‘Economic growth… is not just about individual well-being, it’s not just about prosperity, it’s also about the ability of Western democracies to scale up their defence budgets. It’s about our ability to outproduce our adversaries.’

Are Nimbys a threat to national security? Britain’s inability to build houses and infrastructure is rightly at the heart of our domestic political debate. Dalibor Rohac thinks it needs to be seen as a geopolitical failing as well.

This week on The Capitalist, I sat down with Rohac, incoming director of research at Globsec, to discuss his new book ‘Unshackled: How Economic Growth Can Defeat the World’s Dictators’. We also discussed how to defend Western institutions while still building fast, what Mancur Olson can tell us about vetocracy, whether letting China into the WTO was a mistake and why chasing foreign students out of American universities is an own goal.

Rohac’s argument is that the accumulated sludge of special interests and regulatory stasis which reduces growth and stops houses and reservoirs being built has serious security implications – such as the shortfall in defence production across the West. Free markets can deliver in ways that more centralised systems cannot, but only if the shackles are taken off.

He remains an optimist, on the grounds that free societies have a remarkable power for self-correction. But who will stand up as a new champion of the Western order? A new Reagan or Thatcher may be harder to find.

Below, you’ll find some short excerpts from our conversation.

Marc Sidwell
Editor, CapX

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Why growth is a geopolitical issue:

‘This book emerged in my mind after Russia’s full-scale invasion of Ukraine in 2022. I was puzzled by two things. First of all, I was puzzled by the fact that the collective West – the EU, the UK, the US – have been quite ineffective in trying to build a broad-based coalition of countries that could hold Russia accountable and apply sanctions. From Indonesia to India to South Africa to Brazil, much of the so-called Global South just decided to sit this one out. And secondly, I was stunned by the fact how Russia, despite all of its economic and demographic and other weaknesses, has been able to outproduce us when it came to the defence industrial base in many sectors. To this day we are sort of struggling to restock stockpiles of artillery shells, high-precision missiles and many other weapons. And I was trying to think about the drivers of this kind of fecklessness, this lack of effectiveness on the part of the West. And I think fundamentally the reason boils down to the fact that we’ve done a whole lot to squander our soft and economic power in recent years and decades. Economic growth is a strategic variable. It’s not just about individual well-being, it’s not just about prosperity, it’s also about the ability of Western democracies to scale up their defence budgets. It’s about our ability to outproduce our adversaries.’

Nimbyism blocks more than new homes:

‘What my book tries to argue is that there is something that could be described as Nimbyism, broadly understood – the collective assortment of vetocracy and regulatory stasis which has been pervasive throughout our economies. That is the same thing that prevents housing from being built in the Bay Area, that drives the cost of infrastructure projects to astronomic heights, that prevents us from adding new capacity in electricity generation. And that’s the same force that also makes it very difficult to produce artillery shells at scale. Obviously the specifics will differ country to country. I think one way of understanding the problem is by going to the great economist and social theorist Mancur Olson and his theory of special interests and distributional coalitions – how those add up over time to a system in which it is very difficult to get anything done, and in which these overlapping distributional coalitions effectively paralyse the economy. He calls this process institutional ossification, and he then argues that it takes a big crisis to shake those interest groups off.’

On populism’s own goals:

‘One of the greatest strengths of the United States during the Cold War era has been its ability to leverage international talent and inward migration – the whole generation of wartime European refugees that settled in America. I think that should have been one of our strengths in this new Cold War against China or Russia or Iran. Everybody is trying to get to the West. And today the administration is busy trying to chase away students who are trying to come to the United States, is trying to kick out researchers at universities, putting its hostility towards international talent on display. And that’s very much an own goal that I see very little justification for. It’s driven by this populist impulse, but channelled in a very unhelpful direction. And I think the same could be said about our trade policy, or lack thereof. We should be building broad-based coalitions – for our allies and for ourselves – to build alternatives to a dependence on Chinese supply chains. We are doing the exact opposite.’

What defines the West?:

‘To me, the West is not a geographic category. It’s not a category that could be defined ethnically or racially. To me this is a category that’s defined primarily through institutions. Countries that embrace liberal democracy and a free market economy, to me, fall into this basket. And I think that makes them naturally very like-minded and aligned in some fundamental ways. We can debate that as an empirical proposition, but I think the intuitive case for this is quite strong. The empirics of democracies not fighting wars between each other is also quite compelling.’

On the hidden power of free societies:

‘At a very basic general level, I have a great deal of faith in the self-correcting ability of free societies. We can discuss things, we can see what has failed, what works, we can learn from past mistakes. I think that’s the biggest advantage that we in the United States and in Europe and the UK have over the unfree societies. I mean, Vladimir Putin can’t really get himself out of this war in Ukraine that he started. We have the ability to reconsider. Very often when you look to the past, it’s been the same administrations, the same political leaders who drove into the ditch that then changed course and shifted trajectories. The big push for deregulation started in the 70s under President Carter, and so on and so forth. So in a sufficiently long sweep of history, I’m optimistic. ... Insofar as America remains a free society, it can basically get itself out of any hole it’s in, no matter how deep.’

