How to Starve a Leviathan
A Manual to Hand to Your Next Government
We live now, for good or ill, in a globalized world, and that one fact has quietly rewritten the rules of belonging. If you have money, you have options, and options are a form of escape. A Londoner can go to Italy and strike a deal there, reach a private arrangement in Switzerland, or decamp to Dubai for three years, five years — and some who leave never come back. An American can do the version of the same trick without a passport: leave California or New York for Texas, Florida or Tennessee, where the income tax is zero and the regulators are quieter.
The principle is identical on both shores. Capital and talent now flow toward whoever treats them best, and they flow fast. It is a brain drain happening in real time. Corporate startups are in decline. And why wouldn’t they be? Everything is set against them.
You cannot plan ahead when the rules change all the time. A bad situation you can prepare for; if you know the weather is going to turn, you pack a coat. What you cannot prepare for is not knowing what the finance ministry will do next week.
Consider the person who, in good faith, bought an electric vehicle because the state told them it was the responsible choice — and who now hears that they might be taxed by the mile. The rules are being changed retrospectively on a decision already made. Or take the owner of a second home, who may wake to find their council tax quadrupled, again retrospectively. An American small-business owner who built a supply chain on one set of trade rules, only to watch tariffs rewrite the maths overnight, knows the same vertigo. How is anyone supposed to build a life, a business, a future on ground that shifts beneath them?
And so, increasingly, people have simply said: we’ve had enough. What has emerged is a global marketplace for the wealthy. There is, undeniably, a privilege that comes with money — and the chief privilege is mobility. You can move from country to country, state to state, jurisdiction to jurisdiction, picking whoever treats you best, playing the system in ways the middle and lower classes never can. It is a reality we may have to accept rather than resent.
Some people, as the now-familiar phrase has it, are somewheres and some are anywheres and a meaningful proportion of citizens will say, frankly, I am mobile, and I intend to hedge my bets. Governments that refuse to recognize this are not principled; they are foolish. Drive out the mobile and the tax take shrinks, and a shrinking tax take begets higher taxes, which drives out more people still. That is the negative circle. What is needed is the opposite — a virtuous one.
A Tale of Several Economies
It would be easy to assume the whole West is in the same boat. It is not. One or two countries are actually doing rather well, and the contrasts are instructive — within Europe, and across the Atlantic too.
The major European economies are struggling. France is in desperate trouble; its fiscal position is, if anything, even worse than Britain’s. Germany’s situation is very bad too, for entirely different reasons. But look elsewhere. A generation ago the Republic of Ireland was a basket case — a poor, largely agrarian economy on the western edge of Europe. Today its GDP per capita is among the very highest in the world, third or thereabouts. Yes, that figure is a statistical freak in part, inflated by the likes of Amazon booking their numbers through Dublin. But strip the distortion away and something real remains: the Irish gamed the tax system, and they did it cleverly, for the benefit of their own citizens. They turned themselves from one of Europe’s poorest countries into one of its richest.
Meloni’s Italy is learning that same lesson. Italy is not out of the woods — it carries a major debt problem, it endured a generation without growth, and its demographics remain a serious drag. But it has started to attract capital. People are moving there. Property, in most parts of the country, costs considerably less than it does in Britain. The quality of life is high, and — crucially — there is tax certainty, and newcomers are made welcome. Italy is addressing its debt, slowly, from a high base, and it is beginning to grow.
Then there is the most interesting European success story of all: the former Eastern Bloc. These nations started from an incredibly low base, and yes, some of their progress is simple catch-up. But the deeper truth is that they have been fiscally conservative. Their states are smaller. They did not go down the mass-migration route — if anything, their populations have shrunk. And the results speak for themselves.
