♠ Posted by Emmanuel in Cheneynomics,Europe
at 7/16/2010 12:02:00 AM
OK, so the post title is speculative, but I believe most will agree with two relatively uncontroversial statements: (1) there is a conservative backlash against Obama that focuses on his maniacal spending, and (2) Obama's spendthrift ways are forcing moderates' views of the current administration. While most of the rest of the world would probably prefer Obama to a backlash candidate taking the reins of power, there is no guarantee that non-reactionary choices will prevail come 2012. The 2010 midterm elections will indicate how much support Obama still retains two years later given that the US economy is quite pitiful as various macroeconomic indicators say despite unprecedented deficit spending unseen in world history. With disapproval of Obamanite policies across the board, current trends look unfavourable for the incumbent and his party.Anyway, the point I wish to make is that a President Palin may not be as bad as it sounds. Indeed, the rest of the world may come to realize that, despite the unappealing Amerocentric bluster, tea party-esque candidates may win favour by inflicting less massive deficits on Americans and abroad. The term "sado-monetarism" was coined by Bill Keegan to denote what Margaret Thatcher put the UK through as the eighties rolled in. Nowadays, we have yet another Tory administration taking the reins of power after a profligate Labour one.
Once more, however, the song remains the same as echoes of sado-monetarism recur in present-day and rather cash-strapped Britain. As new Chancellor of the Exchequer George Osborne asks various departments to look for up to 40% savings, the surprising thing is that the public is actually reacting favourably--although it must be noted that almost all of the cuts will still be phased in during the next fiscal year:
George Osborne was surprised to learn this week that he is the most popular Conservative chancellor since Ipsos/Mori began testing public opinion on the issue in the 1970s. But he knows that the warm feeling may not last. Mr Osborne’s Budget last month heralded £113bn of spending cuts and tax rises, an austerity package whose necessity seems to be appreciated by the public, who have yet to see what it means in practice.So there are lessons here. As I suggested earlier, people generally are willing--if sometimes grudgingly so--to forsake public largess provided that the rationale is spelled out clearly. Remember Canada's example next to that of economically illiterate America. Next, I am damn sure that the tea party-esque candidates will claim to be able to close the fiscal gap through spending cuts alone. For that the British example indicates increasing revenues will also play a role as value-added tax goes to 20%. Higher taxes are an utterly hard sell in the land of the soft in the middle, but they need to be tabled if they're serious.
For now the chancellor’s positive approval rating of about plus 20 is above that enjoyed by Nigel Lawson, Ken Clarke and Sir Geoffrey Howe, not to mention Norman Lamont, whose approval rating plummeted below minus 50.
The axe falling on about 700 school building projects is a taste of what that austerity package means in practice and Mr Osborne’s work is only just beginning. This week the chancellor convened a meeting with senior ministers sitting on the public expenditure committee – alias the “star chamber” – to hammer out plans for achieving average departmental cuts of 25 per cent by 2014-15.
Mr Osborne wants his cabinet colleagues to provide him with a “menu” of cuts – ranging from the merely painful to the truly excruciating – before MPs rise for their summer recess this month. The chancellor will give ministers at least two targets for cuts. For most departments that will mean a “best case” scenario of at least 25 per cent, while ministers will be asked to model for bigger cuts of perhaps 40 per cent or more...
Health and overseas aid budgets have been protected from the cuts, while Mr Osborne has said defence and education will be spared the worst effects of the spending curbs.
The Evening Standard's Anthony Hilton begins to complete the picture. Sado-monetarism turned into, ah, a term of endearment shouldn't be all negative cut/hack/slash/burn. Alike with sadomasochism's enthusiasts, there should be an element of, yes, fun involved (as strange as it may sound). Certainly, Obama's joyless brand of megadeficit spending--few results and gigantic outlays--pleases few. So there. The renewed version of British sado-monetarism may be what can help cure America of its fiscal morass should it prove to be promising. Just like Thatcher preceded Reagan to office, Cameron may be setting the stage for a similar anti-deficit character stateside. Remember, the UK has already broken ranks with the US in the stimulus versus austerity debate:
There is scope here for a more fundamental shift in the role of the state than that implied by simple belt-tightening. Cabinet Secretary Gus O'Donnell revealed at a Pro Bono Economics lecture this week that the website asking the public for ways to save money had attracted 60,000 suggestions. This hints at a considerable public appetite, not necessarily for cuts, but for making sure public money is well spent. People still want public services but they don't want the waste and fraud that often seem to go with them.If US politics weren't so primitive and the tea party movement's adherents had any brains, they'd follow goings-on in Blighty. To paraphrase Deng Xiaoping, it doesn't matter if the deficit reducer is Palin so long as the deficit is actually reduced.
The Government has considerable support for a purge, and that is new. But a little less glee among some of its number would also not go amiss. If they can get the tone right, they have a big opportunity. Talking about the quality of public services in the future rather than the quantity to be cut now could change the way we are governed — and for the better.
UPDATE: The WSJ blog even sees the pound sterling as a safe haven amidst the US going down the tubes.
