Well, the last post didn’t age well, did it? Slightly better than fresh fish, worse than a piece of cheese, the lettuce is out for the count. No idea if this one will be relevant tomorrow, either. Events, dear boy, events
It wasn’t really meant to turn out this way. Good old Krazi Kwarteng was out there, implementing the Trusster’s Britannia Unchained Manifesto with vim and Etonian self-confidence.
Overlooking the first rule of right-wing thinktanks the world over, which is fulminating generally that governments don’t have their own money Krazy Kwasi decided to slow the inflow at the top of the tank by cutting tax, without saying how he was going to reduce the outflow at the bottom in the form of cuts. Apparently all those less taxed higher earners were going to do a jolly hockey-sticks investing and spending splurge which increases growth and make up the difference automagically. Exactly how, Kwasi left as an exercise for the reader.
That included all the people who normally lend money to the UK, who asked themselves
How many times in the last few outings of the trickle-down theory has it actually worked, because we’re on the hook for the extra lending to fill up the tank if it doesn’t?
When you ask a wingnut what it believes, it will say one thing. But when you ask wingnuts with money to pony up, you realise that when it comes to their own money, they don’t believe everything they say. That’s for little people. In particular, it seems that supply-side economics was considered so off the wall at this time that they demanded a moron risk premium to invest in a submerging market.
Not only did Krazy Kwasi not want to show his own working, but he was damn well not going to let anybody in the know comment for several weeks. Instead, he produced word salad
“We are confident in our long-term strategy to drive economic growth through tax cuts and supply-side reform.
“Supply-side reforms are critical — increasing capacity brings down prices.
“Cabinet ministers will set out more supply-side measures over coming weeks to make meaningful change. Right across Government, departments have to be focussed on this.
“We are committed to fiscal discipline, and won’t re-open the spending review. We have a medium term fiscal plan coming on 23 November, alongside an OBR forecast. That will be a credible plan to get debt to GDP falling.”
Which is all very well, but can be summarised as Trust Me, I’m Kwasi, and for some reason that didn’t wash. It got him sacked for culpable incompetence and his boss into rather hot water. The wrong sort of clever, apparently, Cambridge failed to introduce Crazy Kwasi to Socrates. Or Icarus…
His replacement canned the entire Britannia Unchained budget, save some minor bits and the cap on bankers’ salaries. Oddly enough I am all for that. It will no doubt lead us into deep trouble at some future point, because it rewards risk taking but limits the downside to losing your job, now that debtor’s prisons are no longer a thing. However, making money out of money is one of the few things modern Britain is/was good at, so the moral hazard is probably worth it in the round.
Nobody was able to find a way to make the great Britannia Unchained project fly. So now we have Austerity 2.0, and somehow the guy who came last in the Tory leadership election is in charge, because he has a better bedside manner than Krazy Kwasi or the current incumbent of No 10. He’s also got a basic grasp of arithmetic. I always like that in a chancellor.
Let’s look on the bright side. At least the British Army isn’t in charge and on the BBC telling us all to stay indoors. The Tories seem to be doing their best not to let our Dear Leader open her trap, however, on the grounds that the economy cannae take another hit of Britannia Unchained gobshite.
Something that puzzled me about the Britannia Unchained agenda was that Dear Liz monstered those cynical of the whole trickle-down agenda as the anti-growth coalition which has spawned some great memes. Let’s ask ourselves what is the biggest anti-growth coalition of recent times? There’s a clue in that Trussonomics is about the supply side. So what did the BoE say about supply-side then
Brexit is a supply shock — that’s not a value judgment on Brexit, it’s an economic fact.
Hmm, obviously we’ve had enough of experts on that subject round here, but what effect did that have, now the results are in?
Put it this way, in 2016 the British economy was 90 per cent the size of Germany’s. Now it is less than 70 per cent.
Whoops. So who is the biggest agent of the Anti-Growth Coalition? Brexiters, bless ’em, and the current muppets in charge have been specifically selected for saying Brexit is A Good Thing. As Carney said, it’s not a value judgement on Brexit, if you are rich enough, you may well conclude that a > 20% fall in the size of the economy against a comparable European country is a price well worth paying to get control of your own destiny. If you are a low earner subject to the winds of competition from EU immigration you may be making a perfectly rational call that your end of the boat is fine. But it does seem a bit rich to be moaning about the anti-growth coalition faced with such full-throated support of a growth epic fail of that magnitude. You wouldn’t start from here if you want to get there.
Anyway, the Anti Growth coalition rode into town as the cavalry to save La Truss from herself, in the gnomic form of Jeremy Austerity 2.0 Hunt, busting the ass of the tax cuts, promising rises in other areas, Taking Back Control of stuff already promised to people like the energy price cap and the triple lock.
Apparently La Truss and stablemate Kwasi made some mistakes. No shit Sherlock. They got it all pretty much 100% wrong. Your mortgage will be dearer, if you want anything done by the government it will be greatly impaired because The Axeman Cometh, and the much-vaunted energy price cap will be filleted, so better start putting pound coins in the jamjar right away. Wingnuts are already rewriting history to say it was the
bailouts energy price guarantee wot did it, presumably soon to be followed by ‘Britannia Unchained was right all along‘. Inquiring minds would like to know how other European countries managed the trick in similar ventures, for the moment at least.
Apologists for this crew will no doubt say that interest rates and energy prices are going up across the developed world, so suck it up, proles. Nevertheless, the question has to be asked, given that you are now getting tax rises and spending cuts how could they have got it so wrong that such a full-spectrum reverse ferret is required? Surely there must be some suspicion that Liz Truss’s grasp on the reality of what she could do is a few bricks short of a full load?