This article originally appeared in Varsity (Issue 691, Friday 20th February 2009).

In Defence of Doing Nothing
Inaction is the best way to deal with this recession

In the 1983 film War Games, the WOPR computer is about deploy the USA’s entire nuclear deterrent to destroy the Soviet Union. However, it is tricked into playing a game of Noughts and Crosses. Eventually the WOPR is forced to conclude that, since two good players have as much chance of beating each other in a game of Noughts and Crosses as in a nuclear war, the best move is to do nothing.

Unfortunately, however, there is always a problem with doing nothing: someone, somewhere, always thinks that something should be done. And so we had the arms race. Inevitably, if there is a perceived crisis and you do nothing about it, you’re accused of being shortsighted, naïve, or even heartless.

Faced with the current economic crisis, the gut reaction has been to throw money at the problem. But, just as the arms race did not alleviate the Cold War, the bail-out has not got the financial system moving again. Indeed, is it in our interests to prevent the crisis?

The current crisis is necessary in order to correct an overvalued market; and by keeping credit going, the market is going to remain overvalued. Instead of getting out of crisis, this is merely going to prolong it. Besides, liquidity only works if people have the confidence to use the money. Why else has Alistair Darling’s economic bail-out not worked?

Of course, this has not stopped the Labour Party persisting under the delusion that doing something, no matter how ineffective or costly, is innately laudable. The ‘do nothing Tories’ mantra is a common insult. But what is the value of doing something that will not help?

David Cameron and the Conservative Party come from the classical liberal tradition that the market will correct itself and that (most) public intervention within that market will be ineffective at best and damaging at worst. The Conservative Party is derided for not having any policies. But to let the market run itself is a policy. To become a credible alternative rather than simply an opposition, the Conservative Party needs to construct a narrative against prevailing attitudes.

After all, it can be argued that the only reason that the current crisis has developed is because of government action over the past twenty years or so. It was the government (albeit a Conservative one) that turned building societies into banks. It was the government (albeit an American one) that forced banks to lend to people with no assets and poor credit ratings. And it was the government (a Labour one) acting through the Bank of England that has kept interest rates artificially low for the past decade.

The problem is, however, that it is exceedingly difficult for the Conservative Party to claim that doing nothing with regards to the economic crisis is actually the best course of action. Obviously the Conservative Party does not think that absolutely nothing should be done. It is agreed that the most vulnerable — those likely to fall through the cracks of poverty — need to be protected. But when it comes to keeping credit moving they are less enthusiastic.

In the world of modern politics, doing nothing is not an option. Whatever the problem may be, no matter how small or insignificant, the government is expected to deal with it. What can an MP do about someone who throws a cigarette butt in the park? Should the government really take responsibility for what every parent feeds their child? If an adult prefers to sit at home and watch television rather than going out and exercising, who cares? And yet thousands of words are wasted and gallons of ink spilled dealing with precisely these issues.

The economy is slightly more important. Nevertheless, although the call for inaction may seem heartless, in the current crisis it is not. It will allow the market to recover quickly and efficiently, and allow the government to focus on helping the individuals adversely a affected by the crisis rather than worrying about a global market which is, frankly, too big for it to control. To think that anyone can end boom and bust is ludicrous.

But, then again, the tide is already turning. In the wake of the failure of the first economic bail-out, the Labour Party is increasingly behind in the polls. Indeed, senior Labourites like Tony Blair’s former aide Benjamin Wegg-Prosser are urging Gordon Brown to drop the ‘do nothing Tories’ attack line. It seems that people may, after all, be willing to give doing nothing a try.

Tags: economics

This entry was posted by James Arthur Sharpe on Saturday, February 21st, 2009 at 6:09 pm and is filed under Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.