Wednesday, October 20, 2010

Strategy, Spending and the Tea Party

The emergence of the "Tea Party" protest movement in the United States was both natural and even desirable. The positive side of things is that new people have become engaged with the political process in a way that they were not before, and indeed the break down of the American financial system has left many Americans with a lot to protest about. Yet, the initial spur to the foundation of the movement- a resentment of bloated government expenditure at the Federal level and a determination to impose stricter limits on Federal government power has become so confused with the social conservatives positions taken by such as Sarah Palin as to render the movement essentially incoherent.

Social Conservatives are- by definition- anti-Libertarian. So it is hardly surprising that time after time the relatively inexperienced candidates supported by the Tea Party Movement have not been able to provide consistent answers to questions that are put to them. As the mid term elections draw night it now seems clear that this lack of coherence will reduce the gains that the Republicans have been hoping to make at the expense of President Obama's Democrats.

Yet the questions that the original Tea Party agenda was asking of the American political establishment remain important and valid. The fact is that on both sides of the Atlantic, the question of where to place the limits of state power is of increasing importance- especially as it becomes clear that the state can no longer fund activities that have hitherto been taken for granted as belonging to the public sphere.

In Europe, the gathering storm of protest in the face of significant reductions in government expenditure does not answer the critical question of why we intend to burden future generations with the costs of our own failure to provide for our welfare in retirement. The baby boomers- retiring in their fifties, but living in many cases into their nineties- have lived lives of ease that were unimaginable to their parents, and it seems will be unimaginable to their posterity. More to the point they have failed to fund the decades of retirement they now regard as their right.

The result is that ever more state funds have been diverted to funding the retired at the expense not only of those in current employment, but also at the expense of necessary strategic projects. The physical infrastructure of both the US and the UK has not been maintained, and new projects such as high speed rail links, which improve the efficiency of the economy for the future have essentially not been funded at all. As China benefits from massive investment in strategic infrastructure, the US and especially the UK fall ever further behind- because of the burden of funding the bankrupt pension system.

The demands from the British Labour Party to continue the current levels of government expenditure are simply demands to continue stealing from the future to pay for the present. It is wholly irresponsible to maintain "expenditure" when long term strategic investment has had to be cut to the bone.

Thus the problem is not just setting the limits of what the state budget can do- we already understand that we are at or close to those limits. The bigger issue is what the mix of state activity should be. The American Conservatives seek restrictions on behaviour they see as aberrant- gay marriage etc.- and demand that the state actively support causes they see as moral: "the family" etc. British Socialists insist that current expenditure should be maintained, in order to maintain the current level of consumption based economic activity. Yet American Libertarians have a far more consistent approach of limiting the state role, regardless of any given "moral" agenda, and British Liberals would argue that we must make expenditure sacrifices today in order to fund strategic expenditure for tomorrow.

If we continue to allow unfunded pension commitments to grow, then nothing: not strategic projects nor current expenditure can be afforded. We must stop paying for today by leaving tomorrow unfunded- and the sacrifices that we need to make to do this will be substantial.

I suspect that the American Conservatives have already undermined the Tea Party, and although gains may yet come for the Republicans, the real debate is being lost under a welter of Conservative hypocrisy. In the UK we must avoid the distractions offered by Labour and not only reduce government expenditure but also substantially restructure it.

2 comments:

Lord Blagger said...

More to the point they have failed to fund the decades of retirement they now regard as their right.

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Lots have funded it. However the government didn't invest the money it spent it. No compound interest, no fund, and the next generation when it really gets told the truth will say we ain't going to be a mug in a ponzi.

Ian R Thorpe said...

I think you "misunderestimate" the strength of anti - Obama feeling in the US Cicero. And it is not related to his colour as his supporters would have us believe.

I was looking at the polls on Politico earlier today and if they are anything like accurate I think the Republicans will be very pleased with the outcome.

As for our lot, unfortunately the election came too soon for the Lib Dems, another year and Labours chickens would have come home to roost next to those of the 1979 - 97 Conservative financial short - termist regime.