HPNM

While the Tories slowly destroy Britain, US conservatives are transforming America

image

If the UK feels gloomy and broken, it’s in large part because the Conservative Party has abandoned its basic principles

On a flight back to Britain the other week, I watched Manifest. A story of the supernatural, an aeroplane mysteriously lands several years after it took off. The time-traveling plot might have been daft, but it was good preparation for my arrival at Heathrow, where I felt that I had landed back in the 1970s.

The news in Britain is full of stories about strikes and disruption. Inflation is out of control. Once again, we have a government intent on raising taxes and throwing ever more money at underperforming public services. From the NHS to the police, much no longer seems to work the way it should. A pervasive pessimism seems to hang over every conversation. Conservative ministers and policymakers do not appear to have a clue how to fix it.

How different things feel over in America. There, conservatives are finally overcoming their infatuation with Donald Trump. In the recent mid-term elections, the so-called Republican “red wave” might not have materialized, but conservative leaders in a number of key states showed that they know how to win again.

In the US, the heirs to Ronald Reagan are clambering back into the saddle. In Britain, the heirs to Margaret Thatcher are looking lost.

Last week, at the Margaret Thatcher Conference on Growth, at the Guildhall, organized by the Centre for Policy Studies, I listened to Michael Gove. It was more Ted Heath than Margaret Thatcher. He spoke of a regional policy, now called “leveling up”. Britain’s problems of productivity and inequality would all be solved, he suggested, with just a little bit more government direction.

Other ministers and pundits cling to the delusion that Britain’s woes can be entirely explained by a series of unfortunate extraneous events, such as the war in Ukraine, Brexit and US-Chinese trade tensions. It is almost a case of bad luck, they seem to say. In his Autumn Statement, Jeremy Hunt echoed that idea, describing Britain as being in a “recession made in Russia”.

The reality is that Britain’s economic mess is largely of its own making. Over the past 12 years, British Conservatives have made a number of policy blunders, the consequences of which are catching up with the country.

Britain has become poorer in part because of its ruinously expensive (and unnecessary) Covid lockdowns. For two years, the Government paid people to sit at home and borrowed money to pay for it all. With fewer goods and services being produced, but lots of money in the system, inflation rose. We used up the equivalent of our national overdraft to pay for people to be unproductive. Now, the bank won’t lend anymore. Unsurprisingly, since they presided over it, Britain’s Conservatives seem reluctant to recognize this.

“But surely,” you interject, “every economy around the world is facing a cost of living crisis. The Ukraine war has made matters worse for everyone.”

True, but while geopolitics has increased the price of natural gas for everyone, Britain has done a number of things that have made us especially vulnerable. For most of 2022, natural-gas prices have been five to six times higher in Britain compared with America. Is this because the laws of physics are different Stateside? Of course not. Energy is more expensive in Britain thanks to bad policy.

Britain has pursued the idea of eliminating hydrocarbons as a source of energy more vigorously than almost any other country – including America, despite President Biden’s best efforts. According to Rishi Sunak at the Cop27 climate summit, this will make Britain a “green energy superpower”.

Whatever that might mean, more renewable energy necessarily means being more dependent on natural gas since it is the only realistic energy source that can plug the gaps caused by intermittent wind and solar supply. Since Britain has banned fracking, that in turn means being more dependent on expensive imports of natural gas.

Far from addressing any of this, ministers talk of “doubling down” on their commitment to renewable energy. On the other side of the Atlantic, conservative leaders, such as the governor of Texas, Greg Abbott, who has just cruised to a landslide victory, are unapologetic in their support for the oil and gas industries.

One thing Conservative ministers in Britain can be counted on to say they support unequivocally is the NHS. So slavish have they been in their devotion to socialised health provision that they seem oblivious to its shortcomings and quite incapable of proposing desperately needed reform.

A recent report by the Institute for Fiscal Studies revealed that spending on the NHS has grown by 12 percent since 2019 in real terms. There are now 13 percent more NHS doctors and 11 percent more nurses. Yet the NHS somehow manages to treat 5 percent fewer people. Behind these abstract figures sit real stories of personal angst, including a friend of mine whose cancer returned after several years of remission, only for them to discover NHS indifference.

With the NHS accounting for an ever-growing proportion of public spending, its atrocious productivity has a drag effect on the entire economy.

Hunt this week said that he would like the NHS to have “Singaporean efficiency”. In Singapore, every citizen has a dedicated healthcare account, with money following the individual and providers competing for patients. In Britain, ministers can’t bring themselves to charge patients who don’t bother turning up to appointments.

Monetary policy has also added to Britain’s malaise. Ever since the financial crisis, the Bank of England has used a monetary trick known as quantitative easing to try to stimulate economic growth. Initially, it worked, raising output but only by generating ghost growth.

In his brilliant new book, The Price of Time, Edward Chancellor explains how the monetary magic of QE comes at a cost in terms of poorer productivity and underperforming companies. Conservative ministers talk blithely about raising productivity by improving education outcomes or relocating businesses to the other end of the country. In a party that once fiercely debated monetary policy, few even seem to understand the damage caused by central bankers.

Across the pond, the Federal Reserve has not been innocent of the same monetary sins. But it has not held back from raising interest rates, either. The American economy might be first into a recession, but it is likely to be out of it and growing again while Britain stagnates. How many Conservative policymakers yet understand that higher interest rates are not just unavoidable, but essential if we want the next generation to prosper?

Britain’s Conservatives don’t understand the causes of their country’s underperformance. Small wonder they have no idea how to fix it.

While Hunt raises the tax burden as Britain heads into recession, American conservatives are doing the opposite and cutting it. President Biden’s Democrats might run Washington DC, but that has not stopped Republicans from implementing conservative economic policies at a state level.

In my adopted home state of Mississippi, for example, conservative leaders responded to the downturn by implementing the largest tax cut in the state’s history. The state income tax was cut from an average of 7 percent to a flat 4 percent. Mississippi also responded with a far-reaching red tape reduction strategy, giving people with professional qualifications issued in other US states a near automatic right to practice in Mississippi.

“Ha! Mississippi!” some will scoff. “What has Britain got to learn from a small southern US state? Besides, isn’t Mississippi poor?” My adopted home state is indeed the poorest state in America. But in the next 12 months, the per capita income of Mississippi ($45,881 in 2021) is expected to overtake that of the United Kingdom ($47,202 in 2021). A generation ago, Britain was roughly twice as wealthy per person as Mississippi. Tell me again that tax cuts and deregulation don’t work.

Mississippi is in a way simply emulating what other southern states, such as Tennessee, Texas and Florida, have already done. While we have cut our income tax, they have eliminated theirs. While we deregulate, we do so by drawing on what we have seen work next door.

Thanks to the reforms that conservative leaders are implementing at the state level, the American south has become the fastest-growing part of the US. Indeed, it is well on its way to becoming the demographic, economic and, one day soon, perhaps the political center of gravity in America.

If only British Conservatives were willing to look across the Atlantic to see what works over there.

Douglas Carswell is a former Conservative MP and now the president & CEO of the Mississippi Center for Public Policy, one of America’s leading state-based think tanks. He lives in Jackson.

This article originally appeared in The Telegraph.

Read more by clicking here.

Local Dining Stream

Things To Do

Related articles