Amidst the kerfuffle surrounding the Chancellor's Autumn statement, it might be a good moment to take the political temperature.
George Osborne has been attacked by Labour for the last three and half years on the basis that his economic recipe wouldn't work. It now looks as if they were wrong. Plan A has got Britain back into growth. Of course Ed Balls would say that it would have happened quicker if we'd done what Labour wanted, but that would have involved higher borrowing and higher interest rates. The deficit, which has stalled at about £120 billion, might well have increased, sending out a disastrous signal to the debt markets, from whom we must borrow about £2.5 billion every week.
In middle-age my political sympathies tend to lie with the parties that have had the most credible economic plan, because it's only when you have an economy which works that you can afford the kind of public services most people would like to see. In all my adult life I can't remember a single Labour policy devoted to balancing the books, and, looking back, I'm amazed to find that I voted for them so many times.
In the months leading up to the 97 election Labour promised to stick to Tory spending plans for a couple of years in order to head off a repeat of the "Labour's tax bombshell" headlines said to have done for John Smith in 92, but since it was explicitly a Tory policy that was being copied, I don't think this counts. Actually it's adoption led to a brief period - the last such - when Britain ran a surplus.
I think Osborne, like him or loathe him, has followed the least bad course of action open to him - none of them were good - and stuck to his guns despite overwhelming public, political and media hostility. He deserves his political reward. We don't hear too much about Plan B nowadays. Of course we are having the wrong kind of recovery, whipped up out of QE and the housing market, but it is better than none, and when you consider that the EU, one of our principal export markets, is flat on its back, we should be grateful for what we've got.
But about Osborne's political reward. There isn't much of it. Ed Balls has given up telling the Chancellor he was doing the wrong thing and avoided the temptation to claim that growth would have happened sooner on his watch, seeing more fertile ground in the protest that, for most people, living standards are falling, growth notwithstanding. Labour's lead in the polls is modest but shows no sign of going away.
On several grounds this is an infantile objection. In the first place, an economy only a few months out of recession is not going to be uprooting many trees. In the second, wages have been stagnant at best (adjusted for inflation) for some years, and it didn't just start when the Coalition got into office. Thirdly, there are assumptions in Balls' criticism which are totally unwarranted, namely that we are entitled to eternally rising living standards - we aren't - and that there is some magic button Osborne could press if he chose which could restore them - there isn't.
As I've argued on here before, in the last half century we exported our manufacturing capacity and tried to fill the income gap with borrowing (that's what the bankers were doing before it all went wrong - finding more and more ingenious ways of lending us money). The only way of returning to widespread employment is by restoring some lost competitiveness. Lower wages is one way of achieving that. Labour is so far from understanding this that it recently suggested that companies with "market power" should charge consumers more in order to raise wages for their staff.
Companies like, er, the big six energy companies? They certainly have plenty of market power.
One of George Osborne's announcements today was of future increases in the pension age. This is one way of lowering the benefit cost of an ageing population. It sounds and is harsh, but bear in mind that at the time the welfare state was set up, life expectancy for working men was about 48.
Another way of making sure the UK will be able to pay its pensioners in future is by a dramatic increase in immigration. But the UK is already one of the most crowded countries in the world (the South East of England would I think be third, behind Hong Kong and Bangladesh), housing is increasingly unaffordable, building land scarce and expensive, and immigration very unpopular with most people. Moreover immigrants themselves become old in time, and a future plan which proposes more of them to solve our budgetary problems looks increasingly like a demographic Ponzi scheme.
All of this - a senescent population, an overspending government, falling wages and a housing shortage looks to me like one of those situations which can't go on forever and which must therefore stop. Judging by Labour's lead in the opinion polls an awful lot of people don't see it this way.
There seems to me a divide between those who view this particular circle as one that can't be squared, and those who think an incoming Labour government can restore the natural pre-2008 order of things. But an incoming Labour government will, in 2015, face exactly the same problems the Coalition currently faces, and will I think swiftly discover that taxing the rich a bit more won't darn the hole in the fiscal sock.
The obvious conclusion to draw from this is that the post-war welfarist society those of us of a certain age have grown up with cannot go on as it is. Pension age is merely a harbinger. From welfare benefits and care for the elderly to taxation and retirement, things are going to change whether we like it or not. I don't personally think it will be pretty.
