Could Brexit herald a wealth tax?

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The justification for Brexit, according to its thoughtful supporters, was that it would force the UK to confront the deep structural issues which had led to its continuing decline. Membership of the EU, they argued, had “featherbedded” areas like London and the Southeast, which sold financial services to the EU, while the old industrial regions rotted in neglect. It is a view held by leftwingers such as Larry Elliott and rightwingers such as Dominic Cummings.

One of the deepest problems that has afflicted the UK for centuries is its comparative lack of entrepreneurs and industrialists, and its development of a rich rentier class. Historians (many with impeccably rightwing credentials) have traced the consequences of this distortion. Think Corelli Barnett‘s Collapse of British Power * or Martin Wiener.* Their thesis is well known. As a powerful rentier class emerged from the profits of the industrial revolution, its values and mores crowded out those of the industrial engineer. The political and strategic consequences are well summarised by Simon Heffer in The Age of Decadence.* A report in today’s Guardian maps the current picture, which you can read for yourselves *. We point to one chilling fact: one in ten adults will inherit half as much wealth as the average person earns in a life time. The effect on such virtues as enterprise, thrift and hard work are obvious. As Piketty warns-how you marry will have far more effect on your outcomes than how hard you work.

Two Prime Ministers made attempts to tackle this. Margaret Thatcher hoped that her reforms would unleash wave of industrialists and makers. The capture of her party by financial interests, and perhaps the wave of oil money ensured the initiative would be still-born. Harold Wilson had flickering hopes for a wealth tax . But the combination of social, financial and media power meant that he was never able to introduce it. There are profound cultural and historical reasons to suspect that a government which bears a Labour badge will never be allowed to do so.

History shows that rentier societies are decadent. Think seventeenth century Castile or France before 1789. Healthy societies do two things that are quite different . They recruit the best talents from all ranks. And they make things, not money. Keynes called for the abolition of the rentiers so that the intelligence, skill and determination of the entrepreneur can be harnessed to the service of the community on reasonable terms of reward. The current Conservative government has a large majority, a friendly media, and deep cultural support from the mass of its subjects. Can it find the will to do the patriotic thing?

https://www.theguardian.com/commentisfree/2020/jul/26/the-guardian-view-on-a-wealth-tax-necessary-but-not-sufficient

Simon Heffer The Age of Decadence Britain 1880-1914 Random House 2017

Corelli Barnett The Collapse of British Power Alan Sutton 1984. The work is the first in his Pride and Fall series

Martin Wiener English Culture and the Decline of the Industrial Spirit Cambridge 1981

Thomas Piketty Capital in the 21st Century Harvard 2014

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