Whatever works doesn’t work

In today’s Times, Lord Hague unfurls a popular Tory banner saying “Conservatism isn’t an ideology”, and I myself have been known to wave it.

Whatever works is Conservatism to Lord Hague, and whatever doesn’t work isn’t. That’s too empiricist for my taste.

For no ideology shouldn’t mean no principles – and the calculating pragmatism advocated by Lord Hague doesn’t qualify as such, not by itself. If a party lacks or abandons its own principles, it ends up borrowing them from the other side.

This Lord Hague himself proves by insisting that support for homomarriage and ‘non-traditional’ families is a cardinal Tory virtue. Opposition to those things is to him un-Conservative and too American to be British.

In fact, one struggles to see any pragmatic value (other than winning more votes in the upmarket parts of London) in destroying the family as it has been for millennia. In fact, it’s easy to demonstrate, figures in hand, that traditional family reduces crime rates, boosts economic performance and improves public health – physical, mental and moral.

That’s the thing about traditional beliefs and principles: they have survived long enough to become traditional specifically because they work. And nowhere is this confluence of philosophy and pragmatism more evident than in the economy.

What our economists often forget is that economics isn’t a branch of mathematics. It’s a study of human behaviour, which starts from some basic understanding of human nature.

Since human nature is more or less immutable, the same economic principles have always been proved to work – or not. One principle that has always worked is based on a fundamental human trait: aversion to taxes. Thus, the more of their money do people get to keep, the harder they try to make more. That benefits not only them personally but the economy at large.

That’s why low taxation is both a sound conservative principle and a pragmatic idea known to work. Someone like me, a chap ignorant of the recondite interplay of numerals, indicators and indices, can still advocate a sound taxation policy based on that general principle only.

However, by myopically seeking a short-term gain, the Tories discard that traditional principle, claiming instead that their goal is purely pragmatic. However, they fail on both counts.

Take Sunak’s idea of raising corporate tax from 19 to 25 per cent. That clearly goes against core Tory principles – which is why it won’t work. Any short-term gain will be wiped out by an exodus of businesses seeking a warmer economic clime.

Some major foreign corporations have already indicated they now plan to take their business elsewhere. The effect of such withdrawals may not be felt before the next general election, but you can be sure it will be felt soon enough – and it will be devastating.

A simple policy, which Lord Hague would doubtless regard as being obtusely doctrinaire, would be to proceed from first economic principles, ignore the short-term bean counting and lower corporate taxes even further by offering foreign investors and our domestic entrepreneurs far-reaching tax breaks.

Putting Lord Hague’s notion of pragmatism into practice, the Tories are also in the process of ending VAT tax breaks for foreign visitors.

Thus an American tourist shopping in Paris or Milan will get the sales tax refunded. The same American shopping in London won’t. Where do you think he’d be more likely to shop? This is another example of general principles hard at work.

What effect do you suppose this will have on our hospitality and retail industries, which are both significant contributors to Britain’s GDP? You don’t need a calculator to answer this question. Just a set of proven conservative principles will suffice.

Britain’s economic legs are bending under the weight of the greatest taxation burden known in our peacetime history – this after 13 years of Tory government. Or rather zero years of Tory government if one looks at the principles from which it proceeds.

Trying to choose between principles and pragmatism, the Tories consistently choose neither. And if – or rather when – Starmer’s Labour take over, things will get even worse.

Those chaps share the Tories’ evident commitment to beggaring the country and pushing it even further down that road. For example, Britain now offers non-domiciled status, and hence tremendous tax breaks, to wealthy foreigners living here.

This is what Starmer promises to abolish, thereby supposedly adding £3 billion a year to the Exchequer’s coffers. That commitment reflects an underlying strong principle that happens to be wrong.

The principle is that squeezing the rich will improve the lot of the poor. But as often as not the result is exactly the opposite.

Most of those non-doms aren’t wealthy layabouts who spend their time lounging on their estates and yachts. Much as I love England, there are more attractive places in the world for that sort of thing.

With few exceptions, those non-doms are actively involved in increasing Britain’s GDP, and they didn’t choose Britain for the weather. Non-dom status was a major part of their decision to move here.

Since their attachment to Britain typically lacks a strong emotional component, take those tax breaks away from them and they’ll be likely to move elsewhere. How many of them? I suspect most, but I don’t really know and neither does Sir Keir.

Yet if only as few as half of them up sticks, even the immediate effect on tax revenue will be negative. At the moment, the non-doms pay close to £8 billion in annual taxes. Even accepting Sir Keir’s £3 billion prognosis, Britain will still be a billion short. And only a morbidly credulous individual would accept any Labour prediction at face value.

Preparing for power, Labour politicians openly talk about introducing wealth tax and closing all tax loopholes on North Sea oil exploration and production. That would work if the North Sea were the world’s only area rich in hydrocarbons. But it isn’t.

The Exchequer would definitely gain from such measures, but the benefits would last only as long as it’ll take big companies and wealthy individuals to move elsewhere. Which won’t be long.

The conclusion is clear. At that level, pragmatic measures only ever succeed if they proceed from sound first principles. By denouncing what Hague calls ‘ideologies’ but what is in fact a philosophy of life, the Tories invariably end up wearing socialists’ hand-me-downs.

The two parties then compete on which one can beggar Britain the fastest. So far it’s almost neck and neck.

5 thoughts on “Whatever works doesn’t work”

  1. i am always sorry to disagree with Mr Hague, who has been one of our more reliable and responsible politicos, but on this subject I am in complete agreement with you. Spot on! Mr Boot, as I often say (and more often think)

  2. It is not hard to look around the world and find countries that have dramatically improved their economic status over the years (Singapore, South Korea, even Bangladesh come to mind). If our leaders cared to learn from these examples they would find policies that encourage new businesses (and risks), investment, and good (not “equal”) education. But I am sure they would find plenty of excuses (we are more developed – that is, better – than those countries, so we have an obligation to do more with our – the people’s – money, etc.) to continue and expand their poor policies.

    Of course, with more then 50% of the population receiving government benefits, any politician running on a platform of lower taxes and fewer benefits fights an uphill battle. More and more the word “entitlement” is used to describe these benefits. I think that says it all. Assistance was seen as an embarrassment as recently as the early 1960s, but with Lyndon Johnson’s “Great Society” and the push for more and more welfare from establishments like the National Welfare Rights Organization that was quickly changed. Progress!

    There are many examples of countries becoming less poor by encouraging education, hard work, and investment. There are no examples of countries that have become less poor through taxation. But, hey, maybe Britain will be the first! She will be a shining example to the world, a city on a hill! Or not.

  3. Another anti Conservative measure this government has in mind is the tightening of Landlord’s rights to evict tenants.

    Along with other anti-landlord measures, this is guaranteed to drive available rental properties off the market.

    When I was a young man living in bed sits in East London, I was thrown out of a few of them for, well, doing what young men do.

    It didn’t matter much because there were plenty of other places to be had. Then a Labour government brought in security of tenure measures and immediately, the plentiful supply of bed sits disappeared and the rent for the remaining ones went up.

    This is a tale of the absence of common sense in politicians.

    1. In California deadbeat renters have more rights than the property owner. I have friends who own rental properties and their horror stories make me glad that I do not.

  4. The basic economic principle is that they’re no way of making the poor richer without first making the rich richer. Why isn’t this obvious to everybody?

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