Wednesday, November 02, 2011

Time to look to the future

It is time to face some hard facts.

Whether Greece holds a referendum, and whether or not its people vote yes or no, is irrelevant: the country is bust.

The Eurozone countries are pledging €1 trillion, €2 trillion... It doesn't matter: none of them have the money in the bank—or, indeed, the credit line—to pony up on their fantasy. No, not even Germany—which will soon struggle to service its own colossal debts.

The last hope of Merkel and Sarkozy was the Chinese—and they, sensibly, declined. The governments of the EU must attempt to recapitalise the European banks when they themselves have no capital.

Only the other week, several governments had to bail out three European banks who have almost all, as yet, failed to write down their EU state debts.

I have said it before and I will say it again: the social democratic model is bust—it is time for this country to cut its losses and look forwards—to prevent bankruptcy in the short term, and to promote prosperity and freedom in the long to medium term.

So, how do we do that?

The first step that this government needs to take is to announce immediate withdrawal from the EU—with the first step the immediate cessation of any payments to the EU (including MEPs salaries, etc.). This is a process that will take some time in any case—so better sooner than later.

There are three main drivers for this course of action:
  1. to ensure that we are not on the hook for any more Euro bailouts—we are going to need every single penny that we can possibly save for the next steps;

  2. to enable this government to take immediate and radical steps to reduce regulations on business—those that trade with Europe will need to continue abiding by the EU's rules, of course. However, since only 10% of our trade is done with the EU, that will considerably lighten burdens on businesses—especially the SMEs that create the most jobs and growth in the economy.

  3. to be able to open dialogue with every other country in the world in order to gain advantage in uni- and multi-lateral trade agreements—something that we cannot do whilst part of the EU (which has total control over trade policy). Britain already has an advantage in being part of the loose network of countries known as the Commonwealth—a band of national states that roughly share the Common Law legal system and, in many cases, the same language.

    The aim should be to promote totally free trade throughout the world. Even if other countries will not acquiesce, then we should immediately declare the free movement of goods and capital through this country.

All of these measures will take time—so the best time to start is now.

The EU

Our erstwhile partners in the EU will not take too many steps against us—with the balance of trade in our favour (as far as negotiation is concerned), we can ensure that the 10% of trade that we do with them is not adversely affected. However, the medium term aim is to reduce that proportion.

The simple fact is this: we have placed far too many of our export eggs in one basket: now the bottom is falling out of that basket and we are about to loose an awful lot of cash. In negotiating uni-lateral deals with the other 150-odd countries around the world, we can minimise any future disruption.

Foreign Aid

The next step will be to reduce any foreign aid—unless used as a bargaining chip with solid economic gains attached.

Our money must be made to work for the monetary interests of the British taxpayers—not for the vanity projects of MPs. And nor can we afford to hand over colossal amounts of cash in order to insulate other people from the disastrous decisions of their own governments. That may sounds harsh, but we simply cannot.

The only way in which these various tyrannical governments around the world will be brought to heel—and brought to heel they must be—is if we make it extraordinarily clear that we will help their citizens to trade with us, and that's all.

I think that we will find that this will bring about property rights and free trade in some of the more backwards parts of the world far more swiftly than any "humanitarian" or "debt-foregiveness" interventions will.

The IMF

We should also withdraw from or severely renegotiate our relationship with the IMF. As with many other supranational organisations of which we are part, our presence at the "top table" seems merely to mean that we hand over huge chunks of money with absolutely no return (other than enabling our puffed-up peacocks of politicians to strut about like they own the fucking world).

Further, since the appeal to the Chinese has failed, it is now inevitable that the Eurozone will now appeal for funds from the IMF: this will mean, despite Osborne's blandishments, that we will suddenly be indirectly bailing out the Euro.

If we are to help out other countries, it will be on our terms and for our own advantage—neither for theirs nor that of the corrupt technocrats and bureaucrats of the IMF, UNESCO and all those other unaccountable world government structures.

On the home front

So, we need to boost business—especially SMEs—in this country. The simplest way to do this is to drop taxes on business, and on capital investment.

So, as I stated earlier, we are going to need some cash and a very sound business plan. Because we are almost certainly going to have to borrow some money ourselves. And we'll have to tread very carefully.

The first step will be the immediate sacking of the top three grades of civil servants (at least), and the voluntary retirement of anyone who would like to get out before the real cuts happen.

The next step is to cut National Insurance by 1% for employees and 8% for employers. Why this difference? Simple—there are far fewer employers creating jobs than there are employees looking to fill vacancies.

VAT (or its post-EU equivalent) can stay where it is—we need some income and, as I have said before, I believe consumption taxes (with the exemptions for "necessities") are the closest to voluntary that you can get.

Capital Gains taxes—for returns on money invested in businesses within the next three years—should be cut to 15%, with the expectation that they will rise thereafter. This should stimulate capital investment now, when we most need it.

Corporation Tax for businesses turning over less than £5 million should be reduced to 15% also. R&D tax relief at the current level will continue to apply.