Do we need a new Thatcher or Reagan?:

‘I mean, it is very hard to look up to similar examples today. One of the challenges of the present moment is that our voters in the present information ecosystem get tired of incumbents very quickly, no matter how well-intentioned or thoughtful they might be. And I wonder whether we’ll see a new generation of Thatcher or Reagan-like leadership. But history suggests that we need it. It will be very hard to make any headway without.’

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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.

Each week we bring you Despatch – an example of the best writing from CapX, read aloud. For hosted conversations, listen to The Capitalist, every Wednesday.

‘Be careful. Understand that this thing is difficult to control. Once you unleash these forces, they tend to go in surprising directions.’

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 great 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, the second Trump presidency has proved, he says, ‘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, I asked Hanania for 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.

Below, you’ll find some short excerpts from our conversation.

Marc Sidwell
Editor, CapX

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On the ‘Tech Right’:

‘I coined the term “Tech Right” back in 2023. And I thought these people were less populist, they were libertarian, they were obviously smart. To the extent there’s been a human capital deficit on the Republican side since Trump came along, there would be a solution to that, too. And they had money, and they had influence and they had large voices. You’d think they’d shift the American Right in their direction. But the lesson of the last ten years is that the Trump cult is just much, much more powerful. They were spending all their time on Twitter and getting a lot of brainworms – they didn’t stay who they were when they went over to MAGA. They became more MAGA than they influenced the Trump coalition. It’s a good lesson that no matter how smart you are, you need healthy epistemological standards and connections.’

On Reform UK’s prospects for success:

‘I wouldn’t say it’s completely crazy. The UK is stuck, and if you think there’s some reform Farage will enact that nobody else will, that’s not a crazy way to view the world. I’d just say: be careful. Understand that this thing is difficult to control. Once you unleash these forces, they tend to go in surprising directions – when people were supporting Trump in 2015 and 2016, there wasn’t a hint that anti-vax would end up being part of that coalition.’

What makes someone elite?:

‘What distinguishes elites is not just money or power – Donald Trump is an elite in that sense, so is Elon Musk. It tends to be that they’re playing a status game where they primarily care about the opinions of other elites. Populism is the opposite: someone powerful and influential, but whose source of power is a direct connection to the audience. Trump becomes president not because the Republican Party picked him – in fact they really didn’t want him – but because he had a direct relationship with the voters.’

On AI as an anti-populist technology:

‘AI seems to me one of those technologies that takes us in a less populist direction, because people tend to trust it, and it’s smart – it’s like having a smart person directly talking to you about the issues you care about. The problem with conspiracy theorists is they’ll drop the names of ten studies and you’d have no idea what they’re talking about. What AI can do is actually look up those studies, see if they exist, see what’s wrong with them, and point it out in detail. And if it’s nonsense, you’re not going to convince ChatGPT that anti-vax is true – it has other information at its disposal, and it will hold its ground.’

On defending free markets in a populist age:

‘It's kind of a short-term versus a long-term thing. Trying to convince elites is going to be very hard, but if we get an elite that's open to these ideas, free markets will be on a firmer foundation than they've ever been before – and historically, more educated people have been more pro-market. Populism is a path to sometimes short-term success. Switching elite opinion on these questions is the only long-term goal for free markets to be viable and safe in the long run.’

Is populism ever worth the risk?:

‘Maybe it’s worth it. Maybe your elites fail so badly that what populists say about elites in Argentina, or pre-Bukele El Salvador, is actually true. But they’re usually not that bad, I don’t think, in the US or the UK.’

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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 Despatch – an example of the best writing from CapX, read aloud. For hosted conversations, listen to The Capitalist, every Wednesday.

‘Trying to get rid of the price system is a few steps down the line towards full communism.’

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.

This week on The Capitalist, I sat down with Alex Tabarrok, Professor of Economics at George Mason University and co-founder of the blog Marginal Revolution, who wrote a viral post in 2024 on Britain’s ‘Orwellian’ approach. He walks 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.

Below, you’ll find some short excerpts from our conversation.

Marc Sidwell
Editor, CapX

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Do politicians need economics lessons?:

‘Everyone needs to read their Adam Smith. Adam Smith literally talked about these kinds of problems. He talked about, you know, what he called compensating differentials. In the Next case, which was comparing retail workers with warehouse workers, the warehouse has got all kinds of issues. It’s very noisy. It could be a little bit dangerous. But the tribunal had said, no, these jobs are equal. But the lead plaintiff of the retail workers said, if you want me to work there, you’d have to pay me more. What more can you say?’

On tribunals for apples and oranges:

‘The fundamental problem is that trying to get rid of the price system is really a few steps down the line towards full communism. I don’t want to sound hyperbolic, but it is true when you get rid of the price system. Essentially what they're trying to do is compare apples to oranges. ... How would you do that? … If I don’t sell my apples, I can turn them into apple pie or apple juice, but there’s no orange pie. So I can’t do that. So you have to compare that. Or there’s orange juice. Okay. But do people like orange juice as much? Just trying to even think about the innumerable comparisons that you would have to make shows you that this is why we have markets.

