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Governing the British Economy

Governing the British Economy. What does this mean? The whole range of economic phenomena relating to production of goods and services Growth, stability (price, currency), unemployment, distribution Policy and implementation Power and Constraints Identifying success, rather than luck

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Governing the British Economy

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  1. Governing the British Economy • What does this mean? • The whole range of economic phenomena relating to production of goods and services • Growth, stability (price, currency), unemployment, distribution • Policy and implementation • Power and Constraints • Identifying success, rather than luck • 'Riding the economic cycle' • 'Puzzling' and learning through making policy (Hall)

  2. Two cases • Heath • In 1974, the Prime Minister called an election asking "Who governs Britain?" They answered "Not you, Ted", albeit narrowly. The Conservatives polled more votes than Labour but held fewer seats. (BBC news) • Gordon Brown's confusing move • Taking away his own power?

  3. Frameworks • Power and Constraints • Ideas, Institutions, interests (3i) • Hall's model (see later)

  4. Power and Constraints • Power • Hall claims the state has unrivalled power in making economic policy • cf. the mechanistic model • Howell contradicts this suggesting power moved away from state: down to firms and out to the international arena

  5. Power and constraints II • Constraints • Ideological • Unions • Special position: private workers, public workers, represent the most vulnerable to economic failure. Political but not governing • Institutions • Global Economy – EU • 'The model of capitalism' • Inherited traditions

  6. The three I model • Three different ways to explain policy change • Ideas • Including, but not restricted to, ideologies • Institutions • Graham suggests that the highly centralised executive power in the UK was key in... • King and Wood – models of capitalism • Interests

  7. Hall's analysis • Politicians have values • From these they set their targets or goals • Then they make choices to achieve them • There is a hierarchy of possible changes: • Change the levels of a chosen instrument • Change the chosen instrument • Paradigm shift affecting all values, goals, instruments and levels

  8. Interlude: the story of British Economic policy • The post-war consensus. 'Butskillism' and Mr JM Keynes. Nationalisation • Wilson: Macmillan's 'You've never had it so good' is dead, Devaluation struggle, Beer and sandwiches at Number 10 • Heath, Wilson and Callaghan: Failures on all fronts and especially income policies and unions. 'Cap in hand' to the IMF. Culminates in 'the winter of discontent': several thousands of workers, causing bodies not to be buried, etc

  9. Interlude II: the story of British Economic policy • Thatcherism I: a bright new dawn: no more 'tax and spend'. The end of Keynes? Privatisation • Thatcherism II: a terrible nightmare – Boom and Bust. Finance Ministers trodden underfoot. Armies of unemployed. • Prudent Gordon: Labour as the 'new tories': 'no more boom and bust', 'the golden rule', back to full employment? • But where is Blair?

  10. Hall Revisited • Hall’s is a limited analysis: government, even if central, still has to get ideas from somewhere • He suggests that consistent ideology allows government to govern rejecting others views • Pemberton looks at policy networks: relates involvement of actors to first and second or third order change • Howell contradicts the model altogether

  11. International • Post war austerity and rationing: bankrupted by saving Europe • Oil crisis • Cold war defence spending (cf. Germany, Japan) • Protecting sterling in EMU • Stability and growth pact – but stricter • Aligning economic cycle to join Euro • High % of trade with EU forces Eurozone shadowing? • Staying out: £ becomes a hedging currency for $ + €

  12. What is government for? • How much should we govern? • Government and control (traditional) • Markets (Thatcherism) • Regulation (New Labour) • Sub-issues • Clause 4 • Deregulation • Market failures • Redistribution (in secret?)

  13. Success or Failure • Late 60s, early 70s generally viewed as failure • But how do citizens remember Britain? Swinging 60s and smiling faces • Thatcher changed Britain • Did she succeed in governing the economy • Did she create a better Britain • New Labour govern ‘rationally’ • They talk about evidence based policy: they get judged on evidence • Redistribution by stealth: good or bad?

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