“There has been no austerity at all! No austerity!” Douglas Carswell MP

Asa Bennett talks to the most radical man in parliament

Douglas Carswell is a man on the up. After working in Conservative headquarters in the policy unit (headed by a Mr David Cameron), Carswell became MP for Harwich in 2005 with a majority of 920 votes. He was later returned as MP (for the new constituency of Clacton) by a stonking 12,000 majority.

As a new MP, he didn’t wait to show how the Conservatives, beaten at three general elections, could renew themselves. His modernising vigour was expressed in his book “Direct Democracy: an agenda for a new model party”, which was co-written with such figures as Michael Gove, Jeremy Hunt and Greg Clark. With many of his co-authors now government ministers, it’d be hard to accuse Carswell of being behind the curve on the direction of the Conservatives.

Carswell rose to greater prominence when he co-wrote with European parliamentarian Daniel Hannan a book called “The Plan: Twelve Months to Renew Britain”. In this tract, the pair laid out numerous policies to revamp democracy, such as directly elected police commissioners and open primaries. The fact that policies like these have been eagerly taken up by Cameron and his allies shows Carswell’s extraordinary ability to lead the new wave of Conservative thinking.

And now he has written a new book, titled “The End of Politics and the birth of iDemocracy”. No small claim, you may think. I met Carswell to see why he anticipates the “end of big government” and the supremacy of the internet in politics.

The idea of your book is that the days of big government are over because of the rise of technology. Would that be an accurate summary?

That’s part of it. The issue really is maths plus technology, by which we’re going to see smaller government. Maths, by which I mean the big model of government we have in the west is unsustainable because in order to have all that big government, governments have to live upon their tax base.

It has done that by borrowing and manipulating money, it can’t do that forever.

How unsustainable is it then? After all, Vince Cable recently announced a British Business bank

Hang on a second! What the political elite want and what is going to have to happen are two different things.

I can’t think of a single politician in Greece, a single one who ever stood on a platform for shrinking the Greek state – yet the Greek state has shrunk.

When maths and the laws of maths meet the political elite, the laws of maths tend to prevail.

If you’re saying to me, “Aaaaah, this isn’t going to happen because turkeys don’t vote for Christmas.” Yeah! But December 25th still comes to pass!

It’s not what Vince Cable thinks that matters, it’s not what the political elite thinks matters, it’s that you run out of options because the money runs out.

David Cameron was said to be a reformer and you’ve said before he has become an establishment figure…

If you’re looking for what’s in the book to be echoed by politicians, you’re looking in the wrong place – it’s not going to happen.

The book is a little bit broader than what happens to be the soundbite of the day amongst the politicians in Westminster.

Let me put it like this. We’re now five, maybe six years, into a financial crisis. None of the politicians has I think properly understood the reason for the financial crisis. They don’t understand that fundamentally the reason why we’re in this crisis is because the western model is bust.

We’re trying to run a social democratic model on a capitalist, wealth-producing base. It doesn’t work.

If I was going to sit here and look hopefully for Vince Cable to get it or heaven forbid George Osborne to get it, we’d be here a long long long time

Politics is not ultimately driven by what the political elite regurgitate and spew out at one other and call debate. Politics is driven by economic fundamentals.

Surely once the economy recovers, any debate about examining the efficiency of the state would dwindle in importance?

I don’t think this government is even on the right page when it comes to this.

At the very height of the credit bubble, when the government was hosing cheap credit at the economy in order to allow it to carry on borrowing… in opposition our lot were talking about something called ‘sharing the proceeds of growth’!

Even at the height of the pre-bust debacle they didn’t get it.

Now we’ve had five years of bust and we’ve prevented the unravelling of all that malinvestment just by chucking more credit into the system. They just don’t get it.

You say they don’t get it but George Osborne said in 2009 that there would need to be an age of austerity…!

There has been no austerity at all! No austerity!

Gordon Brown as chancellor used to talk about prudence, what prudence? He borrowed and spent money like a drunken sailor

George Osborne has talked about austerity, what austerity? In the second and third quarter of this year, the deficit has gone up by 20%. We’re due to reduce it by 5% this year, that figure is for the birds!

There has been no austerity, absolutely no austerity. Look at the money George Osborne’s tax increases has took in, he put up taxes and was that additional revenue used to pay down debt? Not at all the state spent it!

