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A Lily Bit
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Important info Leviathan
If you have money, you have options, and options are a form of escape.
The principle is identical on both shores.
Capital and talent now flow toward whoever treats them best, and they flow fast. It is a brain drain happening in real time. Corporate startups are in decline.
And why wouldn't they be? Everything is set
against them.
Or take the owner of a second home, who may wake to find their council tax quadrupled, again retrospectively. An American small-business owner who built a supply chain on one set of trade rules, only to watch tariffs rewrite the maths overnight, knows the same vertigo.
How is anyone supposed to build a life, a
business, a future on ground that shifts beneath them?
What has emerged is a global marketplace for the wealthy...
There is, undeniably, a privilege that comes with money - and the chief privilege is mobility. You can move from country to country, state to state, jurisdiction to jurisdiction, picking whoever treats you best, playing the system in ways the middle and lower classes never can.
It is a reality we may have to accept rather than
resent.
Drive out the mobile and the tax take shrinks, and a shrinking tax take begets higher taxes, which drives out more people still. That is the negative circle.
What is needed is the opposite - a virtuous one.
It is not. One or two countries are actually
doing rather well, and the contrasts are instructive - within
Europe, and across the Atlantic too.
Today its GDP per capita is among the very highest in the world, third or thereabouts. Yes, that figure is a statistical freak in part, inflated by the likes of Amazon booking their numbers through Dublin.
But strip the distortion away and something real remains:
They turned themselves from one of Europe's
poorest countries into one of its richest.
Then there is the most interesting European success story of all:
These nations started from an incredibly low base, and yes, some of their progress is simple catch-up.
But the deeper truth is that they have been fiscally conservative. Their states are smaller. They did not go down the mass-migration route - if anything, their populations have shrunk.
And the results speak for themselves.
These are societies that are conservative with a
small c, socially cohesive, fiscally sensible, and possessed
of a strong work ethic. They have welfare states, but welfare states
that are not out of control. They are building strong moral
societies - dominant may be too strong a word, but they are catching
up with the rest of Europe after fifty, sixty, seventy years of
appalling misrule under the Soviet yoke.
It has its problems and its yawning regional disparities.
But is it mere luck that the most valuable
companies on earth cluster in California and not in Frankfurt or
Birmingham? No. The Americans are doing something right, and the
lesson is there to be learned - even as their public finances rot
from the inside, a contradiction we will come to.
The growth in Europe now lives in the east and the periphery.
Both truths matter.
Britain has two of the greatest universities on the planet and at least twenty more that are genuinely first rate. It has Wimbledon, Wembley, Twickenham - every sport there is. It has rock music. It has cultural depth that other countries can only envy.
Stand in Soho and feel it:
The
City of London, for all its
problems, remains the second most important financial center on
earth - behind only New York, whose own dominance is a reminder of
what concentrated talent and deep capital can still build.
The assets are still there. The creativity is
still there. Enough people still have the spark. But they are being
crushed, and everyday people struggle to understand why the Treasury
and the Bank of England - or, for that matter, the Congressional
Budget Office and the Federal Reserve - cannot see it.
Those reforms have since been unpicked, one by one, and the result is a country in a worse place than it was even in the 1970s.
Because this is not merely an economic malaise.
It is a cultural one too. The division and rancour, the willingness
of the state to legislate on matters of private ethics that ought
never to have left the private sphere, the sense of a society at war
with itself - all of it feeds a pervasive feel-bad factor. Americans
feel it as keenly as all of Western Europe; the bitterness of their
politics is the same disease wearing different colours.
The rot set in with the embedding of the big state, much of it moved off balance sheet and beyond proper parliamentary scrutiny through a careful web of institutions.
A Supreme Court was founded that made meaningful change far harder to enact. A quangocracy was built. A civil service was cultivated that is, by temperament, hostile to precisely the kind of reform now required.
And here is the part the right would rather forget:
The American story indicts both parties.
The national debt did not climb to thirty-eight trillion dollars under one banner. Republicans cut taxes without ever cutting spending and called it conservatism; Democrats expanded entitlements without ever funding them and called it compassion.
The Leviathan is bipartisan.
That is the first thing an honest observer has to admit:
The symptoms are everywhere once you look.
