Economists will be familiar with Gresham’s law, the principle that bad money crowds out good. What is less appreciated is that the theory also applies to politics. As the modern British Conservative Party amply demonstrates, politicians can fall into a similar destiny loop, in which ideology crowds out realism, faith drives out nuance, and political purists banish pragmatists.
In the political version of currency debasement, ideological factions evict rival views in a struggle that ultimately weakens a party’s base. Parties that fail to stop this, particularly in first-past-the-post systems that reward broad coalitions, are on the road to political rot.
This is not an exclusive Tory problem. Jeremy Corbyn’s Labor provided almost the perfect example after the hard left took over the party. Moderate MPs left the party, were expelled, formed new parties, or simply sat on the back bench as the party plummeted into ineligibility. Others fled Westminster for the refuge and autonomy of life as regional mayor.
Another clear example of this political humiliation is offered by US Republicans in the Donald Trump era. Fearful of defying the MAGA mobs, those in the party who should know better fake the fiction of a stolen election and secure candidacy by logging on to his platform. When that happens, good people melt away.
Truss’s Tories aren’t in that league, but they are showing many of the signs of late-stage political humiliation. This is a world where political purity trumps all other qualifications, so elect someone as your leader who will admit to being a poor public performer because she fits the ideological profile; as if the ability to communicate in modern politics was just a “nice to have”. It can be seen in allies denouncing your Thatcher rival leader as a socialist for levying taxes to protect public finances. Here, a home secretary who has been appointed leader of the hardest Brexit group describes a parliamentary backlash to a botched budget as a “coup”. Cabinet ministers openly argue.
Intolerance is also relevant. In the last six years, the Conservatives have lost decent, established and talented MPs. Under Boris Johnson, Remainer rebels who were not expelled from the party were expelled from office. Many left in the last election.
Now Truss, who won as the hard-right candidate, has similarly swiped supporters of her leadership rival Rishi Sunak from across the cabinet. Some of it is inevitable wear and tear. She is not wrong in calling for a team that supports her policies, but with even pragmatic Brexiteer MPs standing outside the tent now, the available talent pool is thinning. The weak drive out the strong.
The firing of the chief financial officer signaled to the ambitious to shut up. The ministers keep their heads bowed. The result is a government that has no one with the political antennae and clout to stem the ideological sugar rush — or see how an unfunded tax cut would affect the rich during a livelihood crisis before it spooks and elevates markets has mortgage interest.
One can argue for Truss’ ideas – after all, parties are supposed to have a political direction. But the vision must be anchored to the circumstances. You can only sail the ocean you are on. Spurred on by free-market think tanks like the Institute for Economic Affairs and the TaxPayers’ Alliance, Truss and her chancellor, Kwasi Kwarteng, ran a “mini” budget driven by an ideology that suited neither the moment nor the markets.
Can the Tories stop the decline? Theoretically yes. Truss has more than two years before the election needs to be called, enough time to change the narrative. The economic storms could abate. Labor’s huge polling results are less about enthusiasm for the opposition than contempt for the government.
And there are some small positive aspects. Truss eventually withdrew for scrapping the top 45p tax rate. Efforts are being made to reshape the relationship with the EU. Policies of the second order are shelved. Ensuring delivery is urgent; Many Tories are praising the coordinating skills of Nadhim Zahawi, the cabinet minister who describes himself as the government’s chief operating officer.
Some still hope to correct course. The revolt against the ‘mini’ budget has been spearheaded by ex-Cabinet colleagues such as Michael Gove and Grant Shapps. A prominent rebel argued that there was a struggle to prevent the “libertarians at the top” from pulling the party away from conservative values or becoming the “political arm of the think tanks”.
But these are thin straws to grasp at. There is also a mutinous party, a leader unable to communicate with voters who shattered the victorious Tory electoral coalition, an inexperienced ministerial team and a shattered reputation for competence.
The public’s first impression of Truss was both disastrous and deserved. Perhaps she will grow as a leader. The backlash might soften their instincts. But those of us who have watched the fall of previous governments catch the familiar smell of death.
Historically, there is only one way out of the deepest loops of destiny: opposition. Parties lose office or are kept out of office until they regroup and learn to put voter concerns ahead of activist feverish dreams. Truss should appreciate this. It’s the market solution.
https://www.ft.com/content/b2e97943-f899-483e-bf49-d9c2e23f4f33 The Conservatives have chosen the path of political rot