What would Clement do?

A Labour blog that witters on about Clement Attlee. Hurrah for The Major!

Archive for the tag “Economics”

Zombie Economics.

Back in 1980, when George Bush Snr. was competing with Ronnie Reagan for the Republican nomination, he decried dear Ronalds free market mantra as “Voodoo Economics”. Oops, as thats what we have endured, by-and-large since then, with increasing amounts of deregulation until the system crashed in 2009.

Having crashed and burned, you would think that any Government that had to get out of such a mess would think twice before repeating the old Small State Monetarist dogma...

How wrong could you possibly be? With few exceptions, under EU and IMF pressure, what we are seeing in Greece, Portugal, Ireland, Spain and in the UK is a dull, unthinking march into the future. The Chicago School hordes are ravenous for the flesh of the State, and have only one thing on their minds…

“Deficit…Deficit” they groan as they shuffle onwards, no other thought in those otherwise lifeless brainpans.

There is still hope though, and it comes in the form of the economic figures coming out of the USA, where, schooled in Zombie Movies since 1968, an Heroic Black Man is courageously, and intelligently keeping the undead  Tea Party mob at bay…

…just like Night of The Living Dead, when you think about it…

Consider this: In every country where Austerity measures have been implemented, economic conditions have got worse- economies have shrunk, wages have fallen, the cost of living has gone up, jobs have been lost and inequality is on the rise. In Ireland, emmigration, is massively on the rise – something that the “Celtic Tiger” thought was a thing of their underdeveloped past.  The only people to gain from Austerity in every case have been the Super-rich.

So, are we doing all this for the benefit of Lichtenstein?

In the United States, growth is up, unemployment is falling, and the economy is moving in the right direction.

In Austerity Britain, where the economy needs to grow by more than 3% every year until at least 2015 for Gideons plans to work, the OECD has predicted a sluggish rate of 1.5% this year, and 2% in 2012. Even I can see a problem here, one that will be made much worse by having to fork out huge amounts of unemployment benefit, and consequently take much less in tax revenues.

Little Nicky and the Tribalists.

So today, after keeping schtumm for the whole campaign, Nick Clegg wades in with a fairly coherent op-ed article in The Telegraph. So far, so good – a reasonable, reasoned argument for reform, in Britains’ most august Tory daily.

Sadly, he followed this up with a massively partisan and mendacious attack  on the Labour Party with his follow-up speech at the Institute for Public Policy Research. Little Nicky simply repeated Osborns canard that Labour would have cut only £2bn less than The Coalition is doing. This would be fine if we were still fighting the May 2010 election, but that was a year ago. It completely ignores the changes made on economic policy by both Ed Miliband and Ed Balls. It also ignores the economic facts of life.

Unemployment – In the last quarter of 2010, this fell by just 12,000 (0.1%). At the same time, our GDP fell by 0.5%, apparently this was caused by snow in December – a previously unheard of event. In Barak Obamas USA, under a radically different economic regime to the austerity we suffer, unemployment fell by 1 Million (1%), and in the last quarter of 2010, their GDP ROSE by 0.8%.

YEAR-ON- YEAR, OUR ECONOMY HAS SHRUNK BY 1.5% UP UNTIL MARCH 2011! WELL DONE GIDEON!!!

The OECD, which Osborn so often quotes as supporting him, has issued the following economic forescasts for GDP over the next two years:

                               USA            UK

2011                      2.2%          1.5%

2012                     3.1%           2.0%

So, in the midst of a Referendum Campaign, when it is imperative that ALL Party members who support change work together, why has Clegg thrown such a massive spanner in the works? The cynical answer could be that he is intent on sabotaging his own cause, on the basis that he doesn’t really want it, and it was only a sop to his activists anyway.

Could it be Coalition loyalty? Possibly,but for the life of me, I cannot credit the Cabinet Office stipulating that he preface a call for electoral reform with an attack on a party who’s supporters need to be won over.

No, I believe that in essence, for Nick, this is simply politics as usual. For all the guff about “new politics”, up and down the country, anyone involved in local politics knows just how nasty the Lib Dems can play. From personal insults to pretend innocence, the centre party of British debate plays rough, whilst appearing doe-eyed before us.

