Unfettered Free Market Bad, Public Interest Good? – David Blunkett

Blind since birth, the Rt Hon David Blunkett was elected to the House of Commons as Member for Sheffield Brightside in 1987. A former Cabinet minister in governments led by Tony Blair and Gordon Brown, he was central to the economic and social policies of New Labour. More recently, he has undertaken work on anti-poverty and affordable credit, social mobility and a review of the future role of the community and voluntary sector. On Tuesday 10 November 2009, David Blunkett offered his unique perspective to The Sydney Institute on the global financial crisis and the changing nature of democracy. The speech below has been adapted from a transcript of David Blunkett’s talk.

Unfettered Free Market Bad, Public Interest Good? Why hasn’t the global meltdown led to a resurgence of left of centre politics across the world?

DAVID BLUNKETT

Thank you very much for the invitation and, above all, for being here; because if you weren’t it would be very lonely here up at the front this evening. I’m very pleased to have the opportunity of addressing the Institute and to share a few thoughts which I hope will stimulate discussion and debate.

We all know that we live in a rapidly changing, rapidly moving world which, for many, causes great instability and insecurity; for others, it’s about losing their sense of identity and sense of belonging. It is quite hard in the modern world to pin down your own identity as easily as you would wish.

A few years ago, I was elected to the National Executive Committee of the Labour Party in Britain. It was at a time when we hadn’t yet invented the term “New Labour” and we thought that being elected to our own bodies was tantamount to being elected to government; we were so pleased with ourselves. I was walking along with my guide dog and some people were coming towards me; it was at the annual conference. I heard them saying: “It isn’t – it is – it can’t be,” and my ego was rising. As they came up alongside me, they said, “Yes, it is. It’s a curly-coat Retriever.” It took me down a peg or two.

One of the examples which bridges the thousands of miles between the UK and Australia is the issue of immigration. I noticed the moment I arrived here this weekend that once again the opinion polls were testing whether the Rudd government was tough enough in relation to the boat people and transit arrangements on Christmas Island. I noticed, from the Sunday papers back home, that another row has broken out in Britain about what happened five years ago in terms of the way in which several hundred thousand asylum seekers, over a ten year period, had been handled. We go round and round in circles on whether people feel that they are being literally swamped by changes to their culture, to their ethnicity, to the identity they feel.

What strikes me about that, and many things that I intend to touch on tonight, is how easily people can be disturbed, how quickly people can feel that those insecurities, those uncertainties, that rapid change which is making the world for them a place that they don’t feel as comfortable in as they did in the past. Some of it is nostalgia for a world that never existed. Sometimes it is for a world that did exist but wasn’t anywhere near as stable and as comfortable as people would like to think.

This is added to, not just by what happened with the global meltdown economically, but also by what is happening with the global meltdown in terms of climate change, what is happening with the rapid change in information technology and the speed of communication; satellite, iphone, the internet, changing what is available and what can be seen and heard and experienced, literally at the twitch of a button. All of that brings into people’s homes, and into their lives, things that would have taken time to reflect on, maybe that would never have actually reached them, which make them feel a little bit disquieted, even when it is thousands of miles away.

I’ve experienced that combination of new technology and insecurity in the jobs I have had. When I was the Home Secretary, in charge of security and immigration, policing, and much else, my opposite number was Nicholas Sarkozy who is now, as you know, the President of France. He was then Interior Minister. We had an encampment at Calais on the French coast called Sangatte, which was a magnet for people making their way across Europe to claim asylum in the UK. We don’t have a Christmas Island to put people on, so they were desperate to get on the train, the Eurostar, or the freight trains coming under the tunnel, or to get on a boat across the Channel, to England. This camp was a major problem for both the French and the UK. I had only been in post a very short time when I reached agreement with Nicholas Sarkozy that we could close the camp. But he wanted me to take several hundred Iraqi and Afghan potential asylum seekers.

We met at the French embassy in London and, just before a dinner which preceded the formal events the following morning, Sarkozy took me aside and said, “I want you to know, David, that I already know what your bottom line is in terms of the negotiations.” I sat for a moment and thought I had better call his bluff. I said, “What is it?” And he told me what my bottom line was. I said, “And I presume that the French security services are working overtime?” He said, “No, it’s just simply that the people who were emailing from the Home Office here, in London, to your embassy in Paris didn’t encrypt their emails.”

That was a giveaway in several respects. Firstly, how incompetent our people were and, secondly, the French were intercepting everything that was coming in their end. I did feel a little insecure and unstable at the time. I use the example because we live in that sort of world now, where people put material on Facebook without realising what it might mean. In the United States, a mayor of a small town put herself on MySpace in her underwear. When there were calls for her to resign she explained that she thought that MySpace was personal to her space, rather than going out to the general public.