Fundamentally, since 2001/2002 the British state has had to borrow the equivalent of 10% of GDP just to pay down its bills. It is incapable, I would say constitutionally and systemically incapable, of living within its tax base. So maybe the system will have to change, maybe the fundamentals wil have to change if whoever is in the office cannot get the British state to live within its means, the forces of financial gravity will bring the good airship down to earth.

How would “airship UK” be brought down?

I think throughout the west we’re going to have to see governments living within their tax base. That is going to be reinforced in a number of ways by the digital revolution.

We’re already starting to see western states unable to borrow in order to carry on living within their tax base. Although Britain and America are in some sense in a bond bubble and are still able to do that.

Other states notably in southern Europe and Belgium are unable to do that. Unfortunately we keep looking at those problems and seeing them as a problem for the euro rather than a problem of the government borrowing too much.

The big government model rests on three pillars.

Excessive borrowing, the days of that are coming to an end.

Debauching and manipulating the money since 1971, the British state along with most other western states has systematically devalued and debauched the currency in order to transfer wealth from the people to the official sector.

I think and argue in the book that in the age of digital money it is going to be very difficult to do that. Today most people in this country are captives of what we’d call the George Osborne pound. If he chooses to debauch the value of it there is not much we can do to escape that, unless we’re millionaires and can buy property or pension masters paintings. The digital revolution means that it will be very easy for people to opt out of state monopoly money.

The third way I think digital revolution will make it impossible for the government to carry on doing what it has done, is because we have had almost 100 years now of unequal taxation, or ‘progressive’ taxation. I think one of the reasons why the state was able to grow big in the first place was unequal taxation. Unequal taxation meant you could have people people voting to increase state expenditure without expecting to pay a proportionate share of the increased bill.

For a number of reasons in the digital economy, it’s going to be increasingly difficult to do that. It’s not just the rich taxpayers that can take flight, you’re not taxing income you’re taxing intellectual property.

Isn’t there limited capability for politicians to move on in the tax debate? Labour will want progressive taxes while Conservatives want competitive taxes.

The way I see it? One group of politicians gives lip service to one idea of lower taxes, the other lot give lip service to the idea of slightly higher taxes. But under both lots, taxes go up.

Why just lip service?

(chuckles) Has the centre-right administration at the moment reduced or increased taxes at the moment? Increased! Taxes go up whoever is in office, under the current model. What I argue in the book is that you’re inevitably going to have to move towards flatter types of taxes and taxation in the future, one of the reasons for this is that it’ll be increasingly difficult to tax income, if you’re taxing income it is much easier to tax people unequally. When you start having to tax intellectual property, it moves if you tax it too much.

The sorts of taxation we’ll have to rely on, taxes on consumption and on property – by definition that has to be a flatter system of taxation.

As you move away from a century of unequal taxation, you move towards flatter taxes. Once you have flatter taxes, you’ll resensitize a whole chunk of the electorate to paying taxes.

Suddenly you’ll find yourself in a situation which the Victorians and Edwardians had, where any proposal to increase taxation will be unpopular across the board.

So flat taxes, as suggested by Ukip, would be the future?

It’s not a question of them being in the intellectual ascendancy, it’s inevitable that you’ll have to move towards flat taxes. I see this as inevitable, it’s not a case of me sitting in Westminster arguing this is what I want but this is what I think is going to happen.

What about predistribution, as launched by Ed Miliband?

Good luck with that…good luck with that. I think that’s a sort of mid 1960s idea but there you go.

I’m pretty confident. As a libertarian conservative, I’ve never felt more confident than I do now because I think the big government model is bust and the three pillars on which it rests are crumbling.

You’ve often been viewed as an outsider. Do you think there’s a chance of your ideas prevailing?

I’m very optimistic. In The Plan, which I wrote with Daniel Hannan earlier, some of those ideas were taken up. Some of them have been acted upon, as seen with elected police commissioners.

Surely that’s because they’re positive ideas?

No, no, no. One of the reasons why an enormous amount of lip service was paid by the Conservatives in opposition. David Cameron gave an entire speech in Milton Keynes based on the ideas in The Plan, although I’m sure his speechwriters were far too modest to admit the source of it.