The benefit system is out of control and has become counterproductive. The country is riddled with cliff edges. In Europe, spare a thought first for the people who never earn thirty thousand a year - who get up early, work hard, and watch a neighbour who simply can't be bothered do no worse.
Then there is another group, perhaps less likely to attract sympathy:
It is plainly absurd that someone doing well in
life pays a higher marginal rate than someone earning half a
million.
But it can begin to turn the tank around. This is a fifteen- to twenty-year project, and there will be pain. You cannot rectify a fiscal crisis, a tax crisis and a regulatory crisis simultaneously without taking some genuinely tough measures.
Whoever governs next should take that pain very, very early.
Go big. Take it early. Do the work before you are
elected. And anchor it all in fairness, because everyone agrees that
people who are genuinely in trouble should be helped - that is not
for debate.
A reforming European government needs to take perhaps a hundred to a hundred and fifty billion Euros out of public expenditure almost immediately, and recycle a good portion of it into tax cuts. Is that doable? Yes - and there are several ways to get there.
Britain, for example, spends around three hundred
and sixty billion on benefits, roughly half of which goes on
pensions, and there is not much to be done about that half. So the
pain has to be shared.
Beyond that, the country needs to get back to a normalized number of people on benefits, and to think very hard about where the bar sits, because it cannot be right that someone on benefits can end up better off than someone on the minimum wage. A great deal can be shaved from the welfare budget without cruelty.
And the quango budgets demand ruthlessness:
Not required. Not required. Yes - we need that
one.
The honest truth, on both sides of the Atlantic, is that the maths cannot be made to work by trimming the parts everyone agrees are wasteful.
The big money sits in the promises that are most popular, and courage means saying so out loud.
The hard truth, too often forgotten in the
euphoria of polling day, is that winning the election is the easy
part. Implementing the program is the difficulty.
The headcount has risen from around three hundred
and eighty thousand to five hundred and fifty thousand. From a
post-austerity low of three hundred and eighty-four thousand in 2016
it climbed to five hundred and sixteen thousand by March 2025, and
it is almost certainly higher now.
How can that conceivably be the case? Layer on
top the NHS, which has swollen from around 1.2 million to 1.7
million staff, and the picture is of more than a million extra
public sector workers delivering, on the available evidence, less
output.
When a reforming president arrives, the machinery slows, the lawsuits multiply, and the careerists wait him out. The resistance, in both countries, will not stop at the broadcasters and the bureaucracy. It will come from the other parties and those doing their bidding. There will be the familiar slurs hurled in every direction - fascists, racists from one side; communists, traitors from the other.
And it will come from the courts, in the form of
legal challenge after legal challenge after legal challenge.
It should learn, too, from what Trump's team attempted in 2024:
(That America then demonstrated how easily such
an effort can collapse into chaos and self-dealing is part of the
lesson, not a refutation of it.)
Above all, the markets must be convinced. Any serious party must put fiscal sustainability front and centre, because it is absolutely essential, and it leads directly to an aggressive plan to regularize spending.
The timid route is the one already worn smooth by the tax system:
Freeze them and fiscal drag does the work
quietly, hauling in perhaps twenty or thirty billion a year as
inflation erodes their real value - the same stealth tax that
American bracket creep imposed for decades before indexation.
In a free society, the country will blossom - and the left may be surprised to find that, in the long run, it produces a better health service and a better education system. Freedom and liberty ultimately deliver better services for everyone.
What the current approach does is put the cart before the horse:
But the comparison has curdled. The country has trashed more than its reputation as a low-tax destination. It has trashed its reputation for sane regulation, for the rule of law, for freedom and for fairness. That, more than any single tax rate, is why people are leaving.
And America should not be smug here:
There is a creed that circulates online, blunt enough to provoke and clear enough to remember.
Choose freedom...!
The one correction worth making cuts against the political right, not in its favor.
The self-described champions of free markets have, in office, presided over the largest expansions of the state and the debt in history - which means they were never really capitalists at all, merely statists who preferred a blue rosette to a red one.
And that is precisely the point.
Many of us believed, until quite recently, that we lived in free countries - and have been shocked to discover the qualifications, not only in the erosion of economic liberty but in the narrowing of speech.
