The myth of fiscal headroom

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Fiscal rules are magical things which, apparently, every party needs to have. Parties can and do, however, invent their own rules. And change them, if ever they become ‘inconvenient’. It’s easy to see why the Tories, particularly late in a parliament facing an election which they are all but certain to lose, would want to lay down rules which would constrain an incoming Labour government. It’s a lot less easy to understand why the Labour Party would be stupid enough to let them get away with that.

Whatever, the Tory rule is, in essence, a very simple one: it must show that government debt overall is reducing by the end of the current five year period. Effectively, it doesn’t matter what happens in years 1 to 4, as long as the numbers show the right answer by the end of year 5. Although it might sound very difficult, it’s actually quite easy to achieve, all they have to do is make up the numbers. And that, in effect, is exactly what the Office of Budget Responsibility accused them of doing last week. As their head honcho put it, it’s not that the government figures are a work of fiction, because there was no work involved. They are simply invented numbers, with no plan for achieving them and no evidence to justify them, yet statute requires the OBR to pretend they are serious.

But that isn’t the end of it; the rule is even more magical than that. When one year ends, what was year 5 becomes year 4 and a new year 5 gets added on to the end. The rule now only requires a reduction in debt by the end of the new year 5. If they want to, the government can put off debt reduction almost indefinitely and still claim to be meeting the rule which says it’s reducing. By definition, the figures for year 1 will always be firmer and more accurate (or rather, less inaccurate) than the figures for later years, and they become the basis on which the government manages the books for the year. So, if income increases for whatever reason (such as more people being brought into payment of income tax through frozen limits) or expenditure reduces (such as lower interest rates leading to reductions in the cost of debt servicing), the government finds itself with what it and the media like to call ‘fiscal headroom’. Without borrowing any more than they’ve already planned to do, there is suddenly cash available with which they can do one of three things.

They could reduce the planned borrowing for the year, they could increase spending on failing public services – or they could cut taxes. And all the talk at the moment is that the Chancellor will use this apparent windfall to reduce taxes in next month’s budget, in the belief that doing so will be a big enough bribe for people to vote for the Tories. They will still be borrowing the same amount as they’d already planned to borrow (for all their talk about needing to cut borrowing, that’s a task which they’re more than happy to put off until the mythical year 5 and thus leave to an incoming government). They’ll just use some of that borrowing to reduce taxes. That’s right – the policy is effectively the same as that promoted by the previous worst PM on record, Liz Truss, namely borrow money to cut taxes. The only difference is that she alarmed people by planning to exceed the budgeted amount of borrowing without providing a good enough set of fictitious figures for the future, whilst Hunt is promising to stick within the already agreed fiction.

Here are two facts we know. Firstly, cuts in income tax always help higher earners more than low earners. And secondly, when the government borrows money and pays interest thereon, it necessarily borrows from those who have money available to lend, whether that’s directly through NS&I investments or indirectly through pension pots. Heads the better-off win, tails the less well-off lose. Doubly so, in a sense – the less well-off are also more dependent on the failing services in which the government is deliberately choosing not to invest. It’s easy to see why such policies appeal to those who have money: who wouldn’t prefer to pay less tax and then lend money to the government and receive interest on it instead? It’s a lot less obvious why this ploy will appeal to the majority who neither have the money available to lend to the government nor are likely to benefit greatly from any tax cuts. But then, sleight of hand is the secret of a good magician; most people aren’t seeing the full picture.

Burying the nugget of truth

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The trouble with bizarre and delusional rants is that any nugget of truth contained therein can easily be obscured by the patent nonsense in which it is embedded. Liz Truss’s opus magnus in the Telegraph on Sunday (widely covered in other media) is a case in point. The idea that the OBR, the Civil Service, the media and the markets are all run by some sort of left-wing conspiracy, and the suggestion that the only thing she did wrong was to fail to communicate her 'brilliant' ideas effectively, would lead anyone to wonder what her home planet looks like. But the nugget of truth is this: there is an accepted consensus around economic policy, shared by government and opposition politicians, the civil service and the media, and it is difficult for any politician, whether in or out of government, to challenge that consensus.

‘Left-wing’, however, it most definitely is not. It’s a consensus around ‘sound money’ and ‘balanced budgets’ which dates back to Thatcher and has broadly been followed by all governments since. Suggesting that Thatcherite economic policy is ‘left-wing’ tells us more about Truss’s own position on the political spectrum than it does about economics, but portraying Thatcher as some sort of dangerous communist is not a picture that many will recognise. It’s a consensus which the Tory-led government of 2010-2015 tried to embed as some sort of unchangeable basis for the future by setting fiscal rules and appointing the Office for Budget Responsibility to assess all government action against those rules. I’m sure that Osborne intended this to make it very difficult for any future alternative government to do anything different, although he probably didn’t expect a PM from his own party to be the one caught out. The fiscal rules were set by the government; the remit for its work was set by the government; and its members were appointed by the government. If a new government comes along – led by a maverick such as Truss, for instance – and leaves the same rules in place, to be assessed by the same people, working to the same remit, it should hardly be a surprise if, when that government then takes actions contrary to the fiscal rules, the OBR criticises those actions. And it’s hardly evidence of some great conspiracy – it worked as the Cameron government intended it to work, which is to force the government back to the accepted normality.

Whether the economic view on which it was based – that of the Treasury, the media, and Tory, Labour, and Lib Dem politicians alike – is the right one is another question entirely. And it isn’t only Liz Truss who’s questioning it. Last week, the BBC itself published a report on the way it covers economic policy (and Prof Richard Murphy has a brief summary of some of the salient points here) in which it accepts that it has given too much credence to prevailing orthodoxy and not enough to alternative viewpoints.  Specifically, the report accepts that the BBC (while making the valid point that it isn’t the only transgressor) has given excessive credence to the ‘household analogy’ for government budgets, without pointing out that it is opinion rather than substantiated fact and that there are other views. It’s not exactly coming from the same perspective as Truss, of course, but the underlying point – that there is an Overton window outside which debate is rarely allowed to wander – is the same.

None of that is intended to in any way support the insane proposition put forward by Truss that decreasing taxation on the rich would magically lead to economic growth and increase government revenues. All the empirical evidence suggests that borrowing money to give tax cuts to the rich ends up simply increasing government debt and financial inequality; but the infamous Laffer curve continues to draw support despite the fact that it is entirely unevidenced in practice. The fact that Truss was, and is, utterly clueless about how to generate growth, preferring to believe dogma than look at evidence, doesn’t mean that she was wrong in principle to worry more about overall economic performance than about specific levels of government debt. It’s a pity that her failed experiment, coupled with her tendency to see dangerous lefties under every bed and in every institution, will actually make it harder, rather than easier, to debate alternative viewpoints.

