Can I just say – I endorse many of the ideas central to this post, by Paul Evans?

Indeed, much of my post about Red Toryism (and my view more generally about the conservative task) is to regenerate our political being; my enthusiasm for localism (rightly understood) is very much one of enabling and encouraging people to come together again, and re-learn the art of being a community, working through disagreements to compromise.

For that reason, I do share some of Evans’ reservations about the Tory proposals for local government, especially the use of plebiscites on…  well, just about anything.  I also am not enamoured of elected police chiefs – they’ll either be toothless whingers or petty tyrants; elected executive mayors, however, I think have significant potential, given the changed nature of the relationship between bureaucracy and voter.  (Much of the rest of the world seems to survive fine with them, as well.)

So, yes, I’m with Paul – for politics before any ideological principle.  I think it was Martin Diamond who said that the American Founding Fathers designed their constitution on the premise that “the common people are usually sensible, but rarely wise” - and it’s a sound principle.  Most people have, well, lives, which means that their engagement in politics is changeable, transient.  We need a politics which engages them to understand their aims and aspirations, but as a part of dialogue, not to passively adjust.

Political institutions should be designed to achieve good government – decisive where it matters, deliberative where it doesn’t.  Because of heated passions and concentrated interests, pure democratic majoritarianism doesn’t work* – referendums (I believe this was Thatch) “are devices of dictators and demagogues”.

I say all this, and I remember too that it was a Labour Government which, with the support of its members, brought us plebiscites on devolution in Scotland and Wales (the Welsh one passed with about a quarter of the electorate backing it), on local mayors, and a mania (as Evans alludes) for relentless consultation which undermined the political authority of local government institutions.  I recall that it was a Labour Government which gave this country its only nationwide referendum (on membership of the EEC in 1975; this was the occasion for the Thatcher quote).

So, while I agree with Evans that the drift of Tory policy is “dangerous”, I can’t agree that it’s necessarily “reactionary”, except as maybe a gamble; indeed, typically, the notion of institutions providing pure democratic rule is something considered Left, progressive.

It may be that the times have changed and tables turned.  Possibly, the unmet demands of democratic majorities (or, anyway, pluralities) now lean more to the concerns of the Right (increasing police authority, NIMBYism, taxcapping) than of the Left (redistributionism, diversity).  This is probably part of why I’m enthusiastic for a political localism; that people, empowered to govern themselves, will typically help to regenerate our social and cultural fabric.  But note that Evans and I (Left and Right) would seem able to find some consensus on means here, even as we may differ significantly on ends; so let’s not damn referendum madness as a sickness only (or even primarily) of the Right.

* Incidentally, because of transient engagement and our tendency to tribalise, proportional representation model tend to undermine good government; too often, they finish up approximating a proof of the Schmittian critique of Parliamentarism.

It seems likely, for reasons well rehearsed, that the Tories will form the next government.  This is for me a cause of some celebration – I look forward to the imminent arrival of the opportunity to cry “betrayal”…  It’s been so long, after all.

I am a supporter of David Cameron and his leadership of the Conservative Party over these past several years.  I am not without my criticisms, but I think he has led us well and has the makings of being a competent Prime Minister.  In fairness, he doesn’t get the credit he deserves for almost having made the Conservatives a live option for alternative government in a time of prosperity; his road to crisis-leader has not been smooth, but he has taken it…  But it’s fair to say the prospect of power is now very different to what it was in the early years of Cameron’s leadership.

For all of these reasons, I’m beginning to worry a little about how the party carries itself and talks in Opposition, for how this will bear on us once in Government.  It’s fairly standard form to promise things which won’t be delivered in fact (poor Will Hutton can tell you a story…), and people will often accept that.  But it’s important that the grand scheme of expectations are managed and, most of all, we do not sign up to rhetorical tropes which will look very different from office.  I have in mind two narrative themes which the Conservative Party (or its identifiable figures) have embraced as critiques of the New Labour era:

“The Broken Society.”  It is not that I do not understand the point being made, or the importance of the issues the narrative refers to.  In fact, I’m probably more interested, more convinced of the problems raised, and more willing to talk about meaningful solutions than most Tories are.  But the idea is too much.  The Times had it right last summer, when it said that we have broken communities, but we are not a broken society.  This is not just a matter of language.  First, if British society were broken, there really is nothing left for conservatives to conserve – repairing a broken thing smacks surely of social engineering, something which should be anathema.  Second, this one will come back to bite us, especially if we’re lucky enough to win two consecutive terms – inasmuch as the Broken Society narrative is a coherent analysis, it highlights wounds which will take generations to heal, even where the necessary treatment can be administered in full (which will require a heroic effort of political will).  David Cameron will be tortured by a Labour Leader ten years from now, heart bleeding tax-funded promises all over the shop, “didn’t you promise to heal our Broken Society?  Isn’t it still broken now?”

“The Davis Agenda,” by which I mean, civil liberties, Gitmo, etc.  This one will come back to bite us much sooner.  Although I’m doubtful of the present Government’s proposed means (I think ID cards a ridiculously bad idea, and I think some of the police powers sought are a bit too much), I’m fairly in sympathy with their ends and I am no civil libertarian.  I think that maintaining the security of the nation is pretty much the essence of the State, and am fairly supportive of all means necessary (there’s the question) to achieve it.  I’m happy to justify this all in moral terms, but think of the politics for a Tory Government which scales back security measures only to see a terrorist attack in its early years; I think it’s the same fear which is causing Obama to be more circumspect on these issues now he’s in office.  The problem is that there’s now an internal constituency (surrounding Davis) which demands action on this front, and will become still louder if no action is taken when we’re in office.  The fact that Davis’ inside man (see the link) is Dominic Grieve is particularly troubling on this front; his devotion to the ECHR makes the point.

In both cases, it is not that I don’t think the critique has merit; but we need to be sure that we don’t take them too far; language matters, because it is only through our language that public expectations can be shaped right now.  There are also some areas where the inverse is true, where we aren’t promising too much so much as we’re not getting the harsher messages across – I’m thinking here about preparing the grounds for the fiscal consolidation (read: spending cuts and tax hikes) which will become necessary come 2012 (say); and also, a subject for another day, managing expectations, especially within the Party, on what can and cannot be achieved with regard to our role within the European Union.

“When it is not necessary to change, it is necessary not to change.”

Lucius Cary, 2nd Viscount Falkland

The occasion for this post is further reflection on Tim Montgomerie’s ongoing attempt at formulating a statement of conservatism, upon which I have previously (negatively) commented.  I remain of the same basic opinion, but (and Montgomerie’s efforts are to be commended for this at least; at least by me), it has made me think a bit more about what it means to be a conservative today.

It’s entirely possible that I’ve missed it, but in Montgomerie’s original statement, I find no statement to the effect of that quotation above – or any one of a number of others, be they from Burke, Kirk, Salisbury, or whoever – praising continuity over change.  The closest we get is Montgomerie’s no.20, which even then is a brief for change; just not quite so fast, please.  That struck me as more than a little odd, and the thought has nagged at me.  After all, surely that’s where we conservatives, like, get our name from?

