Is the new approach to economic policy of the Truss government important. Well, just look at the overreaction.
“It has been extreme” says the mild-mannered Tyler Cowen, who goes on to add:
“I certainly can see reasons why one might oppose the plan, but the skies are not going to fall.”
Criticism from many of the government’s opponents can be dealt with relatively briskly – it’s usually easy enough to pick out contradictions in their own recent testimony. Cowen again, with admirable restraint:
“Remember when people used to tell us [the low marginal cost of UK government borrowing] meant there was no major problem on the fiscal side?”
But it’s the criticism from friends that’s most interesting.
While a smidgen is based on fiscal purity and a fair bit looks like sour grapes from the losing faction in the recent leadership battle, the rest seems to fall into two camps. The first camp just doesn’t yet realise there has been a sea change in policy; the second doesn’t believe that it can be sustained against the orthodox blob in the media, civil service, industry – and the electorate.
The second view is certainly plausible when one contemplates the scale and scope of policy change implied by the government’s initial change of direction.
And in turn, it puts into (unflattering) perspective, the relative failure of the Johnson government at deregulation. The irony of course is that Boris could legitimately claim to have done more, much more, than his peers (saving perhaps the Trump administration’s regulatory pause). But that simply shows the extent of the buy-in to the regulatory state by mainstream right-of-centre parties in rich Western countries. The best mark Johnson could expect from the examiners is ‘Should’ve tried harder’.
And his experience suggests trying hard won’t be enough on its own. Ministers will need extraordinary focus and strength of purpose, not just on one big policy like Brexit, but across the board.
On immigration and skills, for example, the new PM and Chancellor are thought to be minded to let more skilled migrants into the UK.
There are good arguments for this but it’s probably not the level at which to address policy.
Bear in mind that the preceding Boris government – acting no doubt on the best expert advice – used its post-Brexit powers to revamp the system in order to reduce overall immigration and refocus it on highly-skilled migrants.
But according to Migration Watch UK, the result in the year to June 2022 was:
“ … an astonishing 1.1 million visas granted for people to come and live in the UK (a rise of more than half a million when compared with the year to June 2019 – before the pandemic).”
Sure, there are the exceptional reasons: the Ukraine crisis; the Hong Kong troubles; did we mention Covid? The EU for once can’t be vilified, as only 65,000 visas were issued to its citizens.
But diving into the headline number, Migration Watch finds 486,000 study and 230,000 resettlement visas, with more than 20% of total visas issued to “family of people on other visas”. It’s not obvious that the policy is doing what it was supposed to do.
So the review will be a test of the government’s ability to focus only on the main objectives and ride roughshod over all the safe compromises that might negate their achievement.
And that done, move on to the next hitherto-intractable problem.
You might say that overreaction to the Truss government is entirely appropriate. It’s saying it will rip the carpet out, rather than find new ways to hide the dust under it.
Just a different sort of overreaction to the one which we’ve been having.