And suppose we get to a situation where we’ve decided, okay, we’ve got the just price between apples and oranges. We have solved the apple-oranges tribunal problem. Well, suppose then that it’s announced that oranges reduce cancer. Linus Pauling was correct. Vitamin C is good. Oranges reduce cancer. Now everyone’s going to want to buy oranges. Okay. Well, how are you going to get more oranges? The price has got to go up, right? But we just said we created the just price, and presumably the labour in apples and oranges has got the just price. But now how are we going to get more labour to produce oranges now that people want more oranges? Well, we have to pay more. We compared apples and oranges and apple workers and orange workers, and we said we were at the right number. But now we need a higher price of orange juice and more orange juice workers in order to get more oranges. So what are we going to do? We’re finished. Getting rid of the price system is a very, very bad idea.’

On the idea of a just price:

‘Hayek said, look, justice is about how we treat one another. The price system, in contrast, is not created by anyone. I didn't decide the price. You didn't decide the price. Tesco didn't decide the price. Okay, you might think they did, but no, everything is decided through this decentralised market system involving millions of people, most of whom you will never, ever meet. And a lot of situations, facts and figures, none of which people ever understand. It's like evolution. It's a decentralised process. And in that sense, justice just doesn't apply because it's not something that I did or something that you did. It's like the weather. So trying to make a just price is like trying to sue the weather for raining too much.’

On regulation as pebbles in a stream:

‘The first pebble you throw in, it’s fine – there was a good reason for it. Then you throw the second pebble, it’s okay. The third, the fourth, they all start to interact with one another. You’re building a more complicated and complex system over and over again. Each pebble might be a good idea on its own, but a lot of good ideas turn into a bad idea. And now you’ve dammed the stream. And the stream is the economy, the stream is innovation, the stream is growth, the stream is progress.’

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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 Despatch – an example of the best writing from CapX, read aloud. For hosted conversations, listen to The Capitalist, every Wednesday.

‘Socialism didn’t work anywhere on Earth in the last hundred years. Why should it work on Mars?’

In June, SpaceX went public in the largest IPO in history. Three days earlier, a German historian published a book explaining why that moment had been 60 years in the making.

This week on The Capitalist, I sat down with Rainer Zitelmann to discuss ‘New Space Capitalism’, his account of how private enterprise took over the final frontier. We also discussed how SpaceX cut launch costs by 95%, why the space shuttle was a fiasco, what cost-plus contracting does to a defence budget and who will own the land beneath the first city on Mars.

Zitelmann argues that space is the one industry where the world has moved decisively towards markets rather than away from them – which makes it the clearest available demonstration of what capitalism can do. Of 324 rocket launches worldwide last year, 165 were SpaceX’s; if the company were a country it would rank first, well ahead of China. But he also warns that the next stage will stall unless someone settles the question the Outer Space Treaty left open in 1967: whether private companies and individuals can own property beyond Earth.

Below, you’ll find some short excerpts from our conversation.

Marc Sidwell
Editor, CapX

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How SpaceX cut launch costs by 95%:

‘If you compare the launch costs of the space shuttle with SpaceX’s internal cost today for the Falcon 9, they have reduced it by 95%. There are a lot of reasons, but one is that they were the first to build a genuinely reusable rocket. It makes a difference whether you use a rocket once and throw it away, or whether you can use it several times – Musk has now used one Falcon 9 booster 36 times, and he will use it more. Think about aircraft. If I fly to London next time, it would cost seven or eight hundred thousand euros if they threw the plane away afterwards. No one else can do this today, with one exception: Jeff Bezos and Blue Origin. No government-led space agency – not in Russia, not in China, not in Europe, not in the United States – is able to do it. This year’s Artemis II rocket cost $4 billion, for a single use.’

On cost-plus contracts:

‘Even at the time of the first Moon landing, NASA didn’t build the rockets itself – private companies did. But the basis of the co-operation was completely different. It was so-called cost-plus contracts: the company had to show its costs, say $1 billion, and then add a profit of, say, 10%. Which means more cost, more profit. With $1 billion of costs you make $100 million; with $3 billion of costs you make $300 million. It was an incentive to increase costs. I spoke to one senior figure who worked for a contractor in those years and he told me: our best product was our overhead. Musk works on a totally different basis. He doesn’t sell NASA his rockets – they belong to him. He sells a service, like FedEx or UPS: I bring you something from A to B and I charge you this much. So if he reduces his costs, he increases his profit. It is exactly the opposite of what came before, so it comes as no surprise that costs are lower.’

The space shuttle’s record:

‘The space shuttle was a total disaster. They based their calculations on 140 flights every year; in the end it was 135 flights in 30 years. They calculated costs of about $10 million per flight; in the end it was more than $1 billion. Then there were two accidents, 14 astronauts died, and it was ended in 2011. The chapter heading in my book is “The end of the future”, because from that point the United States was no longer able to send its own astronauts from American soil on American rockets to the International Space Station. They had to rely on the Russians and old-fashioned Soyuz rockets.’

