In freaking out about Truss’s plans, the markets did their job

I don’t think I’ve ever been so thankful for the markets.

Markets are of course faceless. They are made up of millions of individuals decisions, many (though not all) taken by people with the usual attributes: good and bad judgment, superstition, coincidence, fatigue, and everything else in the mix that day. But the power of markets lies in their lack of individual actors – they represent a collective that cannot “think” or “decide” per se.

And yet, in recent weeks, more than ever, ‘the markets’ have felt like a burly figure in Britain’s political and economic drama, swinging in exactly the right direction. Yes, Britain is in real political chaos afterwards the resignation of Liz Truss as prime minister, the second leader to step down in the last four months, and with no clear idea of ​​who will be next.

But we can breathe a sigh of relief about what could have been: Because the markets punished Truss’ unfounded economic plans so harshly, we thank him they don’t have to live through.

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trickle-down economics

This summer, Truss was elected by her party – not the country’s voters – on the basis of a platform for broader tax cuts. Their flagship policies and cherished ideals were to prevent corporations from paying so many taxes and lower taxes for individuals, especially the wealthy. The theory behind such a plan is that stimulating the “top” of the economy will lead to growth, and growth will be good for everyone.

Apart from the fact that trickle-down economies have proven themselves worldwide not to work. Indeed, such policies have led to great inequality. Many in the UK and global markets were horrified: They saw that the tax cuts were unfunded and realized that although Truss had not announced cuts to public services, cuts were likely to come. Where else should the government find an extra £45bn other than from the likes of the National Health Service (already close to breaking point) or social services, schools, parks, libraries and other areas of public spending?

Thank you for the harsh way the markets have punished Truss for his unfounded economic plans they don’t have to live through.

During her brief time in the limelight, one of Truss’ traits was an exceptional inflexibility. Borrowing costs increased. The Bank of England intervened to prop up the economy. That IMF issued an embarrassing warning for them to change course. Her own MPs asked her to reconsider, not to mention politicians and thinkers from across the political spectrum. For weeks nothing could shake Truss’s absolute determination that she was right.

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Liz Truss’ days in office were numbered

But it’s very hard to argue with a collapsing economy.

In the face of an ideological struggle, Truss is clearly able to present a smooth surface, impervious to criticism or facts. But no one can deny the pain or the look of the pound falls on his lowest level in history against the dollar.

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Truss reversed their policy in the end, but it was too late.

Markets often don’t work the way they “should” do. Keynesian theory. They don’t distribute wealth fairly. They do not rescue people from poverty or provide for what is reasonable Availability of housing, ambulance, food or life-saving medicine.

But this week they stopped one person with a rigid, little-researched plan who could have done that gutted the UK public services to chase the feeling that she had done what she always said she would do. And we should probably be happy about that.

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