Economies aren’t just about economics

In 1952, when the EU was still barely a twinkle in the eyes of former Nazi and Vichy bureaucrats, one of its godfathers, Jean Monnet, gave posterity an important insight:

“Europe’s nations should be guided towards the superstate without their people understanding what is happening. This can be accomplished by successive steps, each disguised as having an economic purpose but which will irreversibly lead to federation.”

I’m not going to launch into one of my customary diatribes against the EU. My point today is that Monnet laid down a blueprint for modern states in general, especially when run by Leftist governments (and I can’t think of too many others these days).

They all pursue strictly political and ideological ends, using economic arguments for diversion only. Their rationale is as sound as it is underhand.

For most people their money is reality, whereas ideological abstractions are meaningless soundbites. They’ll happily swap them at dinner parties, only to go back to the rough-and-tumble reality the next morning.

One deadly sin, avarice, is the natural destination for this view of life, although some people stop short of it. Fewer people, though, are exempt from another cardinal sin, envy.

Combine the two, and they desperately want to get richer. But, barring that, they’ll make do with their wealthier neighbours getting poorer. Such are the psychological mechanisms activated by today’s politicians.

And taxation is one toggle switch at their disposal. If our economies were just about sound economics, taxes would be half of what they are now. The most successful economies never pump more than 20-odd per cent of GDP into the public sector – and everybody knows that.

Everybody also understands why that’s the case. When people exchange their labour for money, the more money they get to keep, the more and better labour they’ll offer. After all, economic performance is simply an aspect of human behaviour – not the devilishly recondite amalgam of curves, models and paradigms peddled by self-serving economists.

If lower income taxes encourage industry and self-sufficiency, lower business taxes encourage enterprise. Moreover, competitive rates of corporate tax and few government regulations will act as a magnet not only for domestic start-ups, but also for foreign companies seeking broader horizons.

All this means that, in purely economic terms, low taxation and loose regulations are a godsend. They stimulate people to work hard for the benefit of their families and, by ricochet, the whole society.

Alas, the other target sin of government policy, envy, will remain unassuaged, and all modern governments, regardless of their declared politics, are keenly aware of this. That’s why they take economics out of economies, replacing it with parasitical politics and pernicious ideologies.

Taxation policy, one of the most effective mechanisms of economic control, veers away from stimulating and careers towards punishing. Punitive taxes are imposed to mollify corrupted electorates baying for revenge – and all taxation systems in all modern Western states are punitive as their primary function.

Their secondary function is to create a vast underclass of those dependent on government largesse, and thus a broader electoral base for power-crazy spivs. (Mass immigration of culturally incompatible and economically useless aliens can serve the same purpose, as Tony Blair’s boy, Peter Mandelson, once explained in one of his few frank moments.)

The on-going Labour conference has made a special effort to vindicate these comments from its very first day. In fact its slogan told us all we needed to know: “For a Fairer, Greener Future”.

This is an economic suicide note. ‘Fairer’, for those of you whose political jargon is rusty, means higher taxes, bigger state, redistributive policies instead of commitment to growth, and hence as much state control as is achievable this side of concentration camps.

‘Greener’ means eliminating fossil fuels by 2030 (less than eight years from now!). That’s guaranteed to put the economy six feet under all by itself, even without similarly suicidal policies to be pursued in parallel.

This would be the case even if the world were in a state of serene bliss, and energy were cheap, plentiful and easily available. Contemplating such measures at a time of deadly turmoil betokens either hatred of Britain or catastrophic idiocy.

Sir-Comrade Keir Starmer (how on earth can a socialist be a knight of the realm?) caused unrest in the Labour ranks by insisting that the Conference be opened with a rendition of God Save the King, rather than the customary Internationale.

I can see the protesters’ point. The usual song has the benefit of honesty. It’s befitting for today’s Labour members to continue their fine tradition by unfurling the red flag and singing: “Arise ye workers from your slumbers/ Arise ye prisoners of want/ For reason in revolt now thunders…” and so on, in the same vein.

But “God”? “Save our gracious king?” Really. How two-faced can they get?

Mercifully, I’m sure they didn’t sing the second verse: “O Lord our God arise,/ Scatter our enemies,/ And make them fall!/ Confound their politics,/ Frustrate their knavish tricks,/ On Thee our hopes we fix,/ God save us all!” Or maybe they did – they just have a different definition of enemies.

In his opening remarks Sir-Comrade Keir viciously attacked the newly announced Tory economic policy. That’s unobjectionable in itself: there is much to criticise there. There is, however, much to praise as well.

A cut in the top tax rate from 45 to 40 per cent is one such commendable policy, and reversing the planned rise in corporate taxes is another. It’s open to argument whether or not such policies can succeed in the absence of a parallel cut in state spending. I fear they may not, but hope they will, given time.

But time is precisely what Sir-Comrade Keir denies even such modest tax-cutting. When Labour takes over, he vowed, it’ll restore the higher tax rates. Some, albeit flimsy, rationale for that pledge could have been provided by a little conditional clause: “… if the lower ones fail to invigorate the economy”.

But Sir-Comrade Keir never uttered that clause. Never mind that the Tory policy of lower taxation, fewer regulations and a commitment to growth may still become a rip-roaring success. Labour will still reverse it on principle. The economic effect doesn’t even play second fiddle there. It’s not in the orchestra at all.

Thank you, Sir-Comrade Keir, for illustrating my points so helpfully. Socialist economies (and even the proposed Tory economy will remain socialist, if marginally less so) aren’t about economics. They are about punishment, envy and runaway state control.

Everything that followed his speech was redundant, if also helpful. Shadow Chancellor Rachel Reeves added a few lines to the aforementioned economic suicide note. The point of the higher tax rates, she explained, is to make sure the better-off pay “their fair share”.

At the moment, the top 10 per cent of UK taxpayers contribute over 60 per cent of tax receipts. That looks more than fair to me. But my definition of fairness is different from the socialist one (see above).

Having thus dug Britain into an economic hole, Comrade Reeves continued to dig deeper: “The next Labour government will introduce a genuine living wage.”

That’s ideological corporatist economics at its most foul. Companies will be told how much they must pay their employees, even if that commitment beggars them. The next step will be around the corner: telling them how much they should charge for their products.

The net effect of such policies will be higher unemployment: rather than getting “a genuine living wage”, more people will be getting none. But hey, it’s the principle that counts. And the principle is the burgeoning state control that will result.

When economics is taken out of the economy, before long politics will be taken out of governance. It will be replaced with out-and-out tyranny, and if you think today’s West is immune to that sort of thing, you played truant at too many history lessons.

4 thoughts on “Economies aren’t just about economics”

  1. If we could replace the economic underclass’s envy with emulation, and their greed with gratitude, we’d live in a better world. But that’s a matter for evangelism, not economics. As it is, proletarian voters must be appeased, not only by making them richer but also by making them aware of having been made richer, and Mr Kwarteng doesn’t seem to have succeeded so far. But what will happen when Commissar Keir wins the election and runs out of money to pay DWP benefits?

  2. It is aggravating. As long as the stupid and irrational outnumber the rational, voters will continue to vote for their own doom. A true monarchy can avoid many of these problems, but is considered “unfair” in today’s world. “I am uneducated and I do not understand how money (or anything, really) works, but it is only fair that I have a say in how our country is run.” Genius. What would be truly fair would be to have the most able running the country, regardless of what the people want. Are there any philosopher kings waiting in the wings?

  3. It was only supposed to be about coal and steel in the beginning. Morphed into something much more. One small step at a time you can get a long way. Those bureaucrats in Brussels you don’t want to offend.

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