In this time of psychobabble, of therapeutic jargon and remote diagnosis, one mental condition is worth our focus for a moment. Treasury Brain. This is a cognitive defect that is said to afflict the finance ministry of the UK. Civil servants there, it is alleged, have an irrational aversion to ideas that incur upfront cost but might improve economic growth over time.
“Might”, I say. But those who accuse the Treasury of this self-defeating parsimony don’t allow for much doubt. An expensive new rail line? It will pay for itself. A public health campaign? Prevention of illness is cheaper than cure. Industrial subsidies? Wait for the high-value jobs to sprout in their thousands.
You, as a mere taxpayer, or holder of UK public debt, might ask when you can expect this putative return on spending to materialise. Look, don’t be so difficult. And learn to call it “investment”. “Spending” is as below-stairs now as calling a napkin a serviette.
Crying “Treasury Brain” has become the leftwing version of drawing a Laffer Curve. It is not always wrong: civil servants can be over-cautious, just as tax cuts above a certain marginal rate can be self-funding. But pushed too far, the idea becomes a belief in free money. (And notice that “Treasury Brain” is on the lips of those who otherwise deny the rightwing theory of a deep state.)
The real problem with the Treasury’s intellectual scepticism is that there is not enough of it in the world. The west is going through a phase of almost messianic belief in the power of government. America’s protectionist turn against China is the largest example. You needn’t go all the way with the Economist, which regards this commercial estrangement as “phoney”, to see that it is already beset with perverse consequences. Yes, the US is importing less of certain goods directly from China. But the “friends” to which it is turning as alternative suppliers are themselves reliant on China for inputs. The US is not isolating its existential rival. It is cutting in the middle man.
The sudden faith in tariffs, subsidies and bureaucratic checks on investments is startling. But it isn’t the only case of Utopian government around. Rishi Sunak is the sixth or seventh UK premier in my lifetime to try to “level-up”, or “rebalance”, his London-centric nation. Emmanuel Macron is almost as far down the line of French presidents who have sought to influence west and central Africa from Paris.
As a measure of that project’s success, the counter-insurgency in the Sahel was abandoned last year and Niger, a rare western foothold there, is in chaos. The lesson — that some things are beyond any state — might be clearer now.
Think of what these politicians are taking on. Joe Biden versus capitalism, Sunak versus a city whose freakish preponderance within Britain predates the Industrial Revolution, France versus the Sahel’s religiosity and inhospitable topography. What is government decree against such ingrained and impersonal forces?
The state can do spectacular things. Europe cut its reliance on Russian fossil fuels at speed. Governmental leadership, not just biomedical genius, produced the Covid-19 vaccine. But these feats tend to happen under extreme duress. In normal times, the business of government is to make things a bit better, knowing that it will make other things a bit worse. This is because: resources are finite, different goals conflict, advanced countries plucked most of the low-hanging fruit long ago, unintended consequences obtain, and social outcomes are determined as much by deep historical patterns or geographic constraints as by diktat.
The problem illness isn’t Treasury Brain. It is Do Something-itis. Public life isn’t full of pessimism. It is full of 10-point plans and summits called things like Horizon 2055. Sunak began the year with a pledge to halve inflation within 12 months. This is a man who “runs” an open, midsized economy, exposed to such outside vagaries as the Ukraine war and foreign central bank policy. Even if the pledge is met, it was vainglorious to make. And he is a relative sceptic about government.
The Treasury was always accused of hiring humanities-trained generalists over technical economists. Is that all bad? With some Shakespeare or Conrad, it is easier to see that one’s schemes to better the world have to reckon with the permanence of human nature, among other external forces. It is a public service, not a mental defect, to understand how little we can do against the tempest.
The article is called “The west has forgotten the limits of government” and proceeds to make several partially misleading talking points in favour of austerity. The author has, I think deliberately, forgotten the downsides of austerity - reduced growth, lower tax take so even worse government finances, and of course unnecessary hardship for ordinary people who didn’t cause the global credit crunch, didn’t cause energy hyperinflation, didn’t cause greedflation and are just trying to make rent, buy food and heat their homes in the winter. Our financial problems shouldn’t be taken out on them.
Ah, got it - I think you’ve made a leap there though.
The article is making the point that, just as Laffer curve advocates on the right incorrectly assume that all tax cuts will become self-funding through increased growth, there is also a problem of people on the left assuming all public spending will become self-funding too by increasing skills/technology/public health/etc.
But that doesn’t mean that no public spending is self-funding. And it also doesn’t mean that this isn’t a reason to do public spending - it’s just that the state should spend money on projects because we think they’re worthy of public money, not because of rose-tinted views that every public project is an investment that’s going to pay for itself. It doesn’t particularly strike me as advocating austerity, so much as advocating that the pendulum shouldn’t swing too far in the other direction either.
A bit of healthy scepticism (about the biases of both left and right) regarding what the state can and can’t achieve is generally a good trait in public policymaking.