Now, ’tis true, the question of finding the right balance of continuity with necessary change has always been a central concern of conservative thought.  Conservatives and not preservatives, all of that.  Even more strange is that I know Tim Montgomerie is extremely concerned with defending substantive moral concerns – the original statement’s nos.1, 2, 3, 6, 14, 19, and potentially others, all allude to an underpinning morality, and I believe that Tim Montgomerie is an evangelical Christian.

I can only assume that that underpinning morality is assumed, along the lines of “if you’re with us, then you’ll get it”.  Leaving aside whether there’s a constituency for it (as I shall explain, not enough), it’s fair comment as an electoral strategy, but it’s not a coherent theory of politics…  If we think of contemporary liberal political theory (from Mill to Green to Rawls), it always attempts to frame its propositions in terms which all reasonable people should accept, at least in terms of high principle – respect each other’s space, look after the weak.  Some conservative political theory – appeals to group loyalty and respect for authority – have the same effect; it take a very brave liberal to renounce all group loyalty, or to argue for anarchy as such.  (For more on how political ideas appeal to our instinctive moral sense, see Jonathan Haidt’s article here.)

To just assume that substantive Christian mores are equally as appealing is to miss the scale of disruptive social change these past decades.  At the very least, for a large number of people, the rightness of traditional Christian marriage or the wrongness of abortion, are arguable in ways that, into the 1970s or 1980s, they were not.  This very fact is fatal to the potential of those mores to serve as the basis for a tractable theory of politics.  This is especially the case in Britain, which is highly (if lazily, indifferently) secularised.  The American Right can (could?) at least muster enough of an electoral coalition behind such propositions to win power in 2000 and 2004; but I think the political experience of those years highlights the unsustainability of the model.*

I come back to my starting point though; this is not conservatism.  Huntington made the point in the 1950s that an ideology that depends internally on a prior, absolute moral doctrine is not really conservatism, and this is the case here – I think the Bush ‘conservative’ movement is perhaps better seen as a democratic nationalist project…  and one where the nation in question is itself highly idealised (American Dream?  Manifest Destiny?).  Inasmuch as Tim Montgomerie’s purpose is to build something similar here, it’s doesn’t seem very conservative or in keeping with our own political tradition.**

More important though, it doesn’t fit with the lived reality of the British people today.  The arguable nature of substantive Christian mores reflects a society where the ideal of social and cultural autonomy is the leading moral principle for at least a plurality.  Now, in fairness, they can do this because of the achievement of late modern society – so deeply embedded are some of the basics of Christian ethics in our social practice, that we can see the full doctrine as inessential frummery.  So, love one another, but don’t hold me back with marriage or ‘owt.

Again, that point is arguable - I think it’s true, but it requires some persuasion for most people to get it, which means it serves no purpose as the basis of an authoritative tradition.  And that brings me to the critical point – there are now no authoritative traditions.  Christian conservatives (and atheist cultural conservatives) have for a long while hoped that the common inheritance of Christian ethics may at least provide the basic grammar, if not the vocabulary, of a new language for moral discourse, to allow a politics which can overcome our obsession with individual and sectional rights.  I’m not so sure that that’s really possible while the role of that common inheritance is not manifest to most people.

The problem with this is that it doesn’t leave us much to conserve.  The conservative vanguard, always ready to fend off the Barbarians, discovers not only that they’ve been governing us for some time (a la MacIntyre) but can now no longer be told apart.  Hegel reckoned that the modern state would balance out; “that personal individuality and its particular interests not only achieve their complete development and gain explicit recognition for their right…  but, for one thing, they also pass over of their own accord into the interest of the universal, and, for another thing, they know and will the universal.”  Or perhaps not – and I think this is the anxiety of contemporary conservatives (at least, it should be), that aside from the fund of decency we now assume (paid for by the Christian virtue of previous generations), society now knows no inherent, self-sustaining source of order; only subjective desires, whims and demands rule the day…  Habit keeps us decent, but habit fades.

And, more rights-talk, rather than politics.  Politics means finding our way together; but now the State becomes increasingly there to administer conflicts between different demands – there is no agreement, there are only winners and losers, funders and recipients.  Where demands get too much, they have to be tramelled and regulated; appeals to self-restraint are, let’s be honest, pretty quaint these days.  The banking crisis shows us both cause and effect here – professional banking culture and all of its constraints died away, but State regulation didn’t compensate for its loss – it simply channelled the energies of greed into off-balance sheet vehicles which probably made matters worse.  (Consider that the banking crisis is more chaotic than anything experienced throughout the modern financial era, from the 1844 Banking Crisis, through the Long and Great Depressions and two World Wars…  Through all of which there was little or no bureaucratic regulatory apparatus.)

It is only on the ground of politics that conservatives need to make their stand; to argue for, and shape policies and institutions for, people to work out their differences rather than talk past one another in the great grievance and whining contest.  This is what it means to go forward, not attempt to move back to some ersatz tradition which finds no authority worthy of the name, and certainly not with new generations; it means going forward because it embraces autonomy, but then asks for people to step up to all its consequences – it privatises the costs as well as the benefits of social autonomy, and then gives people the means to manage the risks those costs bring.

That’s why I’m a localist, but in a way which the Party’s new paper doesn’t even imagine – because refounding politics in this way can only be done from the bottom up, by allowing communities the freedom to effect their own change in the way they live together, and in doing so, create some opportunity to find a way of being together.  This isn’t just a matter of shuffling grants between layers of statutory government bodies, or removing a few restrictions – it means completely rethinking the range of action and the basis of collaboration (and financing, and regulation) between all the different actors at local level; it means rethinking the relationship between the citizen and the market as well as the citizen and the State.

And to come back to where I started, I stand by my alternative, plagiaristic, statement of conservatism as accommodating all of these problems of being a conservative today.  As far as I can see, taking this approach, of making space for a settled people to be together, and therefore to refound the basis of their community, is how we should understand “the rational defence of being against mind, of order against chaos” today.  But hey ho.***

* This isn’t to say that it was only Bush and Rove’s fault.  The outraged nature of Left-wing opposition made it very difficult to seek consensus after a certain point – but there’s plenty of blame on either side.

** This criticism should not be viewed as personal.  Tim Montgomerie’s services to the British Right are many, and his blogging and his reputation both suggest him to be a man of both ability and good intention.  But I differ on the aims he seeks to achieve.

*** Inspiration for the post came, as well as the point about Montgomerie’s curious silence on continuity and change, from reading James Poulos’ writings here and here (it’s the one at the end); although these may only make sense if you’re up with some of the debates they’re written in response to.  This line especially is a keeper: “Through the market, the left has been able to offer the possibility of cultural novelty on demand; through the state, it has peddled the right to it.”

This is apparently the view of the Amnesty International spokesman* Nicola Duckworth, discussing the Abu Qatada case.  In logical terms, it’s obviously true – human rights attach to humans, after all.  But I don’t believe in human rights as such; I think the real experience of anarchy (Somalia, Congo, Afghanistan, wherever) tells us that history is fairly indifferent to such notions.  Rights as we have them exist in particular contexts, created by civil practices and institutions which can also enforce them.

