An inconvenient truth

Sometimes I feel being an economic conservative is hard work. Most people I know and am friends with (I think) disagree with my views varying, on a sliding scale, from polite dismissal to outright "you-heartless / xenophobic / greedy / bigoted / illiberal [insert noun here]" contempt. It would be so much easier to just agree with them, keep my mouth shut, or stop caring. But I can't.

More than a month has passed since a strange election in which the Conservatives managed to throw away a working majority and Labour lost for the third time on the trot apparently – not that you'd guess from the reaction. Celebrating failure is apparently en vogue again.

Why did it happen? My last blog described the choice as between attractive but unaffordable, or unpalatable but more realistic. Millennials and most of generation X never experienced the fatal flaws of unionised high-tax high-spend socialism during the winter of discontent, and when the UK went to the IMF after going bankrupt under labour in the 70s. The surge in popularity for both Corbyn and Labour since the election indicates that the electorate have corporately forgotten this and have failed to ask the critical question, "where's the money?" because, quite possibly, it's an inconvenient truth.

One commentator put it this way: "At some point over the last year, MPs stopped talking about the debt and deficit. Voters, hearing only competing spending pledges, assumed that austerity was over and voted accordingly."

An incumbent conservative government is never going to be able to out-promise a tax & spend socialist opposition on spending pledges. The inevitable conclusion is that a significant proportion of the electorate bought the promises offered by Labour to every interest group they could think of.

They also buried their heads in the sand to the logical financial consequences or – more generously – weren't aware of or didn't understand them. The labour campaign fudged the matter by repeating loudly that their pledges were "FULLY COSTED" despite the IFS trashing them. Tax will only get you so far before the golden geese who provide the most revenue get fed up of being squeezed and move on. There's a reason why governments on both sides of the Atlantic are looking to cut tax rates rather than hike them – something that Trump and Macron have in common.

The conservative campaign erred by not repeatedly hammering home this point, instead choosing to frame the choice between Theresa May and Jeremy Corbyn, and allowed Labour to set the election narrative by focusing on other factors which tugged at the emotions of voters. I haven't even mentioned the inherent contradiction at the heart of Labour's position on Brexit yet.

The debate became increasingly framed in the context of emotive, but narrow, appeals: take more refugees, support our NHS, help teachers, more police – all of which are worthy things – but without an effective funding plan and mechanism, ultimately squeeze more money from the public purse while appealing to our hearts rather than our heads.

The hilarity continued with an appearance from JC (Jeremy, not Jesus, for avoidance of confusion) at Glastonbury. The irony of a field full of punters wearing Hunter wellies, each of whom had paid several hundred quid to be there, cheering on a bearded Marxist preaching about the damaging impact of austerity and the erosion of workers rights while quaffing Kopparbergs as zero-hours contract workers cleaned up around them was apparently lost on some.

Angela Rayner popped up, talking up a further pledge to forgive all student debt (at a cost of £100 billion in case you were wondering, or nearly two full year's worth of net current government borrowing). She was fairly weasel with her words, trumpeting the pledge before rowing back to say that they'd 'look at doing that'. In other words, 'we're going to give a big cash handout to anyone with student debt (but we might not).'

This basically amounts to a fairly middle class giveaway, and a fairly big middle finger to everyone else who didn't attend university, or has paid their debt off. It also leads to greater inequality by ensuring that the burden of paying for university costs falls on the whole population rather than the students who, by virtue of their education, are rather more able to fund it.

So there's the crux. Did anyone else wonder where the money was going to come from? The simple answer is that Labour were willing to buy votes today at a future cost to future generations, and just like an iceberg, the size of the problem would be hidden until it hit us.

To a degree, the Conservatives have been complicit by refusing to make the powerful case for the UK to live within our means. The message coming through is that people are 'weary' of austerity. Well, I'm weary of my mortgage, but I still have to pay it. It's an inconvenient truth.

As a nation, the annual cost of interest on the national debt exceeds the annual education budget. Do we still really think it's sensible to spend more and more money which we know we don't have when the brutal reality will be a higher interest cost and lessened ability to spend more on public services in the future?

If you're a student, do you think that the forgiveness of your debt and abolition of tuition fees should take priority over putting more cash into welfare, policing, security, care or health?

In the UK, most millennials and generation X-ers have grown up in peace and plenty, in a period of unprecedented technological and economic growth. We are far too used to getting what we want, and quickly calling it a 'right' when the reality is that it's a hard earned choice, and often a difficult one at that.

We must learn the lessons that history tells us about the promises of left-wing socialism, and their consequences, or suffer them all over again.

Ultimately the money we have or have not determines how much we can choose or how much we have to compromise. The same is true of a country. It's an inconvenient truth.


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