2012 Reith Lecture: No More Heroes Anymore
June 26, 2012
Professor Niall Ferguson is giving this year`s BBC Reith Lecture. The initial talk examined the impact of the Glorious Revolution of 1688; an event leading to a constitutional settlement grounded in the notion of an inclusive pluralist state underpinned by the rule of law.
Professor Ferguson unapologetically makes the case for the Whig view of history seeing 1688 as the catalyst for political and economic freedom which saw Britain ultimately become the Workshop of the World. It is argued that the revolution of 1688 ended arbitrary rule resulting in the establishment of “inclusive rather than extractive institutions”. This he argues becomes an institutional template for sound governance exported around the world (a benevolent aspect of British imperialism) which according to Ferguson is key to understanding why the West advanced.
Western decline on the other hand is a result of “institutional malaise” leading to the unacceptable sovereign debt in Greece, Italy, Ireland, UK and USA. Ferguson argues we must move beyond the jaded debate about austerity versus stimulus and instead concentrate on the issue at the heart of the problem the breach of a social covenant that Edmund Burke described as the “partnership between the generations”. What is now required is new transparent forms of public accountancy which will identify the intergenerational impact of fiscal policy.
It is the breach of Burke`s covenant that allowed previous generations to spend the inheritance of those not yet born, lumbering individuals in the future with massive debt, huge tax bills or alternatively cuts in public expenditure resulting from the profligacy of the past.
Professor Ferguson`s speech has a right wing Republican flavour especially when he observes that young Americans should if they “knew what was good for them” vote for the Tea Party. But he argues younger voters do not cast their ballots in a self serving direction because they are duped into supporting an agenda that is shaped by an older politically savvy generation.
Professor Ferguson`s Reith Lecture concentrates on the USA, although he finds time to praise UK prime minister David Cameron and George Osborne Chancellor of the Exchequer. One wonders how the Professor will react to the recent announcement by David Cameron committing a future conservative administration (freed from the shackles of coalition) to the abolishing of housing benefit for under twenty-five year olds thus saving £2 Billion, a policy that would garnish many smiles among Tea Party supporters in the USA.
At the end of Professor Fergusons lecture he was asked what he meant by heroic leadership his reply revealing:
Well I think there has been some heroism so far and more of course is needed. I think what I find hopeful is that if you look at what George Osborne and David Cameron have said they understand the need to go beyond the old arguments about austerity and stimulus. We need to make people recognise that overhauling the public finances is the only way of paving our way to a future of growth. That`s the kind of heroism that seems to me that political leaders need today.
The Prime Minister’s less than heroic declaration about cutting housing benefit was made whilst reassuring older voters that pensions will be protected, a policy that sits uneasily with Burkes `partnership between the generations`.
Ferguson`s Tea Party agenda compels him to focus on President Lyndon Johnson`s `War on Poverty` strategy when he highlights Medicaid, which came into existence in 1965. This is lambasted by Ferguson as a reason why the deficit is so high, while the shenanigans in Wall Street appear to have no connection to the deficit. And in this first lecture there is no mention of the Federal government bail-out nor the socialisation of American banking losses in 2008, although there is a hint that this will be broached later.
It is the area of government spending that Professor Ferguson chooses to ignore where the real haemorrhaging of the public purse occurs in the guise of `military Keynesianism`. Massive government spending on what Eisenhower called `the industrial military complex` is an issue that is side stepped illustrating a fundamental flaw at the heart of Professor Ferguson’s analysis.
While LBJ declared `War on Poverty` he massively increased spending on the war in South East Asia, a strategy that pushed the USA towards stagflation, the by-product of overstretch abroad while LBJ simultaneously attempted to emulate FDR`s `New Deal` at home. It is the spending on Welfare initiatives that the right focus on, most famously by Ronald Reagan, when he declared that “LBJ declared War on Poverty but Poverty Won”, antagonism about `big government` centre around `The Great Society` and these concerns are still evident today.
A consensus has formed amongst conservatives and liberals alike that the deficit is a problem and it is the poor who are to blame. This has vast implications for the future development of the social democratic institutions that came into existence in Britain after 1945.
However, there are people on the left challenging the new deficit orthodoxy, most notably Professor Noam Chomsky:
Let`s start with the deficit. The propaganda today is we have this hideous deficit that we need to concentrate on getting rid of it. First of all it doesn’t make sense, in a recession you want to have a deficit as you need a stimulus to grow your way out of an economic recession when 17 million people are unemployed. You get back to economic recovery and then you overcome the deficit.
Professor Chomsky who is a genuine hero to many is outlining a standard Keynesian solution to the problem, but his later comments strike at the heart of the thesis presented by Professor Ferguson:
Putting that aside what is the deficit? Well if you listen to the right the deficit is Social Security and Medicare. But that`s only because the rich and the privileged have been trying for years to destroy them. Social Security is not in any kind of trouble. Medicare is in trouble because it is linked to the privatised health system – which is in serious trouble. Take a look at the deficit, half of it is military spending which is going up under Obama, in fact it is reaching new heights. Nobody is talking about cutting that so when people talk about cutting the deficit you know right away they are not serious.
It is not the deficit that the right want to cut but the Welfare system that benefits the poor and there is a hint of this logic behind the first Reith Lecture of 2012. Professor Ferguson cherry picked aspects of public spending that equate with a Tea Party analysis, this partial overview may be remedied in his further talks where it is hoped he will extend his analysis and broaden his critique away from the parochial parameters of the Republican Tea Party.