When Protectionism Makes Genuine Sense – Even if it Stops Some from Making Money

The debate over tariffs on Chinese electric vehicles has been bubbling across social media, and what’s striking is not the policy detail but the discomfort it creates among the market‑orientated commentariat.

These are people who have spent decades insisting that globalisation is the only sensible economic model, that markets should always set the rules, and that any interference – especially by governments – is a step backwards.

Now, faced with the reality that the UK may need to work with EU partners to protect domestic manufacturers, they are being forced into intellectual contortions that reveal just how brittle their worldview has become.

The friction here is not really about cars. It is about the deeper assumption that the economic model we have – a model built on global supply chains, financial expansion, and the relentless pursuit of growth – is the only one that makes sense.

That assumption rests on a one‑directional pull toward opening trade as far as conceivably possible, because that’s supposedly where growth will be found. And growth, in this worldview, is not about people becoming better off. It is about the creation of yet more money, usually through debt, which pushes up GDP and keeps the financial system ticking over.

This obsession with growth hides a fundamental truth: the growth that markets obsess over is not the same growth that most people experience.

GDP can rise while living standards fall. Productivity can increase while wages stagnate. Asset values can soar while home ownership collapses.

Many people still cling to the myth that political growth will make things better – or at least return life to how it used to be – but the numbers have been going up for years while the lived reality has been going down.

To understand why protectionism now makes sense, we have to understand the money system that made globalisation seem inevitable.

The Money System Behind the Illusion

Modern economies run on fiat money – money created not from physical value but from government authority and, crucially, from debt. When banks issue loans, they create new money. When governments borrow, they expand the money supply. Growth, in the political sense, is simply the expansion of this created money.

For decades, this system worked because the newly created money was tied to expanding production. Factories were built. Goods were made. Jobs were created. Communities thrived. The money had something real behind it.

But once production was moved overseas, the link between money creation and real economic activity broke. We kept creating money – but we no longer created the goods, jobs, or value that once justified it. Instead, the West became dependent on consumption funded by debt, while production was concentrated in China and a handful of other countries.

This is where extraction enters the story.

Extraction: The Hidden Cost of Globalisation

Globalisation didn’t just move factories abroad. It extracted value from every part of Western society:

Extraction of jobs – manufacturing, engineering, logistics, and skilled trades hollowed out.
Extraction of wages – pay stagnated while costs rose.
Extraction of communities – towns built around industry lost their purpose.
Extraction of environmental stability – long supply chains increased emissions and resource depletion.
Extraction of political agency – decisions moved from local hands to global markets.
Extraction of national wealth – profits and production flowed outward, not inward.

Above all, globalisation extracted economic power from people and transferred it to corporations, financial markets, and foreign production hubs.

This wasn’t accidental. It was the design. Globalisation was sold as efficiency, but it functioned as a massive wealth transfer mechanism.

Wealth Transfer: The Real Story

The wealth transfer happened in several layers:

1. From wages to profits

When production moved abroad, labour costs collapsed. The savings didn’t go to consumers – they went to corporations and financial markets.

2. From communities to global supply chains

Local businesses couldn’t compete with imported goods. Wealth drained outward.

3. From national economies to China

The West consumed; China produced. The money followed the production.

4. From real economy to financial economy

As production declined, financial speculation replaced industry as the main driver of “growth.”

5. From future generations to the present

Debt expanded to maintain consumption levels that wages could no longer support.

This is why the system feels hollow: because it is.

The Illusion of Efficiency

Globalisation was sold as efficient. But efficiency is fragile.

Efficiency removes redundancy. Redundancy is what makes systems resilient.

Here, redundancy doesn’t mean job losses. It means resilience. In systems terms, redundancy is the spare capacity, backup options, and local alternatives that keep things functioning when something goes wrong. A resilient economy has multiple sources of essential goods, local production alongside imports, and enough slack in its supply chains to absorb shocks. Globalisation removed this kind of redundancy – not by cutting jobs, but by stripping away the buffers that once protected communities, industries, and national security.

Local supply chains, local production, and local skills were once buffers against shocks. Globalisation removed those buffers. It replaced resilience with fragility, and called it progress.

When shocks hit – a pandemic, a war, an energy crisis – the system broke exactly where it had been hollowed out.

The Curious Love Affair With China

This is where the love affair that politicians, industry aficionados and financial players have with China becomes so curious. They praise China’s industrial might, its manufacturing efficiency, and its ability to produce goods at scale and at speed. But they are blind to the realities underpinning the Chinese powerhouse – just as they are blind to how things really work economically here at home.

China’s industrial strength is real, but its economic model is fragile. It is heavily dependent on exports, deeply entangled in debt, and centrally managed in ways that hide structural weaknesses. The property sector has been in crisis for years. Domestic consumption is too weak to sustain growth. And the country’s manufacturing dominance relies on a global system that assumes stability, cheap energy, and constant demand – none of which can be taken for granted.

Yet Western economies outsourced their industrial base to China under the assumption that globalisation was permanent, stable, and mutually beneficial. They believed that moving production overseas would always be cheaper, always be efficient, and always be safe. But globalisation was never a natural law. It was a confidence game – a system that works only as long as everyone believes it will continue working.

