Alistair Darling’s split personality

Comparing the credit crunch to postwar Britain reveals little about today’s economy, but a lot about our leaders.

Daniel Ben-Ami

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On 24 September, in central London, spiked is hosting a public debate titled ‘Are we talking ourselves into a recession?’ Here, Daniel Ben-Ami argues that many of today’s top-down recession fears are based on government catastrophism rather than hard facts. Buy your tickets for the spiked debate below.

The furore over Alistair Darling’s comments about the economic situation being the worst in 60 years revealed that Britain’s elite, and Darling in particular, is suffering from a split personality.

On one side is Mr Catastrophe. Darling, the chancellor of the exchequer, revealed this side of his personality in his Guardian interview published last weekend, in which he talked about Britain’s current economic plight in near-apocalyptic terms (1). Since the interview was published, other influential voices, from the Guardian itself to Conservative Party leaders, have more-or-less endorsed this depression school of economic thinking.

On the other side is Mr Calm. This was the Darling persona that was to the fore both before and after the Guardian interview. It holds that Britain’s resilience will enable it to weather the problems facing the global economy. Prime Minister Gordon Brown – who could never come across as Mr Happy even if he was on hallucinogenic drugs – is the most prominent member of the denial school.

Each personality represents a different side of the same meagre brain. Britain’s political elite is deeply lacking in confidence and feels disorientated by any social change. That explains why it is prone to veering between nightmare visions and superficial bluster on the economy and other issues. To understand this point, it is worth exploring Darling’s apocalyptic statement and the reaction to it in more detail.

Darling’s interview was given to Decca Aitkenhead, a Guardian journalist, at his family croft in a remote island in the Outer Hebrides (2). Sitting in front of an open peat fire – which seems out of line with the government’s policy of minimising individuals’ ‘carbon footprints’ – he said the economic times for Britain were ‘arguably the worst they’ve been for 60 years’. He went on to say that the crisis ‘is going to be more profound and long-lasting than people thought’.

The Conservative Party’s reaction was equally telling. George Osborne, the shadow chancellor, described the interview as Darling’s ‘outburst of truth’ (3). David Cameron, leader of the Conservatives, told the BBC’s flagship Radio 4 Today programme: ‘I think it’s extraordinary that the chancellor said it, because – remember – a chancellor of the exchequer has got to think not only “I must tell the truth at all times” but also “I must use my words carefully, so that I don’t actually create a situation that’s even worse, that creates a crisis of confidence.”’ (4)

In other words, the Conservative leader did not dispute Darling’s views but thought it was a mistake to express them openly. His criticism can best be characterised as a patronising ‘not in front of the children’ approach to public debate about economic matters. The Conservative Party seems to share substantially the same outlook expressed in Darling’s Guardian interview, but does not want it aired in public.

A couple of days after the interview was published, the Guardian itself – with its reputation for left-liberal views – published an editorial headlined ‘In praise of… Alistair Darling’. It concluded by saying: ‘Our often infantilised politics has little time for quiet truth-talking pragmatists.’ (5)

The problem with this ‘truth-talking’ view of Darling it that it contradicts his alternative Mr Calm persona. Both before and after his interview he has argued that the British economy is resilient. Back in April he said in an interview with Today that he was optimistic about Britain’s economic prospects and said it had a ‘strong economy that had proved remarkably resilient’ in the slowdown (6).

On Tuesday, he gave another interview to the BBC, in which he restated his optimism, but somehow tried to square it with his Guardian interview. He started by saying: ‘As I said at the weekend, we face a unique set of circumstances that we have not seen in generations where you have a credit crunch and you have high oil and food prices.’ But he then went on: ‘I remain optimistic as I have said on many occasions before that we can get through and we will get through it.’ (7)

Rather than try to follow all these linguistic contortions, it is best to examine the thrust of what Darling was saying – or at least what he appeared to be saying – at the weekend. How useful is it to compare Britain’s economic plight today with that of 60 years ago?

On this score the most accurate assessment came from outside the political mainstream. John Band of the Liberal Conspiracy blog had it right when he described Darling’s arguments as ‘absolute, shimmering, festering poo on a stick’ (8). However Darling’s claim is examined, it makes little sense.

