Liz Truss was a British Republican when an undergraduate. Now she’s much more an American Republican than a British Conservative. Her rhetoric about tax cuts, paying for themselves through increasing economic growth, is straight out of the Reaganite textbook; which is hardly surprising, since she is on record as having asked right-wing think tanks in Washington while visiting what lessons she could learn from Reaganomics and their attacks on regulation and red tape.
It is surprising that commentators in Britain have not paid more attention to the long-term colonization of the Conservative Party by the American right. I first caught a glimpse of the process when catching a plane to Washington for a transatlantic conference during a short parliamentary recess, some twenty years ago, and found myself accompanied by over a dozen Conservative MPs – none of them specialists in US-European relations – invited to meetings with Washington think tanks. The stalwarts of the European Research Group look across the Atlantic for intellectual leadership, and often travel across; though they rarely interact with Conservative politicians on the European continent, except with Fidesz in Hungary and other authoritarian populists.
The Heritage Foundation, the Cato Institute, the American Enterprise Institute and other generously-funded libertarian think tanks have established close links with smaller counterparts in London, from the Institute of International Affairs to the Adam Smith Institute. The Taxpayers’ Alliance was founded specifically to promote shrinking the state through lowering the acceptable level of taxation, explicitly following the example of American campaigners. All these, as well as Policy Exchange, have close links to hard-right American think tanks and funders. Truss has met with several of these US institutes, on several visits. She wrote in the Telegraph three years ago that the UK could learn lessons from the Trump Administration’s ‘about-turn in regulatory direction.’
Liz Truss thus spouts libertarian doctrine, not traditional British conservatism. American libertarianism is close to right-wing anarchism: deeply distrustful of state action except in defence and domestic order, opposed to regulation of markets, sceptical about climate change. She has not gone as far as Nadim Zahawi in proclaiming Ayn Rand – the Russian-American philosopher of ‘ethical egoism’ and laisser-faire capitalism – as her intellectual mentor, but her insistence on immediate tax cuts, her commitment to a sharp rise in defence spending, and her refusal to say what other government programmes would have to be cut to square the difference all echo the language of Republican Administrations from Reagan to the younger Bush to Trump.
There’s a reason why Republican Administrations have run deficits which Democratic Administrations have struggled to control. It’s easier to cut taxes than to cut the spending programmes that they fund. Jacob Rees Mogg has taken this principle further, by attempting to cut the size of the civil service by 20,000 without cutting the tasks it undertakes (which have of course grown since Brexit as functions we shared with other EU countries have been repatriated), in the expectation that this will force government to do less. The damaging experience of cutting the size of the police force by 20,000 has not deterred these anti-state activists from repeating the experiment with the public service as a whole.
Liz Truss is neither a Conservative nor a patriot. As her ambition has moved her across the political spectrum, she has adopted ideas that please the US-indoctrinated Tory right. How much she really believes in them is hard to tell; the point is that she is playing to a right-wing audience (and right-wing media), and gaining ground against Rishi Sunak’s efforts to explain that the choices governments have to make are not as easy as she suggests. Meanwhile the Republicans in the USA are struggling to contain Trumpian challenges to the integrity of democratic institutions and the irrational conspiracy theories that fuel US populism. Let’s hope she doesn’t follow them that far, and unpatriotically undermine the democratic foundations of the British constitution.
* William Wallace is Liberal Democrat spokesman on constitutional issues in the Lords.
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26 Comments
“ her insistence on immediate tax cuts, her commitment to a sharp rise in defence spending, and her refusal to say what other government programmes would have to be cut to square the difference ”
How does this differ from our own party ? We have also called for tax cuts, increased defence spending and far from proposing cuts are calling for substantial public spending increases
There is little evidence that changes in tax rates, up or down, have any significant impact on economic growth as this Forbes article points out Tax Rates And Economic Growth: Is There Really A Correlation?
You only have to look at the economic record of the high tax Scandinavian countries to see that it is perfectly possible to have a healthy economy alongside a adequate social safety net.
On the economic argument, Sunak is right about the need to address inflation first. However, as the Forbes article writes “[economic arguments] miss the mark. For the average American family, taxes aren’t a textbook issue, they’re a checkbook issue. When moms or dads sit down to pay the bills, they aren’t interested in what economists have to say. They look at the paycheck and try to figure out what they are going to do to make ends meet that month”.
