Three myths surrounding Boris Johnson’s ‘New Deal’

Prime minister Boris Johnson’s ‘build, build, build’ speech on 30 June failed to throw much light on what, or if, there is a distinctive Johnsonian approach to economic policy. As many commentators noted, the £5 billion he pledged for various infrastructure deployments is a small amount for a government recovery plan, less than one quarter of one per cent of pre-pandemic annual output. This is like turning up to a battle with a water pistol.

As we assess the substance, if any, of Johnsonomics over the coming weeks and months of announcements, we can start by dismissing some of the fanciful narratives that are doing the rounds, both from the government’s supporters and its critics. The first, and most pertinent, myth is that the economic woes we face are primarily the result of the pandemic lockdown. In fact, they long predate it. The second myth is that we are entering a distinctive era of state economic leadership that marks the rejection of ‘neoliberal’ orthodoxies. And the third myth, given Johnson hails his plans as ‘Rooseveltian’, is that President Franklin Delano Roosevelt’s New Deal ended the Great 1930s Depression.

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Why the West must stop bashing China

Problems in the US are for American people to resolve. Problems within Britain are for British people to sort out. The same applies with regard to China’s national sovereignty. Chinese Communist Party repression against Chinese people, the same as the repression meted out by authoritarian regimes anywhere, will not be resolved by other governments or international bodies stepping in with economic or other weaponry.

The basic solidarity principle to follow is that to be genuine, freedoms have to be secured by ordinary Chinese people. History reveals that durable liberty and democratic politics are not things that can be brought about by government bodies nor by outside institutions, but only by the people themselves.

From this perspective, there are five reasons that Western China-bashing is regressive, counterproductive and dangerous.

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It’s time to transform the UK economy

It is said that crises provide fertile ground for innovation. This is only partly true. The acute pressures, the falling away of pre-crisis norms and the sidestepping of regulations, liberate individuals and teams of people to come up with great ideas about how to do things differently. This fresh thinking can originate better, more effective and efficient ways of conducting existing productive activity, or it can conceive brand new products or services that improve people’s lives.

Certainly in this pandemic and the lockdown crisis, we have already seen lots of inventive deliberation.  But where the saying falls short is that devising creative ideas is not enough for innovation. Innovation represents the implementation of that creativity for social benefit. While crises can be great times for ingenious thought, novel ideas only become innovations when they are applied and are replicated to bring change, improvement and progress to people’s lives.

This conception of innovation brings out the biggest obstacle to seeing much of it happening in the medium-term future. We are not just in a period of crisis, but a crisis within an existing state of economic depression. Depression is not simply an extension to recession, in the way it is being discussed today. It is a protracted phase of economic sclerosis that has become self-reinforcing.

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The making of an economic crisis

The UK’s Office for Budget Responsibility (OBR) has offered a grim projection of a one-third fall in output in the April to June period. Even without a second Covid-19 wave precipitating another government shutdown later in the year, the OBR anticipated a full-year contraction of about 13 per cent of national output, worse than anything in recorded history. Some economists speculated this scale of collapse could be greater than any since the Great Frost of 1709 (though, of course, no one was measuring anything like gross domestic product then). This shows how unprecedented this government-determined recession really is.

However, at a Downing Street briefing last week, Rishi Sunak, the chancellor of the exchequer, said something that was even more disturbing and, ultimately, economically damaging. Acknowledging the ‘tough times’ flagged up by the OBR, Sunak sought to offer some comfort: ‘But we came into this crisis with a fundamentally sound economy.’ On the back of this he went on to insist that the economy will ‘bounce back’.

The great danger of this false portrayal of the past is that today’s self-imposed and brutal recession could be extended into a self-imposed and much more vicious depression than we have experienced up until now. This is not inevitable.

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The destruction of the old world order

It is often said that everything changes in a major crisis. But this is not quite right. The changes that happen seldom derive from the crisis itself, but from the acceleration of existing trends. So far, Covid-19 has similarly sped up and crystallised earlier tendencies. As a result, it is helping make the true state of affairs clearer. As the Economist Intelligence Unit concluded, the ‘coronavirus pandemic will not usher in an entirely new global order, but it will change things in … important ways … [and] bring to the surface developments that had previously gone largely unnoticed’.

In particular, three pre-pandemic features of international relations are being amplified and brought to the surface: the changing economic balance in the world; the unraveling of the post-1945 world order; and tensions between the advanced industrial nations.

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