Here’s a cheerful follow-up to Andrew Stuttaford’s posting on the decision of Moody’s to downgrade the European bailout funds. The latest economic news from London is that the Britain’s gross domestic product fell by 0.7 per cent in the last quarter. This makes it the third quarter in a row that GDP has fallen. Indeed, of the nine quarters since the Con-Dem coalition took office, the economy has contracted in five and expanded in only four. Britain is now undeniably in a recession — and the light at the end of tunnel seems to be receding.
This prompts three brief reflections, one economic, one high-mindedly political, one nakedly political, all concerning the justifications for the Tories forming a coalition with the center-left Lib-Dems.
The economic justification was that only a coalition government could take the tough decisions needed to get down Britain’s excessive debt and retain the confidence of the markets. Let me gloss over the fact that the policy of all parties over this period has been not to reduce debt as such, but to reduce the long-term budget deficit. Public spending, far from being cut, has increased substantially.
To be sure, the coalition’s budgetary planning originally cut the deficit marginally more quickly than did the previous, Labour government’s plans. But since the coalition has been blown off-course, its budget planning has been revised so that it is now more indulgent (i.e., it will take longer to eliminate the deficit) than Labour’s. And though the original planned budget reductions relied much more on spending cuts than on tax increases, the former were disproportionately located in future years. Few people now believe they will take place on anything like the scale originally proposed. So the main economic argument for the coalition is in tatters.
What of the high-minded political justification? Some senior Tories argued that their party needed to change its “toxic” image and that would not be possible in opposition. Only in government would they be able to take the popular actions and accumulate the praiseworthy record that would persuade the voters that they really had “changed” and that they deserved national support.
There are so many stupidities inherent in that argument that I can scarcely count them. But the most obvious one was advanced by Joseph Addison 300 years ago: “’Tis not in mortals to command success . . .” Unless David Cameron and his coalition partners could guarantee a successful economy and similar achievements in other areas of government (Europe, welfare, crime, etc.), the Tories were betting on a big risk rather than a certainty. The new GDP figures drive that lesson home, and recent polls showing the Tories something like 8 percent behind Labour confirm the toxic effect.
And, of course, by allying themselves with a center-left party and thus having to swallow policies and arguments foreign to them, they were taking a bigger risk: namely, that of replacing one toxic effect with another. Sure enough, the latest polls show about a third of 2010 Tory voters fleeing the party — some to the center, some to abstention, and a large number to UKIP, the alternative party of the center-right.
That undercuts the nakedly political argument for joining the coalition: to get into office at all costs and on any terms. Is not politics about power more than principle? After 13 years of Labour government, that argument had strong appeal to all Tories but it was decisive for Cameron and his close associates. If they didn’t get into government, Cameron would probably lose the Tory leadership and the power of any kind of patronage. And the cost of that policy — keeping the Lib-Dems sweet at all costs — has shaped their decisions in government. For the party as a whole the effect has been a gradual soul-changing drift toward a different kind of partisan identity. Every week yields an example.
This week the party drifted a few yards toward the kind of inquisitorial government that it has traditionally opposed. A Tory junior minister at the Treasury told the country that it is ”morally wrong” for people to pay tradesmen in cash since the tradesmen might not declare it on their income tax returns. This has caused a backlash; several ministers have admitted paying traders in cash; some Tory MPs have pointed out that there is nothing illegal in paying people in what is after all legal tender; the statement now ranks as a gaffe. But it is a gaffe that tells a truth. When the Treasury is desperate for money but unable to halt such expensive Lib-Dem policies as subsidizing “alternative” forms of energy, then it will be driven to closing every tax loophole it can — whatever the costs in civil liberty or in simple everyday convenience. While they’re in coalition with the Lib-Dems, Tories have not merely to accept the Lib-Dem conditions on policy, they must also mouth the arguments justifying them. And contrary to orthodox biology, the mouth eventually influences the brain.
Cameron and the Coalition are not doomed. ’Tis not in mortals to command failure. Events may yet save them. So might the Labour party. But they are in deep water. And they don’t seem to have a policy for getting out of it other than to repeat the original argument that they are cutting the deficit responsibly. And that makes the latest GDP figures so damaging.
As Louis Macneice wrote in “Bagpipe Music,” (foreseeing perhaps Moody’s judgment on the euro-bailout funds as much as the plight of the Cameronians):
The glass is falling hour by hour, the glass will fall for ever
But if you break the bloody glass you won’t hold up the weather.