It’s as if the Tories would have preferred the economy to contract again as a stick to beat Labour with

By David Beeson

There was a great moment on a recent episode of the ‘News Quiz’ on Radio 4, when one of the panellists said something along the lines of “I keep wanting to vote Cameron, but then he opens his mouth and shows me again why I can’t.”

As it happens, I’ve never felt any inclination to vote for Cameron. To me he produces almost nothing but froth, and on the rare occasions on which he comes up with some substance, it’s so unappealing I wish he hadn’t.

A great example is all that stuff about recognising marriage in the tax system. The Tories always claim to want small government, but nobody is more intrusive. In particular, they can’t keep out of our bedrooms. Under Thatcher, it was Section 28 and their opposition to homosexuality, as though it was any business of the government’s. Now it’s marriage.

What on earth does it have to do with the taxation system whether we choose to get married or not? Let government collect the taxes it needs, and leave our sexual orientation and domestic arrangements to us.

The latest disaster area is the Tories’ response to the news that the UK is finally coming out of recession and that unemployment has started to fall. It’s really difficult to see how this can be interpreted as bad news, however shaky the recovery so far. Even so, the Tories and their friends in the media have been quick to whinge. It’s almost as though they would have preferred it if the economy had continued to contract last quarter and unemployment had risen still further.

Come to think of it, isn’t that exactly what they would have preferred? A stick to beat the government matters more to them than anyone’s well-being?

It’s true, of course, that the recovery is fragile and it has taken a lot longer to get going than we might have hoped. But Britain was disproportionately dependent on the financial sector, making a financial crash deeper and more painful here than in other countries. The government deserves to be criticised for not having done more to bring financial services under control – but can you imagine the row if they had? “25% of taxation comes from Financial Services,” we would have been told, “regulating the banks would be strangling the motor of our growth”.

In any case, Labour’s failure to control the banks hardly makes the Tories a preferable alternative. After all, they were the main architects, with Mrs Thatcher dutifully following in Ronald Reagan’s wake, of the disastrous deregulation of the banking sector that led to the whole problem in the first place.

So we have a weak and late recovery, but it’s a recovery all the same. The government deserves credit for getting us this far: it’s taken courage to brave the wrath of the City and the right wing press by maintaining high levels of public spending to get out of recession without the usual levels of bankruptcy or unemployment. Next, the recovery needs to be nurtured and strengthened, which again is going to need careful doses of public spending.

Anyone who’s complaining now needs to hope they never see what Tory spending cuts might do to choke off recovery. Then they’d have every reason for whinging.

Postscript:
One of the great recent moans about the weakness of the UK economy came from the fund manager Bill Gross, getting front page treatment in The Guardian for declaring that Britain’s economy is lying on “a bed of nitroglycerine”. When reading this kind of material, you just have to keep saying to yourself ‘fund manager, fund manager’ and then go and read the American economist Eugene Fama’s brilliant study of the profession. He shows that, on average, managed funds behave exactly like the stock market – in other words you’d do as well buying shares and leaving them alone as investing in a managed fund. Since you wouldn’t have to pay the high fees people like Bill Gross charge, you’d be better off.

Even when a managed fund performs better or worse than average, statistically any effect observed can be completely explained by chance. So fund managers are people who make a one-way bet with your money: the outcome for you is down to luck; the outcome for them is a dead certainty since they charge fees.

Bear that in mind when you read any of their pronouncements on economics. Or any other matter, come to that.

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