The Tory / DUP Arrangement

I hold no brief for the Conservative Party. However if I were a Labour supporter right now I'd hesitate to accuse anyone too loudly of friendship with terrorists. Pots and kettles spring to mind.

As an economist I'm naturally concerned about the public finances. On the other hand in respect of the agreement between the government and the DUP we are talking about finding an extra £1b over an extended period as opposed to the Labour policy of finding £50b. Unsurprisingly I'm less exercised by the former.

The inescapable fact is still that the crash of 2008 ruined the public finances and since then we've only partially recovered. The National Debt is unmanageably high and we're adding to it every year rather than reducing it. The so-called austerity policy aims for nothing more dramatic than ceasing to increase National Debt by 2025, in other words we're already allowing ourselves another 8 years of living beyond our means for which we expect our children and our children's children to pick up the bill.

I accept of course that some debt-financed public investment will lead to growth, though usually public investment is less productive than private investment. A certain amount of public investment in NI would have been needed anyway in order to maintain a frictionless border after Brexit. At the moment I don't know whether that's included in the £1b or not.

I don't accept that large scale running up of debt to finance public consumption is a wise course. Like any public body the NHS for one has extended its remit well beyond treating and preventing sickness. When we can't pay nurses properly we have no business providing free fertility care for example. A reassessment of NHS priorities is overdue.

The same would seem to apply to local authorities which neglect basic housing yet seem able to finance all sorts of special interest groups.

We don't need more government, we need better.

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The Devil You Don't Know

I’ve been trying to think back to the old days. Were those of us who were enthused by Gene McCarthy’s ‘Children’s Crusade’ as ill-informed as the youth of today? Did we really think, back in 1968, that you could have everything for free?

Do you know, I don’t think we did. We did tend to remark that we’d rather be red than dead, which still chimes with Jeremy Corbyn’s attitude today, but in those days the Keynesian idea was that you really could restart economic growth by deficit financing.

Around 1976, as I recall, Jim Callaghan announced to the Labour Party Conference that spending your way out of recession only led in the long run to inflation. There are limits. You cannot indefinitely borrow money from your children to finance the living standards of today.

In the last twelve months we’ve seen Bernie Sanders in the USA, Jean-Luc Melenchon in France and Jeremy Corbyn in the UK each enunciate their conviction that these issues have not really been resolved conclusively, and we’ve seen a new generation of enthusiastic youth convinced they have found a new answer rather than a recycled intellectual blind alley.

I do hope I’m wrong, but I have a nasty feeling the dragon of inflation is not slain but only sleeping.

Minority Government Options

I understand the distaste in some quarters for a government to be supported by the DUP. But consider please what Scots would have to endure if Labour were to do a deal with the SNP. 63% of us have just voted against the SNP, sending a very clear message that we don't want another referendum. Would Labour give them one anyway in order to get into government?

So far as I understand it there is no threat of a CON + DUP coalition, the proposal is for a 'confidence & supply' arrangement. This does not involve importing DUP social policy into mainland Britain. Almost certainly, I should have thought, the price they will exact is a soft border with Eire after Brexit.

When eating with the devil, use a long spoon. Of the two deals with two devils likely to be on offer in the short term, I'm inclined to feel one of the alternative spoons needs to be substantially longer.

Fortunately the Northern Irish peace process has two referees not one. The role of the second referee is automatically strengthened when the NI Assembly is suspended and I suspect that any error by referee one would very speedily result in an appeal to referee two.

Secondly the price likely to be demanded by the DUP (see above) is not politically controversial in NI as far as I know. No-one is likely to complain if they extract this concession. Note that it is a big concession. If you must have agreement on the NI border then you cannot carry out any threat to walk away without a deal.

Thirdly, should anyone ask why Unionist Scots are afraid of another referendum given they should win it easily, I reply that no-one who did not experience the gut-wrenching unpleasantness of our last referendum can possibly understand. We are trying vainly to rebuild our community with the threat of another vitriolic campaign constantly hanging over our heads like the sword of Damocles.

Fourthly, as I've said before, referenda settle nothing. The losers never accept the democratic verdict and go on campaigning as though nothing had happened in the hope of wearing down the majority will by sheer importunity. Frankly I'm with Brenda from Bristol. We've had enough!

What we actually need is a grand coalition in which the two large parties come together for the duration of the Brexit talks and sort out a common British negotiating position.