Plans to introduce a universal Flat Tax, with high Personal Tax Allowance, will be set in motion with a legislation to be moved at the end of three years.

The National Minimum Wage will be reduced to £2.50 per hour, with Local Authorities empowered to set a suitable top-up precent for their own area. In other words, Westminster Council might decide to bring that up to £8 per hour, whilst East Yorkshire might maintain it at the national rate. This will start to prepare Local Authorities for more autonomy over the next few years.

As far as energy policy goes, government backing for fracking for the production of gas will be immediately granted, ensuring Britain's supply of cheap, low(ish)-carbon energy. Planning permission for gas-fired power stations will be fast-tracked through the process, to ensure that we can take advantage of this wonderful new energy source.

Finally, the NHS will be reserved for essential medical work only, with all funding for non-essential treatments and "preventative" advertising campaigns, etc. slashed to nothing. The government will also start renegotiation of PFI contracts, with the backers involved quite openly threatened with default if concessions are not made.

Conclusion

The above measures are designed to provide a quick kick up the arse to the economy, and to help businesses in the short term. In the medium to long term, a number of other radical steps will be taken (which I shall expand on in a following post)—the above, however, should buy us some breathing space.

Much of it requires the state to act in a ruthless, devious and occasionally downright dishonest manner—however, I believe that both the short-term crisis and the medium-term gains merit it. And reparations—in the form of higher growth and productivity—will be made apparent, eventually.

I'm sure that I've not covered everything, but it's a start—and I commend the measures outlined above to the House.

56 comments:

Anonymous said...

I'd vote for you Devil! But I'm afraid, that all the politicians, are socialist. Even the PM.

Trooper Thompson said...

Sounds like a plan.

Boots McGonagle said...

Ah! The poor to support the rich? Nothing new here, then.

Simon Jester said...

@Boots: wibble?

Steve Perrett said...

Dear Boots McGonagle. Please explain your reasoning. I think I fall into the catagory of 'Poor'. I'm self employed and last year (2010 - 2011) I earned just over £14,000. I'm not an educated man, but even I can see that the world is in a fuckin mess! Mainly due to socialist ideas and corrupt politicians! (They make the rules.)
I used to pay slightly less tax than I do now. But then Gordon Brown decided to abolish the 10p rate of tax. Which obviously helped me enormously! I remember that New Labour were going to abolish poverty and help those most in need! But amazingly, poverty is still rife, and an astonishing number of care homes and nursery schools still managed to close! But we did get lots more jobs created! In the form of utterly essential areas like 'Second Assistant Head of Bio Diversity & Service User Communications Officers'
So please Mr McGonagle, explain yourself?

Bill said...

Spookily I am in almost the exact same self employed earnings band as Steve and also fell foul of the one eyed Scots attempt to 'alleviate poverty by raising taxes'. I have no doubt that Cameron is playing the same game. And if, god forbid, Clegg were PM he would make Brown & Cameron look like beginners.
DK's blueprint for a Britain is the best I've seen all year and one that would get my full support.

Boots McGonagle said...

@ Mr Perrett
The poor, like yourself, produce the wealth: the rich take it. That's why the rich are rich, and why you (and me) are poor. Paying the poor even less (Devil suggests £2.50 per hour) is taking even more from the poor to give to the rich. So, that is why I say nothing new here. And, should there be any misunderstanding, there is none more vehemently opposed to Socialism than me (not even our host).

Devil's Kitchen said...

Boots,

For many people there are two options:

1) a low-paying job, or
2) no job at all.

The NMW contributes significantly to the second state of affairs. FFS, there was a study out only a few weeks back stating this categorically.

However, I have put in a provision for local authorities to raise this amount if they want to. This enables people to choose:

1) a lower chance of getting a job in a high MW council, or
2) a higher chance of a lower-paying job in another council.

Let the people decide, as they say.

DK

Pogo said...

Much of it requires the state to act in a ruthless, devious and occasionally downright dishonest manner...

That's OK... It acts more-or-less like that now, except it's occasionally ruthless but always downright dishonest.

I'd vote for a party with the manifesto detailed above.

cornishgianr said...

I expect, in the medium/long term stopping the NHS funding disease prevention work would actually lead to a significant increase in the cost in healthcare. Indeed, the lack of such work in the US is thought to be part of the reason why health care costs are so massive.

I understand you don't enjoy being preached at by the medical profession (who does?!) but preventing disease is almost certainly cheaper than treating it. And sick people are less likely to be economically active...

The real shame is we don't have any politicians to do anything radical at all. I'd rather the government to radical action even if I didn't agree than continue on the current 'change nothing' course.

Michael in Craster said...

Spot on - the Devil for PM!

paul said...

And why do people have a choice of
low paid job or
no job

FREE TRADE!

If you can make widget X in Bangladesh paying labour $1 a day and ship it globally for cheap enough, then everybody else in the world making widget X LOSES THEIR JOBS!

http://monthlyreview.org/2009/07/01/free-trade-in-agriculture-a-bad-idea-whose-time-is-done
and a more general one
http://www.isometry.com/trade.html

Steve Perrett said...

