cobden

“We are on the eve of great changes” Richard Cobden told Parliament in February 1846. He was correct. Britain stood poised to embark on a period of growth unparalleled in its history, which would, in a few short years, bring it wealth and power not seen since ancient Rome. A major reason for this was Britain’s path breaking adoption of free trade, and the man behind that as much as any other was Richard Cobden.

By the late 1830s it was apparent that the Whig government led by Earl Grey and then Viscount Melbourne had exhausted itself in the passage of the Reform Act of 1832. This had given the vote to propertied males, enfranchising many of those made rich by the Industrial Revolution. The Radical faction within the Whig Party sought a new cause with which to restore the momentum which had carried the 1832 Act and settled on repeal of the Corn Laws.

The Corn Laws was a catch all name for the thicket of tariffs which had been erected to keep foreign wheat out of Britain. Justified on the deathless grounds of ‘food security’, these laws also had the handy effect of benefiting the landowning classes, many of whom sat in the Commons and Lords as Tories.

The Corn Laws, as with any tariff, had the effect of making the product in question and associated goods more expensive. The burden of this was borne disproportionately by the members of the emerging working class in burgeoning industrial centres such as Manchester and Leeds who spent a large percentage of their incomes on food. By extension, they raised labour costs. And blocking foreign producers from selling in Britain prevented them from earning the money to buy the output of the new industries.

Out of this shared interest between workers and bosses (and other factions such as dissenting churchmen) came the Anti-Corn Law League, established in Manchester in 1838. One of its founders and leading lights was Richard Cobden.

Cobden was born the son of a poor Sussex farmer in 1804 and started his own textile printing business in 1828. It quickly became a success and in 1832 Cobden moved to Manchester, the centre of the booming British textile industry.

Immersed in the city’s Radical politics Cobden quickly became active. He was instrumental in the shift from broad based reform agitation to a single issue focus which had led to the creation of the League, noting that “the English people cannot be made to take up more than one question at a time with enthusiasm”. Throughout the campaign Cobden would hold to the principle of single minded focus on full and immediate repeal of the Corn Laws.

He became a prolific writer, and in his work he revealed the broader purpose behind the activities of the League. In Cobden’s mind free trade and peace were linked, he wrote in 1842 that “Free Trade by perfecting the intercourse and securing the dependence of countries one upon another must inevitably snatch the power from the governments to plunge their people into wars”.

With the Corn Laws Cobden and the League faced a problem of concentrated interest. While the benefits of repeal were spread across society, the costs were concentrated. Each person in Britain might benefit by a few pounds a year from repeal (though that was no small sum to impoverished workers) but those relatively few people who would be adversely affected by repeal stood to lose far more. The landowners were incentivised to act more strenuously in fighting against repeal than individual consumers were in fighting for it.

Partly because of this the League was frustrated during its first two years. Copying the tactics of the campaign for the 1832 Reform Act and the contemporary Chartists, the League attempted a strategy of mass agitation with open meetings and lectures. These suffered from frequent attacks by Chartists who resented any reforming competition, after one meeting Cobden wrote: “The Chartist leaders attacked us on the platform at the head of their deluded followers. We were nearly the victims of physical force; I lost my hat, and all but had my head split open with the leg of a stool”. The failure of this strategy left the League short of money. Attempts to petition Parliament were heavily defeated and the League members were frequently tempted away into movements for wider reform.

In 1841 Cobden convinced the League to change strategy. He wrote to a fellow member “You will perhaps smile at my venturing thus summarily to set aside all your present formidable demonstrations as useless; but I found my conviction on the present construction of the House of Commons, which forbids us hoping for success. That House must be changed before we can get justice”

From now on the League would seek to make Parliament its battleground, starting with a by election in Walsall in February 1841. The Tories allied with their Chartist arch enemies in an effort to defeat the League which still came a close second. Cobden’s strategy had been a success, the Morning Chronicle noting that “one consequence of the contest at Walsall is that the Corn Laws are, and must henceforth be, throughout England, a hustings question”. With a general election approaching the Whig leaders adopted a stronger free trade stance.