We can still, within reason, say more or less what we like.
But in the mainstream that freedom is increasingly challenged, and the window of what is acceptable to discuss keeps closing - in American universities and corporate HR departments quite as much as in European institutions.
The historian A. J. P. Taylor observed that an Englishman born before 1913, if he was law-abiding, might pass his entire life with no interaction with the state beyond the local bobby on the beat and the local postman. Taxes ran at around ten percent, a biblical tithe, and most of even that went on the Royal Navy.
America before the First World War was much the same:
It is a myth, mind you, that there was no welfare
in the old order; it simply was not delivered from the capital. It
was localized - a dense fabric of local charities, churches and
mutual societies, many of which, in Britain, helped to found the
Labour Party seventy or eighty years later.
The state's share of the economy climbed from ten percent to twenty-five or thirty. Then came the second war, and then, in Britain, came Attlee, and Attlee changed the game. He nationalized personal responsibility. It sounded moral, and in many ways it was done for genuinely altruistic reasons.
America's version arrived in installments - the New Deal, then the Great Society - and with the same logic and the same trajectory:
Over the decades that followed, the welfare state grew out of all control, and in doing so it broke personal responsibility and corroded the will of people to make their own way.
We have now reached a tipping point.
Either there is a counter-revolution in which we
grasp just how far our liberty has been eroded, or we enter a
genuinely dark period in which the state dictates virtually every
aspect of life, and the scope for individual action narrows to
almost nothing.
There are serious people arguing that Europe is
effectively in a state of civil war, a claim that is hard to process
and harder still to dismiss out of hand; and anyone who has watched
America's politics curdle into mutual loathing will recognize the
diagnosis.
And yet one can understand the anger of the young who turn to the radical left, even while judging them wrong. Many have been failed by poor parenting and poor education.
They were funnelled into university and saddled
with debt. They cannot find good jobs. They cannot get on the
housing ladder. They live in a society that barely punishes petty
crime. Of course they are ripe to be sold a socialist story. They
are mistaken - but the anger is comprehensible, and a right that
merely sneers at them will never win them back.
The two tribes are becoming, quite literally, different peoples.
It was written about America, but it describes Europe just as exactly, and that is precisely the point:
Consider a first home bought in Glasgow a long
time ago for thirty-six thousand pounds - not much of a house, but
then a first house should not be much of a house; you are meant to
build up in life. The point is that it was affordable, and in much
of Europe today it simply is not - just as it is no longer
affordable in San Francisco, in New York, in every coastal American
city where a starter home now costs a fortune.
A whole cohort has been forced into renting, and into paying very high rents.
In Britain, both Michael Gove and now the Labour Party have made it worse, because their regulation of the rental market only pushes rents higher still; America's rent-controlled cities have run the same experiment with the same result. Add student loans, often run up at frankly questionable institutions, and ask honestly how a person in their twenties is supposed to get on.
They need to feel that opportunity exists. And if
they are tempted by the radical left, they are making a very serious
mistake, because all they will achieve is the destruction of the
last vestiges of liberty - and the further shrinking of their own
wealth and prospects.
Many of the policies sold as compassion are, in narrow self-interest, good for people who already own assets:
The villain here is not the market but the
state's printing press.
We have now reached a more dangerous tipping point, where those same assets are being taxed - which is genuinely perilous, because the people who would build up wealth can no longer do so, and once the remaining wealth has been eroded, there is precious little left.
The knife edge, again.
Do it retrospectively and you are not merely
failing to grow the cake; you are shrinking it.
Why?
Partly the decade of near-zero interest rates, which bred deep distortions everywhere central banks held rates on the floor. Partly the vast expansion of the state and of regulation, which between them have stripped away the opportunity to do something positive with one's own life.
When working for the government becomes the best
gig in town - and in large parts of Europe, and in whole American
cities and counties, it has - you have a serious problem. What is
needed instead is a can-do culture, where people have a go; some
succeed, some fail, but the attempt is made.
To America, overwhelmingly, to
Silicon Valley and Austin and Miami, which is exactly why the
comparison stings. It is not too late to save it, but salvation
requires radical action, and an honest reckoning with the scale of
the problem.
