I cannot recall having seen such a fulminant denunciation of our ‘ruling elites’ in the MSM, never mind in the ‘Torygraph’. It’s a scream of anger and frustration. I am astonished it saw the light of day! Here it is, ‘for the record’. The title is: “Elite groupthink is driving Britain into a nightmare of inflation, idleness and rage” and the subtitle doesn’t pull punches either: “We face a calamity even worse than the financial crisis thanks to the hubris of our failed ruling class” (paywalled link).
The first paragraph sets the scene:
“To the experts, economists and other idiot savants who inexplicably failed to see this storm coming, thanks for nothing. All of their acronyms, PhDs, fancy modelling and algorithms have proved useless: Britain and the world are plunging into the most terrifying economic, political and cultural crisis of the past 40 years. A bunch of intelligent amateurs couldn’t have done much worse.
Inflation is out of control, a terrible recession is looming and higher interest rates are about to send house prices tumbling and unemployment soaring: the politicians are still in denial, unlike the voters, but the reckoning, when it comes, will be traumatic.
This is like the financial crisis all over again, only worse: for the second time in less than 15 years, the public has been betrayed by a failed technocratic orthodoxy, an over-educated yet staggeringly ignorant ruling class convinced that it can defy human nature as well as the laws of economics.” (paywalled link)
It gets better – Mr Heath goes on the attack, his gloves are off:
“Why do these people never learn? Why do they have no shame? Where is the abject apology from the Governor of the Bank of England for the fact that, even after stripping out the cost of food and energy, inflation is hugely higher than his target? And why are our politicians refusing to treat this crisis with the sense of emergency that it requires?
The system is broken, millions are facing poverty, the middle classes are being hammered and yet no action is being taken on tax or supply-side deregulation, while interest rates, scandalously, remain at just 1 per cent. Why is the Chancellor not holding Andrew Bailey, the Governor, publicly to account for his reluctance to act and his abysmal predictions? Since when is the Bank’s “independence” an excuse to allow it to fail with zero consequences, with no genuine oversight? The cowardice and buck-passing are sickening.” (paywalled link)
Indeed so – but this cowardice and buck-passing ought not to have surprised Mr Heath because this is what has been happening during the covid years, the lockdowns, the knee-taking to SAGE without any of those having to face the consequences. Next:
“The rot started, as with so much else, in 1997 with the election of Tony Blair. The Bank of England was given the wrong mandate when it was granted its operational autonomy: it had to focus almost exclusively on consumer price inflation, rather than asset prices (such as property) or financial stability. […]
All of these tools and more were wheeled out again and again over the past decade, as those entrusted with our money convinced themselves that inflation was forever tamed. Fixated as they were on narrow measures of price increases, they turned a blind eye to the money gushing into property, commodities or tech stocks. The central banks, the supposed guardians of our capitalist society, had become central planners, prisoners of an intoxicating groupthink: they were sure they could manipulate interest rates and use QE to guarantee perpetual growth. They thought they were right, god-like even, and everybody who didn’t buy into their new religion was not just wrong but stupid and old-fashioned.” (paywalled link)
Yes, well, that’s a bit like crying over spilled milk now. Nobody, especially not in the Westminster MSM Newsrooms wanted to be seen as a Cassandra, and it’s not as if those living in that charmed circle didn’t profit nicely from those policies. There’s more:
“The politicians, starting with David Cameron, lost interest in economics: an older generation of Tories studied Keynes, Hayek, Friedman and even Mises to understand the chaos of the 1970s, 1980s and 1990s, but their successors – with a few glorious exceptions – couldn’t be bothered. […]
Instead, the job of the politician, as Cameron, Theresa May and even Boris Johnson see it, is to divvy up the proceeds of growth that somehow automatically appear like manna from heaven, rather than having to think how to grow the size of the GDP pie. Thanks to the magic of ever-lower interest rates, it no longer mattered whether they hit businesses with regulations or entrepreneurs with higher taxes – or so they thought.
This emboldened the hard-Left. If it was OK to print money after the sub-prime crisis, why not print more now to pay for public spending? Why not ignore budget deficits altogether? The centre-Right, meanwhile, embraced green and public health schemes to make energy, travel and food more expensive, convinced that overall prices would remain low.” (paywalled link)
Yes, well – this ain’t due to giddy, economically illiterate politicians, it’s also due to those politicians chasing re-elections for which we plebs need to be bribed with being given back some of our money which they’d taken from our pockets. Next, Mr Heath looks at the consequences of the covid years:
“The lockdowns were the culmination of this madness: the Government spent as if in a World War, “paid” for by central banks creating money out of thin air. […] The magic money-tree was normalised, with catastrophic short, medium and long-term consequences that haven’t all become clear. Millions became addicted to the crack cocaine of free money. House prices and share prices rose further, fuelling the rage of the have-nots. Many decided that they were entitled to an income without needing to work for it. Older workers quit the labour market. A socialist ethic gained ground, undermining the free society.
The benefit-to-cost ratio of lockdowns continues to deteriorate: yes, furlough bailed out millions, but now is the time to pay up, and the inflation tax, dislocation and cultural meltdown is going to prove extraordinarily steep.” (paywalled link)
In his concluding paragraphs Mr Heath cannot refrain from a gratuitous remark about ‘that’ war even though he acknowledges that the dire economic situation would have happened anyway:
“The inflationary hit is being greatly exacerbated by Russia’s invasion of Ukraine and the massively reduced supply of food this is causing. But this supply shock comes in the context of years of excessively low interest rates and quantitative easing, a grievous set of errors for which Western elites have nobody to blame but themselves. Inflation would have been a massive problem even without Putin’s crimes.
It now looks as if the public will either be forced to accept its greatest real-terms pay cut ever, or wages will spiral, requiring a savage overreaction via much higher interest rates – and a bitter recession – to wring the inflation out of the system.
“Why did no one see it coming?” the Queen asked after the demise of Lehman Brothers during a trip to the London School of Economics in 2008. The answer then is the same as it is today: a toxic combination of intellectual error, hubris and political short-termism. The voters’ revenge, when it comes, will be pitiless.” (paywalled link)
So there we are: nobody saw it coming, nobody learned from the 2008 crash, or rather: learned the wrong lessons. I agree with Allister Heath’s analysis of the hubris and intellectual poverty of our ruling classes. However, I find his last sentence cute: how will we, the voters, take revenge? Vote for ‘none of the above’, as voters have done in the recent local and by-elections? How is that going to help – and how is it going to help against the entrenched powers of Whitehall Mandarins? And anyway – aren’t we British and just don’t do pitchforks and stuff like that?
Perhaps that’s why our ruling classes of any rosette colour are feeling so secure …