Winner of the New Statesman SPERI Prize in Political Economy 2016

Saturday, 24 September 2022

A budget that harms everyone except the very rich


Before getting distracted by the spin put on Friday’s budget, it is important to be clear what the motivation for it is. It’s not a budget for growth, it’s a budget for the rich and those who fund the Conservative party. Abolishing the 45% tax band obviously benefits only the very well off, dropping the increase in corporation tax will mainly benefit shareholders who are mostly at the top of the income distribution, not extending the windfall tax on energy producers will exclusively benefit shareholders, not increasing NI rates benefit the better off far more than anyone else, ending the cap on bankers bonuses benefits the already very rich, and so on. Conservative MPs are much more right wing on economics than Conservative voters or even party members, and this is a budget for them, as long as it doesn’t mean they lose their jobs.

The Resolution Foundation calculates that almost two thirds of the tax gains go to the richest fifth of the population, with almost half going to the top 5%. They also point out that the stamp duty changes mainly benefit richer households in the South East. Of course poorer households will get a small amount of this giveaway, but less than is needed to cover the increased costs of essentials according to NEF. The IFS have looked at all the forthcoming tax changes (including frozen income tax allowances), and they calculate that your income would have to exceed £155,000 before you are better off, and if you earn a million a year you gain £40,000

It is also a budget that is highly likely to mean cuts in public spending after the next election. The OBR were not allowed to publish their post-budget forecast, for the first time in their 12 year existence, because if they had been their budget deficit projections would have shouted ‘not sustainable’. Not sustainable is just a shorthand way of saying that taxes will have to rise or spending will have to be cut, unless something very beneficial for the public finances turns up. But of course it’s equally likely that something detrimental to the public finances will turn up. You don’t get to announce the biggest tax cut for 50 years in a deteriorating economic climate without severe implications for future spending.

Here are the Resolution Foundation’s assessment of the deficit and debt, and here is the assessment by the IFS. Both suggest deficits in the medium term that are unsustainable. The new Chancellor also committed himself to reducing government debt relative to GDP in the medium term, meaning that if these deficit projections turn out to be even roughly right he is going to have to raise taxes or cut spending.

It cannot be stressed often enough that cutting taxes and spending less is a very unpopular policy to pursue, unless you are a Conservative party member or a large part of the commentariat. This is from the latest British Social Attitudes survey.

Just 6% of the population want lower taxes and lower spending on health, education and welfare, while 52% want the opposite.

So to the spin. What the government would like you to think is that this is about fairness vs growth. These measures are very unfair, but they say they are designed to increase long run growth so everyone will be better off (just the rich will be a lot better off than the poor). The spin, like the deficit spin that these same politicians lectured us with for the last 12 years but have now abandoned, is a load of nonsense. There is no relationship between tax levels and prosperity. Worse still, as I outlined here, the evidence clearly suggests that increasing inequality at the top reduces growth. Either the government is blind to the evidence, or they have to pretend it’s all about growth as a cover for the true reason for tax breaks for the rich: their ideology and party donors.

If this government really wanted to increase growth it would make trade with the EU easier, but right now it is doing the opposite. It would be focusing only on encouraging the energy of the future, green energy, which is now much cheaper than gas, Instead they are encouraging fracking (and saying you shouldn’t worry about small earthquakes) and more investment in getting oil out of the North Sea. If this government really wanted to increase growth, it would be helping the NHS reduce the number of people not working because they are sick by training more nurses and doctors and paying them more. Instead tax cuts now mean that in the future the NHS, with its record waiting lists, will be even worse than it is now, if it has a future at all.

If you (erroneously) think the markets know more about growth than researchers who examine the evidence at the IMF, then they too think the government is doing nothing for growth. If the markets believed this budget would increase long run growth, sterling would appreciate. Instead the uncertainty created by an unfunded tax giveaway for the better off has led to the cost of government borrowing rising substantially both just before and following the budget, and sterling has fallen against the Euro. (The latter is particularly significant, as you would normally expect an unfunded tax giveaway to appreciate sterling because of expectations of higher interest rates.)

Some of the criticism of this budget is also missing the point. It's very unlikely we will see a repeat of the Barber boom of the 1970s for two reasons. First and most importantly because we now have an independent Bank of England. Instead what this budget ensures is higher interest rates. (Can there be much doubt that if it was Kwarteng rather than the Bank that decided interest rates, then a short term inflationary boom would be a bigger possibility.) But as I noted in my last post, offsetting a short term inflationary boom with higher interest rate is not a precise art, so there is a possibility that the government might get lucky with three or six months of 2.5% annualised growth (or more) before the next election. The second reason we will not get anything like a Barber boom is that most of the tax cuts are going to the better off who save most of their extra money.

What has to be added is what was absent from this budget giveaway. There was only the smallest additional help beyond the price cap for those struggling to make ends meet, and instead more use of sanctions for claimants, sanctions which the government’s own research says caused more harm than good so they refused to publish it. Alongside higher energy prices, we have sharply higher food prices which the government is ignoring. It is indicative of where this government’s priorities are that their first fiscal actions have focused on giving the most money not to those who need it most, but those who need it least.

Why was this a uniquely awful budget, that led to higher government borrowing costs and a falling currency. Tax cuts aimed at the wealthy at a time when many less wealthy are finding it hard to make ends meet is pretty bad, but it is not unique in recent times. George Osborne cut the top rate of tax in 2012 in the middle of a sustained period of austerity, and cut corporation tax too. Nor is justifying tax cuts aimed largely at the rich by pretending they will boost long term growth a new excuse. Trickle-down economics has been growing as part of Conservative DNA since Thatcher. The growing evidence that it doesn’t work and will probably reduce growth has little chance when set beside growing party donations from the very rich.

What made this budget stand out from any UK budget over the last 30 years was the absence of any attempt to match taxes to day to day spending over the medium term. I’m not talking about the deficit fetishism of Osborne, Hammond and Sunak: that had long passed its sell by date. However for the last thirty years Chancellors have attempted to put their decisions within some kind of overall fiscal framework. Kwarteng not only failed to do that, but he stopped the OBR making that clear. That matters not just because it raised borrowing costs and depreciated sterling, but because it almost certainly means, if this government remains in power, spending cuts on the horizon. Cuts in spending that will be far deeper than anything George Osborne did, because UK public service provision is already at rock bottom and in some cases close to collapse.

