Perhaps it is time to revive Keynesian policy. The fact that monetary policy in the US and Britain does, in practice, take into account unemployment and growth as well as inflation is taken as a sign that some secret Keynesian demand management is at work. From this point of view, the odd men out are what Anatole Kaletsky calls the “sado-monetarist” central bankers and finance ministers of continental Europe who are wedded to price stability and the Maastricht criteria. I believe that Keynesian policy does have a role to play in improving the performance and stability of economies. But this belief does not warrant either historical or theoretical amnesia; nor should it blind us to the practical difficulties, particularly on the fiscal side, of reinstating even a modest version of Keynesian policy.
Thursday 27 June
I am in St Petersburg both as a tourist and as a British observer of the second round of the Russian presidential elections. The excuse for tourism is that the House of Lords Bridge Club has been invited to play a match against the South African consulate. I fly to St Petersburg with my wife, Augusta and our younger son William (19). Our elder son, Edward (22), joins us from Moscow where he is working. Our leader is Richard Gisborough, who has organised the expedition. On arrival at St Petersburg airport we board a coach with a poster stuck on the front window with the words “House of Lords” written on it. A band strikes up God Save the Queen. I smile radiantly and am about to raise my hand to acknowledge the reception, when the band turns round to face the next coach and starts up the Marseillaise.
There is widespread agreement that the welfare state needs to be drastically reformed, certainly slimmed down. Designed in the 1940s to protect weakened capitalist economies against the assault of revolutionary socialism, it is now under assault itself. Governments all over Europe are busy chipping away at entitlements and benefits built up since the war. Yet even minor cuts in welfare spending face huge political cost as Alain Juppe is discovering in France. The reason is that most people in Europe have come to rely on tax-financed welfare of one kind or other, and governments have failed to discover a political formula which might wean them from this dependence. Only in the US, whose welfare state is underdeveloped by European standards, does an anti-welfare ideology resonate Continue reading “Essay: Welfare without the state”
Review of Capitalism with a Human Face by Samuel Brittan
Published by Edward Elgar, £49.95
This collection of essays by the UK’s leading financial journalist ranges widely, from studies in utilitarian ethics to technical macroeconomics. Samuel Brittan is as much at home with John Rawls as he is with Milton Friedman.
FOLLOWING its publication in England in February, John Charmley’s biography of Winston Churchill comes to the United States on a gale of argument which is sure to continue. What he has done is to challenge two of the most sacred postwar Anglo-American myths: that the war against Hitler was justified, and that Churchill was a prescient leader in peace, and a magnificent one in war. Mr. Charmley’s verdict is different: the war cost Britain its inheritance, and Churchill, while rhetorically magnificent, was as erratic in war as he had been in peace. The distinct impression is given that Churchill lost Britain the empire it was his life’s ambition to preserve. Triumph and tragedy, indeed.