The Abortion Debate Does Not Exist
This is the constitutionally correct move. It is a convention that the front bench should not introduce legislation on what we traditionally constitute as matters of conscience, and this has served the nation well. It should never be the prerogative of a government to introduce legislation on matters of conscience that could find any justification for the employment of the whip.
It is also the correct move for another reason: it reflects reality. The reality is that the “debate” in public life over abortion has failed to exist for some time. The last round of debate on the Bill was a noble exception to this, but in public discourse we effectively see two camps completely unable, some might say unwilling, to understand the views of the other. Each shouts its own language parallel to, rather than cognisant of, the other. They are the “two nations” of our times.
Two nations between whom there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planet.
Nowhere is this more evident than the names of the camps: “Pro-life” and “Oro-choice”. Two entirely separate axes that work to smear the opponent. Pro-lifers are not anti-choice: they believe that the unborn child is a living thing and therefore there is no valid choice to make. It is also unfair to suggest that they are all basing their ideas on the Book of Jeremiah: the Church of Rome argues that when there is uncertainty (as there is), the benefit of the doubt ought to lie with the potentiality of life. Likewise the pro-choice camp are not anti-life, but believe that life does not begin at conception. It all ultimately centres around the fundamental question of where life begins, and a failure to address this basic first principle where people disagree renders any subsequent discussion meaningless.
Then there are those who try to work through a frighteningly complex moral issue and disagree with articles of faith of both sides. Those who may not accept that life begins at conception, but believe that abortion has undermined traditional values, or those who believe that abortion is little more than infanticide, but nonetheless support legalised abortion as more compassionate than further deaths through the backstreet clinics. Those who . They do not feel comfortable with either side, and get villified for dissenting on some of the basic articles of faith of the two camps. Theirs is a sorry lot, neither pro-life nor pro-choice, their heresies lead to villification by both sides.
As it stands however, the “debate” often feels more like two rival camps preaching to their own side and doing little more than villifying the other. It is not debate, it is enmity.
As a means of testing this principle I put out a statement on my facebook page today declaring myself to be “pro-life with some exceptions”. This is, naturally, an illogical statement: you are either pro-life or you are not. It immediately aroused the anger of many a person who would consider themselves to be “pro-choice”. With one notable exception who noticed this inherent contradiction, people launched for the jugular. It did not matter that in the subsequent discussion I had expressed support for legalised abortion, declared that a foetus is not the same as a human being, or rejected the idea that life begins at conception. It took a significant amount of time for any calm discussion to emerge having raised the red rag of the “pro-life” label. An immediate characterisation of opinion emerged that was at complete odds with any sort of case I wished to make.
In some senses this is inevitable: there will always be those who believe that life begins at conception and will be unshakeable in that belief. This is where majoritarianism proves essential: on a question of an irreconcilable clash of conscience, the opinion of the majority, within some constraints, will have to prevail. Far from being the tyranny of the majority, it is an ethical consensus. As the science changes, abortion will have to be revisited by Parliaments for ever more, and rightly so. There are those on both sides who are open to persuasion. Reactionary characterisation and a refusal to engage in a sensible and intelligent manner to what remain legitimate concerns does neither cause any good.
The problem with the “pro-life” and “pro-choice” labels are that they immediately raise straw men to the other side. They are representative of the worst of political language in that, far from providing an illuminating descriptive label, they are pejorative expressions that serve to restrict debate. Pro-lifers are not against the autonomy of women, nor do pro-choice campaigners support infanticide. Both are moral movements. The discourse however does not acknowledge these basic realities. We ought to do away with them in the name of mature discussion. It is soundbite politics at its worst.
Sphere: Related ContentThe New Religion: An Apologetic
The New Religion is out in force. Its holy book, though published comparatively recently in the grand scheme of things, has now become a sacred text to adherents, to which they must refer on any matter of faith. Their prophet is dogmatically insistent that religion and reason are completely incompatible, and undertakes grand designs to write the moderate out of his vision. Prone to gross oversimplification of the rich complexity of human life, he has a selective view of history that omits the inconvenient for the sake of promoting dogma. Their Supreme Being a wise old man with a beard whose pronouncements destroyed the idols of the past. The aggressively seeks converts, describing all who disagree with him as The Enemies of Reason, on which he holds an absolute and incontestable monopoly. No challenge, no criticism, no argument with his worldview is acceptable; those who dare to are clearly a lower order of delusional beings.
