Douglas Carswell's blog article.
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Douglas Carswell's Blog

TalkCarswell.com

07 MAR 2013

An alternative budget

It is not just our credit rating that got downgraded. Last week, in the Eastleigh by-election we Conservatives were politically downgraded, too.

Losing our AAA credit rating is a hint of where we are heading economically. Eastleigh
is an ominous sign of where our stewardship of the economy could take uspolitically.

Living standards are falling. The cost of living is rising. The economy is flat lining. Public debt is rocketing.  The banks are still bust.  Where is the compelling economic reason to vote Conservative?

At the heart of the Conservative party, where there ought to be a coherent free market economic policy, lies a vacuum. And it is a problem that stretches back more than two decades.

To put things right, we need to see where they went wrong.

Ever since we abandoned our belief in monetarism in the late 1980s, we have failed to replace it with anything coherent that works. So we have drifted.

Initially, we pegged our currency to the Deutschemark because we had no post-monetarist philosophy to inform us otherwise.  Then we were carried into theExchange Rate Mechanism because that is where fashionable opinion flowed.  When we crashed out, we lost our reputation of economic competence – and have struggled to regain it ever since.

We carried on drifting. In the 1990s, we floated along with the fallacy that central bankers could engineer growth. With no alternative to recommend, we could only look on as Gordon Brown's credit fuelled bubble made folk feel rich.

When the Brownian bubble burst, we had nothing else to offer. Five years into this downturn, we are still bobbing along with the Brownian notion that monetary stimulus can produce prosperity.

Over the past two years, I've half wondered if Gordon Brown might still be locked away inside the Treasury basement, running the show. Of course he isn't, but with no overarching free market approach of our own, our technocratic tinkering ends up feeling much the same as his.

We print money and give it to banks - Quantitative Easing. Print-money-and-pray economics does not work economically, and is a disaster politically. Why? It confers credibility on those who would rather we printed money and gave it to people.

Gordon Brown's sidekick, Ed Balls, ought to be an utterly discredited figure. Yet our monetary activism has put his debauched Keynesianism back in the game.

By 2015, George Osborne will have presided over the largest fiscal stimulus inBritish history. There is no other way of explaining the £100 billion a year plus difference between what the government takes in tax and what it spends. It is Keynesian stimulus in all but name - and within the five year term of thisParliament, it will have added more to the national debt than thirteen years ofGordon Brown.

It is time for an alternative to this failed Osbrown economics.

Over the next two weeks, I will be setting out in five blog posts the alternatives on bank reform, on how and where to curb spending, on tax cuts and how to unleash the potential of wealth creators.  I will outline the post-monetarist approach that I believe we have long lacked.

For too long, even the slightest hint that we might do things differently has prompted team Treasury's pet pundits to write dismissively of those wanting "unfunded tax cuts". Or of the alleged hypocrisy of those wanting spending cuts in theory, but opposing them in practice.   This will not do. 

A change of policy is needed. Using this blog, I will set out some of my ideas on what the alternatives might be.

87 Comments"

It will be good to see Mr. Carswell's alternatives over the next two weeks/five blogs.