James Carville, Bill Clinton’s strategist, got it wrong when he said: “It’s the economy, stupid.”
In today’s world, certainly its British part, ideology doesn’t just trump economics. It enslaves economics for its own nefarious purposes.
Allow me to explain this by boring you with a few economic truisms, facts so basic that any secondary school pupil should have them at his fingertips. Since our ministers, with the possible exception of Angela Rayner, possess such qualifications, nothing I’m going to say should be news even to them.
One such truism is that consumer confidence is a key factor in a consumer economy, which is what every Western country is supposed to enjoy. When consumers look towards the future with optimistic hope, they begin to, well, consume and invest more.
As a result, the economy grows in strength, the key indicators improve, consumers and investors become even more confident. Happiness all around.
Are you with me so far? Good. So what economic indicators are known to make consumers more confident?
First, inflation has to be low for otherwise people’s earnings will have less purchasing power. And here’s the good news: Britain’s inflation rate is down at a manageable 2.2 per cent.
Then there should be plenty of jobs around, so consumers won’t toss and turn at night fearing unemployment. More good news: unemployment is at its lowest level since 1974.
What else? Oh yes, the economy shouldn’t be stagnant. To be fair, our economic growth isn’t brilliant, but the British economy is still the fastest growing in the G7.
All in all, Britons should be serenely confident that our economic future looks bright, or at any rate brightish. And yet the Consumer Confidence Index is languishing at minus 20, meaning that consumers are running scared.
Such sentiments will have a knock-on effect on the economy: people will be spending and investing less, tax revenues will go down, the government will have to borrow more, inflation will go up as a result, employers will stop employing, unemployment will soar – well, you don’t need me to teach you the economic primer.
So why are British consumers lacking confidence? Simple. Within the first weeks of its tenure, the Labour government has already stated its wholehearted commitment to wrecking the economy by suffocating it with taxes.
Turn another page in that primer, and you’ll find another truism: high taxes make capital, and hence jobs, flee. A higher capital gains tax, inheritance tax, employment tax all have this predictable effect.
Chancellor Rachel Reeves will deliver her first budget on 30 October, but entrepreneurs are already fleeing en masse in anticipation. To repeat the old joke, I just hope the last one to leave will lock the door and turn off the lights.
When the budget is actually delivered, and people’s worst expectations are exceeded, the economy won’t take long to collapse or at least suffer the kind of damage that will take decades to repair.
Miss Reeves knows all that as well as you and I, possibly even better. After all, she holds a master’s degree in economics from the LSE, not just a secondary school diploma. And yet she is lying to the country by saying she’ll have “difficult decisions” to make on taxes, meaning she’ll raise them.
The lie isn’t that she’s going to raise taxes: she’s perfectly truthful about that. The lie is that the decision is difficult. It isn’t. It’s dead easy.
By the same token, if Fido could talk, he wouldn’t insist that his decision to chase Tabby around the block is difficult. That’s what his DNA is wired to do, and all socialist governments (meaning the governments of all Western countries) are just as programmed to raise taxes.
There’s no point arguing against that on economic grounds. Doing so can only spring from the failure to realise that the implicit purpose of modern taxation isn’t always, and never merely, fiscal.
Another omnipresent aim is to extend the power of the state by limiting the people’s ability to become independent of it. In that sense, taxation in the modern Western world – whatever else it might be – always has to be punitive and preventive.
The whole system is designed around this desideratum, and it will fight any interloper with the kind of resolution that would put the Spartans at Thermopylae to shame.
Another aim has more to do with PR. It’s to assuage the desire large swaths of the population have been brainwashed to feel for ressentiment and craving revenge against those more successful than they are. That’s why they’ll welcome, or at least won’t resist too strongly, the tax hikes whose sole effect will be reducing the state revenue by driving the wealthiest and most productive people, not to mention businesses, out of the country.
Labour politicians emetically shout about their concerns for the ‘working people’, especially – I dare say exclusively – those who belong to public-sector trade unions. Yet real working people and our government inhabit two different economic worlds.
People work their whole lives to live comfortably, raise and educate their children, provide for their own old age – such is their actual, tangible reality. The government, on the other hand, lives in the virtual reality, where ideology and powerlust reign supreme and nothing is tangible.
The two realities are irreconcilable; like Euclid’s parallels they never cross. That’s why we should prepare ourselves for another crisis, with the economy lying in ruins. And rising out of them, like a phoenix from the ashes, will be the state – stronger, bossier, increasingly tyrannical.
Sorry to be such a doomsayer. But hey, I’m a consumer too. That’s why my confidence is racing ahead of the Index on its way down.
Mr Boot, we just hope you are wrong.
But, alas! we fear – feel it in our bones – that you are right.