The Followers tend to wander round with an air of smug self-righteous moral superiority. Intolerant of other religious practices, they are keen on impressing on everyone else how backward and delusional they are. Like the best of intolerant fundamentalists, they are now “unnerved” that anyone might question their beliefs in public, and are launching a campaign of propaganda.
I am, of course, referring to the Atheist Bus Campaign.
One can understand their motivation: the fire and brimstone adverts on the sides of buses were distasteful to say the least. Nonetheless, there is nothing wrong with challenging someone’s faith or lack thereof. The idea that one should not put up religious adverts is facile. The Book of Dawkins has had enough adverts in recent months: why shouldn’t the New Testament get a few in as well? If society censored all ideas that were “unsettling”, then Ariane Sherine, the founder of the campaign, would most likely not have the vote. It is also not the most unsettling advert carried by London’s buses: the rather gruesome pictures of severed heads that accompanied adverts for the latest Saw film were far more disturbing than the idea of being sent to a hell you don’t believe in. If Ms. Sherine is so worried that her atheism cannot withstand the threat of condemnation by a figure she does not believe in to a place she does not believe exists, perhaps she ought to engage in some critical self-reflection?
The proposed adverts reflect the very same moral blindness that these pop-atheists accuse religion of. Let us bear in mind that they only inserted the word “probably” into the adverts to satisfy the Advertising Standards Authority. That absolute moral certainty, unassailable by any form of reason, is one of the very things for which Dawkins criticises religion. The second half of the advert, “stop worrying”, can loosely translate as “stop thinking”. Combine that with Dawkins’ claim that “thinking is anathema to religion”, and this atheism becomes very much a religion in its own right. If it were not for “worrying” about the great moral issues, civilisation would never have advanced. The poster is reminiscent of someone saying “Stop thinking about God”. If Dawkins’ brand of atheism is so strong and rational, why can it not bear someone thinking about it? It is arrogant to assume that the matter is a question settled for all eternity. That, ultimately, is a restriction on rational enquiry.
One need look no further than Dawkins’ spurious assertion that “thinking is anathema to religion” to witness the ahistoric and narrow-minded worldview behind his atheism. Perhaps he has forgotten the origins of his own scientific tradition, rooted in the tradition of natural theology. Science has its originated in the belief that discovering how the world works is to better understand the beauty of God’s work. A vast body of scientific and civilisational advancement exists thanks to the efforts of believers and theologians, who conducted their research in the firm belief that by doing so they were serving God. Dawkins himself ought to be no stranger to this. The gene-centred theory of evolution that he is a prominent exponent of would not exist were it not for the research of the Augustinian monk Gregor Mendel. Let nobody claim that such discoveries were despite Mendel’s religiosity; he was inspired to conduct his experiments, and subsequently supported by, his monastic colleagues. The discoveries of the devout lay preacher Michael Faraday in the field of electromagnetism were born of his theology. Like the best fundamentalist leader, Dawkins ignores what his revered hirsute old man says when it flatly contradicts him. In his letter to John Fordyce in 1787, Charles Darwin declared that “It seems to me absurd to doubt that a man may be an ardent Theist & an evolutionist”
The great religions of the world have strong traditions of reason and critical enquiry within them. It underlies the very concept of Theology. Anyone who examines the vast body of Christian thought over the centuries will be amazed at the level, range, quantity and quality of debate. The Jews have the Talmud, a vast discourse on the teachings of the Torah. Rabbi Maimonides, one of Judaism’s prominent thinkers, was not only a theologian and philosopher, but also a physician. The Jewish community is renowned for their reverence for lawyers and doctors; professions reliant on reason and logic. In Islam, the Qur’an commands its adherents to “not accept any information, unless you verify it for yourself. I have given you the hearing, the eyesight, and the brain, and you are responsible for using them” (17:36); a clear demand for empiricism.