@ Boots. The rich also create a lot of jobs. I have worked for quite a lot of rich people as a tradesman. Most of them are employers to a greater or lesser extent! I believe we need to stop making work unaffordable. I don't agree with the Devil on all his policies, but give me him over the present(and posibly future) crock of idiots we are lumbered with!

Devil's Kitchen said...

"The rich also create a lot of jobs."

Most companies, at one point or another, require capital for expansion—or to put Widget X into production so that they can actually sell it.

The capital usually comes from one (or more) of two sources:

1) angel investors (rich people), or
2) banks (rich people).

Poor people don't have any capital. They almost always cannot get businesses to the point of employing loads of people.

This capital is what has ensured that "capitalism" is the system that has made more people richer than the human race has ever been—and in a very short space of time.

"If you can make widget X in Bangladesh paying labour $1 a day and ship it globally for cheap enough, then everybody else in the world making widget X LOSES THEIR JOBS!"

Yes. And then they find another job because a great inventor has come up with Widget Y—a super new invention which enriches the entire human race.

Then Widget Y gets made by people in Bangladesh, but already the human-life-enriching Widget Z has been invented, and so on and so forth...

DK

Steve Perrett said...

@ Paul. You're fucking kidding me? You think that waffle is about free trade? My understanding of free trade is this.

A fair exchange of goods or services for a mutually beneficial trade.

What you see as free trade (according to what I've just read) is this;

An exchange of goods or services with the interferance of Bureaucrats, politicians and unelected oligarchs dominating the European parliament in persuit of their own wealth and power on the world stage.

bilbaoboy said...

@ Steve

'fair' doesn't come into it. Fair is a woolly word. 'An exchange of goods or services for a mutually beneficial trade' is enough.

If it is sufficient for both parties then it is OK.

What is a fair price for a bottle of water that costs £1 to produce and deliver to point of sale?

In London they'll charge me £2 and I'll gripe but pay. In the desert when I'm dying of thirst, I'll pay £500 to keep me alive until the morning when the rescue team is going to arrive. The alternative is unacceptable so £500 is OK. The bottle is the value of my life. (all right, I would have paid my entire savings but don't tell the water seller, he might get upset)

We only know the cost. We can never know the fair price. We can know the price somebody is willing to pay and if it suits you that is the 'fair' price.

Boots McGonagle said...

Steve/Devil

I didn't claim that the Devil's ideas weren't better than anything offered by self-serving bunch of thieves governing us now, or the even worse bunch lying in wait: what I said was there was nothing new in the idea of screwing the poor to pay for the mistakes of the rich. Is it my £8.60 an hour that has brought the house of cards down? Or the £6.08 an hour my wife is paid for serving customers in a department store? Maybe Capitalism is all that the Devil claims it is in the comment above, but it operates on an escalation of more and more production for marginally less return. In that structure, it is inevitable that the great majority of people are eventually going to end up getting poorer and poorer. It may be that the world is over the hump of growth already and we're on the way down. What is needed, I think, is some real lateral thinking, not harking back to a system which did well but which now may be bust.

Andrew S. Mooney said...

"As far as energy policy goes, government backing for fracking for the production of gas will be immediately granted, ensuring Britain's supply of cheap, low(ish)-carbon energy. Planning permission for gas-fired power stations will be fast-tracked through the process, to ensure that we can take advantage of this wonderful new energy source."

One thing that could be done to improve this idea is that there is talk of creation of a Sovereign Wealth Fund for the UK. This could be financed through the fact that fracking is a specific technique being used to extract gas, rather than conventional gas drilling technology. Gas from fracking can then be earmarked for export through adjusting the tax structure and making it attractive to export it. By exporting the gas, we then bring hard currency back to the country for investment in our current energy options, particularly Nuclear power.

....And this could finance all sorts of things to improve infrastructure and not just supply energy. Railway electrification and a new London Airport for instance. There would not be any risk of Dutch disease (Wikipedia) because these projects are all in need of doing immediately and so could be paid for as fast as the gas is being pumped.

The logic of this is that we could export fuel and get money to spend upon lots of things, at any time in the future. Or we could just put a match to the asset and get a few petawatts of electricity, once, and only once.

Furthermore, because other people are burning the gas, they are paying for the emissions permits, generator equipment, etc, etc.

Compensation for any damage fracking causes can come out of the sovereign wealth fund, that way, if lots of claims occur, drilling will be done more responsibly because the drain on the fund will be readily noticed, and taxpayers will not be expected to fund any of it directly. (Which you can be certain that drilling companies would like to happen so nobody notices the damage it causes.)

That way, this energy windfall brings a legacy in the form of the repair of infrastructure, and yet, if it isn't very profitable, it doesn't cost the taxpayer any money.

Anonymous said...

So Boots, what would happen if the min wage was raised to £20 an hour? Both you and your wife would now be unemployed. If you want a higher wage, then be prepared to pay more for your weekly shop at LIDL. Or are you one of those people who thinks money comes out of the air? (Hint: only true for tax-raisers)

If DK's policies were implemented, and we had true free trade, then you would probably earn only a bit more than the person in Bangladesh - such that it wouldn't be worth it to send goods from Bangladesh to England when they could be made locally. Only when someone in Bangladesh invents something that you want and can't get here would you pay a premium to import it.

