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The leftist who saved Britain

Both Blair and Biden ceded power to left wing rivals; only one was a success…


This article is taken from the February 2022 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issue for just £10.

Gordon Brown celebrates his 70th birthday on 20 February. My guess is he will find a purposeful way to do that, perhaps by re-reading some of the notes John Maynard Keynes left in the Treasury’s archives, as Gordon was fond of doing during his reign over British economic policy.

Brown got many things wrong, among them the idea that he could somehow bring an end to “boom and bust”, and the belief that he could restrain his impatience with lesser mortals to become a completely successful Prime Minister. But on the most important issues — the need for an independent Bank of England, whether Britain should retain control of its financial and economic destiny by retaining its own currency, how to save the international banking system from collapse, who to select for important jobs — he got it right.

Brown relied on a combination of his formidable intellectual powers and sharp political elbows

Brown gained control of British economic policy from the Prime Minister in much the same way as Bernie Sanders gained control of U.S. economic policy, giving us two examples of a nation’s more centrist leader delegating economic policy-making to a more left-leaning colleague. For Britain it is an example of a happy outcome; for America, not so much, at least not yet.

Some time in 1994 Gordon Brown and Tony Blair cut a deal. Gordon would not oppose Tony for the Labour Party leadership, and Tony would cede control over economic policy to Gordon. Neither man gave up very much, since Brown would have lost a leadership fight with Blair, and Blair had little interest in economic policy. Some time in 2020, Joe Biden cut a similar deal with Bernie Sanders, his by-then defeated rival for the Democratic nomination. Biden would cede control of economic policy to Sanders, and Sanders would urge his unhappy supporters to abandon their sulk and campaign actively for Biden.

Biden had nothing to lose. He had no fixed economic agenda, and no real understanding of how a capitalist economy works, and much to gain from Sanders’s support. Sanders had nothing to lose — his choice was between exclusion from making policy against a gamble that, with his hands on the policy-making machinery, he could convert the American economy into an entitlement state along the lines of European social democracies.

In the end, Blair came to realise that Brown interpreted his control of economic policy-making to allow him to refuse to discuss budget plans with the Prime Minister. He also realised that Brown was a less centrist politician than he was and, worse, had a different notion of the date at which power-sharing would end and Blair would step down.

Years later, Biden came to realize that Sanders was far to the left of his own centrist position and was skilful enough to force Biden to slide left lest he lose complete control of his party. Still, after three decades chasing the Democratic nomination, a quest that nearly stalled when he was caught stretching the definition of the Special Relationship to include permission to plagiarise a speech by Neil Kinnock, it was now or never to occupy the Oval Office — even if that meant supping with a former opponent.

The consequences of those power-sharing deals reverberate today. Brown did become Prime Minister by wearing Blair down and prompting him to seek a better and richer life than he had at Number 10, given the increasingly unpleasant war with Number 11. But not before accomplishing what few Chancellors could have accomplished: with the help of Ed Balls, now a chef and a dancer, he prevented Blair from trading in the pound for the euro.

Had Blair won that battle, which he saw as essential to obtaining Britain a seat at “the top table of Europe” (and perhaps for himself the presidency of Europe at some point), Brexit would have been impossible. The hurdles to achieving an escape from the EU bureaucracy would have been insurmountable had they included the resuscitation of an independent currency.

Brown relied on a combination of his formidable intellectual powers and sharp political elbows, and on Balls, to develop tests to be met for adopting the euro, tests that Britain could not possibly meet. Brown realised what Blair could not, or did not, deem as important as that top-table seat: the economic cycles and structures of key British and European economic sectors are out of sync, as a result of which EU fiscal and economic policies would often prove disastrous if applied to the UK economy.

By way of proof, Brown presented his cabinet colleagues with a series of excellent studies of important sectors of the British economy, and if recollection serves delivered the several volumes to them on the Saturday preceding the Monday on which they were to vote on the question so they would have uninterrupted time to study the data and conclusions.

