He is blamed for the financial crisis, but his new book sets the record straightby Vince Cable / November 9, 2017 / Leave a comment
It is the victors who get to write history. The Tudor version of history has a narrative in which Richard III is a murderous villain rather than a Yorkist hero. After Gordon Brown lost the 2010 Election, the Tories managed to portray him as the Richard III of modern economic history: a flawed anti-hero who committed political murder to get to the top and then plunged the country into economic chaos.
But, unlike Richard III, Gordon Brown wasn’t executed on the battlefield and has lived to tell his own version of history in his new book, My Life, Our Times and it is pretty convincing. I write those words as someone who tried to provide a balanced and nuanced account of the financial crisis which was drowned out in the battle-cries of tribal political conflict.
It is a decade since the emergence of the credit crunch that spiralled into a global financial crisis. For the previous 10 years, the economic sun was shining. The economy was growing briskly by past standards and in comparison with the rest of the western world. The government’s fiscal coffers were replenished from taxes from rising incomes and, in particular, from a buoyant financial services sector. Public services expanded on the back of strong revenue. The debate about Gordon’s legacy is about whether he should have seen the storm coming and prepared for it and how he reacted when the rain fell in torrents.
I was Liberal Democrat economic spokesman during the boom years. I worried and warned at the time that Gordon’s claim to have produced the best growth performance since the Hanoverians was unsustainable and hubristic. Only a limited acquaintance with economic history suggested that the debt fuelled asset bubble in the housing market was dangerous and would end in tears. The egregious behaviour of many bankers and the recklessness of both their household lending and gambling in the casinos of investment banking were, regrettably, overlooked both in the Brown Government and the Conservative opposition. The latter, lest we forget, argued that banks were regulated too lightly rather than too tightly. There is a legitimate criticism of Gordon Brown that he missed the signs of impending financial disaster but it is not a criticism that Conservatives did or could make.
“Having been on the receiving end of historical revisionism I rather feel for Gordon, who has suffered the same fate”
They attacked from a different direction, campaigning that Gordon should have “mended the hole in the roof while the sun was shining”: in other words, should have accumulated a budget surplus rather than merely operate at the outer limit of self-policed fiscal rules. However, having debated with the Conservatives at the time, including in the 2005 Election, I recall that their proposals were extremely modest—amounting to spending cuts of under 0.5 per cent of GDP: a tiny amount in relation to the tsunami of red ink which was unleashed by the banking crisis. On this slender base, the Conservatives built a large fictional structure around the argument that the cause of this disaster was Gordon Brown’s spendthrift approach to the public accounts. It has sustained their narrative ever since. And, conveniently, it shifted from blame the banks and bankers.
Gordon Brown has rightly been praised (along with Alistair Darling) for recognising the necessity to nationalise failing banks in order to sustain credit flows; to allow large fiscal deficits temporarily to arise so as not to aggravate the deep recession which resulted from the financial crisis; and to see cooperative solutions along with other leading governments. I don’t recall the Conservatives recognising (or understanding) any of these imperatives.
The modern Labour Party has now re-written history again. Gordon Brown doesn’t feature in it. Nor does the massive fiscal deficit of 10 per cent of GDP left over from the crisis, and which Labour was then committed to eliminating by painful spending cuts and tax increases. In the New Authorised Version, the modern world was created in 2010. Wicked Tories aided and abetted by my party invented something call “austerity”: a deliberate, systematic plan to plunder the (impoverished) many in order to reward the (plutocratic) few. Neoliberalism and its social democratic collaborators have failed.
Having been on the receiving end of this historical revisionism I rather feel for Gordon Brown who has suffered the same fate. He was, fundamentally, a decent, thoughtful, idealistic man who did his best for the country and will, in time, be remembered more respectfully than his ideologically driven successors now allow.
Read Stewart Wood’s lecture on what Gordon Brown got right on Europe—and what he didn’t