Boots McGonagle said...

Anonymous

I've searched the words I wrote and nowhere do I see any suggestion that the minimum wage should be raised even marginally, never mind the ludicrous tripling that push as an example. The fallacy you introduce with that example is called The Straw Man fallacy. Look it up.

Boots McGonagle said...

Also, Anonymous

"Or are you one of those people who thinks money comes out of the air? (Hint: only true for tax-raisers)" Not only true for tax raisers, but true also for those parasites who sit at home checking the value of their stocks and shares.

Also, you seem to think, along with DK and numerous other mathematical innocents, that there is no limit to growth. Check out the exponential function.

Anonymous said...

"This capital is what has ensured that "capitalism" is the system that has made more people richer than the human race has ever been—and in a very short space of time."

This is not true though. Capital has increased and been concentrated into the hands of fewer and fewer people, and will continue to do so even more if what little restrictions on bankers and businesses is removed.

Unfettered capitalism will further fuck the poor and make the rich richer, as all the stats and evidence say it has been

Devil's Kitchen said...

Fuck me, there are some stupid people on the internet, eh?

"as all the stats and evidence say it has been"

Since they "all" say that, you'll have no problem linking to a few, yes...?

DK

Pogo said...

@Boots McGonagle: 11/03/2011 10:42:00 PM -

true also for those parasites who sit at home checking the value of their stocks and shares.

Thanks mate, that means me...

A "parasite" who's invested money, that he's earned and paid tax on, in shares - upon which I pay tax on any income therefrom and tax on any capital gain I might be able to make.

No "parasites" == no investments == no businesses bigger than a corner shop you ignorant cunt.

Anonymous said...

http://www.epi.org/page/-/old/images/snap200608232.gif

42 years of job creation, seems to be working well....

Anonymous said...

this is pretty basic, but solid

http://www.youtube.com/watch?v=kjaAMCKSyzw

Andrew said...

I really am curious as to how people come to the conclusion that the state cares for them and has their best interests at heart. And if it only had a bit more control over all those nasty businesses and bankers the world would be a better place.

When the visible reality is that the state couldn't give a shit about anyone but itself.

It continually increases in size, it pokes its nose into as many areas of your life as it possibly can.

Its representatives love to bleat on about things like "accountability" yet nothing happens to those who waste billions on failed projects or send our soldiers to die because they're lacking basic equipment.

Why the fuck would anyone want more of this?

These people are psychopaths, they only give a shit about your money and your obedience. And they have no problem whatsoever using violence to get both.

Really, why the fuck would you want more of them and give them more control over your life?

Steve Perrett said...

I have yet to meet anybody who thinks politicians are trustworthy individuals working hard for the people they represent. And yet there are millions of people ready to let these same individuals run 'The State'! I wouldn't let them run a fucking egg and spoon race! We seriously need to cut them down in numbers and responsibilities.

@ Boots. Investers are parasites?

Sorry Boots, that's the talk of a bitter and jealous man. Anybody who can make their money work for them is OK by me! I wish I had some money to invest! My Father in Law was a small invester. Worked all his life in the building trade but made a few small investments which are now paying for his wifes care in her old age.

Michael Fowke said...

I don't think there is a solution to our problems. The West is in terminal decline because: there is something wrong with the spirit of the people.

Lord T said...

Good list DK.

If only we had people of honour in parliament and not the selff selving bunch we have now.

Lola said...

Good post DK, but fukc me, there are some real economic ignoramouses in the comments.

Anonymous said...

I don't trust "the state" to make thing better and look out for me any more than I trust corporations and bankers with no regulation to suddenly decide that driving down wages and accumulating more money is not what they're about. That's why "the State" needs to change as well.

We need a government that isn't just the political wing of the corporations. Lobbyists out, primaries in, binding regulations on referendums. etc

Money makes money in a capitalist system, fact. of the richest 400 people in the US 45% where rich enough to qualify at birth and have doubled their wealth. This raises inequality unless it is checked, and the higher the inequality the more social unrest you have.

The world we live in today is the result of virtually unfettered corporatism and don't pretend that they are in any way regulated effectively, or pay any taxes, there are many examples of huge corporations paying zero tax a year.

I'm not against small businesses or people earning 200k a year, but that is missing the point, Everyone is fighting over half the pie, whilst the other half is being enjoyed by 0.1% of the population. They are the robber barons and they need to be addressed

Andrew said...

"That's why "the State" needs to change as well."

But it won't, the very nature of it means it never will.

"there are many examples of huge corporations paying zero tax a year"

No corporation, bank, or any other business has ever paid a single penny in tax.

Only people can pay tax.

"Money makes money in a capitalist system, fact."

Bullshit. Money can make money, there's no guarantee. But so can a good idea, or hard work.

There's nothing to stop anyone from becoming a success in a capitalist system.

