But the trouble with "economic liberalism"...
08.12.07
at 15:34
at 15:34
tagged with:
...is that it always seems that the first steps towards it, the first things to be cut away from the protectionism ridden form of capitalism we have now, hurt the small person more than the big person. If the "average Joe" (and no, it's just a phrase, not meant for you Joe O or Joe T!) cannot see the benefits to them of peeling away layers of protectionism and bureaucracy why would they support removing the state's comfort blanket?
Much of what we remember about Thatcher era attempts to roll back the economic power of the state, for example, centers around mining and industrial communities with their "hearts ripped out" and of the "haves" becoming the "have mores" through privatisation whilst those often for whom the state industry had been the economic lifeline were cut off. Or of the rise of the oligarchs in Russia, leeching off the common property of the people of that country in the form of its natural wealth.
Which is why economic liberals must strive to show that the root cause of the grossest inequalities we see in the world around us is that the rich and powerful are, as often as not, made so and maintained by protectionism and monopoly. Then when we act, unlike in the Thatcher era, we must be clear that each step we take strikes directly at that privilege and produces a perceptible incremental and preferably material rather than hypothetical benefit to those whom the existence of that privilege has hitherto harmed.
Our Liberal forebears knew this, hence the urgency with which they attempted to go about radical change, attacking monopoly and protectionist created wealth, in the People's Budget. It must be equally obvious with hindsight that the failure to drive through the most radical of those proposals left the way open for the Labour party to sneak in and push socialist, statist, coercive rather than liberal means to what they claimed were the same ends. Those means we now know have failed and continue to fail wherever they are tried. And not only that but they do not have the saving grace of freeing people from that other gross dependency on the state and the political establishment.
This is the main task for our shared liberal future - and it looks like 70% of us might just agree.
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I would have thought that some policy choices are obvious.
1) Cut taxes by raising the Personal Allowance to £10,000 p.a.
2) Scrap all import tariffs, which raise the price of consumer goods, e.g. doubling the price of a basket of weekly groceries
3) Scrap the Olympics, which is a massive boondoggle for the catering and hoteliary industries
4) Introduce LVT to encourage land-owners to build more houses (I don't reckon you'll argue with that one, Jock!)
5) Introduce compulsory water metering so that rich people stop (literally) flushing away poor people's money
6) Scrap the culture budget, most of which goes on middle-class fancies
Others, however, help the poor but are a much harder sell:
7) Axe the minimum wage, which stifles job creation
8) Axe payroll taxes, which stifle job creation
9) Reduce corporation tax, which discourages companies from basing their operations in the UK and so... er... well, stifles job creation.
And then some are just down-right wonkish are are hard to sell to anybody
10) Introduce road user pricing so that poor people stop subsidising rich people's car use.
Okay, that's my first Budget. What shall we do in year 2?
Tom, that is more or less the same as my budget, only, (1) you have to get reduce and pahse out VAT long before you worry about corporation tax. Corporation tax is far from the worst tax, VAT and Employer's National Insurance are much much worse. (2) Road pricing, forget it, you can cover that via LVT and fuel duties.
Also, is it asking too much for LVT to replace Council Tax, Stamp Duty Land Tax, Inheritance Tax, the TV licence fee, capital gains tax, s106 agreements and so on?
Yup, VAT is pretty much 95% EU harmonised. It also happens to be the worst tax, or at least first equal with National Insurance.
I have nothing to support the fact that the EU impose VAT because they are evil, rather than just because they are stupid. But nothing surprises me and I think we ought to to leave the EU post-haste.
Under EU rules, the standard rate has to be 15%. This has nothing to do with the amount of our EU contributions.
There's a problem with number 2 unfortunately, a lot of it is controlled by the EU, so we need EU wide reform.
6 would be difficult to sell to the media - especially the nice middle class Guardian etc.
9) The point needs to be made that it reduces the pay received by workers.
One thing we should be doing is waging war on indirect taxation. For the sake of democracy as well as economics. Taxes like corporation tax and tariffs are popular amongst politicians because they are hidden. They raise prices/lower wages but that is not obvious and can be blamed on the evil capitalists...
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I'd be disappointed if you thought I was average ;-)
Good article Jock. Economic liberalisation has to benefit the little guy it it's to work. That's why I think that our aggressive tax cuts aimed at the working poor are a step in the right direction, and at the same time avoid any accusation of being "right wing" in the sense of Thatcherite Tories...