Guy Corbet is a communications and marketing consultant.
Having woken up to the need to rebuff Marxism once more, the Conservative Party is full of zeal for new ideas. But they could be asking the wrong question. Shouldn’t the focus be on good ideas, whether new or old? And shouldn’t we recognise that sometimes new and good are not the same things?
So far, too many attempts to see off the socialist threat have focused on Corbyn-lite policies (increase tax, increase spending, increase regulation) which would stifle growth and innovation.
Or they have focused tactically on reaching for the youth vote, which can set hares running looking for easy fixes. Many of these aim to make it easier to get on the property ladder (again, increased spending on subsidies, which increase house values making them more unaffordable, rather than addressing planning).
And now we have the big NHS play. Though the funds have been committed, it is not yet clear what the money will be spent on or how it will deliver a better service.
In all these cases, these tired old tax-and-spend ideas could do with a refreshing trip back to basics.
Economies grow when governments get out of the way. And when economies grow, so it becomes easier for society to afford the things it wants. That includes health spending, of course, but also health education and social services, public services, defence, foreign aid and education.
In other words, free markets are good for society, and lowering taxes ultimately increases the overall take.
Michael Gove may be right that those wishing to revitalise free markets should not hark back to Margaret Thatcher’s golden age. Those old ideas need to be brought to life in new and more era-appropriate ways.
We are in need of good ideas, and many are to hand. Just as the 1970s showed us that socialism doesn’t work, so the 1980s showed that free markets do. Neither should be forgotten.
Many new think tanks have sprung up determined to develop new policies that are appropriate for the age. But that does not mean they should be turning their back on the free market principles that have served so well in the past. Those lasting principles, more than any fleeting policy initiative, need to be re-established. Nor should they look to increase the size of the state and the tax rate, which over past decades are what have got us to where we are now.
Despite years of so-called “austerity”, both tax and spending have increased as steadily under the Coalition and Conservative governments as they did under Gordon Brown. As Liz Truss points out, it is bad politics to increase spending just to appeal to voters. She echoes the recent chorus of concern about Conservative policy lines that are too easily characterised as Corbyn-lite.
More importantly than bad politics, tax and spend is also bad economics. No matter how cunning the Treasury is in hiding away its stealth taxes, spending increases need to be paid for. If not from increased revenues through economic growth, then through more taxes somewhere, whether now or later to pay off loans.
Higher taxes take money out of people’s pockets. It stops spending in the real economy, which supports local business large and small, and provides firms with the cash to grow, invest and create jobs themselves.
History shows us time and again that millions of independent people will collectively make better spending (and investment) decisions than the centralised “man from the ministry”. That is the wisdom of crowds (and a basic concern about a Corbyn-McDonnell administration).
Yet now we hear the Ministry of Defence, Home Office, Energy, Environment and Health all wish to put their hands deeper into our pockets to pay for their policy drives. Where will it end? With Corbyn and McDonnell?
We should not be playing to a popular perception that increasing government expenditure is a good thing and that the money will come from ‘somewhere’. Isn’t it time to make the case that the best way to deliver strong public services is through a low-tax capitalist economy? That is what will generate growth, create jobs and pay rises and raise the revenues to pay for the services we need.
We should start with the NHS commitment, and ensure that increased funding will depend on clearly set out efficiency improvements.
The Conservatives have not traditionally been the party of low taxes because they don’t believe in public services. They are the party of low taxes because they do believe in them. Low taxes leave the money where it will do the most good. Where it will work harder, creating jobs and generating more tax revenue.
In short, it is too easy for calls for the reform of capitalism to be interpreted as a need to replace it with something new, such as new spending. If anything, let’s hope they find new ways of expressing the very basic truths that free markets are good for society, and that the new policies they develop will illustrate that.