'Hammer the rich!' At last a political leader has the nerve to say what pollsters find most people think. Good for Menzies Campbell. Were those words so hard to utter when the polls have said for years that top pay is "obscene"? But you won't catch Gordon Brown or his chancellor even whispering the thought in the dead of night. It may be seen later as one of Labour's great derelictions.
What better day for Campbell to break the spell. The queues snaking out of every Northern Rock branch look like grainy pictures from the 1929 Wall Street crash. The only bank run we've ever seen is in Frank Capra's It's a Wonderful Life, but where is James Stewart to rush out and beg the savings and loans customers not to destroy their own mutual lifeline? Alas, Adam Applegarth, Northern Rock's chief executive, is no James Stewart. He did not hurry to give hard-hit shareholders back any of his pay: if he took 10 times less, he'd still be left with £140,000 - and that's not counting his pension.
The trouble is there's no escape from a bubble, even when every pundit agrees these pyramids of debt were not sustainable. Group-think eclipses common sense because any fund manager who gets out of a risky market too soon is fired just as surely as when he stays in too long. The madness of the private equity bonanza let Boots be bought on impossible debt: that debt has already been sold on at a loss. British airports were sold to a company that borrowed £11bn, leaving no money to invest so now our airports are a worldwide synonym for the hell of flying. Infinite debt's airy magic is fuelled in part by the mystique of City wizards' awe-inspiring pay.
So the Liberal Democrats have struck a blow for sanity. Strong gestures matter in politics, and this chimes with the mood of the moment. Hammer the rich, shut loopholes for tax exiles and cut the basic rate of income tax for all by 4p sounds good. So does cutting the huge pension tax reliefs for the rich, long overdue, yielding as much as £7.5bn. Dead right to axe the inexplicable relief on capital gains for private equity, which would bring in another £6bn. All these the chancellor of the exchequer should steal wholesale for his next budget: think what he could do with £13.5bn in a very tight spending round. He won't, of course, do anything as brave - people who work private equity are rattling his cage with threats that touching their perks will lead to "meltdown".
Tax and spending defines a political party: apart from war, other policies are marginal. The Lib Dems have planted a good banner on turf Labour long ago vacated. Sadly, they no longer promise a 50p tax rate for earnings over £100,000, but they remain the only party to do any hammering at all.
However, a party's identity lies not just in where the money comes from, but where it goes. Here Labour scores higher on social justice. The Lib Dems always have a tendency to want to collect more from the rich, but to redistribute it more to the middle. Remember their commitment to free care for the middle-class elderly, and free tuition to mainly middle-class students. Lib Dems prefer universal benefits that please middle England, so they promise £5 extra child benefit for all. But Labour has been singleminded in targeting tax credits on the poorest children.
Here are the Lib Dem changes: they would cut income tax by 4p and at the same time abolish council tax and replace it with to an average 3.5% extra local income tax (some would lose on council tax benefit). They would end child tax credits on above average earnings, but add £5 child benefit for all. They would tax flying and driving more, affecting the better off.
Here's what you end up with, according to their calculations: someone on £150,000 loses £2,000, a lot less than under a top 50% band. A professional couple with no children earning £50,000 each would be £1,700 worse off. But winners would be a couple with two children on £25,000, who would be £700 better off. A single mother with two children with an income of £8,000 would be £550 better off. Needless to say, Labour disputes this. They say that cutting the basic rate gives the top 10% of tax payers 50 times more than it delivers to the bottom 10%, so just to compensate for that, you need a big tax credit bonus.
Nor is it all hammer blows for the wealthy. Lib Dems would raise the inheritance tax threshold to £500,000, costing the Treasury £1.5bn, and raise the threshold for stamp duty on properties over £500,000. Both these make the wealth gap worse - homeowners are already undertaxed on their vast capital gains, unshared by those who will never be able to afford to buy.
So what does all that say about the true identity of the Lib Dems? They have a natural tendency towards class blindness which gives them less commitment to the poorest than Labour. True, they are hammering the rich, but they are also stroking them a bit, too. True, the green taxes are a good in themselves, tougher than the others on gas guzzlers and flying, to invest more in trains.
But most disappointing is their boast that these tax plans are revenue neutral. Why on earth? In the comprehensive spending review, however Labour tries to hide it, there will be very little more money, yet everywhere you look the need is great. Children's opportunities need more, for the under-fives, for schools and youth projects. Despite promises, there is far too little money to help more people buy their own home, and this cheap mortgage collapse will make it worse. Money plundered from the arts for the Olympics needs replacing before the collapse of many arts programmes. So if the Lib Dems show how to raise £13.5bn from top perks, why not use it well? It's doctrinaire to cling to the idea that the tax take itself must never rise. We are a low-tax nation.
Labour's silence on gross excess is partly why left of centre voters vacillate between two parties whose supporters are pretty much the same. Yet the Lib Dems endlessly seek out unique selling points, while Labour just as futilely digs for artificial reasons to trash them. What's needed is a blending of both and an end to this century-long split. If only the two friends, Gordon Brown and Menzies Campbell, could make that happen, they would transform the future of British politics. Never mind tea with Mrs T, it's time to end the narcissism of small difference between these two parties.