On Wednesday, the politician who wishes to be in charge of Britain’s government budget was trolled for his economic idiocy.
Interviewed by BBC journalists, John McDonnell was left embarrassed as he struggled to explain how his left-wing economic agenda would strengthen Britain’s economy. Amusingly, this is the second time the Labour Party has been trolled in as many weeks.
First up, McDonnell was confronted over his plan to increase national borrowing. “How much,” host, Andrew Neil, asked “do we now spend on paying the interest on our national debt?”
McDonnell didn’t know the answer.
It is 46 billion pounds (or $61 billion) a year, Neil told him. If that doesn’t sound huge, remember the figure is just interest on the debt and that Britain’s economy is seven times smaller than the U.S. Still, McDonnell was undeterred. Considering that U.K. interest rates are at historic lows, McDonnell said, the government can borrow now and benefit from the money being paid back by the economic multiplier effect.
This, of course, assumes that a Labour government spent borrowed money on productivity. And that’s a big assumption, seeing as the Labour party is a firm supporter of Venezuela’s starvation kingdom.
McDonnell then explained how he intends to renationalize Britain’s utility and transport sectors without costing the taxpayer a single pound.
He’ll issue bonds to shareholders and then split the utility profits between those shareholders and central government revenues.
This is the most idiotic of all McDonnell’s ambitions. After all, it assumes that the nationalized industries would remain profitable under the control of government overlords and that they would continue to invest in new technologies and efficiencies. Challenged on this concern, McDonnell responded by referencing a rail company. “I’ll give you the example, East Coast line was brought back into public ownership and control and contributed a billion back into the treasury. And it was run efficiently as well.”
Unfortunately for McDonnell, the reporters had their facts in hand. “The head of East Coast said the way they did that was to stop investment,” one responded.
McDonnell had a solution, “So what you could do instead of giving a billion back to the Treasury as just cash or whatever, you’d just use some of that to invest.”
Who gets to define “some of that?” The all-knowing government.
Amusingly, the BBC’s chief political correspondent then piped in to inform McDonnell that East Coast rail line had also hiked its rail fare prices.
Next, McDonnell was challenged on what would happen if no one bought his bonds in nationalized companies. He didn’t have an answer.
Deepening McDonnell’s misery, “Do you accept,” another journalist asked, “that one of the biggest challenges facing this economy and its slow growth is productivity, and to do that we need to attract investment. What signal does it send — a nationalization program — when you need private investment?”
“What you also need is the state to invest as well,” McDonnell blurted. The officially titled shadow chancellor claimed that he has spoken to asset managers who want more government spending.
Andrew Neil wasn’t buying it. “Who have you been talking to?” he asked.
McDonnell refused to tell.
“So you can’t tell us a single major asset manager you’ve met?” Neil pressed.
The man who wants to run Britain’s finances then got angry that the journalists wouldn’t take him at his word.
Then came the best moment. Evidencing the utter fallacy that lies at the heart of socialist central planning, the economics journalist challenged McDonnell on his asset manager claims. “It’s a bit unusual, John, for asset managers to appreciate the fact that the value of their assets will be determined by Parliament. That’s not something that generally sits well with them.” McDonnell is vulnerable on this point both due to his economic idiocy and his prior recognition that Labour would spark a capital flight from Britain.
“No it isn’t” McDonnell squeaked.
The interview concluded.
This was a great showdown between socialism and reality. By simply asking questions rather than offering their own viewpoints, the journalists elucidated the central absurdity of socialist ideology: its assumption that government ministers and bureaucrats know better how to manage complex entities and allocate resources than the private sector.
In doing so, we saw how McDonnell and his fellow lefties see capitalism’s greatest strength, its fostering of a competitive market economy that forces efficiencies onto companies, as its greatest weakness. Instead, they believe they know better.
