‘There’s a real threat that in the coming months a lethal “progressive alliance” will form a government. At that point I may well just give up’
Luke Johnson: The success of Corbyn’s hard-Left agenda shows tectonic plates are shifting in our society
Entrepreneurs are by nature optimists, but right now I don’t know many who are feeling very optimistic. Since the appalling election results I have talked to lots, and they are all feeling pretty depressed. The older ones are afraid. Afraid that we may well be slipping back towards the catastrophic pre-Thatcher era of madcap socialism and economic ruin.
The truly shocking fact that 40 per cent of the voters supported a hard-Left party led by Jeremy Corbyn makes my blood run cold. No longer can he be written off as an extremist clown: there must be a real threat that in the coming months, or possibly years, a lethal “progressive alliance” will form a government. At that point I may well just give up — and I suspect many thousands of risk- takers will do likewise.
Over the last 35 or so years, through ups and downs, Britain has generally been a good place to invest and do business. But Corbyn and his neo-Marxist gang would soon reverse this trend — with a vengeance. Their economically illiterate programme of sharp tax rises, increased borrowing and massive public spending increases, combined with a lunatic programme of industrial nationalisation would wreck the national finances and alienate capitalists. Interest rates would rise, sterling would fall, jobs and investment would disappear, growth would go into reverse, and the nation would tumble into a spiral of decline.
The Left have a fantasy that The Rich and Big Business will simply pay all the bills. But entrepreneurs and companies are dramatically more mobile than they used to be. They are also much more international in their outlook. Already five million Britons live abroad, and 300,000 emigrate every year. There are a number of very pleasant English-speaking nations — Australia, America, Canada, Ireland, New Zealand — that would welcome the right immigrants from Britain — as well as huge expatriate communities in places like Spain and South Africa — and of course tax havens like the Channel Islands and Monaco for the very rich.
For the better-off, the skilled and the successful, moving abroad to such destinations is reasonably straightforward. Those nations want high-quality human capital — especially if they bring financial capital too. Modern communications, transport and logistics mean becoming an exile from your home country isn’t nearly as isolating as it used to be. The arrogant Left believe that entrepreneurs will always be there like milch cows to pay for their grandiose public spending plans. But the world is full of opportunities, and many places offer a less heavily regulated environment in which to do business, more space, a lower cost of living and much nicer weather. An inhospitable government which sends a firm signal that Labour is in the ascendant and capital is despised would have inevitable consequences. London, the true engine of the British economy, would be worst-hit, as the exodus of talent became a flood.
Already the country is much more dependent than ever on the rich to pay for its extensive welfare state. Almost 30 per cent of income tax is paid by the top 1 per cent of earners; half of income tax is paid by the top 10 per cent. Millions may feel society is unfair, but the highest-paid 3,000 taxpayers actually pay more income tax than the bottom nine million. And of course if the high earners leave — or decide the extra effort isn’t worth it and earn less because of punitive marginal rates of tax — then tax receipts will slump.
I’ve heard experts say that this level of support for Corbyn’s hard-left agenda shows the tectonic plates are shifting in our culture. The profit motive, free markets, property rights, competition — these essentials are all going out of favour. As ever, socialists fail to see that free enterprise is not a zero sum game. But they are so obsessed with redistribution that they forget entirely about vital matters like incentives, and the importance of stimulating animal spirits among risk-takers. Corbyn and McDonnell’s vision of big government crowds out more productive investment from the private sector. Their plans to expropriate industries like the rail and postal sector will cost billions and drive away investors on whom we depend to fund industry and the deficit.
Socialism has never worked, and has only ever caused chaos and hardship, but today’s relatively benign economic conditions fool voters into thinking we can afford unfunded giveaways. The young were gerrymandered with the abolition of student fees, and have no memory of the misery inflicted on Britain by socialism in the 1970s. Our current credit rating is relatively fragile, since the national debt, at £1.9 trillion, is higher than ever, and we continue to run a deficit; it would not be long under a Corbyn administration before the impact of their incompetence was felt. Britain depends hugely on London, the City and financial services. Attacks from Labour like the financial transaction tax could fatally undermine the capital’s competitiveness globally. But the uninformed don’t care: they hate “the banks” and fail to see how much our standard of living depends upon them.
Ayn Rand’s Atlas Shrugged describes the desperate shambles which occurs when the most productive elements in a society go on strike. Today I am beginning to wonder if it is really worth the effort. The vast majority of wealth-creators would not actually announce their withdrawal. They would individually choose to simply stop expanding, stop hiring, and think much harder about how they might exit. I fear we might be at that tipping point. And if the entrepreneurs decide to down tools, then the country is in very deep trouble.