faith in politics
the economy
Background
- Since the last election, when the British economy was described as a "success story", the recession which kicked in during 2007 has bitten hard. The credit crunch dampened economic activity and bailing out the banks by the government to prevent a catastrophic collapse has cost billions. Unemployment has risen fast and no rapid end to the recession is in view.
- Levels of debt, both personal and national, are very high by historic standards. The economic downturn is a global phenomenon, but the UK's place in the financial markets means that much responsibility lies with this country and our economy is particurlarly vulnerable.
- Income inequality, which had been narrowing before 1979 has, since then, widened. Research shows that the damaging impact of wide inequality on happiness, wellbeing and human relationships is very significant.
- The near-collapse of the banking system, and the damage this has caused to the economy suggests a major flaw in the model of deregulated markets. But no serious alternative has yet made its mark.
- Getting out of the present difficulties, without causing massive inflation or provoking a deeper depression, is the major dilemma facing governments.
Issues
- Banking regulation -The Keynesian approach, using public spending to stimulate jobs and economic activity, helped pull the UK out of the depression of the 1930s but appears to have stoked up problems like inflation, for which markets and monetarism were seen as the answer. Should we seek solutions in a return to Keynes, a continuation of the deregulated market model, or something different?
- Fiscal responsibility - What is the place of public spending in a recession? The government has spent billions bailing out the banks, but has called for no significant changes in return. Rising unemployment and poverty make increased demands on public spending whilst reducing revenue from taxes. Should the priority for public finances be to balance the books and trust in low taxation to stimulate economic activity, or create jobs and activity through public spending at the expense of higher taxation?
- Global poverty - By global standards, the UK remains prosperous. How can efforts to eliminate global poverty and mitigate the impact of climate change - both of which are costly but urgent - be maintained whilst rebuilding the domestic economy?
- Income inequality - In the UK, the gaps between the mega-rich, the ‘middling majority' and the very poor are extremely wide and continues to widen. Gross inequality affects the social fabric, weakening social bonds and damaging the common good. Yet redistributive taxation seems to be electorally unpopular.
- Sustainability - Some are asking whether continual economic growth is a valid goal for society. Unlimited growth raises questions about environmental and economic sustainability. There is, however, no political consensus on how to measure prosperity and well-being.
- What is the economy for? - Regulating the market to curb its tendency to boom and bust requires moral agreement about the principles of regulation. But British society may have become so individualised that such agreement is impossible. The Churches may be a forum where the purposes of economic life may be debated and shared values forged.
Questions
- What conditions should the government impose on the banks in return for bailing them out of a crisis largely of their own making?
- How can the different parties' policies prevent the most vulnerable in society from bearing the brunt of the recession and the austerity measures which may follow?
- What makes a prosperous society and promotes human wellbeing? Do you accept that treating growth as the only economic goal has made people in general less happy and has damaged social bonds? How can the government and the economy serve human interests better?
- How can the government work to redress the widening inequality of wealth?
Further information
The Revd Dr Malcolm Brown, Director of Mission and Public Affairs, The Archbishops' Council of the Church of England
Contact: Email 
Website 
Please note: the views and analysis outlined in this paper are those of the author alone and do not constitute a statement of policy on the part of the organisation the author belongs to.
Faith in Politics: Acknowledgement and thanks