On a ten- or fifteen-year view, the difference could be tremendous.
Because the alternatives are bleak:
There are not many places in Europe left to go.
You might choose Italy - but for the lifestyle and the wine and a much lower tax bill, not for creativity, and not to build something. Perhaps Estonia, with its elegant flat tax; Eastern Europe is a different proposition altogether, and Estonia in particular is a small, beautiful country with a great deal going for it - though, being small, it cannot absorb everyone.
And the deepest worry is this:
You will need to tempt them home.
Listen to the entrepreneur who used to love starting businesses and now says, flatly, I can't be bothered right now.
The temptation is to scale back, because in Europe it has become too much hard work merely to tread water, and even when you do pull a rabbit out of the hat and make some money, it is no longer life-changing. It is so much easier to put the money into the markets - the NASDAQ, an index tracker, a little gold, some commodities, a nicely balanced portfolio, even Polymarket funds - and simply sit there collecting a few percent a year.
Why shoulder all the risk that has been loaded
onto entrepreneurs while the rewards are stripped away? (That the
safest passive bet for a discouraged European builder is to buy
American equities is itself a quiet indictment of where the dynamism
has gone.)
Which is why the next few years really are the last chance:
The culture compounds the economics. We have built education systems that no longer celebrate excellence.
We have moved from a university model that was,
if we are honest, frankly elitist, to a prizes-for-all model - and
it is fair to ask whether the resulting fifty or sixty thousand
pounds of debt is worth it. In many cases it is not. A young person
would often be far better off setting up a small business - a
joinery, a fabric shop, whatever it might be - than taking on that
debt for a degree of doubtful value.
And there is more to undo besides:
(The point is not to install a rival set of
commissars, but to get the state out of the room altogether and let
people associate, hire, speak and spend as they freely choose.)
Britain's Office for Budget Responsibility spends some fifty million pounds a year on a large team of economists.
Goldman Sachs spends a fraction of that on its
economics function. Yet it is the official bodies that keep getting
it wrong, and the reason is that they have become consensual -
everyone gathers around the same comfortable forecast, and the
consensus is reliably mistaken.
Look at a forecast from seven or eight years ago and the debt today is at least half a trillion higher than they predicted.
Perhaps it is the same instinct as the founder
pitching Silicon Valley, who naturally plugs the rosiest numbers
into the model.
More tax drives more people out, which worsens
the finances, which demands more tax. The loop has to be
short-circuited, and it will not be short-circuited by tinkering at
the edges. What is required now is radical surgery.
Capital is not sentimental; it goes where it is treated well, which is the whole reason it keeps flowing to America despite everything wrong with American public finance.
Shrink the civil service dramatically, shrink the
welfare state dramatically, all within three years, and you will
need a great many new jobs to appear in step. Cut a hundred and
fifty billion from spending while also offering big tax breaks, and
you are still, on the face of it, running a deficit to do it. It is
a great deal to attempt simultaneously.
And remember that the state is already spending something like forty-eight thousand pounds per family, possibly more.
Try to name a single thing that has genuinely improved over the past twenty-five years and you will struggle - genuinely struggle - to come up with anything, in an age when technology should have allowed the state to do far more with far fewer people.
The opposite has happened all across Europe.
So when someone protests, but what becomes of all those sacked public servants?, the honest answer is a question in return:
In the end it comes down to a philosophical choice, and it is the same choice in Westminster and in Washington.
Do we want to live in a tokenized, statist world in which the state controls the pot, doles out little sweeties here and there, and rations everything? Or do we want to take a measure of risk in our own lives and do things for ourselves? There would still be a safety net - a very large one. But the issue is no longer merely that the state is half the economy.
It is that its regulation of the private half has become endemic.
That single comparison ought to end the debate. The story tells itself. An entrepreneur goes to America seeking investment for a European project and is told, by a successful investor, that the country is simply uninvestable as things stand - and that the very first thing to deal with is energy, because Europe is anti-competitive internationally on an industrial scale.
Sort out energy prices and you have, in effect,
handed every business and household a tax cut. America's cheap
energy, its shale gas above all, is one of the quiet engines of its
industrial edge - the kind of advantage Europe has chosen to throw
away.
