Thursday 29 September 2022

Liz Truss has offered sound economics, but terrible communication, says David Frost

In which Lord Frost builds a strawman, rogers it soundly and then buys the deluxe model, the one with real hair, and gives it a good seeing-to.

Frostworld is a horrible place but I read the article and so must you. Ho ho. Text below.

I write this week in a state of high anxiety, deep concern and, yes, even anger.

I am angry at the feeding frenzy that has once again surrounded our Government and our country - but also at the avoidable mistakes that have caused it. The stakes could hardly be higher. This country has been offered the opportunity to be the first to break from stagnation, from the paradigm that says that growth is unattainable or maybe doesn't even matter. That won't be easy. So it is crucial to proceed with seriousness - to explain, to persuade, and to bring people along.

This week has not been a great start. The Government must raise its game, and fast.

Liz Truss is taking on the economic establishment - the conventional view, the view of the international hectoring classes like the IMF, the European Commission, the Mark Carneys and the Gordon Browns, the editorial board of the Financial Times and the The Economist, the whole ghastly crew that thinks that the West inevitably faces stagnation and decline.

These people think the future is one where more taxes are the solution to every problem; where demographics inevitably push up public spending; and where monetary policy is the permanent shock absorber, with super-low interest rates and super-high house prices. They like regulation, they don't like competition, and they prioritise "stability", the quiet stability of the grave, instead of constant churn and change that comes with dynamic capitalism.

They lack confidence in the future of the UK and therefore attach huge importance to the opinions of the international nomenklatura, to maintaining "influence" through respectability, and to symbols like the value of sterling. They are happy to see Britain as a shabby-genteel aristocrat, desperately keeping up appearances in our historic mansion, but too proud to get out and earn some money.

This Government rejects that defeatism. It believes growth can be re-established if we get back to free markets, real competition, and incentives to invest and work. It sees no future in high-tax high-spend. It maintains that regulation has furred up the arteries; that monetary policy needs to get back closer to normal; and that the exchange rate is a shock absorber not a target. And it is confident this country can succeed if after Brexit we do things differently and learn from successful countries.

I share this view. Luckily for the country, so did a majority of the Conservative Party membership. Let's not forget that, novel and radical though it may sound, this is the conventional wisdom of most modern economic history. It is the past twenty years that are the outliers.

But taking this view means looking reality in the face. It means telling people that Labour's "things can only get better" is fantasy. Instead, it means spelling out that we can't go on as we are, things will be difficult - but that it is worth it. The Government began this new journey last week. The measures set out last week were exciting, and correct. They must stick to them.

But they were launched into a political and economic environment that wasn't entirely ready. The break with the paradigm needed to be spelt out, explained, justified. Spending control and structural reform should have been as prominent as tax changes, supporters lined up, the arguments prepared. This didn't happen. So it is hardly surprising that the markets were spooked.

Mistakes will of course be made. But it is important to recognise them - and correct them fast. The Prime Minister and the Chancellor should not offer comment on every twist and turn in the markets. But they should have been visible, making their strategy clear, and doing so again and again so people understood. They will now have to do so at next week's party conference, and it will be high stakes.

We are, unfortunately, operating in a highly collectivist environment, one in which "fair" division of a static cake has become much more important than growing it. That can be changed, but it will take time and the Government must take the lead.

Moreover if they want to re-establish confidence in the markets, ministers must be honest in what they say. Yes, global conditions are part of the story, but it is obvious that last week's statement caused the crash. Yes, Putin's war has made things worse - but it is not the cause of our problems, as Liz Truss tried to argue on local radio yesterday.

There are many, many people who want the Government to fail - much of the media, unreconciled Remainers, the international commentariat and, it seems, not just Labour but all too many Tory MPs. It is all the more important not to give them unnecessary ammunition.

The team around Truss is pretty inexperienced. They must hold their nerve, but also learn from the past few days. Many more weeks like this one, and people will be saying: "We tried your form of Brexit. It lasted a month. Now can we get back to normal?" If we don't want this to happen, the Government needs to get serious - now. Blow this chance, and years of patching up the British stately home await.


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