Regular readers will know I’ve not a great deal of admiration for the economic ability of Will Hutton. He’s the one trick, that Britain would be a better place if everyone damn well did what Will Hutton told them to. Beyond that there’s nothing to his shtick. But then that is Kip Esquire’s Law, isn’t it, that every planner envisions themselves as being the one doing the planning.
A useful example of this lack of nous over matters economic is this:
For there is no Brexit dividend, as the shamelessly economically ignorant Jacob Rees-Mogg keeps claiming. The Institute for Fiscal Studies computes that just to stop public spending falling as a proportion of national income, while balancing the budget will mean another £30bn of tax increases by the mid 2020s, with £11bn on top to pay pensions and meet the demands of the elderly on services. Inheritance, companies and property will need to be more highly taxed – but so will everyone.
The point being that he’s making an assumption there. That spending as a proportion of GDP must remain the same as it is now. This is just so self-evident that it is not argued for, it’s just a stated fact. From which comes that insistence that taxes must therefore rise into the future.
But why must, or even should, public spending remain at today’s percentage of GDP? It’s currently some 6 or 7 percentage points above the level of Gordon Brown’s first couple of years as Chancellor. Actually, it’s still several percentage points above the level of any year of Gordon Brown’s Chancellorship. As I’ve explained elsewhere recently:
Leave aside who did it and their rhetoric and the past decade has in fact been just that – straight Keynes. We did have an economic disaster and it would have been very much worse if government hadn’t borrowed and spent. Not spending upon anything in particular, just spending in order to keep economic activity going. It’s true that we’re not all entirely happy with how things are now but the potential for that disaster is past and we should be matching tax and spending rather more closely. There is still one large difference though. The usual measure of government spending is in relation to GDP. That is, how much of everything we produce gets spent through government? Current rhetoric from everyone – most complaining and the Tories boasting of it – is that spending has been relentlessly slashed. As a matter of fact, spending is up since before the recession, Hammond is disposing of a greater portion of our incomes than Brown ever did. Quite an achievement for a Conservative Chancellor, to be following the same basic plan as Gordon Brown, only taxing and spending even more.
Quite the interesting point is that Willy Hutton is exactly such a Keynesian. Public spending should have expanded in the depths of the recession – we can argue about that if we like but he’d certainly sign up to it – and it’s entirely reasonable to suggest, even within that standard Keynesian framework, that it should fall back when the Sun is shining.
So, we’ve either got Willy entirely unaware of the basics of the economic policies he says he supports or he’s lying to us all about what they mean or imply. Either answer meaning that we shouldn’t just damn well get on with what he tells us to do. For ignorance and or casuistry aren’t great recommendations for a prophet are they?