National Paedomorphosis: U.K. Progenesis, U.S. Neoteny
ARTHUR B. LAFFER
The United Kingdom's version of the supply-side revolution is "in a pickle" to say the least. High interest rates and high inflation seem in the eyes of British voters to have more than offset the euphoria of lower taxes. Margaret Thatcher, now serving her fourth term as Prime Minister, can still pull it out, but, to date, she doesn't seem to have any intention of doing so.
The most recent data for the United Kingdom show just how serious is the plight for Thatcher. British gilts have a yield a smidgeon below 10 percent as compared to long-term Treasury bond yields in the United States of a little less than 8 percent. Short-term Treasury securities in the United Kingdom are yielding about 14 percent whereas their U.S. counterparts have a yield less than 8 percent. Individual consumer loans in the United Kingdom cost as much as 22 percent annually. The British pound has been soft against the U.S. dollar of late and has been holding its own against other European currencies. U.K. inflation is high and rising.
The Labour party has been bolstered by the virtual demise of all third parties. These third parties had siphoned votes away from Labour in early elections. In addition, Labour, under the stewardship of Neil Kinnock, appears and probably is somewhat less radical than it has been heretofore. No longer does the articulate Fabian socialist Wedgwood Benn hold sway. And Michael Foote is also out of the picture. Labour, while still far to the left, does not appear nearly so dogmatic to the average U.K. voter.
Lastly, and probably illogically, people are simply tired of the sameness and