Thinking about May 2015

Posted on

I am a member of an email based discussion group that considers a wide range of new economic issues. Post the Euro elections there has been discussion on politics in the run up to the 2015 general election and I made a rare intervention in the group's discussion as part of that debate. I thought it worth sharing more widely:

This has been a fascinating discussion and so let me make a rare outing in this forum.

I start by saying I am not a member of any political party and whilst very obviously left leaning I actually make my advice available to any non-discriminatory party that asks for it – and most have. That provides interesting opportunities for discussion and lets me see most politicians as being the same flawed human beings as the rest of us are.

But there are bases for differentiation that I think we have to apply if a choice is to be made and as far as I am concerned the issue is not past record, or to some extent stated plans, but the expectation of what a party might do if faced with what might be reasonably predicted to occur during the next five year period for which they might govern, or at least influence policy.

In this respect there are three predictable crises that seem to me to be of significance over the next few years. The first is the crisis many households will face when mortgage rates rise. The second is the crisis that will occur when the housing bubble bursts, which may or may not be related to the first crisis. And the third is the resulting banking crisis as banks plunge into loss making on loan portfolios, yet again. You could choose other crises: there will be a Euro crisis. There will be another massive shortage of tax revenue. There will be problems as a result of resolution of the Scottish independence debate. But three issues will do, made easier by the fact that they are related.

The reality is that – even as Christine Legarde and Mark Carney agree – we have only papered over the cracks of the banking crisis. So what will happen when it re-emerges and what will the priorities be? That seems a basis for reviewing the match between a party’s principles and my own.

First, will the party acknowledge the problem exists before the election? If not – and I think all three are likely so the expectation of opinion being offered is a reasonable one – are they fit to govern?

Second, where are their priorities likely to lie? With those unable to make ends meet? With the householders who want to maintain house prices come what may? With bankers? Or will there be a willingness to intervene this time for an ordered and relatively soft landing in which the foundations of real reform are laid? In other words, will this party waste this next crisis, or not?

And third, is there a long term vision to rebuild from this next, in my opinion nigh in inevitable, crisis? If yes, then all well and good. If no, why vote for that party, even if pragmatically they may gain power?

They are imperfect and incomplete decision criteria (I ignore the environment, for example), but all are. But it’s a way of looking at the issue at a personal level that also informs policy debate, and that’s why I thought it worth lobbing it into the ring.