Economic Consequences of Demented Leadership


Star Trek-effigy Jeremy Hunt
U.S. Department of State from United States, Public domain, via Wikimedia Commons

The woes we face are not theoretical. They are real, and worsen by the day. Very few members of the public really understand their causes, still less what can be done to reverse the decline. Political leaders, who should have some notion of a cure, are as lost as the voters who put them there; and watching them enact populist solutions that will make matters still worse is both bewildering and frightening. Policies once labelled “conservative” or “socialist” can no longer be differentiated in such simplistic terms – instead we have a melange of half-baked, reactive knee-jerks, devoid of any trace of a policy that ever actually worked. Those of us with a dim sense of where it’s all heading can do little other than bewail the folly and the absence of any leadership worthy of the name.

Frustration now borders on despair. The syndrome of suffering in an ailing economy has been repeating throughout living memory – yet the fundamental remedial lessons remain unlearnt. Applying remedies can be painful, particularly when needed to cure a deeply entrenched addiction. When alcoholism becomes so severe that the only alternative to suffering the agonies of “cold turkey” treatment is to die a wretched death, the choice is stark. The UK economy is in a terminal state because of its own twin addictions: unbridled state handouts and the unbridled debt creation that purports to fund them. Any who fail to see that we are now suffering from this destructive symbiosis inhabit a dream-world devoid of consequences, and will not be spared the economic conflagration that must ensue.

Covid consequences

Addressing the Covid hazard was a governmental necessity in every afflicted country, and many alternative responses were tried. It was the UK government’s choice to address it by slavishly adopting scaremongering measures devised by conflicted “experts” – a choice that put the economy into enforced coma for two years, while other jurisdictions achieved better outcomes by allowing fully vaccinated citizens to evaluate the risks, both to themselves and others, and then make up their own minds on how to behave.

If most of us have forgotten the excesses perpetrated during lockdown, that’s because our memory fills us with shame and disbelief. Our taxes paid for protective equipment and clothing under fraudulent jobs-for-pals contracts; vast hospitals were constructed for thousands of people but never took a single patient. There were cases taken out by the police for breaching lockdown restrictions more severe than anything even in wartime: students in Leeds fined £10,000 for having a snowball fight; a beggar fined for sitting in a Tesco carpark; a homeless man fined for being outside Liverpool Street station, arrested for breaching the rules because he had no address. Drones in Wales, with loudspeakers, ordered people  not to go out and, if already out, to go back in their houses immediately. People ratted on their neighbours. And there was the unmitigated loneliness of the elderly infirm who died alone, deprived of even a final farewell hug.

If I were describing experiences in another country, you would say “Thank heavens that could never happen here!”. But it did. It was a mentality that afflicted both perpetrators and victims.

There are limits

The saving grace (if one dare put it that way) behind this utter madness is that it always has limits beyond which even an inherently compliant British public will declare “enough, and no further!” This blight on citizens’ freedom became unsustainable when it was obvious that our political bosses were guilty of the grossest hypocrisy in not following the rules they imposed on the rest of us. The scales were removed from our eyes and, in traceable steps, led inexorably to the political meltdown now before us.

Our government’s lockdown strategy had consequences beyond anything envisaged or foreseen. With astonishing speed a mindset of passive  indulgence became the norm and an unquestioning citizenry played the supplicant “apprentice” to the benevolent “sorcerer” – the state and its power-hungry henchmen. Those consequences have had sub-consequences, such as treating the sorcerer as a milch-cow provider of, not last, but first resort. The resulting dependency morphed easily into entitlement, at which point every vestige of rational questioning – “Where is all this benefice coming from?” “Who’s paying for this?” “Is there a price?” – was sacrificed on the altar of “engineering the next election result”.

And who was in charge of our Covid health policies? None other than the Star Trek-effigy Jeremy Hunt, our present Chancellor of the Exchequer! No wonder Premier Sunak chose him. Their shared ignorance of anything that might revive the economy is testament to the sway still exercised by the deeply held Keynesian  beliefs that continue to stalk every department of government. It goes like this: “if demand is sufficiently stimulated the wheels of economic revival will grind into action”.

Well, they don’t. When the rate of price inflation is unprecedented; benefit dependency is widespread; and  millions face the choice of eating or heating – clearly there is no lack of “demand” – but Hunt and Sunak want still more! We thrash about fruitlessly while the economic end-game plays itself out, and the purblind dummies running the show remain oblivious of any rational, time-tested action that will guarantee a return to the productive viability the economy craves. But, as noted by my colleague Pat Barron, the government is printing money to help people pay for the rising cost of those utility bills and at the same time imposing “wealth” taxes on the utilities themselves; also refusing to reconsider their moratorium on fracking.

The most common symptoms of psychosis are: “confused, delusional and contradictory thought processes, and a total disregard for the consequences of one’s actions”. Could a government that prints counterfeit money to stimulate demand while reducing supply be justly labelled “psychotic”?

They are clueless on what’s needed to get the economy back on track

UK taxes, as a percentage of GDP, are now set to rise to levels not experienced since World War II. Hunt has orchestrated the timing of some of his most egregious tax-hikes so that they bite only after the 2024 election – a ploy that fools no one. It merely affirms his belief that near-zero growth is a price worth paying in the expectation of higher tax revenues in the longer term. It’s obvious that neither Hunt nor Sunak recognise there are still thousands of entrepreneurs in this country who know from observation and experience that productivity is hampered, never enhanced, by taxes so high that they don’t translate into higher public revenues anyway. The recent Autumn Statement was a compendium of ill-masked nasties, strikingly devoid of any pro-business content.

What Sunak will discover, the hard way, is that reducing benefit entitlement once it has become an entrenched addiction is diabolically difficult, and has rarely, if ever, been successfully achieved. Did he imagine that freezing tax thresholds would bamboozle the citizenry more successfully than increasing tax rates? Well, the owners of 60,000 small businesses will soon enlighten him: they will fall prey to the horrors of the VAT regime when government-induced price-inflation pushes their turnover above the £85,000 exemption limit. The timing, however, is scheduled for post-2024 implementation in deference to pre-election vote-scalping – a move that insults the intelligence of traders, while giving them ample time to organise their business affairs so as to avoid the administrative nightmare of VAT – which, don’t forget, is nothing other than a flat-rate sales tax that punishes consumers, but has precisely nothing to do with “value-added”.

It’s now, or when?

The Keynesian god, “demand”, is an ever-present economic actor. It is an implicit feature of human nature from infanthood to old age – but just as ubiquitous is the desire to satisfy it. The means of satisfying demand lie in the realm of innovation and industry, supported by the economic calculation determining viability in the market. For that equation to translate into productive functionality the true role of government is permissive rather than restrictive. Regulatory bureaucracy is the enemy of wealth-creation. The inescapable effect of government regulation is the transfer of resources from workers in productive industry to the un-needy, non-contributing, receivers of made-to-order monetary favours.

We can all sense it. The stakes have rarely been higher. A transition from hide-bound dogma, purveyed by fools, to principled governance is now a nationwide imperative. It is also within reach. Again, it comes down to choice.

It can hardly be better expressed than the words of Brutus:

“There is a tide in the affairs of men, which taken at the flood, leads on to fortune. Omitted, all the voyage of their life is bound in shallows and in miseries. On such a full sea are we now afloat. And we must take the current when it serves, or lose our ventures.”

© Emile Woolf December 2022 (website)