The election of summer 1841 saw the Whigs defeated by Robert Peel’s Conservatives, heirs to the Tories, and seemingly dashed hopes of Corn Law repeal for the foreseeable future. But the situation was brighter than it might have appeared. The election saw a number of League members returned to Parliament including Cobden, now widely recognised as the League’s leader, who was elected MP for Stockport. Also, by the end of the year, ‘operative’ associations attached to the League, mostly consisting of working class supporters, had organised to protect League meetings from the violence of the Chartists. But perhaps more importantly, in Peel, Britain now had as Prime Minister one of the most remarkable statesmen in her history.

With Britain in economic depression Peel deliberated before finally announcing his budget in February 1842. Despite his Tory lineage, Peel recognised that the Conservatives must learn to accommodate themselves to changing circumstances if the wilder, revolutionary wing of the Chartists was to be held at bay. Given the revolutions across Europe in 1848, this was no minor threat. Peel’s Tamworth Manifesto of 1834, as close to a foundational act as the modern Conservative Party has, had been an act of reconciliation with the passage of the 1832 Reform Act.

Peel’s fiscal proposals were in this tradition, proposing a drastic tariff reduction with revenues to be made up by a new income tax. The moves were warmly welcomed by liberals and, while it represented a significant vindication of the League’s arguments, it also brought danger. As Cobden predicted “The greatest evil that could befall us would be a bona fide concession – The middle classes are a compromising set”.

After some debate about strategy (during which Cobden squashed a move to declare a general strike by factory owners) the League stepped up its propaganda. Millions of leaflets, posters, handbills, and newspapers were distributed with the aim of reaching every voter in Britain, though that was only about 600,000 people at the time.

But despite all this activity the League found it needed an event, a shift in circumstances beyond its control, to provide proof of its arguments and swing opinion behind them. That came in 1845 when the potato crop failed. Particularly in Ireland, where much of the population depended on potatoes, this caused great suffering, culminating in a famine which killed an estimated one million people.

Cheap food was needed and quickly. Faced with this unfolding catastrophe, supporters of the Corn Laws were helpless. A further vital, final, factor was Peel’s reaction. Acting on humanitarian grounds and the perennial desire of Conservative Party leaders to pick fights with their backbenchers (in this case the land owning Tories) in order to prove they are ‘different’, Peel moved for full repeal in 1845. In May 1846 repeal was passed and the Anti-Corn Law League wound itself up.

The benefits for Britain were immense and immediate. The effects of famine receded and a wider program of free trade enacted. Between 1815 and 1842 Britain’s exports edged up from £47,250,000 to £50,000,000. By 1870 they had rocketed to £200,000,000.

How had Richard Cobden and the League managed to defeat the special interests in favour of keeping the Corn Laws?

First, and most importantly, they were right. Free trade became the orthodoxy to such an extent that we can forget that while the League was working its ideas were one strand of a lively discourse. There was a long tradition of bad economics arguing for protection and Friedrich List was giving these old doctrines a new outing even as the League was campaigning.

Second, their strategy of exclusive focus on Corn Law repeal was a success. Cobden refused to be, and refused to let the League become, distracted by any other reform or campaign. This ensured that while the Chartists got nothing from a long list of demands the League actually got more than its comparatively modest aims with Britain quickly embracing free trade generally.

Third, they were tactically flexible. There were three fronts to their activities. First, were the mass meetings. These were of limited success largely owing to the competition, both ideological and physical, of the rival Chartists. The second front was education. Here the League had more success, sending literally tons of propaganda out every week. They pitched to all sections of society, sending lurid drawings of emaciated families to lowbrow readers and helping found The Economist for the highbrow. Third, and most effective, was the Parliamentary front. It was arguably the fact that the League engaged here while the Chartists didn’t that guaranteed the success of the League relative to the Chartists.