Calling globalisation a Ponzi scheme might be too simple, but calling it a worldwide confidence trick is not far off. It requires constant expansion. It depends on trust rather than resilience. It shifts production far from consumption. And it leaves countries vulnerable if supply chains break, energy prices spike, or geopolitical tensions rise.

The truth that must be reckoned with is this: transferring every conceivable part of industrial production to the other side of the world leaves a serious question hanging in the air. What happens here – and what happens there – when the money system that is the lifeblood of this one-directional process comes to a grinding halt?

AI: The Final Blow to the Globalised Model

If globalisation hollowed out production, AI is now hollowing out what is left of the wage‑earning capacity that once kept the system going.

For decades, the global model relied on a simple loop:

The West consumed goods made abroad.
People earned wages to buy those goods.
Governments and banks created money to keep consumption rising.
China produced the goods that consumption demanded.

But AI breaks this loop. It displaces jobs across sectors – not just manufacturing, which was already offshored, but services, administration, logistics, design, media, and even parts of professional work. The very wage base that kept the consumption‑debt cycle alive is eroding.

We now face a situation where:

We no longer produce the goods.
We no longer earn the wages.
We still create the money – but it has nothing real to attach to.

This is the point where the global system begins to fail. You cannot sustain a consumption‑driven economy when the capacity to earn wages is collapsing. You cannot sustain a debt‑driven money system when the underlying productive base has been hollowed out. And you cannot sustain globalisation when the domestic economy no longer has the means to participate in it.

AI is not the cause of the crisis – it is the accelerant that exposes how fragile the system already was.

The Collapse of Demand

The global system requires:

constant production
constant consumption
constant money creation
constant debt expansion

But:

production moved abroad
wages stagnated
AI reduces earning power
debt has reached saturation
demand is collapsing

Once demand collapses, the entire global system fails – and protectionism becomes not ideological, but practical.

EVs: A Redirection, Not a Solution

EVs are being sold as a technological fix, but they are built on the same flawed logic: extract resources, extract labour, extract wealth, and hope the system holds.

The deeper issue is not the fuel that vehicles use. It is the assumption that we need so many vehicles in the first place – an assumption created by an economic system built around long‑distance commuting, centralised employment, fragmented supply chains, and consumer lifestyles that depend on mobility rather than locality.

EVs change the technology but not the underlying logic.

The System Is Failing – And Protectionism Is Becoming Necessary

We cannot continue like this. Soon we will not be able to.

The system that pointed everything toward China, foreign production, and EVs is falling to its knees. The question is whether we wake up in time to address the real issues while we still have a choice – or whether events will push everything we know straight to the floor.

In this context, protectionism not only makes sense – it becomes essential. Not just for cars, but for everything people genuinely need each and every day.

Media discussions about “upsetting China” are irrelevant compared to the question of more pressing matters such as whether everyone can continue to eat during a prolonged crisis.

Like so many other forms of essential production and supply we have hollowed out the UK’s ability to feed itself. Politicians may say we produce around 60% of our own food, but that figure is misleading. Much of that production depends on imported inputs: fertiliser, feed, energy, machinery, labour. If borders fully closed, the real amount of food ready to go directly to the table is closer to 11%.

That means in a real, ongoing crisis, we could feed roughly one in ten people. And this would potentially be the baseline for as long as it would take to change, develop and reestablish UK systems to produce enough food to meet everyone’s basic and essential needs.

To call this situation stupid would be an understatement. It is a growing structural vulnerability that has been ignored for decades because it was easier to believe that global supply chains were permanent and that crises only ever happened somewhere else.

The Only Viable Path Forward

Locality, localism, and an entirely different system – one that puts people first rather than money first – is now the only answer. And it’s the same for everyone else too.

Protectionism, in this context, is not about nationalism or nostalgia. It is about resilience. It is about ensuring that essential goods are produced close to where they are consumed. It is about rebuilding the capacity to feed, clothe, transport, and sustain ourselves without relying on fragile global systems.

This does not mean closing borders or rejecting trade. It means recognising that trade should complement domestic capability, not replace it. It means building systems that can withstand shocks rather than collapse under them. It means prioritising the basics – food, energy, manufacturing, infrastructure – over abstract financial growth.

The globalised model didn’t fail because of ideology. It failed because it extracted too much, transferred too much, hollowed out too much, and left too little behind.

Protectionism isn’t a political choice. It’s a survival strategy.

Why Britain feels like we are being priced out of everyday life – and why the real explanation is nothing like the one you were taught

The Great Untold Story of Money

For most of modern history, people have lived inside a simple, reassuring story about how the economy works. It’s the story you hear in school, in politics, and in everyday conversation.

You earn money. You save some of it. Banks lend those savings to others. Governments collect taxes and spend them. If governments need more money, they borrow from savers. Inflation is just prices rising. Markets reflect real value. Wages follow the cost of living. Benefits are for people who don’t work.

It’s a tidy picture. It feels moral. It feels stable. And it is almost entirely wrong.

The real system is stranger, more fragile, and far more extractive than people realise.

Once you see how it actually works, the cost of living crisis stops being mysterious. It becomes inevitable.

This is the story of how money really works – and why Britain has become a place where even full‑time workers can’t afford everyday life.

1. The first truth: most money is created by private banks

The biggest misconception in the public mind is also the simplest: banks do not lend out your savings.

When you take out a loan, the bank does not move money from someone else’s account. It does not use savers’ money. It does not “find” the money. It simply creates new money by typing numbers into your account.

