Vote Republican for nationalisation. Vote Democrat for the war in Afghanistan.

When George Bush emerged from domestic shadows to appear as a serious challenger for power on the Federal and world stage, he was marketed as a caring Conservative. I remember my colleagues studying what he said, as the cross Atlantic bridge between conservative parties reflected on how to “decontaminate their brands” . The phrase used to annoy me. A party should not be a brand but an alliance of people with passions about how to improve their countries. The ideas of personal freedom and responsibility were not contaminated – it was just that on both sides of the Atlantic conservatives in power had made mistakes which had lost them office. In the US a Republican President had failed to cut taxes as promised, and in the UK a Conservative governemt had put them up when people were hard up.

Bush’s words implied that his Presidency would concentrate on domestic issues, and would show how conservative philosophy in action could help the jobless, the poorly educated, the less prosperous district. That part of his message sounded like my kind of conservatism.

Eight years on we see just how buffeted by events the Presidency has become. The so called war on terror has diverted much of the energy and taken many resources, as well as costing America many lives of her young soldiers. The poor regulation of financial markets and the easy money years of Fed expansion have led the administration into three of the largest nationalisations in history within the same month.

Listening to Obama, under the pressure of the campaign he has become a warrior against terror in the Bush way. He seems happy with the idea of more nationalisation and regulation to tackle the Wall Street storm.

Political parties and leading political figures today look powerless before the force of events. None of the main contenders are engaging with the big issues of the threat of recession or the banking crisis.

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6 Comments

  1. Posted September 17, 2008 at 8:34 am | Permalink

    I just dont think they understand it. They take little advice, have a socialist agenda and think wealth grows on trees. We have the BBC that thinks profit and success are dirty words.

    We just need to get real. Dare I say as Mrs Thatcher was.

  2. Posted September 17, 2008 at 11:30 am | Permalink

    What's worse, the socialists over here like Will Hutton, are using the actions of the Republicans as justification for widespread government intervention and nationalisation in the UK. Is it still nearly two years to a General Election?

  3. Posted September 17, 2008 at 11:44 am | Permalink

    On the question of Mr Obama's foreign policy it will be interesting to see how his proposed middle-east 'strike-force' will operate if he does withdraw troops. On Mr Bush, it is sad to see how easily he is railroaded into accepting the harum scarum strategy of Bernanke and Paulsen, no doubt McCain would be the same. Obama and McCain are the worst presidential candidates in living memory and their salability is perhaps the reason for that. Mr Nixon may havebeen a bit quirky at times but having read his volumous autobiography it didn't take me long to realise that he was a man with an outstanding political intellect. Would Mr Nixon have been salable today? Or would he have been too smart to be elected?

  4. Posted September 17, 2008 at 11:49 am | Permalink

    JR wrote:- "None of the main contenders are engaging with the big issues of the threat of recession or the banking crisis."

    Of course not. For the lefties it would mean admitting that their philosophy of tax 'n spend borrow and nationalise was a failure and for the righties saying the opposite – that free exchange, the small state, lower taxes and borrowing is the answer – will frighten the horses. And the horses will further agitated by a largely ignorant and hysterical media. And much of that media has suffered endemic producer capture by smug lefties.

  5. Posted September 18, 2008 at 7:22 pm | Permalink

    Isn't it fascinating how we show much more interest in the USA than of our new Homeland – the Beloved European Union?

  6. Posted September 19, 2008 at 4:06 am | Permalink

    It's true that the last Tory administration, of which John was a prominent member, put taxes up – by a considerable amount, just as Geoffrey Howe had done before through his big tax-raising 1981 budget (increasing the tax burden by nearly 2% of GDP in a recession).

    In both cases there was considerable political courage involved, as with the accompanying spending cuts – although the nature of the tax increases, particularly in Howe's case (freezing the personal allowance at a time of high inflation, in effect a big tax hike for the low-paid), left a lot to be desired, and a more progressive government would have spread the pain more fairly.

    What is interesting from a macroeconomic standpoint is that in both cases the economy recovered despite the tax increases, and indeed it was deficit reduction rather than tax cuts that helped offset the devaluation of sterling and supported economic recovery in the mid-1990s (as in the US under Clinton/Rubin).

    That said, there was still a structural budget deficit in 1997 and you couldn't say the public finances were in good shape – but they were coming round.

    To that extent, the Lamont/Clarke tax increases and spending cuts, although painful, worked – as did the new monetary policy framework which laid the groundwork for the MPC.

    I'm certainly not saying the tax increases were desirable; they were necessary, however, due to past policy mistakes, including the hubris of the late 1980s (believing that tax revenues were far more buoyant than they actually were due to one-off privatisation proceeds, North Sea oil revenues and an overheated economy), an electorally-driven public spending binge and the costs of having to fix the poll tax debacle.

    In my viw it is illogical to criticise the Lamont/Clarke tax rises without disowning the wider macroeconomic record of the Tories in the mid/late 1980s, which left the public finances in such shocking shape (much worse than even now, although give it another year and we may well see 8% deficits again…).

    Which bits of those 1993/94 budgets, which you presumably supported at the time, were so ill-judged?

    I think most fair-minded people accepted in 1997 that Ken Clarke had been a pretty good Chancellor; the reasons for the Tories' loss of public trust lay elsewhere.

    The lesson for today is that Cameron and Osborne (despite their flakiness on tax policy, a distorted set of priorities in putting further IHT cuts ahead of income tax cuts, and excessive caution on spending restraint) are right to put such emphasis on sound finance, even at the expense of tax cuts.

    Even if now is not the right time to be doing it, in the medium term there is going to have to be a fiscal tightening, and that means spending discipline and only modest tax cuts. A responsible government will look to pay down debt and reap the fiscal dividend of lower debt service costs (which Brown enjoyed in 1999-2000, but wasted).

    Reply: I was a persistent critic within the government of the economic policy pursued between 1988 and 2005. I opposed shadowing the DM, opposed joining the ERM and opposed the tax rises. I proposed a lower spending budget, because of course I wanted deficit reduciton.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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