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IEA - McDonnell speech was economically illiterate
Mark Littlewood, Director General at the Institute of Economic Affairs, commented on Shadow Chancellor John McDonnell’s speech at the Labour Party Conference
“John McDonnell’s speech was the epitome of fantasy economics. The very fact the Shadow Chancellor is proudly trumpeting Labour as a party of interventionism despite its catastrophic historical record should worry both business and voters.
“The Shadow Chancellor wants a return to the industrial strategy of the 1970s, ignoring the past failures of a raft of initiatives, from subsidising the nuclear industry to Concorde. Protecting inefficient domestic steel production, a centre-piece of his vision, has been shown to have disastrous impacts on downstream industries in other countries. His potted history also ignores the huge successes seen in the 1980s and 1990s from liberalising the energy sector and labour markets. A real modern agenda to boost productivity, rather than promising investment promoted by politicians, would focus on liberalising land-use, returning to a market-based energy sector and allowing airport expansion. All of these would enable productivity increases and lower costs to consumers and businesses alike.
“Yet again, McDonnell promoted mistruths on austerity. In the last Parliament, spending was restructured, but reduced by just 2.3% in real terms. It’s time for the Shadow Chancellor to get real. The long-term economic prosperity of the UK will not be secured by shifting taxation to wealth, by higher spending or by more regulation. Labour’s strategy amounts to huge private sector ‘austerity’ in order to protect and expand the public sector. This would be disastrous for the health of the UK economy.”
Notes to Editors:
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The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
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