Britannia Radio

TELEGRAPH          31.1.09
Protectionism is, in the end, no protection at all
The recession will be made so much worse if national governments 
abandon commitments to globalisation.

In 1933, the worst year of the Great Depression, an economic 
conference was convened in London and attended by the representatives 
of 66 nations. Its principal purpose was to revive international 
trade. There was one notable absentee. President Franklin Roosevelt 
stayed on his yacht in the north Pacific and issued a radio message 
condemning the conference for trying to stabilise currencies and 
declared that the United States would not participate in the 
negotiations.

The consequences of the failure of the 1933 conference were profound. 
The collapse into protectionism deepened the recession, encouraged 
the rise of nationalism and resulted, ultimately, in world war. 
Gordon Brown is an economic historian who understands this better 
than most. In his interview with this newspaper today, the Prime 
Minister recalls what happened: "People came to London in an attempt 
to get agreement, partly on trade, partly on other aspects of the 
economy. It failed. And partly as a result of that failure was that 
the rest of the Thirties was blighted by protectionism."

Is history about to repeat itself? Another conference has been 
planned for London in April, when the leaders of the world's 20 major 
economies are expected to meet. There is, however, no official 
confirmation from Washington that President Obama will be among them, 
although the British Government certainly expects him to attend. This 
conference, like its 1933 predecessor, is intended to stop the 
world's trading blocs establishing protectionist barriers. To do so 
would be, as Mr Brown suggests, disastrous; yet there are ominous 
signs that this - the single most important lesson of the Great 
Depression - has not been learnt, or not well enough.

It is inevitable that, in times of economic hardship, governments 
will act in ways that they consider to be in their own national 
interests. They are under great political pressure to do so. The 
wildcat strikes by oil refinery workers across the country are a sign 
of things to come and Labour's reaction has been instructive. During 
the boom years, the Government extolled the virtues of globalisation 
for attracting foreign workers to these shores to do jobs that 
British people either no longer needed or could not be bothered to 
do, at the depressed wages that could be paid to overseas employees. 
Yet, at the first sign yesterday of unrest over this approach, 
ministers have run a mile. Hilary Benn, the Environment Secretary, 
said the striking workers "deserved an answer", although without 
specifying the question.

It is easy to see how political realities can chip away at a 
government's commitment to globalisation. The same is happening in 
America, where Mr Obama is under intense pressure from industrialists 
and Democrat politicians to erect trade barriers; in China, where 
imminent recession is likely to encourage the use of that country's 
huge foreign reserves on domestic projects; and in Japan, now in its 
deepest slump since the Second World War, and in no position to help 
revive international trade. The Euro-bloc is also under political 
pressure to pull up the economic drawbridge.

As our YouGov poll showed yesterday, Mr Brown has his own political 
difficulties; many voters concede that the recession is a global 
phenomenon but do not believe that he has acknowledged his own 
responsibility for the particular problems faced by Britain - 
something he surely needs to address. Yet he must continue to speak 
as positively as he can and is justifiably angry with those who would 
talk the country down; this is no time for despondency, but for the 
sort of resilience for which Britain is noted. Mr Brown is right to 
put his efforts into trying to forge an international response to a 
crisis that, as he has now implicitly accepted, threatens to be every 
bit as grave as the one 70 years ago.
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THE TIMES       31.1.09
What if the English patient doesn't get better?
As we crawl from the wreckage of the crash, the Tories must be 
merciless in pinning the blame on the Prime Minister

Matthew Parris

That capitalism-with-a-conscience speech by David Cameron in Davos 
last night contained the moral uplift suitable for the chocolate-box 
setting of a Swiss resort. But here in Britain the principal 
Opposition must wade into some evil stuff. It's not going to be 
pretty, and exchanges between the Tory leader and Gordon Brown at 
Prime Minister's Questions on Wednesday were only a foretaste. While 
sensitive chaps like me cough embarrassedly into our silk 
handkerchiefs and look away, the Tories must play the kind of 
politics that gives politics a bad name - and do it with relish.

They must lodge deep in the national imagination a dismaying thought: 
that Britain is worse placed than its competitors to recover from the 
economic virus now sweeping the world. If I'm right, then Mr Brown's 
battles have hardly started. It's in the convalescence from this 
malady, rather than the illness itself, that the really ugly 
political argument could lie.