"I'm not against small businesses or people earning 200k a year"

That's very good of you.

So, at what point would you authorize violence against someone who's earning than you think should be allowed?

Anonymous said...

"There's nothing to stop anyone from becoming a success in a capitalist system."

Haha! bullshit. The very nature of it means that those who are successful pass on all the advantages of their success to their offspring by being able to pay for better education, help or completely pay for all the important first purchases like housing, car etc. All of which makes it far easier to succeed and become successful yourself, it's a self perpetuating circle with very few dropping out or coming into that circle. Overwhelmingly if you are born poor you die poor and if you are born rich you die rich. And the reason that happens is not because the wealthy have to pay to much tax!

"There's nothing to stop anyone from becoming a success in a capitalist system."

As above

Ohhh violence! I think the people who benefit more than most from a better educated workforce, roads that haven't fallen appart, a defence dept that protects their far more valuable investments and property, stops them getting thieved from, develops the infrastructure they rely on more than some horrible poor with some lightbulbs and a dsl connection ever could, should pay their fair share, ie more! I'm perfectly happy to have 60+% tax on anything over 150k. And there should also be a comparable tax on capital as well as income so that you don't get the Buffet paying less tax than his secretary situation (and no i don't think he's a "good guy")

Andrew said...

"Haha! bullshit."

Not at all. If you want to be a success and you work for it, you can achieve it.

That's the beauty of a free-market capitalist system.

According to Buffet himself (so might not be 100% accurate) he paid $6.9m in taxes last year. I rather doubt his secretary paid anything like that.

But then, like all lefties, you're not really interested in the "poor". You just have a bitter, jealous hatred of the "rich".

The fact that no matter how much money the state gets it simply pisses it away seems to pass you by.

The very idea that stealing even more money would change anything is just ludicrous.

There will always be the haves and the have-nots, it's human nature - some people lead, others follow.

And you can't do a thing about it. (Especially when your prime concern is attacking the "rich").

When you try and force some sort of bullshit "equality", everyone ends up poorer. But as long as some of the "rich" are brought down I don't suppose you give a fuck.

Lola said...

Andrew/Anon. Hang on a minute. Look, we do not have 'capitalism', we have 'crony capitalism', so it's now wonder that the rich get richer.

'Capitalism' itself is a misnomer. Essentailly it is people being free to do stuff that leads to capital formation. Such an approach always provides opportunity, because it needs the labour, for everyone prepared to work hard. The trick is to ensure that fruits of that endeavour are not sequestered by rent seekers and confiscatory taxation.
Capitalism is essentially an opportunity system founded on competition.

Anonymous said...

If that is the case genius, then how come wealth inequality is increasing. Are you suggesting that it just so happens that rich people are the only ones who want to work hard or are clever enough to make money?

Earlier in these comments there is a man supporting your view who earns 14,000 a year, are you saying he is lazy or stupid? or could something else be at play here? By your reasoning if everyone worked hard then they would all be rich, but you can't have that can you? because for some people to be rich others have to be poor regardless of how hard they work. Maybe you could consider the idea that someone may well want to work hard and make a fortune but unfortunately little things like earning enough to feed your family and pay the rent got in the way, that and the shit education they got because they couldn't afford a private one etc etc

I can't believe i'm arguing with someone who can't grasp the difference between amount and percentage.....Buffet paid less in a percentage of his income than his secretary, he said it ffs!

If it helps you to stop foaming at the mouth I'm in the top 10% of earners in this country, and i don't really want more tax, but if i was earning 100k i wouldn't mind paying more to give people in my country a better life.

You say it's human nature, and some always lead and others follow. So who are the best leaders, those who recognise that at a certain point their accumulation of wealth and power is pointless in terms of happiness after a certain point and is denying other people happiness, or Louis XVI is more to your liking?

Andrew said...

"If that is the case genius, then how come wealth inequality is increasing. Are you suggesting that it just so happens that rich people are the only ones who want to work hard or are clever enough to make money?"

Well, if you're lazy and stupid you're going to struggle...

"Earlier in these comments there is a man supporting your view who earns 14,000 a year, are you saying he is lazy or stupid?"

I know nothing at all about his situation. But as you say the state's sub-standard education certainly doesn't help people.

"I can't believe i'm arguing with someone who can't grasp the difference between amount and percentage"

Hmmm... I am fully aware of the difference between an absolute amount and a percentage. You said "so that you don't get the Buffet paying less tax than his secretary situation". And he doesn't.

"If it helps you to stop foaming at the mouth I'm in the top 10% of earners in this country"

Congratulations, but so what? And if you want to pay more tax there's nothing stopping you.

"and is denying other people happiness"

You really are having a laugh aren't you? My accumulation of wealth has hurt no-one. All my trades have been entirely voluntary - both parties were better off. And your example is great, using the murderous greed of the state to try and attack private business. Fantastic.

Devil's Kitchen said...

Anon,

"because for some people to be rich others have to be poor regardless of how hard they work."

I actually cannot believe that I am having to point this out yet again (because it is so fucking basic): ECONOMICS IS NOT A ZERO SUM GAME.

