Populist politicians are not markets’ saviours

WE WILL know we have progressed to a higher level of civilisation when a politician praises a course of action that does not give him more power.

On that measure, David Cameron remains as vulgar as the rest of his colleagues. He said yesterday, “many people are questioning not just how and when we will recover, but the whole way our economy works” – and then rapidly moved on to explore exactly how much control of our economy that meant he needed to take.

Cameron talks a good game, saying, “I believe that open markets and free enterprise are the best imaginable force for improving human wealth and happiness.” Indeed, who, looking at the statistics, could disagree with him. Two hundred years ago, the world economy was at the present level of Bangladesh. Two centuries on and the average person consumes some ten times as much. We have broken with the poverty of history thanks to capitalist growth. There is inequality between the richest and the poorest, but those who are poorest are immeasurably richer than could have ever been conceived for almost all of humanity’s past history.

And yet like the most cynical arriviste, Cameron wants to exploit the current economic difficulties to exact political power for himself. Such behaviour is shameful; it is shocking to see a prime minister conduct such a power play in plain view.

What he failed to mention in his speech is the truth about markets, which is that they function best when politicians aren’t running them. It is pretty rich for an inhabitant of Downing Street to claim that he is best placed to correct the market. The power of the market is based precisely on the idea that control from the centre is corrupting. Far from correcting the marketplace, Cameron only has the power to distort it.

The economic historian Deirdre McCloskey, who wrote on these pages last year, has argued at length, with support from the work of economist Joel Mokyr, that the transformative power of capitalism is tied directly to a rhetoric of approbation for capitalism and the free innovation of the middle classes. From this point of view, Cameron’s currying of favour with voters who are envious of the levels of pay in the financial services sector is not just cynical, but destructive. Chasing a short-term electoral advantage, he throws the health of the British economy under the bus.

As McCloskey says: “Give a man and a woman the liberty to innovate, and persuade them to admire enterprise and to cultivate the bourgeois virtues and you save them both for a long life of wide scope, and for successively wider lives for their children and their grandchildren too.”

Cameron isn’t listening. Posing as a friend of the markets, he reaches out his hand to manage them. As such, he reveals himself for the aristocratic meddler he is at heart. His inability to empathise with the middling sort and their ambitions, and to unleash their potential, will in the end be his downfall. Fine words on the correction of markets from the centre reveal nothing but a politician who will, like all the rest, say anything if it buys him an edge.

First published: City A.M., 20/1/12

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