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This, Boris, is why your party exists


IN THE lacklustre climax of this over-long and pathetic election campaign, Boris Johnson and Jeremy Corbyn went ‘head to head’. What we should have seen was a brutal clash of ideas – the ideas that the Cold War was fought about. Libertarian, free-market capitalism v state socialism (drifting inexorably to communism), advanced by their leading proponents. There should have been passion, vitriol, fury, inspiration and blood on the carpet in spite of the moderator’s efforts. (Side comment: Nick Robinson did a pretty good job. I’m as happy to praise the BBC when appropriate as ridicule it when necessary).

But what we got was a slogan fest, trivia, irrelevance and closing statements read from an autocue. Two candidates stuck to lecterns, both utterly uninspiring as they tried to stay on message, the red firebrand and the bravura darling of the blue rinse brigade acting like comperes at the launch of a new widget. This is serious, because the three million or so woke new voters who believe in freedom, fairness, justice, the planet and world peace will not realise that socialism delivers the opposite. BoJo’s failure to make this compelling case is a sure sign of a party that has forgotten why it exists.  Allow me to remind it.

Solving the problems of the world requires stuff, and the world trades stuff for money – money being the manifestation of wealth.  The more problems you want to solve, the more money you need and the more wealth you need to create. Wealth creation is what commercial enterprises do: from BAe Systems to Pete the (self-employed) painter in his white van, everyone in commerce is working to create wealth. Those enterprises that are good at wealth creation survive and grow, those that aren’t collapse and try again. Their success is largely determined by their customers: if the enterprise delivers a product or service that customers want and at a price that they can afford, they thrive. If another enterprise comes up with a better offering, it will attract more customers – forcing its competitors to improve their offering.

In the process of creating wealth they pay wages to workers (on which the workers pay tax), buy from other enterprises, pay interest to lenders and pay tax on their profits. The remaining profit accrues to those who provided the capital to establish the business – the shareholders. For public enterprises many of these shareholders are actually the pension funds who will pay pensions to the public.

The private sector is thus in a state of constant self-improvement, striving to serve its customers better and creating the wealth that ultimately pays all taxation and thus pays for society. The self-improvement means that competent managers are promoted on merit and the incompetent are removed. Note that free markets require strong legislative support from governments. The laws of property, commerce and contract are fundamental. As Adam Smith points out in The Wealth of Nations, governments also have to prevent or control monopolies through regulation.

By contrast, state-owned nationalised industries have little or no competition. (If water companies, say, are nationalised it is illegal for anyone else to set up a water company). In the absence of competition, there is no incentive for product improvement and no driver to reduce costs. Profit, if any, accrues to the state which is, of course, a monopoly owner. In the UK there is a further complication, which is that the socialist Labour party is owned and financed by the trade unions. State-owned companies then end up being run in the interest of workers, not customers or even the owners (which in a democracy should be the electorate). In state ownership the wage bill of vehicle-maker British Leyland increased by over 300 per cent while productivity increased by under 25 per cent, with the result that the company made huge losses, underwritten by the government using taxpayers’ money (that tax being generated by the private sector). The net result was that the country was bankrupted and had to be bailed out by the International Monetary Fund.

Note that this failure was not the result of poorly implemented socialism. Similar outcomes have happened in every other socialist country, from the Soviet Union to Venezuela. Socialism does not work. Look at Scotland.

Which is not to say that free-market capitalism does not have problems: it does. At the moment the UK seems most worried about wealth inequality and the environment. Plus a vaguer concern about ‘excessive profits’ in the utilities.

Wealth inequality will always exist, and is perhaps a distraction from the alluring but vapid politics of envy. It is already the case that the highest earning 1 per cent pay around 30 per cent of all income tax (and probably VAT). Over the past decade the proportion contributed by the lower paid has rightly diminished (under successive capitalist governments). Managing this process is an art, not a science, but politicians would be wise to remember that the people most able to relocate out of the UK are the richest 1 per cent, who may already have a second home in some other jurisdiction. If they feel exploited, abused or vulnerable they will move, taking with them their huge contribution to the costs of government.

In the UK the concept of poverty is complicated by the continuing confusion between relative poverty and absolute poverty. The former is set as a percentage of median income. As median income rises in times of growth (and the UK has been growing for almost a decade) then the number in relative poverty will rise too. Absolute poverty means that you can’t afford to feed, house or heat yourself and your family. In the UK, the benefits system (funded by the taxes on the rich) should alleviate absolute poverty. If the benefits system is failing the solution is to manage it better and, if necessary, spend more on benefits. Driving the rich away to other jurisdictions will reduce relative poverty by reducing median income, but it will also cause a cash crisis in the benefits system.

That this election has morphed from one about Brexit to one about the destruction of this country is, I suppose, a tribute to the work of fanatics like Momentum on social media. You may hate Boris Johnston’s Tories, but to vote for Corbyn’s Labour you must hate yourself and the poor.

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Patrick Benham-Crosswell
Patrick Benham-Crosswell
Patrick Benham-Crosswell is a former Army officer who has spent the last 30 years in commerce. He is the author of Net Zero: The Challenges, Costs and Consequences of the UK's Zero Emission Ambition. He has a substack here. He is the Reform Parliamentary Candidate for Swansea West.

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