In many of the great struggles against injustice, religion has been at the fore. William Wilberforce and John Newton’s campaign for the abolition of the slave trade was rooted in their evangelical Anglicanism. The first anti-slavery group was founded not by scientists drawing their arguments from cold reason, but by Quakers armed with the moral authority of the Book of Exodus. The most remembered leaders of the American Civil Rights and South African anti-Apartheid movements are a Baptist Priest, an Anglican Archbishop, and a devout Methodist. Of particular interest, evangelical Protestants were some of the foremost advocates of a secular United States. Our ideas of what constitutes a just war, a discussion as alive as ever, are based not on the writings of scientists, who tended to focus their efforts on creating obscene engines of mass destruction, but the Christian thinkers Grotius, Augustine and Aquinas.
As any epistemologist knows, the scientific method is not the only way of thinking about the world. In his Enquiry Concerning the Principles of Morals the atheist David Hume acknowledged the limits of reason in our moral understanding of the world. In philosophical terms the scientific method is based on what is called a posteriori inductive reasoning; the drawing of conclusions of varying probability from empirical evidence. The limited nature of evidence means that it will never reach any “proof”, but rather only a probability. It is why dismissing evolution as “just a theory” is utterly inane: it is the most probable theory we have at present. It is however not the only form of logical reasoning available to humanity. For example, mathematics is based on a completely different system of a priori deductive reasoning, starting from first principles and working through to conclusions. In these systems, as long as the underlying principle is sound, so too is the conclusion. These alternative forms of reasoning separate from science permeate our daily lives. We could not conceive of the rights of men or ideas of justice on empiricism alone. The US Declaration of Independence opens with an article of faith: “We hold these truths to be self-evident, that all men are created equal” is not an empirical statement. Science, for all its wonders, is not the only way of thinking about the world. As Faraday knew, it can account only for the how of existence, not the why.
Religion does not believe that the existence of God is a settled question. The very idea of faith is reliant on uncertainty. Were we to know with absolute certainty that God existed, faith and morality would become meaningless. Choosing God is impossible if one is certain about His existence. Atheism has to be a credible alternative if faith is to have any meaning whatsoever. It has also been instrumental in holding the teachings of God to account. In posing the difficult questions atheism has provided religion with its means of renewal and continued relevance. It is a disloyal opposition, but a no less necessary one for that. The vast numbers of works made to advance the idea of belief in God demonstrate anything but complacency on the part of thinkers such as Paley, Aquinas and Kant, and the theodicies demonstrate that religion is not ignorant of the apparent paradox of a just deity presiding over a manifestly unjust world.
The history of the twentieth century ought to provide sufficient evidence to dispense with the notion that religion is uniquely responsible for the suffering of this world. The barbarism of the atheist Soviet Union and the anti-Christian, anti-Semitic Nazi Germany demonstrated the capacity for any fundamentalism to dehumanise and murder. Looking further back, the violent excesses of the French Terror were based not on religious concepts, but on what was considered to be the exercise of reason. Religion may have contributed to the Crusades, the Thirty Years’ War and al-Qa’eda, but science gave us the atomic bomb, mustard gas and Josef Mengele. Is this sufficient reason to dispense with either? Their excesses, contingent but not inherent, do not provide sufficient reason to abandon them.
It may seem something of a cheap shot to ask whether this is a good way to spend money, but then atheism tends to feel smug about not wasting money on such “trivia” as paying vicars and maintaining churches. So far the campaign has raised over a hundred thousand pounds. On a purely teleological analysis, is it really worth it? The subtitle of the adverts, as argued earlier, oppose the spirit of enquiry about religion in favour of complacent certainty, and is unlikely to win itself any converts. It is simply there to preach to the converted rather than spark any debate, which has been in response to the proposal rather than the adverts themselves. Spending that amount of money for negligible gain is immensely wasteful.