Staying afloat on a tide of outrage

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When it emerged on Monday that Liz Truss had been meeting the Chair of the 1922 for ‘routine discussions’, I’m sure that I was not alone in assuming that this particular 'routine' was the one where the PM was passed a figurative bottle of whisky and a loaded revolver. It’s certainly starting to look like a routine occurrence. However, by the time she got to the House of Commons, it looked like she’d drunk the entire bottle and then forgotten to use the revolver. Or, given past performance, fired it and missed. Six times.

As she then sat on the bench surrounded by the circling sharks, wearing a fixed non-expression while a standing Jeremy Hunt trashed everything she’d said, including things uttered only in the previous few days as well as things she hasn't even said yet (past, present, future - all happen simultaneously in Trussland), the image from the past which came to mind was of Yeltsin dictating terms to Gorbachev as the Soviet Union disintegrated. Like Gorbachev, she retained the job title, but all power had already flowed out of her grasp, even if the full realisation hadn’t quite sunk in.

Today, she is due to face the House of Commons herself for Questions to the PM. Perhaps Starmer will have an off day; perhaps he will struggle with some sort of strange internal sense of kindness. But barring either of those (or a reloaded revolver being quietly passed to her before she gets to her place), she is facing further utter and very public humiliation over things she’s said and is still saying. It can surely only be a serious deficiency in the functioning neuron department which prevents her from understanding just how humiliated she has already been, and just how pointless it is to continue the farce.

Closer to home, our very own First Minister showed a very rare flash of anger yesterday. It has outraged the Tories, of course, but they would probably be outraged if they discovered he had dared to eat cornflakes for breakfast (unless he hadn't, in which case they'd be outraged at that). Outside the ranks of the perpetually outraged, it will probably have done Drakeford more good than harm (although we should probably also exclude those who are opposed to cruelty to dumb animals). The Tory ship, as badly holed as it is, can surely not continue floating for much longer. Expelling vast clouds of faux outrage through the ever-increasing number of holes in an attempt to keep the water out is necessarily a time-limited operation - even RT's apparently limitless supply of the stuff must come to an end at some point.

Clarity is a virtue. Usually.

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If there’s one thing that can be said with certainty about this month's outgoing PM, Liz Truss, it is that she is always ‘very clear’. Reminding us just how clear she is has become something like a trademark catch-phrase, a form of words which seems to open almost every sentence which utters forth from her mouth. The difficulty is not that what she says isn’t clear, it is that she has an amazing ability to be very clear about two complete opposites at the same time.

·        She was very clear that abolishing the highest rate of income tax was absolutely (another favourite word) the right thing, and equally clear that scrapping the proposal to abolish it is also the right thing to do.

·        She was very clear that increasing the rate of corporation tax, as proposed by Rishi Sunak in a budget which now seems like it took place sometime last century, would definitely cause a recession and would in any event not raise any additional revenue. She’s now equally clear that going ahead with the increase is an important part of her plan for growth and will also raise an extra £18 billion for the government’s coffers.

·        She is very clear that the government can increase planned expenditure, cut planned revenue and borrow less all at the same time, and that there is absolutely no need for any cuts to departmental budgets. She’s now equally clear that the numbers need to add up, and that means some hard decisions on spending will have to be taken.

Being clear is usually a virtue, and she now seems to be very clear that she’s done quite enough to convince people that she has a clear way forward which is clearly understood by everyone. Clarity, though, is a bit like beauty: it’s all in the eye of the beholder, and in this case there seems to be a distinct lack of beholders sharing her perception. To be entirely fair to her, though, there is one big thing that she has achieved. Tory MPs are now falling in behind her in droves, exactly as she asked. I wonder when she’ll realise that most have them have knives in their hands, even if the rest are armed only with the traditional offering of a glass of whisky and a revolver. Perhaps Brutus Kwarteng will initiate the final denouement next week by making the customary personal statement allowed to ousted ministers. Pass the popcorn.

Only two more before Christmas

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One of the wonders of the internet is that it is easy to find out whether some of the most familiar quotes were ever actually said by the person to whom they are most often attributed, by simply tapping into publicly-available research done by others. It has turned out to be a bit of a disappointment, though; many (perhaps most) of the pithy quotations about whose origin I have been so certain for years turn out never to have been uttered by the alleged author. It shouldn’t really affect the validity or usefulness of the words or phrase themselves, but it’s still something of a disappointment to find that something has been misattributed for decades.

And on the subject of usefulness, it turns out that there is, apparently, no trace of Lenin ever having referred to ‘useful idiots’. It doesn’t mean that useful idiots don’t exist, however, and that brings me to the newly-appointed Chancellor of the Exchequer. The outgoing post-holder certainly discovered that he was little more than a useful idiot to the shortly-to-be-former PM. He had thought that he was being appointed because of his outstanding ability, intellect, and understanding of economics. It’s the sort of exaggerated and arrogant self-worth which is drummed into students at Eton, and which never thereafter leaves them. Events have shown, however, that he was little more than a human shield for an economic experiment which his boss was determined to conduct, and has now been sacked for following her orders too enthusiastically.

Whether his successor will be as useful is now an open question, but there can be little doubt about the extent of his idiocy. Having a chancellor committed to a different economic approach may turn out to be of some use in the short term – and not just to the PM. Kwarteng himself will also benefit from the idiocy of the new incumbent, as he finds himself bumped down the leader board from the second shortest-serving chancellor to the third within a week or two. Only an idiot’s idiot would hitch his wagon to a doomed PM whom most of her own MPs now believe is destined to be turfed out herself within days. Step forward Jeremy Hunt (and isn’t it reassuring to get back to the days when at least one member of the cabinet admitted that he was a Hunt). Perhaps he believes that his soon-to-fail attempt to rescue that which cannot be rescued will place him in pole position to replace her; perhaps he even believes that his own ability is so all-encompassing that he can actually achieve the impossible (even if Charterhouse isn’t quite as well known as Eton for instilling that particular type of arrogance). We won’t have long to find out – only two more chancellors before Christmas.