The tax cuts tend to be accompanied by the austerity - the cuts to spending on welfare etc that you didn’t mention at all, but which reduce growth because the folks at the poorer end of the income distribution don’t have any income to spend. Tax cuts don’t stimulate growth because they tend to disproportionately benefit wealthier folks who tend to save the extra cash than splurge it. It just takes money out of the real economy and gets turned into rental properties which takes even more money out of the real economy. If you increase benefits, you get an immediate increase in consumer activity and services because the hordes of ordinarily-incomed folks have plenty of things they need and want to spend on and couldn’t. Not to mention the hardship that comes from severe lack of cash.
Small government isn’t good in itself for any particular reason other than further wealth hoarding by the already comfortably off. This article is a fairly unmitigated argument in favour of small government and it takes no account whatsoever, and neither have you, of the ills visited upon ordinary folks by austerity. It’s not a balanced argument, and making out that it’s in the slightest bit centrist is “alternative facts”.
Also, the UK is not in the slightest danger of the pendulum swinging too far the other way.
What tax cuts? The only reference the article makes to tax cuts is to a) criticise the sort of blanket Laffer curve-ism that the political right are guilty of, but b) note that, just as sometimes Laffer curve-ism can be correct, so sometimes the belief that government spending pays for itself can be correct. The article doesn’t at any point advocate tax cuts.
I think you made an (I think incorrect) assumption about the author’s intent when you read the article and so are imposing a bunch of assumptions on to it that don’t reflect the actual words that are written.
The authors intent was clearly and obviously to dissuade people from supporting government expenditure that has anything like an aim of improving the country. You’re trying to convince me that the author, (who labels Biden as anti capitalist and Sunak as anti London) isn’t attempting to convince governments to spend less. It isn’t working. “See how it never works! Laugh at the naivety of trying to make things better! Worry about the government spending your money! Worry about the debt you somehow personally participate in as a result of government spending!” The article is so wholeheartedly pro small government, anti big government and anti social intervention, it’s absurd of you to claim it’s not arguing for reduced government spending and reduced tax intake. It isn’t saying it explicitly very often, but the only point against tax cuts (and the one you keep bringing up) is that they might not be self funding. It’s not arguing that tax cuts always bring in more tax, no, but it is arguing for reducing taxation by spending less on “investment”.
You’re trying to convince me that there’s no wood by drawing my attention to several trees, and even some tufts of grass. You have missed the point of the article which is to reduce government spending, especially outside London. Cuts. Cuts hurt. They hurt the poorest most. You’ve never addressed that point and you’re misrepresenting the purpose and the message of the article.
In this time of psychobabble, of therapeutic jargon and remote diagnosis, one mental condition is worth our focus for a moment. Treasury Brain. This is a cognitive defect that is said to afflict the finance ministry of the UK. Civil servants there, it is alleged, have an irrational aversion to ideas that incur upfront cost but might improve economic growth over time.
“Might”, I say. But those who accuse the Treasury of this self-defeating parsimony don’t allow for much doubt. An expensive new rail line? It will pay for itself. A public health campaign? Prevention of illness is cheaper than cure. Industrial subsidies? Wait for the high-value jobs to sprout in their thousands.
You, as a mere taxpayer, or holder of UK public debt, might ask when you can expect this putative return on spending to materialise. Look, don’t be so difficult. And learn to call it “investment”. “Spending” is as below-stairs now as calling a napkin a serviette.
Crying “Treasury Brain” has become the leftwing version of drawing a Laffer Curve. It is not always wrong: civil servants can be over-cautious, just as tax cuts above a certain marginal rate can be self-funding. But pushed too far, the idea becomes a belief in free money. (And notice that “Treasury Brain” is on the lips of those who otherwise deny the rightwing theory of a deep state.)
The real problem with the Treasury’s intellectual scepticism is that there is not enough of it in the world. The west is going through a phase of almost messianic belief in the power of government. America’s protectionist turn against China is the largest example. You needn’t go all the way with the Economist, which regards this commercial estrangement as “phoney”, to see that it is already beset with perverse consequences. Yes, the US is importing less of certain goods directly from China. But the “friends” to which it is turning as alternative suppliers are themselves reliant on China for inputs. The US is not isolating its existential rival. It is cutting in the middle man.
The sudden faith in tariffs, subsidies and bureaucratic checks on investments is startling. But it isn’t the only case of Utopian government around. Rishi Sunak is the sixth or seventh UK premier in my lifetime to try to “level-up”, or “rebalance”, his London-centric nation. Emmanuel Macron is almost as far down the line of French presidents who have sought to influence west and central Africa from Paris.
As a measure of that project’s success, the counter-insurgency in the Sahel was abandoned last year and Niger, a rare western foothold there, is in chaos. The lesson — that some things are beyond any state — might be clearer now.
Think of what these politicians are taking on. Joe Biden versus capitalism, Sunak versus a city whose freakish preponderance within Britain predates the Industrial Revolution, France versus the Sahel’s religiosity and inhospitable topography. What is government decree against such ingrained and impersonal forces?
