Are governments really that stupid ?

I recently found myself – much against my better judgement – engaged on Twitter/X with a climate change denier.  The difficulty facing the deniers is that 99% of scientists in this field believe that human engendered climate change is happening, and constitutes a danger to life on the planet. Their rebuttal of this is that all these scientists (and NASA, and the Royal Society, etc etc) have been bribed by government because government wants to boost its spending, and climate change provides an excuse to increase taxation.

This is, of course, ludicrous.  If there is slush money to change what scientists say, it is more likely to come from oil companies than university research grants. Anyone who knows about higher education knows that reputations are made, not by going with the flow but by disproving current wisdom and commonly held beliefs. In any case, climate change action doesn’t increase government revenues – there is no climate tax that passes to the hands of megalomaniac politicians and civil servants.  But there’s a more forceful reason to know it’s nonsense. Anyone observing the politics of Europe in the last ten years or more – since COVID, since the 2008 financial crash – will know that governments are desperate to reduce public deficits, and to avoid increasing taxation.  There is concern inside and outside government about the cost of borrowing or the size of the National Debt.  Nothing would delight governments more than the discovery that climate isn’t changing, and that fossil fuels are not involved. 

Which comes to my point.  The climate denial mob are not alone. 

• Those who believe in the Laffer curve tell the government that, if they cut taxation, there would be a rise in government tax receipts as incentives lead people to work harder, increase their incomes and thus boost the economy.  We’ve even heard it recently from Richard Tice of the Reform Party, with the usual nodding interviewer alongside. “The Times” even published budget advice by Laffer himself, the man who is to fiscal prudence what Uri Geller is to metallurgy. But it’s just not true – as I (and many others) have demonstrated elsewhere. Where it’s been tried, it’s been a disaster. But, for a moment, let us suppose that it is true.  What they are saying is that governments are keeping taxes and budget deficits higher than they need to be, which leads to the question – why on earth would any government do that ?
• On the left, there are enthusiasts of Modern Monetary Theory (MMT) which maintain “that the level of taxation relative to government spending (the government’s deficit spending or budget surplus) is in reality a policy tool that regulates inflation and unemployment, and not a means of funding the government’s activities by itself. MMT states that the government is the monopoly issuer of the currency and therefore must spend currency into existence before any tax revenue could be collected.^[1] The government spends currency into existence and taxpayers use that currency to pay their obligations to the state.^[2] This means that taxes cannot fund public spending,^[3] as the government cannot collect money back in taxes until after it is already in circulation. In this currency system, the government is never constrained in its ability to pay,^[3] rather the limits are the real resources available for purchase in the currency.^[3] “ (Wikipedia). So the government doesn’t need to raise taxes to support desirable programmes (unless we are at full employment)*.  Again, why wouldn’t the government adopt this policy if it were true ?
• Further left, we are told that government will not need to raise taxes if the unpaid debts of tax dodgers and the corporate sector can be hunted down. Of course there are dodgers, and the rich get away with too much in financial jiggery-pokery, and this needs to be chased with vigour. However, the sum involved are unlikely to be sufficient to be transformative.  For example, unbiassed estimates suggest changing rules for multinationals will increase UK receipts by less than 1%.  And again, let’s ask – if this were true, why wouldn’t governments do it ?
• My climate change denier also claims that governments wish to bring in “millions of migrants to live on benefits”. It’s a policy would increase public spending and taxes and lose votes by the bucketful. So, again, why would any government want to do this ? (Yes, I have heard of the Great Replacement Theory, but that’s a whole new swivel-eyed anti-Semitic level of “why would governments ever want to do that”)

It’s OK to say governments are adopting the wrong policies, I think (even if Trump doesn’t).  But the idea that governments throughout the advanced world are consciously adopting policies that make themselves look bad, and lose them elections when cheaper and more popular policies are available seems, well, as I said in my Twitter spat, silly. 

• In passing, those advocating this have been quieter since Liz Truss’s budgetary experiments.