Gordon’s personality might not have been for all markets

The evidence more than suggested that if Germany, calling the shots in Europe, decided austerity was just what its economy needed at a time when the British economy needed a deficit-fuelled stimulus, a UK recession would result. If you doubt that could happen then ask any Greek finance minister.

In America, Sanders’s drive for massive spending on child credits and other entitlements, at a time when red ink is flowing over the nation’s ledgers, is one of the several factors contributing to an inflation rate of 6.8 per cent, the sharpest spike since 1982 (closer to 5 per cent if you look to the “core rate” that excludes food and fuel and is of relevance only to those who neither eat, nor drive, nor heat their homes).

In November, voters are deemed likely to react by handing control of one or both houses of Congress to the Republicans. In which case Sanders would lose his hold on economic policy, and Biden will spend two unpleasant years unable to enact his agenda, perhaps working with his party’s chieftains to find a more plausible successor to challenge his woefully inept vice president for the Democrats’ presidential nomination in 2024. As Blair came to regret delegating economic policy to Brown, Biden might come to regret delegating it to Sanders. To be fair to Bernie, Gordon had greater control of tax policy as Chancellor than Sanders has as chairman of the Senate budget committee.

For Americans, Brown’s successful effort to save the pound and set the stage for a successful Brexit matters less than his performance during the international financial crisis brought on by the collapse of Lehman Brothers. As the magnitude of the crisis unfolded, Brown “ordered a bank rescue that became a model for shoring up financial systems”, as The Guardian put it, in this case an accurate rather than merely partisan appraisal. Just as he had recruited Ed Balls to help save the pound, so Brown recruited Shriti Vadera (now Baroness and chair of Prudential PLC) to cobble together a series of bank-rescue packages, including the £37 billion partial nationalisation of Lloyds banking group.

Gordon’s personality might not have been for all markets, but it surely was one that attracted the sort of tough-minded talent that could stand up to his relentless questioning and impatience. It was Gordon, after all, who not only recruited Balls and Vadera, but made it possible for the estimable economist John Vickers (now, Sir John, warden of All Souls) to take the reins of the leading regulatory agency and forge a tough but sensible competition policy favoured by Brown, who also backed efforts to criminalise cartel behaviour.

A living standard more luxurious than that of a dour Scot

It does not take a particularly astute reader to recognise that I have a certain personal fondness for Gordon Brown. He treated my objections to some of his policies with respect. When we debated whether his tax policies were consistent with the teachings of that Great Scot, Adam Smith, I talked The Wealth of Nations and he The Theory of Moral Sentiments. The debate arena Gordon chose was not exactly a level playing field — the University of Edinburgh — but he did not press that advantage over this foreigner and, worse, a devoted Thatcherite.

I do recognise that my personal contacts with Gordon might be, and probably are, tilting my policy comments in his favour. But I am not by inclination a hagiographer. Brown made life unnecessarily miserable for Tony Blair, doing everything short of stringing barbed wire between Number 10 and Number 11.

He did not fully understand that many of Britain’s most productive entrepreneurs were driven by a desire for a living standard more luxurious than that of a dour Scot, and would flee high taxes. He might have been too tight-fisted when it came to defence spending, as Field Marshall Lord Guthrie contends, although Brown did approve funding for two aircraft carriers. In my view Brown relied too heavily on NHS bureaucrats to do the right thing because it is the right thing, rather than create economic incentives to induce efficient, humane behaviour.

No matter. At a time when coherence is in short supply among the political elites, when ad hockery substitutes for steady, considered policy-making, when Britain needs a viable fiscal policy to cope with the wreckage Covid has made of the nation’s finances, it would be rather comforting to hear both of Brown’s signature sounds — growls and hearty laughter — echoing from the Treasury, while he browsed the library to discover whether Keynes had left some notes that might point the way to a prosperous future.

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