Thursday, December 23, 2010


Clement Attlee generated a memorable quote: "He was a modest man, with much to be modest about." Churchill described him as a "sheep in sheep's clothing."

Clement the Great.

Great Britain won WWII, against all odds, then fired Winston Churchill immediately and hired Clement Attlee as its Prime Minister. From 1945-1951, under Attlee, Great Britain acquired a huge, Anaconda-like welfare state, for which Churchill coined the phrase "cradle to grave." To pay for this they divested themselves of their Empire around the world and nationalized great swathes of their economy.

In all they did, the Attlee government was guided by complete confidence in the power of smart bureaucrats and politicians to make smarter decisions about the economy than the market could. Their great prophet was John Maynard Keynes.

Lord Keynes.
The Attleeites' great fear was a return to the Depression and political chaos of the 1930s. Their great myth was that free markets wrought the Great Depression. In fact, it was a series of politically motivated decisions imposed by governments on the economies of Europe and North America that gave birth to the Great Depression.

At the time the grand project seemed like a marvelous idea to everyone involved, Labour, Liberals, Conservatives.
It was the right thing to do, the only moral thing to do. Anyone who opposed it was a selfish. unreconstructed troglodyte, out to stiff the working man. There were a few lonely economists who predicted that the whole business would come to no good. They were vilified, marginalized, and ultimately proven to be correct.

Friedrich Hayak. Read his "Road to Serfdom." Chilling.

By the 1970s Great Britain was in desperate economic shape as a result of the grand experiment. The very smart politicians and bureaucrats had proven quite incompetent at running an economy. The British economy was suffering from both stagnation and inflation, memorably dubbed "stagflation."

Margaret Thatcher came to power in 1979 (very much as did Reagan, in 1980) with a mandate to dismantle the welfare state. The notion at the time was that however unpleasant a less regulated economy might be, it couldn't be much worse than the ramshackle, broken muddle Britain was living with.

Margaret Thatcher
Thatcher's efforts, while not completely successful, did result in a substantial unwinding of government controls over the economy, and an economic boom.

If you think a welfare state is the right thing to do, never mind the economic consequences; if you think good intentions allow you to ignore economic facts; Clement Attlee is "The Man."

For a hip-hip hooray! rendition of the jolly good Attlee years, see the Guardian. For a less enthusiastic view, see Andrew Stuttaford.

For an explanation of the phrase "mess of pottage" check the link, or read Genesis 25:29-34.

Right now my Democratic friends are building Attlee Progressivism right here in River City. Never mind the Brits have spent the last 30 years trying to unwind the Anaconda from around their necks.

We continue to ignore the fact that we cannot afford to tax our economy at the rate necessary to support our present wealth of government expenditures. We spend and borrow, believing that economics is like politics. If we have smart enough people in charge and give them enough power, somehow they can command the tide to stop coming in and the rivers to flow uphill.

President Obama Parts the Red Ink
But economics is not like politics. Economics is like gravity. Step off a cliff and you will fall down. Every time.

Here. Listen to Garry Marshall from the movie "Lost in America." He's trying to explain all this economics stuff to Albert Brooks, whose wife just lost their "nest egg" in a casino.

I am not concerned because I am afraid of the future. I am concerned because I am aware of the past.

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