Politics

Debt and Credit: The Politics of Recalibration

Last week saw the Liberal Democrat party conference, bringing to the UK the sight of a LibDem leader proposing tax cuts and reductions in spending. Since the mid-nineties, it has not been unusual to hear the Liberal Democrats described as ‘left of Labour’; most famously, their stand under Charles Kennedy against the war in Iraq established the party as a repository for disgruntled old socialists who had given up on Tony Blair and were biding their time until the great left hope, Gordon Brown, led them back under the red flag.

But with Brown languishing in the polls and continuing to wave the New Labour colours, Nick Clegg has with much fanfare repositioned his party as a sort of socially responsible Conservative party. This week, The Independent denied in a leader that their fellow free-thinkers were so aligning themselves, calling the idea that Cameron and Clegg shared political ground a “myth”, and painting Clegg as a brave and reformist leader looking to recalibrate British politics and bestow upon his party relevancy and dynamism. The Indie wasn’t all wrong: whilst it’s hard for LibDem activists to pretend any longer that their party is redistributive in any real sense, Clegg is attempting to match his party to a new political climate in which the tax-cutting Cameroons are consistently more than twenty points ahead in the polls. When even the Guardian is publishing leader articles with the headlines ‘Progress in Blue’, this might seem a necessary strategy.

But a week is, with the predictability of all good cliches, a long time in politics. Even as, in probably the most audacious piece of conceptual art ever, Damien Hirst was selling cheap knock-offs of worn-out ideas to know-nothing nouveau riche for unjustifiable millions, the biggest financial institutions in America were going to the wall and, in Britain, HBOS shares were toppling to the floor. In yesterday’s Guardian, Polly Toynbee caught the leftist zetigeist best: “This is the time for social democratic values to glow their brightest: markest are both essential and dangerous. The paradox is that for markest to flourish, they need boundaries that only a strong state can provide.” Even the leader in today’s Sunday Telegraph says that the state needs to “save capitalism from itself”. Meanwhile, Conservative shadow chancellor George Osborne appears on the front cover of the Mail on Sunday magazine shooting his Prada cuffs and smouldering above the title SHOW ME THE MONEY.

The economy is thus bipolar: on the one side are the oblivious super-rich, only belatedly waking up to the damaging effects of their rampant spending; on the other are the people at the bottom of the economy, already hurtling towards negative equity and wary about their banks (somewhere in the middle are the women wearing last year’s Jigsaw dresses shopping at Lidl). No electorate can stand this tension for long, and so to Gordon Brown this morning on the Andrew Marr show, recasting himself as a humble but stolid defender of the people, and fighting off the rebels in his own party with the assertion that his standing in international finance is Britain’s greatest asset in these troubled times. (Ed Balls was left to make the party political point that Brown’s economic muscle and strong social conscience is in these recalibratory times capable of putting the clear blue sea between him and Cameron that has so far been catastrophically missing.)

A new ComRes survery has put the LibDems back on 21% after some polls showing them on 12%. This has eaten into the Tories support, bringing them down to 39%, not Labour’s, who are place at 27%. This suggests that Clegg has succeeded to some extent in maintaining his own core vote and, for a while at least, stealing some votes. But it’s no longer Labour voters he wants: he is attracting Tories with promises of a lower tax burden and a smaller, less interventionist state. He had a good conference, except for a publicity-grabbing wobble about how much the weekly state pension is worth, but as the waters shift the question comes to be about whether Clegg has shifted with or against it.

There appears to be a real appetite for state intervention, for taking the hedge fund managers down a peg or two. Short selling, the process by which shares are borrowed for a fixed term by hedge funds, immediately sold, and then bought back at a lower price and the profit pocketed, has already been banned; the HBOS-Lloyds TSB merger escaped the notice of a monopolies inquiry when the government insisted the new megabank help first-time buyers and protect jobs in Scotland; in American, Hank Paulson and Ben Bernanke are channelling Engels. People have lost confidence, and want their hands holding.

Whether the loose grip of Clegg and Cameron’s new laissez faire will be the comfort voters require will depend much on whether Gordon Brown can convince them that he has not only the answers, but the credibility and potency with which to enforce them.

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