The 2016 Brexit vote has focused minds on the recalibration of our social politics, but the leftward economic shift of the Establishment, who are in some ways following the public, is less commented on. Indeed, while the Brexit vote explained the Conservatives’ rise in the Midlands and the North in the 2017 General Election, it was the popularity of Corbynomics which propelled Labour to near parity with the Conservatives two years ago – a spectre which haunts this election.

The figure of Corbyn obscures the fact that Labour’s economic statism and red-in-claw socialism is popular and has been for some time. A recent YouGov poll indicates that the unpopular Labour leader, with the worst opposition leader ratings of all time, has a manifesto whose contents, when polled, have majority support across the board.

Survey after survey, and vox pop and after vox pop indicates that the British public are tired of austerity, tired of a battered and shabby public realm and now fully support better funding for public services, and more investment — even if this means higher taxes. The 2019 party manifestos reflect this new normal, with the Tories committed only to modest spending and tax rises, with Labour committed to shifting the country’s economics to the far Left.

UnHerd has commissioned polling which indicates that only 30% of the public agree that “Tax rates for high earners should be minimised to keep the UK competitive”, with 42% actively disagreeing with this statement. In terms of electoral geography, FocalData has estimated that only 22 of Britain’s 632 parliamentary constituencies have more people than not committed to tax competitiveness. Indeed those high spending manifestos are a reflection of these sentiments.

Of the 22 seats that support minimising tax on high earners, 17 are in London – including, somewhat ironically, the constituencies of Jeremy Corbyn and Emily Thornberry; yet another issue on which the capital finds itself out of step with the rest of the country. In fact, it’s easy to assess how likely an area is to support minimising the tax burden on the richest simply looking at how high house prices and average wages are in a constituency.

Just as interesting, though, is people’s perception vs reality on where the tax burden in this country really lies. The Government’s own data suggests that the Top 1% pay a staggering 30% of all tax, while taking only 13% of income. Tax change after tax change has shrunk the tax base, and while the many may want the few to pay a bit more, what happens if the 1% decide, in a world of global capital and free movement, that they don’t fancy paying for 1/3 of all Britain’s public services. We may be about to find out…

Source: HMRC

The aims set out in this manifesto are Socialist aims, and we are proud of the word… It is our intention to:

Bring about a fundamental and irreversible shift in the balance of power and wealth in favour of working people and their families

Eliminate poverty wherever it exists in Britain

Make power in industry genuinely accountable to the workers and the community at large

Achieve far greater economic equality — in income, wealth and living standards

Increase social equality by giving far greater importance to full employment, housing, education and social benefits

—

It’s time to take on vested interests holding people back.

Labour will build a fairer Britain that cares for all, where wealth and power are shared.

Labour will rewrite the rules of the economy so that it works for everyone. We will rebuild our public services, by taxing those at the top to properly fund the services we all rely on.

The first section was taken from Labour’s manifesto in February 1974; the second from its manifesto of 2019. As Corbyn and McDonnell started their careers during the Seventies heyday of widespread nationalisation, empowered trades unions and high taxation why not go back to find solutions from that era?

There are, of course, some similarities. Like today, it was a febrile time with politicians facing challenges from all sides.

There was economic upheaval, terrorism (from the IRA) and the rise of the far right countered by anti-racist movements on the streets. There was the rise of the feminist and gay movements. A debate and then referendum on Europe. There was even extreme weather: 1976 had the second hottest summer recorded and a hapless Labour minister, Denis Howell, was named in annual succession the Minister for Drought, then Floods and finally Snow.

In the past decade we also have seen economic upheaval, terrorism (from Islamic religious extremists) and the rise of the Left and Right in mainstream politics. Feminism and gender identification with the rise of the #MeToo and LGBTQ movements. We have had a debate and a referendum on Europe. Climate change is now a mainstream issue.

