New priorities

Well the British people have just delivered a verdict of sorts. It is one which, for all John Major’s personal triumph, can give little comfort to either of the two main parties, amounting as it does to a rejection both of the imbalances brought on by unbridled individualism and of the stifling and arrogant tyranny of state diktat. But if the verdict is a repudiation of the candy-floss manifestos on offer, it is also eloquent testimony to the clear sightedness of the British jury. There is cause for real celebration.

Now that the crosses have been counted and the party pillow fight is done it is time for savers to think about what they really need from the next parliament.

Anyone who reads City circulars knows the saver’s standard checklist. It includes lower tax rates, lower inflation, and rising company profits. It amounts to a cry for the freedom of each individual to choose how each earns, saves and spends his or her money, and it carries a force which, after seventy years, has struck the chains from the wrists of 300 million Russians and reduced the jail of totalitarian socialism to a pile of rubble.

Over the past thirteen years in Britain, many of the usual items on the shopping list have been ticked off. Income tax rates have been cut, inflation is lower and real average incomes have risen, and dividend growth has far outstripped inflation. For all the current recession, at least 80% of the population have never had so much of what money can buy.

Yet the election showed that the British people share deep misgivings about the nature of the enterprise culture and its failure to satisfy a number of basic requirements. Left free to help themselves, individuals could prosper and wealth would flow out to the community around them, so ran the idea. But as it turns out, the community has come to be seen, in all too many ways, as a crowd of consumers to be exploited, not an extended family to which each member owes a responsibility.

The result is that for all the material gains piled up on the plus side of most people’s balance sheet, big doubts have loomed up. These include doubts about where the boundary should be drawn between public and private services, about pay differentials between the boardroom and the shop floor, and about treatment of many like those in the caring professions whose work cannot be measured in business terms. Underlying some of these doubts is the fact that the gap between rich and poor has been widening and though the poorest have grown less poor, it seems that freedom for the individual will remain a very mixed blessing unless the exercise of personal choice is tempered by an understanding of what makes for a mutually supportive society. Without it a spirit of naked individualism will tend to push the least competitive groups to the limit of tolerance where they will deeply resent any benefits enjoyed by the successful majority.

Savers have their own concerns of course, and control of inflation and a rewarding tax regime must stay high on the political agenda, because they are necessary conditions of enduring prosperity. But they are insufficient in themselves. Unless each voter can see the seam that joins his lot to that of his fellows, the fabric of the nation will be pulled and twisted until it hangs in tatters. Creating a higher vision will only be achieved through the process of education, and that is the priority to be set above all others. Education, not in the formal sense of schooling a nation, vital as that is, but in the sense of bringing to each citizen an understanding of his role in and responsibility to the society in which he lives and works.

For the government that means devoting money and effort to explaining how the forces of the free enterprise system can be harnessed, instead of sharpening the cutting blades of competition or taxing the rewards of thrift and industry as if they were sores to be lanced. It will mean reaffirming the worth of endeavour in the caring professions, in teaching, and in the arts where so much of value is done for its own sake rather than to meet market demand. Above all it will mean setting an agenda for a generation and not for the term of a Parliament.

Governments in large part reflect existing priorities, but they also have a duty of leadership. Electors should press this one to exercise it in promoting a fresh understanding of how society hangs together.

That will be easier said than done. With the weakening of family ties and the loss of loyalties passed down through generations, the voice of consensus and conciliation has grown feeble. There is a large contribution to be made, therefore, by employers, with their authority over livelihoods, in explaining how their own business fits into the society in which it operates. In the financial sector in particular, investors, policy holders and depositors should remember that the prosperity of the institutions which manage their savings is linked to the wider economy quite as closely as is their own, individually, to the surrounding community.

The problem for all special interest groups including home owners, policy holders, and savers and investors of all shapes and sizes is that the conditions which make for their enrichment may be damaging to others in society upon whom they ultimately depend. The cost of a stable exchange rate and low inflation may be acute hardship for millions; housing incentives which suit borrowers and savers may push house prices beyond the reach of young families; tax concessions for financial institutions may make it difficult for the small investor to exercise control over his savings. Savers need all the encouragement they can squeeze out of their new representatives at Westminster, but they also need to remember that economic prescriptions, just like any other ones, have side effects.

Maybe Solomon would be a good man to remember this Easter. He was given the original blank cheque, but instead of writing in a figure with lots of noughts he settled for the gift of wisdom. Around 750 BC Israel had plenty of problems, and a strong army, a powerful ally, or a fat war chest might have dealt with some of them. But Solomon’s vision was grander and because of that he got all the other gifts as well as what he chose. As they turn to a new Parliament, let the savers of this nation fix their priorities with a vision like his. They might be surprised at the gains they make as a result.