Making the Best of a Bad Situation

So news is in that Britain’s next government is going to be a Tory-Lib Dem coalition, bringing an end to thirteen years of New Labour dominance. At a time of profound economic uncertainty and the imminent return of Great Power politics, it is pollyannish to believe that any British government could resolve Britain’s manifold problems without incurring big social costs. That said, this coalition is likely the UK’s best chance of pulling through in salvageable shape.

Let me recap. First, the UK has a budget deficit of 13% of GDP and a debt to GDP ratio of 80% for 2010. (For comparison, the figures for defaulting Argentina in 2001 were 6.4% and 62%, respectively). According to PricewaterhouseCoopers, “Britain would have to make across-the-board budget cuts of 5% a year to come close to cutting the deficit in half by 2014” – and that assumes an economic upturn that may not materialize due to Britain’s deindustrialization, high energy costs, and the growing crisis in the Eurozone. (If Britain doesn’t make deep cuts soon, a descent into a Greek-style compound debt trap is inevitable). Second, the UK’s abysmal energy policy under New Labour – ignoring the depletion of the North Sea gas fields, declining to invest in new generating capacity, and not concluding long-term gas supply contracts – has made chronic electricity shortages all but inevitable by 2015. Third, separatist undercurrents are ever present. Not very visible now, granted, but that tends to change when a state comes under severe socio-economic pressure. Overall, I would say all this qualifies as a “bad situation” for Britain.

But why is a blue-yellow coalition going to make the best of it? For the simple reason that combined, their set of priorities is near optimal, and each will hopefully be able to check the other’s less savory tendencies. I will be drawing from this excellent website explicating the positions of British party candidates on major issues (h/t Fistful of Euros).

Take taxes and spending. The former will have to rise, the latter will have to fall. This is not an ideological statement, it is a matter of fact. The alternative is default, either outright or inflationary, and a forced readjustment. And the ruling parties are in tune with this reality. Only 28% of Tory and 41% of Lib Dem candidates believe that “Britain should increase spending on public sector services” despite the recession, compared with 61% of Labour candidates. This isn’t because they are nasty neoliberals. Some 76% of Lib Dems and even 60% of Tories believe that any tax increases should be “disproportionately” paid by higher earners. Big majorities in every British party are averse to higher inequality. In today’s Britain, we are all social democrats. 😉

The Lib Dems and Tories are also the best bet for a balanced foreign policy. Elements of the Conservative Party (including one “e-friend” and successful local candidate) have expressed an interest in improving relations with Russia, which is a very wise move considering its bleak natural gas and energy outlook. Nick Clegg, the leader of the Lib Dems and to be Deputy PM, “has worked extensively in the post-Soviet bloc”. This will be a welcome change from New Labour’s Russophobia. What isn’t so good is that the Tories are one of the most bellicose parties, with only 39% of them saying they would not support a strike against Iran and 67% supporting British troops staying on in Afghanistan “as long as they are needed” (which is historically synonymous with “until you go bankrupt”). That said, their views on these matters are in line with all the other mainstream parties. The only pacificists are on the fringes – the Green Party (good intentions, no realism) and the BNP (which views these wars as Zionist projects).

Only 6% of Lib Dems and 30% of the Conservatives (that is, their reactionary wing) support beginning negotiations to exit the European Union. That would be an idiotic idea. Now I’m not saying that Britain should integrate further with a European Union that is being riven apart by economic crisis and self-interested nationalisms. But maintaining a foothold in it (and a veto!) is a very useful mechanism for sabotaging moves towards European federalism and manipulating the balance of power on the mainland on the cheap, not to mention the markets it provides. To their credit, most Tories realize this.

In this section I should warn you that my views here are colored by a social liberal bias. (But this isn’t critical – the most important issues that will define Britain’s near future are in how it handles its economic, fiscal, and energy predicament, not on how many gay rights or CCTV cameras it acquires). I should stress that the modern Conservatives are not a party of social reactionaries, Labour propaganda to the contrary. Now there is certainly a large undercurrent of social conservatism there, in contrast to the three “progressive” parties – Labour, the Lib Dems, and the Greens. But these reactionary tendencies on immigration or climate change will be countered by the Liberal Democrats. And with the sole exception of New Labour, all parties agree that there “are too many CCTV cameras in Britain”. In my opinion, not only is the UK’s surveillance culture insidious, it is also a waste of money and resources.

