Truss at the Wrong Time

TRUSS AT THE WRONG TIME

In her speech to the Conservative Party Conference, Liz Truss told her audience “I have three priorities for our economy: growth, growth and growth.” In fact she thinks it is such a high priority “growth” got 30 mentions, often in the context of the “anti-growth coalition”, which she conjured up as her enemy.

The details of her Government’s plan for growth have not yet been published, but they have already been signalled as including a reduction in employment rights, some destruction of the countryside, using the tax and benefit system to bring about an increase in inequality, additional carbon emissions creating more frequent extreme weather conditions, and getting almost everyone to work harder and certainly not from home.

However, even for Truss, growth may not really always be the overriding priority. Very few economists ever believed Brexit would add to growth, even though some people obviously hoped the economic damage would be more than compensated for in terms of national identity, immigration control and a sense of independence. And now it is reported there is a new argument about immigration: a selective increase, e.g. in Indian IT workers, would contribute to economic growth, but the Home Secretary, “Cruella” Braverman apparently believes minimizing net migration is a higher priority.

Unfortunately for the Truss project, there is no sign that people in the UK are willing to make the sorts of sacrifices and bear the sorts of costs needed for her economic plan, even if we could be sure (which we are not) that the Gross Domestic Product (GDP) figures would rise faster if we were.

GDP figures are how economists measure economic growth (or recession). Part of the problem here is what GDP does and does not include. It is the total of the money value of everything bought and sold in a country in a year. Many of the things which are important to people are not included. For example, if I’m afraid to walk along the street after 10pm, nothing changes in the GDP figure, because nothing has been bought or sold. If I look after my child at home, that’s of no value in terms of GDP, which only counts childcare when someone gets paid for it. If there are less bees, butterflies, and trees in the local park, GDP is unaffected, but if a multiplex cinema is built there instead, GDP increases. If I commute, the GDP includes my train ticket or petrol costs, but if I work from home, there are no transport costs to add to the figures.

GDP is a very poor measure of what people actually want and value. Increasing it is no guarantee whatsoever that they will get more of what they want and value, particularly if it comes with all the costs the Government has hinted will come along with it. And particularly if it comes with a very unequal distribution of income, whereby the benefits of increased GDP can stay just with the richer section of the population.

The Truss project’s ideas have been around for a long time, in the pamphlets of think-tanks such as the Institute of Economic Affairs and the Adam Smith Institute, and their current versions are largely the result of the Tories’ traumatic defeat back in the 1966 general election. What is strange about the current situation is that this is an exceptionally bad time to be trying out these ideas, which have an aura of old dogma around them, rather than being a response of the problems of the present.

The covid pandemic and lockdowns reminded large numbers of people that they cared about friends and relatives, liked their local parks, valued the medical and food workers who kept them alive, rather liked not having to commute to work, wondered if climate catastrophe might be even more devastating than the pandemic, and were glad of state and community support in getting through. In short, everything that GDP does not measure felt more important, and the policy programme Truss represents felt completely out of keeping with people’s hopes for the future.

Covid affected Boris Johnson in a different way: he was shown to be a liar who believed the rules he drew up and enforced on others did not apply to himself. The pandemic affects Liz Truss in this way: it means her ideas bear no relation to what the present moment requires.

Victor Anderson

Victoranderson7@aol.com

7.10.22