That’s it. A few keystrokes, and the money exists.

This is not a metaphor. It is the actual accounting. More than 90% of the money in the economy is created this way – by private banks issuing private debt.

It is the first thing people need to understand, and the first thing that makes them say: “That can’t be right.”

But it is.

2. Public debt vs private debt – the difference that changes everything

Understanding the economy requires understanding two very different kinds of debt.

Private debt is created by banks. Every loan creates new money. Every repayment destroys money. Interest payments transfer wealth upward. Households and businesses carry the burden.

Private debt is the engine of money creation.

Public debt is created when the government spends more than it taxes. It is structured through gilts – government bonds.

Public debt does not create money by itself. It is not repaid the way private debt is. It is held by pension funds, banks, insurance companies, and foreign investors.

Public debt is the engine of financial stability.

The key insight is simple: private debt creates money; public debt organises money.

Most people have never been told this distinction. Once they see it, everything else starts to click.

3. How government money creation actually works

People imagine government finances as a household budget: taxes come in, spending goes out, and if there’s a shortfall, the government borrows from savers.

But that is not how it works.

Government spends first

When the government pays salaries, pensions, or contractors, the Bank of England credits bank accounts. New deposits appear. New reserves appear. Government spending adds money to the economy.

Gilts come after spending

Gilts are IOUs the government sells to investors. When investors buy gilts, they use money that already exists – money created earlier by private banks or by government spending itself.

The government’s account at the Bank of England is credited. No new money is created. Investors simply swap cash for government IOUs.

Gilts do not fund spending. They record the deficit and provide safe assets to the financial system.

QE is where money creation and gilts intersect

When the Bank of England buys gilts, it creates new reserves. Investors receive new deposits. This does create new money. And that money often flows into assets – property, shares – pushing up prices.

This is why QE inflates asset prices.

The missing piece: private bank money flows into gilts

The money investors use to buy gilts is the same money that banks created earlier through lending. Private banks create the water; the government builds the pipes. Gilts are how the state absorbs, stores, and stabilises the money created in the private sector.

This is the part most explanations leave out – and without it, the system doesn’t make sense.

4. Inflation: not “prices rising,” but money losing value

People feel inflation is wrong because the official numbers don’t match reality. But inflation is not simply “things getting more expensive.”

It is your money being diluted.

Inflation happens when banks create more money through lending, when government spending adds money, when QE adds money, and when production is hollowed out. Supply chains are fragile. Asset prices rise faster than wages.

Inflation feels like theft because it is a transfer of value from people who hold money to people who create money.

5. Globalisation: the hollowing‑out engine

Globalisation wasn’t just trade. It was a restructuring of where value is created.

Manufacturing moved abroad. Supply chains centralised. Local businesses couldn’t compete. Profits flowed to multinational corporations. Towns lost their economic purpose. Communities weakened. Wages stagnated. Dependence on imports rose.

Britain didn’t just lose jobs. It lost the ability to generate real value.

Once that happened, the country had to rely on finance, property, consumption, and debt.

This is the hollowing out.

6. Markets: not value systems, but expectation systems

People think shares represent real company value, dividends are slices of profit, and markets reward good businesses.

In reality, shares represent claims on future expectations. Prices move based on liquidity, interest rates, and fund flows. Dividends are capital distribution decisions.

Companies can lose money and have rising share prices. Companies can be profitable and have falling share prices.

Markets are giant betting systems, not value systems.

7. The rise of extraction economics

When a country stops producing real value, it must extract value.

Britain chose to extract from housing, wages, public services, small businesses, and future generations.

Homes became financial assets. Prices were pushed up deliberately. Rent became a wealth transfer mechanism.

Wages stagnated because companies could outsource labour abroad. Workers lost bargaining power.

Public services were cut, forcing people to pay privately – another extraction channel.

Small businesses were crushed by global supply chains, supermarket monopolies, online giants, rising rents, and rising energy costs.

The local economy died.

8. The minimum wage trap: the part almost nobody talks about

Here is the piece that makes the whole system morally and economically unsustainable.

A full‑time worker on minimum wage cannot afford rent in most of the country. They cannot build savings. They cannot cover unexpected costs. They cannot support a family without external help.

This is not an opinion. It is a structural fact.

The minimum wage is not a living wage. It is a political number.

In‑work poverty is now normal. Most benefits claimants are working. They work full time or multiple jobs and still cannot afford rent, food, transport, childcare, or energy.

This is not a personal failure. It is a system failure.

Benefits have become a subsidy for low‑pay employers.

When wages are too low to live on, the government steps in with Universal Credit, housing benefit, tax credits, and childcare support.

Taxpayers cover the gap between what employers pay and what life costs.

This is not a welfare system. It is a corporate subsidy system.

Debt and foodbanks fill the remaining gap. Debt becomes a survival tool. Foodbanks become part of the infrastructure.

This is not normal. It is a financial death spiral.

And the psychological trick is simple: people are told that if they fall behind, it’s their fault – they should work harder, budget better, make better choices.

This narrative protects the system. It keeps people blaming themselves instead of the structure that is failing them.

9. Why Britain feels “priced out of everyday life”

Because the system has hit its limit.

The model relied on rising house prices, rising private debt, cheap imports, low wages, shrinking public services, foreign investment, and government subsidies for low‑pay employers.