Finally, and most importantly, a blue-yellow coalition really is the best of all possible worlds. It kicks out Labour, just like the voters wanted to. It prevents the Conservatives from becoming entangled with the national-ethnic parties or kooks like the UKIP and the BNP. It presents the possibility of electoral reform to modernize Britain’s outdated “first past the post” system. It offers a (kind of) credible commitment to fiscal stabilization, without connotations of Thatcherite social injustice and insufferable moralism. Their foreign policy is moderate and well-tailored to Britain’s national interests. Most importantly, the two parties balance each other out – the Liberal Democrats will be able to nullify the global warming denying, viscerally anti-EU and anti-immigrant Tory reactionaries, while the Conservative mainstream will be able to squash the dafter Lib Dem ideas like getting rid of Trident.

All in all, a good match – and if it holds together, one that may just bring Britain in decent shape through its biggest crisis since the Second World War.


  1. As I mentioned on Facebook I agree with the bulk of your post Anatoly. Although both Cons & Lib Dems came to power advocating some type of tax cuts. I hope they re-evaluate. I agree that it is not time to be cutting taxes. It was conspicuous that no party was prepared to rule out an increase in VAT pre-election. Although it would be felt universally, there is an argument that it could be the most effective means of making inroads into the deficit.

    On foreign policy, there is a Conservative tradition which advocates a more cautious approach and William Hague, the probable Foreign Minister is an enthusiast (Cameron too).

    There are, however, plenty of neo-cons still active and influential in the party. Liam Fox, who held the shadow defence portfolio, is a perfect example. Days after Hague outlined the new Tory approach to foreign policy, Fox wrote this totally one-eyed article about Georgia.

    I hope that the new government advocates British values, but respects difference throughout the world and drops the type of interventionist preaching which Labour maintained to the end. Thank god that David Miliband didn’t become PM. It isn’t a given though.

    • Thanks for the comment.
      I’m not sure what you mean by advocating British values (what are they anyway?), otherwise concur.

  2. An interesting article. I do hope they get electoral reform through though, living in a deocracy would be nice. Yes, it will be interesting to see what happens.

    Other things.
    -The trouble of course is Britain’s traditional Europhobia (and definately Russophobia,- I am sick of telling my fellow countrymen Russians are not all gangsters, oligarchs or cheap appeasing wives and prostitutes). This will be exacerbated by America having less interest in Britain, at a senior level, and a nationwide/cultural level, as the US’s demographics change from being largely white European to being more mixed race. So Britain will essentially be isolated. We as a nation are still as bigoted and intolerant as ever. Did anyone see день победы on Saturday, Putin and Angela Merkel are happy to be together, considering the atrocities on the eastern front years ago, relations have improved. And Britain of course is still bigoted. Not everyone, but a significant minority wear it as a badge of pride, or ‘Britishness’, and it is very much in the mainstream. So is anti intellectualism, not universally speaking, but generally Britain is quite an anti intellectual country.

    -Our ‘special relationship’ is often summed up with the analogy- Britain requests, America demands,- when there are bilateral negotiations between our two countries

    -Afghanistan is a futile war which serves absolutely no interest to us.
    – The media are too powerful and influential, especially the Rupert Murdoch owned press.
    -Scotland and Wales may well break away.
    -Domestically, there are problems with our welfare state. As you say, the ‘Chavs’ and all. However this is tied to a regrowth in inequality and heirarchy in British society
    -We have almost completely destroyed our manufacturing base.
    -Our science/technology aspect is ok, but not great. Many doing these practical (and useful for the future) subjects are of an Indian subcontinent or Chinese background. Obviously many do stay here, but our universities are often full of silly degrees, there have been targets to get more people into higher education, even if the subjects are quite silly. So don’t expect any future weapons systems or technological advancement to be British.
    -The surveillance state and Orwellian nature of the state. Of course I hate it. However, I would argue it is a consequence of our welfare state being to accomadating. There really are some people who just act like they have impunity, they have free money coming in, they act reckless. If they behaved decently we wouldn’t need CCTV or electronic tags.
    -Replacing the Trident nuclear missile delivery system is going to cost a lot. As I said above, we don’t really have the sci/tech base to develop a next generation, so that would mean we would have to buy whatever delivery system the US develops, which will be a blow to independant foreign and military policy. For smallish nations like Britain and France, a nuclear detterant is huge. The only thing I can think of is more EU military integration, perhaps to one day suceed NATO.

