If we learn our history then we can repeat it
Andy Beckett in The Guardian:
In 1931, the Labour chancellor Philip Snowden – preoccupied, like Reeves, with making the government seem financially responsible – responded to the Depression and a growing budget deficit by rejecting expansive, more leftwing policies and proposing benefits cuts. Only a narrow majority of the cabinet backed him, and the government collapsed. At the election that followed, Labour was crushed.
Well, yes, but it’s worth really learning our history so that we can, in fact, repeat it. The incoming Tory Party then came off the gold standard and thus the pound devalued. They also cut - no, really, cut - spending. Interest rates dropped dramatically and there was a vast building boom - the last time the private sector has built 300k houses a year in fact.
The by now very fashionable AI version:
The “Great Depression” in the UK was not in fact a depression nor very great. The economy recovered within 18 months so it was a recession.
It’s not even necessary for Labour to lose an election. They’ve a sufficient majority to be able to do this themselves. Slash government spending - and yes this does mean benefits -, close the budget deficit, free the building industry to house the nation and we can then repeat that history of the 1930s. We even have a name for this policy set - expansionary fiscal contraction. And the thing is, we know that done well it works. The rest of the world really didn’t enjoy that economy of the 1930s. We here did quite well out of it. Largely because we didn’t have - as with Roosevelt in the US - some vast expansion of government fiddling with things. Instead, reduce government and rely upon the muscular efforts of free markets.
Yes, yes, we know, this isn’t what people believe about the 1930s. But, but, Keynes showed that government should do more, Roosevelt showed that government was the way! But that’s not - not at all - what the actual evidence is. Britain recovered and then thrived on less government, less spending and the liberation of a vast building boom.
Works for us to be honest. A few years of 4 and 6% growth would also make all those budget sums add up.
Seems simple to us too. When government’s strangling the economy by refusing to allow markets to thrive reduce the strangling, cut government, and watch in wonder as markets boom. This is not just some phantasm of neoliberal cheese dreams, this is what happened in Britain in the 1930s. So, now we know our history we can repeat it, right?
Tim Worstall