All of these are breaking down.

Prices rise because money is constantly created. Wages don’t rise because global labour is cheaper. Housing is unaffordable because it’s an investment product. Public services collapse because they’ve been strip‑mined. Small businesses die because they can’t compete with global giants. Communities weaken because their economic base vanished. Workers cannot live on their wages. Benefits subsidise employers instead of protecting citizens. Debt fills the gap until it can’t.

This isn’t a temporary crisis. It’s the end of a model.

10. The credibility constraint: governments cannot go bankrupt – but they can lose trust

Here is the final piece of the puzzle.

A government that issues its own currency cannot run out of money. It cannot go bankrupt. It cannot involuntarily default. It creates the currency. It settles payments through the Bank of England. It cannot run out of the thing it creates.

But it can lose credibility.

And credibility is the oxygen of a fiat system.

Investors buy gilts not because the government needs their money, but because gilts are supposed to be safe. They anchor interest rates. They stabilise pension funds. They act as the plumbing of the financial system.

If investors lose confidence in the government’s ability to manage the economy – even though the money they use was created by banks – they can refuse to buy gilts. Not because the government is insolvent, but because they no longer trust the system’s stability.

This is exactly what happened in 2022 when Liz Truss was Prime Minister. Markets briefly refused long‑dated gilts. The government wasn’t bankrupt. But trust evaporated. The Bank of England had to intervene to stop pension funds from collapsing.

This is the real constraint on government: not solvency, but credibility.

And credibility becomes harder to maintain when the real economy weakens, public services decline, politics becomes unstable, and the financial system grows more fragile.

11. The simplest possible explanation

Britain built an economy where money is created easily, but real value is not.

The country stopped producing and started extracting.

Now there’s nothing left to extract, so everyday life has become unaffordable – even for people who work full time.

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Why Politicians Obsess Over Growth – And Why it Has Nothing to Do with You

If you listen to politicians for long enough, you’ll notice that one word appears more than any other: growth. It’s repeated so often, and with such certainty, that most people simply accept it as a kind of universal good.

Growth is presented as the answer to every problem, the justification for every policy, and the measure of every government’s success.

It has become a mantra – a belief system – and like most belief systems, it survives because very few people ever stop to question it.

But what if we did?

What if, just for a moment, you paused and asked yourself what politicians actually mean when they talk about growth?

What if you asked why it matters so much to them, and why it seems to matter so little to the quality of life you experience every day?

Because the truth is this: the growth politicians talk about is not the growth you think it is.

What We Think Growth Means

When ordinary people hear the word “growth”, we think of improvement. We imagine better jobs, rising living standards, stronger communities, investment in public services, and a general sense that life is moving in a positive direction.

Growth, in the everyday sense, feels human. It feels like progress. It feels like something that should make life more secure, more hopeful, and more stable.

That’s the growth most people assume politicians are talking about.

But they’re not.

What Political Growth Actually Is

Political growth has almost nothing to do with people, communities, wellbeing, or the environment. In political and economic circles, growth is a very specific thing: GDP.

GDP doesn’t measure prosperity. It doesn’t measure wellbeing. It doesn’t measure fairness, stability, or the health of society. It measures economic activity – any economic activity – without asking whether that economic activity improves life or destroys it.

If money moves, GDP goes up. If money moves faster, GDP goes up faster. It doesn’t matter what the money is doing or who it is benefitting.

This is why GDP can rise while your life gets worse. It can rise while public services collapse. It can rise while inequality deepens. It can rise while the environment is pushed beyond repair. It can rise while the majority become poorer in real terms – something we’ve seen in Britain as GDP per head has increased while median wages and household disposable incomes have flatlined or fallen .

Yet politicians continue to insist that growth is essential, as if the number itself were more important than the lives it is supposed to represent.

GDP: A Tool That Dehumanises Everything It Touches

In an earlier piece, I described GDP as one of the most dehumanising tools ever created. And I stand by that.

GDP reduces an entire society to a single number. It strips out meaning, humanity, and context. It rewards activity even when that activity destroys communities, erodes stability, or undermines the very foundations of everyday life.

GDP treats human beings as units of economic throughput. It treats communities as marketplaces. It treats the environment as a resource to be consumed. And it’s important to remember that GDP was never designed to measure human wellbeing at all – it was created in the 1930s as a wartime production metric, intended to track industrial output, not the health of society.

Because GDP can be measured, it can be manipulated. If you can measure it, you can control it. If you can control it, you can justify anything – austerity, privatisation, deregulation, asset inflation, debt expansion – as long as the number goes up.

GDP has become the perfect political tool: simple, manipulable, and detached from reality.

How Britain Became Dependent on Growth

Over decades, Britain’s economic model has been hollowed out. Financialisation replaced real productivity. Asset inflation replaced genuine prosperity. Debt-driven expansion replaced sustainable development. Outsourcing and privatisation replaced public responsibility. Austerity stripped out resilience and capacity.

This is the story behind the fiscal armageddon we now find ourselves in. It’s how Britain ended up borrowing into oblivion, hollowing out the institutions that once held society together, and becoming dependent on a model that can only function if the illusion of growth is maintained.

Growth is no longer a sign of strength. It is a sign of dependency – the only thing keeping a failing system upright.