That means that if the rich get richer, the poor don't have to get poorer.

Seriously, if you cannot grasp this fact then there really is no point in continuing with any kind of debate.

However, let me illustrate it very simply: over the last ten years, whilst these evil rich bastards have been accumulating ever huger piles of ill-gotten gains, we have seen the largest ever chuck of humanity—over 1 billion Chinese—lifted out of absolute poverty.

Economics—not a zero sum game. Do you see?

Why have the rich got ever richer? Because over the last 50 years, the rate of global trade has increased massively. And that means that markets are vastly bigger.

If you take £1 profit on your widget but only operate in the UK, the most people you can sell those widgets to is 60 million. But if you trade globally, you have a potential market of 7 billion. Thus, despite dropping your profit to 60p per widget, you still make massively more money.

Is that clear enough?

"I can't believe i'm arguing with someone who can't grasp the difference between amount and percentage..."

I cannot believe that I'm arguing with some who thinks that "for some people to be rich others have to be poor"—but that's life, I guess. This whole situation seems to have brought the economically illiterate bigots right out of the closet.

Anyway...

"Buffet paid less in a percentage of his income than his secretary, he said it ffs!"

Yes, but he was only counting direct taxes on his income. Actually, he should have counted federal taxes on the corporation and dividends before they reached him: those alone are over 30%.

Besides, you might have heard of the concept of "revealed preferences"—pay attention to what people do, not what they say...?

Buffet said that he wanted to pay more tax. Luckily, like the British Treasury, the US government will happily accept voluntary tax donations. Buffet did not, you'll notice, actually donate any more tax. Despite his fine words, he decided that he actually wanted to hold onto his cash rather than donating it to the state.

Surprise, surprise.

You might be interested to know how much the British people have donated to the Treasury in voluntary tax? It's just under £7,600. In the last seven years.

Yes, that's just over £1,000 per year.

So, next time some arsehole—like Polly fucking Toynbee—tells you that they'd happily pay more tax, you can ask "well, why haven't you done so?"

Despite being in the top 10% of earners, Anonymous, you don't want to affect your standard of living in order to help your fellow man; if only, you say, you earned over £100k—well then you'd help! Possibly. But, let's face it, you almost certainly wouldn't.

In fact, to put it rather more bluntly, you are all mouth and no trousers.

What I suggest is that you give £10,000 of your salary to Steve Perrett: that will bring his earnings up to (just about) the median wage; you will also have struck a blow against inequality. (I'm sure Steve will take a cheque.)

Either put up or shut up.

DK

Alistair G said...

I agree with most of what you say, but would add the following 1) Get rid of the minimum wage altogether, the state has no business fixing the price of anything including wages. 2) Cut all non-contributary benefits by 10% per year until they no longer exist--savings of tens of billions per year. 3) We need our roads and railways fixed--these are Capital spending infrastructure projects that have been postponed for over 20 years--cost of about 3-5 billion per year. 4) We need to start paying for routine medical care out of our own pocket, leaving catastrophic expenses only for the state.

Steve Perrett said...

Thank you Devil. Can you forward my address to Anonymous please? :)

Steve Perrett said...

Oh and by the way Anon. Let's not forget that most of these super rich cock suckers you talk about are the very parasites that are robbing us due to unfair business practices. i.e. corrupt bankers and politicians!

But you have me worried now about passing on my worldly goods to my children...? It might make their lot in life slightly easier... but! It might corrupt them and make them lazy and not want to work for the 'State'.. Hmmm. What to do what to do?
Fuck it! I'll leave it to the cat!

Lola said...

Anon, 'the rich get richer and the poor get poorer' under any 'system' but capitalism. We don't have capitalism, and have not had it since 1945 and not had it in spades since 1997. Since 1997 we've had cronyism, and that does exactly as you say.

Anonymous said...

"ECONOMICS IS NOT A ZERO SUM GAME."

No but I guess the difference is, you think that the 1 billion Chinese that have been lifted out of a life of subsistence farming and grinding hardship should be thankful that they now get to live in a concrete box and have a smartphone. "Thank you thank you" they should cry as their betters in Chinese society siphon off a greater and greater SHARE of the countries wealth earned off their backs.

Rich and poor are not absolutes they are relative, shouldn't be to hard to grasp. For instance I am wealthy compared to Steve Perret, but my wealth is utterly insignificant compared to the top 1% in the world. The argument shouldn't be between me and Steve, it should be between us and the worlds billionaires and corporations. They take more, they use more and they exploit more, so they should pay more.

"Why have the rich got ever richer? Because over the last 50 years, the rate of global trade has increased massively. And that means that markets are vastly bigger."

They haven't got richer, they have concentrated a higher and higher percentage of the worlds wealth into their hands, which means that there is a smaller percentage to share around the rest of us. If everyone had got "richer" because of globalisation then they wouldn't be "richer" would they, we'd all be as rich or as poor as we had always been, that's not the case though is it. We are poorer because they are richer, and they haven't done it just because they're cleverer and harder working than poor people.
Just because technology has moved people away from having to scrabble to survive doesn't mean you've addressed the issue of wealth inequality and inequality of opportunity. Let them eat cake comes to mind.