Even if one accepts every premise of climate
change, what Europe does is, frankly, irrelevant to the global
outcome - while it is busy destroying what remains of its industrial
base. It is madness. Fixing it is an easy win in principle, though
not one that can be conjured overnight, because the infrastructure
is built in; but on a ten- to twenty-year horizon it can be sorted.
France, it is worth noting, quietly built exactly such a fleet decades ago and reaps the benefit in cheap, clean power to this day, while America is now racing to build small modular reactors to feed its AI data centers.
Over those twenty years Europe could stop wasting its time and money on solar and wind, cut energy prices in the short term, and still arrive at net zero. So why is it not being done, when the technology exists? Timidity, frankly.
Cowardice. And environmental zealotry...
The result:
Scotland sits on the North Sea and is letting it
sink beneath the waves - much as California sits atop vast energy
reserves it refuses to touch. These are ideologues who do not
understand the damage they do - and who loses most from high energy
prices? The poorest. Always the poorest.
As one neat formulation has it:
They appear kind.
How, after all, could it be wrong to help a man down on his luck - yes, help him up? But the effect of the system they build is to reduce that man's incentives, to centralize everything, to scatter arbitrary incentives, to make planning impossible, until gradually the system itself takes control of the state and becomes the main engine of society.
When a career in the City began decades ago, governments were barely discussed - there was a mild, curious interest in the Budget, in whether the Chancellor would put a penny on a pint. Now virtually every conversation with clients is about the actions of governments. It used to be about the actions of entrepreneurs and individuals.
It is a little different in Silicon Valley, in an
America where the state is still somewhat smaller as a share of the
economy; but even there the questions creep in - what will the Fed
do, what will the tariffs do, what will Washington do? - and how do
we protect ourselves?
The civilization that founded the Industrial Revolution, and the one that built the modern world's wealthiest economy, now watch China build the equivalent of Britain's entire energy network every three years, and the equivalent of its entire motorway network from scratch every two or three.
By comparison the Western debate is pathetic. Yes, of course you build the third Heathrow runway, you idiots! Wake up and smell the coffee, or the next generation will be immeasurably poorer than this one.
The answer, of course, is that it is no longer a communist country in any economic sense; it opened up. There is much in China to worry about, the surveillance society chief among it, and no one should wish to import its authoritarianism.
But China is more decentralized than outsiders
appreciate. It has a very high savings ratio. Its welfare state is
far smaller than ours. And - like Poland, like the others that have
known real poverty within living memory - its people understand the
value of work. There is a powerful work ethic there.
Not everyone can be Einstein, and that is not the point; the point is that at whatever level a person stands, they should find the best work available to them, whether carpentry or anything else.
We have sold a false promise - that
everyone can go to university and do whatever they fancy, with a job
in an NGO or a sinecure held up as the pinnacle of ambition.
Europe is the exception - the low-growth quarter of the world, where taxes are higher, Britain emphatically included.
This is not a point about the EU; Britain and Europe have travelled in the same direction regardless - more debt, more tax, more regulation, more net zero. And alongside the economics has come the denigration of the family and the casting aside of traditional society in favor of a hyper-individualistic modernity - individualistic, note, in the moral sphere, while the economic sphere has only grown more constrained.
Together these have dramatically undermined the
West's prospects.
Almost everyone now agrees that things are going wrong; what is missing is any agreement on the remedy.
What is beyond dispute is the danger that, should
the same broad governing consensus win yet again - and in Britain it
has, in one form or another, held power for thirty years, with the
Conservative Party very much part of it - turning the country around
will become very nearly impossible.
It took precisely that kind of catastrophe for the Argentine people to wake up and accept radical action. Neither Britain nor America is Argentina, and no one wants to get there - but both are on the road.
Which is exactly why the next few years matter so much:
What is needed instead is sound money.
After COVID, the Bank of England expected deflation. It did not even trouble to look properly at the money supply, ignoring the massive growth in broad money generated by its own quantitative easing and by the furlough scheme - which was, in effect, QE pumped directly into the economy.
The Federal Reserve made precisely the same error at precisely the same time, printing on a scale never before seen in peacetime and then professing astonishment when prices took off.