On NASA’s ‘Hail Mary’ bet on SpaceX:

‘Some people inside NASA called it the Hail Mary move – you know it from football: when nothing else is working, you try something that fails almost every time. They gave a little money to SpaceX. By a little I mean half a billion dollars, which sounds like a lot, but set against a Moon landing that cost around $300 billion in today’s money it was not so much. Most politicians, and plenty of people inside NASA, didn’t believe in it. The woman in charge of the co-operation with SpaceX reported that every week a colleague would come into her office and say: “I’m so sad for you that you have to work with this idiot. I don’t want to be in your shoes.” They didn’t believe in it. But it worked.’

Why Mars needs private property:

‘According to the Outer Space Treaty of 1967, countries are prohibited from claiming ownership of celestial bodies or of land on them. I have no problem with that where states are concerned – I think it’s not a bad idea. But how does it stand with private companies, with private individuals? There is nothing in the treaty, because in the 1960s almost nobody could imagine that some decades later there would be people like Elon Musk or Jeff Bezos. Now there is a legal dispute among space lawyers about whether private ownership is allowed. It has to be allowed. You cannot settle a million people – not even thousands – without private property, because that means socialism. Socialism didn’t work anywhere on Earth in the last hundred years. Why should it work on Mars? Why should it work on the Moon?’

Can space make the case for markets?:

‘The problem with people who are pro-capitalism is that their arguments are sometimes too abstract. It’s theory – here is a Hayek quote, here is a Mises quote, imagine an island and voluntary exchange. If you make it more concrete and ask why the government failed and why private enterprise was so much more successful, and you have a real example like space, that is a better way to convince people. We have so many left-leaning teenagers today. As a teenager I was fascinated by space – I was 12 at the time of the Moon landing, and I even produced my own newspaper. If children are fascinated by space and then by capitalism, that can make a huge difference.’

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Shadow Work and Pensions Secretary Helen Whately says the path to a stronger economy runs through work, not welfare – and the country cannot afford a government too timid to make that case.

Each week we bring you Despatch – an example of the best writing from CapX, read aloud. For hosted conversations, listen to The Capitalist, every Wednesday.

‘I don’t think the only answer is to fill Parliament with people from business – it would just be enormously helpful if the Labour front bench had more work experience than someone who interned in the House of Commons gift shop.’

Britain has a new prime minister. But will Andy Burnham’s new government reverse years of stagnation?

This week on The Capitalist, I sat down with Shadow Business Secretary Andrew Griffith to ask whether Burnham is about to double down on a bigger state or finally embrace growth. We also discussed why Westminster needs more people who have actually run a company, Labour’s ‘insane’ plan to expand equal value pay claims and why putting up taxes was toxic for the Conservative Party’s brand.

Griffith argues that nationalising British Steel is a mistake – reindustrialising Britain doesn’t require more subsidies or state ownership, but cheaper energy, lower taxes, welfare reform and a ruthless assault on red tape. He also explains why business confidence depends as much on certainty as on policy itself, how Kemi Badenoch is steering the party back towards free-market principles and what a pro-growth offer to the next generation should look like.

Below, you’ll find some short excerpts from our conversation.

Marc Sidwell
Editor, CapX

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On what John Healey should do first:

‘A new chancellor could come in and, if they set about reversing the most damaging decisions of the past two years – the National Insurance rise and the Employment Rights Act – they’d have the support of the Conservative Party. That would turn an economic headwind into, ideally, an economic tailwind.’

Why Westminster needs business experience:

‘What it brings is a shorthand understanding of the impact – sometimes the unintended consequences – of the decisions you make. If you’ve understood business, you realise with things like the family farm and family business death tax, that there aren’t piles of cash sitting around, and if you want to tax intergenerational transfer, that normally means you’ve got to lop off an arm of that business and give it to the chancellor. I don’t think the only answer is to fill Parliament with people from business – it would just be enormously helpful if the Labour front bench had more work experience than someone who interned in the House of Commons gift shop.’

On equal value pay claims:

‘The technical word for what they’re trying to do on equal value work is insane. It completely discards the market, the price signal, choice and individual agency – and they’re going to expand that beyond gender into race and disability as well. Good work for lawyers. I think the one reliable growth industry in the UK is lawfare and judicial review, lawyers seeking to expand their territory. Some court may come along in a few years’ time and tell a business it’s got a liability for billions. That sounds like scaremongering, but that is precisely what’s happening in the retail sector.’

On nationalising British Steel:

‘If your energy costs are two, three, four times higher than making the same steel bar in a different country, that is not a structurally profitable basis to compete, no matter how many tariff barriers the government has. The idea that the government should be doing more of that is a folly. The foundations of the Centre for Policy Studies were in making precisely these arguments ahead of the Thatcher government – and no doubt we’ll all be here again in a few years’ time, in government, trying to work out what to do with the relics of industry.’