I have no problem with people being atheists, or with the promotion of religious debate. Ms. Sherine has inadvertently raised awareness of the issues of faith in public life and provoked a worthwhile discussion. It certainly prompted me to subject you all to this rather long and complex piece of apologetics. In that sense it has been an unqualified good. But I object to the narrow-minded stereotyping of religion the proponents have put forward as their justification of the campaign, to the nihilistic message the buses are proposing, and the colossal waste of money it will be.
Sphere: Related ContentNo Ifs, No Buts, Russell Brand Must Go
I’m not going to rehash the details of the story, but if you don’t already know it, find it here.
Obscenity, humour and taste are all rather tangential issues to this. What is at the heart of the matter is that the behaviour of Brand and Ross was bullying.
Brand has past form on this, he has hoax called police hotlines and insulted the daughter of Rod Stewart. It is now evident that this childish excuse for an entertainer is incapable of telling what is appropriate behaviour.
The BBC should also be having a long hard look at itself for broadcasting the episode despite Mr. Sachs’ plea for them not to do so.
Putting them in the stocks, which would be the equivalent of what they subjected the Sachs family to, would of course be unfair and a waste of fruit. Nonetheless they deserve to be punished. I will reserve judgement on Jonathan Ross, but Brand is a repeat offender. He must be fired.
Sphere: Related ContentCartoon of the Week
The sensation of writer's block
Hat-tip: Skeptobot.
The Limits of Keynesianism
Back in Fashion
The Writings of John Maynard Keynes have experienced something of a renaissance. The apparent success of the bailout to save the global financial system from itself has exposed the limitations of concepts based on absolute rationality and brought back an emphasis on the need to adopt special measures in periods of economic turmoil. With the Prime Minister finally admitting that Britain is going to enter a recession, discussion on the measures to take could not be more appropriate.
The underlying concept, that governments need to spend more during recessions, is a fundamental truth of finance. The level of public spending as a proportion of income inevitably rises during a recession as tax revenues dry up. Intervention is also a necessity in a market that operates according to the complex realities of human behaviour rather than idealised abstractions. It preserves order and prevents the irrational anarchic panic of a downwards spiral into a brutal recession. Intervention is required to establish the limits on moral hazard; protecting those liable to suffer from the irresponsible actions of others. Keynesian interventions are also necessary to preserve some of the core skills that underpin the economy. An open letter to the Times today by business and Trade Union leaders emphasises the importance of retaining the skills base of the UK economy.
It is important to remember though that Keynes was by no means an opponent of capitalism. The ideas put forward in The General Theory of Employment, Interest and Money were designed to operate as an additional refinement of the only system that has repeatedly demonstrated its effectiveness in achieving prosperity. Keynesianism does not replace capitalism, nor should it. The burdensome and inefficient economies of the 1960s and 1970s were the result of trying to operate according to such systems beyond recessions, and were in many ways woefully ineffective. Growth and demand ultimately come from below in such systems and the state is rarely a particularly efficient or effective agent. Interventions must be there for as long as necessary, not as long as possible. After the recession has ended, governments will have to reduce the size of their programmes in order to save money for the next downturn.
Bearing this in mind however we must concede that we are very poorly placed to act. Ideally, governments should run a surplus during boom years to save for the rains of the bust ones. Reductions in tax revenues during recessions make this sort of saving necessary, particularly as Keynesian programmes often need to be further supported by responsible borrowing. Unfortunately for the United Kingdom, obscene levels of public spending masquerading as “investment”, coupled with gigantic levels of public debt concealed within Private Finance Initiatives and further burdened by the nationalisations of banks that over-lent, means that very little money is available to fund such Keynesian programmes. Further spending risks completely bankrupting the country, and placing us in an even worse position than if no intervention happened at all.
Still going to happen, but the aim is to reduce their size
Nonetheless the moral imperative of intervention to insure against a complete catastrophe is necessary. Given the unpropitious political and financial circumstances any programmes will have to be limited. They must focus on more than just spending, and instead on building the infrastructure and maintaining the skills required to underpin a future period of economic growth. Projects must have clear ends beyond mere maintenance of employment, and instead focus on greater long-term goals. Keynesianism is not about eliminating recessions, but lessening their impact. It is not a panacaea, but an analgesic. Politicians must bear this in mind and avoid an orgy of self-righteous public spending that risks deepening and lengthening a recession.
