The essence of the matter is how can we explain to people the good times are gone and a new national direction is necessary. This is going to be very unpopular. The messenger is very,very likely to get shot as it were. Paul has posted on his blog to take the matter forward but I think it would be best to concentrate the discussion at Duncan's, otherwise we'll all be flying hither and nither to follow the debate.
So all I intend to do now on this site is reproduce three quotes I've used before which give some clue as to how very bad the economic future might be even if we do climb out of recession. I think everyone should read them.
John Lancaster in the LRB:
"....the cost of the financial crisis is going to be paid not over a few years but over a generation, we have a perfect formula for a deep and growing anger. Expectations have risen a lot, over the last three decades; that’s going to have a big impact on how furious people feel about the hard years ahead. The level of future public spending cuts implied in Darling’s recent budget – which included the laughably optimistic idea that the economy will grow by 1.25 per cent next year – is greater than the level of cuts implemented by Thatcher. Remember, that’s the optimistic version. If we’re lucky, it won’t be any worse than Thatcherism."
Martin Woolf in the FT:
Ratios of public sector debt to gross domestic product seem likely to double in many advanced countries: the fiscal impact of a big financial crisis can, we have been reminded, be as costly as a large war. This, then, is a disaster that governments of slow-growing advanced economies cannot afford to see repeated in a generation. The legacy of the crisis will also limit fiscal largesse. The effort to consolidate public finances will dominate politics for years, perhaps decades. The state is back, therefore, but it will be the state as intrusive busybody, not big spender.
"Britain is going to feel very different in the years ahead. .... Like the empires of Venice, Spain, the Netherlands and Austria before us, Britain no longer has an economy large enough to finance our ambitions and overseas commitments."
The next government, of whatever hue, will surely raise the basic rate of income tax; 22 pence is certain, 25 pence likely. Public sector pay and pension benefits will be frozen or cut. The state pension will not be indexed to earnings growth. The national ID card scheme is dead. We will need a network of public infrastructure banks to finance capital investment, otherwise it will be goodbye to CrossRail and a modernised rail system and any hopes of improving our housing stock. But all this will still be insufficient.
There is no way that Britain's defence, overseas aid and foreign commitments can survive the next decade without swingeing cuts. Trident, the Eurofighter and the planned aircraft carriers must go. A review will cut the defence budget by a third, the aid budget by a similar proportion. Embassies will be shared or sold. Our permanent seat on the UN Security Council will become indefensible. The special relationship will be a joke; Britain will not have the capacity to invade anybody. Suddenly, the European Union will seem a more attractive way of retaining influence.
An urgent debate will begin about how to grow, because unemployment is going to rise by at least another one and half million by 2012 and fall only very slowly thereafter. The Faustian deal New Labour struck with the City cannot be repeated."