The Archbishop of Canterbury may be just the person you would turn to for spiritual guidance. But when it comes to economics, Rowan Williams’ advice is hardly going to impress governments around the world.
The Archbishop does not want Gordon Brown to adopt the classic Keynesian antidote to recession, that is to put more money in people’s pockets in the hope that we will spend our way out of the slump. This, Dr Williams reasons, would be like an “addict returning to the drug”.
He has described the credit crunch as a “reality check” for a society driven by unsustainable greed.
The words ‘let he who is without sin cast the first stone’ come into mind. It would be interesting to know to what extent the Church of England relies on easy credit and how exactly it goes about maximising income from its huge land portfolio. Dr Williams’ strategy would make the recession deeper and longer than may otherwise be the case.
It is true that government finances would be stronger as a result, and the long-term repayment bill for taxpayers much less, but the misery of unemployment would be far greater for many families, which you might assume is something that the Archbishop would not wish to see.
In a cack-handed way, though, Dr Williams has touched on the dilemma striking at the heart of government. That is, to what extent should ministers use public money to prevent businesses from laying off employees or going out of business? When is it right to intervene?
Pleas for help from the banks were relatively easy to call. If the high street banks go bust, society as we know it is finished.
The banks, therefore, had to be bailed out albeit at considerable cost to taxpayers.
The motor industry presents a more difficult conundrum. Companies like Jaguar Land Rover are clearly in serious difficulties following a near collapse in UK car sales, but business secretary Lord Mandelson is surely right to say that JLR’s first port of call is with its wealthy Indian owners Tata.
However, choices are rarely that straightforward and Lord Mandelson will know the extent of the fallout if the government allows large automotive companies to fail.
The political backlash for Labour in the West Midlands alone could be fatal. It seems inevitable that, if car sales continue to plummet, Lord Mandelson will have to produce a rescue package of some sort.
