George Osborne: new ideas and new questions

Just come away from the Great Room after responding to a speech by George Osborne - you can see a short interview with him below. The Shadow Chancellor concentrated mainly on the case for new and better forms of oversight and intervention in financial markets.

My response covered three points:

I welcomed George’s interest in behavioural economics (the RSA is, after all, the leading public platform for thinkers in this area). But I suggested that once we recognise that individual short term choices don’t always add up to the best aggregate outcome the discussion about ‘nudging’ takes us into even bigger debates about the relationship between affluence, economic inequality and well-being. Although David Cameron opened up the well-being debate a few years ago, this is still challenging   territory for the Conservatives.

Second, I asked about how the Conservatives are now thinking about the role of the state. The state can be big or strong in three different ways. It can employ lots of people and provide lots of services, it can collect and redistribute a lot of money, or it can pass a lot of laws that intervene in people’s lives. Take one example: we might address the growing crisis of social care by the state expanding public provision of care, by the state taking more tax giving this to people with care needs who are free to spend how they will, or we could pass a law forcing everyone to look after their grannies. Ideological anti-statists will tend to oppose each of these forms of state power.

The Tories advocate nudge-type policies which seek to shape behaviour.  George suggested in his speech today that the Bank of England might have a general power of intervention over and above any regulation, or that the Government might break up the big banks.  It seems that the Conservatives are recognising that Government needs to be more interventionist while presumably continuing to be sceptical about the state, for example, as a mass provider. I suggested it would be interesting to hear about how today’s Conservatives conceptualise the state we need for the world we are moving into.

Third, echoing my blog yesterday, I asked how economic policy might contribute to building civic capacity; how can we better fuse enterprise and the pursuit of profit with social good and civic renewal?

George gave positive, if rather broad brush, answers to each of these questions so maybe we can get him back to the RSA again soon to elaborate further.