When the mainstream media and non-partisan think tanks talk about this budget being a big gamble, they are going as far as they feel they can in condemning it. What the country and the economy needs right now is reducing the record delays for standard NHS treatments, reducing appalling waiting times for ambulances and A&E, allowing schools to fill the gaps left by the pandemic rather than not replacing teachers to pay energy bills, and so on. An economy where the public sector no longer works is an economy that no longer works. What this budget showed is a Chancellor who not only doesn’t understand this, but intends to make it worse.

Tuesday, 20 September 2022

Going for growth?


In my last post, I missed out one potential benefit from the switch in emphasis from the deficit to growth under Truss and Kwarteng. During the dark days of Osborne’s austerity, the idea that the ultimate goal of fiscal policy was to manage the deficit became firmly established in the media. This idea was always absurd, although I analyse the origin of this belief here. The primary aim of fiscal policy, along with economic policy more generally, should always be to increase social welfare. While it is up to politicians how they weigh the welfare of different parts of society, pretending the government’s deficit is a proxy for this welfare was always nonsense.

Economic growth is related to social welfare, but we should never forget that they are not the same thing. The most obvious example of that, which I will talk about below, is a demand led boom that leads to higher inflation. In addition aggregate growth figures ignore how income gains are distributed among different groups. Furthermore, additional growth achieved today at the cost of yet lower growth tomorrow is not worth having. An obvious example of this is extraction of oil or gas that would add to growth today, but because of global warming would reduce the social welfare of future generations.

Before discussing the merits of Truss/Kwarteng saying they are targeting growth, we should ask why they are doing this. After all, and with the caveats above in mind, all governments before 2010 tried to raise the growth rate in various ways, so this is hardly something new. So why are Truss/Kwarteng making a big deal of it?

Part of the answer comes from the first paragraph of this post. They want to signal a departure from policy that placed a high weight on deficit targets. But another reason is also important. As many have noted recently (see myself here in February), at some point after the Global Financial Crisis the UK economy went from being a success story in terms of growth relative to other G7 countries to being a failure. For a long time the government successfully (in terms of the mainstream media) hid this decline by talking about the deficit (see first paragraph again) and repeatedly pretending we had ‘strong economy’, but now the decline has become undeniable. In addition it is also clear that this decline has happened under Conservative (or Conservative led) governments.

The implication Truss/Kwarteng would like you to draw is that the Conservative governments of the recent past allowed this era of decline to happen because they didn’t prioritise growth, and this new Conservative government will be different because it is going to prioritise growth. While I think there is a lot of truth in the first part of that sentence, I see nothing to suggest the second part is true.

Take, for example, the two major policy mistakes that in my view played a large role in creating this recent era of UK decline. Austerity at the depth of the GFC recession both killed any chance of a normal recovery and probably also reduced the long run level of UK output, but implicitly Sunak had already acknowledged that mistake by not repeating it during the recession caused by the pandemic. In contrast the second major policy mistake, Brexit, continues and neither Kwarteng or Truss show any sign of acknowledging the negative impact of Brexit on growth.

So compared to the last 12 years of economic decline, this new administration is keeping one of the main reasons why it happened and is agreeing with the last government about not repeating the other. In addition, its big idea about how to raise growth, tax cuts including low corporation tax, had already been tried without success by Osborne during this period of UK economic decline.

Behind the unashamed promotion of fiscal measures that increase inequality (not just tax cuts but not imposing additional windfall taxes on energy producers and lifting the cap on bankers bonuses) is the idea that greater inequality encourages growth. The evidence suggests either no such association or the exact opposite. Here, for example, is a quote from one IMF study: “Thus the combined direct and indirect effects of redistribution - including the growth effects of the resulting lower inequality - are on average pro-growth.” More recently the IMF points to a robust result that higher inequality at the top of the income distribution reduces growth. There are many reasons why greater equality might promote growth.

Tax cuts aimed at the rich, therefore, are if anything a growth reducing measure, and almost certainly reduce social welfare. That is why removing the cap on bankers bonuses, or not imposing a windfall tax on energy companies, is more likely to reduce rather than increase growth. The idea that the last 12 years of economic decline under Conservative governments were because those governments prioritised redistribution over growth is nonsense, as Jonathan Portes shows. Once again, fiscal measures that favour the rich were tried by Osborne and it did nothing to stop, and may even have assisted, the last 12 years of UK economic decline.

Its other big idea is to reduce the ‘red tape’ that they believe is holding back UK business. First, we should note the huge increase in red tape for our exporters to the EU created by Brexit, which the current government intends to continue. Second, there is no general relationship between regulations and economic growth. For example, the government has ordered a review into anti-obesity measures. It is not obvious why these measures hold back economic growth, but it is clear that more obese people implies a greater burden on the NHS, requiring either higher taxes to fund it or a reduction in social welfare as other care is rationed. Or take the absence of regulations, since Brexit, to keep our beaches and rivers clean, which benefits monopolies and their shareholders but is likely to encourage imports and reduce exports (UK residents taking holidays to cleaner beaches overseas and less overseas tourists coming to the UK) implying less growth.

The idea that less regulation always increases growth, just like the idea that lower taxes always raise growth, is just right wing wishful thinking. However, like much right wing wishful thinking, there is a whole industry out there trying to manufacture evidence to support these ideas sponsored by those that benefit from such measures. It should be no surprise, therefore, that Conservative governments keep enacting measures that favour wealthy interests rather than favouring growth, when they are advised by newspapers and think tanks funded by those interests. It’s very important that we avoid right wing wishful thinking becoming received wisdom in the mainstream media, as the wisdom of austerity was allowed to do.

Where there is good evidence that fiscal measures can assist growth tend to be on the government spending side: investing in certain types of skill for example. Right now the UK appears to be suffering a negative labour supply shock caused by a rise in long term illness, due partly to Long Covid but also because of the growing waiting lists for other treatments in our overstretched and understaffed NHS. Improvements in these areas can be achieved from more public investment or targeted incentives for private investment (better ventilation for example) but they also require permanent increases in public spending and therefore higher, not lower, taxes.

An indication that nothing has really changed is empty gestures. Having a target for 2.5% growth is just nonsense for two reasons. First, it’s GDP per head that influences social welfare, not GDP, so the target is for the wrong thing! Second, setting a target does nothing to help you achieve higher growth. At best it is an attempt to pass off measures that are rightly unpopular, like removing the cap on bankers bonuses or not extending windfall taxes on energy producers, as necessary to achieve the growth target, but of course neither will have any positive impact on economic growth. Equal nonsense is removing the Treasury’s permanent secretary for no other reason than wanting to show things have changed. One empty gesture might be an accident, but two perhaps suggest there is in reality little substance to this proclaimed change in direction.