The fourth factor was, as Harold Macmillan put it, events, or, more broadly, circumstance. Without Peel’s transformation of the Tory Party into the Conservative Party and its concomitant embrace of free trade, the League would have had to wait until at least 1848 and the possible election of the Whigs who, under Lord John Russell, had finally adopted full repeal as a policy. And without the famine in Ireland it is doubtful whether either party could have carried repeal in as full a form as eventually happened.

To a large extent however, this event is not so exogenous. It could be, and was, painted as the predicted outcome of the bad policies of the Corn Laws.

As a result, when circumstances combined in 1845-1846 in the advents of Peel and the potato blight, thanks to Cobden and the League the arguments for free trade were widely enough known to be accepted as a viable possibility. The lesson is to have rigorous, well tested arguments. Pick a definite, achievable aim then work hard to spread and publicise your views until they become the ‘white noise’ of the debate. Then position yourself to take advantage of changing circumstances and move quickly when circumstances change.

When Richard Cobden died in 1865 the French foreign minister wrote that he was “in our eyes the representative of those sentiments and those cosmopolitan principles before which national frontiers and rivalries disappear; whilst essentially of his country, he was still more of his time; he knew what mutual relations could accomplish in our day for the prosperity of peoples. Cobden, if I may be permitted to say so, was an international man”.

At the end of three successful years The Cobden Centre can continue to draw on its namesakes rich example as it looks forward to furthering his goals of peace and prosperity.

This article originally appeared at The Cobden Centre

Black Wednesday

Lamont and advisor run up the white flag

I’ve mentioned before that I’ve been jotting down some notes about the 1990s. As today is the twentieth anniversary of Black Wednesday, I thought I’d share what I’ve written about that…

In 1990 the British economy entered a recession caused by the raising of interest rates from 7.38% in May 1988 to 14.88% in October 1989. Thatcher’s government did this in an attempt to dampen the inflation they had unleashed with a pre election spending boom between 1985 and 1988 though they claimed it was that it was to prepare Britain for entry into the Exchange Rate Mechanism.

I remember all this quite well. The area I lived in was full of people with mortgages, people who had embraced the Conservative ethos of the property owning democracy in the 1980s. And now, in the name of European integration, they were being crucified on a cross of ERM by the same Conservative Party. ‘Repossession’ became a dreaded spectre, figures reported on the evening news. In 1989 there 15,800 repossessions, in 1991 there were 75,500 and I remember kids I was at school with losing their homes. As a Northerner down south my dad became something of a local oracle in how to deal with tough times and I remember a couple my mum knew through her babysitting group coming round for tea, digestives, and advice in how to deal with a mortgage they could no longer afford.

…

John Major possessed impressive reserves of self belief so he might not have been as stunned as everyone else by (his election victory in April 1992). Even so, these reserves were quickly depleted. Within six months of the election the Conservative Party had thrown away its trump card of sound economic management (the playing of which always involved a fair bit of bluff) and handed Labour a poll lead which it wouldn’t lose except briefly for another fifteen years.

The Exchange Rate Mechanism had been forced upon an unwilling but weakened Thatcher a month before she left office by Major, as Chancellor, the rest of the cabinet, and the civil service. It committed Britain to keeping the value of sterling pegged to the value of the deutschemark. When German spending on reunification threatened to stoke inflation the Bundesbank raised interest rates and, thus, the value of the DM. Britain had no choice but to follow.

Two approaches were pursued, both of them disastrous. First, more than £3 billion of Britain’s foreign currency reserves were spent on buying sterling in an effort to push its value up. All that did was make George Soros even richer. This just left interest rates.

Matters came to a head on September 16th 1992. That morning, with the cash for further currency manipulation gone, the government announced a rise in interest rates from 10% to 12%. Still the value of sterling fell. In the afternoon the government was forced to announce a further rise in interest rates to 15%. Even this failed to stop sterling’s slide. In the evening an exhausted looking Chancellor, Norman Lamont, emerged from Number 11 Downing Street with a young policy advisor named David Cameron at his side to announce defeat. Britain would leave the ERM and devalue.

