Monday 18 September 2023

The Return of Liz Truss

I'm loath to write about Liz Truss again, but here we are. In her ridiculous speech at the formerly respected Institute for Government, the former Prime Minister was given another opportunity - and on live feeds across the main news channels - to peddle the codswallop that crashed the economy a year ago. We've heard it all before, as recently as February, in fact. And the tale does not improve with the telling. The root of our current malaise is the lack of economic growth and if that can be unlocked, all the other problems go away. A line that increasingly finds agreement on the shadow front bench. But wheras they have yet to locate the big red economic growth button, Truss claims to have found it. Massive tax cuts, the peeling back of regulations, the abandonment of net zero targets, fracking and more North Sea drilling, low-to-no tax enterprise zones, less caution and more boldness.

They say the definition of madness is doing the same thing over and over and expecting a different result. This was Truss's prospectus a year ago, and despite being cheered from the rafters by the usual right wing suspects the markets gave her plan the thumb's down. How to explain the rejection of such a market friendly plan by the markets themselves? Truss was asked just this question, and she blamed several things. The rapid increase in interest rates by the Bank of England had absolutely nothing to do with her. They were too low and were planned before Kwasi Kwarteng got up and announced billions in unfunded tax cuts for the rich, implying the Bank had it in for her plan and were not acting to calm the markets. But why would they? Isn't the Bank an institutional bastion of class war economics, and one quite happy to use the whip of inflation to depress living standards and instil labour market discipline? Not so, according to Truss. It, like many other central banks and supranational economic bodies have been captured by the left and "neo-Keynesianism". She didn't say the markets were too woke, but she didn't have to. The implication was clear. She also took aim at how the markets perceived her plan. The promised tax cuts were not "unfunded" because they would pay for themselves. Indeed, asked directly about inequality and giving more money to the wealthy, she said everyone would have benefited from the resulting growth. She claimed the Office for Budgetary Responsibility, who'll we remember did not have advance sight of her plans, operated with "static models" that simultaneously overestimated and underestimated the effects public spending had on the economy. I never had Truss down as a dialectician. And she urged Rishi Sunak to go back to her plan. There was no way Britain was going to meet her target of three per cent annual growth otherwise.

It's completely barking stuff. Despite right wingers - and Rachel Reeves - whingeing about the highest tax burden in 70 years (which is misleading anyway), we can see what low taxes have meant for the British economy by just glancing back at the last 13 years. Cutting the top rate of tax, slashing corporation tax, tossing regulations into the bin fire, and holding wages down has led to profiteering aplenty, but anaemic economic growth, historically low levels of private investment, flatlining productivity, and the transformation of British rivers into sewers. More of what Truss was offering would have meant more stagnation, more pollution, and very little else. What we saw of her programme was profoundly destabilising not just for the country, but the capitalist class itself. It's why, in the end, she had to go.

Still, despite being written off by the "sensibles" in the Tory party and the press, Truss retains a stubborn following. As Rachel Cunliffe notes, the newest in a long line of parliamentary Tory factions, the Conservative Growth Group, reckon Truss's faults were a failure of presentation and that pushing her ideas on the side - such as the recent changes that benefits the wealthiest pensioners - is the best means of realising the programme. This might appeal to the more wonkish minded Tory MP, but the political appeal is simpler even than the apparent fidelity between Truss's drivel and the wisdom of the Blessed Margaret. Right now, there are only two coherent strategies available to Tories who want to live beyond the next election. Truss's programme, which at least offers a everything-will-be-alright-in-the-end hope to those who buy her vision. Or the outright authoritarian, war-on-woke rubbish Boris Johnson bequeathed his epigones. Neither are mutually exclusive, nor would either succeed, but the fault with Sunak - as far as partisans of both positions are concerned - is that he haphazardly filches from each without committing to a firm position that would inspire confidence. Instead, we're left with a government that puts a premium on doing nothing.

In other words, it doesn't matter how delusional, idiotic, and wrong Truss's ideas are. They have a hold on the Tory imagination because there is a vacuum of intellectual leadership in Downing Street. When Sunak took over a year ago, he steadied the boat but doesn't seem overly concerned about steering it in any direction. The Tories are dead in the water, and it's only a matter of time before the incoming salvos from Labour send the ship to Davy Jones's locker. Any puff of wind, even if it's the hot air of Trussonomics, is preferable than staying put and waiting for the end to come.

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Anonymous said...

> Indeed, asked directly about inequality and giving more money to the wealthy, she said everyone would have benefited from the resulting growth.

Oooh, I remember this one. Is it "trickle-down economics"? Or is it "a rising tide lifts all boats"? Where does one of those end and the other begin?

I have noticed that the "trickle-down effect" doesn't seem to be too popular any more among those who are living in this century. As for rising tides, those have demonstrated a preference for lifting Giant Space Penises into orbit, over raising many smaller boats.

> She didn't say the markets were too woke, but she didn't have to.

Oh dear me! What are the Thatcherites to do if the very markets themselves are now "woke"...? What a hilarious situation!

I suppose that their only choice now must be to forcibly bring those villainous markets to heel with, I don't know, a revolutionary program of monocultural authoritarian centralisation, or something like that?

Zoltan Jorovic said...

Phil, I don't know if you have read "When Nothing Works" (Calafati, Stroud, Haslam, Johal and Williams) but in it they describe our current political/economic woes as an "economic policy quagmire". They call it this in reference to military quagmires where victory is impossible but losing unthinkable. The result is a continuing war of attrition where resources are thrown at something (including lives) and copious quantities of propaganda pumped out to justify it. They say that all mainstream political groups are wedded to the idea of escaping from the problem through faster growth and higher wages. But, there are no actual practical policies that can achieve this. Hence we end up with fantasy economics like Truss's. They also point out that in any case, faster growth would just lead to faster environmental destruction and "aggravate the nature and climate emergencies". Which is a nicely understated way of putting it.

It seems that Starmer has settled for "we aspire to faster growth and higher wages, but haven't the means to achieve them, so tighten your belts and hang on until something (we don't know what) changes for the better". As a persuader it lacks glamour, but when the alternative is "look at the complete mess we have made, we want to double down and make it worse" then what is the average voter to choose?

The chapters on their solution are harder going. I think it comes down to "stop trying to find the big solution and stop pursuing growth", instead, look to small incremental improvements and adjustments (adaptive reuse). What defines most people's lives are residual income, essential services and social infrastructure. Focus on these. Austerity has undermined all three, but especially the services. Improving ordinary people's lives can best be achieved by making the services work better, and ensuring that residual income is sufficient for "foundational liveability", as they term it.

Of course, with the relentless torrent of blame, misinformation, confusion, lies and smears that are pumped out by social and mainstream media it is very difficult for any politician, no matter how well intentioned, to navigate a path to electoral success through honesty and practicality. It seems our political system is unlikely to offer solutions because it is a large part of the problem. Tricky.