But this is something of a new one on us, a move that is doomed to failure before it even starts. It appears that George Osborne is considering trying to replace Cameron as PM:
George Osborne’s allies are taking soundings this weekend among Tory MPs on whether the chancellor should stand against Boris Johnson to be the new Tory leader.
We're really pretty sure that's not one of those things that is going to work. And rightly so too.
Allow us to leave the politics out of this, as we should do, and consider only the performance as Chancellor. Most recently people will recall the outrageous slanting of the Treasury and other official reports about the effects of Brexit. The basic problem, as we all pointed out again and again, was that the inbuilt assumption of all those reports was that Britain would follow stupid policies on trade once we leave. And yes, following stupid policies leads to a bad outcome. But no consideration at all was given to what would happen if we followed sensible policies. Like Patrick Minford's insistence that we should simply move to unilateral free trade, the only sensible trade stance to have anyway, which would grow the economy, not shrink it.
Nominally independent, nominally expert, reports deliberately slanted for partisan political gain.
But sadly it's been worse than that Osborne has been a lousy Chancellor more generally. Two points particularly stick with us. A higher minimum wage will cost jobs. Even the Low Pay Commission has been telling us this ever since they first started to set the level. Something called the Living Wage campaign starts to make political headway so Osborne decides to trump them, beat them. By bringing in a living wage higher than they were ever asking for. This is a Tory? A Conservative?
Then there's one more subtle. The Bank Levy. When this came in we cheered it as being obviously correct. Too big to fail is indeed an externality of having large banks. The correct answer is a Pigou Tax on said externality. You can also view it as an insurance premium said large banks must pay for that implicit insurance they get. The original implementation was excellent. The tax was on the right thing, liabilities, and it considered risk. Overnight deposits paid more than long term bond issues, both more than equity. This was a right and good answer to the problem. And the banks were indeed both shrinking and changing their funding models as a result, changing them in the right and desired manner.
That in turn meant that the revenue from the levy was falling so Osborne changed the calculation to maintain the revenue but not the pressure for the banks to change in the desired manner. That is, he entirely screwed up one of the few important things he had got right first time. And all for entirely political, not economic, reasons.
The basic problem with having politicians trying to run the economy is that of course they will do so as politicians, not economists. But Osborne is worse than most. Don't just listen to us of course. Keep looking to see how that campaign works out to be party leader.
Short and sharp we predict, short and sharp and not in a good way.