The “left economic establishment” did not bring down Liz Truss. Reality did | Polly Toynbee
“This introspection was not easy,” she wrote. But although she looked everywhere, Liz Truss never found it. Instead, she found the blame to be scattered on everyone but herself for the havoc left by her 49 days: even ChatGPT reportedly wrote her 4,000-word non-apology with more humanity and humility. Truss’ attempt to resurrect would be easily dismissed, except that his hallucinations run rampant throughout his party: ideas uncauterized by a searing reality check.
Although Truss survived a lettuce, let’s go back to how she did such damage in such a short time: her mini budget was more like a mini H-bomb. borrowing skyrocketed. When its Chancellor proclaimed that more was to come, gold markets plunged and the Bank of England rushed in with a monstrous £65billion bailout. This has left billions of dollars lost in some highly exposed defined benefit pensions and people with mortgages are paying the price.
The country still suffers from its “moron’s premium”: it is trusted less to borrow and therefore forced to pay more, says Professor David Blanchflower, a former member of the Bank of England’s monetary policy committee. “She exposed the UK economy like a shaky knife,” he tells me. “And she made it worse with what she wrote.” That’s because, unrepentant, she exposes the core beliefs of a party where many are too eager to try her killer recipe again.
The failure of his real-life experiment left many more convinced than ever of the theory. Many in her party agree that she was essentially right, she just didn’t roll the court. They cling to their theoretical Laffer curve, claiming that tax cuts for the wealthy bring more taxes to the treasury, although, as Blanchflower puts it, “Trump has definitely refuted it. His $2 billion tax cuts for the wealthy left $2 billion in debt.
The head-on clash when ideology clashes with the real world seems to have left Truss and his party shocked but undeterred. It was the last of three murderous economic experiments. Austerity came first, with George Osborne reducing a recession to smaller government, when all the economic precedents said it was time to invest, so UK growth lagged. Then came Brexit, its high price to pay for years to come. And now this Trussonomics crash.
Free markets was the mantra of contributors to Britannia Unchained, the 2012 manifesto by Truss, Kwasi Kwarteng, Dominic Raab, Chris Skidmore and Priti Patel for Singapore-on-Thames Toryism. Yet it was these free markets that brought him down, not his imagined “left economic establishment.” Hedge funder Crispin Odey, a Brexiteer and Tory donor, who made another fortune betting on Truss destroying the pound and bonds, is the market personified: the brute force of money wins out every time the ideology.
Bleating that no one had warned her of the risk to the bond markets as she borrowed billions to give the rich a tax cut, she was the one who was fed up with the pundits; she who fired Tom Scholar, head of the Treasury; she who threatened the Governor of the Bank of England, questioning the powers of the institution; and prohibits the Office for Budget Responsibility from alerting him to this kind of blunder. She writes: “Even though the measure was economically sound, I underestimated the political backlash I was going to face, which focused almost entirely on ‘optics’.” The optics? No, reality got her down.
Most Tories seem none the wiser, as nervous factions battle, ready to back this formula of magic cuts again if May’s local elections turn out half as bad as they fear. Truss has few personal supporters, but she is the party’s flag bearer for low taxes. The other resentful ex-PM echoes his themes, telling Nadine Dorries that the tax cut ‘must happen’, helping the ‘Bring Boris back, he’s done nothing wrong’ muttering a flurry of bottom. Suella Braverman, with her old-school right-wing faction, is of this ilk; no competitor is too unlikely after Truss. But they have lost public confidence in the economy, and every time Truss speaks she will remind voters who really chose her as prime minister, what she did and the small-state ideal they are for. still attached.
And look at their so-called “sensitive”. Up appears BlackRock’s Rupert Harrison, an architect of Osborne austerity that has pushed Britain’s economy behind most of the EU. He tweets condescendingly that Truss put things in the wrong order: tax cuts should come only after “public sector reform and a sustainably smaller state”. The destination is the same, on the same spectrum of Truss illusions, with their proponents in the press. The leader of the Sunday Telegraph said: “The conservative statist establishment has had its turn and the party is plummeting in the polls; free traders must now speak. The Mail leader says: ‘The ideas she champions may need to be seriously reconsidered.’ Conservative think tanks, funded by God knows who, are swirling with this adrift “solution” without party leadership.
But their great omerta, what they never dare to reveal, is what “small government” and “deregulation” mean and how the hell they could ever make it into even a slightly acceptable electoral platform. When ambulances don’t show up to save Grandma and mothers give up work for lack of childcare, when nurses’ and teachers’ salaries drop, when energy bills soar again and no one sees the difference when the railroads are on strike, “small state” seems like an extremely hard sell. They never say exactly what they mean by cut, shrink or deregulate. It’s their addictive elixir to revive their flagging spirits when all else seems lost, even if it’s a surefire loser.
Incidentally, observers intrigued by the Truss phenomenon may want to check out the Dunning-Kruger effect: “Unskilled and Unconscious: How Difficulties in Recognizing One’s Own Incompetence Lead to Exaggerated Self-Assessments.”