Guardians of Britain’s prosperity aren’t foolish or corrupt

Later, from the safety of retirement, Denis Healey would call it a “pyrrhic defeat”. The International Monetary Fund loan to Britain in 1976 came with fiscal conditions that a Labour chancellor of the exchequer could accept only with a grimace.

Behind the hammy remonstrations, he relished the political cover for cuts he had tried to press on colleagues. The retrenchment, and his commitment to monetary targets, put an ailing Keynesian consensus out of its misery. Three years would pass before Margaret Thatcher became prime minister but Thatcherism, in some of its essentials, had begun.

And so had a period of sound government that may still be with us. In the 1980s, the state unclogged the economy and stopped co-governing with trade unions. In the 1990s, inflation was lastingly tamed and the euro elegantly dodged. In the noughties, investment closed the gap between private affluence and public squalor. With its blend of looseness and generous in-work benefits, Britain’s labour system, so dysfunctional in the 1970s, is now the surviving glory of a slandered Third Way.

Third Way

When unemployment dropped below 5 per cent last month, ex-ministers spread across three political parties and five decades of service could be excused a cluck of self-satisfaction.

They should certainly not wait for praise. The great coup of the anti-politics movement was the popular rejection of the EU in June. The next most impressive feat is to make it feel like a sordid apostasy to say what is plain: Britain has been governed reasonably well for 40 years now.

The fruits have not fallen to all. Those in low-paid work or no work at all, in deindustrialised towns and stone-dead resorts, cannot be begrudged their animus for the governing class and its liberal bromides.

Politicians overrated what education and training could do to prime these communities for new and complex kinds of business. They talked a better game about regional balancing than their policy levers, or even a passing acquaintance with British economic history, could ever warrant. In these places, memories of the pre-Healey world are romantic, not shiver-inducing.

Failure in the particular does not, however, establish failure overall. We know what that looks like: 20 per cent inflation, industrial pandemonium and a per capita income substantially lower than the average of France, Germany and Italy.

Tar and feathers

The time to tar and feather our rulers was the 1970s, when many in the troika of government, big business and organised labour really were insouciant about national decline as long as it preserved them as the corporatist powers in the land.

Since then, Britain has seen a recovery in wealth and prestige that looks inevitable only in retrospect. David Smith's book Something Will Turn Up, published last year, charts the change and shows how much it owed to provocative decisions and the hinge decade of the 1970s.

On rampant form, populists are currently having it both ways. They credit elites with an omnipotence that makes them culpable for all failures: the financial bubble before 2008, the underestimation of Britain’s lure to workers from an expanded EU, the Iraq war, the malaise in its coastal towns and rust belt. But gradual overall enrichment, falling crime and industrial peace are all fatherless achievements somehow.

Ask demagogues to account for the progress on these fronts, and the puppetmasters they malign suddenly become ceremonial nonentities who merely sit atop the impersonal tide of history. Steady growth in national prosperity is spun as the natural way of things. The elites are everywhere and nowhere, depending on argumentative convenience.

The double standard extends to the EU, which is simultaneously the source of all earthly nuisances and marginal to Britain’s convalescence from old economic diseases since joining in 1973. Many Eurosceptics believe two things that cannot be true at the same time: Britain can thrive on its own, and the people who decide everything that goes on within it are semi-corrupt fools. Each dose of happy news is cheered as proof of this country’s qualities in the face of so much downer talk.

But it must also prove that the establishment either determines very little or is made up of competent people of good faith, after all. Both theories are plausible but logic does not allow for a third: the well-run country under lousy management. Politicians, bureaucrats, central bankers and their institutions have done a reasonable job during the lifetime of the median citizen, who was born in 1976. Britons must face the truth about their elites, however pleasant it is.

– (Copyright The Financial Times Limited 2016)