Britain’s failed attempt to stay in had been nothing more than an expensive way to cause more pain for already suffering British businesses and mortgage holders. It became known as Black Wednesday, unless you were a Eurosceptic, in which case it was White Wednesday.

The Major government never recovered. The day after Black Wednesday Major phoned The Sun’s editor Kelvin MacKenzie and begged him to go easy on the government. “John”, MacKenzie is said to have replied, “I’ve got a large bucket of shit lying on my desk and tomorrow morning I’m going to pour it all over your head”

But after Black Wednesday something remarkable happened. With the government’s credibility on monetary policy utterly ruined the Bank of England was put in charge with the goal of using interest rates to control inflation. Worrying about the value of sterling vis a vis other currencies was in the past. And it seemed to work. The economy recovered and embarked on its longest ever boom. Unemployment fell from nearly 3 million in early 1993 to 1.7 million in early 1997. The economy, it seemed, ran better without politicians ‘managing’ it.

The polarization of politics: Let’s mingle more

My captain, my captain

As a Trekkie I was keen to watch Patrick Stewart, late of the Starship Enterprise, boldly going on the BBC’s Hardtalk. Stewart is a man I greatly admire not only for pulling off the impossible and filling Captain Kirk’s seat, but for an acting career that spans Sejanus in I, Claudius and a hypersexed version of himself in Extras.

So it was disappointing to actually see Stewart in action. I knew he was a Labour supporter; he’s a Yorkshireman and luvvie after all. But he went further. He said he actually feels “uncomfortable” around Conservatives. This was yet another manifestation of a depressing trend. People are increasingly unable to tolerate anyone whose politics aren’t just like theirs.

The trend is further developed in the United States than in Britain. In the US the tone of political debate is frequently poisonous. From the right you have ‘conservatives’ accusing ‘liberals’ of wanting to destroy America. From the left you get ‘liberals’ accusing ‘conservatives’ of wanting to grind everyone else into poverty. To each their opponents are not merely wrong, not simply possessed of a different philosophy, but are actually evil. Neither side recognises any common ground at all with the other.

We have not been free of this in Britain. In 1945 Winston Churchill warned that if Labour won the election Clement Atlee would usher in a British “Gestapo” and opposition to Margaret Thatcher frequently scaled quite epic heights of demented lunacy. It still does.

But this was the exception in Britain, perhaps because figures like Harold Wilson, Edward Heath, John Major, or Tony Blair drew most of their flack from their supposed supporters. Enoch Powell could disagree utterly with both Tony Benn and Michael Foot yet maintain warmer personal relations with either than Foot and Benn could manage with each other.

This has been changing. As the coalition undertakes to slow the growth in government debt so that it only doubles in five years, some on the Left have reacted as though civilization is about to end. Worse, they attribute it, as in America, not merely to error or possession of a different philosophy, but to evil itself.

Polly Toynbee, a trail blazer for the New Nastiness in British political discourse, described the popular proposal to cap Housing Benefit to a still pretty generous £400 a week for a four-bedroom property and £250 a week for a two-bedroom home as the Tories’ “final solution for the poor”, seeing in the cuddly Grant Shapps the echo of Heydrich and Himmler.

I am quite sure that someone of a left wing persuasion reading this will respond that the Right does plenty of it too. No doubt the Daily Mail and Peter Hitchens will be mentioned. And they may well be right. I concede the distinct possibility that both sides are as bad as each other but I shan’t find any comfort in it.

The rhetoric of someone like Toynbee and her counterparts on the Right is harmful. If, for example, you are a Guardian reader who accepts Toynbee’s view of the world then, by extension, you must consider people like me, as an occasional supporter of the Conservative Party, a crypto-Nazi.

If this sounds as ridiculous as it ought to then stick Toynbee in the bin. If, however, you do accept her world view that the coalition is evil and acting out of spite then you can understand why someone like Patrick Stewart would feel uncomfortable around Conservatives, even ones like me who wear plastic pointed ears from time to time. We’re Nazis, after all.