A Place Called Stop

In another piece, I described Britain as having reached a place called Stop – the point where a system built on efficiency, extraction, and dependency simply cannot continue.

Everything that could be cut has been cut.

Everything that could be sold has been sold.

Everything that could be borrowed has been borrowed.

Everything that could be outsourced has been outsourced.

We have reached the limits of a model that has consumed everything it can. Productivity has flatlined for over a decade, public debt has climbed to historic highs, and essential services are stretched beyond capacity – all clear signs of a system running on fumes.

Growth is no longer possible without causing harm – yet the political class demands more of it, because they have no alternative story to tell.

Why Politicians Still Worship Growth

Politicians cling to growth because it is the only metric that makes the system appear functional.

Without growth, the cracks become visible. Without growth, the failures can no longer be hidden. Without growth, the political class has nothing left to point to when asked what they have achieved.

Growth has become a political shield – a way to avoid confronting reality.

This is why political culture is obsessed with growth to the point where it seems more important than life itself. Because without growth, the truth becomes unavoidable.

Why People Still Believe in Growth

One of the most powerful forces keeping the growth narrative alive is something I’ve written about many times: paradigm blindness.

People assume growth is good because they assume growth benefits them. They believe they are personally gaining from the system – even as the evidence of harm becomes unavoidable. They defend the model because they think they understand it, even though they don’t.

Paradigm blindness keeps people trapped in a narrative that no longer serves them. It keeps them believing that the system is working for them, even as it actively works against them.

The Consequences of Mistaking GDP for Prosperity

Mistaking GDP for prosperity has led Britain into a state of profound fragility.

Public services have collapsed. Communities have hollowed out. Inequality has deepened. Environmental destruction has accelerated. People have become poorer in real terms.

Yet GDP has risen. And politicians have pointed to that rise as proof that everything is fine.

This is the danger of growth as a political narrative: it allows leaders to claim success even as society falls apart.

The Question That Changes Everything

So let me ask you directly:

When politicians talk about growth, what do you think they mean?

Are they talking about your wellbeing? Your community? Your future? Your quality of life?

Or are they talking about a number that has nothing to do with any of those things?

Once you confront this question honestly, the entire political narrative begins to unravel.

What Comes After Growth

Britain does not need more growth. Britain needs reconstruction.

Reconstruction begins with honesty. It begins with recognising that the growth model has reached its limits. It begins with accepting that GDP is not prosperity. It begins with rebuilding the foundations that were hollowed out in the pursuit of a number.

A post-growth future is not a step backwards. It doesn’t mean stopping progress; it means redefining it – measuring success by wellbeing, resilience, and sustainability rather than by the speed of financial turnover.

It is the first step toward rebuilding what has been lost – resilience, community, stability, and genuine prosperity.

A Final Thought

Growth is not what you think it is. It is not what politicians tell you it is. It is not what the system pretends it is.

Understanding the truth about growth is the first step toward understanding why everything feels like it is falling apart – and why real change begins with rejecting the illusion.

When Tax is the Only Tool They Have Left

A conversation about how Britain reached a point where taxation is no longer a political choice, but a structural necessity.

Noticing the feeling that something has changed

If you talk to people across the UK – in cafés, on trains, at work – you’ll hear a similar sentiment: “It feels like everything is getting difficult.” Not just financially, but structurally.

Public services feel stretched. Infrastructure feels tired. Politics feels stuck. And when a new government arrives and immediately reaches for tax rises, many people instinctively fall back on familiar narratives: “Well, that’s Labour for you.”

But if we slow down, take a breath, and look carefully at the mechanics underneath, a different picture emerges – one that isn’t about party ideology at all. It’s about a country that has gradually run out of road, and a government that has fewer tools available than at any point in modern history.

This isn’t a story about blame. It’s a story about understanding.

Why the old political story no longer fits

For decades, British politics has been framed around a simple rhythm: Conservatives lower taxes, Labour raises them. It was never entirely true, but it was familiar enough that people accepted it.

Yet the data tells us something different. The UK’s tax burden was already heading toward an 80‑year high before the most recent General Election in the summer of 2024, driven by structural pressures rather than ideology.

Even under Conservative governments, taxes rose steadily – partly through explicit measures, partly through “fiscal drag,” where thresholds fail to rise with inflation and more people are pulled into higher tax bands.

So when the Labour Government raises taxes now, it’s not because they are following a party tradition. It’s because the system they’ve inherited leaves them almost no alternative.

This is the first key idea: taxation today is not ideological – it is mechanical.

The broken toolbox: understanding what governments used to rely on

To understand why tax is the only tool left, imagine the UK government as a mechanic with a toolbox. For decades, that toolbox contained several reliable instruments:

Borrowing – cheap debt allowed governments to smooth over problems.
Spending cuts – austerity was used to rebalance budgets.
Privatisation – selling state assets brought in quick cash.
Growth – rising productivity and investment expanded the tax base.
Efficiency drives – squeezing public services for savings.

But each of these tools has worn out.

Borrowing is no longer cheap

Public debt has nearly tripled since the 2008 global financial crisis (GFC). Markets are more sensitive. Interest rates are higher. Borrowing now comes with real consequences.

Spending cuts have reached their limit

After a decade of austerity, public services are visibly strained. The Resolution Foundation describes the UK as stuck in a “fiscal funk” where cuts no longer fix anything – they simply break things further.

