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Friends of capitalism must be angrier than socialists at state protection of “undeserving rich”

Harriet Maltby didn’t pull her punches yesterday when reflecting on how CEOs who cause economic misery for millions seem to face little to no negative consequences for their actions – while, at the same time, young, poorer citizens who commit crimes with very limited social impact end up in jail. While it’s vital to recognise that laws have to be broken for the courts to act against anyone (people can’t just face custodial sentences for being titanically incompetent), there may be no return to faith in western capitalism if, for example, clear rule-breaking of the kind that happened at Volkswagen as part of that company’s cheating of emissions regulations, does not lead to prosecution. Harriet has written about the lack of justice in the VW scandal and YouGov polling at the time of UnHerd’s launch found that fewer than one in twenty Brits and only one in ten Americans thought the culprits of the economic crash of ten years ago have been adequately punished.

All this reminds me of the answer that Michael Gove gave two years ago when I asked him if Conservatives should worry about inequality. His answer was not only an emphatic “yes”, but he went on to insist that friends of capitalism must make a distinction between those who become rich through creativity, hard work and even good fortune and an “undeserving rich” who owe their wealth to rigged property markets, for example, or unjustifiable pay awards from poorly-constructed remuneration committees.

Michael Gove speaking at Legatum Institute event in October 2015, on the fringe of that year’s Tory conference


This continues to strike me as an incredibly important contribution from one of the biggest and most thoughtful brains on the Right of global politics today (and not just because voters also make clear distinctions between, e.g. manufacturers/inventors (thumbs up) and bankers/CEOs operating in false, cronyist markets (thumbs down)). Capitalism cannot be a one way bet in which the rich can get richer but never poorer – and all because of public sector underpinning of banks that are too big to fail or because of planning controls or central bank interventions that stop property investments from ever souring. All ladders and no snakes.

Illustration by Stephen Collins

It was also why Ruth Davidson was 100% on the money in her July essay for us, “Ctrl + Alt + Del. Conservatives must reboot capitalism“. She wrote:

“We will need to be particularly bold when we see restrictive practices. Too much profit comes from tax avoidance, land speculation, financialisation and other unproductive economic activity, rather than through innovation and high performance. Closing loopholes, increasing enforcement and overhauling regulatory frameworks can go some way to addressing the creeping cronyism that is making free market capitalism an unfree and anti-competitive capitalism, but this stick approach should only be one half of the story. Government also has the ability to set the tone and the direction of travel by using its vast array of levers and resource as a carrot, too. It should do so.”

Friends of free enterprise don’t just need to be angry when so-called capitalists bring the system into disrepute, we must be angrier than any socialist. Thank goodness for Gove and Davidson.

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