This matters. Democracies work because every few years, at election time, the losing party hands power to the winning party on the understanding that, at the next election, power will be handed back to them if they are successful. This is only possible because the parties consider themselves part of the same polity. If they don’t, if they see no common ground, then the basis for electoral democracy breaks down. In many places around the world elections are accompanied by fraud or violence precisely because this common polity doesn’t exist.

This also gives some clue as to where this bitterness comes from. Governments are now, increasingly, mechanisms by which wealth is transferred around society. Unlike wealth creation, which can generate wealth which didn’t previously exist and make everyone better off, wealth transfer is always a zero sum game; one party can only benefit to the extent that some else loses. Wealth creation creates winners. Wealth transfer creates losers as well.

And, as governments grow, so does their role as wealth transferors, increasing the number of both winners and losers in the zero sum game of government. Bitterness grows alongside.

I have a great many friends who would describe themselves as being of a left wing persuasion so I can see what people like Stewart are missing out on. Because I know lefties personally and not solely from the pages of the Mail I know that they don’t all want to put me in a Gulag run by Harriet Harman. And I hope that, from knowing me, they realise that not all ‘right wingers’ want to feast on the carcasses of the poor. Each of us thinks the other is wrong; neither thinks the other is evil.

What is under threat in Britain, and almost dead in America, is this sense of commonality, of being part of a shared polity with people we disagree with, but who are, for the most part, just as sincere and well-motivated as we are. And we won’t keep it if, like Patrick Stewart, we seal ourselves off from those we disagree with.

We need to mingle more, not less. Unless you think Picard was a better captain than Kirk, then I really will never talk to you again.

This article originally appeared at The Commentator

We need to talk…about Galloway, Government spending and Syria

I was on my first podcast talking about the issues of the day. I sound camper than I do in real life but here it is if you’d like to listen…Podcast

Taxpayer funding for political parties? Why not pensions for life for armed robbers too?

Not the only bubble that’s burst

Whether it’s General Motors or RBS, no failing enterprise has ever truly breathed its last before gasping the plea for taxpayer funding. ‘Dinnergate’ provided the opportunity for Britain’s failing political parties to utter the immortal words.

In the general election of 1951 Labour and the Conservatives got over 95 percent of the vote between them. Labour got 13.9 million votes, the victorious Conservatives, by a quirk of the electoral system, 12.6 million. In the general election of 2005 labour and the Conservatives got just over 67 percent of the vote between them. The victorious Labour party got 9.5 million votes, the Conservatives 8.7 million. Losing that sort of market share is catastrophic.

Though obscured by First Past the Post the trend in British politics in the post war period is clear; a decreasing number of British voters are interested in either main party.

This increasing lack of interest in either the Conservatives or Labour has also been reflected in falling membership numbers. Perhaps counter intuitively for the self proclaimed party of the working man, Labour party membership has always lagged Conservative party membership. But, even so, in 1953 Labour had more than 1 million members and the Conservatives had 2.8 million.

With occasional reverses Labour party membership fell steadily until 1979 by which time it had fallen by a third to 666,000 members. Then came the Winter of Discontent and, as well as losing power to Margaret Thatcher, Labour lost a staggering 318,000 members in one year.

By the late 1960s the Conservatives had fallen to 1.1 million members but held steady until the early 1990s. From 1 million members just prior to Thatcher’s ousting in 1990 membership had halved to 500,000 in 1992.

But even these figures now look like some halcyon age of mass participation. By 2010 Conservative party membership had slumped to 177,000 while Labour was enjoying a “surge” in membership to 60,000 – a disappointing crowd at Old Trafford. No wonder that Britain’s political parties now find themselves in the position of a busted bank or bankrupt car company.