The Mirrlees review in 2010 was a comprehensive study of the UK tax system that set out a roadmap for reform. On the taxation of earnings the review concluded that:
– the rate structure of income tax should be simplified, and income tax and NICs should be merged.
– A single integrated benefit should be introduced to replace all or most of the current multiplicity of benefits, rationalising the way in which total support varies with income and other characteristics.
– Individuals around pension age – between 55 and 70 – and parents of school-age children are known to be particularly responsive to work incentives. The tax and benefit system should be changed to strengthen these incentives.
The British Conservative Party has been going in a similar direction to the US Republicans for some time now. Thatcher was a shift rightwards from her predecessors and some of her key backers like Sir Keith Joseph were even more right wing.
They (The Tories) tried to rebrand themselves under Cameron but the party had changed like the GOP across the pond. Rockerfeller Republicans like Whitelaw type Tories were a thing of the past.
Like Trump, Johnson opportunistically aligned himself with the right wing of his party to use Brexit as a platform to win the leadership. Truss has read that play book and is doing the same. The saving grace is that this is a government in its death throes and splits are likely to appear again once the ballots are counted. Tory MPs with small majorities will get jittery again if poll ratings remain low.
My hope is that a well run Lib Dem campaign backed up by the right policies can result in a lot more MPs being returned to Westminster at the next General Election.
The pandemic was a weird moment where (most of) the right in the UK saw the need for state to be heavily involved and invest in public services for greater good and (most of) the left saw how badly the state can waste money and how it can be spent in a corrupt fashion. As a result of this most politicians appear to be reaching for same “centre ground” now so it’s interesting to see Liz Truss reach for something different and, in my opinion, worse.
What’s even more interesting is how compared to Corbyn (recognising that he was not trusted to spend all that money, not trusted at all on certain issues including security, had a blindspot on anti-semitism) was torn to shreds for reaching for something different, in my opinion largely better, whereas Liz Truss has been able to gain support of key media outlets.
The politics of the UK is set-up so that the center-left already have to work 10x harder to have equal chance of winning the same vote. If Liz Truss and her Regan style rebuild wins out then 10x harder will become 100x harder, and at the moment Labour is attacking part of it’s potential vote and LD’s are struggling to get any airtime without comical props which means that best opposition is currently Rishi Sunak who has been in charge of the massive increase to wealth inequality. Frankly, things are now dangerous.
Very interesting pice. Intelligent analysis in comments.
Where I would add one thing to this, is that genuine American libertarians are moral relativists in good and bad ways, but in any, are not authoritarian. The Republicans are better when that way but are not that way much, wheras the Libertarian Party are.
So on gay marriage, legal moderate abortion , rights, in general, these are more akin to classical liberals. The Republican right today are worse than Republicans ten years ago, let alone Reaganite era. Regan as Governor of California was moderate, enacted the most libertarian, liberal abortion legislation, and was very comfortable with gay rights. He got more small c conservative later, then again moved back towards the centre ritghish terrain.
Barry Goldwater was a genuine Libertaian on much. Yes a hawk on defence and because of his stauch anti communism. But he was excellent later on on LGBT issues and friendly across the House, with open minded members of the opposite party.
Truss is an odd mix, hard to pin down, yet.
Simon McGrath:
Has the Party called for tax cuts? If so what are they? Is it not the case that the Party has opposed some particular tax increases. Perhaps there has been a call to reduce the VAT on fuel to mitigate the steep rise in prices, but if so that would not be a decrease in the revenue from fuel VAT.
I am not sure what your point is. Is your point to defend Liz Truss?
Martin “Has the Party called for tax cuts? If so what are they? … Perhaps there has been a call to reduce the VAT on fuel to mitigate the steep rise in prices”
The party has been calling for a reduction in the 20% rate of VAT (to 17.5%), e.g.:
Ed Davey in May: “I think we do need a tax cut for everybody.” (https://www.libdemvoice.org/davey-on-tax-cuts-the-nonexistent-electoral-with-labour-and-nuclear-disarmament-70458.html)
and in March, “An emergency cut to VAT is desperately needed” (https://www.libdemvoice.org/ed-davey-cut-vat-from-20-to-175-as-an-emergency-measure-70114.html)
Also, although more of an implicit call for tax cuts than an explicit one, this week, The Telegraph reports that a Lib Dem “blue wall” tactic is highlighting the voting record of Tory MPs on tax and NI increases, freezing income tax thresholds (a “stealth tax”), and blocking a VAT cut. (https://www.telegraph.co.uk/politics/2022/07/30/lib-dems-flood-disgruntled-blue-wall-voters-tory-tax-rise-attack/)
Peter Watson:
Thank you, possibly this is what Simon Mcgrath had in mind, though I wonder about his intent.
