
The economic cure to populism
If there is one theme that has featured most heavily in these columns over the last four years, it has been the dangers of right-wing populism. The destructiveness of Brexit, the dishonesty of Boris Johnson, the recklessness of Liz Truss, and the authoritarianism of Donald Trump have all been familiar themes.
It has to be said, however, that populism seems to be surviving my weekly onslaught. Reform UK leads in the opinion polls. The Conservative Party is led by someone who is half-tempted to turn her party into a fully-fledged populist party and who will likely soon be replaced by someone who will not hesitate in turning his party into a fully-fledged populist party. To the extent that President Trump is running into political difficulties, it is for being insufficiently committed to isolationism and conspiracy theories.
The public is angry, dissatisfied with the status quo. There is a market for politicians who can articulate that anger, identity something to blame, and promise simple answers to complex problems. And it cannot be a coincidence that the rise of this type of politics has occurred during a period of economic stagnation. There is much more to populism than this; it is at least as much a cultural phenomenon as an economic one. But it is also surely the case that the attraction of populism in the UK would diminish if, by the time we got to the next general election, living standards were rising and expected to continue to rise.
It is, therefore, an option for the Government to focus relentlessly on delivering economic growth as a means of achieving re-election (not to mention the more than incidental benefits to the country). Of course, many factors determine economic growth. Some of them can only be delivered in the long term; some – such as Trump's obsession with tariffs – are largely beyond the Government's control; some come at a very high political cost.
Let us, for a moment, assume that the Government is willing to risk these high political costs to deliver higher economic growth. What could it do?
Before making a few suggestions, what is not an option is an expanded borrow-to-invest strategy. Our current fiscal rules are already loose, in part to fund higher levels of capital spending. That is no bad thing, but remarkably little of that higher capital spending is going into the most economically beneficial areas, like transport or scientific research.
The markets are already nervous about our fiscal sustainability and we have the third-highest debt interest costs of any developed country. If the interest rates on our government debt were at the same levels as Germany, we would be paying £50bn a year less than we do. Rather than borrowing more, a credible plan for fiscal credibility is necessary to get those costs down. Contrary to the fashionable view that austerity is bad for growth, it is the loss of control of the public finances that is the real danger.
Subscribe to The New Statesman today from only £8.99 per month Subscribe
This does mean reducing the costs of government both in the short term (the disability benefit bill cannot be allowed to grow at the current rate) and in the long run. For a start, a plan should be announced to get us off the pensions triple lock. Even with spending control, taxes will have to go up. The challenge is that the least unpopular taxes are the most economically damaging. Focusing on the rich goes down well with most of the public but drives away the mobile wealthy. At least a partial retreat on non-doms is necessary, and the idea of a wealth tax should be dismissed. If we need more revenue (and we do), use the main taxes for a broad-based increase.
The Government has made some progress on planning but even on this has recently retreated on environmental requirements. The real benefits of planning reform come from increasing the population of the highly productive parts of the country. This requires a substantial expansion of housebuilding in London (where next to no houses are being built) and the Ox-Cam corridor (where we should be massively ambitious), with spending on transport infrastructure focused there too. Ignore the complaints about the Treasury Green Book; we should invest where we get the best return. Economic growth should be prioritised ahead of reducing regional inequality.
And while I am being provocatively right wing (at least for a New Statesman column), we should also drop the onerous tax we place on developers that reduces housebuilding, namely the requirement to build large numbers of affordable homes. Just build more homes. Planning is one area where regulations have become too onerous. Rachel Reeves was right to highlight in her Mansion House speech last week that excessive regulation is stifling growth. Her rhetoric needs to be matched by implementation – including in the context of employment rights.
Returning to centrist dad mode, what about Brexit? Reduced access to our biggest trading market has proven to be a substantial drag anchor on our economy, predictably enough. The bolder and more ambitious the plans to restore a sensible relationship with the EU, the better. The economic gains will be worth upsetting a vociferous but shrinking minority.
Taken together, it would be an agenda that maximises our chances of delivery economic growth and, in the long term, defeating populism. Is it an agenda that a government, especially this Government, could deliver politically? Probably not. It reminds me that, as I conclude the last of these regular New Statesman columns, that it is a lot easier to write about politics than to be a practising politician.
[See also: Why is Boris Johnson so scared of Emmanuel Macron?]