If a growth target makes no sense, and none of the measures advertised so far will help increase growth, how will this work politically? It is possible that Truss/Kwarteng may try to cut taxes and increase spending, producing a sufficiently big enough increase in effective demand such that output growth exceeds their target just before the next election, allowing them to proclaim their policies a success. Comparisons have been made with the Barber boom of the early 1970s, a boom that helped create the largest rise in inflation in UK post-war history.

Today, with an independent central bank, such a policy combination would create a rapid increase in UK interest rates. For this reason among others, manufacturing an unsustainable short term boom is likely to damage long term growth rather than improve it. However raising interest rates to counteract fiscal largesse is not a precise science, and it is possible that for a quarter or two annualised growth could exceed 2.5%. If it does, expect many proclamations of a new dawn from Conservative politicians and their press. But even if that does happen, and it may well not, it will be yet another deception. This decade or more of economic decline will not end by cutting taxes, deregulation, making exporting harder, and increasing inequality.

Tuesday, 13 September 2022

How to judge fiscal policy in the time of Truss


As expected, Truss has announced a freeze in energy prices. That means that inflation will not be as high as some recent forecasts, the cut in living standards will not be as great as in the most recent Bank of England forecast, and so therefore the Bank’s prediction of a prolonged recession with plummeting inflation is less likely to come to pass. All good news, but what about the government’s deficit, particularly if she keeps her promise to cut various taxes?

This is the question that many journalists, and I suspect opposition politicians, are currently asking. Despite furlough, much of the media continues with the ‘government as household’,’how will you pay for it’ version of macroeconomics. Partly for this reason, the Labour oppositions since 2010 have felt obliged to ‘be responsible’ by ensuring key spending announcements are accompanied by equal revenue raising plans. Does this all now need to change?

I have always argued that it should change. (On why debt targets are a bad idea, see here and here.) The emphasis given to the government deficit in the media is totally inappropriate, and can at times be extremely dangerous (as we saw after the Global Financial Crisis). However it is also true that the media takes very little notice of academic economics, and much more notice of what a government (particularly a Conservative government) is doing, so the media’s obsession with ‘the deficit’ would only have a chance of changing if the government changed its emphasis. It now has.

I suspect and hope we will see an end to two particularly silly aspects of deficit fetishism in the media. The first was monthly commentary on public borrowing, with associated ‘tax will go up/down’ headlines. That kind of commentary only makes sense when Chancellors have short term deficit targets, and I will be surprised if Kwarteng doesn’t ditch this aspect of Sunak’s policy. The second was around budget time, when annual movements in the deficit attracted far more attention than they deserved.

However those hoping that both the government and the media will completely ignore what happens to the government’s deficit will I suspect be disappointed. If I am right, at some point Conservatives will resume using an unsustainable government deficit to argue for spending cuts and a smaller state. The argument between Truss and Sunak was essentially political. Truss believed that, with two and a half years before the next election, playing the deficit responsibility card would reap few political dividends and might prevent the government from doing more popular things, like cutting taxes. Deficit obsession was never a fundamental part of neoliberalism, but just a useful tactic at certain times to achieve a smaller state.

So I would not be surprised to see Truss and Kwarteng still stressing the importance of fiscal ‘responsibility’. How will they square this with the fiscal largess implied by an expensive energy price cap and tax cuts (compared to previous plans)? It is actually easier than you might think.

The huge cost of the energy support package can be justified in the same way as furlough was: an exceptional response to exceptional events. After all, the main event that has had the biggest positive impact historically on government debt was a war, and the government could with some justification argue that the need for a large scale fiscal support package is the war in Ukraine.

The government is on trickier ground with any tax cuts, but even here they have an excuse within the spirit of some of the rules they themselves have set. A UK recession is still a strong possibility, and Conservative Chancellors since 2010 have generally recognised that fiscal rules can be set aside in recessions (or even milder economic downturns). So the new Prime Minister and Chancellor might try to justify any tax cuts as measures to prevent a recession, and still argue that they were being ‘responsible with the deficit’ in the medium term.

In macroeconomic terms this doesn’t wash for three reasons. First, if you were looking for a fiscal stimulus to prevent a recession, you would not choose cutting national insurance or corporation tax as effective measures to do that. The most effective and quick way of stopping a recession is to increase universal credit, because you can be reasonably sure most of that will be spent. In contrast, it’s not clear whether cutting corporation tax will have more than a tiny positive impact on aggregate demand during an economic downturn. The main influence on business investment is what is happening to output, not the corporate tax rate.

Second, and more importantly, effective fiscal stimulus during a recession is inevitably temporary. It is designed to either prevent a recession, or lift the economy out of one, and once that goal has been achieved you no longer need any stimulus. Truss, however, intends her tax cuts to be permanent, so the prospect of a recession is no answer to the ‘where is the money coming from’ question.

Third, outwith the lower bound for interest rates, it is monetary policy that should be worrying about inflation and recessions. In this light cutting taxes to avoid/moderate a recession looks very odd when the Bank of England is raising rates. Does the government think the Monetary Policy Committee of the Bank could be making a mistake? 

However all three points are unlikely to be made by most of those who will interview government ministers, so in political rather than economic terms the excuse of a possible recession is tenable. [1] What this means, I suspect, is that Truss and Kwarteng are not going to start saying the deficit doesn’t matter, implying everything Osborne and Sunak said about it was wrong. What it will mean is that the government can no longer use fears about the deficit under a Labour government as a political weapon. Instead they will just say that a Labour government will mean higher taxes.

Where I think the government is more vulnerable, and where I think the media will rightly continue to talk about the deficit, is following OBR or other reputable medium term forecasts. Absent unexpected good fortune, the OBR is likely to be forecasting in five years time government deficits which will imply either government debt or net wealth are unsustainable. This five year time horizon is important not because it is likely to happen, but because it’s a good assessment of the underlying level of taxes and spending, abstracting from short term shocks and the business cycle.

This will not imply any immediate crisis, and any impact on the exchange rate will have probably already happened. But it is important nevertheless, and it is why we should not ignore government deficits altogether. Persistent and large excess deficits (where excess means government debt is persistently rising or net wealth is persistently falling) generally indicate spending cuts or tax rises in the future as I suggested earlier. But if left unchecked, they can predict one of two things. The first is a persistent fiscal stimulus, which in absence of monetary policy would imply rising inflation. Of course with an independent central bank with a medium term inflation target persistent fiscal stimulus will imply higher interest rates to prevent higher inflation. While that upward pressure on interest rates was welcome when rates were stuck at the zero lower bound, that is not true today.

