As I may have mentioned before, Liberals the world over have one blind spot - one prevailing weakness which can blunt their effectiveness and their wisdom if they leave it unattended. If socialists are not terribly interested in the abuses of power, Liberals are not terribly interested in the abuses of money. They don't think about economics very much.
That leads them into the greatest of all political errors which the English trip over in every generation: they don't think about it very much but, when they do, they assume that the way money works and flows and accumulates is by some kind of eternal law, set down by God at the creation of the world.
No nation on earth is so conservative about the way money works as the English. They still believe Captain Mainwaring is at his desk, dispensing sherry, and weighing up the pros and cons of specific loans, when he has long since been pensioned off by software at regional office. They think that money is created by the Bank of England in the form of notes and coins, when actually 97 per cent is created by banks and it surges through the wires in the form of speculation at the rate of $4 trillion a day.
Last week, I used the phrase 'an ecstacy of positioning' about Lib Dem economic policy over the past fifteen years. It keeps being quoted back at me and, I must admit, I'm quite pleased with it. The basic problem is that they haven't believed that economics was important enough to shape a distinctive approach to it.
I don't believe the modern Lib Dems can ever thrive unless they do, unless they wield a slogan like Lloyd George's 'We Can Conquer Unemployment'.
So I was very glad to see Nick Clegg's letter to party members, announcing his intention to do just that. But there remains a problem: it is still just a list of measures, which any sensible government might do, and no To-Do list is itself a memorable and distinctive approach, which people might hear, think about and whisper to themselves: 'We ought to give it a try - it might work'.
Luckily, I am in a blogging mood this morning, so I can supply what is missing. Three things, and they can all be done by the party immediately:
1. Name it. There were announcements in Nick Clegg's statement about a new way of extending local borrowing to build council houses and extending apprenticeships, but all the rest is about the same thing: creating the institutions capable of lending to a new entrepreneurial sector - the very institutions which Britain currently lacks so badly. That is the core of the approach: it means naming it, and making it distinctively Lib Dem.
2. Commit to letting the new Business Bank operate on lower profit margins, as similar institutions are allowed to in other countries. There is no point in creating another bank exactly like the other dysfunctional institutions, and that means they have to be explicitly committed to lending at below market rates to get the UK economy moving again - setting up sustainable, independent businesses which can't quite leap through the hoops that the big commercial banks set. The Treasury won't like it - but the Lib Dems should have two more years in government and these decisions will make a huge difference, if they are absolutely committed to making it happen.
3. Regionalise the management structure of RBS. The government has ruled out splitting up RBS into mini-banks, but then that wasn't exactly what was being proposed. What is needed is not a set of tiny local banks, but a network of self-governing parts of RBS county by county - like the networks of local business banks in Germany and Switzerland, with local business people on county or regional boards. RBS will still exist, but its governance will be regional, and it will keep its national network to send the capital and liquidity where it is needed. It can then provide an answer to the big question about the Business Bank: where is its network and lending staff? How will it get its intelligence? Because if it is just relying on the branch network of the commercial banks, then it will be about as effective as Funding For Lending (that is to say, not very much).
As always I'm indebted to my increasingly influential colleague Tony Greenham for the guidance on regionalising RBS, and he is absolutely right.
So there we are, let's not confuse people with long lists of diverse intentions. Let's call the Lib Dem approach to recovery what it is - a commitment to reviving local economies by providing the effective lending institutions which the UK so badly needs.
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