Lessons of Coalition (15): what do the Lib Dems need to learn from the first 3 years?

LibDemVoice is running a daily feature, 'Lessons of Coalition', to assess the major do's and don'ts learned from our experience of the first 3 years in government. Reader contributions are welcome, either as comments or posts. The word limit is no more than 450 words, and please focus on just one lesson you think the party needs to learn. Simply email your submission to voice@libdemvoice.org and copy info@eastmidslibdems.org.uk

Today Richard Flowers shares his thoughts.

The Economy (it's too soon to say)

Three years into a five-year fixed Parliament, with the economy showing tremulous signs of growth, and we're all very keen to pass judgement: "austerity has failed" or "the medicine is working".

The rolling 24-hour news cycle, newspaper deadlines, and election timetables demand instant analysis. People need to try to understand the chaotic world and events that surround them so Parties, commentators and analysts must continue to supply answers.

But don't confuse that with the truth. Most people may accept the news cycle agenda, but it's totally useless for measuring real economic changes or even political ones.

The problems of our economy, from "bonus culture" in the banks to failure to invest in housing, are problems of "short-termism", and even three years is very short term when looking at the macro-economy.

We should be asking ourselves: "What are the Liberal Democrats trying to achieve in the long-term?"

I would suggest that our ongoing aims ought to include (but not be limited to):

(1) A sustainable (green) economy, that is in a position to reduce the impact of both booms and busts.

(2) A political system that responds more fairly to what people want.

(3) A state that maximises opportunity and minimises intrusion.

It's very easy to say now with hindsight that we see that the Labour Government was incredibly profligate, running a deficit during the biggest boom in history, but it's important to remember that very few voices (honourable mention to Vince Cable) were saying that at the time. People couldn't see it not because they were stupid or selfish or deliberately obdurate, but because it's very difficult to make good judgements when you are so close to the data.

The Coalition is keen to claim credit for the economy while Labour wants to pile on the accusations of failure. Signs of growth, lower inflation, low interest rates and no big spike in unemployment versus the biggest fall in living standards in the developed world and the economy still not back to pre-2008 levels.

The sad truth, however, is that almost nothing that the Chancellor (any Chancellor) can do will have any effect within the lifetime of even a five-year Parliament.

The changes to government spending are simply not big enough nor fast enough to have any major short-term impact. Cumulatively, sure, they represent a marked change of direction, but not a quick one. The Coalition neither caused nor cured the recession.

The true test of the Coalition's stewardship of the economy will be in the next five to 10 years, and will be determined not just by whether growth continues and strengthens or remains faltering, but also whether the Treasury is able to balance the books in proper Keynesian fashion, by running surpluses as the economy recovers, or returns to the Gordon-omics of borrow and spend, and whether the reduction in income inequality is sustained - something, I suspect, will require a continued Liberal Democrat presence in the Treasury to ensure.

Previously Published:

Stephen Tall: Stronger policy development and campaigning on issues that matter to the public (AKA where's our liberal equivalent of the benefits cap?)

Mark Valladares: Better party communications responding to the realities of governing

Gareth Epps: Government: What's Occurrin?

Nick Thornsby: Making a success of coalition government as a concept

Caron Lindsay: That old "walk a mile in each others' shoes" thing works

Louise Shaw: One member, one vote for all party elections

Mark Pack: The invisible ministers should up their game, or be sacked

Robin McGhee: We should organise ministers better

Rob Parsons: Understand the mechanics of government

Richard Morris: Make the red lines deeper and wider

Bill le Breton: The Open Coalition and Its Enemies

Patrick Murray: Make sure our policies are reflected in our manifesto

David Allen: If It Won't Work, Walk

Joe Otten: Government is hard

Note from the Webmaster

All responses to this series of five articles will be posted on the website and forwarded to Phil.Kowles - Policy Officer for the East Midlands and Lucy Care our representative on Federal Policy Committee