...Truss believes in the wisdom of the markets. It is the unaccountable power of quangos, civil servants and law courts she fundamentally mistrusts. So what caused the banks and the currency exchanges to turn against her? Are they communists, too?
She had no answer to this question at the launch of PopCon, not least because she did not take any questions. But in front of a very different audience at the Institute for Government (IfG) last September,
she tackled what had gone wrong head on. She told a roomful of financial journalists and policy wonks that her economic plans had been scuppered by the failure of key institutions to support her. The Bank of England had cavilled at her proposals at a time when monetary policy was tightening because of its own inattention to the risks of inflation; the OBR had leaked that it believed there was a £70bn hole in her forecasts without having done the legwork to cost them properly; the BBC and wider media had failed to challenge the quangocrats on these failures while mercilessly laying into Truss and Kwarteng. “Why don’t you give the governor of the Bank of England as hard a time as you always give politicians?” Truss asked Faisal Islam of the BBC, when he questioned her on her failure to secure backing for her budget. But she didn’t need to ask – she already knew the answer. Her opponents in the Bank, the Treasury and the media were all on the same “London dinner party circuit”.
There are two basic problems with this analysis of why she failed. First, her argument that the markets were spooked by some media backchat – which she believes was ideologically motivated – hardly sits well with her belief in their innate wisdom. The point of a free-market approach is that serious money is meant to see through the ideological bullshit. Truss insists that only immediate tax cuts, deregulation and supply-side reforms can rescue the sclerotic British economy. The markets should have understood that – whatever the BBC might say. Instead, when she and Kwarteng launched their assault on the pieties of the stale economic consensus, the serious money fled for the hills. That means either Truss was wrong in her prospectus for the economy or she is wrong in her faith in the markets. If City traders can take fright at a bit of dinner party pushback, then maybe
Corbyn is right after all: the markets really are not to be trusted.
Both at the IfG and at PopCon Truss repeated a line that has become part of her new stump speech mantra: it is not enough to will the ends if you don’t also will the means. In other words, it can be easy to know what’s popular, or even right, but unless you also understand how to get things done, it doesn’t matter what you want to achieve. But she’s kidding herself if she thinks the means to getting things done is to bypass the institutions of the bureaucratic state. This is in many ways the persistent flaw in libertarian thinking: an assumption that the power of powerful state institutions can be countered by simply ignoring them. Nothing could be further from the truth. The only organisation that has the power to limit the power of the state is the state itself. That means any serious project of reform has to be a long game.
You’ve got to work with what you’ve got.
Yet despite this, Truss presents herself and her new movement as being on the right side of history. The tide, she says, is turning their way. That’s because they are looking beyond these shores and her recent local difficulties. Her perspective is now international. Littlewood pointed out that although the centre left looks as if it’s winning in Britain, the country is an outlier. A year of elections around the world is likely to see the populist right on the march, from India to the EU to the US. Trump’s name was not mentioned at PopCon, but his presence hovered menacingly in the background. Who cares if Starmer pushes out Sunak as it will just mean more of the same?
What counts is the possibility of a global reset starting in Washington.
Analysis@the Guardnia