Viewed in those terms – that rights are rooted in our society, rather than our humanity – Ms Duckworth’s assertion seems to me to be wrong.  States not only can pick and choose which ‘people’ (i.e. humans) have the full panoply of civil rights, they are pretty much obliged to do so.  States have citizens, and the protection of those citizens, and the exercise of the civil rights which they enjoy as such, is one of its primary duties.  Protection of those citizens is necessary from enemies within (i.e. criminals and traitors) and from enemies without (i.e. aggressor states or terrorists); the first group have to be dealt with through due respect for their rights; the second group only through respect for the rules we consent to for the use of force.

Abu Qatada was allowed to stay in this country as a guest; but he has no right to remain here.  As a host, we expect our guests to meet up to certain basic standards of behaviour, and applauding attacks on our country and counselling other people to join in such attacks, do not seem to me to meet them.  What right he did have to remain was granted by the British government’s own administrative decision-making process; and what the State giveth, the State taketh away – once that same decision-making process decides that he has outstayed his welcome, then he must go.

The question raised by Abu Qatada’s defenders (including his oddly-named hasn’t-met-an-enemy-of-the-state-she-didn’t-like lawyer Gareth Peirce) is whether the State has the obligation to give a non-citizen, who has made himself undesirable through his own conduct, the right to stay in our country for as long as deportation to their own land might result in an unfair trial and potential mistreatment.  The Law Lords said that the use of torture-based evidence does not produce an unfair trial as such; and the Jordanians’ use of it is their business as a matter of justice – the British government can hardly be expected to offer residence to all criminal suspects from countries using torture (we’re already densely populated, after all).

This seems eminently sensible to me; as it goes, I don’t accept the idea that the British government is responsible for making up for all of the inequities of other states.  The world is a pretty chaotic place, and our privilege to live under the rule of law does not give us the obligation to offer its benefits to all and sundry.  The idea that anybody facing trouble upon their return to their country (often because of their own previous conduct) therefore has an unconstrained right to stay in this country, regardless of their celebrating the efforts of our declared enemies, and seeking to sow unrest among other people, can only mean our becoming a safe haven to all of the world’s Bad Guys.  Not a good plan.**

* I am impressed that the BBC and/or Amnesty International styled her as ’spokesman’ rather than ’spokesperson’ – gender-neutral terms are just so hollow, aren’t they?  After all, being a Chairman is authoritative – but Chairs just get sat on.

** Since the judgement on the administrative imprisonment of the Qatada and his like at Belmarsh, if the Law Lords hadn’t accepted the right of the Government to deport such people with only basic safeguards in place, it would’ve effectively disarmed them against any foreign terrorist operating on the edge of the law.

This Tom Harris discussion, thinking about if Labour win next time, is interesting but, as many commenters point out, horrifically misguided about the current mood among Tories.  I don’t think there is any arrogant assumption about winning for most of us; if it had arisen, the Brown bounce quelled it a bit, and the knowledge that constituency boundaries and our inability to gain significant traction in Scotland and Wales both leave no small amount of nerves.  There’s an old Woy Jenkins line about Blair having been given a precious vase and just having to carry it without dropping it; but these times are nothing like that.

For one thing, and this is a bugbear of mine, the Tories aren’t Labour and 2010 (or 2009) is not 1997.  So when people point out the limited popular enthusiasm for a Tory government, they are missing the different relationships the parties have with the electorate.  The Labour Party is historically the one that has an emotional tie to a broad part of the electorate – their election-winning offer is traditionally one of values.  The Tory Party is different; its offer is traditionally one of competent governance.  The consequence is that Labour (and before them the Liberals) sometimes get elected from Opposition with an enthusiastic landslide; the Tories with a cautious victory which, if successful becomes a landslide.

The Labour offer works best in happy times; the Tory one in troubled times.  That doesn’t mean either side can’t govern successfully and be re-elected successfully in the other times, but their respective offers are likely to be most attractive as an alternative government in different climates.  In 1997, there was little the Tories offered that Labour couldn’t match; and Labour had a whole language with which to describe a future which could use the new prosperity – the Tories didn’t.  In tougher times, a party which is devoted to positive social change (as Labour is) can’t make its promises credible (there’s no money to finance them) or meaningful (sure, poverty’s all bad and stuff – but can I keep my job first?); a party with perhaps more modest ambitions seems more focused on public priorities.

1979 was like that.  Thatcher’s latter-day hero-worshippers may believe the British people enthusiastically embraced the full-blooded Thatcherite agenda of sound money, free markets, union-busting, etc.  But it wasn’t the case; leaving aside that what became ‘Thatcherism’ didn’t really exist in 1979, inasmuch as it was articulated, people were generally sceptical – after all, Heath, Wilson and Callaghan had all promised to quell the unions and kill inflation.  A majority of 43 was the result; a solid outcome – the first really decisive one since 1970 – but no more than that; it wasn’t until 1983 that Thatcher won her landslide.

1970 was like that, too – it’s just that Heath screwed it up and didn’t get his landslide; but see that, amidst the crisis, the Labour Party did not find its way back into meaningful, big majority power, before the Tories remade their offer and lived up to it.  1951 was another one; Churchill’s Tories scraped in with a razor thin majority, before 1955 saw them come good; all the way back into the 1920s, 1922 and 1923 were stuttering moves between Tory and Labour, before decisively swinging behind Baldwin’s Tories at the end of 1924.

There are always historical vagaries and contingencies, so the theory isn’t watertight – but it provides a good guide.  A good example is 1992.  The Tories should have lost; 13 years in office and a deep recession with negative equity should’ve done it…  But the man (Kinnock) and the message (Labour policy at the time) just didn’t seem right for the times – all very nice to splash money around on worthy social initiatives, but there’s a recession on, y’know.  The voters stuck, decisively in raw numbers (if not parliamentary seats), with nurse.

Harris is also talking rubbish in his analysis of the Cameron leadership.  His suggestion that Cameron is pure presentation, a pleasant face to front up a hideous Right-wing gang itching to close all the hospitals, shut down the schools (see more from Harris here), and drastically curtail civil liberties (already done), is rubbish.  It’s not that there aren’t tensions in the party, or that Cameron doesn’t put his best face on (he is a politician, after all); but the attack is no more true than Demon Eyes was of Blair in ‘97.*  Most of us Tories thought that was very clever at the time; but it was ridiculous – and those not into politics saw it for all that.  Seems like Harris and his colleagues are stuck in the same trap; and in that sense, it’s not the Tories’ arrogant presumptions of election-winning which he should worry most about – it’s Labour members’ presumptions that because the Tories haven’t been competitive in a national election since ‘92, that they never can be.

But anyway, to Harris’ main point – the thought experiment about Labour winning in 2010.  Harris’ main consideration is what would happen to Cameron and where the party would go, especially if only a majority of one or two seats.

Well, let me say what I think about the Tory Party in that circumstance first, and then move on to Labour.

In those circumstances (a wafer-thin Labour majority), it’s likely that the Tories’ support was heavily concentrated in the South, squeezing out the Lib Dems.  In that case, we can envisage the Tories having gained quite a few more seats, and probably a significant majority of English parliamentary representation.  Bearing in mind Labour’s low popular vote last time, it seems entirely possible that the Tories will have lost with a greater (if not 40%+) popular vote; the Lib Dems having picked up peeling-off Labour voters in northern constituencies, but not sufficiently concentrated to break through into seats.