So we live entirely different lives from what we did even ten years ago – the geopolitics that you experience here in Australia and the nature of Australian society. The mention of immigration illustrates how uncertain people are about cultural issues and about change here. All of that is underpinned in other parts of the world by the way the global meltdown has affected people’s prospects of employment, the way it has undermined their certainties about what has happened to their investments, to their capital holdings, to the future of themselves and their families. You, obviously, have had an experience of a modest downturn, but nothing like what has happened in Europe or North America. And I hope it remains that way because it will have helped, not only in terms of people retaining their jobs, but in terms of people behaving and thinking rationally about what is happening in the political and social arena around you. Because what is happening in Europe and North America is anything but rational, in terms of the way people are responding.

Tonight I want to talk about a puzzle. With the free market, the operation of capital markets and the unfettered, unregulated operation of capital leading to downturn and tremendous instability, why isn’t it right-of-centre politics and politicians who have been blamed or been seen to have inadequate action to deal with it? Why is it that, in Europe, it is the centre-left who have, on the whole, taken a drubbing? And although Barack Obama is in a different position because he was elected at the end of the worst of what was happening in the United States, the recent elections in Virginia and New Jersey have actually seen a substantial swing to the right.

I believe that my Prime Minister took the right actions, both in getting people together through the G20 in terms of the global actions that were required and in terms of our own economy. But there is no question whatsoever that we’ve got a mountain to climb if we are going to stand a chance of winning the general election which will have to be held by May 2010. Therefore, in our own situation in the UK as well as across Europe and North America we have seen a reaction, and I wanted to explore why I thought that was the case. Historically, if you look back across the globe, you see that when people are insecure and there is instability, they tend to go for certainties, and they tend to look to people who actually are offering greater stability in other areas of their lives. So those who are seen to be tough on issues that worry people – that subliminally worry people – are the ones who genuinely benefit. In the past it could have been the far left as well as the right of politics, but with the collapse of the Soviet Union and the Eastern Bloc 20 years ago and the changes that have taken place in China – that isn’t the case.

One of the twists that was put to me just five or six weeks ago, by the former finance minister from Sweden, was that the decision of the Chinese to create greater marketisation within China, the fact that people were expected to save and develop their own income for retirement and investment in schooling for their children, rather than relying on traditional State provision, led to the creation of investment portfolios which had to go somewhere. Very often this went to the United States and underpinned the lending that took place in the US in the sub-prime mortgage fiasco that destabilised the world economy. It is an interesting reflection about how one change can lead to other domino effects, which then have a major impact on the way in which people perform and react elsewhere.

In the United Kingdom, we have an upsurge of the British National Party, which is as near fascist as you can get in a modern setting; it did extremely well in our European Assembly elections. Our election system for the European Parliament is different from our first past the post in Westminster, and it is not a system I’m comfortable with. It is a regional lists system and in my own region the BNP won a seat with just 6.4 per cent of the vote. This, to me, is a distortion of democracy. But it is this upsurge of feeling and insecurity that is reflected in the vote for the British National Party in Britain, not least of all because they have a subsequent right to appear on major prime time television, in programs like Question Time.

This is not so much the case in Australia; although people still are extremely worried about insecurity on the street; about muggings and theft. Even though burglary and car crime has gone down by over 40 per cent in the last decade, and overall crime is down by about a third, people still fear that in their lives. The post 11 September 2001 situation has lead to people, once again, subliminally, being extremely insecure about the nature of the world around them and the threat, perceived or otherwise, in relation to terrorism.

The debate we are having in Britain about our part in fighting the Taliban and Al-Qaeda in Afghanistan, and the aftermath of our intervention in Iraq, has created all sorts of uncertainties and, I believe, instability. I voted, and would do so again, for our intervention in both Iraq and Afghanistan. I think we were right to do so, but we’ve not understood or taken measures to ensure social cohesion and social inclusion so that people can open their minds and hear messages which are otherwise closed to them.

There is no point in asking people that I represent, in my constituency, to start discussing how we play a part on the global stage in terms of the restoration of the global economy, or our intervention in protecting ourselves by tackling the Taliban, or the issues of climate change, or how we might actually be more open in terms of inward migration, when they feel that their job is about to go from under them, or they’re in danger of not being able to pay the mortgage on their house, or that they won’t be able to put money aside for the future of their children.

You can’t ask people to have the open mind and open heart that people here are debating at this Institute unless you actually settle and provide the substance of people’s everyday lives. The left in politics have misunderstood that and have not necessarily always been prepared to acknowledge what needs to be done to get alongside people, to speak with people in the language and the issues that they themselves are concerned about, and to acknowledge those worries without pandering to them. Not all of you will agree, but I think that Kevin Rudd and Julia Gillard have done a really good job in the time that they have been in office here in Australia. I don’t imagine for a minute that they get the full credit for it but Labor at least seems to be about twelve percentage points in front here. We would love to be back in that sort of situation; but we got used to it, and we got complacent about it. Even with the Iraq war splitting our country and my party down the middle Labour still won a substantial majority in 2005, but we drifted away again from understanding those core issues.