Four negative numbers can become one positive number - with enough faith

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The UK Government continue to insist that they have a ‘plan for growth’. They do not: they have a plan for tax cuts, half a plan for spending cuts, and a half-baked plan for deregulation, the sense of which the head chef, Jake, is having difficulty convincing even his fellow cultists about. Their ‘plan’ for growth consists of little more than an unshakeable faith that growth will inevitably follow the implementation of those three ‘plans’ despite a complete lack of corroborating evidence.

Leaving aside the question of whether growth is always desirable or even attainable anyway (infinite growth in the context of a finite quantity of resources, for instance, is at the very least questionable), and assuming that what the PM means (although she hasn’t actually spelled it out in so many words) is an increase in overall GDP, how likely is it that growth will actually happen? There are a number of different ways of calculating GDP (all of which should ultimately produce the same answer, although the presence of estimated numbers in all of them means that there can be some variation). One of the most common is the simple equation:

GDP = C + G + I + (X-M)

By the same token, any increase in GDP can be measured by the increase in the total of the four factors, which are: C = consumption, G = government spending, I = investment, and (X-M) = the difference between exports and imports. (Prof Richard Murphy has more here). For GDP to increase, simple arithmetic tells us that at least one of those four terms must increase. The problem is that the increasing gap between prices and income will reduce C, the government is due to reveal on 23 November (assuming that the markets and restive backbencher allow it to wait that long) by how much it will reduce G, I is outside the control of the government to a large extent, but investment in new plant, equipment etc looks like a risky assumption in a time of economic uncertainty, and we know that (X-M) is impacted directly by Brexit. A government which was serious about growth would want to ensure that household consumption could at least remain static rather than fall, it would ensure that government spending – particularly on infrastructure – rose, it would do its best to create the sort of stability which reduces the risk to businesses of making large investments, and it would seek a closer trading arrangement with the UK’s closest and biggest markets. In reality, a government which claims to be committed to growth is actively taking decisions in relation to all four of those factors which will either suppress growth or, even worse, ensure a recession. No amount of blind faith can make four negative numbers add up to a single positive one.

There is, though, another possibility, and that is that the PM is not referring to growth in GDP at all. She wouldn’t be the first to confuse ‘making people wealthier’ with ‘economic growth’, and leaping from there to an assumption that an increase in the concentration of wealth amounts to economic growth. It would make rather more sense of her statements, to the extent that making sense of them is a realistic possibility. If the wealthiest in society have more money in the bank, the inescapable corollary is that they will be wealthier as a result, and if all the people with whom you mix are in that ‘wealthiest’ category, it can be easy enough to believe that ‘people in general’ are getting wealthier. The salary of a back-bench MP puts MPs in the 95^th percentile of employed people in the UK, and many of those with whom they socialise (and from whom they seek donations) will be in an even higher percentile. The numbers, to say nothing of the everyday experiences of the rest of the population, might tell a different story; but who needs numbers when you have faith? That would be almost like asking an expert.

Letting them know who's boss

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When George Osborne set up the ‘independent’ Office for Budget Responsibility 12 years ago, he surely intended it as a way of locking in orthodox thinking and making it harder for any future government to follow a significantly different path. That was in the days when the Conservative Party was the upholder of financial orthodoxy, but had only a slim grip on power in coalition with the Lib Dems. The possibility of a Labour government looked realistic and constraining the freedom of movement of that party would have looked, to a Tory, like a really cunning plan. Although Osborne admitted that having an outside body conduct an independent review of his budgets placed limits on him as well, it’s doubtful that it really worried him a great deal (it was, after all, his own fiscal orthodoxy that he was attempting to set in concrete); and it is certain that he never expected that his OBR would find itself in direct conflict with his own party’s government. But fortune-telling has always been a dodgy business at the best of times, and it’s easy to believe that he didn’t expect the fiscal fetishism of the Conservative Party of 2012 to turn into the doomsday cult of 2022.

In any event the ‘independence’ is more illusion than reality, when push comes to shove. The members of the Budget Responsibility Committee are appointed by none other than the Chancellor of the Exchequer, and it’s an iron rule of any power relationship that he who appoints can always find a way of unappointing if he needs to. But recent events have shown the limits of the ‘independence’ in another way as well: it turns out that the OBR can only produce a forecast if the government asks for one, and are expressly forbidden from publishing one if the government does not. And whilst the underpinning legislation requires the government to request that a forecast be produced for any budget, that which might look like a budget is not a budget within the terms of the legislation if the government simply decides to call it something else.

Various apologists for the government have come out with all sorts of excuses as to why the OBR couldn’t have produced a reliable forecast (as though such a thing actually exists in the first place) for this particular package, despite having managed it for previous budgets. The excuses have varying levels of credibility ranging from infinitesimal to zero but the inverse ratio between credibility and the absolute certainty with which some Tories present them is a wonder to behold. Not Truss herself, of course, for whom words are simply words, devoid of any meaning or expression. The OBR itself says it could have produced an analysis – indeed, that it even had one more or less ready for issue which it was not allowed to publish. Whether the government was aware of the content, or could even be bothered to look, is a currently unanswered question; the general assumption is that it wouldn’t have liked what it saw. The Boris Johnson approach to bad news from advisors (hands over ears and hum the English national anthem) is alive and well in Downing Street.

Today’s meeting between the members of the Budget Responsibility Committee and the Chancellor – to which the PM has invited herself as well – has been billed as an attempt to calm the markets by reassuring the OBR that the government is planning to set out how the apparent hole in the government’s finances will be filled. Perhaps. But given the arrogance and the absolute confidence that Truss and Kwarteng have that they know better than anyone else, it’s surely equally possible that their intention is to remind the OBR who’s in charge, and explain to them what they think so that they can go away and write it up as an 'independent' report. Given the way that they’ve reiterated time and time again over the past few days that their plans are the brilliantist ever, it’s hard to believe that there will be any contrition on display. Truss and Kwarteng are still wielding their spades with gusto – the enthusiastic hole-digging seems unlikely to suddenly stop today.

