Liberal again

Inside Politics – The Policy Exchange newsletter (London), 4 October 2007

For people who believe in limited government, low taxation and free trade – in other words, for economic liberals – the Conservative party had for a long time been the party closest to their thinking. Yet over the past months, some conflicting messages have come out of the party.

Some Conservative politicians seemed to have bought Labour’s line of argument that any talk about lower taxes would imply a corresponding cut in the delivery of public services. Yet, as economic liberals would argue, improving the state of the economy through cutting waste and taxes would eventually increase the “economic cake” from which to take a slice for public services. “Sharing the proceeds of growth” was how the party liked to describe this process of shrinking the size of the state, but they were too timid to express this idea more clearly than that.

To take another example, some statements in the quality of life report by Zac Goldsmith and John Gummer were apt to make economic liberals’ blood boil. The report stated that Britain had, some time in the past, gone beyond a point where continued economic growth was a benefit. Economic liberals, whose very goal it is to make society more affluent through growth, were much irritated.

But the Blackpool conference provided some reassurance to economic liberals. And it was not only George Osborne’s announcements of lower stamp duty for first-time buyers and raising the threshold for inheritance tax. One might even question whether his figures actually add up, as Robert Chote from the Institute for Fiscal Studies has done.

What is much more important is that leading Conservative politicians are no longer afraid to spell out precisely which ideas determine their economic thinking. David Cameron emphasised the role of markets and freedom, of letting businesses compete with each other without regulating or taxing them too heavily. He also praised Nicolas Sarkozy and Angela Merkel for cutting corporate taxes in France and Germany – music to every economic liberal’s ears.

For far too long the right has allowed the left’s prescription for the economy – more public spending financed by higher taxes and deficits – to hegemonise debate. As it becomes increasingly clear that such a policy leads to a dead end, economic liberals should find their courage again. It is good to see the Conservatives are unashamedly on the side of economic freedom once more.

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