The virus itself can be blamed on America, Satan, sunspots - no 
matter. Seek the prelude where you please; the question ahead is 
about the aftermath. The Tory task is to move the angry inquiry 
forward from the geography of origin to the geography of 
recuperation. Which economies will heal first? Which fastest? And 
when chaos recedes and a weakened West picks itself up again, who 
will be shakiest on their legs? As we move into the new century's 
second decade, will Britain have moved up or down the international 
economic league?

If, as I believe, the answer is sharply down, the Tories must be 
merciless in pinning the collapse on the decade that went before; and 
on the man in charge of the economy throughout - the present Prime 
Minister. To do so won't be entirely fair, but that's politics. Mr 
Brown was happy enough to take the credit while credit flowed.

The politics of this crisis, unlike the economics, have yet to kick 
in properly. Few but a handful of party zealots honestly believe that 
Mr Brown is a principal author of the international banking collapse 
or that a Conservative government in 2007 would have reacted very 
differently or known how to protect us better. So for all the insult-
trading across the floor of the Commons - about Mr Brown's dithering 
or Mr Cameron's do-nothing responses - the exchanges have had a 
desultory quality. The Tories don't know the cure and don't really 
expect us to believe they do. Labour MPs genuinely think that their 
leader is doing all he can, but are not so confident that his cure 
will work. Both parties expect the voters to conclude that nobody's 
sure of the answer.

Stuck in this territory it has been hard for either Government or 
Opposition to land serious political punches. Only two have hurt so 
far. First, the Tory claim that having failed to put money aside for 
a rainy day, the Government is running up debts whose repayment will 
hamper recovery when it comes. And second, Mr Brown's claim that 
Conservatives would let recession run its course whereas positive 
action by a Labour Government could lift us out of it earlier.

Significantly both claims point implicitly to the next chapter of 
this story. The present chapter is about the crash. The next will be 
about crawling from the wreckage and checking for broken bones. And, 
if I'm right, it is in that crawl from the wreckage, the sequel not 
the crash itself, that the big political story will be found.

What if, by the end of the winter of 2009-10, those green shoots 
fantastically conjured up by Baroness Vadera this month, really do 
begin to appear - but only in America? What if China and India, after 
catching a cold, bounce back quite fast as clients' economies begin 
to recover - but not ours? What if the economic trough into which 
Germany, France and other Northern European economies are also 
slipping, proves shallower for them, and their recovery comes faster? 
What if by spring next year the United States is demonstrably 
powering the global economy out of recession - yet we British still 
languish? What if our near-addictive past reliance on financial 
services hampers the restarting of the domestic economy here, because 
it is the City that has taken the most direct hit?

One of the ways I've been trying to comfort friends who've lost City 
jobs this winter is by pointing out (what is perfectly true) that 
there's no stigma in being fired when everyone else is being fired 
too. It is better to be wounded in a crowd than in isolation, when 
your weakness and your plight stand out as personal. Comparisons are 
odious and markets are cruel; failure relative to the crowd is 
noticed and punished more keenly than collective failure.

But if this is true of individuals, it's true of national economies 
too. At present the impression (fair or otherwise) is of a comparable 
fate facing every developed economy. When Mr Brown insists that this 
is a "global" problem the insistence, though tedious, rings true. 
There has not been enough in the British news media about how our 
present plight compares with that of the French, Belgians or Spanish. 
I have no idea how hard or easy it is to get a loan or a mortgage in 
Sweden or Portugal. Is unemployment rocketing in Denmark and the 
Netherlands too? We assume so. We are (aren't we?) assuming that 
although there may be local variations across the developed world, 
the bigger picture is that we're all in the same boat.

This version of history suits Mr Brown - and any incumbent government 
- tremendously well, and so far it remains more or less unchallenged. 
But what if the "English patient" picture of our economy begins to 
take shape again abroad, as did the image of the "British disease" in 
the 1970s? In a year's time, if credit begins to course through 
global arteries but we British continue to look wan, could the 
country be hit by a serious loss of international confidence as we 
keep trying to borrow more, with no sign of the gathering recovery 
that competitor economies are relying on to vouchsafe their debts?

It is for this bleak scenario that the Opposition must prepare public 
and media opinion. Come what may, the Tories will win the general 
election next year - but what next? Scope for action will be 
constricted by Britain's crushing economic plight. They'll have to 
explain. They'll have to blame.
The blaming had best start now.