“Who me?” They cry, whilst dressed like a harlot in a Wedding Dress. Not only this, but certainly the Orange Bookers have swallowed whole the economic nonsense that passes for thought in the pages of the Daily Mail.

Let me state this as clearly and simply as I can; Austerity following the kind of recession we have seen leads to more unemployment. Higher unemployment leads to lower wages for those in work, to smaller tax receipts, and more austerity. It is a downward spiral leading to a car boot sale economy. And Nick Clegg thinks this is a good idea. 



A BUDGET FOR WHO???

This weeks’ Budget, courtesy of the 14th Earl of Whyborne, has been lauded to the skies by the hard of understanding…

…Or as I like to think of them, Monetarists. The lack of imagination, and of any long-term goals other than dismantling the NHS, do not give me any confidence in Gideons’ old Maths Tutor. Then again, what should we expect from a man who dodges £1.6 million in tax whilst telling the rest of us to “pull together”?

Lets just examine a few measures here, for the sake of general interest…

  1. “The Sun Says Yippee! – 1p off fuel duty!” Yes, and there will be a rise of 5p in 2012.
  2. Tobacco duty up by 2% above inflation. Giving a welcome shot in the arm to the smuggling industry.
  3. An increase in Premiums Tax means that the cost of insurance rises – just as the Government wants us to take out private health insurance.
  4. A three year freeze in Child Benefit – so thats a decrease in light of inflation.
  5. The tax on Beer now exceeds £1.00 per pint. Britain’s vibrant Pub and Brewing industries salute you – not.
  6. National Insurance up 1% for us, but not for Employers.
  7. Personal Tax allowance up by £50 per month in April 2012. With the rises in the cost of living over the last twelve months, let alone the next year, this will at best give you £5 extra a month in your pocket.
  8. Council Tax frozen or reduced in EVERY English Council – regardless of the real needs of those communities.
  9. A return of the Enterprise Zone. Thatchers great sticking-plaster of the 1980s, that made little long-term difference to the areas blighted by her recession of the early 1980s. Anyone off to see Liverpool Garden Festival?

For this budget to work, the UK economy has to grow by around three percent each year until at least 2015. This is quite a lot, if we look at our history over he last forty years. It could happen, as the worldwide economy is tenuously starting to revive. Yet massive public spending cuts and redundancies will cost the exchequer dear, and reduce income from taxation – it could lead us into another recession, rather than digging us out of one.

And there is another point. Gideon and his gofer Danny Alexander have done precious little to curb the outrageous levels of  speculation in The City, nor have they come up with the kind of regulation needed to prevent, or at least limit the kind of crash we saw in 2008.

Long term, our economy is seriously unbalanced – with finance far too prevalent, and industry seen as a poor relation. Yet if we look at Germany, a country that actually still makes things and sells them, their recession is ending rather quicker than ours. This Budget does nothing to address this imbalance, nor do the Coalition partners seek to do so. Unsurprising really, when you think of all the ex-City men in the Cabinet…

 

So thats why I urge you all to march on Saturday for an alternative to this ill-considered schoolboy essay masquerading as a Budget.

Death And Taxes – Part One…

It used to be said that you could avoid everything in life except these two constants. Since Margaret Thatcher came to power however, the situation has become a little different…

In the 32 years since Margaret Thatcher came to power, and more spectacularly since the “Big Bang” in The City in 1987, what was once a shady corner of Finance has become a major activity worldwide – “Tax Optimisation”, or Tax Avoidance to you and me.

Simply put, the rich and big businesses, whether Barclays Bank, TopShop or Tesco use legal loopholes and financial skulduggery to avoid paying taxes that you or I cannot avoid. If you run a small business, or manage an outlet for a large company, please be warned that the following may lead you to never voting Tory again…

Historically, the Thatcher/Lawson years were a watershed, with the burden of taxation moved from  progressive Income Tax with more paid the more you earn to consumption-based taxes such as VAT, which had its scope moved from” luxury” goods to more and more of the basics of life. Now taxes on consumption may not always be a bad thing, but as a proportion of income, they hit those on middle and poorer incomes at a greater rate than they do the rich. Simply put, you can only consume so much. By 1987, according to statistics released by The Treasury, the burden of taxation was exactly the same as it had been in 1979 – 33%, but it had been shifted down to the lower earning brackets.