So perhaps it is not surprising that today’s Labour leadership has gone back to find solutions that are no longer remembered by most of the electorate. Labour wants the renationalisation of water, energy, the railways and Royal Mail. It argues that private companies are making huge profits and failing consumers with high prices and incompetent management. “Public ownership will secure democratic control over nationally strategic infrastructure and provide public stewardship for key natural resources” as the manifesto says. And who can argue with that intention? The aspiration to have public control is an appealing one, according to the polls.

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Anyone aged under 50 will struggle to recall nationalised industries. Between 1945 and 1970 coal, steel (twice), electricity, gas, water, air travel, the railways, roads and waterways and the Post Office (including what became BT) had all been nationalised. In the 1970s British Leyland and Rolls-Royce joined them. The level of bureaucracy had, by 1979, become a byword for incompetence; a metaphor for state overreach. From 1979 the industries began to be privatised, and only in 2008 did this trend reverse when the banking system became partially owned by the state as part of the bailout.

Nationalised industries had another effect — they entrenched the power of trades unions so that they became almost a tier of government in determining economic policy. Their power lay in the right to strike. It is impossible to exaggerate the impact of strikes on everyday life in the Sixties and Seventies: from the three-day week and doing exam revision by candlelight in 1973 to the winter of discontent in 1979. That year, 29.5 million working days were lost to strikes.

The Left has never forgotten that a Labour Prime Minister, Harold Wilson, in 1969 first tried and failed to curtail the right to strike. It took Margaret Thatcher in the 1980s to pass legislation, and when Labour eventually returned to power in 1997 Tony Blair refused to reverse it. Like Wilson he is still blamed by the Left, but the days of widespread strikes were over and 2018 saw the lowest level since the 19th century.

Today the Labour leadership has moved back to a much closer relationship with union leaders. Len McCluskey of Unite operates as an extension of the leadership. The manifesto pledges to work in partnership with “the workforce and their unions in every sector of the economy” and for unions to be handed the power to negotiate sector-wide agreements on wages and conditions that will re-empower the union movement. The first stirrings are being seen in railways where on 3 December the RMT began 27 days of strikes leading up to Christmas. Media reports of shivering commuters and shoppers can be expected any day now. For anyone from the Seventies it will be a familiar and depressing sight.

However, it was on direct taxation that the 1970s set some remarkable records, which even Labour’s current manifesto cannot get close to. The concept that high taxation stifled initiative and competitiveness was born in this era and led to much of the thinking on reducing direct taxation. Like nationalisation, high taxation was the policy of both major parties in the 1970s. In 1973, under the Conservatives, the highest rate of income tax was 75%.

When Labour came into power in 1974 Denis Healey as Chancellor faced an economic crisis that led to his creation of 10 bands of income tax. The basic rate of tax (which started at £4,500 a year) was 33%. Income above £20,000 per year was taxed at the staggering rate of 83%. That was nothing compared with the tax rate for investment income, which was set at 98%!

This had an effect on high earners. In what was regarded as a golden period of music two of the era’s greatest albums reflected the fury with tax. A few years earlier, George Harrison wrote “Taxman” on the Beatles’ album Revolver:

Let me tell you how it will be
There’s one for you, nineteen for me
Cause I’m the taxman

Should 5% appear too small?
Be thankful I don’t take it all
Cause I’m the taxman

Not to be beaten, in 1971 the Rolling Stones, each of whom owed more than £250,000 to the Inland Revenue, made themselves tax exiles and went off to the South of France, where they recorded Exile on Main Street — one of their greatest albums.

By these standards, the current Labour manifesto is quite modest. After 10 years of austerity the idea of taxing the rich at a top rate of 50% is by historic standards not too radical. In fact, as UnHerd Britain’s polling reveals, only 30% of the public agree with the statement that “Tax rates for high earners should be minimised to keep the UK competitive”, with 42% actively disagreeing. The top rate was 60% until 1989 — 10 years after Margaret Thatcher became Prime Minister. You can see why veterans from the Seventies are relaxed about it.