Missing an opportunity

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One of the ‘successes’ of the Tories over the past four decades has been implanting the idea that the government’s finances are like those of a household; spending should mostly be limited by income and any borrowing should be as short term as possible and repaid as rapidly as possible. It’s always been utter nonsense, and it’s not a paradigm that they’ve ever stuck to themselves, but they’ve succeeded in making it the starting point for all political discussion of economics under which all parties (except the Tories themselves, of course) are obliged to answer the question ‘how will you pay for it?’ in relation to each and every spending commitment, and then ridiculed for any failure to provide an 'acceptable' response. It’s an ideology which last week’s budget completely abandoned, with the results that we’ve seen on the financial markets, and whilst allowing itself to be seduced by the argument was not exactly a brilliant move by the Labour Party, being seen to be the upholders of what is essentially a Thatcherite position which the government have abandoned in favour of a trip to fantasy island will probably do Labour no harm in the short term. Appearing to be the adults in the room is not exactly a bad position to be in.

And yet… Their continued adherence to the Thatcherite view of the economy does them no favours in the longer term, and helps to sustain the household comparison. At a minor level, it leaves them open to a charge of inconsistency. For example, from the ‘household’ perspective, Labour's promise to reverse the unfunded abolition of the 45% rate of income tax and then use the ‘extra’ money for increasing expenditure in the NHS looks an awful lot like spending the same money twice. The open abandonment by the Tories of the position which they have imposed on everyone else for decades could – and should – be a real opportunity to have a serious discussion with the electorate about the way the economy really works. They could instead be spelling out that the problem isn’t the extent of Kwarteng’s borrowing per se, it’s that he’s using the borrowed money to reduce taxes on the rich: a move which few respectable economists believe will generate anything like the assumed level of growth which is required to make the numbers add up. Had he instead announced that he would be borrowing consistently more for some years to come in order to invest in infrastructure (which most economists would agree does contribute to growth), we would probably not have seen the panic which set in in the financial markets. Failure to even broach the argument that it’s not about borrowing, but how it’s used, is a serious constraint on Labour’s freedom to promise the investment which we need.

It's a failure which is understandable in a sense; in an environment where politics has been reduced to simple slogans, preferably no longer then three words long, and against a backdrop where the household analogy has become established ‘truth’, it’s a very difficult argument to make. And to paraphrase Bonaparte somewhat, “never divert attention from your enemy when he’s making a mistake”. They don’t need to win the argument about the ‘right kind of borrowing’ to win an election which the Tories seem determined to lose, so why get bogged down in a debate which many may not understand? It’s short term thinking, though: after they win an election, how radical can they be in economic terms if the ground hasn’t been prepared in advance? Most worrying of all is the suspicion that they don’t really want to be radical; they’ll be happy just to be ‘in power’ and carry on with the sort of economic policies which (Truss and Kwarteng might be asking some of the right questions here, even if they’ve come up with the wrong answers) have led us to where we are.

Giving with one hand and giving with the other

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The theoretical basis for reducing taxes on the highest paid is that they will invest the money saved in ways which boost economic growth. It’s a sweeping assumption. There is no doubt that ‘some’ of the money will be invested like that, but no-one knows how much, and it isn’t the only option. Some will simply be spent, which is another way in which the economy might be boosted a bit. But some will be saved, and no doubt a significant amount will find its way into secretive offshore tax havens. One of the big unknowns at the heart of the gamble is how the money ends up being split between those four options. That in turn depends on the calculations that those in receipt of the unexpected windfall make before deciding what is in their own best interests. And one of the factors in those calculations will be expectations about the future, which make it unlikely that much of the money will end up being used as the government might wish.

Investing in new businesses and innovation is a long term decision, so one obvious question is whether those making the decisions really believe that this is a good time to be taking long term decisions. With a government which looks as though it might, just about, limp through to an election in two years time, but which has an obvious potential for collapse a lot sooner than that if things go horribly wrong; with a major war raging in Europe, whose progress and outcome, to say nothing of its effect on energy availability and prices, remains highly unpredictable; and a pandemic which is far from being over with the potential for large new waves, many are likely to conclude that ‘certainty’ is a little lacking at present. Major investments look to be riskier than they have been in the past, and the rate of return on savings may be a better bet for many.

We know that interest rates on both borrowing and saving are likely to be rising, a trend which the not-a-budget-at-all will only accelerate, whilst the volatility of the pound adds to uncertainty. All that also has a negative impact on a willingness to take investment risk, and provides a positive incentive to find a safe haven for cash, whether overseas or in the UK itself. And one of the safest havens of all in the UK is government bonds, the interest rate on which rose sharply in the aftermath of the ‘fiscal event’. There is a common belief that when the UK government borrows money, it borrows it from other countries or overseas investors; but in reality, most borrowing is on the domestic market. Most is, effectively, borrowed from UK citizens; sometimes directly, but more often through financial institutions, such as pension funds, investment funds, banks and insurance companies. In a sense, therefore, most of us (through our pension funds etc.) are actually lending money to the government, even if we don’t realise it. This is, on the whole, something which benefits most of us. It’s worth noting, though, that the wealthier people are, the more money they are likely to have in their pension pots (as well as insurance, investment funds, banks etc.), and the more, therefore, that they lend the government. The interest on those loans, however, is paid by all taxpayers, even those who have loaned precisely nothing, either directly or indirectly, to the government. It’s one of the hidden ways in which wealth is transferred from those who have little to those who already have a lot, and that transfer is far more significant than the intergenerational transfer as which it’s sometimes inaccurately painted (the nonsense about future generations paying for today’s borrowing), because future generations, collectively, will inherit not only the liability but also the asset. The issue is that the people inheriting the asset aren’t the same ones who inherit the liability; it’s an inequality issue, not a generational one.

There is another effect here. Those traders who have been betting so substantially against the pound in expectation that the budget would lead to a crash have not only made small fortunes for their banks, they have also made it certain that interest rates will go up – maybe this week, and possibly even as soon as today. The traders can now receive bumper bonuses for their efforts, pay less tax than they previously would have done, lend the difference to the government, and be paid for the privilege at the higher rates of interest which they themselves have done so much to bring about. Verily, this is a government which giveth with one hand and then giveth a bit more, just to be certain, with the other. To the select few.

Half a cheer for the Lib Dems

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In political circles, the things for which the Lib Dems are most famous, and not necessarily in a good way, are dodgy bar charts and an astounding ability to promote completely contradictory policies in neighbouring areas – or even as they move from one house to the next in a street. To give them their due, they’re also quite good at mobilising large numbers of people to deliver a deluge of leaflets to flood voters’ homes in target areas, particularly during by-elections. Long term plans carefully and consistently executed have not, however, generally been seen as a strong point.

