Opinion from a Libertarian ViewPoint

Truss exposes the current instability of Western democracies

Posted by M. C. on October 6, 2022

The turmoil in British politics can lead to disastrous consequences. It also mirrors the current state of the wider West

Graham Hryce is an Australian journalist and former media lawyer, whose work has been published in The Australian, the Sydney Morning Herald, the Age, the Sunday Mail, the Spectator and Quadrant.

Even fervent believers in the stability of Western democracies must surely have had their faith shaken last week by the extraordinary economic and political crises created by the newly-minted UK prime minister, Liz Truss.

In the week after the prime minister’s hand-picked chancellor, Kwasi Kwarteng, handed down a ‘mini-budget’ on September 23, the English pound crashed; the government bond market took a dive; interest and mortgage rates rose; some mortgage markets shut down; the Bank of England staged a highly unusual fiscal intervention to prevent the collapse of major pension funds; and the IMF criticized Truss in a manner usually reserved for the leaders of debt-ridden banana republics.

The global importance of these events and the ongoing economic and political disruption that they will inevitably cause should not be underestimated. Political commentator Alastair Campbell, formerly Tony Blair’s chief of staff, accurately described last week as “the week that everything changed.”

What led to the UK economic crisis?

Quite simply, the fact that the Truss mini-budget provided for billions of pounds worth of unfunded and uncosted tax cuts – including, most provocatively, a cut in the 45% top level income tax rate – caused the financial markets to register a serious vote of no confidence in the Truss government, with all the attendant consequences that followed.

Incidentally, the events of last week show where real power ultimately lies in the West – and it is definitely not with politicians.  

Truss’s mini-budget is, of course, a product of the crude neo-liberal economic ideology that she so fanatically believes in, and which proved decisive in attracting the 80,000 or so Thatcher-worshipping members of the Tory party that anointed Truss prime minister only a few weeks ago. 

Faced with an economic disaster entirely of her own making – one of her first acts as prime minister was to sack the head of the Treasury – Truss simply doubled down, and retreated petulantly to her Downing Street bunker. 

She did emerge briefly late last week to do a round of disastrous radio interviews with regional BBC stations – in which Truss continued to robotically tout the benefits of ‘trickle-down economics’, and (unsuccessfully) tried to blame the economic crisis entirely on Russian President Vladimir Putin and the conflict in Ukraine.

Not surprisingly, the vast majority of commentators in the UK – irrespective of their political affiliations – have been strongly critical of the Truss mini-budget and the prime minister herself. Even Daily Telegraph columnist Ambrose Evans-Pritchard accused Truss of having “embarked on a course of sheer madness.” 

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