Home > General Politics, Terrible Tories > What exactly is Conservative economic policy?

What exactly is Conservative economic policy?

I’m simply not clear on Conservative economic policy in relation to government debt.

Why is Cameron saying one day to business leaders  that there is no need for big cuts in the first year of a Conservative government, while on the very same day one of his top MPs is going on about the ‘need to get to grips with public finances now’?

Why is there a commitment to an emergency budget if there are aren’t going to be any significant cuts?  Would such a budget simply be about reducing corporation tax and therefore increasing the deficit?

Well, there is a track record for such economic stupidity by the Tories. 

Under Thatcher, cyclical borrowing costs caused by the Tory response to recession – itself largely driven by fear of how the markets might respond - continued to ensure that the structural budget deficit continued at more or less the same level for a further four years beyond the actual recession (see the graphs at page 7 of this IFS report).

And the Tories are trying to instill economic confidence with international investors?  Gawd help us.

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  1. January 31, 2010 at 4:07 pm

    It’s most likely the very same Keynesian nonsense Labour subscribes to.

  2. woodlandian23
    January 31, 2010 at 6:21 pm

    BenS.
    You are probably right.
    With both Monetarism and Keynesian economics completely discredited what are we left with?
    Its Socialism.

  3. January 31, 2010 at 6:44 pm

    I can’t think of how socialism has not also been discredited.

  4. January 31, 2010 at 6:59 pm

    I’d say it’s fairly obvious; spending cuts and increases in indirect taxation.

    Geoffrey Howe’s 1981 Budget is often referred as a precedent for the Tories, deflating during a recession. That included cuts and increases in indirect taxation, but it also included increases in direct taxation (Tory right wing & press would go ape-shit) and a windfall tax on bank profits (they’d be called Trots).

    The 1981 Budget has totemic status now among right wing, neo-liberals who regard it as “taking tough decisions that laid the foundation for the successes of the 1980s”. This is only “success” if you regard three million unemployed and helping to destroy manufacturing industry, as “a price worth paying” (© N.Lamont) for the rich to become richer.

    The 1981 Budget was hugely was unpopular at the time. Famously, 364 economists, of all shades, wrote to the Times: ‘There is no basis in economic theory or supporting evidence for the government’s present policies….The time has come to reject monetarist policies.’

    The Tories tanked in the polls and did not recover until after the Falklands War (the so-called ‘Falklands Factor’ is often forgotten today as a factor in the Tories 1983 General Election victory).

    Howe and the Tories have since claimed the 364 economists were wrong and he was right, “sowing the seeds for economic recovery”. In fact recovery was flimsy and insofar as it marked a ‘turning point’ was due of something the 364 economists could not have known: to wit, the Treasury, in defiance Tory monetarist orthodoxy of the time, was relaxing monetary policy.

    This, in the words of ‘stumblingandmumbling’: “unleashed an enormous – unexpectedly so – pent-up demand for loans. So consumer credit growth (and mortgage lending) boomed. Household borrowing therefore offset government saving, with the result that domestic demand recovered.”

    And why wouldn’t this work now?

    http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2009/11/2010-vs-1981.html

    When the present recession is a product of insufficient regulation on free market fundamentalists in banks and David ‘Dave’ Cameron says one of his principal policies with be “cutting regulations” you know we are truly In The Shit if the Tories get in in May.

  5. January 31, 2010 at 7:04 pm

    @BenS

    And how has socialism been discredited? We haven’t had anything nearly resembling it since the 1970s and if you believe, as some right wingers do, Nulabour to be “socialist” then where have you been for the past 13 years?

    You can’t blame this economic crisis on “socialists”, free marketeers did it all by themselves….

  6. January 31, 2010 at 7:08 pm

    In case you missed the article, Vinny, Paul’s query in the title was ironic. We know what their policies will be, or like you we have strong suspicions – but Paul was pointing out the inconsistency of Tories on the subject while they are trying to win votes.

  7. January 31, 2010 at 9:03 pm

    Dave

    Yes I did get the irony.

    Uno problemo, if New Labour sneaked a small victory, or managed to form a government with the Lib Dems how different would they be?

    The Mandelson’s, Millibands and Purnell’s would proclaim it Another Triumph for New Labour and it’s “aspirational” policies….

  8. January 31, 2010 at 9:07 pm

    Oh indeed. And you won’t find much disagreement on this blog. There would be some differences though, and some redistribution is better than none.

    However, until the Left outside (or inside) Labour gets its act together, a Labour government is the best we’re ever going to get. Worrying thought eh?

  9. RNM
    February 1, 2010 at 1:04 pm

    In terms of cold hard predictions I am a bit puzzled as to what the Tories will actually do.

    In a meeting just before Christmas, Larry Elliott said that despite all their rhetoric about being tough on the debt, the Tories aren’t stupid and know that slashing public expenditure would put us straight into deep recession again. So they won’t actually go ahead with the macho slash-and-burn stuff.

    On the other hand, I have it on reasonable authority that a Mr Finkelstein, who is close to the Cameron coterie, was bragging at a private function recently that the cuts are going to be terrifyingly deep and wide, even worse than what they are admitting in public.

    We need a bookie to open a market on this.

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