One must also be aware of the limitations of projects capable of implementing the objectives of Keynes’s economics. A new government spending project takes, from conception to implementation, roughly eighteen months. That often means that by the time it is able to intervene, much of the recession has passed and a well-meaning initiative becomes just another financial burden to bear during the process of economic reconstruction. Governments should therefore be wary of new projects and initiatives proposed by various interest groups promising greater employment and infrastructure. Unless it can be demonstrated that any such projects are genuine investments (and not just expenditure masquerading as investment), they should not be supported. Unless there are genuinely good reasons to shorten the conception to implementation period, this process should, in general, be avoided. A far better method would be to expand the scope of existing projects, accelerate their implementation, and move further towards implementation those projects that have already been conceived. Working with what one has is infinitely better than having to start such projects from scratch. Crossrail and the London Olympic developments here stand as good examples, as others have already mentioned.
In all this one must however remember that much of the existing data on Keynesian programmes is skewed by the events of the late 1930s. The transition of much of the United States, Britain and Germany into total war economies means that the level of acceptable state intervention is far greater than what one could even begin to countenance in a time of relative peace. The results are therefore difficult to discern having been overtaken and distorted by events.
What none of this must conceal however is the moral necessity of reductions in public spending. The arguments for nationalisations in previous weeks does not detract from the legitimate criticisms of the inefficiency and waste of the public sector. At a moment no more timely, a report released by the Chartered Institute of Personnel and Development suggests that the public sector wastes billions by failing to adequately deal with people taking spurious sick leave. Denis MacShane, a former Labour minister, bemoaned “the waste of money on pointless projects, publications, or legions of press officers that add no value“. These inefficiencies have restricted our ability to effectively finance the measures necessary to lessen the blow of a recession, and during a recession itself, such abuses of power are inexcusable. The case for cutting spending is clear: the money is now urgently needed to be allocated to those projects and parts of the economy that are genuinely deserving of money.
The re-appraisal of Keynes in this period is necessary, but we must not accept any policy with his fingerprints on it uncritically. The government has to realise that it cannot cure the recession but only lessen its impact, and resist the nostrums many will attempt to sell under such an illusion. We must acknowledge that we are poorly placed to implement an effective series of Keynesian programmes, and that our efforts must be specific, limited, temporary and with a clearly-defined set of objectives. We should favour expanding existing programmes over new ones. Spending in non-essential sectors will have to be cut to make room for vital projects and the expansion of welfare to accommodate the unemployed. Above all, the damaging hyperbole favoured by many on the left must be resisted in favour of a more measured long-term view. We must accept the limitations of Keynes’ ideas, and must not accept any programmes with its label uncritically.
Sphere: Related ContentFinal Presidential Debate
From: Mike Rouse.
The Second Honeymoon Will End
Pundits are predicting that in the next few weeks Gordon Brown’s government will receive a further bounce in the polls and narrow the Conservative lead to single figures. The emerging theme is that the Prime Minister’s hour has come and he may stand astride the world as the heroic figure who rescued the financial system from complete collapse.
It is true that the First Lord of the Treasury has acted decisively to shore up the British banking system. The result is a natural bounce in the polls. But as Mr. Brown must now be all too painfully aware, what goes up must come down.
The current boost in Gordon Brown’s popularity is the temporary result of a crisis. Politicians whose status relies upon crises are ultimately hostages to fortune. As Churchill discovered in 1945, once the crisis is over, the electoral response tends to be “thanks, but it’s time for a change”. As the immediate crisis gives way to a lingering recession, Mr. Brown’s inability to empathise will once again come to hurt him.
In this particular instance the blow may be doubly hard. Not only will the crisis bounce come down, but people will start looking for who in the government was responsible. The popular ire will likely be directed at the man who presided over the economy for ten years, ignored the warnings and failed to act decisively much earlier.
