Liz Truss’s populism smashes headlong into reality, with results that are horrible to watch

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Even now, almost a month later, the question remains: why? Why did Liz Truss, the British Prime Minister, and her now-departed Chancellor of the Exchequer, Kwasi Kwarteng, just days into their new jobs, present a mini-budget containing tens of billions of pounds in unfunded tax cuts?

The problem wasn’t the tax cuts, per se: it was the refusal to pay for them, either with cuts in spending or measures to broaden the tax base. Or rather, it was the refusal to say anything on the subject – not only how the tax cuts were to be financed, but even how big the resulting deficits would be. The whole thing was simply dumped on the British public – and the financial markets – without even an attempt at an explanation, let alone the kind of careful independent costing with which governments usually try to show there is no funny business going on.

The results are well known – the worst own goal in recent political and economic history. First, there was the financial crisis, as bond markets, already struggling to absorb a large fresh supply of bonds from the unwinding of the Bank of England’s purchases during the pandemic, worried about the war in Ukraine and reeling from the recent surge in inflation, were suddenly forced to contemplate public-sector deficits on the order of 7 per cent of GDP.

There followed the political crisis: a massive backlash in the media, a cratering in public support for the Conservatives, the abrupt dismissal of Mr. Kwarteng, ending with this week’s near-total repudiation of the mini-budget by his successor, Jeremy Hunt. Ms Truss is now on political life-support, mocked and disowned by members of her own party.

So: why did they do it? It’s not as if they weren’t warned: the whole of the recent party leadership campaign was taken up with an argument over the wisdom of unfunded tax cuts, especially in present circumstances, with Ms. Truss’s opponent, the former chancellor Rishi Sunak, taking the contrary position.

So it can’t have been that Ms. Truss was entirely unaware of the risks. Rather, she appears not to have cared. Worries about the implications of so much new borrowing at such a precarious moment were dismissed as “Treasury orthodoxy.” Never mind that it was not only the Treasury that advised against it, but most economists. To populists like Ms. Truss, the consensus of expert analysis on any subject is something not only to be ignored, but contradicted; not in spite of their expertise but because of it.

We have, after all, seen this before from populist politicians, on everything from climate change to vaccinations – to the mini-budget’s most immediate antecedent, Brexit. Whatever course might be suggested by the evidence and knowledgeable opinion, the populist will take, quite deliberately, the opposite tack. That, indeed, is the point. It isn’t even about the issue. It is about being seen to defy the experts, to create one’s own set of “alternative facts.”

This is not coincidence. It is endemic to populism. Attempts have been made lately to suggest that populism has a bad rap, as if it were nothing more than standing up for the little guy against the powerful and the privileged. But if that were all it was the world wouldn’t be in the state it’s in.

Rather, populism purports to defend the “people,” usually some subset identified as the “real” people, against some other group identified as being not really part of the people, if not actually hostile to it: elites, yes, but also foreigners, immigrants, “special interests,” Jews. In its current incarnation, it seems peculiarly directed at people who possess specialized knowledge, from which it is a short hop to taking issue with knowledge itself.

That fits well with populism’s other meaning: a tendency, rather than to level with the people about the issues they face and the hard choices in front of them, to pander to whatever sentiments are most easily aroused in them. Of these, nothing is more appealing than the idea that reality is optional, that constraints are not binding, that they do not have to take any of the harsh medicines they have been prescribed – carbon taxes, vaccines, austerity. Reality is tedious and uniform, bound as it is by the laws of logic, physics and economics. Whereas the universe of fantasy holds an infinite variety of wonders.

Ms. Truss won the Conservative leadership by telling the membership they could have tax cuts the country couldn’t afford and, in the bargain, stick it to those eggheads and scolds who told them it couldn’t be done. It was a fun thing to believe, for as long as it lasted. Alas, as the economist Edwin Cannan put it, “However lucky Error may be for a time, Truth keeps the bank, and wins in the long run.”