Perhaps we’ve all misjudged them. Liz Truss’s ability to pivot from one deeply-held policy position to deeply holding the complete reverse view makes her a classic Lib Dem. No surprise that was her initial choice of party. Infiltrating such an obvious Lib Dem into the Conservative Party with the sole aim of destroying that party from within is something of a master stroke, which shows clear signs of long term planning and organisation. After spending twelve years as a minister supporting the policies of three successive Prime Ministers, it turns out she never agreed with anything they (or she herself) did or said, another giveaway about her true allegiance. From upholding the idea that there is no magic money tree to claiming that she controls a complete enchanted forest, without even pausing for breath, is a manoeuvre which must have taken the breath away from even the most experienced Lib Dem candidate. A party which has spent 40 years telling us that they believe that spending must always be balanced by income suddenly decides to trash the very basis of its reputation by arguing that the bigger the gap the better; that’s on a completely different order of magnitude to merely overturning policy on student fees.

So, why only half a cheer for such an astounding achievement? Whilst the success of the cunning plot has almost certainly exceeded the wildest expectations of the plotters, they really don’t seem to have anticipated quite how much collateral damage would be caused for the rest of us when the bomb exploded. Perhaps they thought that she might get to a senior position but assumed that the Tories would never be stupid enough to make her leader. It’s an easy enough mistake to make (who wouldn’t have made a similar assumption?) but catastrophic for many of the least well-off in society. Next time, stick to dodgy bar charts. Please.

Escaping from the laboratory

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Attempting to make a virtue out of inevitability is not a wholly unreasonable starting point for a PM who seems to be going out of her way to take decisions which will be unpopular. However, deliberately setting out to make herself unpopular is what Sir Humphrey would call a “brave decision” and it may turn out to be rather too brave for those Tory MPs sitting on small majorities whose votes she seems to be taking for granted. There are major questions about whether the strategy of going for growth at all costs will work or not but, even supposing that it does, it is unlikely to produce much success in the two and a bit years which remain of her premiership. Growth is more like a giant tanker than a tap; it can’t just be turned on or off at a moment’s notice. Whether her backbenchers will be prepared to hold back until the ship is irreversibly sinking before acting, or whether they will follow the more traditional Tory approach of looking after their own interests is an open question, and not one on which she would be wise to stake her future.

It's far from clear that she’s really as committed to economic growth as she claims anyway. There is one single decision that she could take which would do more than anything else to reboot the UK’s economic prospects, which most economists and businesses would support, which would be largely painless to most people, and might even prove relatively popular (except among her own backbenchers), and that is to negotiate a closer trading arrangement with the EU’s Single Market. Given her own past commitment to membership of the EU, it surely can’t even be ideology which holds her back – it’s not clear that she has any ideology other than pleasing those she needs to please to keep her job. So, whatever she says, "growth at any cost" is clearly not on her agenda.

At the heart of her policy is the utterly discredited (see, for instance, IMF report from 2015) notion of ‘trickle-down economics’, under which allowing the richest to get even richer means that they spend and invest their extra wealth in ways from which we all benefit. It’s an ideological standpoint which requires its adherents to argue both that paying the poorest more makes them idle whilst paying the richest more makes them work harder, and to believe that people who already want for nothing will buy more goods and services, and invest in potentially risky startups, rather than simply locking the money away in some offshore tax haven. They also argue that companies which already have piles of money available for investment if the opportunity arises – and which, even if they don’t, can easily borrow money currently at what are still historically low interest rates – will use any tax cuts to invest in new capacity and innovation rather than distribute the money to shareholders through dividends and share buy-backs. And they regularly fall back on the infamous Laffer Curve, which purports to show that cutting taxes increases government revenue rather than reducing it. The problem is that there is no – zilch, zero, nada – empirical evidence to back up Laffer’s theory; it is just an interesting, abstract theory. That doesn’t prevent those who have a vested interest in reducing their own tax bills from quoting it as though it were gospel, but convincing people that a theory which benefits them is wrong is never going to be an easy proposition. Indeed, such evidence as is available on the operation of trickle-down economics shows that giving a bigger share to the rich ends up with the rich getting richer and increases inequality. Common sense trumps abstract economic theory. The argument that the size of the cake is more important than how it is shared out has a superficial ring of authenticity to it but if the extra cake all goes to those who already have the biggest pieces, then growing the cake is of no benefit to most people.

When in trouble, double down on the original proposition seems to be the order of the day for Truss, as it was for Johnson. But calling for all other major economies to follow her example and implement a similar approach is something of a classic. Not only does it betray (again) that special sense of exceptionalism which leads English nationalists to believe that they know best and the rest of the world should follow suit, it is also utterly self-defeating. The whole point of reducing taxation and regulation is, allegedly, to create competitive advantage (although there are serious doubts as to whether it would do so in practice; trade agreements which ban unfair advantages might make it difficult in practice to exploit such changes), but if everyone does the same those already dubious advantages are wiped out. All that’s left is growing inequality under which the rich get richer and the gap between rich and poor grows ever larger.

We – all of us who live in the UK – are about to be turned into a gigantic experiment in economics in the expectation that an experiment which has produced a consistent result when tried elsewhere will for some strange reason produce a different result here. The most rational response is to make a quick exit from the laboratory.

Honesty from a government spokesperson

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Yesterday, the new spokesperson for the new Prime Minister told us that the new cabinet represents the "depth and breadth of talent” in Tory party. Rarely has a truer word been spoken by an official spokesperson, although it’s not entirely clear why they felt they needed to spell out just how bad the situation is; most of us had already worked that out for ourselves. It’s a refreshing level of honesty which one suspects is unlikely to last.

How it could have been done

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Yesterday’s pantomime in two acts as one PM flew off to Scotland to resign and his successor flew separately off to Scotland almost immediately afterwards to be appointed in his stead has been reported more than adequately. It seems that they needed to take two separate flights in case anything happened to one of them on the way there, and the outgoing one wasn't allowed to go in to see the Queen until the incoming one was in the building, just in case. How they would have coped if anything happened to the new one on the way home doesn’t seem to be recorded anywhere.

Not much of the reporting seems to have asked whether it was all really necessary. Whilst it’s true that ‘tradition’ dictates that PMs are appointed in person, and, leaving aside the question of what sort of functional state depends on the health of a 96 year old who has been in post for more than 70 years already, it would certainly be asking a bit much to ask her to travel from Scotland to London for two meetings neither of which needed to be longer than five minutes. But it doesn’t follow that two expensive separate return flights were required. Traditionally, PMs have to kiss the monarch’s hand in a demonstration of fealty in order to be appointed, but that ritual was replaced some years ago by a handshake, and the sky didn’t fall in as a result. It’s equally unlikely that it would fall in if the handshake was replaced by a Zoom-carried cheery wave, or even a simple old-fashioned telephone call. First Ministers of the devolved administrations are also appointed by the monarch, but it doesn’t happen in person – why should the PM of England be an exception?

