Close This site uses cookies. If you continue to use the site you agree to this. For more details please see our cookies policy.


Type your text, and hit enter to search:

Economic policy and morality

The direction of economic policy matters

It is amazing that the economy is not attracting more attention in this election campaign, despite the focus in the last leaders’ debate. Not just that, but the nation is missing out on a great moral debate. In the years to come we will all in various ways have to pay the price for the financial crisis and subsequent recession. There is still great outrage in the country about what happened and about the way the banking sector, having driven the economy to the brink and been bailed out, is now continuing as if it was ‘business as usual’. The outcome of this election matters when it comes to our economic future.
The moral questions raised by the greed and lack of concern for the common good in the banking sector were never answered satisfactorily. All agreed we needed a return to values in financial life. Yet more reform is required. The three main parties have policies on this. CSM supports the global levy called for in the Labour manifesto, for example.
However, there is another moral aspect to consider when thinking about economic policy. That is the focus on jobs. One of the problems with the last Conservative governments was that unemployment was considered a ‘price worth paying’. It was indeed paid – but in broken families and communities. The divorce rate peaked just after the 1980s and 1990s recessions – both under Conservative government. David Cameron says he believes our country is a ‘broken Britain’ but he shows little sign of having learned the lessons of the past. Many of those communities he has in mind got that way during those two last recessions. Such was the scale of the problem that Christians campaigned for action to fight urban poverty. The Church of England published a report, Faith in the City which was rejected by the Conservatives but did lead to the Church redistributing its own income to poorer areas.
It seems that only Labour is really emphasising the fight against unemployment. Unemployment is well below predictions last year (some said up to 4 million but we have unemployment around 2.5m). There are many reasons for this but one key reason is that Labour has focused policy on economic recovery and measures to help people find work. Such policies do not occur by accident. There is a good economic case: it is more efficient for someone to be working during a recession than out of work and receiving benefits. The moral case is there too.
The price of the banking crisis was paid in particular by some who did lose their jobs. For these people, who were mainly on low or middle income jobs in the first place, Tory rhetoric that ‘we’re all in this together’ rings hollow indeed and especially when combined with Conservative proposals to cut inheritance tax for the wealthiest. That is not the only inconsistency in Tory economic policy. In times like these, a shaky grasp of economic policy is dangerous.
Labour’s policies focus on securing the recovery, financing future growth through high tech and green businesses; funding infrastructure to improve our productivity (eg a high speed rail line); and include a guarantee for a job or training place for young people out of work for six months. Labour will toughen shareholder voting on executive pay and tighten bank regulation. Meanwhile, it has a firm commitment to halve the deficit over four years, including saving £20bn a year by 2012-13.
The details matter. But so does the direction. This cannot be separated from moral concerns. Christians cannot put their faith to one side when thinking about our economic future. The priorities are important. The moral compass at the heart of each party’s economic policy should be studied carefully.
This article was first published on the Christian Socialist Movement website, on 28 April 2010.


Christian Socialist Movement, 28 April 2010, 28/04/2010

Not an easy task given uncertainties, especially if energy and commodity prices do fall later in the year. Ultimately, radical economic reform required.
Central banks are struggling to head off general inflation while dealing with price shocks that will be negative for growth. They waited too long, which has made their tasks more difficult.
The Bank of England has raised interest rates, but that does not mean it has been most effectively managing inflation risks.
The Bank should signal it will act if higher prices look likely to translate to higher inflation rate.
The IMF's Fiscal Monitor is actually quite radical.
Spare a thought for finance ministers, and the opposition counterparts who aspire to replace them. The conventional wisdom was that they should at least make an attempt to follow fiscal rules. Now, there are no rules.
My letter in the Financial Times on the need for a framework for economic policy decision-making.
Responding to Brian Griffiths' article in The Article on the risks of inflation.