This post by me was on The Conversation, a blog reserved exclusively for academics, today:
It looks like Boris Johnson is opting for a novel approach to economic policy. Not for him the idea of Johnsonomics, to follow in the path of Osbornomics and Corbynomics. Nor, apparently, will there be Johnsonism, as in Thatcherism. Instead it is reported that his government will pursue “boosterism”. Seemingly a mix of hype, economic stimulus and tax cuts, boosterism appears to be an economic credo with shaky foundations.
A quick search of Google Scholar reveals that the term “boosterism” is not a mainstream economic idea. The term most commonly refers to the hyping of a bid by a city seeking to host the Olympics or some other major event. Used in this way the term would appear to have its origins in the 19th-century development of the American West and the practice of small towns hyping their appeal with extravagant claims as to their supposed advantages in the hope of attracting new residents. Boosterism was then about the promotion of an exaggerated faith in a place — perhaps something Johnson is relying on for post-Brexit Britain.
A more recent interpretation of boosterism might suggest that it is about exaggerated nationalism — the local has been replaced by the nation. Donald Trump's “America First” concept fits this pattern. And the fact that the America First phrase was first used by Woodrow Wilson to defend American isolationism before its entry into Word War I only reinforces the idea, and its appeal to a prime minister who is dedicated to taking the UK out of Europe.
Flawed claims
That, though, does not explain the economics of boosterism — ill-defined as Johnson has left them to date. I would suggest these can be aligned with the economics of another US president prone to hyperbole: Ronald Reagan. Trump has made this link — he recently awarded Arthur Laffer, the prime architect of Reagonomics, the Presidential Medal of Freedom for being the “father of supply-side economics”.
Laffer is perhaps best known as the proponent of the “Laffer curve” in economics, which suggests that tax cuts increase tax revenues. Economist Thomas Piketty and colleagues have picked holes in this theory, finding in the process that if there is an optimal upper tax limit to get the most revenue, it is at rates well above those currently in use. But it appears Johnson is on Laffer's side: he has proposed tax cuts for the well off, suggesting that these might increase revenues, a position he has long maintained.
Johnson would be minded to learn from the US city of Kansas, which followed Laffer's ideas from 2012-17. In the so-called Kansas Experiment, the city's governor, Sam Brownback cut taxes heavily, especially for business, and promised reduced deficits, increased growth and employment. The opposite happened and Kansas remains unimpressed. No amount of hype — and there was plenty of it — overcame the flaws in Laffer's claims. Boosterism failed.
In trouble
Yet this is the approach Johnson seems to be espousing. Various reports from Johnson's staff indicate he intends to put “rocket boosters” under Britain's economy, with plans to spend heavily on infrastructure, while also cutting taxes. There's talk of spending up to £26.6 billion to alleviate the economic impact of a no-deal Brexit — this figure being the amount of “fiscal headroom” Johnson has before breaking a budget deficit cap of 2% of GDP introduced by former finance minister Philip Hammond.
But, for this to have any chance of working, at least three conditions are required. First, those subject to this hype have to believe that the talk is plausible. Second, they must think it possible that the plan can be delivered. And third, they have to believe that the booster knows what he is doing.
Johnson appears to be in trouble on all three counts. Few believe that a no-deal Brexit will boost the economy, whatever Johnson says. In addition, many will doubt that the resources to boost the economy exist when the government keeps claiming there is full employment, while discouraging immigration. Who is going to build all the infrastructure that Johnson is promising?
Lastly, Johnson's proposal for spending without also raising taxes runs the risk of a boom and bust cycle, given the widely known failings in Laffer's thinking. Recent history has given us enough of hype leading to crashes.
The dot-com crash was built on hype. So too was the 2008 crash. Both overhyped an activity without relating it in any way to underlying economic reality. And that's just what Johnson is doing now with his boosterism. He's hyping an offering he cannot deliver because it is wholly unrelated to real economic activity. It is bound to fail. Here's hoping that people will see through the hype, which is all boosterism is.
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Trickle-down economics is alive and well then.
Who was it said that to keep doing the same thing and expecting different results was a sign of insanity?
