Labour has fluncked Britain’s economy, as much as Britain’s economy has flunked itself. The Government of course is only to blame if the huge rise in public spending, is related to the lack of credit in the markets. The link would have been clear to even the most disgruntled, asinine of economists twenty years ago: multiple raising of taxation, to slowly and surely dry the credit swamp. And credit swamp it was. When rebranded old-Labour first came into power in 1997 the economy was in a period of growth and there was a steady increase in working capital in the country to allow for a slow expansion of the market.
The problem today resulted from an acute ideological short-coming in the New Labour propoundment of the mythology of a socialist brand of commerce. In simple terms: that whilst Blair was pretending to show he loved business, his Party had never truly signed up to free-market ideology. It forgot about the premise of low taxation and more importantly that this premise should run through all areas of policy making and Government function. Au contraire, Labour’s post 1997 strategy was in tight fitting with much of its traditional socialist economic position: (i) tax and spend and (ii) oppose the free-market with increased cost associated regulation. The Tories, however, doing well in the polls are missing a trick here. Whilst current Shadow Treasury focus is to emphasise the deficit, and thus lay the ground for an agenda of cuts (which both mainstream parties have now conceded), they are not taking the opportunity to bring back free-market ideologues into the current economic discourse. It should be made clear to the City that Friedman style approaches to fiscal policy that resulted in an overall paradigm of growth in the 80s and 90s, shall once more become the mainstream- and there shall be a gradual claw-back of taxation on all fronts. Basic macro-economics will show a relationship between taxing the end of any line of consumption and the primary producer of credit: thus cutting tax on all fronts for a member of the public or corporations, will assist the lenders and the market as a whole. Excessive critiques of bankers should also be curtailed: the modern economy is credit based, and in large parts credit driven. Bankers are thus one of the cornerstone and first foundation stones of our economy. They turn its first wheel. We could do more than reflect on whether the fault lies with them or, more truly, with New Labour. As long as we have our modern economy and society, we will need them and their revival will be, in both short and medium term, the path to our economic recovery.
Copyright Birkenhead Society.