Tag Archive | economics

Letter: UKIP tax voodoo

Ironically David Potts seeks to correct South Tyneside Labour politicians on the upper income tax rate (2nd April, Taxation: The Big Picture), whilst himself making an unproven assertion.
His support for the 50p tax cut relies on the theory that the 50p rate is ‘uncompetitive’ and damages the UK economy.  This is merely a contemporary twist on the Reagonomics of the 1980s, long discredited as ‘voodoo economics’.
If there was any definitive evidence that the 50p rate was damaging, then UKIP, the Tories and the right wing press would never shut up about it. Instead, David Potts points to a letter in The Times from economic gurus he happens to agree with, which is a bit like relying on the authority of clerics on the number of angels on the head of a pin.
Given that UKIP’s denialist stance on climate change makes them a joke on science, is there any reason to take them seriously on economics either?
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What ‘greenest government ever’ candidates said before their parties decided to put business before the environment

Another day, another set of proposals from a government set to take the UK back into the 19th Century by removing scores of environmental regulations under the excuse of cutting red tape.  At the last election, parliamentary candidates for my home town of South Shields were desperate to show how green their political landscape was.  Here’s what Karen Allen, Conservative Parliamentary candidate for South Shields at the last election, said about the Tories’ position on the environment:

From the very beginning of his leadership of the Conservative Party, David Cameron made clear that Britain must take a position of leadership on the global – as well as our own – environment.

Given the Conservative’s plans to to slash and burn environment regulations, it seems that the real commitment wasn’t to the environment, but to let business get on with polluting our beautiful country.

But let’s not forget those enablers of the Tories’ wholesale plans to turn the UK into a hell-hole.  I have a lot of time for Stephen Psallidas, the Lib Dem candidate for South Shields at the last election.  He walks the walk (or cycles), but his description of his party’s dedication to environment doesn’t match with the reality of Oliver Letwin’s cull of environmental protections:

Both I personally, and the Lib Dems as a party, are very strongly committed to tackling climate change, and progressing environmental policy generally.

So, the Lib Dem commitment to ‘progressing environmental policy’ has turned out to be something more like ambivalence.

Without our ecological assets we can’t take anything for granted; health, food, water.  Worrying about the relatively minor economic benefits of cutting ‘red tape’ to buff the bottom line of companies is insanity.  Our environment provides us with an unaccountably awesome value – for free – a value which will be lost if business is allowed operate without sensible checks and set free to rape the environment.

Goverment housing policy – still in the 1980s

It seems that we are doomed to repeat our mistakes.  Well at least the Con-Dem government is.  A question has been doing the rounds recently in an attempt to explore the current Con-Dem approach to the economy by comparing it to a fabled Tory golden age: what would Thatcher do?

The answer would be simple: strip the state’s assets and put them into the hands of the markets.

Yesterday’s announcement that the government was planning to ‘get Britain building’ should set off alarm bells for anyone who has taken the slightest notice of the housing market over the last thirty years.  In a desperate attempt to boost the economy the government wants to introduce a mortgage indemnity scheme, where the government would underwrite mortgages – for lenders – of up to 95 per cent loan to value.  This means the taxpayer will carry the risk of high LTV mortgages going south.

And South is where much of this money will go.  As house prices are already high in the southern regions, returns there are much more attractive for developers.  This means yet again, government adding further heat to an already overheated south, boosting building in already overcrowded areas or on attractive greenfield sites, and help further push southern region house values into the stratosphere.

At a time when government can hardly issue a press release without mentioning national debt, it intends to implement a scheme which will increase personal debt and government risk of debt, as lenders will take full advantage of this guarantee.  It’s not hard to imagine that underwriting decisions by lenders will be made in this light, making risky lending decisions more common.

So who benefits?  Builders build, lenders lend and people will get to buy pretty new houses.  Sounds great doesn’t it?  But what this plan really represents is a privatisation of the profit whilst nationalising the risk.

It seems this government is only too happy to help the dead hand of the market along, despite the claims of Tories and Lib Dems.

Sadly, Labour support this policy.

Instead of creating another housing price bubble built on debt – underwritten by the tax payer – there should be a move to fund the building of affordable social housing.  The Tories started to kill off social housing with the right to buy scheme (another example of tax payer funded housing market interference).  Labour failed to stop the decay, instead allowing councils to offload their social housing portfolios into arms length management organisations and privatisation on the cheap.

