British ¡Afuera! is a new series of pieces applying the principles of the IEA’s ‘Sharper Axes, Lower Taxes’ and Argentinian ¡Afuera! to Britain today.
Introducing the project, Dr Kristian Niemietz writes…
A decade and a half ago, the IEA published the book ‘Sharper Axes, Lower Taxes’, a comprehensive public spending review that was not just about saving a few pounds here and there, but rethinking what the state does from first principles. It was what – echoing Argentinean President Javier Milei – we might now call a British ¡Afuera! plan. Today, in the context of an even worse fiscal outlook, we are picking up that theme again.
There are a number of Spanish-language political slogans which have travelled far beyond the Spanish-speaking world, and achieved iconic status. For example, ¡Hasta la victoria siempre! (Always until victory) is a slogan of the Cuban revolution, taken from a letter from to Che Guevara to Fidel Castro. It has its own Wikipedia page, and is printed on countless T-shirts and posters. The slogan ¡No pasaran! (They shall not pass) was first used by the socialist side in the Spanish Civil War, and picked up again half a century later by the Sandinistas in Nicaragua. Last but not least, in Britain in the 2010s, it made it into the Twitter profile of Jeremy Corbyn’s then media spokesman Matt Zarb-Cousin. ¡Venceremos! (We shall win) was also a battlecry of the socialist side in the Spanish Civil War, which was later taken up by Salvador Allende’s Marxist coalition in Chile in the early 1970s. Allende’s supporters also liked to chant ¡El pueblo unido jamás será vencido! (The people united shall never be defeated), a slogan which soon found its way to the trendy Western Left. For example, in 2019, the Corbynista rapper “Lowkey” released a song with the daringly bold and edgy chorus:
McDonald, Trump, Mc-McDonald, Trump,
McDonald, Trump, Mc-McDonald, Trump,
McDonald, Trump, Mc-McDonald, Trump,
¡El pueblo unido jamás será vencido!
What these slogans have in common is that they all come from the same corner of the political spectrum. Until a little over two years ago, the socialist Left had a monopoly on Spanish-language slogans outside of the Hispanic world.
Until the Argentinean presidential election of 2023, when an eccentric dark horse candidate, the libertarian economist Javier Milei, outlined his plan for government reform. Standing in front of a white board with a list of labels that represented government departments, Milei ripped off the labels of departments he wanted to see thrown out: ¡Afuera!
After Milei’s unexpected victory, the slogan ¡Afuera! was adopted by small-state reformers around the world.
To what extent Javier Milei actually delivered on his ¡Afuera! plan, or was ever likely to deliver, is, of course, a matter of debate. I will not pretend to be an expert on the idiosyncrasies of Argentinian politics, and I am certainly not endorsing any particular politician, political party or political project. But the general sentiment behind ¡Afuera! is a sound one, even if it may sound simplistic at first.
Milei is by no means the first head of government who tries to control public spending. With varying degrees of success, countless other governments have tried this before him, whether out of necessity or conviction. One major problem with fiscally conservative governments, though, is that they usually take the state’s current portfolio of functions as given, and then try to chop off bits and pieces here and there. They do not start from first principles. They do not start by asking themselves: what is it that we actually want the state to do? What are the core functions of the state, what are optional functions, and what are functions that the state should not get involved in at all? And what are government functions that we do want carried out, but in a completely different way?
A good example was the UK’s Comprehensive Spending Review (CSR) of 2010, which formed the basis of what was soon dubbed “austerity”. As Prof Philip Booth, then Editorial and Programme Director at the IEA, said at the time:
“[I]t was piecemeal and anything but comprehensive. Many benefits and government functions remained untouched and unreformed and there was a definite air of ‘salami slicing’. […] [T]he CSR has been a missed opportunity to reform large areas of economic life and reduce and simplify taxes. […] An alternative approach would lead the government to ask which functions it should no longer be carrying out because the money would be best left to ‘fructify in the pockets of the people’.”
Imagine you tried to balance your own budget in that way. Imagine you tried to keep doing everything you do now, and just spend a bit less on each activity. You still go shopping in the same places and with the same frequency; you just try to put a bit less into your shopping basket each time. You still go dining out as often and at the same places as now, but you skip the starter, and replace the pricier wine with the house wine. And so on.
Any savings you make in this way are likely to be modest, and you will soon tire of them, because it constantly feels like you are denying yourself things that you like, and have grown accustomed to. So you are much more likely to approach your finances in a more strategic way, cutting out a few large spending items entirely, and otherwise, looking for cheaper ways of doing things. You may, for example, move to a smaller place to save on rent and energy costs. You may take up cycling to save on transport costs. You may shop at Lidl rather than Marks & Spencer, and go to Wetherspoons rather than an £8-a-pint pub. When it comes to making adjustments to our own personal finances, most of us are more ¡Afuera! than austerity.
Britain’s experience since 2010 bears this out. The budget deficit (public sector net borrowing) initially fell during the 2010s, but never below 2% of GDP, and even that fall was not sustained. At the time of writing, it is back up to around 5% of GDP. Public sector net debt, meanwhile, is up from just over 70% in 2010 to around 94% today, despite tax revenue being at record highs. Debt interest payments are up from around 2% of GDP to close to 4%.
But even though the fiscal situation is objectively worse than it was in the early 2010s, public acceptance of that fact is lower than it was then. ‘Austerity’ has long become a dirty word; governments have to U-turn over even minor savings; and rather than discussing more intelligent ways of economising, the policy idea of the hour is the Wealth Tax.
There were alternatives. In 2011, the IEA published the book Sharper Axes, Lower Taxes: Big Steps to a Smaller State, which outlined what we would now call an ¡Afuera! approach to fiscal consolidation: a long-term spending plan derived from first principles rather than unsystematic salami-slicing. If we published the book today, ¡Afuera! would almost certainly be its title.
We are not publishing it today. But we are launching this ¡Afuera! Substack series, for which we have asked various authors to rethink public spending in their respective areas of expertise from first principles. For some authors, this is straightforwardly about saving money. For others, it is about increasing efficiency to get more out of a given budget. Some can quantify savings. For others, it is more about developing a market discovery process where none currently exists, and so, by its very nature, we cannot know in advance what the results are going to be.
What they all have in common is that they combine radicalism with sound economics. Private-sector productivity growth in recent years has been disappointing, but at least there was productivity growth in the private sector, while public sector productivity has been flat for a long time. Large parts of the British state are not up to the job, and if there was an obvious way to improve them, we would probably have found it by now. Under those circumstances, it is those who are still believe in piecemeal reform who are the dreamers, while the radicals are the hard-headed realists. The British state has clearly reached a stage where less is more, and where large sections need to go. ¡Afuera!
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