Britain may be waiting for the Etonians, as the mournful title of Nick Cohen’s new book puts it, but this sense of changing political eras owes more to a failed Labour past than any present enthusiasm for a probable Conservative future…
While the analysis is fine as far as it goes it misses the weirdness of our times.
This ought to be the moment for sensible social democratic reform. Finance capitalism has run wild, just as social democrats predicted. And indeed, we are living through a moment of ideological crisis for conservatism: supporters of free markets and light touch regulation are everywhere hanging their heads in shame. But Labour is not benefiting, and not only because it was implementing the laissez-faire approach to finance as the bubble grew.
As I’ve emphasised in pieces here and here Labour thinks it can turn back the clock. Put like this the government sounds like a bunch of delusional nostalgics. Alas, there is a wider problem which I discuss in the opening essay of Waiting for the Etonians
And so in an unprecedented manner, and with not wholly
bad intentions, the left in power went along with a lawless
market, and only after it went down did it show the flair and
boldness of true social democrats by taking over much of the
banking system. It left it too late because while the bubble lasted
it did not want to think what would happen if the City fell
Failure was an unimaginable eventuality because, in
truth, no one on the left or right had the faintest idea how else a
country in which agriculture formed a tiny part of the economy
and manufacturing industry had withered could make a living.
The political left might have tightened the regulation of the
banks and the City, but the financiers did not seem to be joking
when they said that they would respond by emigrating and
leaving the economy in the lurch. It might have given the Bank
of England the authority to raise interest rates to stop the
growth of debt and the rise in house price inflation, but the
consequences would have been too severe to contemplate. By
2007, the only sectors of the economy that were booming were
retail and leisure, funded by consumer debt, financial services,
dedicated to getting consumers further into debt, housing,
bought with yet more debt, and state spending, based on levels
of government debt which made borrowers from Northern
Rock seem like paragons of responsibility.
If they brought down the debt economy, what else could they
put in its place?
If you had asked me or anyone else what was Britain’s unique selling point in a globalised economy two years ago, we would have replied that London was one of the great centres of financial globalisation. Now the City has crashed, what are we to put in its place? Labour does not know the answer to this question, so a reluctant public is turning Tory, even though it is far from clear that the Conservatives have an answer either.
PS If anyone thought I was going over the top about the crisis in conservatism, today’s Spectator blog quotes David Frum, an honest Republican thinker who is always worth reading whether you agree with him or not.
A federal bank takeover is a bad thing obviously. I wonder though if we conservatives understand clearly enough why it is a bad thing. It’s not because we are living through an enactment of the early chapters of Atlas Shrugged. It’s because the banks are collapsing. Obama, Pelosi, et al are big-spending, high-taxing liberals. They are not socialists. They are no more eager to own these banks than the first President Bush was to own the savings and loan industry – in both cases, federal ownership was a final recourse after a terrible failure. And it was on our watch, not Obama’s, that this failure began. Our refusal to take notice of this obvious fact may excite the Republican faithful. But it is doing tremendous damage to our ability to respond effectively to the crisis.