Liz in Wonderland. Racing to the Bottom on Taxes?
Liz is out of the gates. Can the Bank of England be the White Rabbit to Kwasi's Mad Hatter?
It was the sound bite heard round the world: “I have the best advice for women in business. Get your f*cking ass up and work. It seems like nobody wants to work these days,” Kim Kardashian subtly announced in an interview earlier this year.
It seems there’s a dearth of good reality tv material…
Well the genteel world of Kim's 330 million followers exploded in outrage and her signature caution tape Balenciaga catsuit was redesigned.... but Kwasi thought finally someone was paying attention and Liz loved the outfit. After all way earlier in 2012 he was quoted describing his admiration of the Chinese worker in the Guardian.
"I’ve been round a Chinese factory, and I can tell you,” he told the Guardian admiringly in 2012, “they time absolutely every single thing that you could ever do. They have to do a certain job in an hour, and if they do it in 58 minutes, they get two free minutes.”
It seems Kwasi doesn’t get out much - or certainly not to well run factories. Mind you, Amazon just gets a robot to do it…
“We have created a culture in which people can, as a lifestyle, opt not to work,” he said then, claiming the public agreed with his view. “It’s quite acceptable nowadays, and possible, to decide never to work (what’s not to agree with so far). And at the same time people who are in work are very highly taxed.” Duh, only because you haven’t figured out how to tax people who don’t work. He added that the people “working long hours in the fields for not very much pay” tended to be immigrant workers, not British people. Right…
It's an old hackneyed story on the political right wherever you live. Visions of welfare queens and benefits cheats dance in their heads like Kim on a rare night out with the gals sans cameraman. Oh and Rees Mogg is throwing in the towel on scores upon scores of indulged civil servants in bloated government departments. (Maybe Kwasi’s factory remarks were aimed more at these poor folk?). People don't want to work anymore. Unless they're immigrants who work in the fields.... Oh, wait.
Sir Keir’s solution is to build a competitor to Gazprom aptly named GB Energy because he’s noticed how successful GB News has been and he also wants to blow up pipelines in the sea. Apparently he’s not so keen on King Charles owning all of Britain’s shoreline. He tells us GB Energy will be owned by the public, presumably so that when the class-action/royal lawsuits come crashing in he won’t be left holding the company deed. We’ll all be holding it. Plus ca change...
Liz and Kwasi have an answer to Britain's productivity problems. It’s called ‘Liz in Wonderland’.
The dynamic duo wrote a book together, ‘Britannia Unchained’. It called for a radical shrinking of the welfare state and a return to Victorian productivity. Not Victorian workhouses (at least Kwasi hasn't said that out loud but he was really inspired by that Chinese factory...)
It's Thatcherism and Reagan’s trickle-down oops supply side economics. Slash taxes, ignore debt, fight wars and get rid of regulations. Motivate people's ingenuity to build, create, invent the businesses and means that'll pull us out of the recession/shitty economy their predecessors created in the first place. It’s wealth creation on steroids. It worked for Thatcher and it worked for Reagan and it worked for all those arms suppliers. And it should work for the dynamic duo when they return to the private sector in about 18 months. Assuming anyone will hire them by then.
Some have pointed out that Thatcher had a lot more time to get the economy working before facing a new election and Reagan really didn't care about debt and well everybody really liked him. He was a super popular guy. You know, like George Clooney.
But Liz and Kwasi wrote the book and they get to put it into practice. And they are doing it with the zeal of true believers. So maybe the conditions aren't great for it right now. Two years of extraordinary borrowing because of the Covid emergency, another year (or two) presently for the energy crisis because of Russia's war, Brexit, will have to be ignored as there's no time to shore up the country's finances before embarking on their great plan (something Thatcher did) as in less than two years they might be handing over the whole thing to Labour - or is it GB Energy?
Liz and Kwasi say there isn't time to consider the politics. "never mind about the distributive implications, growth is all that matters” and “never mind about borrowing, growth is all that matters”.
And never mind about Larry Summers ‘cos no one listened to him in the first place.
Certainly I don't think I've ever seen a reaction like this to any budget plan in my lifetime. Everyone at the IMF, to David Rubenstein and the head of the Bank of England, seem to be horrified. There's a sprint on the pound. The Bank of England will likely be jacking up interest rates to shore up the currency and investor confidence. Britain's going to have billions more in debt interest payments. Liz might even have to stop ordering Norwich City memorabilia on Number 11’s credit card. She could just hustle them with anonymous crypto on Opensea like the rest of us.
“There's a sprint on the pound.”
There'll be no more money for social programs (apart from the energy support program) a positive side effect for Tories like Rees-Mogg. But with the possibility of mortgages rising to a worrying 6% interest rate from 1 - 1.5% now will Huw Pill (is he?) actually do more than make a stern warning. He is the ultimate Solomon choice: Raise interest rates to shore up the pound and force mortgage rates to levels not seen since the 70's? Or don't and watch the pound fall below the dollar and inflation take a ride in that US rocket they keep trying to send around the moon.
The British homeowner, (a mythological giant in England and every King loving conservative's dream) are mostly short term and flexi-rated mortgage holders. They might prefer candles and woodburners to Liz's energy support program and Kwasi's stab at wealth creation at this point. A pub in Cornwall has already shifted to candles for light and they strongly recommend it, claiming that Victoria is indeed proud and the punters struggle to see how much they’ve watered-down the drinks.
There is a chorus rising from economists everywhere, and some random dude from Virgin Atlantic who’s desperate for a good scoop, that there's no shame in backing off this budget. Even Kim Kardashian apologised and claimed she was taken out of context. But I can hear Liz right now smiling and claiming the Lady's not for turning... (For this one hangs out with too many bankers).
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