If that’s the case, we’re into near-hung parliament terrain, especially given the number of rebellious Labour MPs there already are who’ve grown tired of supporting a Government which keeps them starved of their red meat.  The smaller parties will mostly be against Labour (SNP, PC obviously – DUP make odd bedfellows, to say the least); and the remaining Lib Dems will be northern, more Left-wing but also more opposed to Labour as such (as their electoral enemy).  In these circumstances, the prevailing feeling would be that the Government would not last long – it would either lose confidence or seek a stronger mandate within a few years – and so my guess is that Cameron could probably hold on.

Cameron would also have greater options; having taken his newly brand-disinfected Tories through an election, the spectres of Right-wingery past will have been lost to the public mind, and so he can afford to make stronger noises on fertile territory (crime, immigration) which he has so far had to leave to Labour to make loud noises about.

And that brings us to Labour.  If I were a Labour man (I’m not, obviously), I’m not sure I’d want to win in 2010.  I say this as a Tory who fought 1997 and has to admit now we didn’t deserve to win that time.  But a win in 2010 could be even worse for Labour’s long-term health.  Here’s why…

Labour hasn’t decisively won an election since 2001; 2005 was victory by default, but with less enthusiasm than any British government in modern times.  They won with just 35.3% of the popular vote.  Since that time, Labour has only rarely polled above 40%.  You might say that, until recently, neither had the Tories – but this misses the point.  We Tories knew we were unpopular and had to change in 2005, 2006 and 2007 – so that when our ratings started to bump above 40% at the end of that period, we had won our prize.  But Labour saw no such need to change; after all, the election had been ‘won’.

Here’s the thing then – where’s the coalition Labour is defending?  Back in 1997, we Tories made great play of the fact that Major had won in 1992 with a record number of individual votes (which still stands); our argument was that it would take a lot for Labour to peel off all of those votes to abstentions or to change sides.  As it turned out, the total fell by over four million.  But Labour has already lost a similar number of votes from 1997 to 2005; if they had been allocated more purposefully in 2005, it would’ve easily lost the election (to a hung parliament).

Now, I don’t think many Labour people are envisaging winning over great new constituencies this time around; I assume the hope is that some of those voters who have deserted the party since 1997 will come home.  That’s a big hope (although the Iraq war’s disappearing relevance makes it more tenable), and one that seems primarily to depend on voters sharing two, linked, goals – keeping the Tories out and staying loyal to Labour.  The first isn’t a major issue for most people (aside from the minority of committed centre-Left and Left political enthusiasts – 15%? – nobody really cares what Thatcher did or didn’t do), while the second seems to be essentially “we’ll come through for you if you vote for us one more time.”

So, Harris is hoping that enough of them will turn out to squeak Labour through – as I say, probably with an even more jaded mandate than in 2005, with no popular vote plurality or parliamentary majority in England, and possibly not even a popular vote plurality in the UK as a whole.  The votes it did get were gathered by appeals to “stick with us”, rather than much of a fresh, popular programme; it probably has no new voters across huge (and often growing) tracts of the country, and no advocates, in the workplace, the pub or wherever.

Brown is returned to office – in the middle of a recession, which may last for years, even if by then the fall in GDP has probably come to its end; there’s lots of reason to think, because of debt overhang, that it could take years to start growing again.  Labour won (somehow) by fighting an election against Tory cuts, but coming through the worst of the recession means bringing the budget into at least the prospect of balance – so that means big tax hikes or big spending cuts; probably both.  Every spending cut means annoying a constituency, and proving that what the Tories said last time was right.  Every tax hike just brings back all the old saws about Labour not being trustworthy with your money.

By the time 2013, 2014 or 2015 comes along – whenever it would be – Labour wouldn’t stand a chance.  And probably not for two elections after that.  I think (for reasons of political sociology) that, as things stand now, if Cameron wins in 2010 Labour will find it difficult to come back much before 2020, unless the Tories do a Heath; but if they cling on to the last – a government that probably outlived its usefulness when its only real leader left in 2007, and certainly had outlived its public trust – then the voters will turn their back on them.  We might actually see that overdue realignment take place.

So yeah, hope for Labour to win in 2010 – because Labour as we know it might never win again thereafter.

* In fact, the comparison is very apt, and so it would be with Thatcher in ‘79, and in the US with Reagan in ‘80, Clinton in ‘92, Bush in ‘00 and probably Obama in ‘08.  In each case, a leader and their relatively small cabal took the reins of a party and, with the acquiescence but not always enthusiastic support of its members, took them into election-winning territory.  The age of mass politics, with vibrant member movements is over – this is a consumerised model for consumerised times.  The interesting point is that only some of those above definitively changed the minds of their membership – Thatcher and Reagan, yes; Clinton and Blair, no; Bush, ultimately perhaps broke the party; Obama – well, like Cameron, it’s too early to say.

Chris Dillow helps Charles Bean with what he should’ve said about quantitative easing – and to dispel some of the myths around it, as it is fundamentally only a different means of adding to the money supply.

Here’s what I don’t get about the Bank’s position (or is it the Government’s position?) right now: why not initiate a substantial quantitative easing now (or even, a month or two ago), of a few tens of billions of pounds?  Why wait until rates are already down near zero, and it’s seen as a desperate measure?

The most common explanation as to why they won’t do it seems to me to make the case.  The explanation is the one Chris links to – the fear that any step towards easing will trigger a crisis of confidence, causing capital flight in fear of hyperinflation.  But surely, lurching into quantitative easing as a desperate act is more likely to do that than a planned and declared intervention?

Doing it in a planned way could also be shored up by explicit commitments against deficit monetisation (best backed by a clear plan for fiscal consolidation in the medium term, unlikely though it is) and to a price-level target over the next five years (more suited to managing expectations in a highly uncertain environment).

Significant quantitative easing before interest rates hit zero might trigger a bit of inflation, but at least the relative changes in interest rates needed to counter this would then be more modest (2% to 5% is less drastic than 0% to 5%).  If interest rates are already at zero and quantitative easing is used as a desperate measure, there must be some question over the credibility of the Bank in raising interest rates to choke off any inflation amidst recovery?  Better to take the decisive action sooner and deal with its potential downsides in an orderly way, or so it seems to me.

Long and windy, even by my standards…  Be warned.

I voted for the other Dave in the 2005 Tory leadership election.  I was suspicious of Cameron and the siren calls of Blue Labour.

Since then, I changed my mind, and am now a loyal and dedicated follower of the Leader of the Opposition.  Why the change?  Partly, history since then proved him right and me wrong.  Partly too, I guess I changed in my view on certain points; conservatives above all should be accepting of new lessons from experience.  And finally, he showed himself to be a genuinely conservative Conservative – his 2008 conference speech is a truer Tory statement than has been uttered from that stage in many years – and that, I liked.

