Why not tell voters the truth?

This is an interesting examination of the wool-that-is-pulled-over-
our-eyes syndrome! It is worth the read and exposes the Brown
government in all its awfulness.

But its central theme that governments can do nothing is pure
baloney! In his final two paragraphs giving advice to the Tories he
misses the whole point by failing to notice that the government has
been borrowing and spending beyond our means. This must stop.
Governments, therefore by that example alone, CAN do something.

xxxxxxxxxxxxx cs
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INDEPENDENT 20.8.08
Why not tell voters the truth?
Michael Brown

Gordon Brown has no more power to abolish boom and bust than he has
to control Britain's weather

How the ghosts of Macmillan, Wilson, Heath and Callaghan must be
having a quiet chuckle as they look down, from the great Downing
Street in the sky, on the latest economic news facing today's
politicians. Rising unemployment and inflation, high interest rates,
the pound tanking south, public borrowing soaring through the roof –
combined with zero growth – all seem to be combining to make this the
moment when 1960s and 1970s booms and busts are back with a vengeance.

But in spite of the economic disasters of those times, at least their
governments had, nominally, real powers of control at their disposal.
Laws could be passed restricting rises in prices and incomes.
Citizens would be forbidden to buy more than £50 worth of foreign
currency. Interest rates could be altered on a whim to suit the
political timetable, and physical import controls could be introduced
to protect domestic industry. The fact that such powers ultimately
impoverished and bankrupted the country still made it difficult,
however, for Margaret Thatcher to convince many voters of the
uselessness of such powers.

Of course, flexible labour markets and the diminution of trade union
power make it possible for the present generation of politicians to
reject suggestions that we are back to the days of Mr Macmillan's
"stop go". But the proud boast from Gordon Brown as Chancellor that
he had abolished "boom and bust" now looks like a sick joke as more
hubris takes its toll on his popularity rating, in the latest ICM
poll, giving the Tories another whacking lead. Mr Brown has no more
power to abolish boom and bust than he has to control the weather.

The only silver lining for the Prime Minister is the finding that
David Miliband has no greater electoral appeal than the present
incumbent. So further leadership manoeuvres may be on hold until
after the Labour Party conference next month. Now it appears that the
voters of Glenrothes will be as likely to decide Mr Brown's fate as
any attempted coup by Labour dissidents.

In the meantime, we are led to believe that Mr Brown has spent his
summer break preparing the necessary bribes to forestall such
political difficulties with one-off payments of £150 to families with
children. This government – as most previous governments presiding
over a boom have done – has fallen into the trap of believing that it
has been primarily responsible for the good economic state of the
country, allowing itself no exit strategy when it seeks to blame the
world economy for the downturn.

In the past, whether things have gone well or badly, a government
could legitimately claim that outcomes, beneficial or otherwise, were
solely down to them. Equally, Oppositions were duly entitled to blame
the government if things went pear-shaped. If the pound was devalued,
it was perceived as directly attributable to the mis-management of
the economy by the government of the day – even as recently as 1992,
when Britain left the Exchange Rate Mechanism. Yet, as the pound has
sunk in recent weeks by as much as the single devaluation
necessitated by Britain's exit from the ERM, there has been barely a
murmur from any other party. And, these days, neither the balance of
trade or balance of payments even feature on voters' radar – although
they played a central role in Harold Wilson's defeat in the 1970
general election.

Of course free exchange rates, along with the abolition of exchange
controls by Geoffrey Howe in 1979, were probably the biggest single
advances for this country's modern economic prospects. Others would
also argue that Mr Brown's move to give control of monetary policy to
the Bank of England was similarly beneficial.

But, unlike the 1960s and 1970s, when all the indicators point in the
wrong direction, there is actually little, apart from fiscal policy,
that any government can now do except to cross fingers and hope for
the best. The dilemma is the extent to which politicians wish to
continue feeding the public's belief that governments can make a
beneficial difference to their standard of living. The truth is
ministers can make things worse – but have few economic powers to
make things better. On the one hand, Mr Brown has boasted that the
good times were down to him. On the other, he claims that the bad
times now are all the fault of the rest of the world.

But Mr Brown would be better placed today if he had consistently said
during the good times that the economic well-being of the country had
absolutely nothing to do with him or the Government. Because of this
failure of strategy, the inevitable rise in unemployment, predicted
to be two million, according to British Chambers of Commerce, by
2011, means that the Brown government will take yet another political
hit.

If Mr Brown had not claimed the credit for "three million new jobs",
since 1997, it would be easier for him to pass off any increase in
the jobless total as the fault of the worldwide downturn. But
unemployment will consequently be as much an issue at the next
election, regardless of who or what is to blame.

All this is good news for the Tories but poses the familiar question:
"What would you do instead?". The answer is probably "not much
different" – apart from, hopefully, on public expenditure and fiscal
policy. [That’s enough to be going on wikth, for heaven’s sake! -cs]
But equally, this provides the Tories with the chance to make the
case that modern governments do not have the economic powers of their
predecessors – and even when such powers existed most governments
made a mess of their usage.

It may be that the growing inevitability of a Tory victory will
enable Mr Cameron to put on the record that, unless he seeks to
retake powers over interest rates, exchange rates and prices and
incomes, modern governments in free democracies are largely
economically impotent. Telling voters what they do not wish to hear
is the bane of politics, but such modesty now may serve to re-educate
voters that when the next downturn occurs – on the Tories' watch – it
won't be Mr Cameron's fault.