It could even have been done by a few swift tweets:

@BoJo: Dear @RoyalLiz, I resign #PM #Quit #Butillbeback

@RoyalLiz: Goodbye @Bojo #PM #Quit #Hesfinallygone #Royalrelief #Noyouwont

@RoyalLiz: Will you @CommonerLiz form a government? #PM #Quit #Apparentlyonehasnochoice

@CommonerLiz: Yes #PM #LizforLeader

@RoyalLiz: Then you @CommonerLiz are hereby appointed. #PM #Whatdidwedotodeservethis

@RoyalLiz: PS: Just let me know when you @CommonerLiz are ready to resign. I’ve got enough time for another two PMs at this rate. #PM #Quit #Onecanhope

It could all have been over in about 30 seconds, and saved tens of thousands of pounds. For a new PM elected on pledges to challenge orthodoxy and keep a tight control on government spending, starting off by spending a whole day on this pantomime ‘because that’s how it’s done’ is not an auspicious start.

Calculating a majority

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The proposal to require a majority of the whole electorate in any future independence referendum is just one example of the tendency for the Tories to announce a policy without thinking through the implications and the practicalities.

In terms of the politics of it, it is a fact that, had such a requirement been implemented for the referendum on leaving the EU, the UK would still be a member. And it’s noteworthy that the people now demanding a 50%+1 majority for Scottish independence are, in many cases, the same people who would be protesting bitterly had a simple majority of those voting not been considered enough on that occasion. That’s just politics, though; they can and will bluster their way through that one. The fact that the proposed rule can award a resounding ‘win’ to a minority of those voting is, equally, just politics; it doesn’t matter because it would be the ‘right’ side winning. Assuming a turnout of around 80% (and it will never be 100%, for a variety of reasons: some people forget to vote, some can’t be bothered, some are away, some are ill, and some even have the temerity to die before polling day), then if 49.9% of the electorate votes yes, only a maximum of 30.1% (allowing for spoiled or invalidated ballots) can vote no. The patent unfairness under which a split of 62:38 of those who vote is considered insufficiently enthusiastic to justify independence, whilst 29% of the electorate voting against is considered to be resounding support for the union is, again, just politics.

No, for a government whose majority is based on English votes, and which is prepared to impose its will on the Scots and face them down, using the full power of the absolute sovereignty of Westminster, none of these political problems matter, and the policy will appeal to the English nationalists on whose votes the Tory Party now depends. It’s more the practical issues of implementing it which it seems to me that they haven’t really thought about.

In the first place, the UK does not have a constitution, which means that the constitution can’t be amended to introduce the new rule. That in turn means that it can only be done by Act of Parliament, and in the arcane world of Westminster, no Act can ever bind any future government. At some future point, a more pragmatic and less dogmatic government, faced with a situation in which it becomes politically impossible to resist the demand for a new referendum could, and probably would, simply delete or amend the requirement. Without a written constitution, accepted by the population at large, loose rhetoric about making Scottish independence impossible, ever, by changing the rules is just that – loose rhetoric.

Secondly, what form would this proposed legislation take? It would be a curious act of parliament which said something along the lines of “if there’s ever going to be a referendum, which there isn’t because we won’t allow it, then the rules for considering a majority to be binding shall be as follows:…”.  Very Ruritanian. Passing a law to define the rules for a hypothetical future referendum is also seriously damaging to the hypotheticality of it.

There’s another problem with enacting such a law as well. I don’t doubt that there would be a clear parliamentary majority in favour of it – and it wouldn’t surprise me at all to see Labour and the Lib Dems piling in in support of the government, making the parliamentary majority a very healthy one. But at the last election, Scotland elected 48 SNP MPs out of 59 – a total of 81% - and current polling suggests that they may well do even better next time round. Whilst there’s no doubt about the legality of the outcome of the parliamentary vote, using an English majority to over-ride 81% or more of the duly-elected Scottish MPs doesn’t immediately strike me as the most brilliant way of winning Scottish hearts and minds. It plays, instead, to the narrative that Scottish wishes are being ignored – more likely to help the independentistas than the unionists.

And then there’s one other little complication, the one that they regularly forget about – Ireland. The question of a border poll and how the results should be interpreted is, as I understand it, set out in the Good Friday Agreement, and requires the Secretary of State to arrange a border poll “…if at any time it appears likely to him that a majority of those voting would express a wish that Northern Ireland should cease to be part of the UK and form part of a united Ireland” (my emphasis). Whilst it’s hard to rule anything out from a Truss government, starting to unilaterally tinker with that international agreement is a matter of a different order of magnitude. That leaves them imposing one rule for Scotland (and Wales) whilst operating to a completely different rule for Northern Ireland. Good luck to the government lawyers on arguing that case when it comes before a court, as it almost certainly will. From the Government’s perspective, they have the power and they make the rules. But wiser heads might well wonder whether somebody shouldn’t take their spades away before they dig much deeper.

The Omigod variant

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It’s not clear precisely when the disease first struck. Theresa May suffered from an early onset variant with her proposal for what became known as a dementia tax, a proposal so poorly thought through that it was abandoned within days of making contact with the real world. The disease, which manifests itself as a tendency to announce policies first and think about the implications later, spread rapidly under Johnson and seems destined to reach its zenith under Truss. The disease vector seems to be the Conservative Party; there is no known cure and no hope of a vaccine, not least because all those who offered any such hope were promptly driven out. The prognosis (for the patient) varies from bad (a lengthy period in opposition) to worse (political oblivion). For the rest of us, that’s the good news.

The bad news is that we have a remaining period of up to two and a half years when the disease will continue to work its way through the body of the Conservative Party and during which we will have increasingly bizarre announcements made. Whilst Johnson seemed to have developed a curious form of semi-immunity under which policies would be announced and then simply forgotten (bridges, anyone?), it appears that Truss has a bad case and enjoys no such immunity. Instead of quietly abandoning mad proposals, it is believed that she will actually attempt to implement them, egged on by the fringe elements in her party which have caught the even more serious Omigod variant.