Related

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


The Herald Scotland
11 minutes ago
- The Herald Scotland
Trump Medicaid cuts will help Americans in poverty find work
The biggest welfare program - Medicaid - has been disconnected from helping its 84.6 million recipients find work. And while the food stamps program technically has work requirements, they're inconsistently enforced for the 42 million people who benefit from the Supplemental Nutrition Assistance Program. The result: Tens of millions of people, especially able-bodied adults, have been trapped in government dependency. But they deserve the chance to become self-sufficient. They deserve to fully share in our country's progress. And they deserve to shape that progress while pursuing their own American dream. Trump is fixing broken welfare system That is why President Donald Trump's One Big Beautiful Bill Act is so important. The president and Republicans in Congress have started to fundamentally fix America's broken welfare system. They're finally connecting welfare to work. Your Turn: Medicaid handouts only create dependency. Able-bodied adults should work. | Opinion Forum Unfortunately, many Americans haven't heard this side of the story. They've been told - by virtually every politician on the left as well as a few loud voices on the right - that Trump and his fellow Republicans are gutting the safety net that vulnerable Americans need. Nothing could be further from the truth. In reality, the president has preserved the core of the safety net for the truly vulnerable. He and his fellow Republicans are helping millions of able-bodied adults leave welfare and find work. That's the point of the safety net: to support people who've fallen on hard times, then help them move on to better times. It was never meant to be a hammock. Yet that's what it has become, trapping millions of people in generational dependency. Trump's welfare reforms are righting this wrong. To start, Medicaid now has its first federal work requirement in history. Able-bodied adults without children as well as those without young kids will now be required to work at least part time to keep receiving Medicaid. Will Trump's big bill kill people? Here's the truth about Medicaid cuts. | Opinion That is common sense. Medicaid was created to help the neediest people in society get health care. It wasn't intended to cover healthy adults who are capable of working but choose not to. It's good for them, and all of America, if they find jobs and raise their incomes. The same is true for food stamps. The president and Congress are closing loopholes that have allowed able-bodied adults to avoid work requirements. They've also put states on the financial hook for giving food stamps to those who aren't eligible. These reforms will help millions of people find work and boost their incomes. That's good for them and the rest of society. Work requirements will help people living in poverty Those who criticize these commonsense reforms aren't just missing the point. They're missing something profoundly American. We should want our fellow citizens to find good jobs, earn more income and put themselves on the path to everything from buying a car to buying a home. That's the ticket to a life of fulfillment - to the American dream. But we shouldn't want people to stay on welfare with no strings attached, especially able-bodied adults. We should want them to lead better lives. And we should believe in their incredible potential and innate ability to improve their lives. Opinion alerts: Get columns from your favorite columnists + expert analysis on top issues, delivered straight to your device through the USA TODAY app. Don't have the app? Download it for free from your app store. Trump's welfare reforms are grounded in this deeply American principle. They will move millions of people from welfare to work, transforming lives in powerful ways. Virtually everyone intuitively understands that this is a good thing for everyone, including those on welfare and those of us who pay for it. The real question is why some politicians and pundits think it's bad to empower people on welfare to rise through work. Hayden Dublois is data and analytics director at the Foundation for Government Accountability.


The Herald Scotland
11 minutes ago
- The Herald Scotland
Trump rejects Netanyahu's claim of no starvation in Gaza
Trump made the remarks ahead of a bilateral meeting with United Kingdom Prime Minister Keir Starmer in Turnberry, Scotland, where the second-term U.S. president arrived July 25 for a four-day trip. More: One meal a day. $20 for an egg. Choosing which kid gets fed. Starvation stalks Gaza As images of starved children in Gaza have alarmed the world, Netanyahu denied that Israel is conducting a starvation campaign, calling such accusations a "bold-faced lie" and even rejecting that starvation is occurring. "There is no policy of starvation in Gaza and there is no starvation in Gaza," Netanyahu said on July 27 More: Israel pauses some military action in Gaza as starvation spreads: What to know The Gaza health ministry said on July 28 that at least 14 people had died in the past 24 hours of starvation and malnutrition, bringing the war's death toll from hunger to 147, including 89 children, most in just the last few weeks. To help get additional food into Gaza, Israel on July 27 announced a halt in military operations for 10 hours a day in parts of Gaza and the creation of new aid corridors as Jordan and the United Arab Emirates airdropped supplies into the enclave. Trump, speaking alongside Starmer at his golf resort, said the United States had provided $60 million for humanitarian aid, and other nations would have to step up. Trump said he discussed the issue with European Commission President Ursula von der Leyen on July 27, and she told him European countries would ramp up their assistance very substantially. Starmer called the mounting starvation in Gaza a "humanitarian crisis" and an "absolute catastrophe," adding that "the people in Britain are revolted by what they're seeing on their screens." More: More than 100 aid, rights groups call for action as hunger spreads in Gaza Israel cut off all supplies to Gaza from the start of March, reopening the territory with new restrictions in May. Israel says it abides by international law but must prevent aid from being diverted by militants, and blames Hamas for the suffering of Gaza's people. "You have a lot of starving people," Trump said, later criticizing the Hamas militant group for not agreeing to release more Israeli hostages, living and dead. Trump said he told Netanyahu that Israel's approach would likely have to change. "I told Bibi that you have to maybe do it a different way," Trump said. Contributing: Reuters Reach Joey Garrison on X @joeygarrison.


