One of the most influential ideas of the past 30 years died this month…
One of the cutest criticisms of the last budget was that it was “Labor-lite” – the idea that the Coalition had turned it’s back on hard-edged conservatism in favour of something fluffier, friendlier and more chemical-ly-tasting.
And then over in the UK last week, the British Conservatives announced the manifesto they were taking to the next election, and there were hints of the same artificial sweetness.
The big sticks were gone and the bribes were back. And statements like, “We do not believe in untrammelled free markets,” and “We reject the cult of selfish individualism” are more Karl Marx than Margaret Thatcher.
And of course there’s Trump. It can be a bit hard to get a fix on where he’s at from week to week, but his election campaign was pitched solidly to the people that globalisation left behind – the people of rust belt America. He railed against the “elites” and promised to “drain the swamp” (before stacking his cabinet with some of the wealthiest, global-iest swamp monsters in America).
So whatever you make of the substance (and you never know in politics), there seems to have been a real shift in the branding. Conservatives pushed the envelope too far, and now they’ve seen that they need to meet people in the middle.
Is that right?
Maybe. It’s one way to read it.
I would actually say that while no one was noticing, one of the most dominant ideas of the past 30 years died, and now politicians are just trying to get away from the stench.
RIP: The dream of the free market.
The initial pitch was strong, I think. You don’t want government messing in things too much. In the economy in particular, government intervention tends to create rent-seeking, dependency and parasitic industries.
And so we should put government on a very strong leash.
“But who will look after us then?” the people cried.
“Don’t worry, the economy will become so much more efficient, that we will all have better jobs, more money, and a better standard of life.”
I think that was Thatcher’s pitch in a nut-shell.
But I can see why UK Conservatives are back-peddling now. And it’s not that the diagnosis was necessarily wrong, but the prescription sure didn’t seem to work.
These ‘untrammelled free markets’ didn’t create the golden good times they promised. Industries left and jobs went with them. The jobs that remained became less secure, and there was a shift away from full-time work to part-time and casual employment.
And that came with a personal cost. Across the world, mortality rates for men aged 40-60 have been falling everywhere except one place – rust-belt America. Communities there are being hit hard by substance abuse and suicide.
The rising tide didn’t lift all boats, as promised. Income in-equality grew and some boats got swamped. Other boats installed a fourth bathroom and became super-yatchts.
As a result, popular anger and disenchantment grew (gaining visibility through a decentralised media) – until it suddenly found an outlet in Brexit and Trump.
Boom.
Now, conservatives have realised that there isn’t any advantage to having their brand tied to these ruthless economic forces.
“Hang on, aren’t you the free-markets party?”
“Oh no no no. We do not believe in untrammelled free markets.”
And so suddenly we’re at an interesting cross-roads. If the doctrine of ‘free markets’ is dead, what takes its place?
Perhaps we’ll see a push-back to bigger governments. I hope not, but I’m not sure that’s what people are calling for anyway.
I don’t know if you caught this story last week. A town in Sweden has rejected a proposal for paid sex leave – the idea that people should be given an hour a week, on full pay, to go and have sex! A bonk on the boss!
(To boost the birth rate, apparently.)
But even in free-thinking Scandinavia, they said, actually, no thanks, we’ve got to draw the line somewhere.
I think (and hope) that people get that big governments are a problem. The diagnosis still stands. The question now is how we make a more human economy if we can’t trust ‘untrammelled free markets’.
For me I think it’s a problem of pace and scale.
Free markets work in the economists’ models because everything adjusts fluidly and automatically. Problems are solved as soon as they are created. Balance is restored. Harmony is maintained. There is peace in the Kingdom.
But people are actually much slower than money.
If my industry dies, I can’t just relocate to Townsville (or Budapest) at the drop of a hat. Retraining into a new field can take years. Unemployment can have a toll on your wealth and health that can take a long time to bounce back from.
So personally, I think there’s a role here for governments, not in being the provider of jobs directly, but in facilitating transitions. Helping humans live in an environment geared to the pace and scale of modern money.
That requires governments to be a bit intelligent and forward looking, so I’m not holding my breath. But I am hoping.
Because we’ve got to go somewhere. The idea that untrammelled free markets are always and ever good is dead. It doesn’t have any friends left.
It had a good run. But now it seems, it’s time for something new.
How do we make economies more human?