IN HIS masterpiece, ‘The Economics of Welsh Self Government’ (1931), Carmarthenshire’s DJ Davies warned of a mistaken economic strategy which left Wales at the mercy of a wider economic entity reliant on the banks and the financial institutions of the City of London, writes Jonathan Edwards MP.
His work with his wife, Dr Noelle Davies, was prophetic.
Still, even they, I suspect, couldn’t imagine the transformation of the UK economy over the following decades to becoming overly reliant upon the financial sector coupled with the neglect of manufacturing and producing industries.
A major acceleration of economic realignment occurred under the Thatcher UK Government, where a deliberate so-called ‘Big Bang’ strategy was pursued, which removed regulatory constraints on the financial sector.
The essence of the philosophy was that wealth generation by the financial geniuses in London for the super-rich would eventually trickle down to the rest of society and distribute geographically away from the South-East of London.
The Blair and Brown Labour Governments accepted neo-liberal economic thinking.
The result of this policy, as we all know, is that the UK has become the most unequal State in Europe in terms of geographical and individual wealth.
Far from trickling down, Thatcherism became the vehicle whereby the proceeds of economic growth were syphoned from the poor to the rich.
Furthermore, when the inevitable crash came in 2008, the bill was left to ordinary working people.
The Golden Goose, as the bankers like to see themselves, turned out to be a Golden Gun kept afloat with loans, grants, and guarantees equivalent to 100% of the British state’s annual wealth.
With ultra-loose monetary policy, which has yet to normalise, further cataclysm was avoided.
However, the general acceptance amongst policymakers, albeit through gritted teeth, was that the public would never be expected to step in to nationalise the failures of the financial elite.
The election of Liz Truss as Prime Minister is a defining moment as all indications seem to suggest that her Government has given up on restructuring the UK economy towards a more balanced, sustainable path.
(We can have a long debate about whether the British Government was ever serious about distributing wealth to every part of the state, but the reality is that even the rhetoric has now gone).
In his first major fiscal statement, the new Chancellor, Kwasi Kwarteng, heralded a new pro-growth economic strategy.
This is code for letting the City of London run rip by loosening regulations, taxation and restrictions on bankers’ bonuses.
The new Government’s ideology is firmly rooted in the infamous ‘Britannia Unchained’ pamphlet of 2012, co-authored by Truss and Kwarteng.
It called for economic shock therapy for the UK and labelled the British as the worst workplace idlers in the world.
The pamphleteers’ thinking largely shaped the Singapore-on-Thames vision of the most fanatical Brexiteers.
We are about to get the real deal six years after the referendum.
These are very serious times.
Instead of the short-termism that has characterised Westminster policy-making for decades, we need long-term plans and strategies to deal with cost-of-living pressures, sustainability of our public services, and climate change.
Worryingly, Trussonomics could lead to a full-scale run on the currency as speculators ponder how the £150bn energy package will be paid for at a time of swingeing tax cuts for the super-rich and large corporations.
A far more sensible approach would be to introduce a windfall tax on those making excessive profits out of rising energy prices, increasing taxes on the richest individuals, and increasing corporate taxes.
The biggest policy boosts the British Government should deliver would encourage investment, stabilise the currency, and realign with European economic frameworks.
Instead, the Tories hope a dose of economic steroids will be enough to get them to the next General Election.
The tragedy is that ordinary working people will be left picking up the pieces when the inevitable crash comes.
And by that time, Truss and Kwarteng will be long gone.
- Narberth Athletic earn win over Carmarthen by James Hemingray
- Merlins Bridge seconds come from behind beat Carew seconds by James Hemingray
- The Welsh captain and the Italian revolutionary by Elfed Jones
- Rangers see off Port Talbot Town in FAW Trophy by James Hemingray
- Pennar edge past Saints for first win by James Hemingray
- Top ten famous Welsh people by Elfed Jones
- Top of the table clash between Crymych and Felinfoel ends all square by James Hemingray
- Wales’ longest station name: How it got its name, and what it means by Doug Evans