The Herald Scotland
11 minutes ago
- The Herald Scotland
Trump repeats he's 'allowed to' pardon Epstein aide Ghislaine Maxwell
A reporter asked Trump whether he would "ever consider" a pardon for Maxwell, who met with Deputy Attorney General Todd Blanche for two days last week to answer questions about Epstein. Critics have said the meetings with Blanche, Trump's former personal defense lawyer, were part of a White House effort to quell the backlash over the administration's handling of thousands of Epstein-related files in its possession. "Well, I'm allowed to give her a pardon, but nobody's approached me with it. Nobody's asked me about it," Trump said. "It's in the news about that, that aspect of it, but right now, it would be inappropriate to talk about it." More: How Trump and 'terrific guy' Jeffrey Epstein's party boy friendship ended badly Trump on July 28 also hit back at a question about whether his attorney general, Pam Bondi, has told him his name is mentioned in the federal government's Epstein files, as the Wall Street Journal reported last week. "I haven't been overly interested in it," Trump said. "It's a hoax that's been built up way beyond proportion." Trump then suggested without evidence that former President Joe Biden, then-Vice President Kamala Harris, FBI Director James Comey and Attorney General Merrick Garland could have put fake and incriminating material about him into the files. "I can say this. Those files were run by the worst scum on Earth. They were run by Comey, they were run by Garland, they were run by Biden and all of the people that actually ran the government, including the autopen" during the Biden administration, Trump said. "Those files were run for four years by those people. If they had anything (on Trump), I assume they would have released it." The president dismissed another Wall Street Journal report that said he drew a picture of a nude woman decades ago as part of a lewd birthday letter for Epstein when they were close friends. It was part of a book compiled by Maxwell that included contributions from other high-profile people including former President Bill Clinton, the Journal reported. More: Ghislaine Maxwell lawyer says he hopes President Trump pardons her 'In one of my very good moments, I turned it down' Trump in Scotland also categorically denied that he'd ever been to Epstein's Caribbean island where sex trafficking of young girls allegedly occurred. "I never had the privilege of going to his island, and I did turn it down, but a lot of people in Palm Beach were invited to his island," Trump said. "In one of my very good moments, I turned it down. I didn't want to go to his island." Trump also offered an explanation for why he broke off his friendship with Epstein after the two were close friends for many years. "I wouldn't talk to Jeffrey Epstein because he did something that was inappropriate. ... He stole people that worked for me. I said, 'Don't ever do that again.' He did it again, and I threw him out of the place," Trump said, in reference to his Mar-a-Lago club and residence. "Persona non grata," Trump added. 'We haven't spoken to the president,' Maxwell's lawyer says Trump's comments three days after Maxwell's lawyer said July 25 that he is hoping Trump pardons the former British socialite for sex trafficking crimes she was convicted of in connection with the disgraced financier, who died in prison in 2019 while awaiting trial on related charges. David Markus spoke to reporters after his client's second day of interviews with Blanche in Tallahassee, Florida, near where Maxwell is serving a 20-year prison sentence for trafficking a minor to Epstein for sexual abuse. Asked about Trump's comments earlier in the day about a potential pardon, Markus told reporters, "We haven't spoken to the president or anybody about a pardon just yet." But, Markus said, "The president this morning said he had the power to do so. We hope he exercises that power in the right and just way." When Trump was asked last week if he had already considered pardoning Maxwell, he said no. "I'm allowed to do it, but it's something I have not thought about," Trump told reporters. "I certainly can't talk about pardons now." Maxwell's meetings with Blanche, the No. 2 official in the Justice Department, came amid calls from the public and a bipartisan group of lawmakers for DOJ to release more information it has in its possession about Epstein's clients. The public outcry was prompted by announcements by the Justice Department and FBI earlier this month that they won't be releasing their Epstein-related files, despite promising to do so. Pressure has mounted since then for the administration to reconsider, including from members of Trump's own base who were bitterly disappointed by the announcement. That was especially the case after the Wall Street Journal report that Bondi notified Trump in May that his name had appeared "multiple times" in the files. The president sued the newspaper for defamation for reporting that he wrote the birthday message for Epstein.