Indeed, they may be onto something: the younger generation is tired of austerity. Among the 18-30 demographic the aspiration to tax more, spend more and control more does not seem too radical. The idea that tax alone would have a negative impact on wealth creation does not make sense if you haven’t lived through the 1970s. Today’s impetus is more about fairness and repairing the creaking nature of public services. Such a policy may even work in the short term, as the public sector expands with higher tax receipts.

However, the final lesson of the Seventies is that once the political tools of nationalisation and higher taxes take hold they don’t easily go away. You cannot turn off such bold policies without the political cost of admitting you were wrong. The lesson for Labour is that sooner or later the public turns. Last time it led to Margaret Thatcher and 40 years of reversal. For Labour that would be a huge price to pay. History bites in both directions.

I’ve been thinking about this lately because everyone is talking about billionaires. For instance, there was a very stupid row recently after Bill Gates was quoted as saying that he would be left “counting what he had left over” under tax proposals by Elizabeth Warren, one of the frontrunners in the race for the Democratic party’s nomination for president.

The reason I say it was stupid is because literally the next words that Gates said were “I’m just kidding,” and that he had a moment before said that he had already paid about $10 billion in tax and was happy to pay twice that. Gates — who has also given away about $45 billion to his charitable foundation, to pay for among other things malaria treatment — is a weird example to pick as a representative of the class of “greedy billionaires who want to hide all their money away from the taxman”, but people did it anyway.

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But there have been less stupid conversations about billionaires too, coming from the Labour Party. It started with Labour’s Lloyd Russell-Moyle saying on BBC Radio 5 Live that no one should be a billionaire. Then Jeremy Corbyn had this to say, when he launched the Labour election campaign: “There are 150 billionaires in the UK while 14 million people live in poverty. In a fair society there would be no billionaires and no one would live in poverty.” Then, this morning, the shadow chancellor, John McDonnell, was on the Today programme talking about it too. McDonnell is a bit cannier than those two, so he didn’t outright call for the end of billionaires, but he agreed that the inequality was “grotesque”.

First: are Corbyn’s numbers right? I can answer that quickly: yes, close enough. If you go down The Sunday Times Rich List, you get to number 152 before you reach someone whose wealth is listed as less than £1 billion. Perhaps there are technical reasons why that’s not the right way to look at it, but most of us would be happy to say that Corbyn is right. And the Department for Work and Pensions says that 22% of the population lives below the line of “relative poverty”, that is, in households that earn less than 60% of the median household income, after housing costs; that’s about 14.8 million people. Again you could quibble with the definition, but it would be quibbling.

So the question is: would getting rid of billionaires improve things? Would the fairer society (let’s just shortcut the “what is fairness” debate for now) that Corbyn envisages be brought closer by removing all the billionaires from Britain?

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One point I’d like to make. I think it is likely that the money that Bill Gates has paid in taxes has done far less good than the money he has given away, by most people’s definition of “good”. Let’s imagine that all of the $10 billion he says he’s paid in tax has gone to the US federal government. Here’s a breakdown of the US budget, which tells us that of that $10 billion, about £800 million will go on servicing the national debt, and about $1.5 billion on defence. About $2.5 billion will go on social security, and about the same on Medicare and Medicaid. All the rest will go on assorted infrastructure spending and national payroll and so on.

If he’d given it to his own foundation, according to the Bill & Melinda Gates Foundation’s 2018 annual report, about $3.6 billion would have gone to “global development”; about $2.7 billion to “global health”; and about $1.3 billion on “global growth and opportunity”. Breaking it down further, a quarter of the “global development” fund would have gone on delivering vaccines, a bit more than a quarter to combating polio, 16% on family planning. Of the “global health” fund, about 30% has gone on malaria and HIV prevention and treatment.

If you want to improve the world, at least if you take “improving the world” to mean roughly the same things I do, you would much rather that Bill Gates’s money was spent fighting malaria than servicing the US national debt or paying for F-35 Lightnings. I’d even rather it was spent fighting malaria than going to Medicare or social services. The charity evaluator GiveWell estimates that by providing cheap antimalarial bednets, you can save one child’s life for about $2,800. It costs about four times that to provide one month of treatment for the average cancer patient in the US.

