A stark warning from Britain's former PM
DOUG SAUNDERS
London— From Saturday's Globe and Mail
Published Friday, Dec. 10, 2010
Unseasonably heavy snowfall has shut down the roads and airports and trains from Scotland for nearly a week, leaving the windswept county of Fife, across the Firth of Forth from Edinburgh, more or less isolated from the world. This means Gordon Brown, the county's elected representative, has been trapped in London all week, unable to see his wife and children.
So it is perhaps not surprising that, as Mr. Brown steps into his City of London office to give one of his first interviews since his defeat as Prime Minister in May, he has returned to the tightly wound, somewhat taciturn temperament that dogged him through that lachrymose campaign. Back then, British voters, hobbled by three years of economic shocks, came to see him as the awkward plodder against the bubbly freshness of Tory David Cameron and Liberal Democrat Nick Clegg, who now run the British government together on a cost-cutting mission that led them into their own riot-torn crises this week.
But it is also likely, you realize, that repeated incidents of such geographical and climatic isolation have had an effect on the psyche of this 59-year-old Scotsman, much as they once did on that other economic thinker from Fife, Adam Smith. For Gordon Brown has ended his eight-month exile from the media in order to issue a stark and explicit warning to the world. It is a warning, published in a 315-page manifesto titled Beyond The Crash: Overcoming the First Crisis of Globalization, that has almost everything to do with the former prime minister's deep and nagging fear that the countries of the world are falling victim to isolation – economic, monetary, fiscal, trade, political and institutional isolation – that will end the startling project of unity he attempted in 2008 and plunge us into trouble.
“Let me just say,” he says, before my bottom has touched the seat in his 32nd-floor office, “it looks to me, as someone who can see the trends and the forces at work, that some of the policies we're applying are very similar to the 1930s. And we're in danger of making the mistakes of the 1930s.”
This is not a man with a gift for small talk, as Britain was horrified to learn during the election. We keep ours brief and largely confined to the climatic similarities between Ottawa and Edinburgh. Gordon Brown has not written a book, like the tome recently published by his predecessor and nemesis Tony Blair, as a personal apologia. It does offer a quick defence of his record – he managed, for eight years as finance minister and prime minister, to rein in spending despite a Labour Party social-progress agenda, and keep Britain's public debt to historically low levels, before doing just the opposite in his final two years, and pouring almost half a trillion pounds into rescuing the banks and averting a total crash. He used the G20, previously an obscure meeting of leaders of rich and once-poor countries, to get all the major economies to pour trillions into the system, pushing the world away from the brink and turning a cataclysmic depression into a mere recession.
That now feels like a very long time ago. Now Gordon Brown is watching the world go the opposite way.
His successors have launched what may be the quickest budget-slashing exercise in modern Western history, chopping half a million public-sector jobs. U.S. President Barack Obama this week allowed the Republican-heavy Congress to extend George W. Bush's tax cuts for the very wealthy, effectively removing $700-billion from public investment. And the euro zone is in chaos, unable to co-ordinate a solution.
“Look, the economic orthodoxies which are fashionable today will either be proved to be right or wrong,” he says, exasperated. “My view has been that the world needs to recover growth, and that if we're going to be properly poised for the future, we have to invest. And you've got to be able to trade, then we've got to resist protectionism.”
The election loss, he acknowledges, was rooted in his own awkward lack of communications skills. But not in the sense that the British media understood this: In Gordon Brown's view, he could not get people to think beyond their own borders and understand the huge global rebalancing that has put countries like his in a new role.
“It's very difficult to explain these things to electorates who are looking for quick answers. And I wasn't able to communicate the full strength of the choices that we have had to make,” he says.
“The problem is that we've had a restructuring of the world economy, which means that Europe and North America are out-produced and out-invested and out-manufactured and out-traded by the rest of the world now, for the first time in 200 years … but we're not out-consumed by them. And amid all the talk of deficit reduction, I don't think you can ignore the fact that America and Canada and the rest of Europe have got to invest in the future. Because the big opportunity about to come up is that you're going to have a consumer boom in Asia that is so big that it is going to be the equivalent of two Americas. And that is a huge opportunity for exporting countries to get products to these markets, which will create jobs in their own countries.”
But this is not a view that is being heard at the moment – or, at least, the desire to get government balance sheets in order and taxes down has overwhelmed them. The countries of the European periphery and Britain and the United States are pursuing a more orthodox economic model, choking off the sort of export-investment spending Mr. Brown would like to see and lowering their standards of living.
This, for the former prime minister, is a matter of constant frustration; he says, with a bit of the stump politician's cadences, that he is experiencing it viscerally in his snowbound riding.
“I've got 2,000 students applying for our local college who didn't get places because there have been cuts in educational support,” he says. “So you've got direct consequences from a chain of destruction, if you like, that started in the subprime housing market in America and has ended up with students not being able to get places in a local college thousands of miles away in Fife.”
Mr. Brown is hardly alone in the view that governments are making the wrong economic decisions at exactly the wrong time now. Nobel Prize-winning economist Joseph Stiglitz and noted economist Paul Krugman have both raised dire warnings of this in recent weeks, as have a number of voices.
The problem, in their view, is that this may be the only opportunity to build demand in the Western economy. In previous crises, that would have been impossible, as it would have exacerbated inflation. But this is a crisis without inflation.
“If you don't go for growth in an atmosphere where you have low inflation, then you're missing an opportunity to use your resources effectively, to create both jobs and higher living standards. And if you become protectionist, as happened in the 1930s, and ban this and ban that, and opt out of the benefits of world trade, then you're going to miss out on the huge opportunity that exists in the future.”
Protectionism, he says, is becoming a genuine threat – both in the traditional tariffs and rejections of foreign investment, and in the downward spirals of currency devaluation that have pitted countries against one another this year.
“You have very little progress in the Doha trade round; you have the whole issue about currency wars; you have the whole question about restrictions on skilled workers, and you have questions about takeovers and everything else that you have in Canada. And the important thing to recognize is that we're now talking about how we can actually get the benefit of huge global markets, which, to be honest, we haven't been positioned to do for some time.”
It is an economic failing, in the Brownian view, that is rooted in a political flaw: Unlike his moment of glory around the G20 table in 2008 and 2009, the world leaders, despite a uniform conservatism in much of the West, are turning to narrow economic nationalism.
“At the moment people want to see these problems as purely domestic problems, and they either feel they've done well or badly in relation to their domestic situation. But actually for most countries these are global problems that are impinging on them as national problems.”
This all might bring to mind the old P.G. Wodehouse line about the ease of distinguishing a Scotsman with a grievance from a ray of sunshine. But just as quickly, Gordon Brown switches to his other mode, the son of a preacher, and tries to drum up some economic hope.
“I don't think the divergence is fundamental,” he says. “I think it can be resolved. I think that the art of politics is to find the common ground between what look like divergent positions. If people were around a table as we were in 2009, talking about how you address the problems that we actually face now, people would say that a return to higher levels of growth is absolutely critical if you want to bring unemployment down and reduce the deficit.”
It is just a matter of getting them around that table. The one we sit across, big enough to hold much of the G20, is nearly empty, and soon Mr. Brown bolts from it, grabs his coat, and rushes to Westminster to vote against the coalition government's tuition increase. His side loses, once again, and the outcome is a night of violent riots in London. It seems a dark, and unfortunate, confirmation of his belief.
Doug Saunders is a member of The Globe and Mail's European bureau.
). I'm relatively young and was not taught about this history, the ramifications really freak me out. 