Tonight I would like to argue that one of the paradoxes of the moment is that the left in politics in Britain and North America have not been able to explain what it is that they are offering; and why it was not their politics that led to the current downturn and difficulty across the world. In other words, there hasn’t been a narrative, there hasn’t been an explanation of that in simple and understandable terms rather than complex and highfalutin ones. An explanation that people can grasp, that has something to do with their lives, rather than looking for someone to blame. We all look for somebody to blame in our own lives from time to time, it’s never our fault, it’s always somebody else’s.

In Britain, we demutualised our building societies, our very solid way of saving for a house and for a rainy day, and being able to borrow with security. We demutualised them with people voting after being offered lump sum payments in order to turn those building societies into banks, which were then swallowed up by other banks, which then attempted to swallow banks elsewhere. One of the UK’s major banks went bust because it tried to buy a bank which was already going bust in Holland. And so it went on, from one domino to another. But you can’t get anyone to actually blame themselves for voting for demutualisation. I didn’t vote for it so I can cross myself and say how wonderful I was. It wasn’t because my instinct told me there was going to be a global meltdown, it was because I actually like mutualisation. I like the idea of cooperative and social enterprise, of people being able to share both in the benefits and in the risks in an understandable and simple fashion.

But we don’t anymore, in our politics in the UK, say things simply enough for people to understand. So Gordon Brown, holding the G20 in April 2009 in London, or playing a significant part in Chicago just a few weeks ago, has no resonance whatsoever with the bulk of the population who are worried about their jobs, their homes, their concerns about difference and diversity upsetting their traditional culture and their lives, or the fact that they think the world is going to hell in a handcart, and most of our newspapers tell them regularly that it is. Of course, as you know, those who tell others that politicians are all the same, that politics is a mess, that people don’t really need to bother voting, understand perfectly well that politics make a massive difference to their lives, and they go out and vote.

In Australia, you have compulsory voting and I have come to the conclusion that we should have a debate in Britain about this. Bob Worcester, who set up Mori polls, discovered recently from his polling that if there is a 52 per cent turn out in our general election, David Cameron’s Conservative Party will win with a majority of around 125. If there were to be a 70 per cent turn out, there would be a hung parliament, and if there were an 85 per cent turn out we would win. Maybe it’s wishful thinking, but it suddenly seems to me a very good idea to have compulsory voting.

The point I am making is, firstly, we haven’t got a proper explanation of what has happened, secondly, we are not relating it to people’s lives and, thirdly, we haven’t got a narrative of what we are trying to do and how we are trying to get out of our trouble –  and that is true of the French Socialists, of the Social Democrats in Germany, even the Social Democrats in Scandinavia. Whilst Obama retains substantial popularity, partly because of his personality and his drive and the sheer magnitude of his achievement, the Democrats in the US would be wise to think about what is happening in politics across the world and the way people are reacting to the difficulties we face.

My answer is to try and create a different sort of political system where instead of saying to people “We will solve all your problems,” we say “We will be an enabling government, supporting you in your own community, in your neighbourhood, at your work, in your family and your life to be able to help sort things out together.” This way, we don’t just have an agenda with a manifesto that pretends we can wave a magic wand and put things right, but we try to reinforce civil society, we try and put the glue in by actually enabling people to feel that they can have a say in the things that are happening immediately around them.

We can use technology to help facilitate that. We can encourage people to come together, whether it’s in simple ways, like volunteering, or whether it’s in slightly more complex organisations in charge of the voluntary sector; whether people can be brought into decision making more readily, at local government and, in your case, State level. Whether we can change the nature of public service delivery so that the consumer and user of public services has a much greater say, so that we individualise budgets for personal care so that people, with advocacy and support, can buy for themselves what they wish for themselves rather than what we’re prepared to deliver to them. Can we create a political framework in which it isn’t individualised consumerism, it isn’t individualism and selfishness, but cooperation, with an understanding that people require responsiveness and flexibility, and they want a say, and they want to be able to choose?

We are, some of us, struggling to articulate that sort of agenda. The problem is that it all appears to be the soft underbelly of politics. It’s not sharp edged; it is very difficult to rally people behind it. “Vote for me and I won’t deliver everything to you but I will help you sort it out for yourself” is not too rallying a cry really. It is not what I make my political career on as leader of Sheffield – banging the drum and facing down Margaret Thatcher and rallying people to a different sort of world. But, in the end I believe it will save our political democracy because, I fear in places like the UK that we’re on the edge of meltdown. Not just in terms of our economy and our climate, but in terms of our democratic politics, where there is such disdain for the political process, such concern that politicians don’t have answers, and such worry about whether what we’ve traditionally offered can be sustainable, that we might actually end up pulling the house down around us.

That is why I have been very pleased to come tonight to stimulate a bit of debate and hopefully to hear from you whether you think Australia is miles and miles away from that, as well miles and miles away from the United Kingdom.