Facing an adoring crowd at the Labour party conference, Jeremy Corbyn announced that “the Tories are on notice, and Labour is on the threshold of power.”
A year ago, that would have sounded ridiculous. A year later, you have to consider the possibility.
We have to take seriously the fact that the most left-wing leader and shadow chancellor in Labour’s history could take the keys to Number 10 and Number 11 in the coming years. It’s unlikely, but it is possible – and therein lies a huge economic threat.
Corbyn’s party conference speech promised to end what he called “the failed doctrine of neoliberalism”. He promised a Labour government would take an active role in restructuring the economy. It would introduce a new model of economic management and create a new and dynamic role for the public sector.
More than once he also talked about economic change being “managed”, which was pretty obvious code for state-controlled.
Of course, all this has been tried before, again and again, all over the world. And the lessons from economic history are that: 1) such policies prove to be unaffordable and the governments implementing them sink in a sea of debt and deficit; 2) issues of state failure, not market failure, become the dominating feature, with all sorts of unintended consequences from interventionist policies; 3) tax and spend policies undermine the supply side of the economy and competitiveness, with the result that economic growth weakens.
The inevitable result of all these factors is that it all ends in tears, with savage cuts in public spending.
Economic history 101 shows that the most prosperous economies are the ones which have chosen freedom and free markets over statism. Free markets have been the greatest wealth…