The medical experts are clear that the disease is unlikely to spread outside the confines of the Conservative Party as long as we all attempt to retain some sort of hold on reality and truth, but are unable to offer us much by way of protection from the consequences of the actions of the infected. It is thought possible, however, that concerted collective action might help. Escaping the asylum would be a good start.

Time to escape

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Listening to what the two candidates for the leadership of the Tory Party have to say (an action which probably ought to carry some sort of health warning), one might reasonably be excused for concluding that there are one or two small areas of disagreement between them about policy. After all, in ordinary parlance, for one to suggest that the other’s policy platform would represent a “moral failure” whilst the other describes the former Chancellor’s economic policies as a failure doesn’t exactly scream “unity”. There is one thing, though, on which they are definitely speaking in unison – the outgoing government has been something of an all-round disaster, not just in economic terms but also in managing to keep the number of Covid deaths down to an unnecessarily high 200,000 or so, a level which either or both of them would have been happy to exceed significantly in the interests of securing a further reduction in the cost of pensions and the NHS.

However, whilst the Tory Party might appear to have become a bit like Four Feather Falls – a place where “anything can happen, anything at all”, and where reality or truth are rarely allowed to intrude – in truth we are just witnessing a temporary interlude of summer madness before they return in a fortnight, under what will purport to be new management, to the comfortable incompetence to which we have been accustomed, albeit with the added ingredient of a PM who can’t even attempt an occasional racist or misogynist ‘joke’ as a diversion. Sunak’s apparent conversion to the idea of taking a moral stance will be shown to be exactly what it is, ‘apparent’, before it dissipates in a cloud of smoke. We will have a budget, which they’re not allowed to call a budget because if they did, the Office of Budget Responsibility (established by a foolish government led by some has-been called Cameron in the far distant past before the Great Purge) would be required to assess the proposals and can be more-or-less guaranteed not to give the answer that the new PM wants to hear. Far better to use out of date numbers which give the ‘right’ answer than accurate ones which do not. Sunak will loyally vote in favour of a budget with almost every proposal in which he claims to disagree, because it is, from what he considers to be his highly moral viewpoint, better to have a Conservative government doing all the completely wrong things than risk the possibility of an alternative government getting some things almost half right. Interestingly, no-one (as far as I’m aware) seems to have asked Truss whether she would similarly vote for a not-a-budget-at-all produced by Sunak, presumably because that has become too much of a hypothetical question, but we can probably assume that the answer would also be in the affirmative. And her hated ‘Treasury orthodoxy’ would probably turn out to be a splendid thing after all, if a willingness to say so kept her in the Cabinet.

How long can it last? Well, assuming that Truss doesn’t decide to start a nuclear war over cheese imports with France (which, unbeknownst to many of us, may be our deadliest enemy), she can theoretically avoid calling a general election until the beginning of 2025. She might decide to go earlier than that, but it’s hard to believe that even she is stupid enough to do that in the middle of an energy and cost of living crisis which has all the signs of persisting throughout the winter at the very least. It would be nice to be able to believe that there is, waiting in the wings, some sort of credible alternative government which knows what it would do instead and is able to articulate a programme for reform and change. Sadly, we’re not in Four Feather Falls at all, and the phrase “anything can happen” does not apply. Some things simply aren’t credible, even in the land of make-believe. Best we escape from the asylum now.

Truss, Sunak, and the reluctant genie

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For a Russian nationalist like Putin, it is entirely obvious that Ukraine is not, and never has been, a country at all. It is merely a part of Russia, and its people are just Russians with a funny accent and an odd dialect which some of them insist on using instead of standard Russian. It follows that, in those parts of Ukraine occupied by his forces, it is entirely proper that the school curriculum should be replaced by a proper Russian one, that the people should be issued with Russian passports, and that the flag of Russia should be flown everywhere instead of the previous ‘regional’ flag. Since it is clearly unacceptable to have different laws applying in a single country, obviously the laws laid down in Moscow will henceforth apply in occupied Ukraine also. All this will help those people previously ‘confused’ about their identity to understand that they are Russians, and to start behaving as such.

In the real world, a strategy of Russification will have mixed effects. Those who already identified as Russian (and those of us outside Ukraine tend to forget that that is a significant proportion of the population, particularly in the east of the country) will welcome it; some will comply with varying degrees of reluctance; others will double down on their Ukrainian nationality even if (like Catalans and Basques under Franco) they express it largely in secret, clandestinely passing on their language to their descendants. Some might think that the utter destruction being wrought on the territory taken over by Russia might push more people into the third camp, but the reality is that those in the third camp are perhaps the most likely to have moved westwards ahead of the invasion (or subsequently been deported to the far-flung reaches of Russia ‘for their own safety’), leaving a population predominantly consisting of those who are either delighted or else willing to comply. That is the advantage of using military force to impose a change of nationality on a reluctant people.

But leaving aside the use of military force as the method of choice, how different is what Putin is trying to do in Ukraine from what the English conservative party is trying to do in Wales, and more particularly in Scotland? Demanding that we all accept that the UK is not a union of four nations but a single country in which the same laws should apply everywhere would surely ring a bell or two in the Kremlin. As would branding everything with the Union flag. OK, expecting the devolved administrations to be accountable to the central government in performing tasks which are in their purview would probably look to Putin more than a little bit like going soft on the rebellious natives, but abolishing the devolved parliaments without the use of force leaves the Tories forced to take things a step at a time. And attempting to eliminate any ‘local dialects’ is not a venture which has been met with unqualified success over the last four centuries, with or without violent imposition.

The crucial difference though is that without repeating the highland clearances (which is sort of what Putin is doing in Ukraine), the impact on public opinion of those remaining may not quite work in the same way. Whilst they both start from the assumption that identity can be changed by imposition and central dictat, Putin is driving out those with Ukrainian sympathies so as to leave nothing to chance. Truss and Sunak, on the other hand, are assuming that most of those Scots and Welsh who aren’t already fervent supporters of the Union will simply comply and fall in behind the new reality rather than doubling down on their own sense of identity. Only time will tell whether they are right on that, although in Scotland at least it seems highly unlikely as things stand. They seem to believe that Blair’s devolution let the genie out of the bottle; others might think that the genie would have found a way out eventually anyway. Either way, from what I remember of the myths from my childhood, genies are not often amenable to being controlled, and putting them back into bottles is not an endeavour generally accompanied by huge amounts of success. I suppose, though, that it might divert a bit of attention from the looming economic disaster.