Privatisation has run out of road

Most sellable assets have already been sold. What remains is either essential or politically untouchable.

Growth has stalled

The Institute of Economic Affairs notes that Britain’s long-term growth slowdown is deeply structural, tied to low investment and productivity. Growth can no longer be relied on to “fix” the public finances.

Efficiency savings are a fiction

Public services have been squeezed so hard that further “efficiencies” often mean service reductions, not improvements.

When every tool in the box is broken, the mechanic reaches for the only one left – even if it’s blunt, unpopular, or overused.

That tool is taxation.

The extractive system: how Britain hollowed itself out

To understand why the toolbox is empty, we need to look at the deeper structure of the UK economy – not in a technical way, but in a human way.

For many years, Britain relied on a model that extracted value rather than created it. This wasn’t malicious; it was gradual, almost invisible.

Fiat money and the illusion of prosperity

The UK operates on fiat money – currency backed by trust rather than physical assets.

This allowed governments to borrow cheaply, expand credit, and inflate asset prices.

For a while, this created the feeling of prosperity: rising house prices, booming financial markets, easy credit.

But it didn’t create productivity. It didn’t create resilience. It didn’t create the kind of growth that strengthens a nation.

Financialisation: when money makes more money than work does

Over time, the economy shifted toward financial activity – property, banking, asset management – and away from production, innovation, and infrastructure. The IEA notes that tax policy increasingly discouraged investment, contributing to lower productivity growth.

This meant Britain became very good at moving money around, but less good at building things that last.

The hollowing-out effect

As extraction replaced creation, several things happened:

Public services weakened.
Infrastructure aged.
Local government struggled.
Real wages stagnated.
Social mobility slowed.
Trust in institutions eroded.

People felt the country becoming thinner – not collapsing, but hollowing.

Performance politics: when the story matters more than the substance

Fiat money didn’t just shape the economy. It shaped politics.

For years, governments could rely on cheap borrowing and rising asset values to appear effective. They could announce new initiatives, promise investment, and project confidence – even when the underlying machinery was weakening.

This created what we might call performance politics: politics focused on narrative rather than outcomes.

The ICAEW describes the UK tax system as “trapped by politics,” with reforms blocked because politicians fear creating visible “losers.” This leads to short-term fixes, rushed announcements, and complexity – all symptoms of a system performing rather than governing.

And now we’ve reached the zenith of that performance.

The tragedy: the actors keep performing even though the stage is collapsing

Here is the part that is hardest to talk about, but most important to understand.

Politicians – of all parties – are trapped in a story that no longer works.

They inherited a system that relied on tools that no longer function. They face public expectations shaped by decades of performance politics. And they know that admitting the truth would be politically devastating.

So they keep performing.

They keep promising growth. They keep announcing reforms. They keep projecting confidence.

And when all other tools fail, they reach for taxation – not because they want to, but because it is the only lever that still moves when pulled.

It is immediate. It is predictable. It does not require market confidence. It does not require waiting for growth. It does not require selling assets that no longer exist.

Taxation is the last functioning mechanism in a system that has run out of alternatives.

A fair conclusion: understanding without blaming

This is not a story about Labour. It is not a story about the Conservatives. It is not a story about ideology.

It is a story about Britain – about how decades of structural choices, economic shifts, political incentives, and fiscal pressures have brought us to a point where taxation is no longer a preference, but a necessity.

The wheels of the country are still turning. But they are turning because the government is extracting more from the public than ever before – not out of malice, but out of structural reality.

Understanding this doesn’t make the situation easier. But it does make it clearer.

And clarity is the first step toward imagining something better.

What this means for the future – without predicting anything

It’s important to be clear: this isn’t about forecasting or claiming to know what any government will do next. Politics is human, circumstances change, and unexpected events can reshape the landscape overnight. But when a system reaches a point where taxation is the only reliable tool left, certain patterns tend to emerge – not because of ideology, but because of the mechanics of the situation.

Think of it less as prediction and more as understanding the direction of travel when no other levers are available.

1. Taxation becomes the default response to pressure

When borrowing is constrained, growth is weak, and public services are fragile, governments often turn to tax because it is the only mechanism that produces immediate revenue. This doesn’t mean taxes will rise endlessly; it simply means tax becomes the first tool reached for when something needs funding.

2. The tax base broadens rather than deepens

Instead of dramatic headline tax rises, governments often rely on quieter forms of extraction:

frozen thresholds
expanded eligibility
new categories of taxable activity
adjustments that affect more people rather than a few

These changes feel subtle, but they accumulate.

3. Public services stabilise, but rarely improve

When tax is used to keep the wheels turning, the goal often becomes maintenance, not transformation. Services may avoid collapse, but they struggle to regain strength. The system focuses on preventing failure rather than enabling progress.

4. Political debate becomes narrower

When the toolbox is empty, political arguments often revolve around:

how to tax
who to tax
when to tax rather than deeper questions about structural reform. This isn’t because politicians lack imagination; it’s because the system limits what is realistically possible.

5. The public feels the pressure more directly

As extraction increases, people notice it in everyday life:

higher effective tax rates
reduced disposable income
slower improvements in services
a sense that the state is asking more while delivering less

This isn’t a prediction – it’s simply what tends to happen when a government is forced to rely heavily on a single tool.

