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As a historian, Kwasi Kwarteng — the UK’s second-shortest-serving Chancellor of the Exchequer — must be acutely conscious of how he may be viewed in posterity.
The architect of Liz Truss’s disastrous mini-Budget last year, Kwarteng was thrown to the dogs 38 days into the job (record-shortest chx Ian McLeod died after 30 days), shortly before the lettuce-likened premier suffered her own ousting.
Since then, Kwarteng has had plenty of time on the backbenches to reflect on how things might have been. His conclusions, as you might expect, come with a scholar’s rigour and the hindsight of a truly unique political personality. For example:
I think what went wrong last October, the more I think about it, was you’ve got to have a balanced approach to fiscal policy
Such a pearl of wisdom was dropped as part of a new interview Kwarteng has given to the Library of Mistakes, a public library dedicated to the history of finance.
His reflections — those of a victim of cruel, unpredictable market forces — are undeniably moving*. Prompted by interviewer Russell Napier’s mention of US political strategist James Carville’s infamous quip that he’d like to be reincarnated as the bond market, Kwarteng mused:
I was, in a way, a victim of the bond markets last autumn. And I totally understand their power. And I did before but it’s just that I think that the bond market is not a rational player. Some things it can absorb, like all the extra Covid spending it absorbed without much of a murmur. But then if you step out of line in a small way, it can react very, very strongly against you. And I’ve been personal witness of that.
I’ve never been someone who thinks that deficit spending essentially can pay for itself. And one of the issues that I had in government was, I think what went wrong last October, the more I think about it, was you’ve got to have a balanced approach to fiscal policy. You can’t just spend money that you don’t have, but at the same time if you’re going to have tax cuts, you’ve got to have spending restraint.
But, in peacetime, there’s always been an attempt for hundreds of years to try and match revenues with spending. And it doesn’t have to be exact. But you’ve got to give that sort of impression, you’ve got to give that assurance that you’re trying to, you’re trying to balance, the spending and savings.
Those pesky irrational markets. If only Kwarteng had studied financial history a bit harder before becoming Britain’s top financial minister.
The podcast interview, which you can find links to here, also covers topics such as gold, Alexander Hamilton and Bretton Woods. Perhaps other equally groundbreaking revelations await!
*laughter is a form of movement
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