Poland is on course to be richer than Britain, per capita, within ten to twelve years. Think about how extraordinary that is. Poland has ridden every difficulty with genuine aplomb. Nor is it alone; the same is true across that entire northern and eastern European arc. These are societies that are conservative with a small c, socially cohesive, fiscally sensible, and possessed of a strong work ethic. They have welfare states, but welfare states that are not out of control. They are building strong moral societies — dominant may be too strong a word, but they are catching up with the rest of Europe after fifty, sixty, seventy years of appalling misrule under the Soviet yoke.
And then there is America, which is the great rebuke to the fatalists — and, as we shall see, a cautionary tale in its own right. It keeps creating jobs and wealth, it has grown at roughly three percent a year with a consistency Europe can only envy, and it dominates the industries that will define the century: technology, software, artificial intelligence. It has its problems and its yawning regional disparities. But is it mere luck that the most valuable companies on earth cluster in California and not in Frankfurt or Birmingham? No. The Americans are doing something right, and the lesson is there to be learned — even as their public finances rot from the inside, a contradiction we will come to.
That is the real map. The growth in Europe now lives in the east and the periphery. Old Europe is dying, and Britain is dying with it. And the country that should be Britain’s natural model, America, is simultaneously the West’s growth engine and the West’s most reckless debtor. Both truths matter.
The Dying of the Light
What makes the decline so maddening is how needless it is, because the assets are still here, and they are phenomenal. Britain has two of the greatest universities on the planet and at least twenty more that are genuinely first rate. It has Wimbledon, Wembley, Twickenham — every sport there is. It has rock music. It has cultural depth that other countries can only envy. Stand in Soho and feel it: there are not many corners of Europe with that kind of vibrancy, that density of creativity. The City of London, for all its problems, remains the second most important financial center on earth — behind only New York, whose own dominance is a reminder of what concentrated talent and deep capital can still build.
It is not too late to turn this around. But it is getting close to the eleventh hour. Come the next British election, if the country has not got its act together and taken radical action, people will head for the doors in serious numbers, and at that point the decline becomes almost impossible to reverse. They are on a knife edge. The assets are still there. The creativity is still there. Enough people still have the spark. But they are being crushed, and everyday people struggle to understand why the Treasury and the Bank of England — or, for that matter, the Congressional Budget Office and the Federal Reserve — cannot see it.
Go back to the 1980s. There was a genuine excitement about Britain then. The economy grew three, four, five percent a year. Most people — not everyone, but most — were getting wealthier. It was the same restless optimism that ran through Reagan’s America in those years. Those reforms have since been unpicked, one by one, and the result is a country in a worse place than it was even in the 1970s. Because this is not merely an economic malaise. It is a cultural one too. The division and rancour, the willingness of the state to legislate on matters of private ethics that ought never to have left the private sphere, the sense of a society at war with itself — all of it feeds a pervasive feel-bad factor. Americans feel it as keenly as all of Western Europe; the bitterness of their politics is the same disease wearing different colours.
The window is short, but the problem is recoverable. We should be clear-eyed, though, about how we got here: these troubles are thirty to thirty-five years in the making, and no single party built them.
The rot set in with the embedding of the big state, much of it moved off balance sheet and beyond proper parliamentary scrutiny through a careful web of institutions. A Supreme Court was founded that made meaningful change far harder to enact. A quangocracy was built. A civil service was cultivated that is, by temperament, hostile to precisely the kind of reform now required. And here is the part the right would rather forget: all of that was then entrenched, not dismantled.
The American story indicts both parties. The national debt did not climb to thirty-eight trillion dollars under one banner. Republicans cut taxes without ever cutting spending and called it conservatism; Democrats expanded entitlements without ever funding them and called it compassion. George W. Bush ran wars and a prescription-drug entitlement off the books. Obama presided over trillion-dollar deficits. Trump signed tax cuts and then, during the pandemic, sent cheques to almost everyone and blew the deficit wide open — and is now floating the idea of handing two thousand dollars to every American earning under a hundred thousand. Biden answered with spending of his own. Whichever tribe holds the chequebook, the chequebook only ever gets bigger. The leviathan is bipartisan. That is the first thing an honest observer has to admit: this is not a tale of virtuous conservatives and villainous progressives. It is a tale of a whole rotten political class, of every color, that discovered it could buy the present by mortgaging the future.