One tax he’d abolish?:

‘Inheritance tax. It’s a values tax, so it speaks directly to the values – and it doesn’t raise a king’s ransom, so if you’ve got the choice, that’s one you can genuinely abolish. It’s almost universally a double or triple tax: you’ve acquired an asset out of taxed income, you try to pass it on, and then it’s taxed again.’

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Jack Rankin MP argues this will crush the competition and choice the sector needs, entrenching incumbents like the BBC at the expense of independent creators and commercial rivals.

Each week we bring you Despatch – an example of the best writing from CapX, read aloud. For hosted conversations, listen to The Capitalist, every Wednesday.

‘The cuts which are even the bare minimum – £180 billion – are wild. The things which you should be doing just look like complete fantasies.’

Andy Burnham is days away from becoming prime minister. According to economist Andrew Lilico, he’s inheriting an economy with almost no room left to manoeuvre – and a sense of personal virtue is no substitute for a plan, as the fate of his predecessor shows.

In this week’s episode of The Capitalist, Lilico joins me to dissect the fiscal trap awaiting the new government. He argues Keir Starmer never had a theory of growth – and that Labour, having spent a decade assuming the Tories underspent, had no answer once they discovered the opposite was true.

On Burnham himself, Lilico is sceptical of the PM-to-be’s promised devolution agenda, which looks set to hand local leaders more control over spending but not the power to raise revenue. As for Burnham’s plan to bring water, energy and transport under ‘public control’, the idea that state ownership can conjure lower bills without paying the going rate of return is, in Lilico’s words, ‘very confused economically’.

Plus: why Burnham’s pick for Chancellor will be critical, and can Burnham survive to the next election?

Below, you’ll find some short excerpts from our conversation.

Marc Sidwell
Editor, CapX

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On Starmer’s failure:

‘He didn’t really have a plan of what he wanted to do once he became prime minister. He talked about change, he talked about growth, but he didn’t have any idea how to deliver either of them. He thought his superior integrity and virtue would just by itself make everything work better.’

On devolution:

‘The devolution policy the UK actually needs would be increased fiscal autonomy for regions – more ability to vary, less cross-subsidisation. Whereas what Burnham wants to do is increase local autonomy over expenditure. He doesn’t really have any plans to increase the autonomy over the raising of funds.’

On fiscal rules as ‘mañana politics’:

‘The way to address reducing your deficit and your debt is to just do it. Fiscal rules are an excuse for not cutting the deficit today, but saying I’m going to cut it tomorrow. And the way things have worked in the UK for a long time is we make up these rules, we don’t stick to them and then we change the rule later once we don’t stick to it, to make it looser.’

On the scale of cuts needed:

‘The Tories have some story about cuts of about £50 billion, but that’s way short of anything necessary. You should be thinking the absolute minimum is £180 billion – and that’s politically impossible. People think £50 billion is terribly bold. The things which are even the bare minimum look wild.’

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‘If you want to see will, go back and look at that broadcast. That does suggest a chap with a backbone. The backbones around Westminster are more Haribo than titanium.’

Nigel Farage has just resigned his seat to force a by-election in Clacton. The establishment, his allies say, is trying to destroy him. Perhaps – but have they misjudged their target?

Gawain Towler, Reform UK’s director of communications from 2019 to 2024 and now a member of the party’s governing board, joined CapX editor Marc Sidwell in the immediate aftermath of Farage’s dramatic announcement. He argues the campaign against his former boss is misreading both the man and the country.

Towler admits the drip, drip, drip of negative stories – the donations controversy, the billionaire friends, the standards investigation – are damaging, and that Farage was at best unwise to leave his flank exposed to attack.

He sees the bad press as an artillery barrage from the establishment: wear down morale, make ordinary Reform-minded voters reluctant to associate with a movement under constant fire and hope Farage decides the fight isn’t worth it. Farage, instead, has decided to fight. Will voters be admiring or appalled?

What the establishment may be missing, according to Towler, is the English sense of fair play. People cannot abide the appearance of the entire machine turning on one man – and the more that narrative takes hold, the more it risks generating sympathy rather than aversion.

But the central question that will define the next phase of British politics is this: can a movement built around one figure survive – or strengthen – if that figure’s relatable, clubbable image is damaged by his ties to the wealthy and doubts about whether he’s willing to play by the rules?

Below, you’ll find some short excerpts from our conversation.

Marc Sidwell
Editor, CapX

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On the press attacks:

‘The whole point of this is a rolling barrage.

Why are they pushing [the Parliamentary Standards inquiry] to September? So they can leak and drip and attack, all through the summer. It’s like an artillery barrage on the first night of the Somme – you bombard the front line for month after month until you’ve broken the wire and destroyed morale, and only then do you attack.

That is what they’re doing. They are trying to break the morale of Reform itself.’

On fair play:

‘There is a native sense of fair play in this country. People don’t mind error, as long as it’s apologised for. They don’t mind mistakes, as long as they’re owned. But they hate hypocrisy – and this is beginning to look like the entire machine is focusing on one man. That doesn’t feel like fair play. It ain’t cricket.’

