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

The Daily Telegraph - Business - - Business Comment - Jeremy warner

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

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