The symptoms are everywhere once you look. The benefit system is out of control and has become counterproductive. The country is riddled with cliff edges. In Europe, spare a thought first for the people who never earn thirty thousand a year — who get up early, work hard, and watch a neighbour who simply can’t be bothered do no worse. Then there is another group, perhaps less likely to attract sympathy: those earning around a hundred thousand, who find themselves taxed at an effective marginal rate of sixty-five, sixty-eight percent on income between roughly a hundred and a hundred and thirty thousand. It is plainly absurd that someone doing well in life pays a higher marginal rate than someone earning half a million.
America has its own grotesque cliff edges — the welfare and subsidy thresholds where earning one extra dollar costs a family thousands in lost benefits, punishing precisely the striving the system claims to reward. Different countries, identical perversity.
Can a new government — of any stripe — fix all this in five years? No. It cannot. But it can begin to turn the tank around. This is a fifteen- to twenty-year project, and there will be pain. You cannot rectify a fiscal crisis, a tax crisis and a regulatory crisis simultaneously without taking some genuinely tough measures. Whoever governs next should take that pain very, very early. Go big. Take it early. Do the work before you are elected. And anchor it all in fairness, because everyone agrees that people who are genuinely in trouble should be helped — that is not for debate.
The Arithmetic of Pain
The numbers, set out honestly, are stark — and they are also navigable. A reforming European government needs to take perhaps a hundred to a hundred and fifty billion euros out of public expenditure almost immediately, and recycle a good portion of it into tax cuts. Is that doable? Yes — and there are several ways to get there. Britain, for example, spends around three hundred and sixty billion on benefits, roughly half of which goes on pensions, and there is not much to be done about that half. So the pain has to be shared.
For what it is worth, the triple lock should go. Ending it would save seven or eight billion a year, compounding — modest in any single year, but substantial across the lifetime of a parliament. Beyond that, the country needs to get back to a normalized number of people on benefits, and to think very hard about where the bar sits, because it cannot be right that someone on benefits can end up better off than someone on the minimum wage. A great deal can be shaved from the welfare budget without cruelty. And the quango budgets demand ruthlessness: bring them in-house almost immediately and go through them line by line. Not required. Not required. Yes — we need that one.
America faces the same arithmetic on a vastly larger scale, and the same political cowardice surrounds it. The bulk of the federal budget is entitlements and interest — Social Security, Medicare, Medicaid — the very programmes that neither party will touch, because the pensioner and the near-pensioner vote in numbers the young cannot match. The honest truth, on both sides of the Atlantic, is that the maths cannot be made to work by trimming the parts everyone agrees are wasteful. The big money sits in the promises that are most popular, and courage means saying so out loud.
Re-engineering the State
None of this happens by wishing. It requires re-engineering the very mechanics of the state, and that is probably the first thing a new government has to do. The hard truth, too often forgotten in the euphoria of polling day, is that winning the election is the easy part. Implementing the programme is the difficulty.
The pushback will be enormous, and it will come from every direction. In Britain, whatever shape the BBC is in after its recent troubles — and assuming it remains central — it will be deeply hostile; we saw how it behaved over Brexit, and how it has behaved consistently since. The civil service itself will resist, and it has grown to a size that defies belief. The headcount has risen from around three hundred and eighty thousand to five hundred and fifty thousand. From a post-austerity low of three hundred and eighty-four thousand in 2016 it climbed to five hundred and sixteen thousand by March 2025, and it is almost certainly higher now.