However persistent deficits need not imply that much inflationary pressure, if they take the form of tax cuts for businesses or the better off. The second possibility is that they signal a redistribution towards the most wealthy. If tax cuts directly benefit businesses or disproportionately those on high incomes, they will not add that much to effective demand in the economy because most of the tax cut will be saved. Instead they indicate a redistribution of income to the already rich.

In all cases projected persistent excess deficits are not a problem in themselves, but because of what they indicate could happen as a result of current fiscal plans: spending cuts or tax rises, or future higher interest rates, or future redistribution towards the wealthy.

In political terms this will be a problem for both the government and Labour. The government will claim that the OBR are underestimating the boost to growth that tax cuts will give, and higher growth will lead to higher taxes etc. Labour, along with the non-partisan media, should rightly describe this as wishful thinking not backed up with evidence. If it was backed up by the evidence the OBR would incorporate that in its forecast.

However Labour cannot say the same, so while they can blame the government for being fiscally irresponsible they will also be asked how they would deal with the problem if they win power. As Labour are likely to be repeatedly asked how they intend to close any funding gap, that should influence their stance when these tax cuts come into place. I suspect they will vote for tax cuts for ‘working people’ but against tax cuts for ‘big business’?.

So my answer to the question posed by this post’s title is to ignore any residual media interest in monthly borrowing numbers or the dynamic path of deficits in any budget, and instead focus on the medium term deficit implied by OBR (or other reputable) forecasts, where the inappropriateness of tax cuts will become clear. The increase in government debt implied by the short term energy price cap is not a problem and can be easily justified. Otherwise we should see a welcome change to an economic debate about what really matters: whether it is more important to cut taxes or instead provide sustained support to our underfunded public services and the less well off.

[1] Even if a journalist did make the points above, the government’s response would be that tax cuts lead to more growth and more revenue.

Tuesday, 6 September 2022

The Cost of Living Crisis, its macroeconomic implications and Truss economics


Support for energy users

When I wrote about higher energy prices back in March, I argued for what would become two months later the UK’s approach. I preferred that to the policy adopted in, say, France, where prices had been pegged to near pre-crisis levels.. I argued then it was best to let energy prices rise, tax away the resulting profits of domestic energy producers and give money to those who would have difficulty paying the higher prices. The alternative of keeping prices low was worse because you lost the incentive for consumers and businesses to economise on energy use.

For any country, including the UK, we can think of the impact of higher energy prices in terms of incentive effects and distributional effects. The incentives to economise on using carbon are good both in the short term (reducing Russia’s leverage on those countries supporting Ukraine defend itself) and the medium term (reducing man-made climate change). However there is no reason why energy producers (and their shareholders) should benefit from these higher prices, so it makes sense to tax away excess profits if you can. The only thing that prevents most countries redistributing all the benefits of higher energy prices from producers to consumers is that the energy producers (rather than suppliers) are taxed overseas.

Since then energy prices have continued to rise, and so policy makers once again have to make a choice. Do they let prices rise further and give cash to those who cannot afford those higher prices, or do they force suppliers to keep prices at their summer level and give money to these suppliers (as Labour are suggesting)?

As @TorstenBell points out, there are a number of distractions from this basic choice. One from the left is nationalisation. Nationalisation may be part of holding down prices, but it is not necessary for this, and nor does it make it any cheaper for a government to do. An argument against windfall taxes from the right is not 'interfering with markets'. Nothing in economics says that the owner of a finite resource (energy in the form of carbon) has to get richer when the price of that resource rises, and that becomes especially so when we don’t want that owner to be incentivised to extract more of the resource. (Unfortunately Sunak’s windfall tax does just that, illustrating how anti-green the government already was before Truss became its leader.) One final distraction is trying to relate the size of any government spending on support to the size of the increase in windfall (or any other) taxes. With future prices very unpredictable there is no reason why these two should be related in the short term.

There are two good reasons why a UK policymaker might want to switch from allowing prices to rise and supporting those who need it to a strategy of holding prices down at their current (higher) level. The first is that most of the incentive effect has already been obtained by the initial increase in prices, as there are limits to how much households can (or should) economise in the short term. The second is that with even higher prices, directing support to where it is needed gets much more difficult.

As Torsten Bell notes here, only around 45% of the poorest half of the population receive benefits. In addition there is a wide variation in energy use within different income groups, particularly among the poorest. Many disabled people are also intensive energy users. Designing a scheme that relates how much support each household receives to their income and energy use is difficult but not impossible. An easier route is just to cap prices at their summer level, continue with the May support scheme and compensate the energy suppliers, as Labour suggests. In either case, substantial windfall taxes on energy producers making massive profits are what any sensible UK policymaker would do.

Unfortunately, higher energy prices are not the only problem facing poorer households this winter. Food prices have also been rising rapidly, and rents may do the same. There remains a strong case for raising the level of universal credit, irrespective of and in addition to whatever is done about energy prices. In addition, the benefit cap for large families continues to lead to child poverty. Extending free school meals is also an obvious move for any government interested in the health and education of its children.

The longer term response to higher energy prices for any government interested in the future has to be massive investment in green energy and energy efficiency (like help with home insulation). This should be the case even if the current price increase proves short lived. Recent climate changes emphasise the need for urgent action to reduce carbon use, and recent events show how dangerous it is to be be dependent on energy produced in countries that are not democracies.

Macroeconomic consequences and interest rates

Higher energy prices are having dramatic macroeconomic consequences. Right now everyone is focusing on higher inflation, which in most countries is largely due (directly or indirectly) to higher energy prices. However this inflation is generating falls in real income in most countries, which are likely to lead to a recession in many. As energy prices stabilise or fall, the impact on inflation will unwind, and concern will shift to stagnant or falling output and rising unemployment. (For the impact of energy prices on the level of real incomes to be reversed, energy prices would of course have to fall back to the level they were before they started rising.)

It is really important to recognise that most of the increase in inflation and drop in real income as a consequence of higher energy prices, and not some failure in monetary policy. As Tony Yates points out, real incomes would be falling right now even if the monetary authorities had managed to keep inflation at target by anticipating higher energy prices and the Ukraine war. The difference would be that interest rates would be sky high, nominal wages would be falling and a recession would be certain and much deeper.

