This piece from yesterday's Guardian neatly illustrates the degree of
self-inflicted electoral torpor and issue-avoidance in the current British
general election: Ian Aitken shows how the traditionally-Tory press are
ignoring key issues like Britain's deteriorating payments position. In 1970,
by contrast, the issue of a looming balance of payments deficit was seized
on by the mainstream press as a tool to discredit the Labour govt led by
Harold Wilson, which duly and somewhat unexpectedly then lost an election.
Today Tony Blair is not on the rack despite an far worse payments situation.
As Britain's oil industry dwindles and N Sea reserves disappear, this
problem, the long-term result of Mrs Thatcher's successful
'deindustrialisation' of the country, must get worse, as no doubt will the
US external payments position and for similar reasons.
Tony Blair's commitment to high social spending and infrastructure
investment is a recipe for aggravating the huge payments deficit; the
British economy is quite unable to support public spending levels seen in
France or Germany, but no-one is holding Blair's feet to the fire for the
obvious implausibility of his spending programmes.
Mark
-------------------------------
Ian Aitken
Monday May 28, 2001
The Guardian
One of the strangest things about this increasingly strange election is the
way real issues flit past the politicians virtually unnoticed while they
continue to busy themselves with fantasy arguments dreamed up by the
so-called "war rooms" of their respective parties. All the evidence of the
flat, rock-solid opinion polls suggests that these fake fist-fights are
boring the voters rigid.
The most striking example of this phenomenon is the way the latest balance
of payments figures bobbed up briefly on the City pages of the newspapers
last week, only to vanish again without making the slightest impact on the
inside pages devoted to the election. Yet the trade deficit for the first
quarter of this year hit a UK record of £7.7bn, and still stood at the
highest figure since the Lawson boom of the 1980s (£5.2bn), even after our
handsome surplus on banking, insurance and other services was included in
the sum.
There was a time when a much smaller deficit, let alone one on this scale,
would have precipitated an instant sterling crisis. The dreaded gnomes of
Zurich would have pulled the plug on the poor old pound, the gold and dollar
reserves would have gone into free fall, Gordon Brown would have taken his
begging bowl to the IMF in Washington, and - more to the point - the voters
would have pulled the plug on the government. Indeed, it is widely held that
that is what brought down the Wilson government in June 1970.
As with New Labour, Wilson's pitch to the voters then was that his
chancellor - one Roy Jenkins - had finally got on top of the whole postwar
boom and bust scenario. The balance of payments, the bugbear of successive
prime ministers, was at last showing a surplus. The sun was shining,
everything in the garden looked lovely, and (in Wilson's own words) Labour
had become "the natural party of government". The election was going to be a
doddle.
And then, in the final week of the campaign, out came the balance of
payments figures. To Labour's horror, they were in deficit again. True, it
was only the teensiest little deficit, a minute fraction of last week's
monster figure. Moreover, it was entirely due to the bad luck which brought
the delivery of a couple of big Boeing jumbo jets and a few sackfuls of
industrial diamonds during the relevant period. But there it was: Labour's
claim to have mastered the trade deficit no longer stood up, and the whole
basis of Wilson's election campaign was undermined.
A day or two later, opinion polls which had been showing a consistent Labour
lead began to falter. By eve of poll, at least one was showing a
Conservative lead. By Saturday, Ted Heath was humping his grand piano into
10 Downing Street, and the whole concept of Labour as the natural party of
government lay in ruins. It stayed that way until - well, until now.
So the question is, why on earth isn't William Hague making a huge fuss
about the current deficit? On the face of it, at least, the latest figures
cast serious doubt on Gordon Brown's smug conviction that he has put the
economy to rights and that everything looks hunky-dory from now on. Most
rational people would conclude that living beyond our income on the present
scale is not only inconsistent with Mr Brown's stern presbyterian principles
but also unsustainable for long. It certainly wouldn't appeal to Prudence.
But the lesson of the whole affair seems to be that, in these matters, there
aren't many rational people around. Like the Americans - who have a trade
deficit which makes ours look like an empty piggybank - the British consumer
seems to believe that we can go on as we are indefinitely. For the current
wisdom - if that is the right word - is that the whole thing is "fundable"
by what amounts to borrowing. After all, the Americans have managed it, so
why not us?
Perhaps this explains why William can't bring himself to make a fuss. Maybe
he fears that the great British public actually wants to believe it can go
on spending like there's no tomorrow. Maybe he thinks they wouldn't thank
him for telling them the unvarnished truth. After all, no one loves that
strange fellow with the placard saying "Prepare to meet thy doom".
But just possibly there is a simpler explanation for Hague's silence.
Perhaps someone in his campaign team has pointed out that, if he starts
yelling about New Labour's vast deficit, someone at the Millbank rebuttal
unit will come up with the figures of Nigel Lawson's even bigger deficit.
Better to pipe down, then, and concentrate on the fight to keep the pound?
It's a lot simpler than the trade figures.
