We need relevant fixes, yet Boris looks instead to FDR for solutions
Tory leadership’s citing of Roosevelt as an inspiration shows just how far to the Left it has now drifted
Boris Johnson, the Prime Minister, and Michael Gove, Chancellor of the Duchy of Lancaster, have discovered a new political hero. Forget Churchill and Thatcher; give it up instead for Franklin D Roosevelt. FDR, for heaven’s sake, who is still quite widely regarded on the American Right as the closest the US has ever come to having a full blown socialist as president. Where to start on this one?
Why indeed are we even talking about FDR – who must have been about as familiar to the good people of Dudley, where Johnson gave his “build, build, build” New Deal speech yesterday, as Keir Starmer is to Middle America – when the country is still mired in lockdown and struggling to find a way out?
Chaos over air bridges, renewed closure in Leicester, test, track and trace still woefully short of what’s required, confusion over when and how schools are going to reopen, an incoming tsunami of bad debt and job losses – are there not rather more pressing matters to dwell on than some kind of ill-defined, Rooseveltian vision of reform and British renewal?
We obviously all need to keep our spirits up at times like these. To dare to dream of a better future is only natural in the depths of a crisis. But can we please focus on finding solutions to the terrible mess we have created for ourselves before relaunching the Conservative Party’s pre-existing “levelling up” agenda. Things have changed somewhat since this was written, so much so that it now seems almost wholly irrelevant. What’s needed are quick, practical fixes, not largely meaningless appeals to the spirit of FDR.
If you are going to draw inspiration from past political titans, it is in any case as well to know something about them first. So let’s begin by exploding a few myths around Roosevelt, Thirties America, the Depression, and their relevance to contemporary Britain.
In a speech at the weekend, Michael Gove said: “I defy anyone to say the scale of the challenges our governments face today are lesser than those faced by FDR in 1932, or the scale of change required is lesser as well.” It’s true that the size of the economic contraction is broadly similar to that of early Thirties America, but otherwise the comparison is complete nonsense.
The Great Depression was caused by a stock market crash and parallel banking crisis in which millions lost their savings. This in turn caused demand to plummet, unemployment to surge and prices to collapse. Today’s contraction is wholly different. It is caused by the decision of multiple governments forcibly to close large sections of their economies down in response to a pandemic. The shock is not so much to demand, though that may come if we don’t get a move on in opening up our economies again, as supply.
The importance of the New Deal in getting the US out of the Great Depression is in any case much exaggerated. We’ll ignore the fact that in today’s money, it was hugely bigger than the miserable £5bn of additional infrastructure spending Mr Johnson announced this week. Rather more important in restoring US growth was stabilising the banking system, coming off the gold standard, and reversing the ill-judged protectionism of the previous administration.
Even Keynes didn’t think that Roosevelt’s New Deal ended the Great Depression: “It is, it seems, politically impossible for a capitalistic democracy to organise expenditure on the scale necessary to make the grand experiments which would prove my case – except in war conditions,” Keynes remarked of it.
Growth did indeed start to come back, but it later stalled again after
Roosevelt ramped up taxes to pay for it all, including the 1935 “soak the rich” Revenue Act, which raised the marginal rate of tax on millionaires to 75pc. It wasn’t really until the economic dynamo of the Second World War came along that full employment was restored. Once it had come off the gold standard, Britain by contrast had a rather good Thirties, enjoying the fruits of a number of new, high growth, consumer led industries.
That today’s Tory leadership should cite FDR as an inspiration demonstrates just how far to the Left it has drifted in attempting to rediscover its “one nation” roots. Just as Blair shifted the Labour Party to the Right in reaching out to prosperous, metropolitan types, correctly figuring that the Left had nowhere else to go, so too does Johnson appear to be doing the same the other way around in answering the demands of his new Brexit voting, “Red Wall” constituents. Thatcherism it is not.
The intellectual and economic confusion at the heart of this political contortion is already there for all to see. In response to the freewheeling ways of the Twenties, Roosevelt introduced myriad labour market protections, bolstered the power of the unions, and hugely increased banking, securities and agricultural regulation. He also presided over a massive expansion in the bureaucracy of government agencies. Is this not the very reverse of what we are meant to be leaving the European Union to pursue? It’s all a long way from the aims of the Vote Leave campaign.
You cannot have both deregulation and much higher levels of state interventionism, or both a low tax and big state economy, yet it is this kind of all things to all men fusion of Rooseveltism and Thatcherism that Johnson seems to aspire to. Who’s going to pay for the “New Deal” he promises, or for the unbridled expansion in healthcare, social care and training the Government is committed to, if it is not through taxes?
The only thing that truly unites FDR in 1932 and the Johnson Government in 2020 is the promise of change, and the sense of national crisis that can sometimes make it possible.
Yet in addressing the Great Depression, FDR surrounded himself with some of the greatest brains in America, and acted accordingly. The UK Government’s back-footed approach to the pandemic doesn’t exactly inspire confidence that it can do the same. With the July 4 easing of restrictions in mind, there was reason to think we would soon be waking up from the nightmare of the past three months, but now we seem to be going backwards again, all hopes of a V-shaped recovery left trailing.
As I say, there is no comparison between the Great Depression and today’s self induced economic collapse, but there soon will be if we carry on like this.
Singing the praises of Franklin D Roosevelt, pictured with Winston Churchill in Casablanca in 1943, is at odds with Tory values