Johnson vows to spend Britain back to health

An unlikely pair: Boris Johnson’s spending promise is reminiscent of FDR’s New Deal.

Does the West need a new Roosevelt? As the world comes out of lockdown but heads into economic catastrophe, some say leaders should look to the past to find a solution to the crisis.

Boris Johnson is to launch a spending spree tomorrow – one of the biggest in Britain’s history. New roads, homes, and schools are all part of his new plan to save capitalism after the coronavirus.

Many commentators are already shocked. Conservative governments are normally known for balancing the books. Yet here is a Tory prime minister planning to spend as if there were no tomorrow.

What on Earth can be going on?

The answer may be found in a remarkable speech made this weekend by the government’s leading thinker, Michael Gove, a member of “the quad”, a powerful group of four ministers which runs the country alongside the PM.

Gove is calling for a revival of capitalism based on one of America’s most famous presidents, Franklin D Roosevelt (FDR), best known for rescuing the US from the Great Depression of the 1930s.

Even before the Covid crisis, faith in conventional politicians was broken, says Gove.

The 2008 financial crash led to huge inequality between global elites and the people they rule over.

Voters around the world revolted, leading to shock polls such as Brexit in the UK or Trump’s election in the US.

The situation was summed up by the Bank of England’s chief economist Andy Haldane: “The economic pie has not risen rapidly, and the pie has been unevenly sliced.”

The pandemic has only made the problem worse. Coronavirus exposed social inequalities in many societies – for example, the disproportionate impact on ethnic minorities or the low-paid key workers who died because they could not stay at home.

If leaders keep ignoring people’s concerns, the divisions in society will grow, warns Gove.

The world has faced similar crises before – and politicians responded with change. In the 1930s, FDR called for reform “that builds from the bottom up and not from the top down, that puts faith once more in the forgotten man at the bottom of the economic pyramid.”

Today’s “forgotten man” looks a little different – ravaged not by the Great Depression but by structural inequality, growing automation and a global pandemic.

FDR identified three critical needs. Firstly, to make the “forgotten” people, the first concern of policy.

Secondly, to reform government to make it an efficient force for good. In the UK today, Gove is calling for politicians to leave London and move closer to “the people”. The reform has begun this morning with the announcement by Sir Mark Sedwill, the UK’s top civil servant, that he will leave his post in September.

This means recruiting new people with skills in Science and Maths. The PM’s chief adviser, Dominic Cummings, called for “misfits and weirdos” to work in Downing Street.

Finally, FDR believed that to solve a crisis, leaders must take risks. The New Deal was a radical experiment and many of its programmes failed – but it allowed progress and restored the economy.

Like FDR, Gove argues that letting officials take risks will put the UK economy back on track after coronavirus.

So, does the West need a new Roosevelt?

New New Deal?

Yes, say some. FDR’s New Deal is credited with saving the American economy in a time of crisis. As the world faces another economic slump, people like Gove believe that a similar plan could work once again, despite the risks. After months of shutdown, spending sprees like Boris Johnson’s could be what the world’s economy needs to promote growth and thrive again.

No, say others. The PM is planning to spend millions on a building blitz of hospitals, schools, and transport projects – but it is money that the UK just does not have. The government has already spent an unprecedented amount during the coronavirus crisis, and Britain simply cannot afford to build up more debt. Spending now will make Britons worse off when it is time for the money to be paid back.

You Decide

  1. Is it ever okay to spend money you do not have?
  2. Is the coronavirus pandemic a bigger crisis than the Great Depression?

Activities

  1. When was the last time you took a big risk? Write half a side explaining what the risk was and whether it paid off.
  2. In his speech, Gove called for parts of the UK government to move out of London. Where do you think the government, in the country where you are, should be located? Write a list of five possible locations, with pros and cons.

Some People Say...

“Take a method and try it. If it fails, admit it frankly, and try another. But by all means, try something.”

Franklin D Roosevelt (1882-1945), 32nd president of the USA

What do you think?

Q & A

What do we know?
It is generally agreed by historians that Roosevelt’s New Deal was the driving force that saved the American economy following the Great Depression. When Roosevelt, a Democrat, was elected in 1932, unemployment stood at an astonishing 15 million people (over 20% of the population). By 1937, the unemployment rate had fallen from a peak of 24.9% in 1933 to 14.3%. In comparison, in April 2020 the US unemployment rate rose from 4.4% to 14.7%, with similarly bleak figures all around the world.
What do we not know?
One main area of debate surrounds whether a New Deal-style plan would work today as it did in the 1930s. This economic crisis is very different to previous recessions. Whereas the Great Depression started with the stock market crash in 1929, this economic slump has been caused by an entirely different event – the coronavirus pandemic. With the virus not yet eradicated and fears of a second wave, will more spending will be enough to restart the economy?

Word Watch

Spending spree
A brief period of extravagant spending.
Balancing the books
When the Conservatives came to power in the UK in 2010, they pursued a policy of austerity – cutting spending to reduce the national debt.
Tory
A member of the UK Conservative party. The word Tory originally referred to someone who supported King James II in the 1600s.
Quad
A group of four senior ministers, who meet daily to plan the path out of lockdown. Alongside Gove, the Quad includes Health Secretary Matt Hancock, Chancellor of the Exchequer Rishi Sunak, and Foreign Secretary Dominic Raab.
Franklin D Roosevelt
The 32nd US president, and the only president to be elected to the office four times. Widely known as FDR.
Great Depression
A severe worldwide economic depression that started in the US in 1929. People left homeless created shanty towns called Hoovervilles after then President Herbert Hoover.
2008 financial crash
The failure of a number of banks, most famously Lehman Brothers in the US, led to a global recession and skyrocketing unemployment rates.
Automation
Technological advances mean more and more jobs previously done by people are now being done by machines.
Civil servant
The people who work in government departments and are responsible for putting policies into actions. Civil servants are not politicians – they do not belong to any party.
Dominic Cummings
One of the prime minister’s most influential advisers, who was at the centre of controversy last month after it was revealed he drove to Durham during the lockdown.
New Deal
A series of programmes and projects started by FDR to stabilise the economy, which significantly expanded the scope of government.

Subjects

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