Thursday, 6 October 2016

Caretaker May has only one job - Brexit

I was quite pleased to hear Mrs May attack the dogmatic libertarians in her party yesterday. By this she probably means those who have a strong crossover with the Brexiteers on the Tory right. You know. Morons.

Right wing libertarians frown on any state intervention and regulation in general. The problem with our sorry lot is that the general principle becomes a red line. All regulation is bad and all intervention is bad. You cannot possibly have a grown up debate with people who think like this.

We've seen this nonsense during the Brexit debate - about the regulations on vacuum cleaner motors. As readers of this blog are probably aware, these regulations are in fact standards and they do make a lot of sense from the point of view of demand side management - which reduces the need for power stations and all the negative externalities that go with them. Left to their own devices businesses would not innovate - they would produce the worst designs as cheaply as they could for as long as they could get away with it. Intervention is necessary for the common good.

As a country the people have a right to shape and steer their environment and set the rules in which business can operate. Ideally we want as little intervention as possible and only as much as is needed. That however is a difficult estimation in an ever more complex world. Some activities have externalities and risks that must be weighed against others. Some things that normally do not need intervention sometimes do.

So government then becomes the deliberative process of deciding where to intervene and on what basis and for what outcome. To dogmatically insist that government should never intervene is a politically convenient position in that it means you can exist in a world where there is no complexity and there are only absolutes. Only tyrants and children think this way. It's a cop out.

What we do not want is intervention for its own sake and we do not want government creating distortions where none exist without good reason. And though we need regulation we need to ensure the regulation exists for the right reasons while still enabling us to get the best from human endeavours. The most basic guideline is "that which governs best governs least".

But now we are in a world where systems are becoming ever more elaborate and regulation is beyond the capability of politicians to properly scrutinise, we find that industry self-regulation within loosely defined parameters set by politics is the way to go. The less political involvement the better. That, though, changes the role of government from law makers to law takers.

What matters is that we have decent, intelligent and alert politicians capable of examining difficult and detailed propositions to ensure that we have good governance. We need our politicians to serve as goalkeepers. If we have libertarians who insist on little or no regulation then we simply don't get the benefits of good governance and that "free trade" they profess to be in favour of.

Put simply, libertarianism is a non-starter. Governments must intervene and though they intervene badly the only thing worse than intervention is non-intervention. This process is now largely described as managerialism - and we instinctively resist meddling for the sake of ideology. We have seen what socialists can do to economies by trying to impose their ideals onto a system. We do not need libertarians to tell us that socialism is a bad idea.

What worries conservatives though is that Mrs May appears to be parroting Ed Miliband who is very much a social interventionist. This is where I find I have some sympathy with social libertarians in that if you leave people alone they will organise themselves in their own way and will usually be better off for it. May, though, is a known meddler in peoples lives, she is an authoritarian and she does like telling people how to live.

The problem here is that by entrenching dogmatic social policies she could very well nullify many of the benefits of leaving the EU. What the UK needs is to be freed from a lot of the stifling social measures that don't add any real value. Moreover, none of this stuff is going to come for free. Needlessly expanding the size of the state when Brexit is already piling on the bureaucracy is madness.

This all stems from the narrative of divided Britain - and that the government needs to invest more in the regions - and indeed it does - but I have a feeling that leads down that Blairite path of throwing good money after bad to wholly counter-productive ends. May could well end up being the new Gordon Brown when we need a new Mrs T. She's throwing in the towel on fiscal conservatism and trying to spend her way out of problems. That never ends well.

But this all depends on what she does and what she can get away with. To a large extent I find a lot of sympathy with her rhetoric. If being a rich country if it means a permanent underclass of natives while we turn a blind eye to crony capitalism then that's no good at all. I am willing to suspend my scepticism just to see how her vision of an egalitarian meritocracy plays out.

Chances are, though, she will do as all well meaning politicians do. She will spend a lot of money, tinker around the edges, have one or two flagship accomplishments and then make room for the next caretaker. The next ten years will be chewed up by Brexit and that will define Mrs May more than anything.

For a long time to come we will still be operating under EU constraints and no miracle cures are to be found in the meantime. Not until we are free of the EU entirely will we see any economic renaissance. I have a feeling that any borrowing will serve to prop up the normal functioning of government as we see tax receipts declining.

What we heard yesterday, more than anything, was Mrs May putting her own personal stamp on the government sending a clear signal that Brexit does not light the way for an ultra-libertarian future - which is just as well since nobody was voting for that. If that's what leavers had in mind then they should have had a plan of some sort.

As much as Mrs May was signalling her distaste for the Tory right she was signalling to the world that big government centrism is here to stay. Though Sam Hooper is less than impressed I think it marks her as a shrewd politician. Brexit alone is as much radical change as the rest of the world can handle for now.

May will come a cropper by attempting to be all things to all people but for now she has bought the reassurance of those on the left who find themselves without any representation. With the referendum result being an even split and enjoying no mandate of her own she has to seek out a middle way. If libertarians wanted that buccaneering ultra capitalist Brexit then they needed to win by a bigger margin instead of pandering to Ukip.

In the end I think history will mark Mrs May as the manager who delivered a smooth Brexit free of ideological red lines. The unflappable caretaker. We won't see any real radicalism until we are free and clear of the EU and that won't be for a while yet. It may have to go far to the left before it goes back to the boom years. The underlying culture divide is as acute as the economic one. On that score Mrs May might well have hit the right tone by hammering nails into the coffin of the Cameron legacy.

All of this though is noise. The only measure that matters is how May handles Brexit. She can either deliver a safe transitional Brexit or inflict needless self-harm. If her shot across the bow of libertarians was a signal that she won't be including the Minfordists and the Redwoods in the new order then that marks her as a sensible lady. There is a time and a place for ideological crusades. This is not one of them.

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