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In this time of psychobabble, of therapeutic jargon and remote diagnosis, one mental condition is worth our focus for a moment. Treasury Brain. This is a cognitive defect that is said to afflict the finance ministry of the UK. Civil servants there, it is alleged, have an irrational aversion to ideas that incur upfront cost but might improve economic growth over time.
“Might”, I say. But those who accuse the Treasury of this self-defeating parsimony don’t allow for much doubt. An expensive new rail line? It will pay for itself. A public health campaign? Prevention of illness is cheaper than cure. Industrial subsidies? Wait for the high-value jobs to sprout in their thousands.
You, as a mere taxpayer, or holder of UK public debt, might ask when you can expect this putative return on spending to materialise. Look, don’t be so difficult. And learn to call it “investment”. “Spending” is as below-stairs now as calling a napkin a serviette.
Crying “Treasury Brain” has become the leftwing version of drawing a Laffer Curve. It is not always wrong: civil servants can be over-cautious, just as tax cuts above a certain marginal rate can be self-funding. But pushed too far, the idea becomes a belief in free money. (And notice that “Treasury Brain” is on the lips of those who otherwise deny the rightwing theory of a deep state.)
The real problem with the Treasury’s intellectual scepticism is that there is not enough of it in the world. The west is going through a phase of almost messianic belief in the power of government. America’s protectionist turn against China is the largest example. You needn’t go all the way with the Economist, which regards this commercial estrangement as “phoney”, to see that it is already beset with perverse consequences. Yes, the US is importing less of certain goods directly from China. But the “friends” to which it is turning as alternative suppliers are themselves reliant on China for inputs. The US is not isolating its existential rival. It is cutting in the middle man.
The sudden faith in tariffs, subsidies and bureaucratic checks on investments is startling. But it isn’t the only case of Utopian government around. Rishi Sunak is the sixth or seventh UK premier in my lifetime to try to “level-up”, or “rebalance”, his London-centric nation. Emmanuel Macron is almost as far down the line of French presidents who have sought to influence west and central Africa from Paris.
As a measure of that project’s success, the counter-insurgency in the Sahel was abandoned last year and Niger, a rare western foothold there, is in chaos. The real lesson — that some things are beyond any state, new or old — might be clearer now.
Think of what these politicians are taking on. Joe Biden versus capitalism, Sunak versus a city whose freakish preponderance within Britain predates the Industrial Revolution, France versus the Sahel’s religiosity and inhospitable topography. What is government decree against such ingrained and impersonal forces?
The state can do spectacular things. Europe cut its reliance on Russian fossil fuels at speed. Governmental leadership, not just biomedical genius, produced the Covid-19 vaccine. But these feats tend to happen under extreme duress. In normal times, the business of government is to make things a bit better, knowing that it will make other things a bit worse. This is because: resources are finite, different goals conflict, advanced countries plucked most of the low-hanging fruit long ago, unintended consequences obtain, and social outcomes are determined as much by deep historical patterns or geographic constraints as by diktat
The problem illness isn’t Treasury Brain. It is Do Something-itis. Public life isn’t full of pessimism. It is full of 10-point plans and summits called things like Horizon 2055. Sunak began the year with a pledge to halve inflation within 12 months. This is a man who “runs” an open, midsized economy, exposed to such outside vagaries as the Ukraine war and foreign central bank policy. Even if the pledge is met, it was vainglorious to make. And he is a relative sceptic about government.
The Treasury was always accused of hiring humanities-trained generalists over technical economists. Is that all bad? With some Shakespeare or Conrad, it is easier to see that one’s schemes to better the world have to reckon with the permanence of human nature, among other external forces. It is a public service, not a mental defect, to understand how little we can do against the tempest.
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