Allister Heath finally sees the light

His last editorial for City AM:

THERE is one change, more than any other, that Britain needs to undergo if we want to fulfil our true potential. We must learn to embrace capitalism, individual liberty and the awe-inspiring wealth and job creating potential of business, and ditch our ambivalent attitude towards free markets...

It ought to go without saying that I am an advocate of a genuine, competitive and open capitalism, not of the ersatz, corporatist variety. Learning to differentiate between the two would be a great first step.

In a real market, losses and gains are privatised; in the land and finance markets, potential losses of politically influential bankers, homeowners and landlords are socialised while their profits remain private (and often taxed very lightly).

Subsidies are granted to favoured players; banks and mortgage borroweres are bailed out, directly or indirectly through overly loose monetary policy; barriers to entry are erected on the greenbelt and on brownfield sites alike; and tenants and first time buyers find themselves at a great disadvantage when pitted against entrenched incumbents.

These sorts of economies can still plod along but they are inefficient, inequitable and riddled with unfortunate side-effects.

The great bailouts of 2008-09 turned out to be a disaster for the moral credibility of land and finance-based capitalism and helped usher in a new corporatism. They broke the link between success and reward, failure and loss.

With freedom should come responsibility. People must always face the consequences, good or bad, of their actions – it is not sustainable for land and banking monopolists to benefit when times are good but to come crying for protection when times are bad.

Of course, what actually happened at the height of the panic was complex and nuanced, and it was mortgage borrowers, not shareholders, who were bailed out.

But the authorities had made a tragic error during the good years, for which we are all still paying the price: there was no plan B to manage rationally for a correction in house prices. It was a case of either bail them out or let them vote out the sitting government in a completely uncontrolled manner.