That so many people miss this basic point is partly a consequence of the centrality of inflation targets, and the natural but erroneous implication that central banks can or should always control inflation. What central banks really do is manage aggregate demand with the objective of hitting some level of inflation in the medium term. Why would central banks try to create substantial deficient aggregate demand following an energy price shock? The only good reason is if medium term inflation expectations had risen, and unsurprisingly there is little sign of that with a possible recession on the way.

This is important, because it looks to me (and Tomas Hirst) as if the European Central Bank, and perhaps the Bank of England, may be raising rates in part because of the high inflation generated by higher energy and food prices. Indeed it seems as if the higher inflation goes the more pressure there is to raise rates further. This would be a serious mistake, and will only increase the probability of a demand-deficient recession. We are not seeing a rerun of the 1970s. Instead real wages and real incomes are falling substantially which will itself reduce aggregate demand, and there is no need for central banks to add to that. Demand-deficient recessions are rarely inevitable, and often represent a failure of foresight or policy.

There is a widespread view that other central banks have to follow the US, where rates did have to rise to stabilise excess domestic demand. Some even say that without this ‘follow the US’ tactic, currencies would collapse against the dollar pushing inflation up further. I am very sceptical about this argument, which flies in the face of the standard logic for floating exchange rates. If US domestic demand is excessive, and European demand is deficient (which is what most estimates say), an appreciation in the dollar is how you correct both. In addition, the best theory we have about the relationship between interest rates and exchange rates does not imply currency collapse if European rate rises fail to match US rate increases. As any rate gap is likely to be temporary (say 2 years), the impact on European inflation in not following the US will be marginal compared to current levels. [1]

Truss economics

Incredibly, given the urgency, we still have no clear idea what the UK government will do to tackle the latest energy crisis. The contest to be the next PM has paralysed the government because under Johnson government has become far too dependent on its Prime Minister. Johnson, Truss and Sunak could have agreed something during the contest, leaving households and businesses facing less damaging uncertainty, but that was it seems beyond them.

What we do know is that Truss as Prime Minister will create a shift to the right on economic policy. Truss intends economic policy to follow a Tufton Street/Britannia Unchained path. Johnson when he became PM increased public spending in some areas (but not nearly enough), and Sunak’s concerns about the deficit meant that taxes were raised substantially. In contrast, Truss is intent on cutting taxes, despite the need for a great deal of government support following higher energy prices. Her justification for doing this is ‘trickle down economics’, an idea supported by the wealthy but not by the evidence. She even describes such policies as ‘fair’. What they are not, however, is an effective way of avoiding a recession, as the better off or corporations spend little of any tax cut, particularly a tax cut that looks very temporary because the deficit is rising fast.

This lack of concern about the impact of her policies on the deficit should not fool anyone into thinking this makes her policy stance less right wing. Deficit obsession on the right was always a device to achieve a smaller state: Osborne cut taxes as well as spending. An alternative tactic, used in the US, to achieve the same end is called ‘starve the beast’: cut taxes today, and later demand spending is reduced because of the higher deficit lower taxes create. For this reason, as I argued here, the Truss-Sunak contest was about the best tactics to achieve a smaller state rather than a contest about ideologies. It has to be said that in the current situation with multiple crises reflecting inadequate public spending, arguing for a yet smaller state is just crazy.

Yet the new Chancellor would like you to think it’s a new strategy. In his article for the Financial Times, the prospective Chancellor derides “the same old economic managerialism [that] has left us with a stagnating economy and anaemic growth, with labour productivity growing at just 0.4% a year since the financial crisis”. What is this ‘old economic managerialism’ that is to blame for what is indeed a woeful growth performance. He should know, as nearly all of it occurred when his government was in power?

Unfortunately the 2010 government also believed that tax cuts and deregulation would inspire more rapid economic growth. Osborne cut corporation tax substantially, raised income tax thresholds and cut its top rate, and since 2010 we have not had a government piling on new regulations. So this Chancellor’s criticisms of his previous Conservative Chancellors must be about the obsession with the deficit. Fair enough, and also pretty relevant as we may be heading for another recession where deficit obsession would be disastrous.

Yet 2010 austerity was a disaster mainly because it led to cuts in government spending at a time when the opposite was required. It was not a disaster because taxes were raised, as many taxes were cut. Yet Truss talks a lot about cutting taxes, and very little about the need to raise public spending. (In most cases the direct effect of a change in government spending is an equal increase in GDP, while a change in taxes will only directly increase GDP if it is spent.)

This means that there is no big change in government strategy. All Chancellors want higher growth - it’s what they do to try and achieve it that matters. The underlying strategy under Truss will be just more of the same as we had after 2010: cutting ‘red tape’ and taxes. In addition, given her backers in the ERG, she will find it hard to deviate from a path of confrontation with the EU. This new Conservative administration is doing nothing more than doubling down on an already failed economic strategy, hoping one last push will reverse the stagnation we have seen since that strategy was first applied. It seems that the Conservative party mean to carry on what they have done since 2010, which is to harm the economy by their actions or neglect.

[1] An expected 2 year gap of 1%, say, in interest rates between Europe/UK and the US would lead to a 2% depreciation in the Euro/Sterling exchange rate against the dollar. Model estimates suggest that in turn would raise inflation in Europe over time by around 0.2% directly, but activity would also be stronger.

Tuesday, 30 August 2022

How populists use broadcasting impartiality to create bias and obscure knowledge


Some of the criticisms I have seen of the MacTaggart Lecture given in Edinburgh by Emily Maitlis miss the whole point of the lecture. As Maitlis points out on a number of occasions, until recently she largely accepted the BBC view about impartiality. She recalls an interview she did with Robert De Niro, just after Trump had suggested taking bleach internally might be useful in treating Covid. De Niro accused Trump of not caring how many people died, and despite her best efforts she said afterwards that the interview couldn’t be broadcast because it was so anti-Trump. It was broadcast, just two weeks before her infamous Dominic Cummings goes to Barnard Castle intro for Newsnight.

Her lecture is about the impact of populism on non-partisan journalism, and the BBC’s reaction to that Newsnight intro can be seen as illustrating the point she wants to make. The journalist’s role is to ask questions, often critical questions, of politicians that their viewers would find the answers to interesting and informative. The journalist’s role is also to inform their viewers by pointing out facts and knowledge, like the fact that Cummings broke the rules on that occasion. But the populist undermines that role by claiming a more direct contact between themselves and ‘the people’, a direct line which then allows them to not only question what the journalist is doing (e.g. serving an out of touch elite rather than their viewers) but to dismiss what they say as ‘fake news’.