When inflation duly arrived, the authorities blamed Ukraine and snarled supply chains, conveniently overlooking that prices had begun climbing well before either. The real cause was the debasement of the currency through the expansion of broad money.
And the deeper trouble is intellectual:
Genuine Austrians are vanishingly rare, monetarists nearly as scarce.
One thinks of the economist, trained at the LSE,
who described herself as an outlier for being an Austrian, and who
once attended a gathering of the Hayek Society she headed - a grand
total of eight people, the rest of whom turned out to be leftist
Keynesians.
And much of the orthodoxy rests on a myth:
The myth endures because it flatters the state.
The notion that one sits in the cockpit, pulling
this lever and that, scattering sweeties here and taxing there,
clever enough to order the affairs of millions - it is an
intoxicating self-image for any finance ministry.
Sound money is critical, because just as a person
needs to know where tax and debt stand, they need to know that
prices are stable; without that knowledge planning is impossible and
savings quietly evaporate.
When governments debase their currencies relentlessly, people find alternatives - in the trenches of the First World War the currency became cigarettes.
Richard Nixon took the dollar off the gold standard in 1971, and there is even a website, What the f\** happened in 1971?, assembled by Ben Prentiss, that lays chart after chart against that date:
Gold stood at thirty-five dollars an ounce in
1971. It now trades at over four thousand - a hundredfold rise.
Peter Schiff, one imagines, is happy.
For all it does right, the scale of its deficits is about as bad as Europe's:
That debt was built by Republicans and Democrats
together, in roughly equal measure, each blaming the other while
both signed the cheques.
This year, for the first time, America spent more on debt interest than on defence. Only one major European country passes the test comfortably - Germany.
The worst offender is Britain, which spends more than twice as much on debt repayment as on defence:
Worse still, Britain now spends more on servicing its debt than on educating its children - while schools fundraise for basics and cannot attract the best people to teach, and too many institutions, in Britain and America both, drift toward becoming places of activism rather than learning.
It is all of a piece:
Consider the traditional Labour man - the kind
one can disagree with on plenty and still respect - who argues that
Britain has never actually had real austerity, and that it badly
needs some; that it should begin with a new government being
brutally honest with the nation, and that every MP should take a
twenty percent cut to their own pay before asking the rest of the
country to feel any pain.
There are those who insist a country is badly run because its politicians are paid too little; the opposite is nearer the truth. There are two honest schools of thought on it. One says politics should be a part-time calling, drawing in people who have already made their money and do not need the wage.
The other says that if the genuinely brilliant
can earn half a million in finance, you will never tempt them into a
politician's life.
Now it is a shouting match, a relentless playing
of the man rather than the ball.
But the manufacture of a smokescreen, the tearing apart of anyone who declines to share the reigning ideology, is something far more sinister:
When does one ever see a politician turn to an opponent and say, you know what - you've made a good point there?
It would be extraordinary. It would be powerful. We are all drawn to our clusters - and honesty compels the admission of an attraction to the free-market cluster - but there is a moral context to the free market, and the position here is not one of complete libertarianism.
It leans hard in that direction without going the
whole way, and it fully recognizes a proper role for the state. Even
so, it is a struggle to name a single good policy the British
government has produced since taking office - just as it was a
struggle, for an honest critic, to defend much of what the previous
lot did either.
Or take Brexit...
Trump's first victory in 2016 was the same kind of earthquake, written off as impossible until it happened.
The window can be moved. A great many people on
both sides of the Atlantic already sense that the quiet, kind,
rule-of-law, free-speech, moderate society they grew up in is
evaporating, and that if something is not done very soon it will be
too late.
If anything it has copied Europe wholesale.
Having long occupied a distinctive position somewhere between America and Europe - lighter-touch than Brussels, heavier than Washington - Britain has chosen to become, philosophically, a thoroughly central-European power, abandoning the very Atlanticist flexibility that was its comparative advantage.
The likeliest explanation is that the elite was
so shaken by ordinary people putting two fingers up to it that it
has remained, ever since, in a state of flat denial - much as a
large part of the American establishment never reconciled itself to
2016.
Any business owner can answer it in a sentence:
America takes a far more red-blooded approach, and the result is that its workers are paid dramatically more on average.