In the absence of membership fees the effect has been a reliance on ever fewer donors giving ever more money. Lord Ashcroft kept the Conservatives going almost single handed in the wilderness years after 1997. Labour, out of power and drifting to the left, holds little appeal for those with bulging wallets; Labour received just 13 private donations in the year from September 2010. Labour is now reliant on the trade unions (who themselves represent just a fraction of the workforce they used to) for over 80 percent of its funding.

The politicians’ ever greater flattery of their ever fewer donors is a nauseating sight and when it doesn’t cross the line into the criminal it certainly radiates a sleazy impression, as with Cameron’s latest kerfuffle.

The proposal for taxpayer funding of political parties is usually floated in the wake of such scandals. Perhaps because the threat of bankruptcy is very real for the Labour party (a rare example of politicians practising in private what they do in office) the demand for taxpayer funding has come loudest from the left. In the wake of Dinnergate, a Conservative scandal remember, the New Statesman carried articles by Labour MP Denis McShane and Mehdi Hasan arguing for taxpayer funding of political parties. As McShane put it, there is a need “for democracy to pay for democracy”

There is nothing of the sort. There is, instead, simply the desperate desire for members of failing enterprises like Britain’s major political parties to be bailed out. If you won’t give them your money voluntarily they will take it straight out of your paycheque.

Hasan quoted the Independent’s Mary Ann Sieghart saying that “our government was being corrupted by shady donors” so we must introduce taxpayer funding. This idea, that because we cannot trust politicians to raise money honestly we must give it to them in taxes, is absurd. By that way of thinking we would ‘punish’ armed robbery by giving the robbers pensions for life.

The question few seem to ask is why this is happening. Why are our major political parties becoming so noxious that Labour, with a 10 point lead in the polls, can lose a safe seat to a sectarian bigot? Why do 72 percent of voters see the Conservative party as “out of touch”? Answer that and you have a solution to party funding which doesn’t involve taxing people more.

There are long term secular trends. In terms of voting the decline can be attributed to some mixture of weakening class identification and growing disillusionment with both main parties’ inability to deliver on their grand promises. In terms of membership people join thing things less than they used to whether it’s political parties or the Dennis the Menace Fan Club.

But there’s another factor. Why should people give money to people who don’t like them? When Gordon Brown was overheard calling a lifelong Labour voter a “bigoted woman” just for asking some valid questions about immigration he revealed more than he knew. He revealed that the Labour party is run by a metropolitan elite which views its core voters in places like Rochdale as a bunch of unreformed hicks.

The same goes for the Conservatives. The strategy behind Team Cameron was that if they alienated enough of their core vote they would attract enough Guardian readers to more than make up for it. It failed. In the Telegraph Iain Martin wrote that “A fundamental miscalculation was the decision by this group to ape Mr Blair and define themselves in opposition to their party and their core supporters.” You can understand why Conservative party members might balk at giving money, or votes, to people who view them like this.

The truth is that both Labour and the Conservatives are run by people who don’t like Labour or Conservative voters very much. Those voters are entitled to keep their hands in their pockets and not have them picked by taxpayer funding.

This article originally appeared at The Commentator

Why Charlie Elphicke’s priorities are wrong

The NTE Party – Not Taxed Enough

There is a strand of thought in the Conservative party which holds that the party’s failure to win the last election was because they are insufficiently like the Liberal Democrats or Labour; respectively, a party which has popularity levels that would make Gary Glitter wince and one so bereft of ideas that the only thing they needed to worry about being stolen in a recent break in to its leader’s office was the tea bags.

It is this strain of thought which recently led Francis Maude to say that it was the Conservative party’s stance on gay marriage which would decide its electoral fortunes, a view which suggests he hasn’t spent much time canvassing lately.

It is also this strain of thought that has led Charlie Elphicke MP to write a piece for ConservativeHome titled ‘We should target overseas tax dodgers, help the low-paid and only then abolish 50p’

In a country whose government is borrowing £450 million per day, whose national debt is rising at £4,000 per second, yet which is seeing the merest trim of government spending Mr Elphicke has deduced that the problem is not that we are spending too much, but that we are not taxing enough.

