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Commentary 329 – November 2008
03 November 2008 (11:42:38)


Who would have thought that the Liberal Democrats would be worth more than Lehman Brothers, that banks could be taken into effective public ownership to a chorus of approval from the Conservative Party, or that Gordon Brown, a month after being widely considered politically dead, would find himself acclaimed the saviour of the world’s financial system?

A week is truly a long time in politics and, as of mid-October, the financial turmoil has revived Labour, damaged the Tories and left the Lib Dems undisturbed on an unimpressive poll rating.

That might seem unfair given that the party’s shadow chancellor Vince Cable was the only politician of any note to warn that debt levels had reached unsustainable levels. Politics, though, rarely gives rewards for being proved right after the event; it gives rewards for implementing, or at least offering, solutions.

It is true that the party got out a rapid economic recovery plan of measures to tackle the worst short-term problems, but it has so far failed to convince the public that its ability to spot the danger has led to any insights into how to prevent it happening again.

One hears a good deal less nowadays about the Lib Dems pioneering the idea of an independent Bank of England, an institution that hardly distinguished itself by keeping lending rates high as the credit system came crashing down around it.

With that economic flagship listing badly, does the party have anything with which to replace it?

Not really, and it is easy to see why. As the banking crisis has exposed the limits of the markets, and the need for government intervention to rescue them from their own folly, so a climate of opinion has been created quite at odds with the Lib Dem direction of travel.

For the past few years, the party has belatedly embraced the 1980s baggage of faith in markets, ‘light touch’ (for which read ‘ineffective’) regulation of them, lower public spending and an uncritical view of the private sector. Those who espoused these views – and even more so the fringe of libertarians who have lately attached themselves to the party – have been left looking both foolish and irresponsible.

It is governments to which people look for protection when things get bad because only governments can act on the scale required.

There has been a three-party consensus on the role and regulation of business for the past decade, which has allowed the practices to develop that have led to the present fiasco. The Conservatives genuinely believed in a ‘light touch’ and in leaving the private sector to its own devices, Labour was told to believe in it and the Lib Dems went along with this because everyone else did.

If ever a situation cried out for the party to say, “we knew it would all end in tears, and this is how to prevent it happening again”, it is now.

Can the party do a handbrake turn away from an approach rendered redundant by events and call instead for tight regulation of banks and for a mindset that looks sceptically at the claims of the spivs and chancers who have successfully bullied politicians into seeing thing their way for too long?

There may not be too long in which to do this. The Conservatives will eventually revert to type and to a Thatcherite approach to markets and regulation, while Labour may decide it is onto something at present and issue plans for effective regulation to a receptive public.

Remember what happened to the Lib Dems last time there was a general election in which the other parties were both viable, competitive and offered clear alternatives? It was called 1992.


By the time you read this Liberator, the result of the US presidential election may be known. Liberal International British Group’s forum on the subject in October saw Lib Dem chief executive Chris Rennard and Democrats Abroad chair Bill Barnard both cautiously optimistic about Barack Obama’s chances.

An Obama win will neutralise much of the anti-American feeling in the UK and elsewhere in Europe, stoked by the widely-hated incumbent. In general, this country likes Democrat presidents and mistrusts the Republican party’s warmongering religious fanatics. The latter have been exemplified by Sarah Palin, whose views would disqualify her from serious office in most of Europe.

There is not much to be done about the self-styled ‘leader of the free world’ being elected without most of the free world voting on the matter. But things can be done about the cringing before America that led to British participation in the Iraq war.

We cannot influence their choice of president, but we can influence Britain and Europe’s relationship with America. Every post-war political leader of every party in Britain, with the exception of Harold Wilson (on Vietnam) and Edward Heath (on Europe), has blindly followed whatever line comes from Washington.

The friendlier climate that will prevail should Obama win may allow space in which a less craven relationship can be developed.

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