Bagehot in The Economist nails it as far as I am concerned about tensions within the Conservative-Liberal Democrat coalition in the UK, and about the best trade off from a classical liberal point of view. I’m a member of the Liberal Democrats on what the article identifies as the Orange Book wing, that is the wing that leans towards limited government free market classical liberal ideas, int he context of cultural and social liberalism.
A grand bargain beckons. The Lib Dems should accept new, pro-growth reforms to employment laws, welfare and education that anger the left. In return, they should demand concessions on things such as immigration rules that will enrage the right. Coalition government is rare in Britain: both parties should use it to overcome each other’s flaws and remove obstacles to growth. It is a risky strategy. But the alternatives are worse.