At the heart of this lies what has motivated much of the opposition to the coalition’s attempts to get Britain’s ruinous borrowing under control: the idea that things can carry on as before; all we need to do is find someone else to keep paying for it.

The twist in Elphicke’s argument – what sets it a couple of millimetres apart from the sort of thing you get from any number of Dave Sparts – is that instead of targeting ‘the rich’, however defined, Elphicke has non-doms in his sights.

“We should learn from these international lessons” Elphicke thunders. Which international lessons? Well, there’s Spain with its 23 percent unemployed and the United States which, Elphicke notes approvingly, doesn’t “sit there worrying about non-domicile status. They just tax everybody, everywhere”

Well, they haven’t been taxing the increasing number of Americans who have been renouncing their citizenship rather than stump up to two countries’ governments when they only live in one. And Elphicke doesn’t address the rather obvious point that we might actually want to attract these people. He says that “This measure (taxing non-doms on their worldwide income not just that earned in the UK immediately) would raise between £500m and £1bn” annually, one or two days government borrowing in other words. But he doesn’t say whether this figure takes into account the negative effect on inward investment this would have.

As the Telegraph reported, when the £30,000 levy on non-doms which Elphicke celebrates was introduced in 2007, 16,000 of them upped sticks and left. As the Telegraph said

“The latest Treasury estimate is that 5,400 non-doms paid the levy in its first year, worth £162m in tax – way below original estimates. But how much revenue did the Treasury lose by the 16,000 non-doms leaving?

 Well, again according to Treasury estimates, non-doms pay £4bn in income tax and another £3bn in other taxes such as capital gains, VAT and stamp duty. So if 11.5pc of non-doms left in 2008-2009, as Inland Revenue figures show, then it’s not unreasonable to estimate that must equate to about £800m in lost taxes”

Can our battered finances really afford a repeat of this fiasco? They might have to. Just this last weekend the Financial Times carried a report that the number of non-doms in the UK has fallen by 16 percent since the levy was introduced. Now George Osborne is rumoured to be planning to raise it to £50,000.

If there’s no economic logic to all this neither does Elphicke even attempt to offer a moral justification. But then he appears to subscribe to the other foundational myth of the ‘anti cuts’ movement, namely that all government spending is good and, therefore, so is all tax. Tellingly, Elphicke makes no mention of spending cuts in his article.

But the truth is that there is much government spending which is a complete waste, especially following Labour’s spending spree over the last few years.

Labour more than doubled spending on education but we slumped from 7th in reading, 8th in maths and 4th in science in 2000 in the Programme for International Student Assessment rankings to 17^th, 24^th and 14^th respectively in 2008. Labour doubled spending on health but productivity, at best, only “probably improved”. It’s little wonder that people aren’t simply sitting still to be taxed to pay for all this waste.

Rather than dreaming up probably self defeating plans to find new pips to squeak Elphicke would be better off attacking this colossal misuse of taxpayers’ money. The truth is that there is much public spending which is not virtuous and, by extension, there is much taxation which is not virtuous. Some tax, quite frankly, ought to be avoided.

Elphicke is correct that moves should immediately be made to make the first £10,000 earned tax-free but this should be paid for, not with further taxes, but with genuine cuts to runaway government spending, not the glorified budgetary topiary which is the cause of so much misguided fuss.

Elphicke says that “As Conservatives we are committed to fairness and social justice”, well, who isn’t? The real question is what form you give these malleable phrases. He says “That means we believe everyone should pay a fair share” – again, who would disagree?

But it ought not to be the job of the Conservative party to define ‘fairness’ as “tax everybody, everywhere”. After all, besides wooly phrases like ‘social justice’ and ‘fairness’, the Conservatives are supposed to believe in the sovereignty of the individual and over his or her rights over their property. This is especially so when so much of this tax goes to support wasteful spending.

Leave defending that sort of nonsense to Labour and the Liberal Democrats.

This article originally appeared at The Commentator