Populism Strikes the Politicians

Across Europe, politicians are enduring the wrath of people who are being made to pay the price for the dereliction of duty by the elites. The only justification for their exercising power is their superior ability to manage the affairs of state. That doctrine has been exposed as vacuous. The test for their capacity to change will come in the UK in 2015.

In Hungary and Greece, fascist parties are gaining political ground. In Italy, government is in disarray as a comedian’s movement takes over as the parliamentary opposition. In the UK, the Independence Party is making headway by promising to pull Britain out of the EU.

None of this addresses the needs of Europe. But people in general cannot be blamed, because they are not provided with the information needed so that they can insist on the policy changes that would be to everyone’s advantage. The one case where, in principle, reason might prevail – for historical reasons – is in Britain.

If history repeats itself, the Coalition government of David Cameron will lose the general election in 2015. This has been the pattern of the past. Economic recessions occurred in 1902, 1920, 1938, 1956, 1974, 1992 and 2010. Following each of these recessions, the incumbent politicians were thrown out of power. The fate of Britain was not improved, however, because the incoming set of politicians were similarly incapable of mobilising the population behind a programme of effective reforms. The one exception was in 1905.

A Bid to Reverse History

With the fall from grace of the Tories, the Liberal Party came to power in 1905 with a popular mandate to unpick the disgraceful tax scams that had been inflicted on the nation over the previous 300 years. Lloyd George as Chancellor, backed by Winston Churchill, made the case for the re-introduction of direct charges on land rents. The revenue would be used to fund pensions and financial support for the unemployed.

The 1909 People’s Budget was enacted, but the landed aristocracy in the Lords fought a successful rearguard action. Result: with the exception of the events in the mid-1950s, all the booms of the 20th century that led to busts were driven by land speculation. Had Lloyd George succeeded, the incentive to speculate would have been defused and the cyclical boom/bust pattern would have been seriously modified, if not eliminated.

We now come to the present. The rump of the Liberal Party (now called the Lib Dems) is half of Cameron’s Coalition. Some of its members, like Cabinet Minister Vince Cable, are aware of Britain’s need to reinstate the land-based fiscal policies that were given a democratic mandate a century ago. As members of the Tory-led Coalition, they are not free to advocate a People’s Budget today. But what about their manifesto going into the 2015 election?

Cameron’s party will not get re-elected. But neither will the Labour Party secure a majority. Both will lose votes to the UK Independence Party. So there will be a hung Parliament. And the only party likely to be acceptable to both the Tories and Labour is the Lib Dems. This is their historic chance to revive the one fiscal policy that could lay the foundations for economic recovery on terms that would be good for everyone – shifting taxes off people’s earned incomes and on to the rents of land.

Rationally, the Lib Dems should spend the next two years preparing the UK for this strategy. If they fail to do so, the collective craziness that we observe across Europe will also blight Britain.

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