the times | Monday May 2 2022 35

CommentBusiness

Liz Truss unveiled her

plan in a speech at the

Mansion House last week

Liz Truss’s ‘economic Nato’ will change

the way we view security and prosperity

‘G

overnment should

redistribute income

from the better off to

those who are less well

off.” That statement is

important to political scientists, who

use people’s responses to it to

measure whether they lean left or

right on economic questions.

It’s just been used again in a new

academic paper that might well

offer a glimpse of Britain’s long-term

economic and political future. In

that future, the electorate makes a

long-term shift to the right on

economics, reducing support for tax

policies that transfer wealth from

rich to poor.

The reason for that might surprise

you: it’s the increase in the number

of people going to university.

The paper in question is by Ralph

Scott at the University of

Manchester. His work, published in

the journal Electoral Studies, shows

the effect that higher education has

on people’s political attitudes. Scott

uses data on people’s answers to

survey questions asked at several

points over their lives — a

“longitudinal” study — and allows

for the self-selecting nature of the

people who go to uni, and the usual

effects of age on political attitudes.

Even allowing for those things, the

study shows that going to university

makes a person more socially liberal

— support for authoritarian

measures such as the death penalty

falls — and less racist. That might

not astonish you: the idea of higher

education as a motor of left-wing

politics is hardly new, not least

because of the right-wing pundits

and politicians who so enjoy uni-

bashing.

But Scott’s analysis also shows

that going to university makes a

person more right-wing on

economics. Graduates are

significantly less likely than non-

grads to support that opening

statement about redistribution. So

much for the idea that graduates are

all Corbynista tax-and-spend fans.

And so much for old-fashioned

ideas of politics as being a simple

left-right contest based on social

class: education is now the real

dividing line. Businesses should pay

more attention to this divide. If your

communications staff, and

especially your social media team,

are all graduates who talk only to

other graduates, you’re going to

miss, or upset, a lot of customers.

Quite why university pushes

people to the right on economics

isn’t clear. One theory is that

graduates see themselves as more

likely to lose out from

redistribution, so they oppose it out

of self-interest. Another is that the

experience of higher education

makes people more individualistic,

keener for people to be able to make

their own spending choices rather

than let the state do it for them.

Whatever the cause, I think

Scott’s findings so far matter a lot,

and will matter more over time.

Because the share of the population

with a degree is only going to rise.

Scott’s data comes from people who

were born in 1970, a group in which

only about a quarter have a degree.

Now, half of school-leavers go to

higher education, and people such

as Tony Blair reckon we need 70 per

cent of the workforce to be

graduates to raise productivity and

stay competitive.

Whatever the number, the point

stands: if graduates are more

resistant to taxation, more

graduates in the population will

mean that over time, politics tilts

away from higher tax policies. As

the Office for Budget Responsibility

notes, the UK tax burden is

currently the highest since the

1940s. Will that be the high-tide

mark? And will it be a growing

graduate population that helps drive

tax rates and revenues down?

Perhaps, but a long-term move

towards lower taxes will not be

simple, because there are other big

trends at work here. Britain is

getting older, and an older

population makes greater demands

of the state, for health and care

services. A more educated

workforce is good, but it may hasten

us towards a future where the

electorate demands lower taxes and

higher spending — at the same time.

Mark Littlewood

James Kirkup

British side, we seem determined to

ban US chlorinated chicken or

hormone-treated beef. The

justification has fluctuated from

human health to animal welfare.

However, I have yet to find any

British visitor who refuses to eat

American beef or chicken while also

happily consuming their British

equivalents back at home. Each of

these trade barriers is relatively minor

in their own terms, but the volume of

them amounts to a drag on trade

between free nations.

If we fear that total global trade will

continue to flatline, this needs to be

mitigated by doubling down on

encouraging trade between

developed, capitalist nations.

Liberalising trade also has the

unusual feature of producing greater

economic benefits than government

estimates typically suggest. Professor

Patrick Minford, an eminent

economist, estimates that the recent

trade deal between the UK and

Australia could be worth £69 billion,

40 times the official prediction.

Third, if Truss finds favour in

pursuing her economic Nato concept,

it needs to be created alongside a

re-evaluation of whether

international institutions are any

longer relevant to our global needs.

