Political commentary

The unemployment machine

Ferdinand Mount

This is, I think, the moment at which the Officer commanding the recce into no man's land turns round and says: 'Look here, Timmis, I want only volunteers on this Show. You don't have to go on if you don't feel up to it. I know you have to think of Your widowed mother in Coulsdon The barracking from the stands over the past month has tested the stoutest nerves (and several nerves have proved less stout than hoped). Mr Wynne Godley calls on the Government to realise that `no sustained recovery is in prospect at any future date under existing policies, indeed that the slump is still in its early stages'. In The Times, Mr David Blake told us that 'the question becomes not why is the recovery not happening, but why did anybody think that it would?'

Out on the pitch, all this has occasioned a great deal of pitch-prodding, sight-screenshifting, midwicket conferences and taking of fresh guards. Lord Thorneycroft sees no end to the recession as he goes about his friends in business up and down the country. Increased government spending and borrowing are, he says, 'an inevitability' during the recession — which being translated means 'for heaven's sake, let's have a little more discreet reflation or we shall be done for.' Mr Francis Pym warns, as he goes about and up and down, that his impression is that 'the British people will not be Prepared for very much longer to tolerate the worst effects of the recession, if there is not a clear sign that the sacrifice will have been worthwhile'.

I'm all in favour of politicians getting out and about and indeed up and down, but I'm never quite sure whether the businessmen they meet are entirely typical. Businesses Which employ or play host to eminent statesmen often tend to be businesses which have passed their peak and which will find it hardest to climb out of a slump — which is not to say that Sir Geoffrey Howe's assertion that the recession is over meets those standards of exactitude which we expect from our leaders.

It would be feeble not to repeat here this Column's tentative guess that the recovery Will be a little brisker than is commonly forecast. The growth of unemployment continues to come down at just the same rate as it went up. Consumer demand held up well enough during the worst of the Slump to suggest both that it won't slacken all that much now, even after the last tudget, and that the slump itself was caused almost entirely by manufacturers running down their stocks and hence can be ended almost entirely by manufacturers building uP their stocks again. But enough of this presumptuous flummery. The events of the last two years have confirmed beyond doubt one nasty ineluctable truth about Britain (well, perhaps not quite ineluctable, it's amazing what politicians and economists can eluct when they try). Necessity, and only necessity, is the mother of attention. To put it more brutally, in a union-strangulated economy like Britain's, slump is the only way of curing overmanning.

Most Conservatives have been genteely trying to waltz round this. But it is the heart of the problem. No obsolescent or overmanned British industry has ever been put right except when demand for its products has collapsed. So long as the stuff can still be shifted, subsidised or dumped, the unions remain strong enough to resist significant cuts in manning levels.

In other countries where the unions are more docile (West Germany) or more fragmented (France) or where they suffer from lower membership and greater legal restrictions (the United States), the process of workers moving from old industries to new ones is smoother and more continuous. The search for profit and the acceptance of rational change are not obsessively — and successfully — resisted. What is bound to happen in the end happens in tolerably good time. The economy is not crippled by these terrible British time-lags, in which tomorrow's industries are held back by the political need to prop up yesterday's industries, at least until after the next General Election.

Other countries thus do not need the periodic purging of a slump in quite the way that Britain seems to have done for the past century. Their purges have often taken an even nastier form — a national devastation in war, individual destitution unrelieved by a welfare state. For people in well-padded circumstances to say that the slump came to Mrs Thatcher's rescue may seem both hard-hearted and perverse. And yet does anyone seriously imagine that, without a general slump, there would have been such huge reductions by agreement in the workforce at British Leyland, British Steel and British Shipbuilders? At the pit of the slump, some fractional adjustment has even been contemplated at British Airways, that paradise of overmanning which keeps three or four people to clip your ticket for every one employed by some American airlines. But until the bubble bursts, how iridescent it looks, how freely it floats through the air. Until mass unemployment actually arrives, how hard it is to draw attention to its causes. You can talk about 'imperfections in the labour market' and you are derided as an arid academic with no practical understanding of 'industrial relations'. Look, we have full employment now, you are told, that is the main thing and don't tell us it can't last, because in the long run we are all dead.

Not until unemployment is well past the 21/2 million mark, has the government begun publicly to examine its own role in creating unemployment. This role is not at all obscure or hard to get at. Its operations have been clearly set out in economic textbooks — and in saloon-bar conversation — since long before I was born.

Yet it was somehow not to be spoken of in polite politics. The government, like the trade unions, was there to 'create jobs' and to 'maintain full employment'. The suggestion that its actions, again like those of trade unions, might frequently in practice have the reverse effect was uncompassionate and therefore unspeakable.

This phenomenon, by which political discussion agrees in some tacit fashion to avoid all mention of quite obvious chains of cause and effect, is not new, nor confined to the subject of employment. Indeed, you can see the same phenomenon whenever any great new engine of state is created. We provide the engine with immense powers in order that it may fulfil our intentions quickly, surely and comprehensively. We do not stop to think that the release of all this power into a low-horse-power landscape is likely to have shattering sideeffects, like opening up a cathedral close to a stream of articulated lorries.

What we are even less likely to notice until too late is how the new engine will link up with the already existing powerful forces in society to produce a new combined force operating in a new and unforeseen direction.

War, for example, may be undertaken as an extension of diplomacy on a strictly limited scale to achieve certain international ends. But in practice, the military hierarchy, freshly endowed with huge quantities of men and money, links up with forces of technological improvement to produce far more powerful and destructive weapons on the battlefield than were dreamed of before the war. At home, the military machine links up with the state bureaucracy to create organisations for administering and controlling the civilian population which last long after peace has been declared, sometimes for ever.

Only during a slump, do politicians and journalists begin to notice how the power of the trade unions has gradually combined over the years with the power of the state bureaucracy to create a new and quite unintended engine — the unemployment machine. This quiet Leviathan continues to operate so discreetly that both its operators and its victims are quite unaware of its effects, and may even express gratitude for its existence.

Next week I shall try to describe something of the working of this remarkable machine.