The Government certainly believe they have an important role, but it's to
put oil in the economy's engine, not petrol in the tank. And the latter is
not what I understand as Keynesianism - more like the Paris Regulation
school, if there is any academic underpinning at all. I suspect the
Government are genuinely motivated by a recognition that relative economic
failure has determined the tone of British politics since the war. All
debates and initiatives have been sepia-tinged because of the continual
need to trim resources; also, because of the sour and somewhat defeated
feeling generated by being overtaken by competitor after competitor in the
GDP-per-head stakes. Hence the shift towards inflation targets and fiscal
rigour - the only part of the German policy mix not currently out of
fashion. I think there is a real recognition that only by boosting
competitiveness (or productivity, or call it what you will) will politics
cease to be a nasty fight over an ever-smaller pie. In which, of course,
the weak will lose out.
That said, Labour remains a party of the Left with the desire to help the
disadvantaged. (I believed this before this week, but the results of the
Spending Review make it easier to write!) The great conflict is how: the
bruiser in the red corner is for direct public spending on extra services,
opposed by the skinny fellow wearing specs who argues for using regulation
to tilt the playing field. The former is accessible and conceptually
clear, if not altogether credible with policy wonks. The latter is
attractive but not intellectually fully fleshed out, and extremely
unfocused in the public mind. When it does come into focus - e.g. Frank
Field's ideas on welfare - it is unpopular.
The greatest weakness of the "Third Way" is that the UK does not have
strong mechanisms for generating consensus around new policy options.
Public debate is feeble (e.g. who is seriously discussing rationing health
services?). That may be partly because of a lack of media pluralism, but
much more important is the lack of leadership. Our political parties clamp
down on debate, and our adversarial party system makes discussion look like
weakness. In addition, the range of policy options available is much
restricted because of the enfeebled state of local authorities and the
absense of strategic regional ones. All these "constitutional" issues are
in fact economic ones since they obstruct intelligent planning.
Please respond to 3way@netnexus.org
To: 3way@socrates.netnexus.org
cc: (bcc: Iain Osborne/LON/Europe/MCKINSEY)
Subject: 3way Third Way
This seems to me to be an unholy alliance of Classical and Keynesian ideas
with boosted public services and 'back-to-work' schemes (New Deal) combined
with conditional funding and inflation targets. Having tried the two
extremes which proved not to work, is this new 'mix' a Third Way or just a
compromise.
Jerry Johnson
jerry@skynet.co.uk
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