It is hard sometimes for someone who lives in what might be called the “Westminster village” to understand how monumentally boring are all the commentaries in the political press about Which Cabinet Minister is In and Who is the Favoured One of Gordon, etc. In the Daily Telegraph today, Rachel Sylvester ponders the fact that the Chancellor of the Exchequer, Alisdair Darling, is a puppet of Gordon Brown, the Prime Minister. Oh, the horror.
To be honest though, much that I despise this government, it seems to show a lack of historical perspective to complain about the sheer dominance of a Prime Minister over Treasury affairs. I have been reading Douglas Hurd’s rather good biography of Sir Robert Peel, the Prime Minister of the mid-19th Century. As premier, Peel delivered budgets himself rather than get his Chancellor to do so. The budgets, which overthrew the Corn Laws – a system of trade tariffs – split the Tories at the time between the old landed gentry (who wanted tariffs) and the ‘Peelites’ (who wanted laissez faire). But Peel was using his old prerogative as ‘First Lord of the Treasury’ as the Prime Minister is known, to take the lead in economic and financial affairs. In the late 1980s, the same happened when Nigel Lawson, the Chancellor of the time, tried and failed to persuade Mrs Thatcher to accede to his demand that Britain join the European exchange rate mechanism (we did eventually join it, and a right disaster that turned out to be).
Gordon Brown is guilty of many sins, but leading economic policy is not one of them. The problem is not the personnel, but the policies themselves. None of the major figures in the current government favour a more modest role for the state; everything else, my dears, is pure detail.
Quite so J.P.
There is nothing wrong with a Prime Minister (the “First Lord of the Treasuary” after all) being in charge of the budget.
Of course neither Sir Robert Peel or his follower W.E. Gladstone would have talked of government “running the country”.
However, these days government spending (once one has seen through Mr Brown’s deceptions, such as pretending that the “tax credits” are not welfare payments) is almost half the entire economy – and the rest of the economy is caught in a great web of regualtions.
As for Northern Rock (“thirty billion Pounds, not much if you say it quick”):
Sir Robert Peel tried to deal with credit-money bubbles – but the Act of 1844 was only partly successful.
The Act (for example) did not get rid of the “private” Bank of England, so fractional reserve banks could tell themselves that they would be rescued if their games blow up in their faces.
However, the money and banking system of the 19th century (for all its flaws) was wildly different from the one we have now.
Then there were bubbles in the system – now the system IS a bubble. There is no link to anything real.
For example, money is simply fiat (i.e. it is government ORDERS – fiat=command), and borrowing has little or no connection to real savings.
Which is why (in the modern world) real savings can go down and down, and borrowing can go up and up. Malinvestments rule O.K.
It is too depressing to bother thinking about much – we are f*****, and the only question is when will the House of Cards finally collapse.
So let us change the subject.
Of course Sir Robert also knew about government wage subsidies (“tax credits” as we call them now). Before the Poor Law Amendment Act of 1834 got rid of them, the practice was quite widespread.
This “modern” scheme was called the “Speenhamland” system as it spread (from 1795) from a village of that name. It ended up covering most of England and Wales.
Of course there was a time when total government spending (local and national) was only a couple of per cent of G.D.P. (1874 is the low point for national government spending – but some local government spending would have been growing after the Forster Education Act of 1870).
And now government spending (as stated above) is not much below half the entire economy.
So if we were not doomed by the financial system, we would be doomed by the Welfare State.
Oh well – at least we have made a good job of dooming ourselves.
“If, by some miracle, we escape this trap – we will be destroyed by that trap”.