The links related to VAT on fuel are not losses of tax revenue, but unless there were an unlikely massive increase in spending on goods, the second is a loss of revenue. Moreover, such a VAT reduction would not be so beneficial for median and below median income households.
In any case in this article William is warning against both uncosted populist measures and doctrinaire, nobbled state ideology. The right wing libertarians’ view of the role of the state always makes a hypocritical exception for state policing and the military. It is as though they know their arguments are phony.
Lorenzo Cherin: thanks for comments on the distinction between genuine libertarians and rightwingers who are libertarian on economic issues but authoritarian on political and social issues. Sadly, as he comments, US Republicans are now economic libertarians only. Remember that Chicago school economists supported and advised Pinochet’s regime in Chile: authoritarian rule was necessary to ensure a fully free market. The Ukippers who have successfully infiltrated the Conservative Party offer an incoherent message of nationalism, deregulation, and social authoritarianism – not unlike where the US Republicans are now.
More attention needs to be paid to the way in which the right-wing of the Conservatives follow the Republican right in America, and it’s very good that William Wallace has drawn attention to this.
Incidentally, it was already very obvious in the aftermath of 9/11 and the run up to the invasion of Iraq. The Spectator, The Telegraph and The Times were cheer leaders for the invasion, and thrust Michael Gove, Barbara Amiel (remember her?), Boris Johnson, Melanie Phillips, Mark Steyn and similar luminaries down their readers throats – the British branch of the Neocons. Among other things, they specialised in the clash of civilisations rhetoric and sneered at anyone who spoke up for Palestinian rights, which Michael Gove once described as manufactured grievances.
What can we do about it? When we we do it and what effort will we put into it?
Joe Bourke,
Rishi Sunak is wrong, he is following economic orthodoxy which states that inflation has to be countered by removing demand from the economy. Our inflation is not demand driven. There is not too much demand in the economy. In fact inflation is removing demand from the economy which is why I expect us to go into recession next year, if nothing is done about the increase in energy prices.
The government needs to provide all households with enough extra money to pay their increased energy bills or reduce them by the amount of the increase (not just £400 which will happen from October) or a combination of both and reduce duty on petrol to reduce the increase of petrol to those which took place before April. They also need to provide help to businesses to pay their increased energy bills in the same way as the help they should be providing to households. By doing these three things the government can remove inflation and most of the current causes of inflation from the economy and reverse the fall in real-term demand in the economy.
It is also likely that the tax increases and benefit cuts of Rishi Sunak need to be reversed as well by scrapping the National Insurance increase and re-instating the £20 a week uplift to Universal Credit and Tax Credits.
On the tax issue – is it possible that if taxes need to be reduced for the less well-off they ought to be increased for the well-off?
Coupled with other measures – catering for earners who don’t earn enough to pay tax on their earnings, enhanced benefits….
Thanks William, good reply, much appreciated.
I hope that someone in our Campaigns Dept. is studying Truss’ contributions in the 2012 publication< "Britannia Unchained"
https://www.theguardian.com/politics/2022/jul/30/british-idlers-how-a-2012-attack-on-uks-work-ethic-could-haunt-liz-truss
It should be a rich source of attack lines for the next election if she is the Tory leader by then: or maybe even if she is not.
@Nick Collins It’s a good job that Lib Dems don’t need to worry about anything they said or did in 2012!! 😉
@Nonconformistradical “On the tax issue – is it possible that if taxes need to be reduced for the less well-off they ought to be increased for the well-off?”
Isn’t that exactly what Rishi has done with his NI changes and the payslip deduction specifically for the NHS?
I suspect part of the problem is defining “less well-off”; I suspect many (specifically Conservatives given they are voting in this contest) paying higher-rate taxes, would regard themselves as being “less well-off”… I suspect many just don’t believe that earning circa £72k pa. is sufficient to join the top 5% of earners/income tax payers.
@Michael BG
“Rishi Sunak is wrong, he is following economic orthodoxy which states that inflation has to be countered by removing demand from the economy. Our inflation is not demand driven.”