All the while political progress has been slow but steady, resulting in a solid polling lead which withstood Gordon’s surge at the end of last year, I’ve had a lingering fear.  The Cameron project is an elite project; it is driving the Party, but the Party does not embrace it.  There’s no cynicism there – the Party is bored of losing and follows the lead; much like Labour in the 1990s, and to some extent, the Tories in the 1970s.  Change is like that.

There’s one, big difference with those two historic precedents.  When Thatcher took the leadership in 1975, she wasn’t on her own; there were plenty of intellectual backing in the think-tanks and in the press who could circle the wagons whenever the Thatcher campaign came under attack.  Their work was of sufficient quality that some of it can be read with interest and relevance today (I did so the other day).  The same applies to Blair in 1994, for whom there were plenty of opinion leaders who had been hankering for some years for a “Thatcherism with a human face” – and plenty more who were sufficiently annoyed with the Labour Party’s descent into lunacy that they would back Blairite political realism to advance their own goals (Giddens, say).

The Cameron project has no such intellectual hinterland.  Much of the Right-leaning press remain unengaged, and occasionally sees outburstsof naked hostility (have you read Heffer recently?); the think-tanks too tend to fellow-travel but not buy – Policy Exchange used to be close, but perhaps too close, and has since distanced itself.  ConservativeHome’s support is strongest where Cameron’s priorities coincides with Montgomerie’s hopes for an American-style movement conservatism; the goals are clearly different though.   The general chatter on the Right seems to be shot through with a sense of “yes, yes, Dave – but when can we have tax cuts?” – even the broadly sympathetic seem only to add “but it’s great that we’re nice now.”

The leadership might argue that it doesn’t matter – if we lead, they will follow, especially in power.  I’m not so sure, especially amidst troubled and turbulent times.  What’s more, the leadership’s articulation of what I take to be (and support as such) its broad case is weak, with concepts poor and underdeveloped.  The idea of a “post-bureaucratic age”, but when it amounts to eBay Government, colour me unimpressed.  It’s all very well to call for an end to target culture – but what comes after?  Outside schools policy, the arguments seem thin.

So, it is in that context that I welcome the discussion in this month’s Prospect, around an article on ‘Red Toryism’ by Philip Blond.  It’s an attempt at genuine critical engagement with the leadership, to give an exposition of Toryism for the years ahead.

I’ve been aware of Blond’s writing for some time, and I think he has an interesting, although as yet incomplete, argument to make.  I also find it interesting that he seems quite a pleasant chap (I saw an interview with him on-line a while ago, can’t find it now), but isn’t averse to harsh critique, cf. “contrast the potential of Cameron’s civic communitarian conservatism with what it aims to transcend: the corrupt and rotten postwar settlement of British politics.”  A bit of bloodiness is always to be advised in making the Tory case, and this is all to the good.

The good stuff

There is lots that I agree with in Blond’s piece, which I’ll summarise before moving on to the criticisms and points of difference, starting with the diagnosis:

• The embrace of community as a core conservative concept – that we are a people, not just a co-located mass.  (As Newman said, Toryism is “loyalty to persons.”)
• The modern conception of liberal autonomy is antithetical to any conservative vision of order; for conservatives, society is what gives us our individuality, not the other way around.  We are not liberals.*
• That liberal autonomy becomes a licence to egoism, which then more and more comes to rely on raw power to contain it – the self-fulfilling logic of Leviathan.
• That class matters; while it was convenient to forget this while fighting socialism, conservatives above all should understand the pervasive nature of hierarchy and vertical obligation.
• That meritocracy and the promotion of social mobility as such is a liberal principle, which conservatives should not embrace, as it undermines social order – as I set out in more detail here.

Or, as Shakespeare put it, once you break the basis of order,

“Then every thing includes itself in power,
Power into will, will into appetite,
And appetite, a universal wolf
So doubly seconded with will and power,
Must make perforce an universal prey,
And last eat up himself.”

… and then on the prescription, I like (there will be some caveats in due course):

• The promotion of competition.
• The focus on assets and ownership as an important goal for alleviating poverty; and the focus on savings.
• The attention given to corporate power as well as political power, and the recognition of the task of containing the worst abuses of such power.
• The attention given to creating vehicles for investment in local economies.
• The encouragement of employee ownership and co-operative associations.

I’ll also deal with a few of the criticisms made on the Prospect site:

• Rupert Darwall’s argument is a brief for Right-libertarianism; if only we are free to trade, all will be well.  Anomie is a product of welfare dependency; every man has his price.  Darwall makes some fair(ish) points on policy matters, yet seems completely blind to the questions of culture and society Blond raises.
• Catherine Fieschi’s argument is good, honest Leftism; I agree that communitarian conservatism is no driver for modern progress (or “decadence”, as Nietzsche preferred).  Neither though is it about going back – if you hit a dead-end, you make a turn. Her point about the Welfare State’s emancipation refers to the dividing line Blond seeks – emancipation also meant alienation.
• David Green’s argument is that Blond is wrong about liberalism; that what Blond wants is part of the liberal tradition.  We can’t though define liberalism as frozen in (early) Millian aspic.  And one can support existing liberal institutions without accepting liberal values for the future.  Our constitutional tradition includes a strong modern liberal thread; but it also includes ecclesiastical, aristocratic and other threads.

Kieron O’Hara’s response seems to me mostly fair; that an analysis of modern liberalism’s upsides is needed to avoid Blond over-reaching – and that part of that is in achieving support from those who have gained most from the liberal tide.

My criticisms are as follows…

Economics

The economic analysis is pretty hackneyed at times.  Try:

“Yet the great disaster of the last 30 years is the destruction of the capital, assets and savings of the poor: in Britain, the share of wealth (excluding property) enjoyed by the bottom 50 per cent of the population fell from 12 per cent in 1976 to just 1 per cent in 2003.”

This is picking data to fit the theory.  The critical words are “excluding property”; bearing in mind the increased opportunity for home ownership in the 1980s (mortgage deregulation and council house sales), one might expect that poorer people might have shifted their balance sheets into property, and so it did – the share of wealth including property didn’t actually change all that much over the period, even if non-property assets did (it went from 8% to 7%).

People might be insufficiently diversified now; but that’s a different matter, and as a result of choices people in the bottom 50 per cent have made for themselves.  The ability to put your money in a wide range of non-property assets is fairly open and widespread, after all.

More important, Blond’s distributivism goes too far for my tastes.  Global capitalism might be a bitch, but it’s hear to stay; if we turn our back on it entirely, we condemn ourselves to economic stagnation.  Saying that we’ll break up all major national retailers and mobile phone companies, and that we’ll have a long-term state-run mortgage lending arrangement is a recipe for just that.  And here’s the thing; for me, conservatives should want their country to be successful, as well as well-ordered, that we should want prosperity because we know it’s important if we’re to achieve great things as a nation – Blond’s Red Toryism at times seems to say, let the world go hang, as long as we’re all arranged happily.  But eventually, as we fall behind the world economy, we’ll become discontented as well as poor.  (I can’t find the New Economics Foundation research he refers too, but it sounds dodgy, to be blunt.)

