Richard Toye: David Cameron's history lesson (UK)
[Richard Toye is Associate Professor in the Department of History at the University of Exeter and the author of Gordon Brown and the credit crunch in historical perspective. In 2007 he won the Times Higher Education Young Academic Author of the Year Award for his book Lloyd George and Churchill: Rivals for Greatness. He is currently completing a book on Winston Churchill and the British Empire.]
During the Budget debate, David Cameron gave MPs a history lesson. The 'fundamental truth' he claimed, is that 'all Labour Governments run out of money.' He also argued that Gordon Brown 'can never be the future, because he doesn't understand what went wrong in the past'. But Cameron could do with a history lesson himself. In fact there is no such inevitability about Labour governments plunging into the red.
He did not, perhaps, mean to be taken entirely literally. No modern government of any party has ever 'run out of money'. Governments can always create more of it, albeit at the risk of reducing the value of the currency. Britain did come close to actual bankruptcy at the end of the Second World War, but was rescued by an American loan. If we consider all previous Labour governments in turn, however, it is clear that Cameron has made some serious exaggerations.
Ramsay MacDonald's first Labour government fell in 1924 because of a political scandal unrelated to the economy. Cameron may have a point in relation to MacDonald's second government, elected in 1929, shortly before the Wall Street Crash. In 1931, a financial crisis caused a cabinet split and the fall of the government. By modern standards, though, the projected budget deficit at the time - which even in the worst case scenario was a mere £120m - looks perfectly sustainable. It was the equivalent of about £ 4 billion in today's money; whereas according to the Chancellor, public sector net borrowing will be £175 billion this year.
When Clement Attlee's government fell in 1951 the economy was pretty healthy in comparison with 1945, but the Korean War was causing political and financial problems. Labour had split, with NHS-founder Aneurin Bevan resigning from the government in opposition to the introduction of prescription charges. Overall, historians have been right to label the Attlee era 'the years of recovery'. Indeed, had the government been more adroit in its timing of general elections - a skill that Brown also appears to lack - it might well have survived to take credit for the dramatically rising living standards of the 1950s.
On Harold Wilson's 1964-70 government Cameron is not far off the mark, given that financial crisis led to devaluation of sterling in 1967. But by the time of the election in 1970, however, the economy was not doing too badly. Devaluation was a wise move that aided recovery: exports rose and in the final half-year of the Labour government Britain's balance of payments ran a healthy surplus. Wilson's real mistake - aside, perhaps, from not devaluing earlier - was to sound too complacent. His claim that 'the pound in your pocket' had not been devalued was widely ridiculed....
Read entire article at http://www.historyandpolicy.org
During the Budget debate, David Cameron gave MPs a history lesson. The 'fundamental truth' he claimed, is that 'all Labour Governments run out of money.' He also argued that Gordon Brown 'can never be the future, because he doesn't understand what went wrong in the past'. But Cameron could do with a history lesson himself. In fact there is no such inevitability about Labour governments plunging into the red.
He did not, perhaps, mean to be taken entirely literally. No modern government of any party has ever 'run out of money'. Governments can always create more of it, albeit at the risk of reducing the value of the currency. Britain did come close to actual bankruptcy at the end of the Second World War, but was rescued by an American loan. If we consider all previous Labour governments in turn, however, it is clear that Cameron has made some serious exaggerations.
Ramsay MacDonald's first Labour government fell in 1924 because of a political scandal unrelated to the economy. Cameron may have a point in relation to MacDonald's second government, elected in 1929, shortly before the Wall Street Crash. In 1931, a financial crisis caused a cabinet split and the fall of the government. By modern standards, though, the projected budget deficit at the time - which even in the worst case scenario was a mere £120m - looks perfectly sustainable. It was the equivalent of about £ 4 billion in today's money; whereas according to the Chancellor, public sector net borrowing will be £175 billion this year.
When Clement Attlee's government fell in 1951 the economy was pretty healthy in comparison with 1945, but the Korean War was causing political and financial problems. Labour had split, with NHS-founder Aneurin Bevan resigning from the government in opposition to the introduction of prescription charges. Overall, historians have been right to label the Attlee era 'the years of recovery'. Indeed, had the government been more adroit in its timing of general elections - a skill that Brown also appears to lack - it might well have survived to take credit for the dramatically rising living standards of the 1950s.
On Harold Wilson's 1964-70 government Cameron is not far off the mark, given that financial crisis led to devaluation of sterling in 1967. But by the time of the election in 1970, however, the economy was not doing too badly. Devaluation was a wise move that aided recovery: exports rose and in the final half-year of the Labour government Britain's balance of payments ran a healthy surplus. Wilson's real mistake - aside, perhaps, from not devaluing earlier - was to sound too complacent. His claim that 'the pound in your pocket' had not been devalued was widely ridiculed....