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And most of the money going in taxes will not be doing that; it will be building roads in Topeka or paying civil servants’ wages. These are important things, but if you want to maximise the number of lives you save, the money is much better spent on the Gates Foundation or other well-run charities working in the developing world than it is on the US government. There’s a much more rigorous examination of this idea here.

But this is not an overall argument in favour of not taxing billionaires. Not all billionaires are Bill Gates. Jeff Bezos and Warren Buffett and William Hewlett have also donated billions to good causes, but not all do, and some give it to, for example, Harvard University, where it will fund the education of mainly already rich people. Let’s imagine that the amount given to charitable foundations is utterly overwhelmed by the amount that could be taken off them in taxes, so even accounting for the gigantic mismatch in how much good a dollar will do if you give it to the Gates Foundation rather than the US federal government, it’s still better if you take all the money off the billionaires and give it to the taxman.

The next question is: do we think that will lead to fewer poor people? I assume that’s the goal, rather than making billionaires poorer being a goal in its own right. If so, then I should come straight out and say I am deeply sceptical.

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Here’s my reasoning. Billionaires are one product of the loosely defined economic system that we call “capitalism” and which has largely taken over the world since the collapse of feudalism. Luckily, they’re not the only product of that system.

In that time, worldwide, there has also been a spectacular drop in child mortality; a spectacular drop in world hunger; a spectacular growth in the number of democracies; a spectacular growth in life expectancy, especially in the developing world; a spectacular growth in levels of education, especially female education; and many other good things I can preface with the words “a spectacular”. (Just go here and look at “research by topic” to see a load of graphs that can be summarised as “good things over time: up; bad things over time: down”.)

That economic system is, of course, flawed and, like the US federal budget, allocates loads of money in ways that are not optimised for global improvement. A hypothetical god-like superintelligent AI could probably run the economy much better. But the hugely imperfect system we have has steadily improved things, nonetheless.

That’s not to say we couldn’t make improvements to it. But remember the deer? You can make improvements to complex but essentially functional systems by changing them slightly, not by making their legs two feet longer.

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By analogy, the economic system sort of works. It is making people better off and healthier and longer-lived (and, it seems, happier). We could improve it; make its legs a little longer. Making billionaires pay significantly more tax (Gates said he was happy to pay double, remember) seems a making-legs-half-an-inch-longer sort of idea. It might make a few of them move to Grand Cayman, but it should increase tax revenues, and not increase the unemployment rate or damage the economy too badly. If it doesn’t work out like that, at least you haven’t irretrievably screwed a global economy that is slowly lifting people out of poverty, and you can change it back. As McDonnell said on Today, there’s plenty of room for a flatter, more equal society, without getting rid of billionaires entirely.

But “making it impossible for there to be billionaires any more” seems more like a making-legs-two-feet-longer sort of idea. The economic system creates very rich people, often but not always as a reward for creating or selling things that people want, such as Harry Potter or Microsoft Windows or petroleum. I don’t know exactly how you’d change the system to stop it doing that (and Corbyn hasn’t, I think, been specific), but it’d have to be something pretty radical and profound. And then you really do run the risk of doing terrible damage to the workings of the economy. Maybe Corbyn, Russell-Moyle and McDonnell are sufficiently farsighted and brilliant to be able to do it without screwing it all up, but I am unconvinced.

Billionaires is one of those words that sets off culture wars. It has more meaning than simply “someone whose net worth is equal to or greater than one thousand million local currency units”; it’s capitalist oppressor or captain of industry, our team, their team. But billionaires, for better or for worse, are the product of an economic system that is, slowly, jerkily, unevenly, making the world better. If we want to get rid of them altogether, rather than nibble away at the edges, we need to be damn sure we’re not tearing down Chesterton’s fence.

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Given the ten-year time frame, it’s absurdly and obviously over-ambitious. Or is that just conventional wisdom speaking? Looking back, there’s a continuous record of official forecasters underestimating the progress that can be made on green technologies like wind and solar power.

