Journal of the Plague Years

(Last modified, 25 Jan '08)

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Thatcher, Blair and Brown.

When Thatcher was prime minister, I believed that I was watching her dismantling the society in which I lived and, more to the point, I believed that she was damaging the lives of many of the weakest members of our society.

Sadly, even before Blair came to power, I felt that the signs coming from New Labour were ominous: Blair's admiration for Thatcher was too clear, and the removal of Clause Four - or rather, the way in which it was done - seemed to show the way things were going.

Sometimes during the eighties, in the pub, we would discuss and list Thatcher's manifold failings. Once Blair was PM, these discussions became much more heated and bitter.

I wish now that I had kept score during Blair's time – a list, in writing, of what he got up to. The overall picture, though, was clear: there was a Blair narrative which one might say, "conformed with New Labour reality". It was, in fact, the purest post-modern fabrication.

Now we have Brown.

What I found most frustrating about Brown before he even became prime minister was how so many people seemed to hold him up as a model chancellor. He wasn't: he was a disaster and History may yet come to view him as the most damaging British chancellor since 1945.

He started well when he returned some fiscal autonomy to the Bank of England: taking interest rates out from political control - whether one agreed with it or not - at least seemed to indicate a willingness to tackle problems in intelligent ways.

And that seemed to be it.

Some of what he got up to thereafter make the blood run cold: eg:

• selling off Britain's gold reserves at the bottom of the market - just weeks before a boom in gold (which was not beyond predicting) in which the value of gold doubled and more;

• preparing the ground for the Northern Rock debacle - called, not quite correctly, the first run on a British bank in more than a century - by allowing a system (three different regulators, none with teeth or, it now seems, expertise, and with apparently no co-ordination) of confusion and a philosophy of greed...

Let me offer a brief justification for what I'm saying: NR were borrowing short(term) to lend long; it's a quick way to make a killing when short terms rates are low, but any competent 2nd year economics undergraduate can explain how it is an utterly unsustainable system. The low rates were based on a boom economy - itself sustained by cheap imports from Asia which were going to disappear as, say, the Chinese economy matured - and we have never yet learned how to prevent the cyclical recession that would inevitably follow in which interest rates would be forced to rise. (Brown's claim to have broken the cycle of boom and bust is a seriously worrying delusion.) The Bank of England should never have allowed a lending institution to behave as NR did, and for most of the 20th century would not have done so. A good chancellor would have acted - after all, the NR problems were seen as inevitable by many people long before the facts became general knowledge: instead, Brown oversaw a system which actually reduced the Bank's effectiveness.

How Mervyn King (of the BofE) got away with it defeats me.

Let's be clear: what NR was doing was precisely on a par with, and as sustainable as, pyramid selling. Now the taxpayer is paying a quite extraordinary sum to clear up the mess.

• setting an arbitrary tariff on pension funds; ('Oh,' says Brown, 'they're doing rather well, let's make them give the government some billions.' Well: apart from the fact that it was not the govt's money, the funds were hardly even performing adequately; they just looked good while the market was buoyant: Brown knew - or should have known - that markets.... go down as well as up.)

I don't think being pedantic is quite what I intend, and anyway I'm not the world's best expert: I hope I've shewn that I'm not just parroting what I've heard somewhere, but now I'll just list:

• PFIs. (Ye fishes, we're going to be poor in 30 years time, after we've paid massive rents for hospitals etc and then suddenly the private sector companies own them, can do what they want with them, and there's not a thing we can do about it: and they're not even good value in the short term, except that they don't appear in the govt's books.)

Actually, I think our only hope is that two or three parliaments down the line we get a real nationalising administration.

• Balance of Payments. Have you seen the figures? (Once upon a time the government liked to make sure we could pay our way. Too boring!)

• The boom for which Brown has been given credit... No! An unusual situation with exchange rates and the terms of trade which temporarily feather-bedded the West as globalisation bedded in - which is already coming to an end. Things look good for now because of cheap imports from Asia.

• Undervalued privatisations.

• Out of control housing market - like pyramid selling, looks good until the end of the line is left holding the lemon. (Wait and see!)

• Increasingly regressive taxation (don't get me started...)

More later!

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