2012 is a year crying out for leadership.
2011 saw dreadful drift in the West. The EU politicians proved incapable of deciding whether to press on to create a single country called Euroland or not. Would they take the necessary powers to tax, spend, send money to troubled regions and print money on the scale needed to shepherd through their chaotic union? Would the voters let them? Could they do so by stealth, without referenda?
As a result they fell between the two schools of thought. Some wanted to avoid spending and borrowing collectively, thinking they could have a currency union without the usual systems for using budgets to ease the problems in the less successful parts of the zone. Others wanted more transfers and common borrowing, but were unable to convince Germany fully, as she feared she would be paying a lot of the bills.
The US politicians ended up in stalemate. US politics is polarised between those who want to spend and tax less, and those who want to tax more. It is split between proponents of Obama’s health care reforms, and those who want them reversed as soon as possible. Major deficit reduction has been delayed. The US wants to pull out of its Middle Eastern wars, but has sounded an uncertain note over how and when.
In the UK there is clear leadership from two parties in favour of deficit reduction, but the latest figures shows the early plans have been overtaken by slow growth and a slowing world economy. They needed to revise them substantially last autumn, allowing much more borrowing. They have decided to take two more years to get there, as the strategy relies heavily on rising tax revenue.
Politics has been living through a long period of followership. In the US and the UK it has been the fashion to spend large sums on focus groups and polls, allowing the senior politicians to craft messages they know will play well. The aim is to tell people what they already know, what they want to hear, or what they half believe. Whilst in a democracy the people are often more savvy than the politicians and capable of good commonsense, public opinion can be both volatile and contradictory, depending on how it is polled. Trying to make policy and govern by the guiding lights of polls is not a good model.
The worst kind of such approaches could best be called followership. It is unlikely to generate policy that will tackle difficult problems strongly and in a way likely to solve them. All too often politicians duck the issue because the solution polls so badly. Many of the successful Thatcher reforms polled badly when undertaken, but have not been reversed as the country and the Opposition came to see the sense of them.
Today we need leadership. The west needs leaders who will explain that we have to change our ways. The west is too debt soaked. The public sector needs to be transformed, to do what it needs to do for less, and to confine its actions to the those most needed. The Euro area needs to settle its intentions quickly – do they want to pay the massive bills needed to complete their union? Wouldn’t it be cheaper and wiser to cut the membership down now, before more economic damage is done? The US needs to accept that borrowing one dollar in every five that the Federal government spends is not a sustainable model. The UK needs to redouble its efforts to carry through a working plan to eliminate the structural deficit. Getting more people back to work through welfare reform and a growth strategy are crucial to success. It needs to develop a looser relationship with the EU to avoid the collateral damage the Euro’s tribulations will bring.
Enjoy seeing in the New Year – the west needs a new approach.