There's a common mistake in looking at politics which is shared by the left and right - to regard bad policy as mere intellectual error.
Here, for example, is Mike Denham of the TPA complaining that Jeremy Hunt "has not tackled the big problem" of "excessive public spending", as if the Chancellor were simply not just clever enough. What he fails to say is that such a high and rising share of public spending in GDP is not just the result of demographic forces and a lack of productivity growth in the NHS. There's something else - economic stagnation.
Some back-of-the-beermat calculations show the point. Since 2007 real GDP has grown by just 1% a year. Had it instead grown by 2% (which is still less than it did in the 40 years before then) the economy would be 16% bigger than it is. Which means that for the same level of government borrowing we could have £100bn more public spending and still have lower shares of spending and taxes in GDP than we have now. Alternatively, with the same tax take, we could have eliminated the deficit and still had £13bn higher public spending. Or, if you prefer, we could have the same deficit and a six percentage point lower share of spending in GDP, or five percentage point lower share of taxes.
In other words, "excessive" public spending is the product not (merely) of regrettable political choices but of weak growth. The share of public spending in GDP is driven much more by the state of the economy than it is by the will or ideology of governments. Had we had happier economic circumstances, it's highly likely than Denham's complaints would have less force.
But why have we have such weak growth? Here, we encounter another example of the mistake I have in mind: the financial crisis of 2007-08 is often attributed to bankers' bad decisions and/or the failure of regulators*.
What this misses is the point made (pdf) by Ravi Jagannathan and colleagues - that the crisis was "the symptom not the disease". High savings by fast-growing emerging economies such as China forced down western interest rates. In a better world, this would have financed a boom in useful capital spending, thereby increasing productive potential and real incomes. But it didn't because there was, as Ben Bernanke said in 2006, a “dearth of domestic investment opportunities” in the west. The upshot was therefore a boom in property speculation and a reach for yield that fuelled demand for mortgage derivatives. In this way, falling yields led not to greater wealth for all but to financial fragility and bust.
The crisis, therefore, was not (merely) the result of individuals making bad decisions. Yes, they did, but people make mistakes all the time; blaming the crisis on mistakes is like blaming a plane crash on gravity. Instead, it was the product of fundamental forces within capitalism.
Yet another example of what I have in mind is fiscal austerity. Countless economists have pointed out - correctly - that this is terrible economics (pdf). What this misses is why such a bad policy was selected for. The fact is that austerity served many interests - low interest rates suit financiers and rentiers - and the media, partly because it represents these interests, fails to scrutinize adequately such policies. Austerity wasn't just an intellectual failure, but an institutional one.
A further example lies in policies towards economic growth. Intellectually, these are trivial; most economists would agree upon half a dozen pro-growth policies even if they disagree about their weighting: planning reform; tax reform; rejoining the market; better competition policy; infrastructure investment; better vocational training; and so on. The absence of these policies, however, is not an intellectual error. It's because powerful vested interests would be opposed to them. Achieving pro-growth policies is a matter of power, not brains.
A final example is Peter Stefanovic, whose regular videos expose Tory dishonesty. The problem here is not that his work is wrong. It's not. It's that it begs the question: so what if the Tories lie? All informed Tory voters knew in 2019 that Boris Johnson was a serial liar. And they didn't care. Dishonesty is a path to power. In this context, the truth doesn't matter.
What's going on here is, I suspect, an example of how even good schools inculcate an ideology into us. We learn at school that if you are clever and honest you will get a reward or at least avoid punishment. And we carry this lesson with us even into domains where it is not true, such as politics. It might be no accident that the mistake I'm describing is often committed by academics. Take for example this from Case and Deaton:
If technological change and globalization have been responsible for hurting the working class, it is not because that is what technological change and globalization must do; it is because policy was neither wise nor imanginative. (Deaths of Despair p222).
They treat bad policy as if they were marking a bad student's essay. Which is professional deformation. Bad policy is not mere intellectual error. It is the product of capitalism - of economic stagnation and of how capital exercises power over the state. This is true whether you regard bad policy as "excessive" public spending, austerity or lax regulation.
My point here is that political analysis and change requires much more than intellect and knowing the truth. Politics is not merely a matter of asserting one's intellectual or moral superiority. It requires an analysis of capitalism: why it has delivered stagnation, and why it holds so much power over government.
You might think this is a Marxian claim. Well, not entirely. It's also Econ 101 - the idea that people, including politicians, respond to incentives. It is incentives that got us into this mess. And it is different incentives that will get us out of it.
* Regulatory failure is the kindergarten theory of economics: it regards bankers as being like unruly children who need constant close supervision. If such a theory is correct, it is hardly a defence of capitalism.