When journalism elevates their own balance or impartiality above all other values, then this attack immediately puts journalists on the defensive. [1] Maitlis argues that in response, there is a danger that journalists (or the institutions that employ them) signal their balance to those populists who are attacking them by themselves becoming biased. This form of strategic attack by populists who espouse socially conservative views may be particularly effective on journalists who tend to be socially liberal, because the journalists themselves tend to overcompensate for their own liberal views.

The primacy of balance, like the UK constitution, falls apart if one political side no longer plays by the rules and instead seeks to exploit them. It cannot cope when politicians start lying about easily verifiable facts. In response to the populist onslaught against the mainstream media, the desire by journalists to be balanced can ironically lead to them becoming biased in favour of the populist politician.

One of the problems with impartiality is how is it judged? If you use the opinions of viewers as a measure of impartiality, as the head of editorial policy at the BBC did here, you in effect become anti-science: giving the opinion of the person in the street as much weight as an expert in the field. In reality impartiality is normally judged by what politicians think, and inevitably those who shout loudest or those with power tilt the perceived impartiality scales of the journalist or institution in their favour. Within hours of the government’s complaint about the Maitlis newsnight intro, the BBC apologised for the intro without any investigation or due process.

The BBC under this government has gone too far down the road Maitlis describes to recognise the problems she points out. As she puts it provocatively, the government has “an active agent” on the BBC board who tries to be the arbiter of impartiality and also, according to reports, tries to veto BBC appointments that the government doesn’t approve of. Maitlis uses the metaphor of frogs in a slowly boiling pot for journalists responding to populist onslaught, and like the frogs too many in the BBC cannot see the pot is near boiling point.

Maitlis mentions the BBC’s attempts at impartiality during the Brexit referendum, when economic arguments for and against were always balanced even though the number of economists who feared Brexit far outweighed those promoting it. She describes this as “superficial balance concealing a deeper truth”, but I would describe it as political impartiality overriding facts, knowledge and the truth. Yet I have had discussions with well known BBC journalists who dismiss my argument that this was a mistake, and that it could have had any impact on the referendum result. Here is John Simpson more recently commenting on Maitlis:

“The BBC’s job isn’t to tell people what to think about the complex political issues of the day. It’s to lay the arguments in front of them honestly & let them make up their own minds. This isn’t timidity, @maitlis — it’s the essence of public service broadcasting.”

That such responses to criticisms by Maitlis and others are so weak, and would be knocked back in an instant by the same journalists if they were made by someone else in another context, is indicative of deep groupthink within the BBC. The idea that the format where two people from each side spend 5 minutes debating with each other about the economics of Brexit allows the audience to “make up their own mind” who is right is laughable, just as it would be laughable if the subject matter was how to control a pandemic or climate change. There are obvious reasons why it takes countless hours to become experts in trade economics, pandemics or climate change, and why a 5 minute debate is no substitute.

The “essence of public service broadcasting” is to inform and educate, as the BBC’s mission statement says. A 5 minute debate cannot do that for complex issues. Nor would it help much if journalists had reported (which they rarely did) what the majority of economists thought before each debate, for reasons I give here. What the BBC and other broadcasters should have done is tell viewers why trade economists were so united that Brexit would damage trade and therefore incomes, and that explanation could include the riposte of the Leave side. By failing to do that for fear of being unbalanced, broadcasters allow populists to discredit knowledge using labels like Project Fear. Economists didn’t ‘get lucky’ in predicting how Brexit would damage the UK economy but instead applied the knowledge gained from decades of analysis and evidence, and by treating that knowledge as opinion broadcasters actively failed to inform their viewers about what would happen. They took the side of the populist rather than serving their audience.

Impartiality can all too easily become a device where politicians control what journalists are allowed to say. As Maitlis also notes, because ‘both sides’ (Tory and Labour) prefer not to point out the consequences of Brexit, a broadcaster obsessed with impartiality feels they cannot do so either, and so viewers are misinformed about the reasons for empty shelves in supermarkets or delays in travelling abroad. Once again, broadcasters take the side of politicians rather than viewers.

Where I perhaps depart from Maitlis is seeing this as a problem created by populism, rather than a problem even without populism. After 2010, when Labour failed to challenge the Coalition claim that Labour had caused the recession, a broadcast media obsessed with impartiality didn’t challenge it either, even though the claim was such nonsense that Osborne later admitted it was false. When both political parties accepted that bringing the deficit down in the middle of a recession was a good thing, so did much of the broadcast media, even though the economics taught to undergraduates and graduates disagreed. Going even further back, when the Labour government stopped pointing out the benefits of immigration, broadcast media began to assume that immigration was a bad thing. It took the aftermath of Brexit for the public to hear contrary arguments, and public opinion shifted as a result.

As John Elledge points out, the BBC has a particular problem because the government regularly takes decisions about how much money it gets, which gives the government much greater power to shift the BBC’s own scales about what balanced reporting involves. Because the political right since Thatcher finds it much easier to threaten the BBC financially than the left, that means the BBC is more likely to follow the government line when the right holds power. The culture secretary is reported to have said that a particular interview with Johnson had cost the BBC a lot of money. If that was not bad enough, the right wing press are relentless in their criticism of the BBC, tipping the BBC’s own internal assessment of what impartiality means even further rightwards. Empirical evidence looking at the BBC’s coverage and use of think tanks backs up this view.

The argument that we should not criticise the BBC, or broadcasters more generally, because that helps those who wish to harm them ironically just makes things worse. Maitlis is absolutely right that by siding with populist politicians rather than informing viewers, the BBC is actively harming itself. The moment a public sector broadcaster seems to hold the interests of the government above those of its viewers, it is well on the path to just becoming a mouthpiece for the state. The idea that any criticism of an institution has to be an attempt to undermine it rather than improve it is again laughable, and is indicative of a defensive mentality that obsessing about impartiality helps generate.

A far better strategy for broadcasters and any non-partisan media is to make impartiality a secondary goal, and focus instead on the primacy of providing reliable information to viewers. Unlike impartiality, there are readily available objective criteria for assessing what is good information and what is not. Such a shift in priorities would have many benefits.

