6 minute read
The Prime Minister and Chancellor are to make a statement ostensibly on economic policy.
It’s been said before that there won’t be any tax cuts until inflation comes down which won’t be until next year which seems to be code because we’ll have a gift enough close to the election so that it is fresh in people’s minds. the spirits. Any political party can do it. It makes no sense and the electorate is not stupid. What people really want to know is that the government is competent over the long term in its economic policies and in the management of taxes and expenditures. Johnson and Sunak should study the history of our free market to learn how to create economic success, beat the cost of living crisis, level up, and balance the books.
In 1922 we had an empire covering a third of the world’s population. There is a huge misconception that it was only exploitation that made Britain ‘great’. Rather, the empire was created from an accidental acquisition of land, in turn led by colonialists – adventurers, land types and religious reformers – and by Whitehall, when in fact the main objective was the trade and investment.
Britain gradually created in the 18th, 19th and early 20th centuries, a world system based on globalization and a stable currency, which facilitated the fastest phase of human development then known – the Pax Britannica.
There are many in our elites who would now have us believe that we are destined only for decline. Britain has not declined, it has adapted, and back to our roots, free from the shackles of empire and the EU, we have every chance of seeing better days ahead.
It was not an empire that made Britain unique among nations. It was the primordial political soup that fueled economic development and led to the unprecedented Industrial Revolution. The Glorious Revolution of 1688 saw a new settlement which gave primacy to the democratic Parliament and although the mandate was exclusive and largely based on a landowning class, Parliament had the foresight to reduce taxes on productive industry while increasing taxes on unused land. The equivalent today would be drastically reducing corporation tax and fuel tax to stimulate business and reducing income tax to encourage work. He favored innovation and production. It was the start of a change that separated England and Wales. There has been rapid scientific and technological development. The Scots came on board and added enlightenment and Adam Smith.
Free trade and markets have been fought hard against the forces of vested interests. The creation of stock companies, the abolition of monopolies and protectionist corn laws in the 1830s. The expansion of democracy and free markets from the 1840s led to an amazing period of growth and creation of wealth, which benefited the whole of society and was followed by other countries, especially in the Anglosphere. This progress was only reversed when the UK joined the protectionist EU and free markets and free trade became subordinate to the “German project”, which of course the French thought was theirs.
We now have a choice. We can accept the left-liberal establishment’s declinist “let them eat cake” dogma, or we can emulate our ancestors and embrace the creative destruction of a free-market future with all the excitement, innovation, the wealth and growth it will create.
The government must seize our freedom, reduce corporate taxes and the fuel tax. This will not only encourage investment and trade, but, more importantly, stimulate 70% of the national economy, including family businesses, many of which are SMEs.
The unilateral reduction of external tariffs will reduce the cost of living in an instant, as did the abolition of the Corn Laws. It will reap much of the benefits that have yet to come from improved trade deals, but immediately. Why not reduce this tax on food and goods that we do not produce ourselves?
Meanwhile, deregulation would liberate our business community and is of even greater importance than trade as it impacts a much larger slice of the economy.
Yet there is no indication that the government intends to do anything.
Of course, free markets have a purpose and are not an end in themselves. The goal of maximizing profitability and the effective and efficient allocation of capital. Thus promoting growth, wealth creation and well-being.
It works best in a single market like the UK where there is a common understanding of the capitalist system and norms. This works less well in international contexts.
The best of them is where there are common standards of competition and the rule of law, for example with the United States it works reasonably well and with others like CANZUK and some Asian countries.
Where this does not work well is where there are large distortions and market failure characteristic of state capitalism, and where states view economics and trade as an extension of power, for example China and Russia. It would be very foolish to treat them the same way and normal economic considerations trump strategic interests. There are inherent distortions of “free markets” and trade here.
Last year at The Independent Business Network we produced a report on China dependency that was alarming to say the least and the West has only just dawned on its implications.
The creators of ‘Britain’ knew all this in the context of the times in which they operated, they were not fooled, but they recognized the enormous advantages of the free internal market and the expansion of trade within a British world system, within the norms of free trade and the rule of law.
It is the ability of our current political class to recognize the wonderful opportunity they have to restore the future of Britain’s free market that will determine whether they are worthy heirs to our unique island history, or whether they are idiots.
John Longworth is an entrepreneur and businessman, chairman of the Independent Family Business Network, former head of the UK Chambers of Commerce and Conservative MEP.
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