Gordon Brown & National Debt – why I think he’s got it right

This morning I came across this image of the world, sent via Twitter. Yfrog – u6c – Uploaded by tjerubbaal

It intrigued me – it shows areas of the world scaled according to their overall Government debt, and coloured according to the debt as a proportion of Gross Domestic Product. It carried the caption from Twitter user @tjerubbaal “Truly disturbing image: are you paying attention @conservatives, @labour, @libdems? Tinkering won’t work.”

The poster is clearly not making a party political point – not between the three main parties anyway. Which is what intrigues me – because I feel quite strongly that the understanding of this issue, is at the heart of the difference between the Labour party and the Conservative party at the current time.

Forget about whether you understand the diagram or not – it’s not particularly easy to comprehend. Just know this – the debt which the country has taken on really is large – as @tjerubbaal points out – some might say disturbing. There’s no dispute amongst the political parties about that.

You could be forgiven though, if you’ve been reading the popular press, or listening to the Conservative election campaign, that this has come about from some bungling incompetence by Gordon Brown & his chancellor Alistair Darling. You would be wrong. the scale of the debt is intentional – and marks the dividing line between the philosophies of the two major UK parties.

The tradition in recent years among Conservatives has been in favour of light touch Government – ‘small government’ as it’s now being sold. The idea being that the key players in the world’s and the nation’s affairs will effectively manage things with least intervention (interference ?) from outsiders like Governments. The ‘market’ we are told will self regulate – it will have times of lean and times of plenty – in Labour-speak times of boom and of bust. The wise prepare for this, and put by in times of plenty/boom to see them through in the lean/bust years.

This approach carries a certain logical appeal. It has a simplistic fairness, but it is harsh because in lean times, the people who suffer the most are the people who are least able to put aside plenty in the boom years – not the entrepreneurs, landowners, and businessmen – but the workers who work for those people. This was the case in the early 1980’s when Margaret Thatcher argued “There is no alternative !” and allowed market forces to work through the hardship of a recession, meaning millions of people faced mid to long term unemployment.

It also has the disadvantage that, as we have seen recently, the market doesn’t always work well in regulating itself, and there are those operating within the market, who take reckless risks, which put the prosperity of whole nations at risk.

The new Labour approach, under the Blair & Brown government, embraced some aspects of the Conservative free market approach. Labour realised that the nation as whole tended to benefit from being a prosperous trader – but sought to smooth out the cyclical peaks and troughs of a totally free market approach, whilst allowing the market to benefit the economy. (It is a significant shift from a traditional socialist approach).

No return to boom and bust was Gordon Brown’s mantra as chancellor – one which is now often ridiculed.

It was however a highly successful approach – but it fell foul of a factor over which no chancellor can truly have control – the UK economy is not isolated from the World economy. We can dampen the effects of the outside world, we can ignore them for a time, but ultimately we are interdependent with the economies of every other nation, and we are prone to the booms and busts of their economies as well as our own.

As Gordon Brown yesterday acknowledged one of the errors which was made was to grant the financial institutions too much freedom, and provide too little intervention (interference ?) in their affairs. BBC News – Brown admits he made a mistake over bank regulation . The unfettered actions of those institutions then led in large part to the Global recession from which we are now slowly recovering.

For the Conservatives then to blame Gordon Brown for the recession is grossly unfair – in the first place the errors to which he admits, are ones which any Conservative chancellor would have been clamouring for – small Government, free market, and giving business the opportunity to manage its own affairs. These are actually the self same philosophies which the Conservatives wish to re-impose.

Secondly to blame Gordon Brown for the actions of banks, because he didn’t regulate them is akin to blaming householders, who didn’t have the right locks or alarm systems for having their house burgled. Sure they could have made things more difficult for the burglars – but the blame lies with the house breakers. Similarly, whether regulated or not, financial institutions in Britain and around the world, took irresponsible actions which have affected everyone.

Personally though I don’t feel it’s helpful to apportion blame – we are where we are. What is important is how we react to this. This brings us back to the debt which Gordon Brown has incurred.

Margaret Thatcher said “There is no alternative”. (There is no alternative – Wikipedia, )

She was wrong – Gordon Brown has shown this. His actions have been taken to dramatically reduce the impact of the recession, to prevent long term mass unemployment, to keep the economy active, and to put off the difficulties of repaying to a time when the nation will be more easily able to bear it.

The Conservatives still argue that this is wrong. That things should be left to take their course, and massive cuts in public spending should be imposed as soon as possible in order to hasten the economic recovery – but that this is the only way that recovery can happen. The mass unemployment and prolonged economic hard ship for many are seen as the price that has to be paid.

Whilst blaming Gordon Brown for the recession may be unfair, the Conservatives’ criticism of his borrowing to tackle the recession is not without logic. Their policy is philosophically defensible.

It is however a philosophy to which I do not subscribe, and which I feel is morally reprehensible.

So be in no doubt – that huge debt that is illustrated in the diagram in the link above  is not there by accident. It’s there because there is an alternative, and that alternative has protected us from the worst ravages of the recession – which may well still come back to bite us if we are foolish enough to elect a Tory government on May 6th.

[ Just as a test I’ve got Labour’s Eddie Izzard election video – let me know if you can’t see it ]