The UK spends hundreds of millions

every year to support entities from

the UN to the IMF whose relevance

to today’s challenges must be

questionable. Do we draw the lesson

from Covid that the World Health

Organisation is the right body to cope

with another pandemic? Its inability

to satisfactorily challenge the Chinese

Communist Party — or listen to

Taiwan — worsened the situation.

The world has always been in a

state of flux, with new and

unpredictable challenges emerging

daily. International events of recent

months have caused many of us to

start valuing proper security and

increasing prosperity as vital policy

goals, rather than just natural features

that can be taken for granted. Truss

has put forward an interesting

blueprint for how freedom-loving

nations might

recalibrate their

relationships. Now it

is time to put some

flesh on the bones.

The foreign

secretary’s Mansion

House address last

week excited media

coverage for her

pledge to drive Russia out of

Ukrainian territory. She underscored

this aspiration with specific promises

of expanded support for those

fighting Vladimir Putin’s invaders.

However, the section of Liz Truss’s

speech which was most radical and

far-reaching focused on economics.

How and when the fighting in

Ukraine ends, Truss seems to have

concluded we need to rethink the

entire international, institutional

infrastructure to better advance

liberalism and capitalism across the

globe. She explicitly called for the

creation of an “economic Nato”.

Since the fall of the Berlin Wall, the

broad approach of the free countries

of the world to Russia and China has

been to trade and engage, with the

belief that internal, liberalising

reforms would surely follow. The

world became enormously richer

after this explosion of global trade,

but recent years have seen a flatlining

in trade flows and little evidence that

being plugged into the capitalist

economic system is a surefire means

to spread individual freedom and

democracy in other territories.

Indeed, Putin’s war in the Ukraine

is being largely supported by his

assessment that many countries can’t

afford to cut off Russian energy. On

one straightforward reading, open

markets in eastern Europe are

funding war, not encouraging peace.

Over the long term, the Truss

solution to this conundrum is to build

a western alliance based on economic

strategy, which mirrors that of Nato’s

military partnership. This would

initially be born out of the G7

grouping of the US, UK, Japan,

Italy, Germany, France and

Canada. Between them

these nations may only

represent about a

tenth of the world’s

population, but

they also amount

to nearly half of

global GDP.

At present, the

G7 operates as a

co-ordinating body

or, its opponents might argue, a

talking shop. Truss will need to spell

out how she wishes to change its

operations and structure to become

more than that. She has been explicit

that these seven countries would just

be the initial building blocks of a pro-

freedom economic alliance with

membership expanding rapidly. This

could include perhaps Australia,

Spain, South Korea and even Taiwan.

If her words are going to be

converted into a geopolitical reality,

there are three underlying principles

that need to be grasped.

First, the new body must be

configured such that it doesn’t

become a closed, protectionist bloc.

The aim, from a security perspective,

surely is not to throttle off trade with

the rest of the world, but to ensure we

don’t find ourselves in a position of

exposed dependence. Too often, there

is a tendency to derive from

Germany’s reliance on Russian

energy that the future must depend

on self-reliance. If we really are to

move to a situation in which food,

energy and key raw materials should

all be homegrown, the hit to

economic output would be dreadful.

Striving for diversity and switchability

of supply might have some

attractions, but that’s a mile away

from hostility to the very concept of

welcoming imports.

Second, the persistent, protectionist

barriers between the putative

members of an economic Nato need

to be tackled with a renewed and

determined assault. We find ourselves

in a strange position that with our

Nato allies, we are willing to commit

ourselves to protect any member

through means of war, potentially

even involving the deployment of

nuclear weapons. However, we

remain reluctant in many areas to

trust each other with the

free flow of goods and

services.

In the US it is

illegal to buy, sell

or import

Spanish ham

without a

licence. Kinder

Surprise Eggs

are banned in

America, as

confectionary

must not include

any inedible

substances. Haggis is

also illegal. On the

“

’’

Mark Littlewood is director-general

of the Institute of Economic Affairs.

Twitter: @MarkJLittlewood

James Kirkup is director of the Social

Market Foundation

Graduates’ reluctance to

pay more tax is a problem

for an ageing population

‘More graduates may

mean an electorate that

demands lower taxes

and higher spending,

at the same time’

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