Nurse Ratched is dead, and few will mourn her passing. Actually in the real world the actress Louise Fletcher has died. She won an Oscar for her performance as Nurse Ratched in One Flew Over the Cuckoo’s Nest. If you’ve never seen this film you really should. It is a classic, set in an old fashioned psychiatric hospital, or lunatic asylum, where Nurse Ratched rules with a rod of iron – that is until the lunatics really do take over the asylum.
Of course the character of Nurse Ratched was somewhat of an exaggeration for dramatic effect. But I have visited some of those mental institutions in this country and they were places of coercion and control. The original meaning of the term asylum was a place of safety, hence the term “asylum seeker”. However those institutions were anything but places of safety. They were places of violence; places where staff needed to stay in control; places where they used whatever means they were allowed to in order to achieve this. So in the film, when the lunatics do take over the asylum we all feel like cheering.
Now in the real world, it feels like the lunatics really have taken over the asylum at the moment. Only nobody is cheering. The government is crashing the economy, causing interest rates to go up and the value of the pound to fall. This fuels inflation for all of us at a time when inflation was already high. And all in the name of giving tax cuts to some already very rich people who don’t really need them and many of whom don’t want them.
This discredited ideology is being trotted out in spite of all the evidence that it will not work. Cutting taxes for the rich is the very worst, most inefficient way to stimulate growth in an economy. The reasons for this are complex but boil down to the fact that the rich are far more likely to save their money, invest it abroad, or spend it abroad. The most efficient way to stimulate the economy quickly, if you want to dash for growth, is to give money to those who will spend it in their local economy. This generally means those who have the least for whom any additional income will be spent rather than put into savings. If the Chancellor was really serious about achieving growth quickly he should uprate benefits or cut VAT which impacts most heavily on those with low incomes.
Economically the evidence suggests the Chancellor’s strategy will not work. Even if the rich were to invest their windfall in the British economy, which seems unlikely, they will not suddenly start investing it in the right things. There is widespread agreement that what makes the British economy uncompetitive is underinvestment in new technology and in training and skills. This is why we have so many poorly paid jobs and why so many people are on low incomes. There appears to be no reason why this should change because of the Chancellor’s tax cuts. In fact doing away with the proposed increase in Corporation Tax will have the exact opposite effect. It is a perverse incentive since the higher the rate of Corporation Tax the more incentives businesses have to reinvest their profits to take account of the investment tax breaks. “Invest your money in the business or the government will take it in tax.”
So the mini-budget is economically illiterate (no wonder they prefer to avoid OBR scrutiny). Many people also find it morally repugnant. To be giving huge tax breaks to the wealthiest, removing caps on bankers’ bonuses, reducing income tax (which disproportionately benefits the wealthy), while so many individuals and households are struggling, going without food or heat, falling into debt and so on is indefensible.
Finally it is really dumb politics to alienate a large part of your voter base, who own homes on borrowed money and who were already facing an interest rate rise after years of very low interest and will now face an even bigger one because of your actions. And all this to benefit a few very rich cronies. This truly is madness. The lunatics have taken over.