The problem is in office, that radicalism has been completely blunted. This government has been shockingly and appallingly deferential to Sir Humphrey.

But why? Cameron would surely insist he was still a free thinker…

I’m sure Tony Blair would but he got to a stage where he was honest enough to complain about the forces of conservatism in government and the scars on his back.

It is the case that elected politicians find it increasingly difficult to make the unelected Whitehall elite enact the policy changes they want.

So the system is broken?

Yeah, totally. It’s not just the model of government we have has left us bankrupt, or has left most people feeling it doesn’t matter who they vote for they won’t get change, the fundamental problem with all this is this technocratic top down system of government is so monumentally useless because they’re not outwardly accountable to the rest of us, the elite who make public policy increasingly elevate theories to the status of dogma.

They have fashionable ideas that suddenly take over. It leaves us from the banking disaster to the collapse of northern rock lurching from one disaster to another. The elite who make public policy are not properly accountable.

I’ll give you one example, at the moment there is a fad for the nudge unit and the ideas of behavioural psychology.

Although Grant Shapps has recently spoke about how much money it has saved us…

It’s all the height of fashion at the moment, I’m sure you could find all sorts of people in all three parties to say the premise on which it is built is wonderful – but is it? When do we have that debate?

I remember listening to people say for 20 years that low interest rates were a good thing, how did that end? (laughs)

You have a real danger at the moment that a fashionable view will take hold and because there is no real accountability, the questions that should be asked are never asked. 

Who was asking is fractional reserve banking, where you have ratios of for every £1 deposited, loans of £44 are made, who was asking is that model viable? Because no one was ever asking that and no officials in the FSA, Treasury were ever accountable – look what happened!

Part of the problem is because politicians don’t determine public policy, what they tend to do is when they enter office- they become a mouthpiece for the departmental orthodoxy. When it becomes obvious that the views they’re espousing are complete baloney and the orthodoxy is completely wrong, they grasp around for new ideas.

I’d quite like us to live in a democracy where we debated those ideas on the floor of the house openly and accountably but unfortunately that’s not what the way they’re governed.

We recently reported Ken Clarke saying that with Chris Grayling as justice secretary, “the rhetoric may change but the substance may stay the same”…

I don’t like it but it’s vindication of my analysis. Let me put it this way, many people listening to this will have seen that 1980s comedy Yes, Minister – the great joke in that series was the minister always does what the Sir Humphrey figure wants. Unfortunately it is not just a joke. It is a template for how we’re governed. It explains why people have given up on the political process, it explains why they say to me on the doorstep it doesn’t matter who he vote for, we get the same old nonsense. It explains why we lurch from one public policy disaster to another and why officialdom has grown so big that officialdom has lived beyond the its means to pay for it.

In the meantime, you’ll be asking the questions the Establishment needs?

I hope by writing this book that I will convince people inside and outside Westminster that it doesn’t need to be like this.

If we’re sitting here, in the build-up to the party conference season hoping to see a politician saying something that will improve our lives – we’ll be here for a long time!

Maybe the answer is not to wait for politicians to do things but to wait for the state and officialdom every year spends £30,000 per household commissioning public services on behalf of each household. Why not let some of us commission some of those services ourselves? Why not let people decide how they’re going to engage and buy in bits of government for themselves?

That’s almost a version of the Big Society though! People rise up and take control while the state recedes…

I’m glad you know what the Big Society was all about, I didn’t! I hope this book unlike the big society is thought through, I hope it’s coherent. I hope it is grounded in reality. Unlike the big society I hope it is more than just a passing fad.

A lot of people that I represent in my constituency are increasingly giving up on politicians and the political process. The longer I become an MP, I think who can blame them? If we leave it to politicians and officialdom to improve our lives and fix our country’s problems, we’re going to sink deeper into debt and deeper into the mire.

That is a different way, that involves giving people legal rights to take more control of their lives. Why not for example allow every parent who has a child with special educational needs to commission some of those needs directly for themselves? If you started to do that and you allowed people to make those choices themselves, people would realise we have been governed by a parasitical political elite who pretend to know the answers, they emote to pretend they’re on our sides.

Frankly they can’t even run their own House of Commons very well themselves, the idea that they should run our lives is for the birds.

The End of Politics and the Birth of iDemocracy is published by Biteback for £12.99. Available here.

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