The Office for National Statistics, which tracks UK productivity, records that public sector productivity is lower today than it was in 1997 — a year when there was barely an internet and no digital economy to speak of. How can that conceivably be the case? Layer on top the NHS, which has swollen from around 1.2 million to 1.7 million staff, and the picture is of more than a million extra public sector workers delivering, on the available evidence, less output.
America’s version of this resistance has a different shape but the same logic. The permanent bureaucracy — the agencies, the regulators, the federal workforce that outlasts every administration — has its own institutional interests, and they do not include shrinking. When a reforming president arrives, the machinery slows, the lawsuits multiply, and the careerists wait him out. The resistance, in both countries, will not stop at the broadcasters and the bureaucracy. It will come from the other parties and those doing their bidding. There will be the familiar slurs hurled in every direction — fascists, racists from one side; communists, traitors from the other. And it will come from the courts, in the form of legal challenge after legal challenge after legal challenge.
Which is why whoever governs next must walk through the door with a detailed plan already drafted. In Britain, under the royal prerogative a government possesses some significant powers, and where a measure has been set out explicitly in a manifesto, it has the moral mandate to use them. It should learn, too, from what Trump’s team attempted in 2024: assembling people aligned with the agenda, ready to serve as senior advisers from day one rather than spending two years learning where the levers are. (That America then demonstrated how easily such an effort can collapse into chaos and self-dealing is part of the lesson, not a refutation of it.)
Britain must also confront the convention that ministers cannot dismiss civil servants — a convention that should be overturned by an Act of Parliament. Not to import some Goldman Sachs hire-and-fire culture, but to remind the civil service of a basic constitutional fact: the government of the day, however little the mandarins may like its programme, is the government of the day, and its will must be enacted.
Above all, the markets must be convinced. Any serious party must put fiscal sustainability front and centre, because it is absolutely essential, and it leads directly to an aggressive plan to regularise spending. The timid route is the one already worn smooth by the tax system: freezing thresholds. Freeze them and fiscal drag does the work quietly, hauling in perhaps twenty or thirty billion a year as inflation erodes their real value — the same stealth tax that American bracket creep imposed for decades before indexation.
But far bolder things are possible. We should remember that the British state has grown from a third of the economy to fully half. How much is too much? Do you want to live in a free society or a controlled one? In a free society, the country will blossom — and the left may be surprised to find that, in the long run, it produces a better health service and a better education system. Freedom and liberty ultimately deliver better services for everyone. What the current approach does is put the cart before the horse: short-term expediency, generosity with other people’s money, and the slow strangling of the golden goose.
The Golden Goose
For a long while the political class got away with it, because so much of Western Europe was itself a basket case, and by comparison Britain still looked tolerable. But the comparison has curdled. The country has trashed more than its reputation as a low-tax destination. It has trashed its reputation for sane regulation, for the rule of law, for freedom and for fairness. That, more than any single tax rate, is why people are leaving. And America should not be smug here: when a great democratic nation lets its debt and its dysfunction run unchecked, it too begins to trade on a reputation it is busily spending down.
There is a creed that circulates online, blunt enough to provoke and clear enough to remember. Capitalists, it runs, are not mean; they simply understand economics and incentives, and capitalism is enforced by freedom. Socialists, by contrast, are not kind; they are stupid and evil, because every socialist nation has enforced its ideology with wars, bullets and censorship. Choose freedom.
It is a hard-edged formulation, and deliberately so, and the core of it is difficult to argue with: every collectivist project, however prettily it dresses itself, ends in coercion, because a plan imposed on everyone must in the end be enforced against everyone. The one correction worth making cuts against the political right, not in its favour. The self-described champions of free markets have, in office, presided over the largest expansions of the state and the debt in history — which means they were never really capitalists at all, merely statists who preferred a blue rosette to a red one. And that is precisely the point.
The real division has never been left versus right; it is liberty against the state. It is those who would let people keep the fruits of their own effort against those — of every party, every colour, every flavour of good intention — who believe that some committee, somewhere, should decide for them.
