monty
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Actually Gordon Brown inherited a rather good economy from the Major government. The housing market crashed in 1995 but by 1997 things were well on track again. Don't forget that Labour kept the same economic policies as the Tories for the first couple of years and used the surplus to reduce government debt.
I don't buy this idea that Gordon Brown is the messiah for 'delivering' a good economy. He's done a number of things well. Firstly he freed the bank of England to set interest rates independantly of political whims. Secondly he maintained a reasonably liberal economy devoid of the political protectionism seen in much of Europe. This second point is particularly poignant and I'll elaborate on it later.
Where I don't think Brown can take any credit however is the prosperous state of the global economy. Since Labour took over in 1997 there hasn't been a single major economy fall into recession. Add in the rapidly growing developing economies of China, India, Mexico, Brazil, Russia etc and globally the past decade has been very prosperous. To therefore take the praise for Britain simply following the status quo is somewhat disengenuous.
Now then, back to the liberalised economy. The Thatcher government opened up the City in the mid 80's in the so called 'Big Bang'. This helped to establish London as the financial capital of the world. The past decade has seen a vast increase in merger and aquisitions, with many British companies being picked up by overseas firms. With London at the forefront of the financial community this has led to booming revenues for the City. Add in the vast amount of cheap credit flooding the world markets and its a boom time for financial centres, with London riding at the head of the pack.
So, it's my belief that it's that this has driven our economy over the past decade with large scale immigration also playing a big part. What Gordon Brown has done is use the growth in the City to spend (and then spend some more) in the public sector. He has splurged like no chancellor before him (and hopefully after him). Unfortunately the vast majority of this extra money has gone on wages and pensions so the real improvements in public services have been nothing like what could have been achieved given the increase in funding given to them. His oft. touted record on employment looks far less impressive when you take into account the proportion of public sector jobs (ie non wealth creating) and the huge increase in people claiming incapacity benefits (who don't appear as unemployed). It is often said that employment isn't a measure of an economies success but rather productivity. Unfortunately Brown seems to be an economist of the Keynesian school and as such uses employment as one of his key barometers. it would be nice to see productivity used as a measure far more than is currently the case, especially in the public sector, but unfortunately as long as public spending is used as the political punching bag that it is at the moment it's unlikely any party will be able to demand efficiency improvements without the other shouting them down over 'failing to invest' in public services.
It's also worth noting that in the past few years the economy has been slowing notably. In the last budget, Brown predicted growth of 3% and we achieved just 2%. Government debt is rising and is soon set to top the 40% of GDP target Brown himself set, and it's also likely that the next chancellor will be forced to break his so called 'Golden Rule' of borrowing only to fund public spending (although to be honest this rule was broken a while back only for the goal posts to shift slightly). Now again it could be argued that Mr Brown can't carry all the flack for this but it's hard to look at the doubling of taxation under his watch as doing anything to improve our economic outlook. He's milked the cash cow for a decade to fund his public sector spending splurge and the cow might be starting to run dry. If you look at the economy he inherited with the one that Alistair Darling will inherit today it must be said that todays is far more perilously positioned. Inflation is creeping up, house prices are at ridiculous levels and public indebtedness is at a precarious level. With economies in China and America showing signs of slowing things are on something of a knife edge.
In answer to your questions aimed personally at me, I don't claim to be an expert in anything, but I do take an interest in economics and political philosophy so like to think that I'm justified in having an opinion on such matters.
With regards to taxation, yes, I do believe that people should pay for as much of the things they use as possible as I believe that we each know how to spend our own money best. Whether that means zero taxation I'm not so sure. I believe the state has a role to play in defence related issues and possibly emergency services. However this is a libertarian utopia which I don't expect to ever see fruition under our current democratic system as I'm not convinced the general public are politically or economically astute enough to ever buy it. There is however a strong case for low taxation societies. Flat taxes are growing in popularity around the world and nations such as Ireland and Hong Kong have done very well on the back of low tax economies. Indeed it was the classic liberal philosophy of minimal government intervention that led to the creation of the United States.
Norman Lamont.
(follow and digest that