On Farage’s resolve:

‘They are targeting him because they were desperate for him to resign. I have received text messages today from the press telling me that Labour Party people are telling them he’s ill, that he’s having cancer treatment in America. I’ve had that stuff from the Tories before. They are trying to undermine him in every way they can, and they’re trying to make him think: why am I doing this? I had an easy life, making lots of cash, having fun, without this rubbish every day.

But they do not understand the measure of the man. This is a very English response – you tell me I can’t do something, well I’m damn well going to do it. I think they’ve misunderstood that, and misunderstood the character of our nation.’

Is Reform a one-man band?:

‘It can’t be a one-man band when we came second in Wales and have destroyed Labour there – we now hold thirty-odd seats in the Welsh Assembly. We came second, or second equal, in Scotland, seventeen seats up there. Two and a half thousand councillors, thirty-four councils that we run and lots more where we’re very influential. This is not a one-man band. This is a movement which he has led.’

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Then there’s the small matter of logistics: cancelled trains, no privacy for the journey and a Prime Minister who might need his own ‘GBR Force One’ just to get to work. Our PM-in-waiting needs to focus less on gimmicks and more on the hard job of actually reforming who government hires and how.

Each week we bring you Despatch – an example of the best writing from CapX, read aloud. For hosted conversations, listen to The Capitalist, every Wednesday.

‘In politics, you don’t have that time. Your political capital is draining away like an egg timer. So you have to do your big things really early.’

Britain is in trouble. Its economy is stagnant, and its politics are in turmoil, with Andy Burnham set to be our seventh prime minister in a decade. Yet former chancellor Jeremy Hunt has a surprisingly upbeat take on Britain’s potential – if our politicians can be bold enough.

In this episode of The Capitalist, he sits down to discuss his new book, ‘Can We Be Rich Again?’

Hunt advocates a radical programme for growth, and has a warning for Andy Burnham – reform welfare on day one, or see your administration fail like Keir Starmer’s.

For Hunt, scrapping the pension triple lock is now an economic and moral necessity. And he says we’ve got devolution completely wrong; if that’s Burnham’s big idea, he needs to fix it, fast.

We also discuss why our hidden strengths mean Britain is still on course to become the world’s fifth-biggest economy, and why its best days can still lie ahead.

Below, you’ll find some short excerpts from our conversation.

Marc Sidwell
Editor, CapX

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On the welfare stakes:

‘If [Burnham] ducks welfare reform, he will have to put up business taxes, and the economy will continue to be in the slow growth lane... But if he confronts welfare reform... he could save potentially £56 billion a year within five years...

If he is scared off welfare reform, he’s misunderstanding why Keir Starmer ended up having to resign.

When Starmer ducked those welfare reforms, Labour backbenchers began to realise that they had a veto on anything the government did – and essentially it made him an impotent leader...

The moment Andy Burnham arrives as Prime Minister is when his authority is at its highest. That is the moment he can win the argument with the Labour Party...

But if you don’t even try, then Andy Burnham is very soon going to find himself in the same position as Keir Starmer and Rachel Reeves.’

On the triple lock:

‘I would like to replace the triple lock with an inflation guarantee that says the state pension will always match inflation.

It’s something I’ve given more thought to after leaving office.

The savings are not as big as they would be from the working-age welfare bill. But the thing that my research uncovered, and that really struck me as significant, is that although the triple lock has done a good job at helping to reduce pensioner poverty – and pensioners used to be the group most likely to be in poverty – every year that we’ve had it, the country has been in deficit.

So what that means is that the pensioners who are benefiting from above-inflation increases in their pension are seeing that partly funded through more debt on their children and grandchildren.

And I think if pensioners understood that, they might think differently about whether it’s actually fair.’

On devolution:

‘I’ve long been a supporter of decentralising power... But we’ve done devolution totally wrong in this country.

Greater Manchester had more devolution than any other region in England – still three quarters of its income comes as a grant from London.

So to work, devolution needs to be funded devolution... If Andy Burnham as Mayor of Greater Manchester wanted a new ring road, he has to bang on the door of Number 11 Downing Street and persuade the Chancellor to give him the money – and that’s why Manchester’s GDP per head is still only around half of London’s.

The biggest single thing we could do to make devolution work is to say to all local authorities: any planning decisions you make, you get to keep all the extra tax revenues generated... It could add 0.3 to 0.5% annual GDP growth, which over time is a pretty significant amount.’

Why Britain’s leaders need to be radical:

‘I’m nervous about these labels like centrist, or left or right – I think we have to be radical...

The times I’ve left office disappointed is where I haven’t been radical enough; the times I’ve left office proud is where I took bold decisions.

You can get a bold decision wrong, as my predecessor did with Liz Truss and the mini-budget – but it’s really important not to confuse that with boldness being a bad thing.

We’ve got so much potential in this country: three of the world’s top ten universities, potentially overtaking Japan to become the fifth largest economy in the world... and the third largest tech sector outside America and China.

But at the moment there is an inertia, which is why we need bold and radical policies.’

