Embattled and outflanked, Liz Truss and her band of loyalists are doubling down: their priorities, listed in her closing speech to the Conservative Party conference, are still ‘growth, growth, and growth’. Against this agenda stands the anti-growth coalition: ‘Labour, the Lib Dems and the SNP, the militant unions, the vested interests dressed up as think-tanks’.
The anti-growth coalition is a very nice piece of phrasing. Truss is completely right to say that economic growth has been ‘choked off’; infrastructure projects have been delayed, burdens on business have piled up, houses have gone unbuilt. These delays and burdens are the result of political forces attempting to maintain a privileged position in the economy. As the American economist Mancur Olson wrote, stable societies accumulate vested interests which use their position to veto any potential disruption.
So if the diagnosis is correct, and the priorities are right, is there any criticism to be made of Truss’s speech? Well, yes. There is an anti-growth coalition, but it’s mainly the Conservative Party’s voting base.
This tendency was on full display at conference; it’s visible in the view of the Conservative activist interviewed by Times Radio, whose answer for young people worried about house prices was to point out that ‘places like Italy in particular or Germany, they don’t actually aspire necessarily to own their own home’. You can see it in the by-election result in Chesham and Amersham, where the Liberal Democrats hoovered up Conservative votes by attacking the idea that homes need to be built.
You can even see it in previous manifestos. One of the most visible failures to get infrastructure done is the absence of a third runway at Heathrow, a non-decision which sees Amsterdam Schiphol Airport attract a roaring trade in the absence of UK capacity. The Dutch are so grateful for this lack of decisiveness that their chief executive sends a congratulatory cake every time the decision on expansion is delayed again. But whose fault is this lack of decision? Well, who’s been in power for the last 12 years? Who’s been hoovering up Nimby votes? And whose 2010 manifesto promised to ‘stop the third runway’ and ‘block plans for second runways at Stansted and Gatwick’? Ah.
Equally, it’s true that the tax burden – now forecast to rise to 35% of GDP despite the mini-budget – is going to be at its highest sustained level since the 1950s. Whose fault is that? Who’s been in Downing Street all this time? If only a Conservative government had been able to sway the direction of politics towards the sort of low-tax state they want!
And it would be remiss to talk of growth without mentioning the elephant in the room. There are many arguments to be made in favour of Brexit: control over immigration, restoration of sovereignty, you name it. But it’s also a recognised fact that leaving the EU necessarily resulted in greater barriers to trade between Britain and the Bloc. Nobody is saying that growth comes ahead of those other concerns, but if you’re claiming to be the party of prosperity, you do have to own up when you kick a hole in our GDP forecasts.
The Conservative Party can behave in this way because its core electoral coalition is at best ambivalent towards growth, and often actively hostile. A less remarked upon consequence of the great demographic switch – where voting is increasingly polarised by age – is that the Tories are now effectively the party of the economically inactive retiree, who doesn’t benefit from long-term investment – they won’t be around for it! – doesn’t benefit from the sort of disruption growth creates, and certainly doesn’t benefit from increased housing supply reducing their asset prices.
Olson’s concept of the state involved a ‘stationary bandit’, a tyrant who stays in one place and extracts as much wealth as he can from his captive population. This tyrant has some incentive to invest in growth, because he will see the rewards. The alternative is the roving bandit, who will shortly move on. Britain’s pensioners, while not exactly Mongol warriors sacking Chinese cities, are at least spiritually akin in their economic philosophy. Changing this mindset will take more than a catchy term for their behaviour.
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