EDITOR'S LETTERMerryn Somerset Webb
Let’s get back to capitalism
We hoped that last week’s election would result in a Conservative majority in the UK. We are pleased that it did. We now know that the new pensions freedoms will stay with us; that the welfare system – and in particular the tax credit system – will continue to be reformed; that there will be no mansion tax, no rent controls and no rises to the top rate of income tax or to national insurance; and that the margins of private companies are no longer at risk of being determined by the whims of public-sector staff.
We were also pleased to see numbers out this week showing wages and employment rising again. As Roger Bootle notes in my interview with him, the UK looks to be in a perfectly “reasonable position”.
However, look a little deeper, and you will see that we aren’t without our problems. John Stepek looks at the UK’s fiscal situation and the nasty consequences (prepare for capital gains tax to be equalised with income tax); in my interview, we talk about the possibilities of inflation being used to deal with our debt; and Jonathan Compton looks at just how hard it is to escape from the super-easy monetary policy that the UK, along with much of the rest of the world, has been living with for the last seven years. Quantitative easing (QE), he says, is rather like the Hotel California: “you can check out, but you can’t leave”.
He doesn’t much mind in the short term – the more QE you get, the more markets soar, and like all investors, Jonathan likes that. But over the longer term it really matters. Why? Because as we have discussed here before, it subverts capitalism.
• Read the full editor’s letter here: Let’s get back to capitalism