It would have avoided all the mistakes I have noted above that broadcasters have made in the past because they were focused on impartiality rather than being informative. True, it is easy to make programmes involving debates between politicians or their supporters, but it also produces very boring programmes for everyone except political obsessives. Emphasising the provision of information rather than balance would elevate journalists who are subject specialists compared to the political journalists who now dominate news coverage, and it would shift political coverage from a focus on personalities and horse races to talking more about policy. Crucially it would help make journalism more robust to populist attacks and therefore make society less tolerant of politicians pushing snake-oil policies.

[1] Making impartiality the primary goal invites a defensive mentality because there is no immediately available measure that tells the broadcaster whether it is being impartial or not on some particular occasion. Louder and more powerful voices are inevitably given more weight than they should have, and even then without objective measures a broadcasting institution will always feel as if it is on weak ground.

Tuesday, 23 August 2022

After the Virus


Our probable next Prime Minister has said that if another pandemic hit the UK, she would not authorise any lockdowns similar to those employed around the world against Covid before most people were vaccinated. She has also said that she argued for doing less around the cabinet table when lockdowns were discussed. If I could choose just one statement that exemplifies how far the current Conservative party and its leadership are living in a fantasy world, where things like science, truth and facts have been replaced by wish-fulfilment, I would choose this.

Both simple theory and state of the art analysis shows lockdowns imposed in the first year of the pandemic saved hundreds of thousands of lives in the UK. Covid spreads through social interaction, so the more you can reduce social interactions the smaller the number of people who will get the disease. Lockdowns, which involve telling everyone except essential workers to stay at home and supporting them to do so, obviously reduce social interactions. We also know that vaccines reduce both the chances of getting Covid and the chance of hospitalisation and death if you get it. It therefore follows that reducing the number of people getting Covid before vaccines are available by imposing lockdowns will save countless lives.

In the UK it was projections by Imperial College of half a million Covid deaths without lockdown measures, together with a breakdown in the NHS, that persuaded Johnson to abandon the policy of herd immunity. What is true in the UK is also true across the world, with researchers finding that millions more would have died if lockdowns had not been put in place. Epidemiological models also tell us that governments should lockdown quickly once TTI (test, trace and isolate) has failed to control a pandemic, and if they did that lockdowns could be shorter. Countries that were able to do that and impose tight border controls saw far less deaths and (because lockdowns lasted less time) economies were less affected by the pandemic.

This last point completely undercuts the typical excuse the government used to delay imposing lockdowns, which is that they didn’t want to hurt the economy. The idea that absent lockdowns an economy can carry on regardless during a pandemic was nonsense. As my own collaborative study on the economic costs of a pandemic showed more than 10 years before Covid, when infections and deaths are widespread people who are able to will lock themselves down, and consumption of most services drops like a stone. Much better for the state to intervene early to keep cases low.

Anti-lockdown, anti-mask Conservatives are not just ignoring the science on Covid [1], but they are ignoring the lessons on hundreds of years of human history about how you deal with pandemics. As Hilary Cooper and Simon Szreter show in a new book, the state has for the last five hundred years often intervened in drastic ways to try and stop the spread of pandemics. The authors point out that the Italian cities used quarantine measures, including detention of travellers, to help control against the plague: indeed the word quarantine comes from the Italian for forty days. Elizabethan England followed their example, raising local taxes for their equivalent of a furlough scheme.

As more began to be understood about how disease was transmitted, state authorities began to improve sanitation and hygiene. Costly large scale sanitation measures in English cities helped contain outbreaks of cholera. Hamburg, by contrast, decided this was all too costly, and as a result the city was the last significant casualty of cholera in 1892. When the misnamed Spanish Flu hit the US, different cities reacted in different ways. In Seattle there were meticulous restrictions on business activity, closing schools and churches and mask requirements, while little was done in Philadelphia. As a result, Seattle had one of the lowest death rates on the West Coast, while Philadelphia suffered one of the highest death rates in the US.

So why does Truss, along with many on the right in a number of countries, ignore all this? The amount of myth making about the pandemic, largely coming from the political right, has been incredible. Cooper and Szreter lay the blame at the door of the neoliberal project, although they do note that a similar retreat from collectivism occurred when Elizabethan Poor Laws were replaced by workhouses in the 19th century. Furthermore they persuasively argue that since 2010 there has been a concerted attempt to undermine the structure and principles of the NHS and social care by right wing politicians. The response of some of these politicians to the pandemic, with their ridiculous stress on ‘individual responsibility’, is symptomatic of their general attitude to collective health and care provision.

As regular readers will know, my own view is that we left the neoliberalism of Thatcher and Reagan behind with Brexit, and instead (under Conservative leadership) the UK now behaves as an authoritarian plutocracy with periodic elections. Brexit was not in the interests of most UK businesses, as the dire UK macroeconomic position and outlook testifies. It is why under Johnson we had endemic corruption from the top that became clear after the pandemic hit. But for the arguments of this book my distinction matters little, because our authoritarian plutocracy still subscribes to the anti-collectivism inherent in neoliberalism. What has changed is that anti-collectivism is no longer justified by saying corporations always know best, and instead it has become wealthy people who support the party (financially or through the media) know best.

Cooper and Szreter extend the argument that swift government action to control pandemics helps the economy to make a more general point. To quote: “British society - and its economy - has flourished most when it has embraced both universal social security and welfare as a legal entitlement of all citizens …” They argue that the UK has been most successful when it has embraced “collective individualism”: collectively funded support for all individuals so they can flourish as independent agents. But the book’s ambition goes well beyond documenting this and the problems that neoliberalism and recent Conservative led governments have caused. The second half of the book is a blueprint for a better future, covering ethical capitalism, progressive taxation, participatory politics, a sustainable future and more.

As UK society faces a perfect storm of crisis, mainly created by its political leaders who seem oblivious or indifferent to them, it’s great to read a thoughtful, well researched and clearly argued blueprint for a better future. I strongly recommend this book.

[1] A Daily Telegraph headline recently blamed current excess deaths on lockdowns! The right wing press and Conservative party exist in a mutually reinforcing fantasy world, where measures that saves lives are regarded as mistakes and as a result what is actually killing people goes unaddressed.

Tuesday, 16 August 2022

Why our new Prime Minister is ignoring multiple crises, and proposing policies that helped generate these crises.


Many people have commented on the complete disconnect between the issues being debated as part of the Conservative leadership campaign and the many acute crises faced by the people of the UK who this leader will shortly govern. It’s easy to dismiss this disconnect as a peculiarity caused by the atypical composition of the Conservative party membership, and for the same reasons discount all the pledges the candidates are making as just more lies told to gain votes.