We have a government and ‘opposition’ policy which will encourage subprime lending masquerading as first class mortgages (where have we seen that before?) that will ultimately fail to provide what is desperately needed: quality low cost housing developed to meet the needs of a 21st Century society.

A national social housing building and renovation project could be used to usher in a new generation of low and zero carbon housing, provide much needed building jobs with new skills using sustainable technologies, which could help kick start a fledgling green building industry.

There is a housing crisis, but it offers an opportunity to regenerate Britain’s housing into something that would benefit society a lot more than the short term interests of property speculators.  Instead of getting all misty eyed over 1980s Thatcherite home ownership dogma we need a diverse – and sustainable – modern housing infrastructure to face Britain’s future housing needs.

Letter: tackling the deficit doom

I’ve written another letter to the Shields Gazette, in response to a letter from a Mr Dennis Thompson where he makes the case for the Con-Dem cuts by raising the myth of the debt doom. I don’t know if he’s aware of Keynes’ pet concept of the ‘paradox of thrift’; in these terms during periods of economic uncertainty people spend less which further depresses a nation’s economy. In these cases, a government should step in and invest to increase employment, prosperity and investor confidence. The current economic situation could actually be a great opportunity to invest in the future – infrastructure projects for better transport links, develop new renewable energy sources, countrywide house modernisation to improve domestic energy efficiency and many more. As prosperity returns so does the nation’s ability to reduce its debt.

Here’s the letter:

The deficit panic gripping the nation has manifested itself locally in the form of Mr Thompson salivating over cuts (Have Your Say, April 26th), cuts which are purely ideological in nature, unsupported by economic theory, precedent or evidence.

The deficit doom-mongers are promoting a spectacular myth to shock and subdue the public with fear and uncertainty. In the history of audacious political con jobs, it ranks alongside weapons of mass destruction, ‘we’re all in it together’ and ‘big society’.

Mr Thompson’s letter conjures a bogeyman of unmanageable debt and warns of us ending up like Greece or Ireland. Well, Ireland followed George Osborne’s prescription of cut, cut, cut. Look at them now.

True, the UK deficit seems too big to comprehend. But to put it into perspective, public sector debt in 1946 was 250% of GDP; today it’s 60%. In 1946 we started building the NHS and the modern welfare state. Today, despite being one of the wealthiest nations on the planet, we’re destroying it all.

Deficit ‘shock troopers’ like Mr Thompson are promoting a flawed view of economics to support a cuts programme which won’t do any favours for the economy or ordinary British people.

Time and again it’s been proven that when times are tough, a state can jump-start an economy by spending and investing in infrastructure and services, even if it means debt.

Borrowing may be a problem, but it’s also the cure.

ConDem nation

So according to documents leaked to the Guardian, the predictions that George Osborne’s budget was an economic scorched earth policy wasn’t just hyperbole.  The Treasury’s own forecast of the outcome of the slash and burn budget makes Cam n Clegg’s “fair, fair, fair” and “we’re all in it together” mantra look like the trite and dishonest propaganda it is.

Labour gave us the war on terror to use our fear to chip away at our hard won civil liberties, aided and abetted by a pliant media.  What the Lib Dems and the Conservatives have given us is a shock budget, part of a war on deficit, where they can justify just about anything in the name of the economy.  Trouble is, it isn’t our economy, it belongs to those who went to the same schools as Cameron and Osborne and wine and dine at the same restaurants.

The ConDem horse is only just out of the stalls, but it looks like this horse should have sent to the glue factory back in the 80s.

Tory vultures

First there was ‘compassionate conservatism’, then there was a duck house, an alliance with dodgy Polish right wingers, slagging off the NHS, then Ashcroft, promises to bring back fox hunting and abolish rich folk taxes, and now Tories block a bill to curb the blood sucking activities of vulture funds.  To be honest, I was surprised that the bill got as far as it did; Labour play stooges to big money too.  So we shouldn’t be surprised that someone stepped in on behalf of the scumbags which profit from the misery of others, and neither should we be shocked that it was a Tory.

What this episode should confirm is that compassionate conservatism is genuine, but reserves all it’s compassion for the rich.

Same old Tories then.