If the polls are correct, then for the first time since Margaret Thatcher, Britain is on the verge of having a classic liberal, pro-market, educated, economic and political Prime Minister. At university, Liz Truss was a member of the Oxford Hayek Society, a group of libertarian students named after the great Austrian economist. She believes in freedom, material prosperity, the power to choose and the importance of economic, but also social, cultural and political freedom.
She hates bureaucracy and wants Britain to be more productive. A lifelong Eurosceptic, she is now a Brexit supporter who understands, in part through her exposure to anti-British elites in the EU, the need for full independence. Unlike some on the modern right, she hasn’t given up on free trade, which she knows drives progress, but also realized that China needs to be run much more carefully than it was during the naive 2010s.
Her enemies understand none of this and, often suffering from farm derangement syndrome, underestimate her. But it faces a huge challenge: our economy was already semi-socialist and broken before the energy crisis. He is now in big trouble. We went back in time, with extreme levels of regulation, bureaucracy, risk aversion, public and private incompetence, monetary dysfunction, high inflation, falling living standards and a horrible bubble real estate.
Most urgent is the energy crisis. Ms Truss will need to act immediately to reduce the cost of living: too many people, especially those in the bottom half of the income distribution and small businesses, are going to be hammered by prices. This will require borrowing tens of billions of additional dollars, but must be executed sensibly. The wealthy should not be bailed out, there should be no rewards for failure, and the economy cannot be stealthily Sovietized.
It must also use its understanding of free market economics to reform our broken energy semi-market, vandalized over the past 15 years by brutal intervention. One solution would be to separate the price of electricity from that of gas whenever possible. It will have to be drastic, with a “Big Bang” style reset required. Last but not least, it will have to launch a massive race for energy production to increase the amount of all kinds produced by the UK – gas, oil, renewables and especially nuclear.
If anyone can do that, it’s Mrs. Truss. She worked as an economist for Shell and enjoys solving political problems. She must understand the issues. Failure will mean a victory for Labor or the Coalition, and an even further turn to the left – a tragedy for a nation desperate for Conservative reform.