    • 1) The European publics are, surprisingly enough, at least as and perhaps more Russophobic than the British. See poll.
      2) I think Trident is very useful to have. Even assuming the more pessimistic assessments of future costs are correct, i.e. 150bn $ over 30 years, that’s just 5bn $ a year – or 0.2% of GDP (total military spending is about 2.5-3% of GDP). A pretty good bargain for the ultimate deterrent.
      Otherwise, I agree with your comment.

  3. Information warfare is being waged against you, constantly, whether you like it or not, whether you know it or not…

    AK edit: I don’t have enough imagination to write my own stuff so I stoop to plagiarizing wholesale from Nyquist without original commentary.

    • Every major power and ideological movement engages in what you just called information warfare. I see that in your comment you mostly criticized Russian efforts on that front. Do you imagine that the US government, guys like Soros, the neocons, etc. do not engage in information warfare? Perhaps you think that they spend less effort on it than the Kremlin does or that they’re more honest in what they say? If you do think that, then you’re wrong. If you do not think that and were simply making a general point about politics worldwide, then there’s little to argue with.

      Of course, unilateral disarmament is as dumb on the information front as it is on a field of battle. In politics if someone’s calling you a fascist dictator or whatever, not shouting something back at him is gross negligence.

    • Boris, I’ve had enough of your blatant plagiarizing from the Nyquist nutjob. It is impolite, it is off-topic, it is spam, it is against S/O comments policy. This is your last warning. Do it one more time, and you’re IP-banned.

      UPDATE: My words fall on deaf ears. You continue to plagiarize without attributing your sources. Your submissions have been henceforth designated as spam.

  4. (False) Malkhaz Gulashvili says:

    The Russian edition of Newsweek magazine has reported that Russia is planning to move toward a more pragmatic foreign policy in dealing with Western countries.

    The magazine claims it has obtained a confidential Foreign Ministry report outlining Moscow’s new doctrine on foreign policy. The report supposedly lists countries with which Russia plans to develop closer ties to secure future investment.

    Newsweek further claims that the report mentions membership in the World Trade Organisation and the easing of EU visa restrictions as being among Russia’s priorities.
    A preliminary draft of the document is said to have been already approved by President Dmitry Medvedev.

    Russia’s political elite are running scared investment into Russia is at an all time low, in 2009 bi-lateral trade between Russia and the USA fell to a miserable $16 billion dollars down from $36 billion (2008) compare that with the bi-lateral trade between the USA and its closest ally the UK which is around the $500 billion mark and you can see what little economic weight the Russian federation carries.

    This planned move on foreign policy skinks of desperation, its an attempted reversal of KGB Putin’s aggressive foreign policies, Putin alienated Russia’s major investors for example between 2003-6 the UK was the largest single investor into Russia, now the relationship is so poor that no official visit by a UK prime-minister has taken place for years and vis- versa.

    But words are cheap; President Medvedev needs to send a strong political signal that Russia really wants closer ties with the west bringing about the massive investment Russia badly needs. He should sack Putin and force this odious little man to leave the political arena for good.

    • OK, so let’s go through your arguments:
      1) You claim ” investment into Russia is at an all time low”, but just yesterday BusinessWeek noted that “Russia Faces Capital Influx as Investors Flee Europe”.
      2) Economic weight, believe it or not, is not equivalent to the amount of trade between you and the US. Otherwise, Mexico would be an economic superpower.
      3) I’m sure Russia is absolutely distraught at being denier the chance to roll out the red carpet for that Scottish curmudgeon Gordon Brown. Or maybe not…

      EDIT: Do NOT use the names of other real people when commenting. I think I am pretty safe in assuming that you are not Malkhaz Gulashvili.

  5. “It presents the possibility of electoral reform to modernize Britain’s outdated “first past the post” system.”

    Now how can we get this done in the US or Canada?

  6. iskatel says:

    $500 billion in bilateral trade between UK and USA in 2008? In that year, only between US and Canada (US biggest trading partner) was about that amount (even bigger), i.e. $ 600 billion, then between US and China (second trading partner) was $ 407 billion and between US and Mexico(third trading partner) was $ 367 billion. Perhaps your are taking the trading amount between US and EU-27 (27 members, and not just UK) which happens to be $ 639 billion. And from 27 EU member, Germany was the biggest US trading partner in 2008 with $ 151 billion, bilateral trade between USA and UK was $ 89 billion, and between USA and Russia was $ 36 billion for that same year. Go here :

  7. “Борис Андрианович” This cat was posting his J.R. Lyndquist stuff over at Belmont Club, too.