Instead, what we need is to shape the economy to allow for space for community, and for people; that space should allow them a greater degree of choice between risk and security.  Some people want security, some people embrace risk for its rewards; we should allow people to make informed decisions but then insist on their responsibility for them – if you want to make risky investments, fine, go ahead…  But no bailouts – all clear and up-front.  Equally, if you want to live in a localised economy with secure jobs, fine – but don’t be surprised if other people are earning more.  The task is not to turn our back on global capitalism, but to make it work for people.

(The attraction of employee co-operatives, as Blond alludes, is in allowing people to balance risk and security more directly, without relying on the State – I agree that this is a critical area for policy development, although I wonder if Blond realises how middle-class it could become, as knowledge workers may often have most to gain by such arrangements.)

Needs work on the State

In common with virtually all conservative thought since Thatcher’s ascendancy, there’s a yawning gap where a positive conception of the State needs to be.  In fact, because of the more conservative, less liberal, nature of Blond’s proposition, this seems clearer than ever – a communitarian vision needs to be balanced by a clear idea of how, where and why State authority will be wielded.

By this, I don’t mean more government – in fact think Kieron O’Hara’s right that the agenda needs a State (and a polity, too) willing to accept fewer areas of competence claimed for the State – a willingness to say that it’s the community’s problem, not the State’s problem. But I do think that where the State does claim responsibility, it should act and do so swiftly and strongly.

Such a State cannot also limit itself to the Leviathan role, of managing and mitigating conflict.  Central to Blond’s proposition is the need to spur and enable communities to organise themselves.  And here is a point where, if the Tory Party were serious about all this, the term ‘Post-Bureaucratic Age’ should be parked – in a serious critique of what the ‘public sector’ actually means, such that self-financing local bodies – for-profit, not-for-profit, or plain municipal – can find their own way of working together, while the central State (the purest public sector) is much more restrained, allowing a genuine mixed economy to take shape in different forms and different places.  Communities are shaped by people coming together around a common good, which they feel they can affect – by politics with a small ‘p’; there is no one way for it all to end up, and people should be allowed to find their own way.

Responsibility, please

The critique says that we have stripped away much of the intermediating, organic institutions and practices which made capitalist society work in the past, leaving nothing but ego-driven individualism under the raw power of the State; the task is to regenerate, for new times, those institutions and practices.

Blond’s piece says nothing about the obligations for people in all of this.  Instead, it is a long litany of guilty institutions which will be changed and adapted, to create opportunities for people.  Yet if all of this is to work, it means getting people themselves to change – if there are “divided families, unparented children” then we are asking people to unite their families and parent their children in ways they aren’t.

What we’re asking for is people taking responsibility for themselves, and for their community.  There’s a whole agenda here about civility, and one that links to the resurrection of emphatically political life I mentioned above.  There’s a challenge of creating a sense of obligation at all levels of society.

Rights-talk

The other side of the modesty about a call to responsibility is an insistence on talk about including the marginalised.  This is dangerous territory; while I agree with Blond about the ends, and I think we do need to be clear that what this means is conservatives accepting that inequalities are not to be ignored, communitarian conservatism should be about creating strong communities and inviting people to participate, but being clear that participation involves responsibilities…  And those who don’t live up to their responsibilities don’t share the benefits.

Conservatives can get dewy-eyed over old working class communities, and for good reasons.  We forget that we remember what were called the respectable working classes – not all of the working classes.  When we talk about assets, we would do well to remember that the respectable working classes held most of their most valuable assets in common – social capital in their solidarity, their mutual support in times of need, and even their pride in their neighbourhood, with housewives scrubbing their steps to ensure their environment was good.  The dark side of all this was that those who did not live up to their responsibilities were not a part of these communities; and it was through mechanism that that they derived their strength, and that the numbers of irresponsible people was kept to a minimum.  If we think about all this in terms of rights for inclusion, it makes the ultimate outcome we seek that bit more difficult to achieve.

In closing

Well, for now, anyway…

Progressive ends are not the same as conservative ends, although there is common ground.  Despite the name of his project at Demos, I think Blond’s article does recognise this basic fact, which is an advance at least from recent discussions led by Tory politicians talking about “progressive ends, conservative means”.  (Don’t get me wrong, appealing to the elite classes in terms of progressive values can sometimes just mean speaking to them in their own language – but let’s not sell our souls here, people.)

The problem is, after a decade of Heath (when old Tory thinking withered away), and then three decades of Thatcher and successors (where it was all but killed off and replaced by market liberalism), there’s a long way to travel down this road before we will see genuine resurrection.  Thinking with genuine difference about the nature of how we govern to regenerate community from the bottom up, while not compromising our prosperity and achievement, offers a rich seam of thinking for the Right; but making it work is difficult.

Good luck to Blond.  British intellectual conservatism has perhaps been at its lowest ebb in many decades; probably since the 1950s; we’re reduced to Roger Scruton (more popular in America) and, extremely distantly, John Gray, and some commentating historians.  It’s not entirely clear why.  French intellectual conservatism seems healthy.  American intellectual conservatism has the potential to get over the implosion of the Republican party with enough time.  Britain – which alongside France pretty much invented conservatism as a coherent set of political ideas – seems to be lost for now.

* That doesn’t mean we can’t be liberal – we can just distinguish between the virtue liberality and the ideology liberalism.

Over the past few decades, we’ve become less and less trusting of each other, living more and more apart.  How many of us really know our next-door neighbours?  How able are we to strike up a conversation with a stranger?  The causes of this are probably many, and some of them might be good things in other ways – more multiculturalism, more careerism, fading socal hierarchy.

But it seems to me fairly obvious that since the homogeneity (warm bath or stifling hell, whichever’s your poison) of the 1950s, we now have a much more isolated, anonymous, fissiparous society.  It’s not that we distrust each other; it’s just that we don’t really trust each other either?

And yet, the super-smart people being paid millions of pounds to run our banks in this new world thought that it was OK to lend sums worth several times earnings to pay more than 100% of a house’s value, and even to allow earnings to be self-declared.  They invested in securities which represented other institutions lending to those kinds of purchases, without a thought to what their exact composition might be, just because it was another bank offering them for sale.

Isn’t it a bit funny that, just as we’ve all stopped trusting people in general as much as we used to, banks went in completely the opposite direction?  Back in the 1950s, they were famously closed institutions: in a world where people had a common culture and experience with which to understand each other, banks just didn’t lend unless they were absolutely sure.  By the late 1990s, anybody who’d previously paid back a credit card bill but had only vague work history and vague plans for the future could get an advance.

Just sayin’.

Haven’t seen the film.
I think the British Government’s case would’ve been stronger if they’d have refused entry on the grounds of his haircut.
Message over.

As the Spectator asks…  my BSc.-level prejudices on display.

1. Bank of England

a. Was inflation targeting the wrong measure? It worked in the 1990s, but was it rendered unreliable by the deflationary shock of globalisation?

Maybe.  Not sure.  There’s a danger of fighting last wars then, but there’s a danger that we change now and end up making the same mistake.  Ultimately, a broadly stable consumer price index is the generally accepted measure of sound money.  I don’t think output or employment should be an issue for monetary policy; monetary policy is about sound money.

Variations could be in scope or method, however.

In terms of scope, some people seem to be suggesting that the index should include asset prices, but asset prices should rise, at least through some association to general productivity.  Disaggregating that effect to ensure normal prices were stable would be very difficult, because asset prices are also subject to a lot of other factors.

