“Tony Blair Was Right”

Many thanks to the Queen Mary Labour Society for a good discussion this evening. They invited me to deliver a talk entitled “Tony Blair Was Right” (their choice not mine), and we had a lively and intelligent debate.

I reprised themes that will be familiar to readers, such as The Finest Peace-Time Prime Minister of the Democratic Era; The Myth of the Sainted Attlee; Iraq as a Tragedy of Flawed Nobility; The Fallacy of the Wasted Majority; and The Myth of Growing Inequality.

The most challenging part of the discussion, though, was the suggestion that Blair was culpable for the economic calamity in the shadow of which we live and expect to live for years to come.

This forced me to think on my feet, and I doubt if I gave a sensible account of things. Let me try to do so now. It seems to me that, if there was a problem with regulation of the banks, then we should fix the problem rather than decide that the financial sector is the source of all Thatcherite wickedness and that it should be suppressed.

This lies behind a lot of sentimental thinking about failing to promote our manufacturing industry, and that reliable marker of soft thinking, “rebalancing the economy”.

There was nothing wrong with the UK vigorously exploiting its competitive advantage in financial services. The error was in allowing banks, on which the money supply depended, to over-extend themselves. Whether much could have been done about that, however, is a hindsight question.

And, because it was a problem of the global financial system, affecting the rest of Europe and America, I do not see it as negating the successful economic management of 1997-2007. Obviously, it would have been better if the government had kept to Gordon Brown’s prudential rules and had been repaying debt from about 2001, and Blair shares the blame for that (and the Conservatives did not argue for it). But most of the prosperity of the Blair years has been preserved, in a better country and a more resilient economy.

I am grateful to Queen Mary Labour students (and the couple of Conservatives* who attended an admirably open meeting) for prompting me to clarify my thoughts.

Not only that, I was presented with a limited edition Queen Mary Red Mug, of which I am very proud.

*Typically, perhaps, one of the Tories, the chair of the Conservative Society, was a great admirer of Blair; the other was not.

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• http://twitter.com/Chantepoule Arthur O’Connor

  Blair was hypnotised by the idea of himself – he had no idea of economics and Brown less. Both are lawyers who craved prime time exposure and they hated each other. They were besieged by the wrong elements which rapidly embed like a cancer in a Westminster power vacuum. 9/11 was a gift from providence for Blair enabling him to cosy up to the White House and bask in American adulation.He subsequently forgot that he was the PM of UK and went on a disastrous adventure to Iraq with Bush for which our exchequer is still paying. He and Brown let the Banks do whatever they wanted and the Banks proved equal to the opportunity and delivered the present financial omnishambles. ( One of the better words which has crept into the political lexicon). The situation will be resolved by introducing a usury law and forcing the banks to pay decent interest to depositors to encourage the savings which should be the life-blood of our economy and to root out the larceny by executive bonuses and telephone figure salaries which are now distorting national income realities.. All of which could be delivered by the nationalisation of RBS which now belongs to the taxpayers which could uniquely set the rules to bring the other banks to heel. Stella Creasy may be the MP to do it. She has a good grasp of the situation from her showing on Newsnight this evening.

• http://www.facebook.com/nick.garland.581 Nick Garland

  A lively, enjoyable (if occasionally heated) discussion. Thanks very much for coming. We’d love to have you back sometime.

• newfriendofed

  To some extent this is fighting the last (economic) war. The major current question is how to respond to the deficit. There is a clear dividing line between neo-Keynes thinking and Osborne’s ideas. I wonder where Blair or, for that matter, J. R. stand on this issue. His column last week certainly said Osborne could not suddenly convert to Keynes. However, it was not at all clear whether this was merely because it would affect his credibility or because it would be (in J. R.’s opinion) bad for the economy. In other words, it left us in the dark as to whether J. R. believes Keynes is wrong. He also said Balls has a hard time explaining Keynes. I wonder if J. R. thinks the fact that it is hard to explain something is sufficient reason for avoiding it.

• JohnJustice

  I do not blame Blair for the failure to regulate the banks sufficiently in the run-up to the financial crisis. At the time, the banks were providing the resources to help restore our depleted public services, greater regulation was regarded by most pundits as strangling the goose laying the golden eggs and nobody saw the the sub-prime disaster coming.

  Yes we were all living beyond our means but can you imagine the reaction if Blair had introduced credit curbs at a time when everybody was pursuing their colour supplement dream?

  As I’ve said before here, Blair’s financial policies were appropriate for his times whereas Miliband’s approach (with the benefit of hindsight) is right for our times.

• greggf

  Tony Blair owes much of his success to the boom years that pre-dated the sub-prime debacles.
  What decisions he and Brown made have proved in hindsight to be largely flawed, but all PMs and governments make the same mistake of believing their own infallibility during economic booms. Rising revenues every year seem to hypnotize credulous politicians
  of which Blair and Brown were typical examples. And they come to resemble salesmen even, in Blair’s case, often believing their own speil!

  Yes, most of the prosperity of the Blair years has been preserved, but at the cost of a bloated public sector and services already telling on sterling in the absence of any off-setting productive resources.

• greggf

  “….nobody saw the the sub-prime disaster coming.”

  Oh I don’t know about that John!
  Maybe not the specific event but with house prices doubling over a few years in the north of England in the early oughties it was pretty clear to me a serious bubble was inflating.

• http://twitter.com/JohnRentoul John Rentoul

  Interesting point. I think the arguments on austerity vs neo-Keynesianism are finely balanced and make little difference in practice, as we are talking about perhaps £20bn annual difference. Therefore the political arguments decide it.

• mightymark

  Blair was a lawyer – Brown wasn’t.