Philip Hammond has said that pragmatism has required that he abandon George Osborne's policy of seeking to balance the budget. He is right: since as a matter of fact no Chancellor is really capable of controlling their government's deficit or surplus (for reasons I note here) it is pragmatic to stop saying you will try to do so.
The trouble is he lacks conviction. Like Osborne before him Hammond clearly lacks anything approaching an understanding of the macroeconomy. That is obvious because he says e should aim for a budget surplus. This is economic madness unless a government wishes to destroy wealth, reduce the available money supply, deny markets the debt they need, reduce investment and cause social harm. As I have argued before, surpluses are the last thing we need. But that is still what Philip Hammond wants, although he does not know when.
What does this mean then? I suggest the result will be that we get random acts of austerity mixed in with looser fiscal policy. Let's just imagine the consequences. Looser fiscal policy might involve investment in Tory constituencies. And business tax cuts. And big business friendly projects. Whilst random acts of austerity will mean more social security cuts, rationing for the NHS via targeting of the vulnerable and effective education cuts for these who really need support.
Or to put it another way, this new policy, because it claims to embrace austerity whilst permitting fiscal freedom panders to every whim of every Tory minister in ways that could be disastrous for social cohesion. In which case this is not sound economic policy. Nor is it the social policy that is required in a torn society. This is just very bad politics.
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Richard
How right you are, on all counts!
Tragically, though, this re-emphasises how desperately an effective Labour Party (for want of any other alternative opposition appearing remotely likely to magically appear soon enough) is needed.
The hopes for that metamorphosis happening do not appear too rosy at present. But who knows…
It remains to be seen if Labour can pull itself together but the latest leadership contest has at least seen the majority of the PLP renounce austerity. Only after May did (at least rhetorically) on entering Downing Street but it’s something.
Whether or not they understand what they are renouncing and what needs to take its place is another matter. Re-educating the old school media will be … challenging.
It’s just further proof (if any were needed) that today’s politicians are held hostage to popularist attitudes. Irrespective of what they might actually think, they find themselves having to pander to ignorance for fear of being mauled by the MSM, sadly including the BBC. Popularism is a corollary of neo-liberalism – and it’s a very worrying trend across the western democracies. No major political party appears to have the chutzpah to stand up to it. If allowed to fester, it will not end up peacefully.
Hammond’s already playing the same old tune on his organ it seems.
Well said!
I think you’ve nailed their economic plans here.
I increasingly despair of this country. Although things are pretty messed up globally too.
The newspaper of choice in La La land carried a front page headline yesterday that said “this lady is not for turning”.
This is someone who (ostensibly) :-
> is no longer seeking to produce an annual surplus
> has renounced her previous position on membership of the EU
> has said that medical examinations for disability benefit will be discontinued
> has now agreed that there is a shortage of doctors in the NHS
If you can abandon the basis of your economic and foreign policy at a stroke you can get away with anything. Our journalists are a disgrace.
Indeed they are (many of them), which is a great shame. But the aptly-named “gutter press” has been equally awful at some periods in the past too so nothing really new there. The only defence is relentless counter-attack by journalists who really know their stuff. Cecil King’s Daily Mirror was very successful at that, I seem to remember, to Labour’s great gain and the Tories’ great discomfiture – proving it can be done if only you can command the communications skills needed. Where is today’s equivalent on the Left of King’s Mirror? Nowhere to be seen.
But even worse is the kind of pathetic, I’m tempted to say moronic, clap-trap being peddled today at party conferences by politicians like Hammond who like the Bourbons have forgotten nothing and forgiven nothing. Now they *really* are a disgrace, not least because their complete incompetence in running an economy does actual, enormous, harm to 99% of us (whereas toe-rag newspaper barons and their stooges don’t have nearly as much power as they think they do).
The current lot are as bad in every way as – worse because post-Keynes they have far less excuse than – their counterparts in the Great Slump, and the havoc they’re wreaking on society is likely to be longer-lived in its effects and harder to put right.
The moment someone starts parroting “la-la land” you know he’s a complete, economically-illiterate, idiot.
“The moment someone starts parroting “la-la land” you know he’s a complete, economically-illiterate, idiot”.
For the avoidance of doubt, this refers to Hammond’s Conference speech.
Well one fine day the country might elect a politician to office who as prime-minister will order a complete and definitive official explanation is published about the way money is created for economic growth in the UK.