Of course it is not for the population as a whole that Boris Johnson will exert himself and ‘Boosterism’ will simply represent a little filip to business as usual hollowing out the public finances for private gain. Should be worth enough well-remunerated boardroom seats to keep him comfortably into old age in the extravagant manner to which he is accustomed.
I still believe that Trump and Johnson are politicians who are clinging on very precariously. Trump got in (I understand) because of the manipulation of the U.S. collegiate voting system and now we have a far right idiot PM through the back door in the UK.
People in El Paso and elsewhere do not want their President to visit them after the latest Anglo-Saxon terrorist atrocity in the U.S. Trump is not as popular as portrayed.
I think the same will go for Johnson – his stupidity and that of people like Patel, Gove and Raab may very well undo them – Johnson is a divisive character in his own party.
Sorry – but I need something to cling to!!
Hang on….
Pilgrim Slight Return says:
“I still believe that Trump and Johnson are politicians who are clinging on very precariously.”
Indeed. They owe their current status to those who put them there and who keep them there. (The ‘men in suits’, or uniforms, the ‘Kingmakers’.)
There is not much stability at the top of the political Jenga pile. Trump will need a war or a good skirmish (Iran is favourite) and Johnson will need a Brexit fudge that avoids total chaos (to major, powerful financial interests – sod the rest of us) and an ‘economic miracle’ good enough for his middleclass supporters to stay financially comfortable; pensions intact etc.
Of the two rows to hoe Trump’s will be a cake walk. Johnson is going to struggle. Trump can lie on a global scale, whereas Johnson’s arena hardly extends across the channel and soon may not extend beyond England and Wales(?).
Thanks for that Richard.
Boosterism clearly explained and debunked indeed.
If Johnson is counting on people at home believing his optimistic hype, he has some way to go it seems, I suggest he looks at the recent YouGov ratings of his popularity in the regions, among other surveys.
If he is counting on people abroad believing his optimistic hype, he’ll have an even bigger shock if he sees newspapers headlines and photos of himself.
He has detailed work to do to get his boosterism working….
Marie Thomas says:
“If Johnson is counting on people at home believing his optimistic hype, he has some way to go it seems,….”
Given FPTP electoral system the fruits of ‘boosterism-hype’ don’t have to extend far down the economic foodchain to ensure that Johnson is electable.
A third of the votes in the right places will give him a landslide majority in the house. Judicious targetting of booster largesse (Home Counties) and hype (Benighted Midlands and North) will do it. When push comes to shove the left vote will more easily be divided than the right. There is not much room for a Faragist Brexit party to the right of the Johnson cabinet. ‘Twas ever thus.
John McDonnell is desperate enough to wave a phantom fig leaf at the Scots in the hope of garnering a few votes, as observed in these columns the other day. I find that telling as to the lack of electoral confidence of Labour in the present ‘political climate’.
Leave sent 1 billion adverts in the run up to the referendum
Most were lies
That was boosterism
Labour appears to have no a clue how to deal with it
“Labour appears to have no a clue how to deal with it”
Labour’s best offer seems to be ‘Vote for us and we’ll hit you with a smaller stick.’
Doesn’t have much of a ring to it does it ?
So boosterism is another word for digital era state propaganda, and FPTP guarantees it succeeds?
Are we doomed yet?
Marie Thomas says:
“Are we doomed yet?”
Yeah….probably. Trump cancelling the US adherence to the INF treaty puts Climate change, Global heating and economic meltdown onto the list of problems to be put off indefinitely as mere long-term issues. Mid-range and battlefield nukes completely destroy the mutually assured destruction mantra that has maintained a semblance of the balance of power for decades.
Suddenly these infernal devices are going to become ‘viable’ weapons available for use in conflicts. I think that’s a ‘doomy’ enough prospect for most people.
In all this talk about ‘turbo-charging’ the economy, I kept thinking that turbo chargers work on gases emitted from the exhaust.
There has certainly been a lot of ‘exhaust gas’ coming from the Johnson and his cabinet.
It was not the “city of Kansas” where the “Kansas Experiment” took place. It was the state of Kansas, of which Brownback was governor.
The edit was by The Convesation
I am well aware of the difference
I admit I did not notice they had edited it in