In terms of method, the obvious alternative is to move to price-level targeting – saying the index will move 100 to 102 to 104 to 106 over four years, so that the value of the currency can be predicted in future.  But the problem here is – what to do when we go off the trend?  If the index went from 100 to 105 to 110, is the target going to be to engineer a deflation of 4 points in year 4?  Or, if it stays flat at 100, will it have to engineer a 6% inflation?  I think there are some big credibility issues here – over the extent of policymakers’ control, and also their willingness to correct where policy missed the target.  (This doesn’t mean it’s not worthwhile as a short-term expedient – for example, as a commitment measure against a deflationary spiral.  But I’m sceptical how it could work long-term.)

Other measures…  Well, you could go for exchange rate targeting (either bilaterally with the Euro or against the trade-weighted exchange); but the raw political economy tells us, as it did in ‘31 and ‘49 and ‘67 and ‘92, that domestic business and consumer interests will demand policy respond to their needs, precipitating a devaluation crisis – been there, tried that.

So, my guess is we’re stuck with an inflation target.  Unless you could persuade them to go for a commodity prices index; where you could use forward Sterling prices to ensure a continuing steady path for the price level, in principle.  But the mechanics are complex and there’s the question of how much commodity price bubbles could become an issue too.  (There’s also the issue over a 1973-scale oil price shock – in welfare terms, it may be better to allow some of that to feed through into prices; but to do that in this case would be to reduce credibility.  This would be analogous to devaluation crises under an exchange-rate fix; that the domestic economy’s needs come into conflict with the tradable-commodity-focused part, and win.)

b. Should it have paid attention to M3 or M4 supply of money, as the European Central Bank does? Should its remit have included asset prices?

Yes, and yes, but.

Yes, it should have paid more attention to broad money supply, but there’s no easy solution here – Goodhart’s law applies.  The experience of monetary targeting in the 1980s was not a success – the velocity of money is highly variable (as we are seeing now in spades), and that applies vertically (i.e. the relationship between broad money and narrow money) and horizontally (i.e. the velocity of different households and businesses in a changing economy).

Yes, its remit should have included asset prices, but only in the sense that these are another indicator.  Asset prices can shift in dramatic fashion for quite good, secular reasons.  Housing price increases over the past 20 years have been above trend – but maybe that’s because of shifting demographics (people living older, more migrants, more single people) and living preferences (more prosperity means more people choosing to live alone).  It’s easy to say in hindsight now that there was an asset price bubble and to take a guess on its scale…  But it isn’t so simple in practice.

I remember some years ago (long before all of this) Tim Congdon criticised the Bank not for its lack of attention to money and assets per se, but for its lack of any clear theoretical framework for inflation.  I think that’s fair as a starting point – and perhaps with that it could have a means of filtering money supply and asset price data – but none of it could make it fool-proof.

c. Did globalisation undermine its ability to control the supply of money in the economy – i.e. could banks borrow directly from the mountain of savings in China?

No, except for the self-imposed restriction of using short-term policy rates as the only way of changing the supply of money.  All that that means is that they’re making short-term liquidity (i.e. minimal risk lending) available above or below the market price; therefore affecting risk and return perceptions.  Given international financial integration, the consequences of small pricing errors become extremely large – and a small excess of liquidity amidst uncertainty over risk pricing can trigger a large bubble.

The solution to this doesn’t to me seem to be to intervene on long-term lending; getting the whole yield curve out of shape seems likely to make it worse.  Instead, direct quantitative measures seem more appropriate, as long as there’s a route to make the correction; hence me mentioning exchange-rate or commodity-price index arrangements, as they at least allow a direct sell of currency at a fixed future value – but they both have big issues over pricing rationality, and of political economy.  (I don’t think CPI futures – which could be another such mechanism – are practicable, because of the month-long gaps between price data.)

d. It had a very tight remit, and most MPC members are picked by the government. Does the bank need more independence? Would this have helped anything?

MPC members are picked by the Government, but that’s the British way – short of House of Lords approval committees, am not sure how else to do it?

True independence, as the Bundesbank had, only comes through genuine political commitment – in their case, procured through folk memory of hyperinflation.  I’m not sure how it can be achieved without that, especially given the ‘elective dictatorship’ problem we have in our constitution.  At most we can remove the MPC and allow the Bank Governor the autonomy to set rates (perhaps appointing his own committee), responsible to the Bank as a company.  That way, the ability of the Government to shape MPC composition is removed; but it still gets to appoint Governors.

In terms of remit – tightness can mean focus.  But I do think responsibility for bank supervision should be returned to the Bank.

e. Did it notice the asset bubble, and why didn’t it want to act?

I don’t know – go back and read all of the Inflation Reports.

My guess is that it noticed it in the way we all did – uncertainly.  We all felt there was a bubble there, but we had good reason to hope that asset prices were a reflection of changed times.  Just because house prices go up a lot, it doesn’t mean it’s a problem – you have to be able to disaggregate the secular changes from the bubble-driven ones, and that’s not an easy thing to do.

The fear they had of acting is – what if we get this wrong?  What if asset values are inflating for good reasons – after all, record levels have to be set to become record levels.  If we choke it off, we could trigger a needless recession…

And here’s probably the biggest source of the problem – just as the postwar era (1945-1976), so too the post-Cold War era (1992-now), our tolerance of recession and unemployment is so low that no policymaker dare risk it.  The memories of the 1979-1981 and the 1990-1992 recessions loom large for voters and policymakers (especially Labour politicians, for whom those recessions often define their political being.)

f. How important was its claim that consumer spending (which sustained the UK economy in the dips) was not the result of the housing bubble?

It was very important in terms of justifying taking no corrective action – because, for the same growth-loving mentioned above, the fear of there being a housing bubble could be ignored in the name of ‘rational’ consumption levels.  This does again show through into the bluntness of the interest rate tool in a world with walls of money – jacking up rates to counteract stagnant pools of liquidity would be very painful, but there was no other way of withdrawing excess money.

2. The Treasury

a. How did its approach to debt, and the accountancy of debt, change after 1997?

I’m no expert here, but it’s important to bear in mind that the PFI innovation happened during the Major years, as an attempt to finance much-needed capital spending amidst a general effort to slash the deficit.  That isn’t to justify it, but to say that it shouldn’t simply be put on Gordon.

b. Was HM Treasury right to incorporate some of the innovations of the City, such as securitisation (e.g. International Finance Facility) and off balance-sheet financing (PFI)?

Well, yes, as a general principle – the problem is whether individual innovations were good.  PFI is a good thing, but the financial commitments should be recorded.

c. Should it quantify other liabilities, such as public sector pensions?

The accounting conventions (and possibly reporting arrangements too) need work, no doubt.  PFI commitments should be recorded, as should debt obligations under effective Government guarantee.

Public sector pensions – hmm, no, but also yes.  Pension liabilities are an ongoing cost of running the Government, and as long as the UK is a going concern, they’ll be paid – and so they shouldn’t be accounted for as debt.  But the problem is that where there has been a significant expansion of public sector payroll, the liabilities will grow – it seems to me that we should be accounting for the equivalent of an unfunded deficit for a pension scheme; perhaps, a measure of the NPV of future pension liabilities above the % GDP level now being spent (and therefore, already funded).