The old "donate tax" to government gag, hilarious. Misses the point impressively. There will always be people with a fuck you got mine attitude and if we never reined them in but just said, oh that's fair! we'd still be living under a feudal system, which presumably you'd still be defending to the hilt. "Hey work hard and you might get into the church or marry into a noble family! Anyone can do it!!"

I wouldn't trust our current system of government to spend my donation wisely, mainly because they are the exact same shower of bastards who I am talking about.

I just can't get the mindset here, that given what you see when you look around the world, the way business and politicians and banks and corporations have acted and the state they've got us into. The short term-ism, the profit over people the gutting of the countries manufacturing from outsourcing labour etc etc you think the solution is to strip anyway what little accountability there is and they will suddenly start transforming the world into a better place. Because of the free market they suddenly won't work rapaciously to increase their wealth status and power, they will build schools and put safety over profits and take a little less profit to keep people employed.

nah you want a nice race to the bottom, what's the lowest i can pay someone so they are trapped in servitude, with no option but to carry on slaving or stave. "Free market, they can always go else where!!!" Except people fucking can't, can they.

Anonymous said...

I'm sure everyone is disappointed by the fact that my lengthy comment yesterday was never published.....

must've been to insightful

Hamish McDougal said...

If only!

Hamish McDougal said...

Oh, and bugger the poor! Let them starve. (not even cake)

Anonymous said...

I can respect that Hamish, at least your not hiding behind some pseudoeconomic rubbish claiming that your support for capitalism is due to your desire to see all people raised out of poverty and sharing in the worlds wealth.

You come right out and say it, fuck the poor I'm better than them and I deserve better than them. Which is basically what everyone commenting thinks. Even, inexplicably, someone earning 14,000 a year who feels the only reason he isn't a millionaire is because of regulations to stop his water being poisoned and high taxes on people who earn what he does in a month in return for driving the economy of a precipice.

I'm interested to know why he thinks he still languishes down on 14,000 a year? Is it because he is stupid or because he is lazy? Or prehaps it is because a tax bracket he's never earned enough to trouble is set to high? If it was lower perhaps one of his better would lend him some money

Devil's Kitchen said...

Anon,

"I'm sure everyone is disappointed by the fact that my lengthy comment yesterday was never published....."

My apologies: your comment was caught in Blogger's enthusiastic Spam-guard. Annoyingly, it came through to my email—but with no indication that it had been put in the spam queue. As such, I had assumed that it had been published.

My apologies.

As for the content, I shall try to find some time to respond more fully, in the next couple of days. However, a couple of points:

"For instance I am wealthy compared to Steve Perret, but my wealth is utterly insignificant compared to the top 1% in the world."

If you earn over £25,000, you are in the top 1% of the world's earners. Perhaps you'd like to send the ten grand to a village in Africa instead (sorry Steve)...?

"No but I guess the difference is, you think that the 1 billion Chinese that have been lifted out of a life of subsistence farming and grinding hardship should be thankful that they now get to live in a concrete box and have a smartphone."

Oddly, the Chinese seem to prefer it. Otherwise, it would be very, very easy for them to go back to "a life of subsistence farming and grinding hardship".

"We are poorer because they are richer, and they haven't done it just because they're cleverer and harder working than poor people."

Ah, I see: you are talking about relative poverty. You should have clarified that you were using that old canard to measure rich and poor.

"I just can't get the mindset here, that given what you see when you look around the world, the way business and politicians and banks and corporations have acted and the state they've got us into."

So what would you suggest? After all, if we take a point when corporates and government were not so "rapacious"—in the late 1800s, for instance—then equality was little better and the poor were massively poorer than now. And not relatively poor but absolutely, no food to eat, starving or freezing in the street poor.

Perhaps you would like to outline your perfect societal structure for us...?

DK

Steve Perrett said...

You're correct Anon. You don't get the mindset here do you? You appear to be a lot wealthier than I, so, stop your whining and hand over some more of your money to the treasury! What sort of percentage of wealth do you have over me? From down here on the bottom rung of my lazy ignorance, it's probably quite a lot! So I ask you again to hand over some of your money! I doubt you will though, because your mindset doesn't actually include you does it? It's all the other rich fuckers out there! They're the ones who should be handing over their cash! Not you, you clearly don't have enough yet! Maybe you have some expensive cars to run? Or a huge house and grounds to finance? So what's the difference between you and I then? I'm pretty fucking skint right now. Not because I'm lazy, and not because I'm stupid. Apart from a few days here and there from illnes, including a heart attack a few years ago, I've pretty much worked every working day for the last 42 years! But if we were all as rich as you, or as poor as me, we'd all be the same wouldn't we! And let's make absolutely no mistake here. If we were all the same, we'd all be a lot closer to my level of wealth than yours! And you are still confusing capitalism with corporate cronyism. It's not the same Anon. It's not the same!

Put your name up so we know who we're talking to please!