It is very easy to appear heroic when fighting a fire, but when the former occupants of the burnt out wreck discover that you were the one who drenched it in petrol and smashed the alarms, you cannot count on their gratitude lasting.
Sphere: Related ContentOn Regulation
Predictably, members of the Labour Party have begun to use the failure of the regulatory system in preventing the collapse of the UK banking system to launch a wider attack on a Conservative deregulation agenda. Bob Piper describes himself as “shocked and amazed” that
Having spent years complaining about too much regulation, excessive red tape and bureaucracy stifling innovation, some Tories have now got the brass neck to complain that there wasn’t enough regulation!!!
The question is not a case of more or less regulation per se but of better regulation. Nobody seriously disputes that regulatory frameworks are necessary for the efficient, free and fair operation of a market. The objection is the way in which those regulations were implemented. One can have the best system of rules in the world, but if they are not supervised and implemented properly, then they are useless. The Conservative objection has been to the tripartite framework that ultimately hampered our ability to effectively regulate the finance system. Tripartition slowed down decision-making processes, restricted the flow of information to the right people at the right time, and promoted a diffusion of responsibility that created unnecessary gaps in the regulatory structure. The problem was identified over a year ago, and the government failed to do anything about it.
What this misses though is that the conservative opposition to regulation is not an argument primarily related to the financial services sphere, but to a different sort of regulation. It is an argument about the excessive and burdensome level of regulation that has permeated throughout society. The sort of asinine and petty rules that discipline firemen for using their own sleeping bags, or that a computer cannot be carried 200m without appropriate training. Leaving aside the social arguments against this arbitrary extension of state power (which the previous link addresses), the conservative economic argument is that these rules ultimately restrict the ability of businesses to operate efficiently in return for dubious benefit. I invite anyone who seriously believes that all these regulations are necessary to look through the following list of risk assessments and suppress their laughter or groans. Imposing the levels of regulation and paperwork on businesses ultimately distracts them from performing their primary functions: making money and providing jobs. In so doing they limit the growth of the economy.
Paranoid “Health and Safety” regulations are not the same thing as the rules on which the financial system operates, and it is a specious argument to suggest that they are.
Sphere: Related ContentCommon Responses to the Crisis
This is a reposting of an article that originally appeared on John Redwood’s blog, but given the proliferation of misinformed opinions around the financial crisis it deserves wider dissemination.
Sphere: Related ContentLast night I travelled to Hatfield to speak at a dinner. The roads were eerily emptier on a Friday night - a sign of things to come. I am grateful to the audience - and to all of you bloggers - for your thoughts on the crisis. I would like to comment on some of the most common responses.
“Too much deregulation caused this mess” - showing the eternal power of Labour spin. The extreme version blames Margaret Thatcher for this “crisis of capitalism”!
The great difficulties in banking have occured in the most regulated of industries. Regulation of banks and other financial institutions has expanded greatly in recent years. This is a failure of regulation as well as a failure of banking. It is not that we had too little regulation - we had the wrong type of regulation regulating the wrong things, allied to weak regulation of what matters, capital and liquidity.“People like you called for deregulation, so you caused the problem”!
This is the fatuous BBC line. It ignores the fact that I issued warnings about the dangers of the Bank of England have too little power to regulate banks and other financial institutions. It also is a muddled proposal in its own terms, as an Opposition MP calling for something does not mean that something happens! I thought Labour was in government and calling the shots on how much regulation we needed.“Banks should not be allowed to lend more than they get in deposits, so they would be stable.”
