Thursday, 4 July 2019

We're not the target audience

The Institute for Fiscal Studies (IFS), which, for reasons that are dubious to say the least, has become the ‘go-to’ organisation for the media when it comes to government economics, has been very critical this week of the two Tory leadership candidates, accusing them of misleading the public with their extravagant spending pledges.  This seems to me to be more than a little unfair, for two reasons.
Firstly, the IFS always take a very conservative (with both a small and a large ‘c’) view on government finance.  Their opinions are based on the orthodox but mistaken view that the government must, in essence, ‘balance the books’; that taxation and spending must match over an appropriate timescale.  In fairness, that has also been the position of both the major UK parties for some years; austerity (and let us not forget that Labour never really opposed austerity, just wanted a different form of it) is but the most obvious result of that.  Orthodox it might be, but it has always been a nonsense.  It was a pretext for the ideological aim on the part of the Tories of shrinking the state and Labour went along with the principle in the hope of avoiding potentially damaging criticism of their alleged financial profligacy (from organisations like the IFS, the BBC etc).  It was always an ideological choice, though, and all the wild spending pledges of Johnson and Hunt have done is to expose what has always been the reality, namely that government spending is not at all like household finances.  (None of that means, of course, that whoever wins the race will not then try and put the cat back into the bag.)
But secondly, neither Johnson nor Hunt are trying to mislead the public at this stage; they are only trying to mislead the membership of the Conservative party (along with the UKIP/Farageist entryists) who have a vote in the leadership election.  They don’t need to mislead the public yet; that can wait until the general election in the autumn.  In the meantime, they only need to convince a comparatively tiny number of people; the public are just the ‘accidental’ audience of a race which is using the media to reach that small number of people.  Whether the candidates’ increasingly wild promises will convince even those people is an open question; the electorate for this race is after all composed largely of people who have swallowed, hook, line and sinker, the household budget analogy.  I rather suspect that the promises to drastically cut taxes whilst hugely increasing spending will have little effect on that target audience.  It’s a bidding war which is not only unnecessary, but also largely futile; these aren’t the issues on which that electorate will make its choice.
Some Tory bystanders such as Patten and Hammond are becoming increasingly alarmed at the prospect that all Johnson and Hunt are succeeding in doing is legitimising the more modest spending commitments of the Labour Party.  I’m not sure that they need to be over-worried; the way things are going, the irony is that it will be the Labour Party at the next election which is arguing for financial orthodoxy, and which will take the electoral hit which is otherwise due to damage the Tories.  And if the Tories repeat such wild promises in a manifesto for a General Election and then win – well, no-one will really expect Boris Johnson to honour a promise, will they? 

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