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Mario Creatura, a former special adviser to Theresa May in Downing Street, joins CapX editor Marc Sidwell to discuss ‘A Blue Hope’, Mario’s new report for the Centre for Policy Studies. He explains what pushed ambition and opportunity off the Conservative agenda – and how to bring them back.

Below, you’ll find some short excerpts from our conversation.

Marc Sidwell
Editor, CapX

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What does aspiration mean to you as a Conservative?

It’s an incredibly important question, and it gets to the heart of why we chose to write the paper in the first place. Fundamentally, we were looking at the warnings coming out of the polls and the by-election results – what they hold for the Conservative Party in particular, and how we rebuild a centre-right offering that the general public can really get behind.

One of the key lessons from that is that Keir Starmer and the Labour Party had no vision. Andrew Neil termed it the loveless landslide. They won not because they were offering something new, innovative and hopeful for the country, but simply because they were the next best thing to remove the Conservatives from office.

And so from our point of view as the authors of this paper, we asked: what is the animating vision that can fill that gap? For us, that’s aspiration.

Can an aspirational message beat the message that ‘Britain is broken’?

The declinist doom loop is a self-perpetuating problem, and social media has a massive role to play in that. It self-perpetuates when people feel there is a lack of justice – but it doesn’t offer any solutions. It has no path out of the quagmire.

The aspirational message is a harder one to land, because it requires people to believe in something almost intangible. Which is why we’ve tried in the paper to make it tangible – to build a credible framework grounded in polling data, one that looks at different values and translates them into the concerns people are facing in their day-to-day lives.

Why should a young voter pick the Conservatives?

Aspiration and the Conservative Party have a history that is inextricably intertwined.

And there is a reason for that.

Conservatives believe that work should be rewarded, that saving should mean something. That home ownership should be within reach and that children should have fundamentally better chances in life than their parents.

That if you start a business it should be encouraged rather than punished, and that all of the effort you put into your life, all of the responsibility that you have for your life, the contribution that you make to your community should be recognised and encouraged.

And for me there’s only one party that is doing that and that’s the Conservative Party.

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A decade on, with some senior Labour figures openly discussing a return to the EU, Lord Elliott joins The Capitalist to look back at how Brexit was really won, and to make the case for why the battle isn’t over yet. He draws on his new book, ‘Ten Years On: The Untold Story of Brexit’, to reveal what really happened inside the campaign – and why he believes the argument for British independence remains as urgent as ever.

Below, you’ll find a short excerpt from our conversation.

Marc Sidwell
Editor, CapX

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Was it a shock to you when David Cameron resigned after the Brexit vote?

We’d sort of convinced ourselves that he wouldn’t resign, whatever the result.

And certainly that very week. I know that with some of the key Conservative players on the campaign, at least Michael Gove, Boris Johnson, they were very concerned about Cameron resigning.

And there was also talk about letters from Remain MPs and Leave MPs saying that Cameron should stay on. And that was a big topic of conversation.

I think realistically, had we thought about it with a cold towel on our heads, we’d have realised that perhaps he was going to resign having committed so heavily to the referendum.

Has Brexit delivered?

Brexit was all about taking back control.

And once control was back in the UK, it’s really up to UK parliamentarians and voters to decide what happens.

Some things I like.

So, for example, if there’s deregulation in certain areas, it helps free up the economy. And I think the tech regulation, for example, at the moment with AI, that’s really helped us thrive.

Some things I really detest.

So for example, the VAT on school fees, that wouldn’t be possible were we to be back in the single market.

So I hate the fact that’s happened, but you’ve got to accept as a Brexiteer that it’s all about UK politicians making UK laws.

What should we be doing to make the most of Brexit?

We need to be going for growth – and of course the Labour Party talked about it to death before the last election, and sadly didn’t deliver. But really at its core that’s what the British people want.

We’re in a situation where we’re doing minusculely better than France, Germany, Italy – so we’ve outperformed them, but we’re still at historically low levels of growth compared to before the financial crisis, for example.

And if we carry on on the current trajectory, we’re going to slip behind Poland very soon in terms of GDP per capita, and behind Turkey by 2043.

So that’s the trajectory we’re on as a country. We need to reverse that.

The solutions are out there. And they’re the same solutions that the Centre for Policy Studies talked about and championed in the 1970s and 1980s: lower taxes, lighter government spending, smarter regulation, free trade, sound monetary policy. It’s the very same solution we need to do now in order to get back to growth

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Independent economist Damian Pudner argues that the Government is running out of options quicker than many believe. Rachel Reeves can continue hoping for growth, or raise taxes or spend less. She and her colleagues aren’t doing much more than talk about the first, they’re running out of room on the second, and they will not discuss the third. That, Pudner concludes, is how you end up with the IMF knocking on the door.

Each week we bring you Despatch – an example of the best writing from CapX, read aloud. For hosted conversations, listen to The Capitalist, every Wednesday.

I think the important thing to remember is that almost every single UK politician I’ve ever heard discuss these matters is a slack-jawed moron when it comes to technology policy.

