Human nature is somewhat frail. All the wonderful solutions that are continually propounded would probably be brought to nothing if the propounder were responsible for the consequences of what he suggests. Whatever party is in power, there is always a problem of sacrificing long-term for short-term objectives, or short-term for long-term objectives. The admixture is always extremely difficult to achieve. The last administration know to their cost how difficult it was in their circumstances to make up their mind on such priorities.
Those actions which my right hon. Friend the Chancellor of the Exchequer may take today will often have an extremely long time lag. We have seen three crises over seven years: a balance of payments crisis, dealt with by devaluation, followed by deflation, leading to stagnation of the economy and thus unemployment. The present Government then reflated with what has been described by the right hon. Member for Leyton (Mr. Gordon Walker) as a consumer-led boom. They did so because the short-term problem then disturbing everyone was unemployment. The un employment problem is receding, but we are now faced with the consequences of such a reflation, which one might well have expected—a certain amount of inflation, a tendency towards overheating of the economy, expansion of credit and all the rest. It is with great hesitation that one would advise my right hon. Friend the Chancellor now to consider further restraint.
We have several choices before us. The argument of the Opposition—of the Leader of the Opposition and in particular of the Shadow Chancellor—has always been in favour of more severe deflation through increased taxes, control of credit and various other means, but there was every prospect of a recession in world trade even before the Arab countries raised the price of oil, and before oil sanctions, which are likely to make it much worse.
I heard on the news today that Japan has cut her expectation of economic growth down to what is for her a ridiculously low level. What effect will that have on commodity prices and the world markets? The United States and Germany will probably follow suit. If my right hon. Friend took action to cut economic growth now we might be building up even more trouble in precisely the opposite direction in about 1975, allowing for the time lag. That is not what anybody would wish.
Therefore, my right hon. Friend has taken action through a mild credit squeeze. I accept the suggestion that it may have been too broadly based, in that it is not specifically directed at certain people who are so often regarded as evil men. I refer to the remarks tagged on to every other paragraph of the Leader of the Opposition's speech about property speculators, land speculators and the like. I remind the Opposition, however, that the price of land will never be brought to a reasonable level, even by control, till inflationary tendencies are controlled, because people are encouraged to join in the flight to land by inflation itself in the first place.
In view of the possible slackening in world trade, oil sanctions and even a world recession and, therefore, a change in world commodity prices, it would be unwise not take advantage of continuing expansion and our present competitive position. Of course, the balance of payments is disturbing, but it can change quickly and dramatically. Members of the former Labour Government should know that better than most, because between October 1964 and March 1965 the position changed with great speed. It could happen again. Interest rates throughout the world are tending to come down, and I can see no reason why ours should not follow suit—a step behind, perhaps, as necessary, depending on the figures. That seems to me to be entirely reasonable.
I should very much like to take up further time in answering some of the points made by the hon. Member for Penistone (Mr. John Mendelson), but I have a feeling that my reaction to many of his comments, his appeals about class warfare and all the rest, which I regard as nothing short of drivel, would be emotive rather than rational. It is nonsensical to talk in such terms. I will take up one point the hon. Gentleman made with great force, on subsidies. A subsidy is paid either by the consumer or by the taxpayer as a direct payment to keep the price of something down. Therefore, it is much more reasonable and equitable to elevate incomes to pay for it, which is precisely what happens through the various phases of the incomes policy and the changes in social benefits and pensions.
I shall not go into the miners' dispute, about which the hon. Gentleman, representing so many miners, knows more than I, who represent but a few. However, I understand that within the global offer there could be a considerable redistribution, which would make some difference to the hon. Gentleman's figures.
It is only too easy to be wrong in economic policy. I firmly believe that, allowing for the time lags, we should take great care not to draw the economy into deflation, stagnation, and further unemployment two years ahead merely because of an upsurge of feeling now, because of suggestions that there is a need for panic measures or that the situation is much worse than it really is.