I’m having problems finding anything that says just what exactly Rishi is doing about inflation, from what has been published it would seem he is providing (some) cash (ie. increasing the money supply) to encourage businesses. It would seem it is the Bank of England and others that are demanding a traditional approach to inflation rather than an approach that allows for a rebalancing and “levelling up”.
>The government needs to provide
Why?
Whilst it would be nice, the bill has to be paid. It is better we feel the pain and change our habits and so encourage economic growth in new sectors.
The biggest flaw in the Conservative’s blind adoption of American libertarianism is that the UK isn’t the USA, so our debts will have a big impact on the value of sterling, further fueling the energy price spiral.
@Roland
“Isn’t that exactly what Rishi has done with his NI changes and the payslip deduction specifically for the NHS?”
Yes but….. might there be a case for increasing higher rate taxes?
Roland,
Rishi Sunak states that he wants to use fiscal measures to reduce inflation and he doesn’t want to stimulate the economy. He also states the deficit has to be reduced. He is also wrong when he says that the borrowing for Covid measures has to be paid back in the future. Most of the increase in the debt is owed to the Bank of England and so never has to be repaid. All this has to mean he wants tax increases or spending cuts.
The cause of most of the inflation and inflationary pressure in the UK is from the increase in energy and petrol prices. This has led to the increase in food production costs and transport costs which has fed inflation. Therefore to remove this inflation will also remove most of the inflationary pressure and bring inflation down. The assumption behind this is that these increases are temporary and at some point in the future the world market price of these will return to the pre-March figures. Therefore the government support is temporary too. If inflation is reduced then the increased cost of living will no longer be a justification for pay rises. Such pay rises which would lead to inflation being built into the UK economy as happened in the 1970’s.
It would be best if the economy and the public didn’t have to face the pain of a cost of living crisis and we get into a wage led inflationary spiral.
@Michael BG
I disagree with the idea that workers seeking pay increases to compensate for the effects of inflation are somehow responsible for building inflation into the economy whereas businesses increasing prices to maintain their level of profits are not responsible for building inflation into the economy? Why should all the burden of rectifying the rise in measured inflation be placed on those in paid employment? It is perfectly reasonable for Unions to be arguing that their members should not be facing real terms wage cuts.
We had our libertarians once. Mark Littlewood, Liberal Vision, Paul Marshall, David Laws, Nick Clegg.
All that seems to have gone now, although I am confused by how Ed Davey thinks he is going to cut taxes. Fair enough if the policy is to cut taxes for people on low incomes funded by tax increases on people with high incomes, but it looks to me that the overall tax take needs to go up in order to tackle issues like reducing ambulance times and keeping bus routes and all the other things we are campaigning on.
@ Lorenzo and Lord Wallace
I feel that sometimes people are wrongly labelled “libertarian” when they are really classical liberals. In America this is because they use “liberal” to mean “left wing” and aren’t familiar with classical liberalism.
However real Libertarianism is an authoritarian ideology that believes in a minimal welfare state and is the furthest right position economically speaking whilst taking a conservative line on defence, crime and security etc. People who believe in individual rights should be regarded as liberals not libertarians.
Most of the ‘tax cuts’ our MP’s are advocating are really the reversal of tax increases – unfreezing the freeze on Income Tax Personal Allowances and scrapping the National Insurance increase. We are not advocating a low tax society. Our 2.5% cut in VAT is a temporary one to provide people with extra money to make up for the money they have to find to pay their increased energy bills.
Brad Burrows,
I agree that “It is perfectly reasonable for (Trade) Unions to be arguing that their members should not be facing real terms wage cuts”. What I am advocating as the correct response is to remove the energy and petrol inflation from the economy so Trade Unions do not need to request large pay increases to avoid real terms wage cuts for their members.
If the government does not provide the funds for households and businesses to pay the increased prices of energy and petrol then the inflation will become built into the economy and this would be bad.
I am clear that it is the government who should be shouldering the burden of rectifying the increase in inflation due to increased energy and petrol prices.
Yes, whilst the death of social democracy has been much commented on, the corresponding death of what we could call Christian Democracy (in European terms) in the UK hasn’t been much discussed (because it was never ‘officially’ a thing, but you get what I mean).
Small correction: Institute of Economic Affairs, not Institute of International Affairs.