Not that we would vehemently disagree with Tim Congdon - he’s called far too many things correctly over the decades for us to want to do that. But to mildly disagree with this:
He argues that borrowing in order to cut taxes, as Kwarteng plans, actually risks expanding the size of the state because it will lead to higher interest payments on national debt and thereby increase public expenditure.
More of the economy flowing through the maw of the State - subject to the incentives of politics, not consumers - is not something that pleases us. We even, heresy though it is, think that some vague idea of balance between taxation and spending might be a good idea.
However, while this might only be an idea that comes to the front of the mind on bad days, we do sometimes think that paying interest is less bad than government actually doing something with the money.
Some will call us cynical at this point but we prefer realistic. The argument against large government is that government isn’t very good at things. The ultimate limitation on the size of government is how much they can wring out of the population to pay for government. If some healthy chunk of that possible exaction has to be used to pay interest then that means there’s less available for government to spend not very well on doing things badly.
That is, the more interest has to be paid then the less government we get. Given the performance of British governments in actually spending money this strikes us - those bad days again - often enough as a good thing.
Another way to make much the same point. Interest on government debt is money the government is taking in taxation - Boo! Bad! - and then returning to the population in those interest payments. The round trip is inefficient, certainly, but at least it doesn’t stick inside politics where it will get entirely wasted.
We’re not sure how entirely far we would want to take this line of thought so take this as an attempt at finding that silver lining which apparently exists inside every cloud. The more interest government has to pay the less money they’ll have to waste.