The run on the Rock which brought the Rock down shows that deposits are not a stable source of cash if confidence goes. There is a lot to be said for a model where a bank draws its money from a wide range of sources, to reduce risk.“Banks should not borrow short and lend long”
Borrowing short and lending long is a normal banking approach to making money and helping the economy. Done in moderation it makes sense. The interest rate is usually higher for longer term loans than for short terms. Intelligent exploitation of this difference can earn a return for bank shareholders. Of course, taking it to extremes can jeopardise confidence. The problem in the summer of 2007 was the Central banks, especially the Bank of England, left markets so short of short term funds a crisis was likely.“It’s not fair of you to call for lower interest rates - this means savers will be hit”
In this crisis we are all going to be hit. Savers can only enjoy high rates of interest if people and companies can afford to pay even higher rates of interest to borrow the money. If rates are too high too little money is borrowed, and too high a proportion of exisitng borrowings are not repaid. Savers and borrowers depend on each other. At the moment it is too difficult for borrowers, so the savings rates have to come down to prevent the system breaking down completely. I would have thought the experience in the Icelandic banks might start to show savers the dangers of wanting too high a rate of interest for current conditions.“We should limit people to borrowing just 3 times their income again, as they used to do, when taking on a mortgage”
I agree banks and Regulators need to look again at how much they are prepared to lend against any individual property, and how big a multiple of income they will allow. Today, however, the problem is not limiting the amount banks will lend, but getting them to lend enough. This is a something for the future when banks do want to lend more. Many of us were warning against the extreme deals we saw being advertised in 2006-7 before the crunch.“Nationalising the banks would sort all this out - why don’t they just do it?”
Transferring problems from the shareholders to the taxpayers sorts out nothing. The day after you still have the same underperforming loans and the same need for extra cash and capital. The banking sector is too big as a whole for the UK state to take on. Why should the UK taxpayer have to pick up the losses, when we did not enjoy the bumper years for banking profits and bonuses?
Time for Fiscal Conservatism
At this juncture the efforts of all parties to alleviate the financial crisis has focused on extracting the nation from the turmoil rather than any general questions of principle. Nick Clegg summarised this mood at Prime Minister’s Questions, saying “when the ship is sinking you send for the lifeboats, you don’t argue about who sailed it into an iceberg”. Her Majesty’s Loyal Opposition would not want to appear opportunist or opposing for its own sake, lest they be blamed for thwarting a rescue plan without very good reason.
Nonetheless when the dust settles and the immediate crisis gives way to a more lingering period of gloom it will become necessary to unravel the myths of the Age of Irresponsibility and articulate a new economic agenda for the coming years.
We must observe some basic realities. First, capitalism is neither discredited nor dead. It remains the only effective economic system available to humanity, and no alternative has emerged in the past few weeks that would have fared any better. The failures at the heart of the current crisis are ones that have been committed by both public and private sector alike, and there is nothing to demonstrate that full state ownership of the economy or its strategic sectors would have made much difference. The British government is just as culpable for excessive borrowing, failure to properly account for risk, hidden debts and regulatory failure as any single bank. Outside the narrow focus of the financial sector, the fundamentals of a market based around the private ownership of property remain, and with little to challenge them.
Second, there is no such thing as an absolutely “free market”. It is an abstraction that forms the basis of an economy from which reality dictates that we must on occasion deviate. Human limitation necessitates government intervention to preserve the good of the market as a whole. Interventions are required to limit contagion and panic, preventing irrationality bringing the system crashing down. They are also needed to protect the innocent and provide the investment required to get the economy moving once again. Intervention in times of crisis has been a part of capitalism since the days of John Maynard Keynes.
Faced with these basic economic realities, the basis for new economic policy ought not to come from some crude reworking of Marx or Smith, but a re-affirmation of fiscal conservatism. Briefly, this can be considered a commitment to living within one’s means in both the public and private spheres. It is wedded to a wider conservative intellectual tradition in its respect for traditions and acknowledgement of history, with a cautious approach to new ideas. In this analysis, it is also worth including the general conservative suspicion of social engineering as tending to hurt those it most desires to help.
In the United States it has become clear that the sub-prime mortgage crisis that helped trigger the financial downturn was the result of this social engineering. The Clinton administration, keen to get poorer people onto the property ladder, pressured banks into relaxing their rules on mortgage lending. As a result the banks took on bad debts that they knew were particularly risky. The poorest were encouraged to take on debts that they could not repay in the event of a downturn, encouraged by a government that saw this as the promotion of a public good. This social engineering reached its ultimate conclusion with the most vulnerable now facing a widespread threat of repossession as they default on debts many can never hope to repay.
