State intervention

Britain’s addiction to borrowing is a recipe for disaster

philmullan Debt, Economic policy, Politics, State intervention, Welfarism

Is Britain about to be plunged into even greater economic chaos? Pundits have highlighted a remark made by the supposed prime minister in-waiting, Greater Manchester mayor Andy Burnham, in an interview he gave to the New Statesman last year. The government, he said, had to ‘get beyond this thing of being in hock to the bond markets’. Understandably, the worry is that Burnham – who, if successful in the upcoming Makerfield by-election, will likely replace Keir Starmer as prime minister – would water down Labour’s ‘non-negotiable’ fiscal rules to finance even more public borrowing.

Burnham’s, and Labour’s, openness to further public debt needs to be defeated once and for all. Our addiction to borrowing – a near-permanent feature of British politics since the Second World War – is at the root of three issues that have led us to the financial and social abyss we find ourselves in. Borrowing has become financially destructive, it has sustained a class of weak and cowardly politicians, and it has entrenched a culture that has become increasingly dependent on handouts and subsidies. It must be ended.

Read the full article here.

Rachel the Deluded

philmullan Debt, Economic policy, Investment, Politics, State intervention

Playing on the title of an Australian TV series, some critics of chancellor Rachel Reeves have taken to calling her ‘Rachel from Accounts’. That’s unfair to people who work in accounts departments. Most of them can interpret a balance sheet – a skill that seems to be beyond the capabilities of Britain’s chancellor.

Presenting today’s spending review, Reeves once again told the public that she can make everything add up, in defiance of common sense. ‘Rachel the Deluded’ is a more apt nickname

She insisted that the government can stick to its public-spending commitments, while not raising taxes on ‘working people’. And it can do all this while fulfilling her self-imposed fiscal rules.

In her fantastical spending-review statement, she claimed that Brits are starting to ‘see the results’ from her having ‘fixed the foundations’ and delivered ‘economic stability’.

Worse still, the spending review shows that the chancellor is continuing to ignore mounting public debt. Indeed, this clueless government has doubled down on the fantasy that the UK can borrow its way to growth, even though the national debt is already the equivalent of annual economic output.

Read the full article here.

Scrap the fiscal rules, abolish the OBR

philmullan Democracy, Economic growth, Economic policy, Politics, State intervention , ,

The parlous state of the British economy and its public finances shows us what happens when you defer to the ‘experts’. Rachel Reeves is a middle manager posing as chancellor. She exemplifies the managerial politician. She doesn’t make political decisions about what the country and its people need, so much as follow rules and procedures authored by experts – by those who supposedly know best.

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Trump is hardly the West’s only trade warrior

philmullan Creative destruction, Economic growth, Geopolitics, State intervention, Trade

Enough of the hyperbole about Trump’s tariffs. His tariffs are wrong, but so is the rest of the west’s obsession with Trump-driven trade wars. For a start the hysteria over Trump’s tariffs ignores, and distracts, from just how protectionist most mature economies have become. Protectionism in its many forms impedes the domestic business investments needed for productivity growth. And the parallel fear-mongering about a ‘trade war’ is clouding the bigger geopolitical, as well as the economic issues, at stake today.

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The myth of America’s economic exceptionalism

philmullan Economic growth, Economic policy, Productivity, State intervention, The longest depression

What sort of economy is the returning president Donald Trump inheriting? In otherwise polarised and uncertain times, a consensus stands out: the belief in US economic exceptionalism. America’s recent growth out-performance and its ever-climbing equity markets seem to make the country the exception to economic stagnation across the west. But America’s underlying productive decay is not that different to the other mature industrialised nations. The staying power of the narrative of ‘US exceptionalism’ points not to the US’s exceptional vigour but rather to some peculiar forces for resilience in the face of its long-running productive decline. These US-specific factors reveal America’s superior capacity to offset its moribund tendencies.

Read the article here.