For many years opinion polling has reflected an oft-peddled myth that Conservative governments have been better at running the UK economy than their Labour counterparts. In his recently published treatise on the economic decline of the nation, The Tyranny of Nostalgia: Half a Century of British Economic Decline, macroeconomist Russell Jones seeks to debunk this misapprehension and set out a highly critical appraisal of Brexit.
The charge sheet of Tory incompetence
For anyone looking to mine evidence, Russell Jones provides an incredibly rich seam. One can start with the inflationary ‘barber boom’ of the early 1970s and move on to the false tilt at monetarism on the early 1980s. A consequence of the latter and the general shift to neo-liberal economics under Margaret Thatcher and her chancellors heralded the deindustrialisation of that period and paved the way toward unprecedented inequality. To that we can add squandering of the legacy of North Sea oil and the failure to channel revenues into a UK sovereign wealth fund – as the Norwegians have done so successfully.
This was also the period of deregulation in the City of London – the so-called ‘Big Bang’ – that was to leave the banking system more vulnerable when the 2007 subprime mortgage crisis blew in from Wall Street.
The late 1980s through to the 1990s saw the arrogance of both Nigel Lawson and his successor Norman Lamont as chancellors, together with the flawed attempt at sterling membership of the Exchange Rate Mechanism. That ended in the ignominy of ‘Black Wednesday’. Assuming office in 2010, George Osborne in his ideologically driven efforts to slim down the size of the state, gave us austerity, the blighting effects of which are still very much with us.
There is no doubt that the misery engendered by austerity was a significant contributor to the Brexit vote in 2016 that has piled on yet more economic woes. The Truss/Kwarteng budget fiasco arrived just before Jones’s book went to press, so it receives only the slightest of mentions, but it is all of a piece. Evidence of Conservative economic mismanagement comes thick and fast and the above charge sheet is not exhaustive.
Did Labour do any better?
Jones levels a whole series of criticisms of the work of Labour chancellors but the issues are generally less fundamental than the horror stories above. Just as the Conservatives receive praise for some of their supply-side reforms so Labour gain credit for benign curating in the decade after the 1997 change of government. Granting independence to the Bank of England is seen as a good move.
Perhaps Gordon Brown’s finest hour, however, came not as chancellor but as prime minister, when he gave the lead to the West’s ultimately successful response to the global financial crisis (GFC) 2007-9. In Jones’s words Brown was “the chancellor of the world”. Additionally, periods of Labour in government had the effect of reducing income inequality in the UK.
Jones does not engage in ranking Conservative versus Labour but there is a feeling that Labour emerges with greater distinction (and certainly less ignominy than the Tories).
What of Brexit?
Jones devotes thirty pages to the topic of Brexit and is excoriating. He takes as his starting point the widely accepted estimate of Professor Nicholas Crafts that in forty years, membership of the EU has added 10% to the size of the UK economy. In the future further strengthening will be lost largely due to a misguided attempt to deal with internal tensions within the Conservative Party by calling a divisive referendum.
David Cameron is dismissed as “a weak and unconvincing advocate of UK membership” who “regularly resorted to lazy platitudes about EU regulations and its supposed overbearing influence on UK life”.
The Leave campaign is characterised as “grounded in rose-tinted English exceptionalism [that] regularly spilled over into falsehoods, deceptions, prejudice and xenophobia”.
The UK electorate was also poorly informed and misled: “The general level of ignorance across the population about the EU proved extraordinarily high.”
It is sometimes said that there is a trade-off between sovereignty and influence. By being a member of the EU, the UK pooled some of its sovereignty but magnified its European and global influence by sitting around the EU table. Jones writes: “Engagement with the EU had helped amplify Britain’s voice on the global stage. Brexit would muffle it, perhaps to the point of inaudibility.”
Jones sees Brexit as generating a massive and ongoing shock: “It left the population riven; the civil service in turn discredited and then overwhelmed; the political system at times paralysed; the domestic union subverted; the nation’s reputation for sound judgement in matters of international economic policy and diplomacy wrecked.”
Creating a culture of critical thought
In 1849 Thomas Carlyle described economics as ‘the dismal science’ and certainly it would be fair to describe Jones’ book as ‘downbeat’. Indeed, the subtitle of the book is Half a Century of British Economic Decline. That said, the author is very good at sharing his views of individuals and institutions in a few pithy words. In recent years the civil service has come in for criticism from the Tory party. In contrast, Jones credits the service with “remarkable fertility of imagination … [it] performed nothing short of miracles. Its accomplishments during the GFC and in the aftermath of Brexit, for example, were extraordinary”.
Gordon Brown is described as “ferociously intelligent, single-minded and possessed of a formidable work ethic – together with a volcanic temper”. By contrast, former Brexit secretary David Davis was “languid and one-dimensional – but always on message”.
Theresa May is depicted as “the dutiful and determined but insular and uninspiring Home Secretary” and in contrast, Boris Johnson is captured as “the shambolic Old Etonian showman with an ethical deficit”.
Russell Jones has produced a fine book that authoritatively demolishes the myth that the Conservatives are better at running the economy than their Labour rivals. The author has drawn on an impressive range of sources to assemble an evidential brief that is damning. This perhaps raises the question: why has the myth of Tory economic competence persisted?
Part of the answer to that question lies with the pro-Conservative bias in our print media that goes hand in hand with a devious and ruthless public relations department at Conservative central office. Sadly, one must also question the willingness of much of the UK electorate to engage critically with what can only be described as the belligerent ineptitude of much of the nation’s recent politics.