There’s also a history of political resistance to any shift from fossil fuels – on the supposition that the alternative technologies aren’t ready yet. That’s a spurious argument, because new technology tends to get better and cheaper in the process of deploying it. As with so much in life, learning comes through doing. The fact that we’ve seen such dramatic cost improvements across a number of fronts – from offshore wind to LED lighting – shows that governments were right to kickstart markets through subsidies and other interventions.

Nevertheless, compared to what’s been achieved so far, the GND represents a whole new level of difficulty, requiring a much faster rate of progress across a much wider spectrum of technologies.

But for the sake of argument, let’s assume that the GND makes all the breakthroughs it requires as it goes along. With the right technology in hand, how much would it cost?

To get an idea, let’s turn to Michael Liebreich of BloombergNEF, who knows a thing or two about infrastructure investments that actually happen.

Totting up the decarbonisation aspects of the GND, Liebreich tentatively arrives at an annual capital investment figure of “$980 billion per year”:

“This is, of course, very much a back-of-envelope figure, as the text is heroically (and presumably deliberately) vague, but it confirms that the hard capital spending part of the GND would indeed be somewhere around the trillion-dollar per year mark.”

Is this remotely feasible? Liebreich deliberately leaves aside the question of how the US government might raise such a sum, or how it might pay it back. Instead, he asks a couple of really basic, but all important, questions.

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Firstly, is there enough wealth lying around from which the capital required for the GND could, in principle, be raised? The answer to that one is yes:

“According to the Federal Reserve, the net wealth of U.S. households reached $109 trillion at the end of 2018, up from $60 trillion at the end of 2009. Even assuming that all of the GND capital spend is financed domestically, diverting $10 trillion over ten years into the GND’s clean energy, infrastructure and transport plans would absorb less than 10% of the nation’s savings.”

The second question is that, assuming it were raised, could the GND capital be spent? After all, the productive capacity of an economy, while not absolutely fixed, is finite – you cannot pay for more work to be done than there are workers and machines to do it. Furthermore, the rate at which capacity can be expanded is also limited:

“According to the Congressional Budget Office, at the end of 2018 U.S. economic output was 0.5% above its long-run potential. The U.S. has only ever run over 2% above its long-run economic potential for short periods, always followed by inflation, recession, or both.”

Liebreich calculates that “$1 trillion of GND spending would represent 4.9% of [US] economic activity” – thus, mathematically, the GND would require a diversion of economic activity on a “fairly grand scale”. Presumably, the units of measurement here would be hundreds of billions of dollars and millions of workers.

It is therefore entirely apt to describe the GND as a “national mobilisation”: it resembles a war effort.

Nevertheless, the American public appear to be up for it – and not just the youthful urbanites who vote for AOC and other radical Democrats:

“In one poll at the end of 2018, the Yale Program on Climate Change Communication and George Mason University found 81% of registered voters, including 64% of registered Republicans, supported shifting the U.S. to 100% renewable energy within 10 years.”

A cynic would say that those polled are simply expressing a view on an ideal world and that, unlike Michael Liebreich, they haven’t sat down and worked out the practicalities of making the dream come true.

But maybe the public are being more realistic than they’re given credit for. They can see for themselves how America’s trillions have been spent over the last twenty years – whether that’s on disastrous foreign wars, inflating the housing market, bailing-out the banks, pumping enormous sums into the world’s most expensive healthcare system, paying the price of unresolved social pathologies, supplying corporate welfare to the wealthiest corporations on the planet, and providing tax relief to billionaires. They look at all that, and so much more, and wonder if the money couldn’t be put to better use.

Far from perceiving the GND as a “socialist land grab”, to ordinary Americans it looks like an opportunity to take back control.

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But that leaves one teeny-tiny little problem. Who exactly would the GND put in control? Who would be directing the flow of such vast sums of wealth on so accelerated a schedule? Who would have to work out the details of how to raise the capital and recoup the investment?

Would it be much the same ruling establishment that presided over the profligacy, waste and disaster of the last twenty years?

Or can we expect the likes of AOC and Bernie Sanders to make all the difference?