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I often comment via the readers pages to articles in the Press and likely these often motivate to expand my thinking on any particular topic in this blog and particularly when you have ‘companions’ who although they may have different political views, share a common interest in looking for current answers or solutions.

One such person who I met via the Independent is called John and we were discussing an article by Andrew Grice last Saturday when he posed some interesting questions, this blog entry is an attempt to answer those: http://www.independent.co.uk/opinion/commentators/andrew-grice/andrew-grice-bad-case-of-jitters-on-tory-bandwagon-provides-a-test-of-nerve-for-cameron-1838772.html

What John Asked

“Am I right in taking it that your attitude might alter if the Lib Dems were able to displace Labour as the main challenger to the Conservatives? Not that I think that’s likely to happen at present – Lib Dem support across the UK is too patchy and localized for that to be a current prospect.

I do just wonder, though – and disregarding on this context other, and unrelated, aspects of current Toryism which I find deterrent – how far the Tories, given their current ideology, are well placed to challenge the abuses of free market economics which have brought us to our present crisis. They provided a real alternative back in 1979 to the downside of the public policies of the postwar years, and especially of the 70s, in Britain; but now they seem likely to offer more of the same …”

The Liberal Democrats

Really there are two questions here so I will start with the LibDems. My basic proposition was that in a hung parliament with Labour as the Opposition and the Conservatives as the Government, progress would be non-existent on solving our current financial problems mainly because of Labour trying to post rationalise their failed policies when in power. If the LibDems had overtaken the Labour Party as the main Opposition Party, would such a hung parliament operate any better ?

The answer to that must be yes it would if only because as during the Wilson/Heath era, minority Governments don’t last long, a second General Election follows fairly quickly. Thus “devoid of any guilt” for the situation, same as the Conservatives, the LibDems would act very responsibly because they would want to look like a “Government in Waiting” to maximise their chances in the second election where if they didn’t win power, they could at least consolidate their position as the only viable alternative to the Conservatives.

The real possibility of actually forming the Government within a couple of Parliaments would focus the attention of both the Leadership and Members of the Liberal Democrats and likely inject the type of discipline required that they currently lack and is their main barrier to being in that position anyway.

The Missing Imperative

People write articles about “Why is Dave not in the same position today as Blair was prior to the 1997 Election ?” It might be more important to ponder just why with the worse Labour Government of all time that has bought this Country to the verge of insolvency has not led to a major breakthrough by the LibDems in the polls ? True and as I find polls highly suspect come the only one that counts, the Election, they may make progress on the day but the signs aren’t hopeful and yes that is a shame.

Just as the ‘possibility of power’ helped Blair to silence the militant tendency within Labour prior to 1997 and today Cameron has been able to silence the rabid right of the Tory Party by similar means today, it is just a lack of this that prevents a LibDem breakthrough so that they can be seen as an alternative choice in what is culturally a bi-polar political system which even PR wouldn’t solve.

The Tories and the Free Market

To “…challenge the abuses of free market economics which have brought us to our present crisis…”

It is an interesting question that many have asked over these past 12 months or so and some claimed “solutions for”, all of which I seriously doubt. Whilst the fashion is to blame “Greedy Bankers”, one hesitates to say so but remind me who was blamed in 1930s Germany for the Depression ?

People like to have clearly defined villains especially when the real reasons are often very complex. I always think of “accidents” say on the road, as being when two or more people make a mistake at pretty much the same moment in time and in most respects, this global crisis has similar footprints and it is not solely the fault of “Bankers”.

The Elements

The expansion in World Trade, the amazing build up of China as “The Worlds Workshop” led to a whole number of consequences including vast amounts of currency that couldn’t be spent inside the countries that earned it whether China or the Oil Producers. As a consequence, these became bundled up in ever more complex “securities” which included sub-prime mortgages. Unfortunately someone pulled the plug, paper money is always a ‘confidence game’ and it was that which evaporated along with the cash.

My personal view is that we were all following the wrong “business model” and anyway, just ran out of ideas of things to make that people will buy and as the model demanded constant growth and expansion, like when you stop peddling a bike, eventually you fall over. It is frightening to think that the most radical consumer product of the past 5 years or more is the Apple iPhone, its not even a good phone but it is a “wow factor” product.

Stagnation and Wealth Creation

Even in my own area of expertise IT, the truth is and it happens, is that in real terms, personal computing has hit a plateau. Hardware development is always the fastest ship in the convoy, software which demands the highest level of human intellect, the slowest. The product that “made the IBM PC” which is the world standard PC to this day was the spreadsheet but in reality if I look at the latest incarnations of MS Office or even Open Office, in purely functional terms, word processors and spreadsheet products are little different from the ones I used back in the 1980s on PCs running DOS.

What is really missing and particularly in the UK is genuine “wealth creation”, we were once good at it but have lost our way. Also people should always be wary of politicians talking about greed because frankly, personal ‘greed’ if you like is the driving force for wealth creation and it often isn’t a very pretty sight. The Industrial Revolution in Britain was preceded by Land Enclosures which drove people off the land and into the cities where they became the cheap labour force that made it possible.

I can remember many years ago a campaign about child labour on the Indian Sub Continent making sports goods for big Western brands, “Oh this is terrible…” It was successful to a point but as several children interviewed on TV afterwards said, whilst now they could go to school, their family couldn’t afford to eat. Social policies are the province of the bloated Western classes, they are a luxury product that even they can no longer afford if only because of ageing populations.

The Conservatives

More of the same ? The reality is that whilst Cameron may have as an aim lower taxation and a smaller State, he will have to deal with what he inherits from Brown and it is a mess. His choices will be so limited that no possible “Tory party idea” will be able to be enacted during the first 5 years, they will have to win a second term for that.

Ignoring the current level of debt which is stratospheric in its proportions, there is a serious underlying structural deficit of somewhere between £70-80 billion that needs to be eliminated because without the current crisis, it is the gap between what can be raised in taxes in ‘good times’ and what the Government is currently spending, this amount is double the Defence Budget.

In the next Parliament and it wouldn’t matter if it was a Labour Government, there will have to be massive reductions in spending which will mean an awful lot of job losses. This is not a matter of political philosophy, there will be no soft landing, it will be painful and in the PBR statement last week, Brown and Darling were lying and they knew it.

There will likely be a massive expansion of “voluntary work” which people will do in return for any State Benefits paid to them, the £ will also devalue further, increasing the cost of imports and reducing the real value of wages. Growth will probably return led by the City of London but it will be very patchy.

What no Government can or should attempt is what this Country needs most, new commercial ideas, entrepreneurs and wealth creators to build new industries and create new jobs. The answer to the problems of the UK are not political, they are purely economic. In some ways one would expect to see the uncontrolled immigration during this past decade kicking in beneficially by low wages and high aspirations driving the economy but it is doubtful, we will just be over populated.