In today’s issue:
- Yes, taxes are going up
- Yes, public sector employees are getting pay rises
- Yes, Labour is doing exactly as they said they would, so far
Parliament may have just begun their annual summer recess but they’ve certainly made some hay while the sun (finally!) shined across these shores the past week.
And they’ve done exactly as one would have expected (though keep an eye on the unexpected to come):
- They’ve identified a “budget black hole”
- They’ve confirmed taxes are going up, probably in more ways than one
- They’ve taken initial steps to “re-align” several UK policies with the EU, notwithstanding Brexit
- They’ve given NHS GPs a 20% pay rise
This is, of course, what we voted for. Well, some 30% of those eligible voted for it anyway.
No one should be surprised that Labour has already begun to deliver on their promises. Don’t governments normally do that?
Actually, the so-called “Conservative” government of the past 14 years developed a rather bad habit of campaigning on sets of promises that didn’t seem to get much follow-through once elected.
Oh, they had their excuses for that. Clever and creative ones too. They were consummate politicians for a time.
Until they lost.
Promise yet fail to deliver. Bait and switch. Lie and deceive. Change the narrative and hope voters’ memories are short… Machiavelli would have been proud of our late Conservative government.
But would he be of the current one?
It’s hard to say. Machiavelli, you see, suffered from a form of philosophical cognitive dissonance. He never really could make his mind up whether the most important thing was to be in power, or to do good things once you were in power.
He is best remembered for the former, hence the term “Machiavellian”.
Regardless, Machiavelli had no patience for any form of governance that did not empower the nation. Zero. If you’re going to do any good at all you need to be in power to do it. Period.
So let’s allow ourselves a little thought experiment. Knowing he is perhaps not the most experienced politician around, Sir Keir Starmer dusts off an old copy of The Prince from his university days for a quick refresher in power politics.
The first thing to do once in power is to consolidate. Pay off your key lieutenants. Solidify your base. There will be further battles to fight so ensure that everyone who helped you win the last one feels adequately rewarded.
Check.
Second, try to win over marginal supporters. Seek to blame the old prince for whatever ails the nation. Dig up all the dirt you can and throw it at him, before anyone attempts to throw it at you instead.
Check.
Third, find new bogeymen. Blaming the old prince only buys time. The reality of power is that new challenges will always arise. If there is not a convenient enemy available, create a new one.
This is especially true if you plan to increase taxes (including the invisible ones) or debase the coinage to pay off your supporters and finance your pet projects, whatever those might be. Palaces are expensive.
Even the wallpaper is expensive, especially for No. 10. Absent a bogeyman, once your citizens feel the pinch, they’ll come for you instead.
Work in progress I suppose.
As mentioned above, however, Machiavelli also wanted the prince to empower the nation to do good things. He was proud of the achievements of the Roman Republic – less so the Empire – and longed for a prince who would restore Italy to its former glory.
Of course some eggs get broken to make the omelette. Machiavelli had no qualms about that.
But he would have qualms about Labour raising taxes still further from their highest levels ever, outside of peacetime. The historical record is clear: countries with rates of taxation this high never amount to much. More likely they remain mired in stagnation or outright decline, as with Imperial Rome.
He would also have qualms about Britain subordinating itself, yet again, to the unaccountable, bureaucratic behemoth in Brussels. No ambitious young prince with plans for national greatness would ever do such a thing.
Would he have qualms, too, about paying GPs 20% more?
That is less clear. Machiavelli admired the most productive in society, those skilled in trade. An educated, skilled populace was a large part of what made Rome great. GPs certainly belong to the class of skilled workers in the UK today.
But Machiavelli might question whether their skills are put to best use within the NHS, itself an essentially unaccountable, bureaucratic behemoth. Perhaps those skills would be even more effective in keeping British citizens healthy if they were free to compete in a marketplace offering a degree of competition in healthcare, with implied cost-controls and other efficiencies.
Of course, this is all hypothetical. That is the point. The age-old philosophical debates around power, about whether might makes right, whether coercion, cooperation or competition forms the better, healthier basis for a society… Such things will never be fully resolved.
But we do have the benefit of an almost-controlled social experiment now currently underway.
Within the space of only about half a year, we have a new, pro-competition, unabashedly pro-market government in Argentina on the one hand, and a pro-bureaucracy, unabashedly pro-regulation government here in the UK on the other.
In five years’ time, let’s compare their progress in restoring economic dynamism to their respective countries.
Machiavelli, for one, would relish the opportunity to watch this historical experiment unfold right in front of his eyes. It might give him the critical insight needed to restore Rome to its former glory (insights like this one).
Or perhaps even to build Jerusalem.
Until next time,
John Butler
Investment Director, Fortune & Freedom
PS Machiavelli may well relish the idea of watching Keir’s plan unfold – but is Keir really the one in power? There’s an argument to be had that Machiavelli and the people of Britain should be watching someone else – and preparing ourselves and our wealth for what is to come. Find out more here.