The deeper difficulty is that two related weaknesses run beneath the whole predicament, and they afflict every Western democracy. The first is that we no longer have a strong enough culture of freedom; too few people genuinely understand what liberty means. The second is that we have done a woeful job of teaching the basic economics that would let them see how prosperity is actually made. Many of us believed, until quite recently, that we lived in free countries — and have been shocked to discover the qualifications, not only in the erosion of economic liberty but in the narrowing of speech. We can still, within reason, say more or less what we like. But in the mainstream that freedom is increasingly challenged, and the window of what is acceptable to discuss keeps closing — in American universities and corporate HR departments quite as much as in European institutions.
How the Tithe Became the Leviathan
To understand how far the state has swollen, it helps to recall how small it once was. The historian A. J. P. Taylor observed that an Englishman born before 1913, if he was law-abiding, might pass his entire life with no interaction with the state beyond the local bobby on the beat and the local postman. Taxes ran at around ten percent, a biblical tithe, and most of even that went on the Royal Navy. America before the First World War was much the same: no federal income tax to speak of until 1913, a tiny federal government, a citizen who might live and die having dealt with Washington only at the post office. It is a myth, mind you, that there was no welfare in the old order; it simply was not delivered from the capital. It was localized — a dense fabric of local charities, churches and mutual societies, many of which, in Britain, helped to found the Labour Party seventy or eighty years later.
Then came the cataclysm. A first world war, and then a second, both ironically instigated by British money power. After the first came Homes for Heroes and the first pensions — entirely understandable responses to immense sacrifice. The state’s share of the economy climbed from ten percent to twenty-five or thirty. Then came the second war, and then, in Britain, came Attlee, and Attlee changed the game. He nationalized personal responsibility. It sounded moral, and in many ways it was done for genuinely altruistic reasons. America’s version arrived in instalments — the New Deal, then the Great Society — and with the same logic and the same trajectory: each programme launched for the noblest of motives, each one ratcheting the state a little higher and personal responsibility a little lower.
Over the decades that followed, the welfare state grew out of all control, and in doing so it broke personal responsibility and corroded the will of people to make their own way. We have now reached a tipping point. Either there is a counter-revolution in which we grasp just how far our liberty has been eroded, or we enter a genuinely dark period in which the state dictates virtually every aspect of life, and the scope for individual action narrows to almost nothing.
Coming Apart
It feels, already, like a dark time. There are serious people arguing that Europe is effectively in a state of civil war, a claim that is hard to process and harder still to dismiss out of hand; and anyone who has watched America’s politics curdle into mutual loathing will recognize the diagnosis.
Meanwhile the polls register the rising popularity of leftist figures, who are economically illiterate, and the spectacle of the European Greens and the Liberal Democrats drawing together to fight what they call the fascism of the right — an irony almost too rich to bear. And yet one can understand the anger of the young who turn to the radical left, even while judging them wrong. Many have been failed by poor parenting and poor education. They were funnelled into university and saddled with debt. They cannot find good jobs. They cannot get on the housing ladder. They live in a society that barely punishes petty crime. Of course they are ripe to be sold a socialist story. They are mistaken — but the anger is comprehensible, and a right that merely sneers at them will never win them back.
There is a book about America, Coming Apart, published ten or fifteen years ago, that contrasted the country of the 1960s with the country of a decade ago. In the 1960s, the chief executive ate in much the same burger bars as his workers, took only slightly nicer holidays, and lived a broadly similar life. Most people were married.
Set that against today, where a super-elite has detached itself entirely and the curve below has hollowed out — and the further down that curve you travel, the less likely a person is to be married, with all that implies for the stability of society and the prospects of the next generation. The two tribes are becoming, quite literally, different peoples. It was written about America, but it describes Europe just as exactly, and that is precisely the point: this is a shared Western affliction, not a national peculiarity.
