The Conservatives appear reticent about making the economic case against Jeremy Corbyn. Whether spooked by the Remain campaign’s Project Fear failure in the EU referendum, or believing the referendum itself was a cry for more economic intervention, the party’s sharpest attacks have instead been reserved for the Labour Party leader’s foreign policy and “friends” in low places.
Perhaps this calculated strategy is the right one. But in the absence of an economic debate, a vacuum has been created, leading to false equivalence about the parties’ economic programmes.
Critics are correct that the Conservatives under May have neglected economic issues. On immigration and energy price caps, they have taken UK policy backwards. But that is nothing compared to Corbyn’s longing for a pre-Thatcherite economic transformation.
It’s not even so much that his tax and spending plans do not add up. It’s that Labour offers us an approach one might expect from someone who has been asleep and missed all developments since the mid-1970s.
It advocates nationalising rail, energy, water and the Royal Mail, even though the publicly owned sectors of yesteryear absorbed taxpayer funds, suffered chronic underinvestment and poor productivity growth.
It wants individual industrial councils by sector to lead an industrial strategy, even though the previous incarnations, from the 1960s “national champions”, through to industrial subsidies in the 1970s, were useless at picking winners and led to vast taxpayer subsidies to prop up hopeless companies and unproductive industries.
It recommends a financial transactions tax, which if Sweden or France’s examples of similar taxes are anything to go by, will reduce liquidity and actually increase market volatility, whilst raising far less revenue than expected.
It demands higher marginal tax rates on everyone earning more than £80,000, even though we know high earners are even more sensitive to tax rate changes now than in the past. It desires a roll-out of collective bargaining through trade unions, bringing with it a return to the chronic industrial unrest and insider-outsider model which at its height led to record strike days, uncollected rubbish and, eventually, unburied bodies.
It promises rent controls, even though these previously led to a collapse in the private rented sector, which, coupled with more lifetime-tenancy council housing, would entrench people in pockets of deprivation. It aspires to European-style regulation of the labour market, which results in a host of new “rights” in theory but a higher structural rate of unemployment and less mobility of workers in practice.
It recommends the state pension age not rising as quickly as life expectancy, reducing the size of the willing labour force at precisely the time that the costs of pay-as-you-go state pension and healthcare spiral due to demographic change. It suggests more wage controls, with 25pc of the private sector workforce having their pay rate determined by government through the national living wage.
All that is to say nothing about the disdain for private property which underpins the document. There will probably be little love lost for football club owners being forced to offer up places on the club’s board to supporters groups or shares to fans during the sale of the club. Even less sympathy will be shown to banks, for whom Corbyn wants the power to veto high street branch closures. But when the manifesto starts to give workers the first refusal to buy their company, the attractiveness of the UK as a place to invest and grow a business diminishes.
Actions such as these will make other countries far more reluctant to sign trade and investment partnerships with a post-Brexit Britain too. That probably would not bother Jeremy Corbyn much anyway, given the manifesto advocates for more protectionism in areas such as steel, and a raft of new conditions for supporting trade deals (many of which have nothing to do with economics).
Alone, each of these bad policies might be tolerable, but sum them all up and they amount to an anti-supply side agenda, which would significantly impair the UK’s growth rate. We know this because the UK has been to this Momentum rally before. We tried price and wage controls, planning swathes of industry, high marginal tax rates, extensive council house building and powerful trade unions.
The results speak for themselves — a rapid relative decline from 1950 onwards. When Margaret Thatcher, John Major and Tony Blair then liberalized markets, tamed train unions, removed industrial favouritism and injected a host of nationalized industries into competitive markets, of course, UK productivity growth improved significantly.
There is certainly a legitimate debate to be had about productivity growth and why it has been so stagnant in the past few years. But Corbyn and his comrades have proposed a bunch of the same policies we know from experience do not work.
To assume the results would be different this time round is not even wishful thinking, but willful self-indulgence.