The IMF is in no position to give Britain pious lectures

In all the furore last week, it seemed slightly odd that the noisiest international criticism of the Government’s economic policy came not from our near neighbours and former European partners but from the United States.

But then it is hardly surprising that the major EU countries did not orchestrate any chorus of condemnation. They could scarcely denounce our level of national debt as irresponsible when it is lower than theirs, or our prospects for the immediate future when Germany is on the cusp of a recession and Italy’s population is in such despair that it has just elected its first far-right leader since Mussolini.

So no, Europe, for the most part, kept its opinions to itself. It was from Washington, at White House level and from the International Monetary Fund which is now a tributary of the American Left-liberal establishment that the judgments were delivered.

Since when, you might have asked yourself, did the IMF assume the right to criticise the policies of an elected sovereign government? Had we been asking this global finance club for a loan – as the Labour government under James Callaghan had been forced to do– such strictures could have been appropriate. Lenders have the right to impose conditions on borrowers. But the UK Government was asking for nothing from the IMF. Whatever it did was none of its business.

Even more startling was that the IMF felt free to condemn the Truss Government’s actions on political grounds rather than purely economic ones. The “nature of the UK measures” it pronounced piously, “will likely increase inequality”. The White House economic adviser, Brian Deese, chimed in too. He urged the UK Government to maintain “fiscal discipline” by refraining from what he clearly implied were reckless tax cuts. It might be worth considering then, precisely what fiscal policies these smug Washington elites preside over at home.

Reader, do you know what the current top rate of federal income tax is in the US? It is (deep breath) 37 per cent. And do you know how much Americans have to earn per year to qualify for that level of tax? $523,601 if they are single; $628,301 if they are married.

Have you got that? You have to be making over half a million dollars a year before you begin to pay the highest rate of income tax – which is 37 per cent. (The Biden administration is currently fighting against massive resistance to increase that top rate to 39.6 per cent.) So the UK – where people pay income tax at 40 per cent if they earn roughly twice the average wage – is being lectured on economic equality by a country in which… sorry, I’m lost for words.

This American preference for low taxes is, of course, a function of its political culture, which is profoundly weighted toward self-improvement and individualism. The ethos of making your own way and having a right (even an obligation) to make yourself wealthier if you possibly can is still fundamental to the American dream. The US remains a very Calvinist society in which striving for financial success and independence is considered proof of personal virtue.

That attitude is rooted in the immigrant experience: you come to a “land of opportunity” and are expected to make use of that opportunity. There is very little parallel with this in the European Old World with its inherited class guilt and traditions of noblesse oblige.

So don’t get me wrong. I do not believe that the full-blown American attitude to taxation could be adopted here. I don’t even believe that it works in the idealised way that it is supposed to do in the US, which tolerates levels of poverty and deprivation that would be unacceptable in almost any modern European country.

But it is not necessary to embrace the full brutal nature of that make-iton-your-own economic philosophy to adopt what is valuable in it – which is pretty much what the Truss/Kwarteng policies are designed to do.

These are the basic ideas: that mass prosperity and the opportunities for self-determination that come with it are indisputably good things that should be facilitated by government policy; that the way to deliver them is through stimulating the growth of real wealth, and this can only be accomplished by lowering taxation and allowing free markets to be as innovative and resourceful as they are able to be. In truth, the only alternative to embracing these ideas is inexorable decline.

But adopting even an attenuated version of the New World social philosophy will require accepting some propositions that are pretty unfashionable in the current discourse.

For example, the one that underpins that pompous statement from the IMF which rejects any move that is likely to “increase inequality”. It is absolutely necessary – if we are to come to grips with what is causing our problems – to understand that there are very different kinds of inequality. The bad kind is permanent and debilitating: the result of social prejudice or systemically rigged disadvantage. But there is another sort which is transitory and unavoidable. Fluctuating disparities of wealth (which is to say inequality) is an inevitable feature of a flexible, thriving, dynamic economy. At any given moment, some sectors will be failing and others emerging.

Innovation and shifting needs (including demographic changes and emerging social trends) will cause significant, sometimes unexpected mutations in demand and consumption.

The most dramatic historic example of this is the industrial revolution which had tumultuous effects on the possibilities for wealth creation and the elimination of whole categories of work. The only countries that can guarantee absolute equality all the time are totalitarian ones in which wages and living standards are fixed by government fiat.

Inequality is what happens when the economy and the society grow and move on. It is one of the prices we pay for freedom.

In the US, where the IMF is headquartered, the top rate of federal income tax is 37 pc

The only countries that can guarantee absolute equality are totalitarian ones in which wages are fixed