Weekly Briefing: Burnham's blind spot
Plus: the regulator rigging YouTube, what's wrong with JD Vance and how much is a spider's life worth?
My favourite piece on CapX this week was from James Price, on the economic knot Andy Burnham is about to inherit – and why the Left can’t accept the one-sentence solution Adam Smith gave 270 years ago. You can read it in full below.
We also featured Shanker Singham, who imagined the free-market speech Burnham should give on day one as PM, drawing on the tradition of Paul Keating and Roger Douglas, and prioritising competition, property rights and free speech.
While my opponents claim to be business-friendly, or the party of business, I stand for free exchange, for wealth creation, for the markets that drive innovation and for poverty alleviation
Of course, he won’t say a word of it.
Ben Ramanauskas set out why fixing the tax system – not devolution, not nationalisation – should be Burnham’s first job, and says it’s time for stamp duty and National Insurance to hit the scrapheap. Lawrence Newport and Looking for Growth launched Kickstart, a 30-day plan for the new PM that calls for Parliament to sit through the summer and axe energy levies. Alys Denby asked why a Labour minister just blocked £1.2bn in new City of London office space to protect a sightline to the Tower. And Jack Rankin MP took on Ofcom and the CMA, warning that plans to rig prominence rules on YouTube and smart TVs in favour of established broadcasters would strangle small creators.
Elsewhere this week: Valentin Boboc on why JD Vance is wrong about GDP. Plus, ahead of Burnham's first days in office, Andrew Lilico joined the podcast to explain the fiscal trap awaiting the new Prime Minister – and why the bare minimum in cuts, £180bn, is itself politically impossible. Listen here.
Marc Sidwell
Editor, CapX
Forget Manchesterism – try Adam Smith
James Price
In Gordium, the capital of Phrygia, stood an oxcart, its yoke connected to the pole by a knot of cornel bark so intricate that no one could find where it began or ended. An oracle promised that whoever undid it would rule all Asia. For generations, clever men picked at it, theorised, and organised what we might now call ‘working groups’.
Then Alexander the Great arrived, and provided us with one of the great clichés of history. He looked at this infamous Gordian knot. He drew his sword. And just cut it in half.
I’m not about to compare our own ‘King in the North’, Andy Burnham, to one of the great leaders in human history. I don’t expect to have to revise my dismissive attitude towards him, either. But on Friday, Burnham was crowned Labour leader, and the premiership follows on Monday. He is inheriting a Gordian knot of his own. The pages of CapX show just how many strands of failed policy have gone into creating this knot. The one that Burnham and Labour seem biologically incapable of even understanding, of course, is growth.
The heartbreaking thing about all this is that Adam Smith taught us how to cut this knot way back in 1755
The de facto interregnum between two hapless Labour leaders has at least concentrated minds. So-called ‘growth manifestos’ are doing the rounds of the thoughtful Left, such as can be said to exist. What strikes me about them is the convolutions and intricacy of these plans: levies shuffled onto general taxation, cliff edges replaced with tapers, new bills, new bodies, new missions. This knot of its own is the inevitable symptom of being unable to say the obvious, because the obvious is ideologically unsayable.
We have been here before. Two years ago, in fact, when Starmer and Reeves came into office armed with no plans, but fashionable, hollow buzzwords. Take Reeves’s ‘securonomics’. Two years on, the tax burden sits at a postwar high, long-dated gilt yields have exceeded anything Liz Truss managed, and the Adam Smith Institute reckons something like a quarter of a million jobs have gone since Reeves’s first Budget.
That doesn’t sound very securonomicsy.
But all the evidence suggests that Burnham’s answer is to tie the Gordian knot tighter. ‘Manchesterism’ calls for public control of energy, water, housing and transport, with some more council houses and some nauseating vibes thrown in. This is going to collide with reality in a way that would almost be funny, were the consequences not so serious.
Alex Wickham at Bloomberg reports that on his first Monday as PM, officials will hand Burnham Treasury forecasts showing inflation revised to 3.2%, gilt yields rising further, at least one rate hike before Christmas and potential $150 oil if the Iran ceasefire fails. Officials have dismissed a grand autumn Budget as impossible and briefed that they can’t even properly begin to prepare the new Cabinet.
Meanwhile Burnham may still be contemplating Ed Miliband as his Chancellor, clear evidence that he doesn’t even understand the scale of the challenge facing him. This alone causes me to feel a Gordian knot in my stomach.
The heartbreaking thing about all this is that Adam Smith taught us how to cut this knot way back in 1755. Instead of listening to Mariana ‘I don’t understand economics’ Mazzucato, or Gary ‘I don’t understand economics, but angrier’ Stevenson, or any of the tinkering with complicated wheezes from Labour think tanks, Burnham could copy Alexander and cut the Gordian knot with one simple sentence:
‘Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes and a tolerable administration of justice; all the rest being brought about by the natural course of things.’
Smith didn’t need missions, flexicurity, quiet bat people, cliff edges, Oasis quotes or even painting buses a different colour.
I have long been struck by the introduction of a book called ‘The Binding of Leviathan’ by William Waldegrave. Written when Mrs Thatcher was in opposition, it laments that no one knew how to fix the economic problems of the day. We do not have that problem. The 1980s showed, on both sides of the Atlantic, that free-market growth and deregulation are the only way to cut this knot. I shan’t hold my breath, but what Andy Burnham needs is less of the Smiths, and more of Adam Smith.
And if you want more…
– Natural England values a spider’s life more than yours (John Penrose)
– Let’s reconnect Britain without the Treasury’s help (Rebecca Smith MP)
– Youth unemployment needs growth (Dan Moynihan)
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We’ll be back on Monday.