The end of boom and bust means the politics has been taken out of economics. How?by Anatole Kaletsky / May 21, 2005 / Leave a comment
British politicians have been brought up on the assumption that elections are won or lost on economics, and for most of the 20th century they have been broadly right. But the 2005 general election will not be determined by economics.
Ever since detailed polling data on the political salience of individual issues started being tabulated by Mori in the early 1970s, economic problems—unemployment, inflation, trade unions, interest rates or taxes—have normally topped the list of voters’ concerns. For almost the whole of this period, one or other of these items (usually inflation or unemployment) has been identified by more than 70 per cent of voters as “one of the most important issues facing Britain today.” Today there is no economic issue that excites more than 14 per cent.
Why has economics lost its sway over British voters? Partly, of course, because the economy has performed rather well, reducing to irrelevance many of the previous worries about inflation, unemployment and strikes. Gordon Brown understandably tries to claim credit for this economic transformation, while the Tories say that what turned the tide was the years of Thatcherism, followed by the demand management reforms introduced by Norman Lamont and Kenneth Clarke after Black Wednesday. But rather than continuing this argument—for the truth is that Britain’s economic renaissance reflected a fortunate combination of Thatcherite supply-side reform with skilfully activist demand management under both Tory and Labour governments from 1992 onwards—it is worth considering some deeper reasons for the declining political salience of economics, not only in Britain but throughout the affluent world.
With the benefit of hindsight, we can see that the slogan which famously won Bill Clinton the 1992 US presidential election—”It’s the economy, stupid”—marked the zenith of the political ascendancy of economics. While conventional wisdom still holds that Americans ejected the first President Bush in November 1992 because they were smarting from the after-effects of a mild recession, this kind of naive economic determinism had already been refuted in Britain. In April, John Major had been re-elected in the midst of the longest and most painful economic downturn in a generation. Back then, economic determinists could still defend their position by claiming that Major did not really win the 1992 election; it was John Smith who lost it, by threatening to increase by half the marginal tax rate on upper middle-class voters. Since the mid-1990s, however, the idea of economics as…