It took John Majors’ Government to further reduce the Income Tax bands, so that the higher rate of tax was only 40%. Even under Lawson, there had been a marginal rate of 60% for the very rich corporation tax was also lowered throughout the period, to make Britain a “haven for foreign investment”, along with plenty of our money paid as sweeteners to multinationals to come here. And there it has stayed. One of the major failures of New Labour was its insistence on following Conservative economic policies that hurt those in the middle and below, whilst fawning over those in clover. For all the good done over the past thirteen years reducing Child Poverty, refunding the NHS and Education, our party could, and should have done more.

One of the worst areas of inaction was over closing tax loopholes used by the wealthy to avoid even low rates of tax. So in awe of the rich were Blair, Brown and Mandleson, that they gave peerages to people such as Fred Goodwin, then Head of RBS, Philip Green at TopShop and their international guru, Alan Greenspan.

The international super-rich flocked to Mayfair, Kensington and Chelsea, much to the chagrin of the merely very rich City types, who moaned loudly that they could now “only” afford to live in Richmond or Barnes; oh how we did not weep for them. But in spite of  everything done for them, they wanted more. The Billionaires from India, Russia, and China had moved here because their “non-dom” status meant that they could pay almost no tax whatsoever, and homegrown tycoons followed suit. as Robert Peston mentioned in his book about the crash, TopShops boss, Sir Philip Green gets his salary paid to his wife, who for tax purposes is based in Monaco. He is not alone. More worryingly, he is an advisor to the present Government on Business Affairs. This is not just an economic outlook, but also a moral one, as ex-City millionaire David Laws, who was sacked for fiddling £40,000 out of the public purse last year, looks set to rejoin the Government in some position this April.

Yet the Government is unlikely to do much without outside pressure, as a Cabinet with a high proportion of ex-City types, such as Chris Huhne, and sons of stockbrokers such as David Cameron make all the right noises to placate the rich, whilst telling us that “we are all in this together”. Recently it came to light that since 2005, donations to the Tory Party from City sources had reached over fifty percent of its total funding – many from the very hedge fund managers who got us in this mess whilst avoiding taxes here. In January, at the annual Black and White party ( they daren’t call it a ball anymore), secure in Battersea Park, City Internships were auctioned-off to the highest bidder, in aid off Tory Party funds. Perhaps this is the “Big Society”? A short walk away are some of the roughest and most deprived estates in London.

The Mayor of London, Boris Johnson was also in attendance, and as many have noted, has spent much of the past year or so loudly protesting that we must stop “bashing Bankers” over the billions of our money we had to throw at them to save the system. Let us not forget that in 2009 he publicly decried his £250,000 per year stipend from The Daily Telegraph as mere “chickenfeed”. It seems we have not a Mayor for all of London, but TWO Lord Mayors of The City of London…

(Part Two to follow soon…)

Economy Shrinks – Gideon “Disappointed”

A man doing Chancellor impressions today unveiled that the British economy shrunk by 0.5% in the last three months today.

“I blame the weather” Whined Gideon Osborne, “but on the bright side, as you lot have less money, we in the cabinet are even richer, me especially, as I don’t pay my taxes…”

Having seen the economy slowly growing throughout 2010, the last three months saw a reversal of the trend, as Coalition policies began to bite…

Both Treasury Mandarins and Nick Robinson were declared”Surprised”, as they went to Oxford with George Osborne, and thought he was a good chap.

Danny alexander was unavailable for comment, as he has homework to do.

The outgoing Chairman of the CBI yesterday confused the Chancellor with Jeremy Hunt, as do we all…

Joke…

Q. How many Monetarists does it take to change a lightbulb?

A. None – they’re all waiting for the invisible hand to do it.

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