by Nick Gier, professor emeritus at the University of Idaho
Like the GOP the British Conservatives are just as detached from reality.
—Peter Osborne, The New York Times (10/21/22)
Read about Bernie Sanders and Labour Party leader Jeremy Corbyn at bit.ly/3Y5i3cO.
After Liz Truss was elected the new British prime minister, Larry Kudlow, former Trump economic adviser, crowed: “She has laid out a terrific supply-side economic growth plan. She is slashing tax rates and deregulating energy. I love it. Truss has it exactly right.”
Liz Truss Lasted 44 Days
If he had enough awareness to know, free market ideologue Kudlow has the proverbial egg on his face. “Has it exactly right” Truss lasted 44 days, the shortest tenure of any British prime minister.
When it looked as if Truss was going to crash, a British tabloid live streamed a head of lettuce, dressed up with a wig and googly eyes, and it made a wager that the lettuce would out last Truss. The lettuce won.
Without vetting her budget with the Office for Budget Responsibility, Truss proposed $48 billion in unfunded corporate and personal tax cuts. She would have eliminated a 45 percent tax rate that would have favored the highest income earners. Her plan to help Brits with higher energy costs was also, incredibly enough, unfunded.
British Economy Almost Collapsed
The response to Truss’ plans was immediate: the financial markets went into a tailspin, the value of the British pound fell dramatically, and the Bank of England had to intervene to prevent the complete collapse of the economy. Commentators said that the intervention was comparable to the International Monetary Fund rescuing a developing country.
Truss soon backpedaled and fired her finance minister. Markets recovered somewhat, but, as one commentator said: “She could not undo the political damage that the proposal had done.” Her new finance minister quickly reversed most of her programs, but that did not prevent the economy from falling in a recession.
Truss’ Replacement May Fail, Too
First person of color and a Hindu, Rishi Sunak, Truss’ primary opponent, will take over the reins of government. Sunak predicted correctly that Truss’ policies were “fairy tale economics” and that she would “trash the economy.” Fortunate for all concerned, former prime minister Boris Johnson dropped out of the race and made way for Sunak.
Labor Party leaders want a new election, but that would take a vote of no-confidence in a Parliament where there is still a 60-vote majority. The Conservative Party, however, now has an approval rating of 6 percent, and polls show that the Labor would win the next election by 33 points.
Truss’ Libertarian Background
When Truss was elected to Parliament in 2010, she became a member of the “Free Enterprise Group.” She was the co-author of Britannia Unchained, a libertarian program that would bring, she and colleagues claimed, the United Kingdom out of its “statist” malaise.
The New Statesman criticized the accuracy of the book’s content, saying that book contained “factual errors” and evidence of “slipshod research.” We can now see how wrong-headed its policy proposals were. The blindness of supply-side economics—claiming that tax and spending cuts will always solve any and every economic problem—is nothing short of astounding.
Time after time, tax cuts for the rich and corporations show that, typically, neither invest in the economy; rather, corporations many times back their own stock and focus solely on their shareholders. This is of course what Milton Friedman, king of free markets, recommended what corporations do.
Reagan, Thatcher, and Truss
The authors of Britannia Unchained are devotees of former prime minister Margaret Thatcher (1979-1993). Just as her friend Ronald Reagan did, she busted the labor unions; deregulated the financial industry; but, contrary to free market promises, manufacturing declined and unemployment rose.
Ronald Reagan was praised for large tax cuts, but most people don’t remember that they cuts were so deep that he had to turn around pass the largest tax increase on the middle class in history. Still, because of huge lay-outs for defense, there was never enough revenue to prevent the tripled the national debt. This what Hellen Lewis of The Atlantic means by Reagan’s “fiscal incontinence” and Thatcherite Truss’ “derring-do.”
Libertarian Jihadists are “Evil Spirits”
Truss and her colleagues are heavily influenced by the libertarian Institute of Economic Affairs. Many conservative members of Parliament are critical of IEA’s ideology. Robert Halfon, a former Conservative Party leader, is furious: “The new government is run by libertarian jihadists who are blowing up the Conservative Party and the country in the process.”
Danny Blanchflower, a British-American economics professor at Dartmouth College, stated that Truss and her colleagues “have to fess up to the fact that they’ve been a visitation of evil spirits on the British people.”
I’ve concluded that libertarians are just as stubborn as Marxists in refusing to acknowledge that their extreme policies simply do not work. Marxist collectivism failed when the government took over agricultural, but government doctors all over the world provide better health care than the U.S. In her article in The Atlantic entitled “The Prime Minister Who Got Everything Wrong,” Helen Lewis chides libertarians who are “entirely resistant to facts and changing circumstances.”
Journalist Kimi Chaddah, an expert on British politics and culture, predicts that Sunak will be little different: “He will balance the books by cutting social spending and shift the burden onto the backs of ordinary people. After all, he is wedded to Thatcherite notions of a small state, individualism and constrained public spending.” Sunak doesn’t disavow this politico-economic connection: “I am a Thatcherite, I am running as a Thatcherite, and I will govern as a Thatcherite.”
Reagan and Thatcher: More Pragmatic
Reagan worked well with Democrats, who had a House majority in both terms of his presidency. Henry Olsen, author of The Working Class Republican, argues Reagan is actually a “New Deal” conservative. His beef with government social programs was that they were inefficient and cost too much. Olsen contends that when Reagan said “libertarianism is the heart of conservativism,” it was a political ploy to please the Barry Goldwater base.
Liz Truss and her colleagues want to privatize the British Health Service and the BBC, but Thatcher refuse to touch them. She also rejected the idea that British Rail should be in private hands. After she was force out of office, her successors did sell off British Rail to private investors, and the result was far worse service than ever. Incidentally, even with its many faults, the British Health service offers better results in treating six major ailments than the U.S.
The GOP Will Follow Truss
Trump also followed Truss’ supply side economics by not funding massive tax cuts. The result was 1.02 percent economic growth over four years. Trump added $7.9 trillion to the national debt—far more, individually, than presidents Clinton, Bush II, Obama-Biden, and Biden. Biden’s current budget deficit is 3.7 percent as opposed to Trump’s final 14.4 percent. Obama-Biden left Trump with a 3.8 percent deficit.
Just as obtuse as Ludlow is Kevin McCarthy’s “Commitment to America Plan,” which will make the Trump tax cuts permanent, raise the corporate tax rate, and take back the reductions in the price of prescription drugs and health care found in Biden’s Inflation Reduction Act.
More drastic are plans to raise the eligibility age for Medicare and Social Security, which will hurt the poor who have very little savings and many lack health insurance. That alone should have sent them packing in the most recent election.
Even more dreadful is the Republican threat to hold the debt limit hostage in return for large spending cuts. This is a dangerous tactic: it leads to the lay-off of federal employees (some who process social security checks); it threatens the national economy and will eventually, if they persist, put world finances at risk.
Hindenberg-like Economic Disasters
There is a political cartoon drawn by M. Wuerker that features a Hindenberg-like dirigible. McCarthy is loading excited passengers for, presumably because of a promise for the end of Big Government, a ride to “Commitment to America.” In the distance we can see Truss’ Hindenberg in flames.
One last point: European leaders resign when they realize that their policies have failed or when their moral integrity is at issue. It is rare that American leaders leave office for either reason. Let us all ponder why that is the case.
Nick Gier of Moscow taught philosophy at the University of Idaho for 31 years. Read his articles on libertarianism at nfgier.com/2020-the-year-libertarianism-finally died/#more-851, and webpages.uidaho.edu/ngier/libchristian.htm. Email him at ngier006∂gmail.com
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