So this is it. Zackonomics.
Today, Green Party leader Zack Polanski outlined his economic philosophy at an event organised by the New Economics Foundation (NEF). I will not pretend that I was listening with a completely open mind: I mostly made up my mind about Zackonomics on the day when Polanski said that his three favourite economists were Gary Stevenson, Richard Murphy and Grace Blakeley.
My issue with that is not that all three of those are completely wrong about economics (although they are). It’s that they are all wrong in very different, and mutually incompatible ways. You can be a fan of each of them in isolation (although you really shouldn’t), but you cannot, in a meaningful way, be a fan of all three of them at the same time.
Stevenson believes that wealth inequality is the source of all of the world’s problems: he thinks the billionaires are hoarding all the wealth, not leaving anything for the rest of us. His solution, therefore, is to tax their wealth in a punitive way.
Richard Murphy, on the other hand, is a proponent of Modern Monetary Theory (MMT). He believes that governments can print as much money as they like, and that they do not need tax revenue to finance spending. This would make a wealth tax superfluous, or even actively harmful, because it entrenches the idea that taxes fund spending.
Grace Blakeley, meanwhile, is an orthodox, Bolshevik-style Marxist-Leninist. She believes that capitalism is like The Matrix, with the capitalist class in the role of the machines. In that worldview, discussions about different monetary or fiscal regimes are, of course, completely moot, because these are all just changes within the Matrix.
How can anyone be attracted to all three of those philosophies at the same time? That’s very simple: all three are vaguely fashionable, and at the end of the day, that is all Zackonomics really is: a “greatest hits” album of fashionable platitudes.
Polanski starts with some familiar “Boo, Thatcher!” and “Boo, austerity!” clichés. He repeats the old canard that today’s housing crisis was caused by the Thatcherite Right To Buy.
It wasn’t. One sixth of Britain’s housing stock is social housing — that’s more than twice the EU average. What makes Britain different from the EU is not that we have less social housing, but that we have less housing overall. England alone is 3.4 million housing units short of the EU average in population-adjusted terms. Polanski is, of course, not interested in that: he has previously outed himself as a supply side denier, who thinks that no amount of market housebuilding could ever make a difference to house prices. If that’s “Zackonomics”, our housing crisis is a result of the fact that we are already practicing quite a lot of Zackonomics, and have done so for decades.
Polanski’s main solution to the housing affordability crisis is rent controls. In making that case, he disingenuously mixes up the milder, more limited forms of rent controls that exist in parts of the EU with his own plan for a full-fat, all-out rent freeze. They are not the same. My former home city of Berlin briefly tried the latter a few years ago, and it led to an instant collapse in the supply of rental new housing.
Polanski also repeats his call for a wealth tax, a policy which has previously been tried and abandoned in Austria, West Germany, Denmark, the Netherlands, Finland, Iceland, Luxembourg, Sweden and France. Those taxes are bureaucratic and administrative nightmares which depress investment, and which have never raised much revenue anywhere. But maybe real wealth taxes have just never been tried.
In terms of public spending, Polanski is stuck in the Cameron/Osborne era
Of course he also blames Thatcher-era privatisations for today’s high energy prices, which is a complete non-sequitur. Energy prices did fall in real terms for quite some time after privatisation. Until we started boycotting our own energy supplies, due to a max of “energy NIMBYism”, regulatory overreach and aggressive decarbonisation, first in the form of the 2008 Climate Change Act and now Net Zero. Again, we are already doing quite a lot of “Zackonomics” and have been doing so for too long.
In terms of public spending, Polanski is stuck in the Cameron/Osborne era, still ranting about “austerity” and the “decimation” of the state, as if public spending hadn’t already shot up from 40 per cent of GDP to 45 per cent since then. Here, as in other areas, we’ve already had a fair amount of “Zackonomics”. It hasn’t done us much good so far.
I could go on, but I realise that I am missing the point by judging Zackonomics by the standards of a conventional economic policy programme. Zack Polanski may be terrible at economics, but he is a great entrepreneur — a political entrepreneur, that is. The lesson from Corbynmania, the Greta Thunberg movement, BLM, Extinction Rebellion, Just Stop Oil, the gender movement and the Palestine movement is that there is a lot of vaguely youthful, vaguely left-wing, vaguely anti-capitalist political energy around. That energy was looking for a political outlet, a gap in the market which Polanski spotted and filled. I wish he had used his talents to become an actual entrepreneur in the private sector instead, creating wealth rather than promoting ideas that destroy it.
