Are we in a winter of discontent or not? I’m worried the Daily Mail is missing an opportunity to set the tone here, in its difficulty rediscovering this phrase. But I’m not a regular reader so I may have missed it. And since to my knowledge bin collectors haven’t yet gone on strike, there are few opportunities for photographing rubbish piling up in the streets. Perhaps with the nurses going on strike somebody will concoct a picture of body bags piling up.
How does the winter of 2022 shape up with that of 1978/9? Inflation then was just below 10%, which to a degree reflects the success of the Labour government reducing it from the 20%+ it inherited from the Tories in 1974. And how was inflation tackled by Thatcher in 1979? One of her first fiscal measures was to break a promise not to increase VAT. She promptly did just that—and electorally, four years later, got away with it (thanks to the Falklands War as luck would have it). A much mocked approach of the 1970s Labour government was to introduce the ‘Social Contract,’ in other words to agree that if pay rises were kept to an agreed level, then there would be price controls too. Such an approach now of course is (almost) totally anathema—not just for the Tories, but for Labour too. All agree that the market alone should be the judge of prices—although this time round we do have elements of a social contract with the government’s price cap on the unit costs of energy. Not all Tories like that—it’s a universally applied policy which disproportionately benefits the undeserving poor more than it does homeowners in Park Lane.
The problem for Labour is that it has been permanently scarred by talk of the winter of discontent, and I suspect of any mention of a social contract too. Its rhetoric reflects its philosophy, which is to say governments cannot control markets—this is not just a legacy of the perception that the 1970s Labour government was an abject failure about which nobody should be reminded, but also the New Labour embrace of globalisation, which would be the great free trade equaliser and leveller-upperer. The UK in this scenario was meant to maintain its economic prowess through the comparative advantage of its ‘knowledge economy.’ Like the Chinese couldn’t possibly catch up (I think there is a fair degree of racism caught up in assumptions about comparative advantage). New Labour was also scarred by Bennite attempts at industrial recovery. Meriden et al. It therefore had to introduce the notion of ‘we don’t pick winners.’ It’s one reason we stopped e.g. building ships. The loss of certain industries could be blamed on gold plated E.U. competition regulations. Still, France and Italy managed to carry on building ships. I wonder how that happened?
We live in a curious world where we’re told on the one hand that the state is powerless and on the other that it is doing everything that is necessary to save us. I wish they’d make their mind up and act accordingly. But we’re living with governments that have, for decades, demonstrated a kind of split personality. Not encouraging.