6. The system continues until it reaches a natural limit

Every extractive model has a point where it can no longer extract more without causing harm. That point varies by country, by economy, and by political choices. But the principle is simple: a system that relies on taxation alone eventually reaches a point where there is nothing left to tax without changing the model itself.

Again, this is not a forecast. It is an explanation of how systems behave when they run out of alternatives.

A closing thought

None of this is inevitable. None of it is guaranteed. None of it is a prediction.

It is simply the shape of the landscape when a country reaches a moment where taxation is the last remaining lever.

Understanding that shape helps us see the present more clearly – and perhaps imagine a different future more honestly.

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The Time for Performance is Over

The time for performance is over. The music has stopped, and the old system no longer has a chair.

For years, British politics has carried on as if the stage were still set in the old way. Leaders step forward, deliver their lines and reassure us that the familiar rhythms still apply: make the right choices, pull the right levers, announce the right reform, and the country will respond as it once did.

But the stage has changed. The machinery behind it has changed too, and many of the people standing beneath the lights have not yet grasped how completely.

What I Mean by ‘the System’

By ‘the system’, I mean two things that have fused into one. The first is Britain’s post-1980 operating model: an economy organised around growth, consumption, finance, property, flexible labour, centralised fiscal control and the promise that market incentives will allocate resources better than public institutions can. The second is the establishment worldview that treats this arrangement not as one political settlement among others, but as common sense itself.

That worldview is not simply a club of powerful people. It is a shared mental map, carried through the Treasury, Whitehall, political parties, business, the media and much of public life. It assumes that growth will return, that fiscal management is the first test of seriousness, that decisions are safest at the centre, that incentives can repair most failures, and that institutional continuity is preferable to disruptive change.

For a long time, those assumptions worked well enough to look like laws of nature. Growth created room for compromise. Cheap energy and dependable supply chains kept costs down. Borrowing and rising asset values softened conflict. Public services could be asked to do more because the wider model usually produced enough movement to disguise what was being lost.

That is the causal chain at the heart of this essay. The old assumptions shaped the institutions; the institutions narrowed the choices available to government; repeated use of those choices weakened capacity and resilience; and, as the world became less stable, a model built for continuity became less able to absorb change. What looks like a failure of individual leadership is often the final, visible consequence of a much deeper design failure.

This is why capable people can enter government with good intentions and still end up making versions of the same decisions. They are trained to operate the inherited machinery, not to question the worldview that designed it.

The Human Tragedy

If there is a tragedy here, it is not that politicians have suddenly become uniquely foolish or uncaring. It is that they were prepared for a world that is disappearing.

They learned how to build teams, negotiate policy, manage a news cycle and communicate through a crisis. Those skills mattered in a system with functioning levers and thick enough buffers to absorb mistakes. They matter less when the levers are no longer connected to the outcomes they are meant to produce.

So they do what they know. They perform. They reassure. They reorganise a department, rename a programme, launch a review and promise delivery. When the policy meets depleted local capacity, fragile supply chains, high costs or Treasury limits, it slows, shrinks or quietly disappears. The announcement survives longer than the action because the state can still produce language more easily than results.

You can see the strain in the repetition. Every government arrives promising renewal and leaves speaking of ‘tough choices’. Every minister discovers that the service they were asked to reform is tied to half a dozen other systems already under pressure. Pull one thread and the fabric does not become neater; it begins to tear.

None of this absolves leaders of responsibility. People in power still make choices, and choices still have consequences. But blame on its own explains very little. The more useful question is why different people, parties and temperaments are repeatedly funnelled towards the same narrow set of answers.

The answer is that the system does not merely constrain action. It defines what respectable action is allowed to look like.

The Structural Reality

Britain’s operating model depended on conditions that were never permanent: affordable energy, stable geopolitics, reliable imports, manageable debt, rising or at least tolerable living standards, and public institutions with enough spare capacity to absorb shocks.

As those conditions weakened, the model did not adapt. It compensated. Low pay was supported through benefits. Housing costs were carried through household debt and public subsidy. Local government was asked to preserve social stability with fewer resources. Infrastructure maintenance was deferred. Public services pursued efficiency until efficiency became the removal of every margin that might once have absorbed a bad year.

Each response made sense within the worldview of the system. Together, they made the country more vulnerable. When wages lagged behind costs, support payments prevented immediate hardship but also became indispensable to the functioning of the lower half of the economy. When local capacity was cut, central control appeared more necessary. When growth disappointed, more weight was placed on the next forecast of growth. The remedy for each weakness deepened dependence on the model that had created it.

The pandemic exposed this structure and temporarily concealed it. Government could still write cheques on a scale large enough to hold everyday life together. That spending bought time and prevented far worse damage, but it did not rebuild the underlying capacity. It left a more indebted state facing the same structural problems in a harsher fiscal and geopolitical climate.

Today, governments have less room to borrow, institutions have less room to improvise and households have less room to absorb another rise in costs. The runway is shorter because the margins have been spent.

This is why politics feels repetitive and strangely weightless. The language of control remains, but the capacity behind it has thinned. Ministers speak as if the machine were merely jammed. In reality, many of its parts were removed in the name of efficiency, while others were designed for conditions that no longer exist.

The Domino Field

People naturally ask what will set the next crisis off. Energy? Food? Debt markets? Supply chains? AI? A geopolitical event nobody has yet named?

