Thatcher in the 80’s is not the same as Truss in 2022

Liz Truss wanted to turn England into the Singapore of the Thames, but she was about to leave it as the Caracas of the Thames. The British prime minister resigned just 44 days after taking office from her. That brief period was enough to bring down the pound sterling and raise the cost that the British government pays for its debt. She presented an economic plan that could have been signed by a banana republic, albeit very far to the right.

Truss remains the third prime minister of the post-Brexit era. She succeeded Boris Johnson in office and managed to break a record: she is the premier who has lasted the shortest time in office. The previous brand belonged to Andrew Bonar Law. He was at the head of the government for 210 days. Coincidentally, she occupied 10 Downing Street exactly 100 years ago, in 1922.

Liz Truss’s resignation was anything but surprising. Her credibility was severely damaged after the presentation of an economic plan that drew attention for its recklessness: it generated a fiscal hole of more than 150,000 million pounds sterling, without detailing where the resources to finance it would come from. Fiscal recklessness was accompanied by a lack of political tact: at a very hard time for British families, the leader of the Conservative government proposed a tax cut for the highest earners. As icing on the cake, she decided it was a good idea to remove income caps for top banking officials. These ceilings were set after the 2009 crisis, as a kind of sanction for the excesses and bad practices detected in the large financial groups.

Truss’s economic ideas were nurtured in the meadows, situated on the extremes of the British right and echo the policies put in place by Margaret Thatcher and Ronald Reagan in the 1980s. They can be synthesized in some relatively simple formulas: if the economy is stagnant, give more to the richest and they will spend and invest more. That will bring economic growth. Do not worry about the rest, sooner or later prosperity will come to them.

Forty years ago, those ideas rocked England and traveled the world. They were relatively new and they were successful, not least because they were associated with very powerful words like freedom. What happened? Margaret Thatcher in 1980 is not the same as Liz Truss, forty years later. At that time, the ideas of freedom were powerful weapons to defeat the Soviet threat. Now, freedom is still important, but it needs to be accompanied by social sensitivity and more than a minimum of empathy towards those who are having a hard time. We are in year 3 of the covid era, experiencing the throes of the Russian invasion of Ukraine. The Greed is Good (greed is good) of the eighties sounds worse than old, toxic.

Truss’s proposals were beaten by the markets that now require England to show that it has the ability to pay. Such insolence would have been seen, General Cresencio Sandoval would say. This is how things stand: England is a great country, but she is no longer a great power. Brexit has started to take its toll. It is economic competitiveness and the difficulties of keeping inflation at bay, which in September stood at 10.1 percent. England looks to Asian countries like Singapore as examples of innovation and prosperity in adverse conditions. You can look at Venezuela and understand the damage that anachronistic ideas do. Whether from the left or from the right.

lmgonzalez@eleconomista.com.mx