Trussed or Bust?
Ten seconds.
Oh, maybe fifteen.
That’s how long it takes to realize that there will be no change.
Not, at least, if the morning’s op-ed in the Financial Times is to be believed. Written by Kwasi Kwarteng the article is, I assume, an effort to anticipate potential critics and to set forth the outline of an economic game plan for the new Truss administration in the UK. The administration is new. The policies are, however, a tad threadbare. They are well worn to a degree that suggests a complete lack of novel thinking. These are early days though, so let’s hope that Kwarteng has something else up his sleeve when he takes over as Chancellor.
The problem for the author of the article is that the Conservatives have been in power for twelve years already. So this is, essentially, their economy. So to say the following is a bit odd:
“The same old managerialism has left us with stagnating economy and anemic growth, with labour productivity growing at just 0.4 per cent a year since the financial crisis. taxes are now at their highest in 70 years. This toxic combination needs to be urgently addressed.”
Toxic combination? Same old managerialism?
Twelve years in and the Conservatives, having produced old managerialism and a toxic combination of low growth and high taxes, now realize the error of their ways?
A less cynical reader of the article than I would surely then look for both a repudiation of the last twelve years and an outline of novel ideas to accomplish this new start.
Such a reader would, I fear, be disappointed. There is nothing Kwarteng says that has not been said during those twelve fateful years he seems to be in a hurry to brush aside. For instance:
“This means cutting taxes, putting money back into people’s pockets and unshackling our businesses from burdensome taxes and unsuitable regulations.”
Forgive me while I yawn.
Since this is normal neoliberal claptrap — it looks suspiciously like the normal trickle down rubbish that has failed for forty years — what, exactly have the Conservatives been doing these past long twelve years? Writing unsuitable regulations? raising taxes on business? Wasn’t one of the main objectives of Brexit to rid the UK of all those mountains of rules imposed by distant bureaucrats? Has that not worked out the way the Brexiteers expected?
Actually we know the answer to the regulatory question. Brexit has added to the regulatory burden. The Brexiteers, in the zeal to get the deal done, failed to notice that in order to trade with Europe UK businesses had to adhere to European rules. This were the exact rules that Brexit was meant to get rid of. Then, in order to declare sovereignty over regulation, the Brexiteers added a wad of purely British regulations. So business ended up having a bigger mountain of rules to pay attention to than pre-Brexit. But we aren’t supposed to notice.
I have advice for Kwarteng: in order to reduce the regulatory burden he could simply revert back to Euro rules and get rid of all the UK-only rules. Of course, having left the EC, the UK will simply have to follow along and have no input into any future rules, but at least the burden would be reduced.
Another insight into how backward looking the new regime wants to be is the following, which is supposed to an answer to the problem of getting things back on track “for good”:
“That means focusing on how we unlock investment and growth, rather than how we tax and spend. It is about growing the size of the UK economy, not burying our heads in a redistributive fight over what is left.”
Does the phrase “lifting all boats” mean anything to anyone at this point?
This is so old hat that even someone as steeped in the past forty years as me might be forgiven for reaching for a history book to examine the origin of it.
Let me see.
We are cutting taxes in order to unlock investment. That’s a form of redistribution. Upwards of course. Tax cuts of the conservative kind always benefit the upper echelon, after all they have the cash we need to be invested, so any “unlocking” implies leaving them with more after tax income. Then, after redistributing upwards, we are supposed to stop “burying our heads in a redistributive fight over what is left”. Interesting. What is left will be smaller. Kwarteng is quite clear that the new administration is committed to small government. So we are told to expect smaller budgets. The redistribution of those smaller budgets would, under normal circumstances, be a little more fraught than were the budgets more spacious. But, never fear, we are not going to get bogged down in such fighting. The Truss era is a sunny one devoid of ugly redistributive chatter. All those happy boats will be sufficiently lifted that it will occur to no one to worry about the distributive impact of small government and tax cuts that benefit the wealthy. Social services will miraculously be fully funded because … well because all that growth will produce higher tax revenues.
Forgive me for my lack of enthusiasm.
This is so out if date and totally discredited that I worry for the FT. Presumably it printed the article as a courtesy to the incoming financial team. As a segment of modern fiscal management, however, it suggests there will be nothing new. After twelve years in power, and having produced the post-fiscal crisis economy, the Conservatives have, apparently, nothing new to say.
And this represents a challenge. Because, in his conclusion, Kwarteng says that we have nothing to fear. Truss will reject the failed consensus. It’s just that she represents the consensus. So does Kwarteng. So when he says we ought not fear anything, we ought be really fearful.
Plus ca change.