At this stage, the first domino matters less than the field on which it falls. A resilient system contains failure. It has stores, slack, alternative suppliers, institutional memory and people with permission to act. A vulnerable system transmits failure.

Britain has spent decades tightening the connections while thinning the buffers. Energy feeds into food and transport; food and transport feed into inflation; inflation feeds into interest costs and household distress; those pressures feed into public services and political legitimacy. A shock travels because there are fewer places left for it to stop.

The danger is therefore not one spectacular event but a chain: an external pressure raises costs; households and firms cut back; tax receipts weaken while demand for support rises; fiscal rules narrow the response; public and local institutions are asked to carry more with less; delays and failures multiply; trust falls; and the state becomes even less able to mobilise consent for the changes it needs.

AI belongs in this picture as one dependency among many, not as a magical cause or a singular villain. It may raise capability in some places and fragility in others. What matters is whether the systems around it have the energy, skills, governance and resilience to use it without becoming more exposed.

The next crisis will be defined less by where it starts than by what it lands on.

What This Argument Is – and Is Not

This is not a prediction of imminent collapse. Systems can limp on for a long time. Britain remains wealthy, capable and institutionally resourceful, and decline is never a straight line. Nor is this generic declinism: the comforting habit of declaring that everything was better before and that national failure is inevitable.

The argument is more specific. A particular operating model is losing its ability to turn inputs into the outcomes it promises, while the worldview around it keeps excluding alternatives. That can produce sudden crisis, but it can also produce years of drift, uneven deterioration and local adaptation. The point is not to forecast a date. It is to recognise the mechanism while there is still time to change it.

Nor does acknowledging fragility mean denying agency. Quite the opposite. If the problem were simply fate, there would be little to do. If it lies in institutions, assumptions and the distribution of power, then those things can be redesigned.

The Lament

There is no satisfaction in watching the old assurances lose their force. No vindication. Only the weight of what it means for people who rely on services already stretched, for households with no cushion, and for public servants asked to hold together systems that no longer have the strength to hold themselves.

A lament is not despair. It is the honest recognition of what has been lost: spare capacity, local knowledge, institutional confidence, time to think, and the belief that public action can shape the future rather than merely manage decline.

It also asks us to see the people inside the system as people. They are neither all villains nor all fools. Many are conscientious, intelligent and trapped inside incentives that reward continuity. They reach for the familiar because the familiar is what their institutions recognise as serious.

That recognition is painful, but it clears the ground. Once the performance stops, we can ask not how to revive the old rhythm, but what kind of country could function without depending on it.

The Opportunity That Still Exists

The alternative is not a grand blueprint lowered from Whitehall. It is a different distribution of security, capacity and power: a national state strong enough to guarantee a floor and coordinate what must be shared, alongside local institutions trusted and funded to solve what must be rooted in place.

Start with security. A basic living standard would establish a reliable floor beneath income, housing, energy, food and essential services. The purpose would not be to withdraw people from economic life, but to remove the permanent emergency that prevents them from participating in it. Security gives households room to plan, workers room to retrain, carers room to care and communities room to organise.

Then rebuild local capacity. Give councils and community institutions dependable multi-year resources rather than short competitive grants. Let places retain more of the value they create. Restore teams able to plan housing, energy, transport, care and skills together, because those systems meet in real lives even when Whitehall keeps them in separate departments.

Make resilience a practical test of policy. Ask not only whether a service is cheap in a normal year, but whether it still works in a difficult one. Maintain strategic stocks where dependence is dangerous. Support diverse suppliers instead of single brittle chains. Invest in repair, maintenance and redundancy. Treat spare capacity not as waste, but as insurance.

Use national policy to create common standards and long horizons, then allow local variation in how they are met. A coastal town, a former industrial city and a rural county do not need identical institutions. They do need equal dignity, clear rights, accountable decision-making and access to the resources required to act.

Change the measures that govern decisions. Growth can remain useful without being the sole proof of success. Security, health, ecological stability, household resilience, institutional capacity and the time people have to live should matter too. What we measure becomes what officials are permitted to defend.

None of this is quick, and none of it removes the need for hard choices. It changes what those choices are for. Instead of repeatedly sacrificing capacity to preserve the appearance of control, we would invest in the ability of people and places to withstand shocks, learn and adapt.

The new model would be more distributed, but not abandoned to postcode luck; more local, but held within national guarantees; less dependent on endless consumption, but not hostile to enterprise; more cautious about concentrated power, but more ambitious about public purpose.

That is the opportunity hidden inside this moment: not a promise of perfection, but the possibility of building something that works in the world as it is.

The Chair Is Gone

There is a moment in any long performance when the audience realises the actors are still speaking but the play has already ended. The lines continue, the gestures continue, the familiar choreography continues – but the story has moved on.

That is where Britain is now. The rituals of politics remain, but the system that once gave those rituals meaning no longer has the same strength beneath it. The chair the old model relied on – growth, stability, buffers and room to manoeuvre – has been pulled away.

This is not a moment for triumph or fatalism. It is a moment for honesty: about the limits of the inherited model, about the worldview that keeps it in place, about the human cost of pretending, and about the work required to build something else.

The performance is over. The music has stopped. The old system no longer has a chair.

What comes next depends on whether we keep reciting the old lines, or finally face the silence and begin building a system that fits the world as it is – not the world as we once hoped it would remain.