The extreme Left is crumbling in Germany, France, and the UK. Unfortunately, not the US.
Discussion Background
- The UK Labour party leader is Keir Starmer, since April 4, 2020.
- The leader of the Conservative Party since 2022 and UK prime minister is Rishi Sunak.
- Jeremy Hunt is Chancellor of the Exchequer in the UK.
- The shadow Chancellor (opposition leader), from the Labour Party, is Rachel Reeves.
- A Gilt is a UK Government liability denominated in the British Pound and listed on the London Stock Exchange. It’s comparable to US Treasuries.
Liz Truss became Prime Minister after Boris Johnson resigned in a series of scandal. She lasted a mere six weeks after cutting taxes then raising them.
Labour’s Gilt Complex
Eurointelligence discusses Labour’s Gilt Complex
Labour’s problem has been hiding away in the background, drowned out by the noisier spectacle of the Conservatives self-immolating. Sir Keir Starmer and his party have rowed back on a number of policy commitments over the past several weeks, on the grounds they’d be too expensive. First, a promise to abolish tuition fees went. Then the party pushed its green industrial policy scheme back by a couple of years. Yesterday, they ruled out universal childcare.
Shuffling through different policies while you’re in opposition is normal, but these point to a wider issue with the philosophy behind Labour’s fiscal policy. Rachel Reeves, the shadow chancellor, faces a self-imposed trilemma. Labour wants to be an active state in government, adopting a more interventionist industrial policy, and restoring public services. They have also said that they want to reduce the national debt. Finally, they are terrified of raising taxes, or even looking like they will.
A goal of big government does not go hand in hand with a party terrified of tax hikes, backing down on universal childcare and free tuition, easing Green goals, and a goal of reducing the national debt.
Eurointelligence moans this radical improvement in policy positions.
For the Conservatives, this is a short-term electoral opportunity which they will probably waste. Further down the line, it is a liability for any future Labour government. The party is coming out with promises that sound big on paper but end up being macroeconomically insignificant. Budget Bidenomics, if you will.
Precisely what short-term opportunity does this present the Conservatives? Hike taxes? Support free tuition? Raise government spending?
The next UK election has the making of a complete blowout.
We could only hope that Biden would disavow tax hikes, free tuition, free childcare, and roll back some energy objectives.
Then again, who could possibly trust that change in position? Biden ran as a moderate, a healer, and as uniter. He turned into the biggest wet dream of the Progressive Party.
A Political and Economic “Doom Loop” is Underway in Germany
In Germany, A Political and Economic “Doom Loop” is Underway.
Support for the Green Party has collapsed. In many polls AfD, a radical Right party is in second place.
A similar change is underway in France. I will discuss that major turn in a follow up post.
