In a few days the British Conservative Party will select a new leader from within its ranks. The new Prime Minister will have a short window to select new ministers. But more importantly, due to the inevitable adverse consequences of a decade and a half of unprecedented money printing, little real action to complete the promise of Brexit, and war in Ukraine, the new Prime Minister can and should select ministers pledged to sound money, a rational and pro-growth tax policy, free markets, limited government, and a non-interventionist foreign policy.
Sound Money
In perhaps an apocryphal story, it is held that Ludwig von Mises was once asked what one reform he would select if allowed only one. He quickly answered: “…return to sound money”. By sound money, Mises meant a money not controlled by government but rather by the market. Without a doubt the market would choose a commodity based money, most likely gold. Sound money would force government to live within its means. It would be clear that every pound or shilling spent by government comes directly from the people.
New taxes will always be unpopular and rightly so. It is natural and good that government must overcome the public’s reluctance for new taxes and more government debt in order to increase spending. Government must justify their increased spending plans to the people. By the same token, spending cuts will mean that the public will have more to spend themselves.
A Rational Tax Policy
Like the need for sound money, the need for a sound taxation policy is one of the most important, yet least understood, aspects of government, exemplified by Frederic Bastiat’s distinction between what is seen and what is not seen.
Every time one of the candidates declares an intention to cut, say, corporation tax and, more recently, even income tax, the predictable counterblast is “but that will cost the Exchequer ‘£x billion’ per annum, creating ‘£y billion’ of additional borrowing that will take ‘z years’ to repay. I will first address the problem of inflation, and only then cut taxes – that’s the responsible approach!”
These emotive responses perfectly illustrate Bastiat’s “what is seen” – but it completely misses the vast potential increase in tax revenues that might flow from a lower rate. Consequently, what is not seen is the gain to the exchequer of welcoming thriving, profitable companies into the UK, rather than the converse – losing UK businesses to jurisdictions with lower tax rates. It will result in a bigger pie – not a bigger slice of a diminishing pie.
Free Markets
The examples of the failure of government-run programs is there for anyone who is not an ideologue to see.
Scrap regulations on all sources of energy including nuclear and fossil fuels. Nuclear power is one of the safest and lowest cost sources of power available. Its higher costs are the result of unnecessary regulation that, frankly, seems intended to end nuclear power completely.
Britain has been a leader in nuclear power technology for over half a century, and has been a fossil fuel giant since the eighteenth century. Coal made the industrial revolution possible. North Sea oil has never met its full potential. There is no reason that Britain need import fuel, unless it can be purchased more cheaply elsewhere, such as the Middle East or even, dare we say the word, Russia.
Limited Government
Limited government means two things – limited government involvement in the economy and limited spending. The British legal system, based upon the common law, is all that is required for the smooth regulation of economic matters. For example, fraud and contract law are well defined in the British legal system for the smooth regulation of commercial life. Tort law regulates harms actually inflicted, making product liability laws, for example, unnecessary.
A better template than the unitary state is the Swiss principle of subsidiarity. Government is pushed down to the lowest governmental level possible wherever practical, and it turns out that much of day-to-day practical government can be handled at local levels where the people really do have a voice.
The National Health Service is a disgrace on almost any objective basis of functional and cost-effective analysis, and it’s getting worse rather than better. End taxpayer support and put a fee-for-service price on its operation, forcing it to compete with private healthcare providers.
Needless to say, there is no room for EU regulations, quotas, etc. in a sovereign country ruled by common law with limited government. Only Brexit supporters should be considered for ministerial jobs.
A Non-interventionist Foreign Policy
The war in Ukraine has illustrated how nations can be dragged into war when their own national interest has not been threatened. Instead of taking sides in purely local conflicts, Britain should do all it can to create a new Concert of Europe. A truly sovereign Britain can defend itself when its real interests are threatened. Armed neutrality requires a strong national defense and a non-interventionist foreign policy. The emphasis is on “defense” and “non-intervention”. A good maxim to follow is “Mind your own business and set a good example”.
