The Sovereign Individual, James Dale Davidson and William Rees-Mogg’s 1997 classic, is nearly 30 years old. I bought and read it when it was published and, along with a couple of other books, it shaped my thinking about work and employment. It also inspired this blog, The Sovereign Professional. But does it stand up to scrutiny three decades later?

The book is famous (infamous?) as a libertarian call-to-arms and for correctly anticipating the rise of cryptocurrency, remote working and the (often tax-driven) international mobility of capital. As the cover blurb said,

“Economic responsibility will be shifted to individuals who will become completely responsible for their own destinies, arranging for their own welfare through their own pension schemes, medical insurance investments, etc. The individual will become more of an entrepreneur, a private contractor, in complete control of his or her finances with easy access to enormous computing power – in fact the Sovereign Individual.”

I don’t think I saw the book as a manifesto but rather a warning that, at the most general level, an individual should no longer rely on government or a benevolent employer to look after their interests. Nor did I read it as anti-community, but definitely anti-nation-state which it views as a largely eighteenth and nineteenth century construct.

Dipping back into the book, inspired by Michael Wade’s substack on the drift towards isolation, here are a couple of thoughts.

“Strongly right-wing parties will emerge as potent factors, appealing strongly to the new economically disadvantaged”

From rust-belt America to left-behind Clacton, from Donald Trump and Nigel Farage through Marine Le Pen and Germany’s AfD, we’ve seen an upsurge in right-wing politics. Much of this is driven by Davidson and Rees-Mogg’s economically disadvantaged but, in fairness, not all. Illegal immigration and cultural issues, although often related, are also factors.

“Independent nations will find their taxing capacity will fall by 50-70 per cent.”

In 2023-24 (the latest data available), the Top 1% of UK income tax payers paid 28.5% of all income tax. The Top 10% paid 59.5%.

A couple of weeks ago the UK’s third-highest taxpayer, Chris Rokos, announced he was leaving the UK joining an apparent exodus of the most wealthy. And, on a more local scale, Scotland (which has its own limited tax-raising powers) has found its policy of having a higher tax rate cost the public purse £22 million in the first year.

Without a doubt, wealth is more mobile than ever before.

Economic responsibility will be shifted to individuals … arranging for their own … pension schemes, medical insurance investments, etc.

I think this is more nuanced and, for the UK, the data is muddied by other changes.

On pensions, UK companies largely moved from trust-based occupational schemes to group personal pension schemes, and from “defined benefit” to “defined contribution” schemes. Then, in 2012, legislation changed to enforce auto-enrolment into multi-employer “master trusts.” In terms of sovereignty, it means that employees can more easily take their pension pots with them and have control to merge and move them. I’m not sure that’s true sovereign “economic responsibility” as the authors envisaged. And, incidentally, I’ve always felt that people in the US are far more aware of and involved in their 401(k)s than are their UK equivalents.

As regards private medical, the number of people in the UK covered by private medical insurance has increased from around 3.5 million in 1992 to 8.1 million (11.8% of the UK population) in 2023. However, that is largely paid for by employers as an employee benefit rather than by individuals: it was 50/50 company-paid vs individual paid in the mid 80s, moving to over 80% company-paid today.

More interestingly, and more sovereign, a recent survey (again in the UK) found a marked increase in people considering using private healthcare (as distinct from insurance):

• >70% would consider using private healthcare (63% in 2023)
• 2/3 said convenience and easy access is more important than whether it is public or private
• 84% of 25 to 34-year-olds would consider using private healthcare in the future and…
• 72% of 18-to-24-year-olds say the same.

(Reports in The Times and HR Magazine)

The NHS performs “substantially less well” than similar countries on life expectancy, healthcare outcomes and avoidable mortality. It also mired in scandals over poor treatment, especially with regard to maternity care.

I think what is particularly interesting in those survey results is that there is no longer a presumption that the NHS is the answer. NHS funding has grown, in real terms (i.e. after inflation), by an average of 3.9% per year since 1955/56 and is now 18% of total government spending. If, through poor performance, industrial action and high costs, the NHS loses public support, we may see an even greater move towards private alternatives.

Moving to the (re-)read pile

Like all predictions, there’s a lot that The Sovereign Individual gets wrong and, 30 years on, there’s limited utility in re-reading it cover-to-cover. But, forecasts are less valuable for the figures that come out as the thought process and assumptions that went in. I’ve just moved my copy onto the Must Read pile to skim back through it.

Photo by Hannah Busing on Unsplash