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With the Conservative party languishing in the polls and seemingly having no answer to the populist right, there could not be a better time for an intellectually coherent free-market blueprint for Britain, much as Keith Joseph provided for Margaret Thatcher in the 1970s. In the centenary year of her birth, Prosperity Through Growth purports to be that book, promising “a programme to restore the UK economy, drive prosperity and hence grow living standards”.
It fails. Instead, the book is a curious mixture of the greatest hits of rightwing economics, a programme of voodoo policies more extreme than those that were discredited by the 1980s Reagan administration and multiple examples of the bankruptcy of ideas that led the Conservative government to be defeated in the 2024 general election.
At a time when, ahead of next month’s Budget, the Labour government is seeking ideas to increase taxes, this book makes the case for slashing them. The best intellectual stimulation comes from the first part, written by Arthur Laffer, the US economist who became famous for his eponymous curve, which showed that tax revenues decline when rates get too high. His “grand kingdoms” of good economic management will not come as any surprise and they consist of low taxation, public spending restraint, sound money, minimal regulations and free trade.
His chapters are a collection of essays praising what has become known as neoliberal economics, and would be recognised as pretty orthodox by economists of most persuasions. They just feel rather out of date, partly because many examples are decades old and partly because much has become entirely accepted within the profession.
For such a keen supporter of free trade, his chapters are weirdly silent on the damage done by Donald Trump’s tariffs. The US president apparently just “sees trade through an entirely different lens than academic economists do”.
After Laffer’s chapters, the economic coherence of the book deteriorates as his co-authors — Matthew Elliott, former chief executive of the Vote Leave campaign; Michael Hintze, a high-profile asset manager; and Douglas McWilliams, an economist — take over. The plan for Britain’s economy seems to have been dictated by marketing, with the result being a “24/7 Growth Plan”, defined as 24 different policies that would deliver 7 per cent additional GDP by the fifth year of implementation.
This growth plan will please the small minority of people who thought Prime Minister Liz Truss’s “mini” Budget of 2022 was far too timid. It proposes tax cuts more than 10 times the size of the event that destroyed the Tory party’s economic reputation, paid for by a mixture of wishful thinking, double counting and implausible behavioural responses to tax incentives. The book tells us correctly that “incentives matter”, but that slogan is not sufficiently powerful to conjure non-inflationary growth from the ether. The economic proposals are brought to you courtesy of some of the same authors who told us a decade ago that Brexit was the route to riches.
The theme of leaving the EU takes us to the most darkly comic part of the book, which interviews largely Conservative political luminaries about the constraints they faced in promoting a growth agenda when in power.
Boris Johnson blames the failure of Brexit on his chancellor Rishi Sunak. As the world was selling sterling, he says all that was needed was a “big ‘Buy Here’ sign to the rest of the world . . . I kept thinking that Rishi wanted to do things like that, but he was basically just captured by the Treasury.”
Sunak, for his part, says the world is not as pro-free trade as it was, so Brexit benefits are smaller than hoped. It is difficult to win an argument about being pro-innovation and risk, he adds. Of course, he fails to note that EU membership did not prevent UK governments from pursuing those policies.
Most of the other inhibitors to growth identified by political grandees are just a long list of whinges about Britain, ranging from the electorate, the state, MPs, parliament, ministers, the civil service, the Treasury and the judiciary.
There is also a disturbing undercurrent running through the book that democracy and good economics are uncomfortable bedfellows and that things would be much easier if we had an autocratic system of government in the UK.
The modern right does not feel confident enough to win over the public with the wisdom of their ideas. If this is the future of the British Conservative party, it does not bode well for them or for Britain. Thatcher would be appalled.
Prosperity Through Growth: Boosting Living Standards in an Age of Autocracy and AI by Arthur B Laffer, Matthew Elliott, Michael Hintze and Douglas McWilliams Biteback £25, 448 pages
Chris Giles is the FT’s economics commentator
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