Wednesday, October 05, 2011

The Workshy or the Taxshy

I don’t know if you’ve noticed but there is a bit of an economic crisis going on at the mo. There was a rogue trader on BBC telling us that “governments don’t run the world, Goldman Sachs do”, leading to an explosion in online I-told-you-sos from amateur experts who have been saying this sort of thing in pubs for years.

But to be honest I’m not sure if our politicians, or even the so-called experts, know WTF they are doing. Nobody it seems knows, or wants to know, how to manage an economy that is in decline. The only way they know is an economy that is growing, as measured by Gross Domestic Product (GDP). But this in itself is not a measure of progress, simply because it includes all those financial transactions that should correctly be labelled Cost of Failure. You know the sort of thing – Huge government projects like the NHS super computer that don’t work.

So, I’ve been having a bit of a thought experiment – you can pull it to pieces in the comments.

There is this thing called The Spirit Level. The premise being that the more equal a nation’s wealth is distributed amongst its population the happier and more efficient and successful that society will be. This of course is music to the Socialists ears. It involves things like the Minimum Wage, the Maximum Wage and a Citizen’s Income.

On the other hand, the Neo-Conservative Free Marketeers call it the Politics of Envy and point to the “trickle down” effect. The trouble is, it does exactly what it says on the tin. It’s a trickle, it is not a waterfall, not even a dripping tap, it’s a bloody trickle.


Now I’m going to take a slight diversion. You’ve all played Monopoly. OK figure this:

All the players start out equal. They all get a Citizen’s Income (£200 for passing GO) and they all have an equal chance of landing on Mayfair, or the Death Star if you have the Star Wars version. The point is this. Once one player has all the money, the game is over. There is no more, and there can be no more, economic activity. The micro-economy of the game is dead. You have to start all over again.
So, what we’ve got now is that inequality has increased to such an extent that a very small number of people (the Bankers) have vast amounts of money while the rest of us (the vast majority) are being squeezed by downward pressure on incomes (wages, pensions, benefits) and upward pressure on prices mostly driven by increases in energy and fuel costs. Even those with a few bob in a savings account are being screwed with interest rates at 0%.

It is not the mega-rich, or even the moderately rich who are the engine room of an economy. It is the combined disposable income of ordinary people. If ordinary people don’t have the money to buy the entrepreneur’s product then she ain’t gonna make it as an entrepreneur. Period.

Now, this may be a bit of a shock to Mr Osborne, but there is only one way I know to get our economy moving and that is to tax the pants off the mega rich and put it in the pockets of ordinary people so they can spend it, and this is the crucial bit, generate the wealth to make the mega-rich even richer and pay off our national debt.

For the mega-rich, Tax used in this way is an INVESTMENT.

Discuss.

BTW Redbridge Blue is back blogging after a nearly 2 year absence and I’ve added him back into the blog list in the side bar. Always nice to have a range of views.

3 comments:

  1. Who will set the mega taxes? The Government
    Who will gather the mega taxes? The Government
    Who will devise the loopholes? The Government
    Who will make exceptions in order to buy votes? The Government
    Who will ensure that The Nomenklatura won't suffer? The Government
    Who will spend the taxes? The Government

    And if Government is the answer, someone has asked the wrong question.

    ReplyDelete
  2. Judith,
    Sure, Government is a massive mess of contradictions and mistakes, but if you want to find out what no Government is like, go visit Somalia.
    And when you've done that, come join the Green Party in trying patiently to inject some sense into Government. Trying to get Government to do what it is supposed to do, act in the interests of the people, not in the interests of mega-rich and mega-corporations.

    ReplyDelete