The leader we need
The latest news in the financial crisis is that, after weeks of blamecalling by all parties — generally misdirected, as Dennis Sewell argues in our cover story — a single culprit has at last been identified. It is human nature — that incorrigible force which makes us want too much of a good thing when it is within easy reach, and makes us dangerously complacent about risk when the going is good. It was human nature that made bankers behave irresponsibly when their judgment was warped by the temptation of giant bonuses; it made homebuyers and credit-card holders overreach themselves when they were offered too much cheap credit; it made politicians overborrow and encourage market folly when they thought it would buy them electoral popularity.
In the midst of a financial cataclysm like nothing we have experienced in our lifetimes — in which mighty banks, suddenly starved of liquidity and swept by rumour, have been falling by the day, and more will surely follow in the weeks to come — it is sufficient for now to declare that we are all at fault, we should all have seen it coming, we will all have to share the pain. Far more important than blame-calling at this juncture is the coming together of presidents, prime ministers, central bankers and financial practitioners to shore up the world’s defences against economic ruin.
In this respect too, human nature is the key: in times of uncertainty, people naturally look for leadership. They are not reassured by committees or commissions or elegantly drafted proposals, but by individual leaders who are sufficiently charismatic and clearsighted to calm fear and restore confidence. We think of Mayor Rudy Giuliani in the immediate aftermath of the terrorist assault on the World Trade Center in New York, and of course of Winston Churchill in the darkest hours of the second world war. Right now, the need for resolute leadership is made more apparent by its absence from the world stage — but a promising new generation is waiting in the wings.
It is not axiomatic that President George W. Bush is too close to the end of his tenure to be able to lead America out of this nightmare. On the contrary, his flawed presidency might have been partially redeemed by a final burst of activism and persuasive eloquence. But the truth is that he is not up to the job: the same look of startled confusion plays about his face today as at the moment when news of the 9/11 attacks was whispered to him in a Florida schoolroom. Not even his own Republican party listens to him. Meanwhile, the mantle of leadership sits uncomfortably on the shoulders of his hyperactive Treasury Secretary, Hank Paulson, whose $700 billion bail-out was thrown out by Congressional rebels on Monday; but — the plunging stock market having indicated what mayhem might follow without it — the Bill looks likely to pass, in amended form, at the second attempt. Paulson is no politician, and stands accused by populist Congressmen (in fear of losing their seats next month) of putting Wall Street’s interests ahead of the taxpayer’s. But he has worked relentlessly to avert systemic collapse, and galvanised America’s bankers themselves to do likewise. In January a new president, whether McCain or Obama, will bring new hope and new White House dynamism: until then, for better or worse, America’s economic fate is in Hank Paulson’s hands.
On this side of the Atlantic, the fate of the British economy is very likely to remain in the hands of Gordon Brown for another 20 months, and his claim is that ‘experience’ makes him the man for the role. But his demeanour — as ever evasive, downbeat, unwilling to listen, incapable of admitting his own gross mismanagement of the public finances — reminds us constantly that he is not. As David Cameron said on Wednesday, ‘To rebuild our economy, it’s not more of the same we need, but change.’ The likelihood of normal politics being set aside in favour of an all-party approach to managing the crisis must surely be remote if it would require Brown to break bread with his perceived enemies. Even his hapless Chancellor, Alistair Darling, begins to look statesmanlike by comparison, having pulled off a clever rescue of Bradford & Bingley which passes the parcel of risk back to the banking sector.
But most encouraging this week has been the way in which David Cameron and George Osborne conducted themselves at the Conservative party conference. In offering to co-operate with ministers and withdraw opposition to the proposed Banking Bill, and in committing to tough decision-making on public spending and tax, they have repositioned themselves as a responsible government-in-waiting rather than the opposition of smart opportunists they have often stood accused of being. When Cameron declared on Wednesday that if ‘we win, we will inherit a huge deficit and an economy in a mess. We will need to do difficult and unpopular things for the long-term good of the country. I know that. I’m ready for that,’ he sounded statesmanlike and credible. The Conservative leader is demonstrating that he is not just a politician for the good times.
Osborne’s measured platform speech, making clear that tax cuts are now no more than an aspiration within the lifetime of the next Conservative government and that sound public finance and economic stability are the overwhelming priority, made him seem several years older than last year’s more mischievous performance. Cameron’s impromptu speech on Tuesday was a well-judged adjustment of tone at a moment when the conference might have seemed irrelevant by comparison with increasingly frightening news from the financial front. Osborne struck his most resonant note when he declared that he still believes ‘the future can be better than the past’: despite all that has happened in recent months, we can all still believe that — and we can look forward to a change of leadership on both sides of the Atlantic to bring it about.
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