Keir Starmer is giving tech companies three months to activate on-device content scanning and age verification across all smartphones and tablets sold in Britain – or face fines and potentially criminal liability. Framed as a child safety measure, the proposal has drawn fierce criticism from privacy advocates, civil liberties groups and free speech lawyers who warn it amounts to building a mass surveillance infrastructure under the pretext of safety. The messaging app Signal has already said it will not comply – will others follow?

In this week’s episode of the Capitalist podcast, Preston Byrne, free speech lawyer and counsel to some of the internet’s most controversial platforms, joins me to discuss what this proposal could mean for Britain’s tech sector.

Below, you’ll find a short excerpt from our conversation.

Marc Sidwell
Editor, CapX

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Preston Byrne on UK tech policy

I think the important thing to remember when it comes to internet policy is that everybody in Parliament, almost every single UK politician I’ve ever heard discuss these matters, is a slack-jawed moron when it comes to technology policy.

And this is not an exaggeration. These people have no idea how the internet works. They have no idea how computers work.

The policies that they’re proposing are sufficiently over-broad and described in such general terms that it doesn’t really provide a whole lot of guidance to tech companies as to how they could comply with them, except by doing what we’ve seen Ofcom do over the last year, which is that they kind of make it up as they go and political pressure is applied on the agency or on Parliament to do more.

…

There are plenty of applications that if a parent wants to do this, they can lock down their kid’s phone so that a kid can’t get messages.

These tools already exist, right? And they’re optional.

All of the tools that Apple has: you can make sure that your kid can’t download apps that are unauthorised. You can lock down a kid’s phone plenty.

What the UK is proposing to do here in this case – and it remains to be seen what exactly they will do. We’ll have to wait and see what statutory instrument the DSIT secretary decides to publish for approval. But in this case, everybody’s best guess is that what will happen with the age verification on devices is that the UK will compel the manufacturers to require an age verification solution, which will be provided by an age verification company.

And you won’t be able to access the internet as in anybody in the UK – adult, child or otherwise – without first getting your identity verified, which is an intrusion on privacy.

But if you’re just talking about child protection as the objective, the tooling already exists. The issue is that nobody uses it because what happens?

They lock down the phone. You know, the kid goes and uses the phone. There’s some feature that needs to be unlocked. The parent gives up and they say, okay, well, we’ll turn off the feature because we want the kid to go use the phone.

So this is something where if you want to, as a parent, protect your child from the internet, you already have the tooling available to do that on a voluntary basis without the government intruding in American companies’ supply chains and encryption to do it.

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Each week we bring you Despatch – an example of the best writing from CapX, read aloud. For hosted conversations, listen to The Capitalist, every Wednesday.

Soumaya Keynes and Chad Bown argue that with great powers now using trade as a weapon, there can be no simple return to the settled order of rules-based global trade that dominated the late twentieth century. Their new book, ‘How to Win a Trade War’, provides a tour through the toolkit of the trade warrior.

In this week’s episode of the CapX podcast they join me to discuss the new world of economic conflict, why tariffs are like a party drug – and how trade wars can still spiral out of control.

Below, you’ll find two short transcripts from our conversation.

Marc Sidwell
Editor, CapX

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Chad Bown: How China weaponised trade

China fundamentally has a different view of international trade and interdependence that has become increasingly clear over time.

And maybe the sharpest articulation of this was President Xi Jinping in his dual circulation speech, which happened around 2020 or so, where he said that he envisions a world where the rest of the world becomes dependent on China for their supply chains. But China is not dependent on the rest of the world for its supply chains.

And when you think about what really is underpinning a rules-based trading system, it is a willingness to be interdependent with one another, right? I export to you and yeah, we’ll have frictions, but generally we will engage in this trade.

And with that, China was signalling, no, we want a very asymmetric relationship. We want to live in a world where you’re dependent on us. We’re not dependent on you. And then sometimes we’re actually going to weaponise that. And we’re going to take advantage of your dependencies on us to get our way.

And that, I think, is something that’s different. So when we’re talking about economic security now, it’s not just dual-use goods and military security and bombs and missiles and things like that. It’s really the ability to weaponise features of our fundamental economies that we have to deal with.

Soumaya Keynes: A lesson from Britain’s cable empire

My favourite example is Britain’s dominance in telegraph cables at the end of the 19th century.

So we were massively dominant, we effectively controlled international communications networks.

We could surveil other countries. We could censor other governments’ communications. And those other governments hated it.

When we abused our power, when we censored their communications, they said, nope, we don’t like that. We’re going to try to build rival networks. We’re going to turn to wireless communication technology. We’re going to wriggle around.

But what ended up happening is that the advantages that we had, that Britain had, as this dominant provider of telegraph cables, the factors that set up that initial dominance were the same factors that made it really hard to find alternatives.

And then the other thing is that Britain moved to prevent those rival networks being set up.

So actually the end of that story – and there’s a lot more detail in the book – but the end of that story, is it took decades for Britain’s dominance in communications to be truly destroyed.

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