The Capitalist

Britain's national debt has just passed £3 trillion for the first time – and John Penrose says it's time to get it under control. But while Andy Burnham ruled out breaking Rachel Reeves's fiscal rules to borrow more, he's asked his Chancellor to find 'wriggle room' within them.
Penrose argues that what we need instead is full transparency about the state's liabilities. Any honest reckoning would include the future cost of the state pension, already running at over 220% of GDP. Rather than fudging the figures yet again, Burnham should build Britain a proper national balance sheet. With an honest set of numbers, we can finally have a proper conversation about how to reduce the stock of debt.
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Richard Hanania had a ringside seat for the rise of MAGA, as his Substack essays on anti-woke issues gained traction at the highest level of the new American Right. He had high hopes for Donald Trump’s second term, and coined the term ‘Tech Right’, hoping for an administration that worked productively alongside some of the smartest people in Silicon Valley. In practice, he says the second Trump presidency has proved ‘a nightmare scenario’.
Hanania’s new book ‘Kakistocracy’ is an attempt to understand what went wrong – and the wider lessons as populism continues to gain ground around the world. He argues that populists, for all their promises of overthrowing corrupt elites, often end up replacing a flawed system with something far more damaging – ‘rule by the worst’.
On this model, elites can be foolish and subject to groupthink, but they are held in check by a status game that rewards honesty and truth-seeking. Populists, by contrast, gain power from their unfiltered relationship with voters, which makes corruption and lies easier to get away with, and encourages zero-sum thinking.
But what about the pro-market successes of a populist like Javier Milei? And what are the risks for the UK, where Reform UK have a real prospect of forming the next government? This week on The Capitalist, Hanania gives his take. He doesn’t rule out the prospect that a party like Reform could bring in radical reforms that are good for Britain. But it is a strategy with a big warning label: once these forces are loose, nobody controls where they end up.


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The recent Spanish border crisis – in which some 72,000 illegal migrants crossed into Ceuta from Morocco – should be a wake-up call for Europe, argues Mani Basharzad. Most of those who crossed the border soon returned home, but thousands remained and dozens died in the chaos. Even the most fervent Remainer ought to view these events with relief that Britain is no longer bound by the EU’s right to free movement.
But Basharzad argues that the incident show a much wider failing in the EU: how the weakness of one member state can impose huge costs on the rest of the bloc. From fiscal policy to free movement, the union is rife with moral hazard. To rein in bad actors, it needs to restrict the benefits of membership to those who follow the rules.
Each week we bring you an example of the best writing from CapX, read aloud. For hosted conversations, listen to The Capitalist, every Wednesday.
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Britain’s ‘equal value’ pay rules go well beyond upholding equal pay for the same work, and mean that tribunals have the power to ignore the market and decide that bin men and teaching assistants should, in fact, be paid the same. These rules bankrupted Birmingham City Council, and the big supermarkets are already facing claims worth up to £8 billion for back pay. Now the Government wants to expand the law further, adding race and disability to the list of grounds on which you can bring a claim.
Alex Tabarrok, Professor of Economics at George Mason University and co-founder of the blog Marginal Revolution wrote a viral post in 2024 on Britain’s ‘Orwellian’ approach to equal value pay. He walks CapX editor Marc Sidwell through the madness of trying to rule by committee on how to treat apples and oranges the same, and explains why trying to set a just price is like suing the weather.
He says we’ve somehow ended up in the worst of all worlds: instead of the old Marxist fantasy of a scientific bureaucracy making economic decisions, we have a tribunal system everyone can see is broken, spending years and generating hundreds of pages of documents to produce nonsensical outcomes.
Tabarrok argues our pay rules are part of a much bigger pattern: well-intentioned rules piling up like pebbles in a stream, until the stream – the economy, innovation and growth – is dammed. And sometimes only a sharp rap on the head from reality can restore policymakers to their senses.


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Give Andy Burnham his due. He has been arguing for devolution for the best part of a decade. But Tees Valley Mayor Ben Houchen says that’s what makes the Prime Minister’s recent announcements so dispiriting. Burnham says he wants Whitehall to give power away, but he seems determined to grip tighter than ever.
Houchen argues that handing over a share of business rates and income tax counts for little if mayors are restricted from choosing how to spend the money – or whether to offer a tax rebate instead. The proposed arrangement is more like pocket money with strings attached – devolution in name only.
Each week we bring you an example of the best writing from CapX, read aloud. For hosted conversations, listen to The Capitalist, every Wednesday.
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