What is left of economic policy?

One of the reasons why Downing Street is now hotly denying that Mr Brown was ever going to unveil an economic strategy to counter recession is that, put simply, 'economic policy' is pretty much emasculated now. It doesn't really exist.

Margaret Thatcher (in her various guises as arch-monetarist, supply-sider and non-interventionist) had one outstanding effect on economic policy making. She shifted the goal posts by moving them off the pitch. Instead of accepting that economic policy management is difficult, frustrating and risky and involves utilising a range of economic policy instruments, she embraced the myth of the single instrument (monetary base control from 1979-1983; supply-side fiscal policy from 1983-1989...). After all if you really don't understand this stuff, why not just pick a single lever and use it - and blame 'international circumstances' when things go wrong?

Mr Brown, of course, hasn't just moved the goal posts from the pitch; he's given them to another team. The one instrument of macroeconomic policy left to us is interest rate polcy, and he shifted responsibility for that to the Bank of England in 1997. Now you could argue that with the reforms in exchange controls in the 1980s, the restructuring of our economy through privatisation and outsourcing of public assets and services, and indeed economic growth, there are strong reasons for believing that government can do less now to avert a recession than ever before.

This is nonsense. There are still levers of influence and action that Alistair Darling could use - from effecting changes in bank balance sheets through BoE action, through to encouragement for business investment via tax credits, to changes in the purposes of planned public spending (reducing discretionary recurrent spending and increasing capital infrastructure spend, for instance) - that would, when taken together, amount to an economic strategy for coping with the effects of recession.

The belief seems to be that all of this is too hard, too risky. It makes the brain hurt. Better, then, to cushion the blow for (some of) those on low incomes and hope the rest of us can weather the storm - and be prepared to take the credit if we do.

This is politics without principle and without guts. It is artless, deficient in leadership, stumbling and incompetent, and unimaginative.