July 18, 2017

The ‘radical centrism’ once espoused by Tony Blair isn’t as popular at it used to be. This may have had something to do with the radical destabilisation of the Middle East, the radical meltdown of the international banking system and the radical loss of control over immigration. However, emboldened by the success of Emmanuel Macron, the radical centre is staging something of fight back.

Given the utter drivel produced by the populist left and right, there’s certainly a market for a transformative, yet non-extreme, policy agenda. For instance, try this little list from Jeremy Cliffe, the Berlin bureau chief of the Economist. Alongside some very distinctive proposals – such as Britain sharing Trident with Germany – there are some positions that most radical centrists would see as fundamental to their position.

Two in particular stand out: “abolish the immigration cap” and “higher inheritance taxes and lower income taxes.” On one level the combination of open borders with wealth taxes makes a lot of sense. Both are consistent (just as closed borders and inherited wealth are inconsistent) with equality of opportunity – the core principle of radical centrism.

And yet, on closer inspection, a serious inconsistency becomes apparent. Pratik Chougule of the American Conservative explains why:

“High net worth families—those positioned to pass down millions of dollars in assets to their children—are different not only in their means, but also in their outlooks. More so than in previous eras, families who are poised to build and maintain intergenerational wealth are defined by a single characteristic: a penchant for mobility. They are distinct in their willingness to move their livelihoods and their assets in search of opportunity.”

As Chougule points out, a high proportion of these high net worth families are immigrants. For instance 17 of America’s billionaires under the age of 40 are immigrants, as are more than 10 per cent of the Forbes 400 (richest people in America) – “a group comprised disproportionately of tech entrepreneurs who arrived in the United States in the early 1990s.”

This, of course, supports a key argument for open borders, which that immigration is a driver of economic growth. Consider the following, for instance:

“A third of publicly-traded venture-backed companies in the United States between 2006 and 2012 were founded by immigrants, up from just 7 percent before 1980.”

And yet the cross-border mobility of people – especially the most talented and enterprising of individuals – goes hand-in-hand with the cross-border mobility of their accumulated wealth:

“The wealthy are more than the beneficiaries of globalization; they are promoters of it. The global rich are a major reason why ‘connectivity’ has become, like liberty and capitalism, a ‘world-historical idea.’ As Parag Khanna assesses in his book Connectography: Mapping the Future of Global Civilization, connectivity is ‘reengineering the planet to facilitate surging flows of people, commodities, goods, data, and capital.’”

Whether from an immigrant background or not, the wealthy often own property in several countries – not just an investment, but as a way of pursuing a global lifestyle:

“Half of the world’s ultra-wealthy individuals own at least two homes, and one in ten own five or more properties. The demand for these homes, according to a recent Warburg & Barnes report, is driven not only by the global demands of business; so too does it reflect the desire of the wealthy to send their children abroad for educational and professional opportunities, and to pursue leisure activities regardless of proximity…”

That’s all delightfully footloose and fancy free, but the opportunities for “tax-efficient citizenship” and “transnational succession planning” are equally enjoyable. Indeed, countries are already competing to attract the global elite on that basis:

“…even Canada, often stereotyped as a high-tax, second-rate version of the United States, in fact offers high net worth immigrants an unusually attractive tax regime. Canada has no estate or gift taxes and requires minimal taxation for wealthy families immigrating to the country during their first five years of residency.”

Any shift towards wealth taxation is therefore likely to hit the deplorably un-globalised, not-so-rich instead. As the Soviets discovered, if the aristocracy flits off, you can always expropriate the Kulaks.