Getting it right whilst still being spectacularly wrong

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Once upon a time, I found myself trying to drive through a major investment in IT with the intention of improving the productivity of software development in the company where I worked at the time. Somehow, I had to persuade the big boss that the investment was going to produce the returns to justify it, and it wasn’t an easy task. Partly, that was because of the difficulty in measuring productivity in the first place. In principle, ‘productivity’ is easy enough to calculate. It’s simply a question of dividing output by input: the more output you get from a given number of person-hours/ salary costs, the more productive the team is being. Whilst the input is easy enough to measure, the output from software development is a much more difficult task. ‘Lines of code’ is a simplistic approach, but any experienced coder (using the tools available in the 1980s) would know that the number of lines of code required for a given functionality is variable, depending on skill, knowledge and experience, and that some of the best coders wrote fewer lines of code to achieve the same result. Obviously that didn’t mean that they were less productive; generally it meant the reverse. And then, how about accuracy? If the working definition of an operational piece of software is code with all the obvious errors removed, how do the remaining errors (and there were always some, in those days at least) impact on productivity? But the difficulty of measuring productivity was only part of my problem; the biggest part was convincing said big boss that we couldn’t just stand over people with whips (almost literally what he said to me) and force them to work harder, thus achieving the desired improvements whilst avoiding the capital spend.

This week, Liz Truss, who clearly comes from the same school of management as the afore-mentioned big boss, has proved that even the most obtuse politician can sometimes get something more or less right. She is right to draw attention to the poor level of productivity in the UK economy, and right to point out the regional variations in productivity, which appear to show that London has the highest productivity levels. She has, however, rescued her reputation for ideology-led ignorance by getting her diagnosis (people outside London don’t work hard enough), and her solution (bigger whips) so spectacularly wrong. We should be seriously concerned that someone so divorced from reality could ever get anywhere near the levers of power.

The main driver of improved productivity is investment, and the reason that the UK has such a poor level of productivity compared to most other developed economies is because there has been such a low level of investment in recent decades. That in turn has been led by an emphasis on short-term profits, cost-cutting, and asset-stripping. A UK economy which used to be led by people who knew what producing and selling stuff was all about has been replaced by one where everything is about short term returns; a Conservative Party which used to be in tune with productive industry now dances to the tune of the hedge funds and private capital asset-strippers. For sure, profits can be increased in the short term by stripping out costs, leveraging balance sheets, reducing standards and bearing down on the terms and conditions of employees (maybe even by wielding bigger whips), but the extent to which that is possible is limited, and the longer term damage caused by a failure to invest is immense. That lack of investment, in turn, is a direct result of modern Tory ideology, whether applied by Thatcher, Blair or whoever – and the problem doesn’t go away by simply doubling down on the ideology. Or improving whip manufacturing.

The regional differences aren’t all they appear either. That takes us back to the first of the problems I referred to earlier – how to calculate output, in order to measure productivity. There’s a useful explanation here of the three different ways of calculating GDP (which should all produce the same answer), and one of those simply adds up the total of wages and profits in the economy. One of the consequences of that is that a CEO based in London and paid £2 million per annum ends up contributing the same to total output as 50 widget makers, each paid £40,000 per annum, employed in his company’s factory in Wales, despite the fact that the CEO, personally, produces precisely nothing. Since London is often the location for head offices and senior staff, it will almost inevitably appear that London therefore has a higher economic output per head than the rest of the UK – but much of that ‘output’ is, in effect, simply being transferred (some might even argue, ‘stolen’) from elsewhere in the UK. What Truss is telling us is that the widget-makers of Wales (and elsewhere in the UK) add little of value to the economy, especially compared with the bankers, head office staff, hedgies, speculators, and gamblers of London. Truss and her Britannia Unchained colleagues are arguing that the problem is that the widget-makers are just indolent and need a damn good kicking; a rational economic analysis would be asking whether we’re really valuing different economic activities in a sensible way.

How to win people to the Tory cause?

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Last week, the frontrunner for the Conservative leadership declared that young people are natural Conservatives, and gave as proof the fact that so many of them are involved in ‘side hustles’ alongside their day jobs. Those interested in facts and evidence may care to note that poll after poll shows the reverse (young people are actually turning against the Tories) but then the sub-group ‘those interested in facts and evidence’ is not one to which Truss, or indeed many other Tories, choose to belong. Interestingly, and probably by complete coincidence, there was an article in the Sunday Times this week (paywall) which drew attention to the same issue, highlighting that an increasing number of young people are indeed attempting to monetise their hobbies. It did, however, put rather a different gloss on the matter, by explaining that they are doing it largely as a means of making ends meet in an economy that otherwise leaves them struggling.

Whilst there are, no doubt, a small number who have found that they can make more on their ‘side hustles’ than in their main job, that is far from being the norm. In essence, Truss seems to believe that people who feel themselves forced into spending long hours of their ‘free time’ working to earn an hourly rate well below the national minimum wage, whilst also holding down a full-time job, are showing an entrepreneurial spirit which makes them natural Conservatives. It’s a scenario which is open to at least one other possible interpretation about their potential support for a party whose policies have put them in that position. As a way of persuading low income groups to vote Conservative, it’s up there with one of the other core beliefs of her cult, which is that cutting public services to enable the government to cut taxes so that people keeping more of ‘their own money’ can spend more than the amount saved on buying the same services privately is going to make people feel more well-off and correspondingly grateful.

It's an ‘interesting’ approach to both economics and politics, which is certain to collide with reality in the near future. But then ‘believers in reality’ is another sub-group from which most Tories have long since checked out.

If this is the product of careful thought...

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It became increasingly probable during the months before it happened that PM Johnson was going to be pushed out at some point, even if the nature of the final straw and the precise timing turned out to be the Tory equivalent of jailing Al Capone for tax evasion. Both Rishi Sunak and Liz Truss had obviously been preparing to launch their campaigns whenever and however it happened, even if denying the fact is an unwritten requirement under their party’s somewhat flexible rules. Both were not only first-hand witnesses but also active participants in all the errors and failings of the Johnson government from which they are now so keen to distance themselves whilst continuing to praise the author. They both claim to have known better all along, and have both had months to think about the policies they were going to present as part of their campaigns in order to sound coherent and credible.

What all that means is that, no matter how crazy some of their current statements might seem, nor how often they have to retract and retrench, everything they are saying at the moment is the product of months of careful deliberation. Perhaps we should be grateful that they’re not just making it up as they go.