They have fewer rights, yes - but a far better
chance of finding another job if they are let go, and considerably
stronger incentives to work in the first place.
Accept instead that the life cycle of a company is often short - successful for a season, after which its people move on to something new - and you build a far more successful economy. That is what America has done; it lets companies die so that new ones can be born, and Silicon Valley's churn is the proof. And the true gap is wider even than the wage figures suggest, because property is generally cheaper across much of America, and so is energy; the disposable-income chasm is now enormous.
Grant that the bottom ten or twenty percent of Americans are not well off - there is a greater spread - but Europe, and indeed almost anyone in work, would be substantially better off under a more dynamic model, and a free economy lifts that bottom decile faster than any redistribution ever has.
Move even partway toward it and a country would
raise more in tax, and the left's own constituents would enjoy
better services and better pay.
There are only two real cases.
And if someone genuinely cannot do the work, they should go, and they should be told honestly why, so that they might learn and go on to work harder elsewhere.
But when an underperformer can shelter behind employment law and tribunals, where the employer almost always loses, the lesson taught is the most corrosive one imaginable:
These are perverse incentives, and they rot the whole culture. The dial has to be reset - and people learn a new set of incentives remarkably quickly once it is.
There is still enough social capital and goodwill in our countries to turn it around, provided a strong signal is sent, and sending that signal is among the first duties of the next governments.
Even if it can only begin the process, it must declare the direction of travel:
We cannot do it overnight. But we trust you - we trust you to succeed.
Some will succeed more than others, and those who
do will pay a fair amount of tax, still a considerable amount, and
that is what grows the cake.
And they have been sold the comforting lie that a job for life is the goal, when a job for life, however nice it sounds, is not actually good for you; you need to be learning new tricks and reinventing yourself, which is better for the individual and better for society both - and which is, not coincidentally, the American instinct that keeps that country young.
The relentless socializing of every problem clogs
the system and destroys growth - and the worse growth becomes, the
more vindictive the society grows, feeding on itself, forever
blaming others for its own failings.
Incompetence is the wrong charge. They are not
incompetent; they see the world in a fundamentally different way.
They are not classical liberals. They genuinely believe in state
control and direction, in the conviction that they know best, and in
taking what you have achieved for what they regard as the common
good.
But even if a politician privately accepts that
the welfare budget is out of control, he finds it almost impossible
to act, hostage as he is to his own backbenchers - exactly as an
American president of either party is hostage to the donors, the
base, and the entitlement lobbies that make reform electoral
suicide.
Britain is already paying something like a hundred and fifty basis points more than France at the long end of the yield curve.
Were the bond market or the currency to crack, the government would be forced to confront spending - and would pay dearly all round. America has a longer rope, because the dollar is the world's reserve currency and Treasuries are still the global haven, but a longer rope is still a rope; the bond market disciplines everyone in the end.
But the central case is that the Treasury
understands those risks and will do just enough to keep the plates
spinning.
And they will need absolute clarity on spending
cuts - a minimum of a hundred billion pounds. A hundred billion
sounds vast, and it is, but it is only six or seven percent of total
spending.
And then put the question to the people, plainly:
There is still, among the population if not among the elite, a deep instinct for fair play.
There is still elite education that is the envy of the world, both in the private schools now under attack and in the great universities - and the same can be said of America's, whose research universities remain magnets for the planet's best minds. There is still genuinely interesting technology.
And there is the English language itself - an
enormous strategic advantage shared across the Atlantic that almost
no one ever thinks to mention, the common operating system of global
commerce, science and culture.
This is not the view of a neo-Malthusian who fears artificial intelligence will destroy us.
For every job it eliminates, it will likely
create two more. More people were working, until very recently, than
ever before; they simply work in different ways, and the technology
will free up opportunity rather than foreclose it. Remember how mad
the executioners were when they got rid of public hangings? Yeah, me
neither.
Do that, and a wonderful place can be built again, and built quickly.
It comes down, in the final reckoning, to nerve.
A new government must have the courage to walk in on day one and be
hard - that is the thing that matters most.
The lesson is simple, and it is the whole argument in a sentence:
Fingers crossed, they will.
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