From the perspective of the economic indicators so loved by conventional economists, there is no comparison with the late 1940s. In terms of the severity of the downturn, it is relatively muted. As Anatole Kaletsky, one of Britain’s most astute economic commentators, argued in The Times (London):

‘The most obvious contrasts – today’s five per cent inflation and 5.4 per cent unemployment may feel uncomfortable, but these are just tiny ripples compared with the tidal waves of economic hardship – the 27 per cent inflation and 12 per cent unemployment – that hit Britain in the 1970s and 1980s. A similar conclusion comes from almost any other economic indicator: gross domestic product, personal incomes, government finances, employment growth, repossessions. Only house prices are falling faster than ever before – because they were far higher when this downturn began. And despite all the headlines about a credit crunch, financial conditions are also relatively benign.’ (9)

If Darling’s claim is examined in a historical context it appears equally ludicrous. In real terms, the income of the average Briton is several times that of 1948. And the country is not in the grip of anything akin to the austerity imposed on the population by Darling’s predecessors in the Labour government after the Second World War. The description from the MSN Encarta encyclopedia is sobering:

‘Food-rationing covered even more, not fewer, items after the war. In 1947 and 1948 about half of consumer expenditure on food was rationed, including meat, cheese, eggs, fats and sugar. Bread was first rationed in July 1946 and potatoes in November 1947. The ending of food-rationing was a slow process from the second half of 1948 to 1954; coal rationing ended later still in 1958. At its height, in late 1947 and early 1948, consumer rationing covered about 30 per cent of consumer expenditure; it had dropped to 12 per cent by 1949.’ (10)

In today’s credit crunch, shoppers may be buying slightly fewer organic goods and looking more closely at supermarkets’ value ranges. But this is hardly comparable to a situation where staple foods were strictly rationed.

Perhaps the least understood point is that the character of this downturn is different from typical recessions. As spiked has previously argued, it is best described as a consumption-led slowdown rather than one characterised by industrial restructuring (11). People’s disposable incomes are certainly being squeezed by rising prices and tighter financial conditions. No doubt many people are suffering hardship as a result. But it looks like a slow, protracted squeeze rather than a sudden violent shakeout centred on the productive side of the economy.

It may be that Darling’s history or arithmetic is a bad as his economics. Perhaps he meant to refer to the Great Depression of the 1930s rather than postwar Britain of the late 1940s. But as I argued in a previous article, such a comparison would be even less apt (12).

The ridiculous comparison with Britain of the late 1940s says nothing about economics but a lot about Darling’s mindset. And since a similar outlook is pervasive among the political class, it says much about the rest of them, too. Their lack of confidence is so great that they dream up near apocalyptic visions of Britain’s current plight. Even if they are sometimes reluctant to express their anxieties openly, their fear of the future is profound.

Daniel Ben-Ami is a journalist and author based in London. Visit his website here.

Buy your tickets now for the spiked debate ‘Are we talking ourselves into a recession?’ in London on 24 September. Click here.

Previously on spiked

Daniel Ben-Ami described how even free marketeers have lost faith in capitalism. Neil Davenport attacked the . Sean Collins explained how discussion of recession is based on the economics of fear Mick Hume showed how the real depression in political outlook and the dangers of inflating the importance of house prices. Or read more at spiked issue: Economy.

(1) Storm warning, Guardian, 30 August 2008

(2) Storm warning, Guardian, 30 August 2008

(3) Alistair Darling’s job on the line after recession blunder, The Times (London), 1 September 2008

(4) Alistair Darling row: Gordon Brown presents united front on economy, Guardian, 1 September 2008

(5) In praise of … Alistair Darling, Guardian, 1 September 2008

(6) Darling ‘optimistic’ on economy, BBC News, 9 April 2008

(7) Darling says optimistic about economy, Reuters, 2 September 2008

(8) Bad chancellor, bad journalists, Liberal Conspiracy, 30 August 2008

(9) Crisis, what crisis? Alistair Darling got his figures wrong, The Times (London), 1 September 2008

(10) Post-War Britain, MSN Encarta

(11) The real ‘depression’ is in political outlook, spiked, 16 July 2008

(12) Even capitalism’s fan club is losing faith, spiked, 11 August 2008

To enquire about republishing spiked’s content, a right to reply or to request a correction, please contact the managing editor, Viv Regan.

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