There are three reasons why such a dismissal would be a mistake. The first is that a majority of Conservative MPs (including likely cabinet ministers) hold similar views to party members. The differences between the two groups are important, but those differences only make things worse. Conservative MPs tend to be more right wing than the membership on economic issues, so they too believe tax cuts are what the Conservative party is all about, and that regulations are generally evil. In contrast these MPs in private are much more socially liberal than their party’s membership, but not in public because they see winning the socially conservative vote as their means to power.

The second reason not to dismiss what is happening in the leadership contest is the similarity between that contest and what you will find in the pages of the right wing press (The Mail, Sun, Express, Telegraph and Times). This is no coincidence of course. To believe that tax cuts are the answer, Brexit is a success and some of the biggest problems this country faces are due to a woke establishment, it greatly helps if what you read (in print or online) backs you up. In addition if you are Truss or Sunak, it greatly helps if what you say is selected by editors to appear in the pages of newspapers because it is congruent with the stories those papers regularly produce. The leadership contest may (eventually) end, but these newspapers will continue to influence the public debate.

The third reason is that the views of Conservative members and right wing newspapers are not very different to the views of those who finance the party. Not only does the Conservative party rely on these donors to heavily outspend its opponents in elections, it has under Johnson in particular given these individuals unprecedented access to and influence over policy. That situation is unlikely to change if either candidate wins, and these donors will still be there once the leadership contest ends.

Instead of being a short term irrelevance in policy terms, the leadership contest gives us in an unusually concentrated form a window on what the future Prime Minister will come under considerable pressure to actually do, or more probably what they actually want to do. The disconnect between the crises the country faces and what the candidates are talking about is both real and it matters, because it will play itself out from September until the next election. There is a simple reason for the disconnect: while the policies the leadership candidates espouse do nothing to help most people get through the coming crises, they have and will continue to benefit a small minority that controls the Conservative party.

Both candidates believe in tax cuts, and only differ on timing and perhaps which taxes are best to cut. As tax cuts are central to their leadership campaigns, and because they are also seen as essential to Conservative MPs, right wing newspapers and donors, tax cuts of some form will happen. Yet at a time when the NHS is in crisis during the summer, ambulance waiting times are horrendous, we are seeing excess deaths because conditions are going untreated, and our economy is suffering more than most because of growing long term sickness, tax cuts are an abomination.

The likely winner of the contest, Truss, will try and square this circle by both cutting taxes and spending more money. The combination, implying considerable fiscal largess, will be justified by the forthcoming recession. But the political reality that the leadership contest shows us is that the additional spending will be as little as the Prime Minister thinks they can get away with and so - like Johnson’s NHS cash boost - solves little while also constraining any successor government (if there is one) in what they can do.

We will be told constantly that tax cuts are what we need to get the economy moving again, because the myth that tax cuts help economic growth is deeply embedded on the right. Never mind that this was the policy Osborne implemented during the austerity period, where both income and corporation taxes were cut, and we got the weakest recovery from a recession this country has ever had. As Will Hutton reminds us: “The key propellant of investment is not the corporation tax rate but the confidence that any investment will pay back, and in strategy-free Britain in the grip of rightwing ideology, cut off from its major market, there is little or no long-term confidence.” Evidence like this just doesn’t matter to politicians whose success depends on them ignoring it. As a result, we can expect little that will actually reverse the 10/15 year decline in the UK’s relative macroeconomic performance, and plenty that will just make things worse.

Anyone wanting to do something to reverse this decade or more of income stagnation would begin to reverse Brexit. Yet for both candidates it is Brexit escalation that is their way forward. There is a good chance that Truss in particular will see confrontation with the EU over the Irish protocol as something they need to pursue to satisfy the MPs that supported her, and also something that can be used to fly the patriotic flag before an election. In economic terms that would be a disaster. In addition, to the extent that a ‘bonfire of EU regulations’ leads to greater divergence with the EU, it could make the already considerable problems businesses have in trading with the EU even greater.

I’m often asked why the last twelve years when the Conservatives have been in power have seen such a dramatic macroeconomic decline in UK growth compared to most other major economies. Austerity and Brexit explain a large part of that, but I think there is something more intangible as well. A period where the government becomes so open to lobbying and, under Johnson at least, corruption incentivises rent-seeking (increasing your income by decreasing someone else’s, where someone else often includes public money) rather than innovation. This government’s constant attacks on universities and culture because they do not share the Brexit faith does nothing to help either innovation or sectors where we actually are world leaders.

The biggest short term crisis many UK citizens face is rising energy prices. This is one area where Truss’s rhetoric will not survive her coronation, but just as with public spending her desire for tax cuts will mean the most vulnerable in particular will not get the size or speed of help they need. In the longer term both Truss and Sunak have appealed to member’s scepticism about renewable energy, which in turn partly comes from right wing newspapers. This is the exact opposite of what the UK needs not only to fight climate change, but also to get cheaper energy. All parts of the Conservative party seem stuck in a time when economists talked about the costs of reducing our dependence on carbon. Today, thanks to a combination of state action and private sector enterprise, renewable energy is much cheaper than carbon based energy, yet the policy of the next Prime Minister will be to ‘cut the green crap’, much as her predecessors did. As with tax cuts and a smaller state, Conservative policies are actively making our current problems worse.

The second biggest crisis (more accurately, far bigger for an unfortunate minority) is the state of both the NHS and social care, yet here too Conservative policies work against solutions. One of these policies is privatisation of provision, which generally either increases long run costs or reduces quality and/or access. Another is Covid: Truss’s remark that in any future pandemic she would not introduce lockdowns shows that she shares the party’s denial of science about pandemics, which will make any future problems the virus may cause worse. Of course tax cuts are not going to attract new doctors and nurses to stem growing staff shortages. Instead they will do the opposite by making it less likely that we will train more doctors and nurses, or that the pay of doctors and nurses will rise sufficiently to keep those we have.

To go on is both easy (there is so much, including lack of water, farming, public sector strikes, levelling-down, schools, child poverty, crime and more) and depressing. I hope I have done enough so far to allow me to make the following generalisations. What the leadership contest has shown us is that The Conservative party’s key ideas are their old ideas, ideas that the current multiple crises that the country faces have helped create. For the structural reasons mentioned at the start of this post, whoever wins the leadership contest will continue with those failed ideas. As a result the immediate future looks as grim as it did in December 2019. Our only hope is that more people understand this than they did nearly three years ago, and don’t get fooled again. Whoever becomes our next Prime Minister, the new boss will be the same as the old boss.