Corbynomics: Labour Leader's Radical Plans

It wasn't all that long ago that many political and economic theorists had decided that the old era of left vs right politics was over.
As the country and its citizens had become richer, rendering everyone middle class, those old divisions between right-wingers who wanted lower taxes and left-wingers who wanted higher public spending were supposed to disappear.
But look at British politics today and you'll realise that precisely the opposite has happened.
With Jeremy Corbyn now in charge of the Labour party, the gap between the left and right leaning parties has never been wider.
Quite what Mr Corbyn's economic policies will consist of will become clearer in the coming weeks and months - they may well change their complexion now he has a large party to represent.
But to judge from his comments and proposals during the leadership campaign, Corbynomics may well even take the party to the left of Michael Foot.
There are the staple Labour policies: taxes are to be increased - particularly the highest rate, which will go back up to 50%.
There will be a special increase in National Insurance (income tax in all but name) for the wealthiest.
There will be a tax clampdown on companies and individuals, which promises to raise many billions.
There will be free tuition fees and higher public spending all round. A massive scheme of public investment projects will be paid for by coercing the Bank of England to print money.
The rail network will be re-nationalised, as will the energy companies and even the banking system. And all this before one gets to Mr Corbyn's foreign policy and defence proposals.
It all amounts to the most radical set of political proposals from a major party in decades.
Some might quibble and suggest that Foot's 1983 manifesto was more radical - but don't forget that at that stage, even after a full term of Margaret Thatcher, both taxes and spending were far higher than they are now.
Public expenditure was about 47% of gross domestic product; tax revenues amounted to about 44% of GDP.
Today public spending is under 40% of GDP and tax revenues are about 36% of GDP.
In other words, since then, the UK has become a significantly lower tax, lower-spending economy than it was in the 1980s.
One of the questions the rise of Mr Corbyn demands is whether that is likely to change. Will the presence of a far-left opposition leader in the Commons move the needle among the general public?
After all, the Chancellor has shown time and time again that he would be willing to steal ideas from his political opponents if they chime with the public mood.
Then again, it is difficult to see a Corbyn economic policy that George Osborne could easily adopt.
Rail nationalisation may be a popular idea, but privatisation was a Tory idea of the 1990s (further implemented by Labour under Blair, it should be added). The banks are currently in the process of being privatised.
When it comes to taxes, the Chancellor is actually in the process of raising them ever so slightly, but largely in order to meet his fiscal targets. His surplus rule makes big spending plans near-impossible.
Most fundamentally, it is not clear that Britons are particularly keen on a dramatic change to the country's fiscal profile.
Since the late 80s, leaving aside in recession times, public spending has been kept tightly between 35% and 40% of GDP. Taxes have barely risen much above their current level of 36% of GDP.
Such statistics may seem anodyne, but their stability would seem to suggest that Britons are relatively comfortable with taxes and spending where they are.
Who knows: perhaps Mr Corbyn will be able to move the needle. But it will take an extraordinary shift, given how reluctant voters seemed to be for even Ed Miliband's comparatively smaller tax increases at the last election.

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