A basic understanding of history would have helped rein in the excesses of state and private sector spending. The hubristic rhetoric of an end to “boom and bust” that inspired people to spend like there was no tomorrow should have been viewed with suspicion. Human limitations render any economic system liable to downward spirals fuelled by the combination of self-interest and fear. The historic phenomenon of the economic cycle must be respected, acknowledged and planned for accordingly. Instead the government entertained and promoted an arrogance that discouraged any preparation for the proverbial rainy day. The favouring of abstract idealism over prudence and the evidence of the past made us particularly vulnerable.
Likewise a respect for traditions and established practices within the financial sector would have limited the extend of the toxic assets plaguing western economies. Conservatism argues effectively against the radicalism of the social engineers who pressured banks into overly risky lending, favouring established practices that underpinned a stable financial system. More importantly, a traditionalist philosophy provides an effective critique of the complex systems of derivatives that concealed so much bad debt. The very novelty of these instruments and their application should have been grounds for suspicion. Rather than eagerly jumping on the bandwagon, banks should have been more sober in their approach, looking for hidden flaws and unintended consequences, and integrating these instruments gradually and carefully into the financial system. Their failure to do so gave rise to assets that failed to be properly assessed, and whose toxicity is only now starting to emerge. The fear gripping Wall Street and the City is the direct result of its failure to adequately assess these financial instruments for risk when they were first introduced.
At the levels of personal expenditure this form of conservatism would have urged far more sensible habits. The culture of debt that has left so many now facing greater financial hardship was inspired by these twin views of infinite economic growth and an abandonment of traditional cultural attitudes to personal debt. Had governments not been telling people that the good times would never end then it is likely that people would have been more circumspect about their own borrowing. The example set by government to private citizens and enterprises over borrowing will also have helped cause some of the present pain. Rather than abandoning our cultural disdain for debt, we should have preserved the tradition in favour of ill-conceived mathematical sleights of hand.
Fiscal conservatism calls on governments to live within their means. As established earlier, governments have to intervene in economies in order to preserve them. During these periods they have to increase public spending. This bails out businesses to limit the spread of contagion; funds the increased demands on welfare to accommodate those who become unemployed in a recession, and funds both tax cuts and investment in infrastructure required to stimulate growth. What differentiates this from socialist systems of market intervention is its temporary and limited nature. For such interventions to be effective, let along possible, it is necessary for governments to strictly limit their borrowing and spending during years of growth. They must maintain a system where ideally a surplus is run up or, more realistically, debt is kept at a low, manageable, level. This is necessary because the reduced company profits and employment levels during a recession lowers the amount of revenue governments can raise through taxation. The principle of this school of fiscal conservatism is that it makes governments save in the good times to provide for society in the lean years.
In this light the growth in public spending and borrowing, inspired by the ahistoric and idealistic approach to economics outlined above, moves from the imprudent to the disastrous. By spending so much the government has drastically restricted its ability to intervene effectively to deal with both the crisis and the recession: it lacks the funds to do so. This will be exacerbated by its failure to address the problems in its benefits system, which will be placed under significant strain as unemployment starts to rise. Unless the government is willing to seriously curtail public spending in favour of the affordable, the United Kingdom risks becoming bankrupt. That would hurt the economy so severely as to ruin our industry for possibly a decade or more. This is not an argument in favour of cutting essential services to finance generic tax cuts, but a basic proposition of government spending only what it can afford. The profligacy of the past eight years was entirely unsustainable and irresponsible and it will have to be drastically retrenched. Any effort to do so will be particularly difficult as downsizing departments has costs of its own in the form of redundancy payments and pension obligations. Nonetheless it is essential for the wider health of the British economy and the public finances.
In these difficult times the need for fiscal conservatism is more pressing than ever. It offers an account of the events that caused the crisis, an assessment of the failures that have hindered efforts so far, and offers solutions to limit the damage and rebuild the economy. Moreover it provides a set of clear and basic principles by which governments can operate if they wish for the next downturn to be less excruciating.
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