Political commentators used to look at living standards, measured in financial terms, to try and explain the results of elections. This association of political fortunes with economic circumstances has now become conventional wisdom. And political parties have reinforced this presumption by claiming credit for improvements in living standards (if the governing party) or laying blame for deterioration (if the opposition). Government responsibility for determination of the country’s economic situation is allowed to go without saying. And yet, by allowing this, we, the electorate, are insulting our own intelligence.
Any British government is powerless when it comes to determination of international market prices for important necessities such as energy or food. Nor can it affect decisions about interest rates in the Eurozone or the United States. Or anything to do with China.
This is not to deny that government is a significant economic actor. Not only is the state responsible for providing the infrastructure within which both businesses and households carry on their everyday existence but it also arranges for delivery of health and educational services as well as disbursing alms to those whose ability to work for a living is compromised by mental or physical frailty (mainly the elderly). Altogether government accounts for about 40% of national income.
But for as long as sterling is maintained as a sovereign currency the context for government economic policy is determined by the exchange rate. Unfortunately, scandalously even (by defiance of the Nolan Principles), official economic analysis is developed in denial of this fact. See here for a summary of this situation.
Presenting the General Election as a choice in terms of economic policy is fraudulent. As regards economic policy there is nothing to choose between the main parliamentary political parties: the Government (Conservatives and Libdems) and the Opposition (Labour) are agreed that the analysis and judgements offered by the Office for Budget Responsibility should dictate the scope for public expenditure and taxation. To vote for any of these parties is to guarantee that the official assessment of the country’s economic situation goes unchallenged. Since the OBR’s assessments are based on a tragic misperception of the country’s economic situation it is not possible for a truly coherent and effective policy to be developed and implemented by any of these parties (whether alone or in combination). In these circumstances, to vote for any of these parties is to connive with a public act of collective self-deception.
Of course it’s possible to believe that economic policy is unimportant, or that other government policies deserve to be developed along certain lines rather than certain others, irrespective of the economic context, and that expressing a preference for one political party over another is justifiable in these terms. But I expect the economic context will be given priority by the parties. And expecting party place-persons to put citizens’ interests before the interests of their own party places seems to me a misplaced act of faith.
And in the context of a ‘hung parliament’ it also seems optimistic to expect that what any Coalition Government actually does will reflect proposals put to the public in any manifesto. For example: a Labour-Libdem Coalition Government would be likely to legislate for constitutional changes introducing state funding of political parties along the lines previously suggested by the Electoral Commission. Ed Miliband’s only significant reform of the Labour Party has been to base trade union funding on members’ decisions to opt in to political funding rather than allowing a system of default consent to operate: this reform was a pre-requisite specified by the Electoral Commission, and by adopting it the Labour Party removed the only major obstacle to the scheme previously officially recommended. Since these proposals would align state funding with electoral results (votes) all the minor parties likely to be represented in the House of Commons would assist in carrying the proposition. Also likely to be smuggled in with this change would be an introduction of proportional representation (probably in the guise of House of Lords reform). It is doubtful whether the introduction of these changes would involve a referendum: more especially so if it’s a Labour-Conservative Coalition. That’s not to say these are not sensible reforms, for which a credible case could be made: it’s just an example of the sort of thing the electorate should get used to being given by government (i.e. no choice), as coalition is more overtly established as the permanent political context.