It’s simple: Conservatives gave the people what they wanted

UK Prime Minister Boris Johnson arrives back at 10 Downing Street after visiting Buckingham Palace following his election victory. Picture: Getty Images

Boris Johnson’s sweeping victory was a win for democratic principles, fulfilling the historic referendum where the British people voted emphatically to leave the EU. But it was a loss for economic principles, reflecting the demise of the dismal science in political platforms.

In the 1980s, free-market icon Margaret Thatcher famously threw down on the table Friedrich Hayek’s mammoth homage to individualism, The Constitution of Liberty, declaring to cowed journalists “this is what we believe”. Across the Atlantic, president Ron­ald Reagan echoed the same ideas, in a more homespun fashion. In Australia and New Zealand Paul Keating and Roger Douglas, treasurers of centre-left administrations, espoused deregulation and a smaller state as a way out of the Keynesian economics that had left the West mired in inflation and unemployment.

“It’s the economy, stupid,” became the mantra of political strategists the world over, but it is increasingly values, not “the economy”, that determine elections.

Mainstream economics had triumphed across the political spectrum; its influence is dying, humiliated by the global financial crisis and repeated failures since to forecast, explain and remedy wage stagnation amid soaring house prices that have priced a generation out of home ownership.

Three of the most fundamental conclusions of mainstream economics were opposed by one or both major parties in the British election: small government and lower taxes, immigration, and free labour markets. Both parties backed an increase in the minimum wage to well above £10 ($19.50) an hour.

What about smaller government? Almost 40 per cent of the hundreds of thousands of former Labour voters who deserted the party for Johnson did so because of Brexit, according to Opinium, a UK pollster that proved the most accurate predictor of the final result. A little more than 20 per cent did so because of Jeremy Corbyn, and 6 per cent for reasons of Labour’s platform. So this was no northern “rust belt” embrace of further privatisation or tax cuts for high earners in London to encourage effort.

Indeed, the Conservative Party, which won the biggest majority since 1987, eschewed almost entirely any mention of small government, free markets and lower taxes. Its manifesto stressed getting Brexit done, the menace of Corbyn and increased spending on public services. Privatisation didn’t get a look-in in the 64-page document. The National Health Service, by contrast, the most sacred of Labour legacies, received 45 mentions.

As for tax cuts, a promise to lift the income level at which the top marginal rate cut in, from £50,000 to £80,000, was quietly dropped, along with a promise to cut company tax to 15 per cent. It’s no wonder tax cuts resonate less and less when increasingly few people pay any. In the UK, the top 1 per cent of taxpayers pay a third of all income tax, about double the share of income tax paid by the top 1 per cent in Australia. The typical British worker in Manchester and Liverpool earns barely more than £25,000 a year.

If Johnson had the chance to throw a book on the table, it might have been a 2006 collection of his popular newspaper columns, Have I Got Views for You, as evidence of his intellectual dexterity. A champion of Brexit in 2016, Johnson famously wrote two columns for Britain’s the Daily Telegraph espousing Remain and Leave, respectively, before plumping for the latter as more politically saleable. He will be the most pragmatic Tory leader the UK has seen.

Free-market economics is inherently internationalist; national borders and trade frictions are a nuisance. For many Britons, Brexit was code for getting immigration under control.

Economists, by and large, advocate high levels of immigration as a way of lifting the living standards of immigrants without undermining the wages of workers in recipient countries. That’s not how most people see it.

The British Labour Party, which experienced the worst result since 1935, gave up even the pretence of reflecting mainstream economics. However popular some of its economic policies were — some surveys put support for renationalisation of utilities at above 65 per cent — they were drafted in ignorance of the mobility of business, capital and high-income earners.

The Conservatives have been successful in neutralising the aspects of their agenda, such as privatisation, that have become politically toxic. The addition of Tory MPs from Britain’s north, who would like to retain their seats, will entrench the drift to the left on economic policy.

But Labour has shown a genius for unpopularity. Its obsession with niche social issues, such as the rights of trans people, is electoral poison. So is its pro-immigration stance. Corbyn was even proposing to give about two million-plus non-British citizens the vote in a future Brexit referendum, an outrageous proposal for the bulk of people who still think nationality matters. By the time the next UK general election rolls around in 2024, Brexit and Corbyn will no longer be issues but the mainstream’s aversion to bizarre social policies will be.

The winning political combination, in Australia and the US as much as the UK, would appear increasingly to be social conservatism, including a preference for lower immigration, matched by scepticism of privatisation and deregulation. Such a collection of views may not accord with what economists think is best but, in the spirit of celebrating Brexit, it is a democratic reflection of what voters want. Perhaps economists should be impressed with how long they managed to convince governments to implement policies contrary to what most people think is right.