Every time Rachel Reeves repeats her Commons and broadcasts a mantra asking the British public if they are better off now than they were thirteen years ago, it triggers a memory.
As an American correspondent, I was in Cleveland, Ohio, on October 28, 1980, at the presidential debate between Jimmy Carter and Ronald Reagan, when the former movie star delivered closing remarks and asked the American people, “Are you better off now than you were four years ago?” past?’
Reagan’s question, days before Americans went to the polls, has been described by presidential historians as the “defining moment” of a campaign that saw the Republican challenger elected in a landslide.
The irony of Reeves’ use of a phrase coined by an apostle of free-market capitalism cannot be missed.
It refocuses on Reeves as ‘the cut-and-paste chancellor’ after the FT revealed that passages from her recent book ‘The Women Who Made Modern Economics’ had been removed from Wikipedia without attribution.
Reaganomics: passages from Shadow Chancellor Rachel Reeves’ recent book, ‘The Women Who Made Modern Economics’, have been removed from Wikipedia without attribution
There is a crucial difference between the way the shadow chancellor copied a landmark sentence and Reagan’s reality.
The late president knew where he wanted to go with the economy. His response to Carter’s clumsy handling of an energy crisis, major inflation fueled by union demands, and a falling dollar was supply-side economics.
Personal and business tax rates were lowered, on the advice of his economic guru Arthur Laffer, ultimately creating prosperity and employment.
When air traffic controllers tested Reagan’s mettle with an exaggerated wage demand and industrial action, the president called their bluff. Civilian controllers were fired and the White House replaced them with Air Force personnel.
The history is interesting because Labour, for all its fanfare, had virtually no policy responses to Jeremy Hunt at the dispatch box after the Autumn Declaration.
Reeves echoed Reagan’s joke, pointing to the downward revisions to growth by the Office for Budget Responsibility (OBR).
In her copycatting of the right-wing president, she has left out a large part of the economic story.
Yes, the Liz Truss episode was chaotic, but the idea that it is responsible for the rise in mortgage rates is risky.
As central banks battle inflation, the cost of home loans has soared everywhere.
There is no British exceptionalism. What Reeves and Labor So Smart never mention are the three crises that allow her to ask the question ‘Are you better off?’
This is the legacy of Gordon Brown’s high borrowing and debt after the financial crisis, the £450 billion cost of Covid and the energy bailouts after Russia invaded Ukraine.
If Labor had been listened to during the pandemic, there would have been more and longer, costly lockdowns.
It was Labour’s whining about energy bills that contributed to larger and more universal government subsidies than were strictly necessary.
As far as growth is concerned, no one can be happy that the OBR is so miserable. A strange element in the forecast is the predictions that business investment will collapse by 5.6 percent next year due to higher credit.
Perhaps a transition needs to take place as companies weigh the certainty of ‘full expensing’, where companies that invest pay less tax.
But anticipating more specific circumstances could yield a positive response
One wonders whether the OBR underestimates the almost unwavering strength of the British services. The latest S&P/CIPS purchasing managers index shows that the outlook has risen this month and has risen above the critical level of 50 for the first time since July.
New data from the OECD shows that Britain recorded a ‘significant increase’ in invisibles in the third quarter, driven by ‘dynamic trade’ in business services.
Labor may feel that no bold policies are needed at this time. The huge poll lead, the narrative of a Tory horror show and the closing of some minor league tax loopholes that don’t generate enough operating costs for a year are all it needs.
The Reeves City offensive has been effective, but as one veteran figure noted in the aftermath of the Autumn Statement, there is a lack of great economic gurus and thinkers at the top.
The fact that Keir Starmer has to team up with business spinner Brunswick to reach the FTSE 100 well and truly (as reported in the Mail of Sunday) speaks volumes. The closet is bare.