In terms of the massively deluded concerning economics as we all know John McDonnell is one of life’s winners. Anyone who can possibly observe the past 40 years and decide that capitalism as failed is clearly, obviously, either nuts or ignorant. True, he saw through the Senior Lecturer but still.
He is though insisting that a Labour victory, with those associated policies of uncompensated nationalisation, yet more of the country’s investment running through government, will raise the value of sterling.
This might, you know, not happen:
Valuations, like utility, are personal. In this case, we ought not to listen to what John McDonnell thinks of his own policies. Instead, we should listen to those who will be doing that valuing, the market participants. And the answer there is that no one does think that sterling will rise. Nor, obviously enough, that nationalising those commanding heights will benefit the economy as a whole.
The important point is that McDonnell can tell us all he wants that these are going to be beneficial policies and that other people will not react to having their property stolen, but it’s not McDonnell who does that value determination, it’s everyone else who gets to do that. Sterling moving up or down or capital fleeing the country is determined by the opinions of those affected by policies, not the politicians enacting them.
He’s missing the most basic economic point. Valuation, like utility, is personal, not something determined by politics.