The state can do spectacular things. Europe cut its reliance on Russian fossil fuels at speed. Governmental leadership, not just biomedical genius, produced the Covid-19 vaccine. But these feats tend to happen under extreme duress. In normal times, the business of government is to make things a bit better, knowing that it will make other things a bit worse. This is because: resources are finite, different goals conflict, advanced countries plucked most of the low-hanging fruit long ago, unintended consequences obtain, and social outcomes are determined as much by deep historical patterns or geographic constraints as by diktat.
The problem illness isn’t Treasury Brain. It is Do Something-itis. Public life isn’t full of pessimism. It is full of 10-point plans and summits called things like Horizon 2055. Sunak began the year with a pledge to halve inflation within 12 months. This is a man who “runs” an open, midsized economy, exposed to such outside vagaries as the Ukraine war and foreign central bank policy. Even if the pledge is met, it was vainglorious to make. And he is a relative sceptic about government.
The Treasury was always accused of hiring humanities-trained generalists over technical economists. Is that all bad? With some Shakespeare or Conrad, it is easier to see that one’s schemes to better the world have to reckon with the permanence of human nature, among other external forces. It is a public service, not a mental defect, to understand how little we can do against the tempest.
The author has forgotten the downsides of austerity.
What does that even mean or have to do with this?
The article is called “The west has forgotten the limits of government” and proceeds to make several partially misleading talking points in favour of austerity. The author has, I think deliberately, forgotten the downsides of austerity - reduced growth, lower tax take so even worse government finances, and of course unnecessary hardship for ordinary people who didn’t cause the global credit crunch, didn’t cause energy hyperinflation, didn’t cause greedflation and are just trying to make rent, buy food and heat their homes in the winter. Our financial problems shouldn’t be taken out on them.
Ah, got it - I think you’ve made a leap there though.
The article is making the point that, just as Laffer curve advocates on the right incorrectly assume that all tax cuts will become self-funding through increased growth, there is also a problem of people on the left assuming all public spending will become self-funding too by increasing skills/technology/public health/etc.
But that doesn’t mean that no public spending is self-funding. And it also doesn’t mean that this isn’t a reason to do public spending - it’s just that the state should spend money on projects because we think they’re worthy of public money, not because of rose-tinted views that every public project is an investment that’s going to pay for itself. It doesn’t particularly strike me as advocating austerity, so much as advocating that the pendulum shouldn’t swing too far in the other direction either.
A bit of healthy scepticism (about the biases of both left and right) regarding what the state can and can’t achieve is generally a good trait in public policymaking.
The tax cuts tend to be accompanied by the austerity - the cuts to spending on welfare etc that you didn’t mention at all, but which reduce growth because the folks at the poorer end of the income distribution don’t have any income to spend. Tax cuts don’t stimulate growth because they tend to disproportionately benefit wealthier folks who tend to save the extra cash than splurge it. It just takes money out of the real economy and gets turned into rental properties which takes even more money out of the real economy. If you increase benefits, you get an immediate increase in consumer activity and services because the hordes of ordinarily-incomed folks have plenty of things they need and want to spend on and couldn’t. Not to mention the hardship that comes from severe lack of cash.
Small government isn’t good in itself for any particular reason other than further wealth hoarding by the already comfortably off. This article is a fairly unmitigated argument in favour of small government and it takes no account whatsoever, and neither have you, of the ills visited upon ordinary folks by austerity. It’s not a balanced argument, and making out that it’s in the slightest bit centrist is “alternative facts”.
Also, the UK is not in the slightest danger of the pendulum swinging too far the other way.
What tax cuts? The only reference the article makes to tax cuts is to a) criticise the sort of blanket Laffer curve-ism that the political right are guilty of, but b) note that, just as sometimes Laffer curve-ism can be correct, so sometimes the belief that government spending pays for itself can be correct. The article doesn’t at any point advocate tax cuts.
I think you made an (I think incorrect) assumption about the author’s intent when you read the article and so are imposing a bunch of assumptions on to it that don’t reflect the actual words that are written.
The authors intent was clearly and obviously to dissuade people from supporting government expenditure that has anything like an aim of improving the country. You’re trying to convince me that the author, (who labels Biden as anti capitalist and Sunak as anti London) isn’t attempting to convince governments to spend less. It isn’t working. “See how it never works! Laugh at the naivety of trying to make things better! Worry about the government spending your money! Worry about the debt you somehow personally participate in as a result of government spending!” The article is so wholeheartedly pro small government, anti big government and anti social intervention, it’s absurd of you to claim it’s not arguing for reduced government spending and reduced tax intake. It isn’t saying it explicitly very often, but the only point against tax cuts (and the one you keep bringing up) is that they might not be self funding. It’s not arguing that tax cuts always bring in more tax, no, but it is arguing for reducing taxation by spending less on “investment”.
You’re trying to convince me that there’s no wood by drawing my attention to several trees, and even some tufts of grass. You have missed the point of the article which is to reduce government spending, especially outside London. Cuts. Cuts hurt. They hurt the poorest most. You’ve never addressed that point and you’re misrepresenting the purpose and the message of the article.