It’s probably also true that Government should measure its asset base better too, so that we can actually get a view on its Balance Sheet rather than its simple debt level.

3. What went wrong in the City

a. Did it have a reputation as the Peckham of the globalised world – i.e. were dirty tricks happening in London that weren’t in New York or Frankfurt?

I didn’t know that about Peckham.  I must visit.

New York didn’t get away quite so lightly, of course – more of ‘our’ investment banks are still standing.

Other than that, and the fact that US regulation encouraged corporate location in London, I don’t know about this one.

b. Should the Bank of England have kept its regulatory role, or would it have been better to have a functioning FSA?

As mentioned above, I think the Bank should have lead responsibility for banking supervision – which is different from regulation as such.  The Bank should have the power to impose reserve requirements for prudential (not monetary policy – no corsets, please) reasons; this could have been a mechanism to slow the housing bubble, by diminishing aggression.  But it needs to be handled by an agency like the Bank, as part of the City, because there really is no science – people saying about the need for counter-cyclical reserve requirements neglect the fact that we’ve never once been able to accurately predict the cycle; but at least some power might be able to avoid the worst excesses.

c. Was the problem light-touch regulation or wrong-touch regulation?

Both, and neither.

The neither bit is most important.  Capitalist energies can be ruinous to a nation if they aren’t constrained and channelled into productive, non-coercive, non-poltical behaviour.  That’s why the rule of law is important, and that’s why we have regulation, but that’s also too why we have responsibility too.

My view here is that the third of those constraints has disappeared, between the collapse of authority and the fading of institutions from the 1960s through to the 1980s (from Jenkins to Thatcher).  By the time of the 1990s and 2000s, we have a society where good is measured only by achieving private goals – of which money is a surefire part – and nobody is allowed to judge me.

Burke said: “Men are qualified for civil liberty in exact proportion to their disposition to put moral chains upon their own appetites.”  And it seems, we took off all those moral chains and went for it.  But I don’t think more regulation would’ve been a lot of help – in fact, it was regulation which encouraged off-balance sheet vehicles.  Attempting to regulate means putting a wild animal in a cage – what we wanted was to domesticate, and that means getting the wild animal to adopt some self-restraints, and nobody even thought that that was necessary anymore.

But responsibility goes down the line, too.  Nobody forced anybody to get a 115% mortgage, or take on several years’ earnings’ worth of unsecured debt.  Nobody forced the Government to run a deficit among hogwild tax revenue growth.  We’ve forgotten it all, and if we could do one thing for the future, it would be to focus policy (not just banking policy) on restoring ideals of decency and responsibility.  I’m all for entrepreneurial success, but it has to accept its obligations to society; and this isn’t about paying dues to greenies and Lefties (screw ‘em, I say), but about accepting that some deals shouldn’t be done because they’re bad for business; that some risks aren’t worth the returns.

Regulation should support that, while also leaving spaces for risk.  I’m a supporter of narrow banking for the future – that our High Street banks should be heavily restricted from financial engineering of the sort they’ve been doing; focused on deposit-financed mortgages and personal loans.  ’Broad’ banking can be more heroic, but shouldn’t be guaranteed by Government, and should be accessed only by customers who accept (and are informed of) the attendant risks.  We should not seek to protect fools from their own folly, nor to stop adventurers taking risks; but we should make sure both fools and adventurers know it’s all on them.

One other thing worth mentioning – the issue about off-balance sheet vehicles relates to a wider point, that application of prudential financial regulation should be on a conduct-driven rather than organisational basis – we should regulate complex and large-scale financial vehicles of any sort, even where it’s not formally their main business.

d. Did the Treasury have an incentive to look the other way, given that it was pocketing 40% of all bonuses?

Yes, of course.  And didn’t we all?  I don’t see many people complaining about the extra spending those tax revenues afforded – even those of us on the Right were simply aggrieved that we weren’t cutting taxes, including for those earning the bonuses.

But I do think that Gordon Brown’s tenure as Chancellor destroyed one thing about the Treasury which might have saved us all – its traditional miserly resentment of proposals to either spend money or cut taxes, and lament Chancellors’ tendency to do the reverse and never balance the budget.  He changed it into a body with a focus on ‘investment’ (i.e. finding new ways of spending taxpayers’ money) and a seeming amnesia about fiscal rectitude.

4. Where was the parliamentary scrutiny?

a. What did the Treasury Select Committee miss? And is this because it is under-resourced, or the inevitable consquence of having government fix its membership?

Don’t know, really – what did we all miss?  I don’t think the Select Committees provide the scrutiny they need to, probably because of the cited reasons.

b. Should we give up on parliamentary scrutiny and use a quango, such as the Office of Budget Responsibility that George Osborne is proposing?

Yes and yes, but.

Parliamentary scrutiny won’t work because the majority have to back their ministry in the House of Commons; it’s a facet of the British system.  If we had an Upper House worthy of the name, it could have a non-spending approval process where it could rebuff a Budget, and it could be structured in such a way as to limit party influence.  But outside of that (sweeping) change, put not your trust in kings and princes.

As for a quango, well again, I think it will only work if it has some constitutional protection – if it’s a Parliamentary rather than a Government body.  I also think it would have to work differently if it is to have the effect we really want.  I would want it to report not just on debt and deficit trends, and be responsible for overall public accounting, but to do so with a full sense of the fiscal position, reporting each year on the intergenerational consequences of current taxation and spending policy commitments.  My view is that, subject to automatic stabilisers (admittedly difficult enough), we should aim to target a long-term debt/GDP ratio, and budget balances should be judged against the intergenerational trajectory for that purpose.

But, just as with all of this stuff, political context matters.  We need a political culture which values fiscal rectitude and a realisation that we have an obligation to posterity.  Without that, a quango or a group of backbenchers will be voices in the wilderness.

c. Which MPs were asking the right questions, and when? Why did they think they were so alone?

Oh, I don’t know.  Wasn’t keeping track.  And they all need to be tested to make sure they weren’t just stopped clocks before we declare them prophets.

5. Why did personal debt balloon in Britain? Was it a bling culture that needs to change, or just the inevitable consequence of excessively cheap money?

Oh, the same old reasons and then some more.  It couldn’t have happened without such a glut of capital in the world, driven from the other side of the world, and it wouldn’t have gotten quite so bad without the excess liquidity in the early 2000s.

But I do think most of it comes back to us.  The first conceit was that we’d solved the business cycle, that the only way is up.  The second conceit is that today’s consumption is all that matters, because that ever, onward growth path would make all things come good.

As for bling – I don’t think it’s just that.  I think we all think we’re owed are dreams; it’s the happiness, not just the pursuit of happiness, we think we’re entitled to.  We’ve become so far away from the experiences of evil – war, starvation, disease – that we think not getting two holidays in a year is a major hardship.  The absence of pleasure is now what we think of as pain.  And this isn’t (in case you think I think so) all for the bad; it’s allowed us all to do many good, fulfilling things as a society.  But it’s time now to get serious.