Rishi sunak’s task is not just to reopen the economy, but to reform capitalism  | thearticle

In the 6th century BC the citizenry respected the statecraft of the Persian emperor of the Achaemenid Empire, Cyrus the Great. In 21st-century PC (post-corona) Britain it is witnessing the

rise of “Sunak the Smooth”. And smooth he was, as he delivered a summer statement in the Commons last Wednesday in his reassuring, empathetic tone. There was something for everyone, but

perhaps the most important measure was the “kickstart” scheme to get 16-24 year olds on Universal Credit into jobs. The Government will pay companies the minimum wage for up to six months

for the employees they take on. This is important. While older people have suffered the most severe health consequences due to the crisis, it is the young that have been hardest hit

economically. The situation for millennials (those under the age of 40) pre-crisis was already tough, with rising student debt, the prevalence of zero-hours contracts and the prospect of

home ownership a distant dream for many. The danger of a lost generation is now even more potent.  A capitalist system operates on the basis that actors within it possess capital. But if

your human capital cannot secure you a decent job, which in turn prevents you transforming hard graft into physical capital in the form of asset ownership, this indicates a system failure.

Such faulty wiring can be fixed if the problem is localised. However, if it persists it can become dangerous. After more than a decade of austerity, following the financial crisis of

2007-2008, society is at an inflexion point. The restive mood among the public that led to Brexit has not dissipated. As has been seen from the recent bout of statue-toppling across the

land, many people, especially the young, want to see injustices — at least in their eyes — addressed. Top of the list is income inequality, which the crisis has made starker. One of the

central ways of confronting it is for companies and individuals to pay their fair share of tax. This poses a challenge for Rishi Sunak. Thus far, the Chancellor’s attempt to crenellate the

economy with over £350 billion of interventionist measures has revealed his instinct for pragmatism over ideology. It has also demonstrated a willingness to part with the adamantine

Conservative fiscal orthodoxy of tight control of public spending and low taxes. While he has received plaudits for the measures he has taken, including seeking to minimise the risk of mass

unemployment through speedy execution of the furlough scheme, he will face tough choices soon. An increase in taxation is almost inevitable; the question is when to introduce it and whom to

target. He should begin by forcing tech giants to pay tax on revenues rather than profits, which can be understated through clever accounting practices and the use of offshore holding

companies. As the high street continues to suffer — with Boots, John Lewis and Burger King, among others, all announcing job losses last week — he should also consider charging a form of

business rates to online retailers that are not subject to the same costs as those with a bricks and mortar presence. Top earners should also pay more. Executive pay has continued to

mushroom in recent years with a tenuous link, in many cases, to corporate performance. According to the _Economist_, the CEO of the American company Alphabet, Sundar Pichai, was paid $281

million last year. Remuneration levels are not as vulgar in the UK, where the top ten best-paid CEOs combined earned less than Mr Pichai. However, the argument for increasing the tax take

from those earning such vast amounts is a strong one. There is also the moral question of individuals, some with knighthoods or other honours, enjoying tax exile status in places like Monaco

or on private islands, while operating businesses in the UK employing thousands of people and expecting government support. There is a strong argument that if such people refuse to pay

taxes they should be stripped of their honours. In future, honours should be conferred solely on those who pay their taxes in the UK, as the rest of us do. Aside from tax there is the triple

lock, which guarantees that the basic state pension increases every year by the rate of inflation, the rise in average earnings, or 2.5 per cent, whichever is the highest. The former Tory

Treasury minister, David Gauke — who fell out with his erstwhile party and stood as an independent at the last general election — has said that, given low inflation and stagnant wages, a

decision to increase pensions by 2.5 per cent would be “an act of intergenerational unfairness”. He is right. Until now the Chancellor has been commended for his clarity of thought and

swiftness of action. The question of determining how to pay for the biggest expansion in government borrowing since World War Two will be altogether more difficult, particularly if he has

one eye on eventually moving next door to his neighbour’s house in Downing Street. That means keeping his party and its financial backers on side. But the present moment also presents Rishi

Sunak with an opportunity to reset the capitalist system. The market economy needs greater equality at its heart if it is to endure. When and how to go about it, as large parts of the

economy splutter in their attempt to restart, will call for fine judgement.