Anonymous said...

Agree with most of your post. Not too sure about lowering the minimum wage though - or about giving more powers to local authorities. I'd be tempted to abolish them myself.

Steve Perrett said...

There shouldn't be a minimum wage. Never mind lowering it! And you need some sort of vehicle for local infrastructure! Give me local over National anyday! At least you get a more positive say in what happens in your area!

Iorwerth said...

ok, i'm the anon, just so everyone can find me easily :)

I'm not convinced by the argument: if i want higher taxes on the richest members of our society, i.e those whose lifestyle would be affected very little by a tax increase, I should be busy sending my money to the government every month.

Firstly, taxes are a collective responsibility, everyone pays them or they are pointless. My voluntary contribution means nothing, but as a whole we decide what is the appropriate level of taxation on a cost benefit basis. Trying to switch the discussion from a public decision to put it on me personally is a red herring.

Secondly, I'm sorry I said top 1% of the world. I should have said top 1% in the west maybe, or top 0.1% in the world. either way i'm sure you're savvy enough to know what I mean.

Not sure about the dig about sending money to Africa is about. Since we're talking about charity in this instance and not taxes there is just as much onus on you to send 10000 pounds to an African village as me. Why aren't you sending money to them eh? Selfish?

Incidentally, I've read your posts on non-charities Devil and I think it's a very worthy cause.

Oddly, the Chinese seem to prefer it. Otherwise, it would be very, very easy for them to go back to "a life of subsistence farming and grinding hardship".

Yes, strange isn't it? I've heard some people prefer living in a cave than living in a sewer outlet too. I guess they must be happy with the cave though....or they'd just go back to living in the sewer.

Ah, I see: you are talking about relative poverty. You should have clarified that you were using that old canard to measure rich and poor.

yes I'm talking about relative poverty. What other kind is there? can you be poor or rich with out something to compare it to? Besides all the Chinese could be living in luxury apartments and working 4 hours a day, but if the wealthiest 100,000 Chinese are flying around in hover cars and live in floating sky palaces, which they can afford due to their capturing of the economy and explotation of people then it is still morally wrong

Steve, look at what you are saying
I'm pretty fucking skint right now. Not because I'm lazy, and not because I'm stupid. Apart from a few days here and there from illnes, including a heart attack a few years ago, I've pretty much worked every working day for the last 42 years!

Now I don't disbelieve for a second that you havn't worked your arse off for 42 years. We could do with more of that attitude. And yet despite this hard work you describe yourself as fucking skint. Yet early another of your compadres said "If you want to be a success and you work for it, you can achieve it.

That's the beauty of a free-market capitalist system.


Given that you and many others work yourselves into heart attacks and you aren't thick, why are you after 42 years fucking skint. And wouldn't you like to live in a society were by people wouldn't have to be fucking skint after 42 years of work?

I know we have corporate cronyism now, but I'd argue it's an inevitable result of capitalism, which is after all only concerned with the increase of profits.

I would type up something about what i think a better system of government would be, but i'm working (ahem) late with no overtime, thanks to not having a union and my industry's wages being constantly driven down. maybe later

Steve Perrett said...

Well relatively speaking, I'm a lot better off than the geezer down the road who lives in a hostel. Despit two divorces, I still own my own home! I'm feckin skint because people aren't buying the goods that enable me to do my job! (I'm a floor layer) That's as a direct result of greedy, stupid bankers being bailed out by stupid greedy politicians. That is absolutely nothing to do with capitalism Iorwerth! No matter which way you look at it! When Politicians stop sticking their fuckin ore into things they have no idea about, then we might get to a capitalist system that works! When these idiots start chucking my money (tax) into lost causes, it upsets the natural balance. As an example, look at Rover. Millions of pounds of our money, for what? Rover went bust for a reason. Bailing them out doesn't maske any kind of business sense. If it did, if there was a chance that Rover could climb out of the pit, then shrewd people with money would have invested. That didn't happen! Instead, Politicians decided to throw a shit load of money into a burning pit! It's happening now with Wind farms and solar panels! These industries are being subsidised to a colosal extent! So much so that installers were offering free solar panels with feed in tarifs going into their pockets for the next 25 years!!! That is not capitalism. That is not free markets. Have a look at our politicians and ask yourself if you would want any of them to run your business? Look at William Vague, sorry, Hague, Foriegn Secretary? Has he ever had a job? I remember the little twat speaking at the conservative party conference when he was still sucking at his mothers tit! Now he's the foriegn secretary...! God forbid we ever end up with fuckin Milliband as PM...

Iorwerth said...

Steve,

I don't disagree with anything you wrote there! Leaving other things aside, I would hope everyone agrees that the situation we have now is the worst of all things.

We probably agree on a lot of things, for instance, I think the EU is a fucking disaster and it rankles me enormously to see private citizens, such as ourselves having our money taken to bail out banks that by rights should pay the consequences of their bad investment decisions.

I hate that there seems to be a policy of driving Europe into a super state with an unelected, unaccountable leadership.

And I hate that our government is staffed by an incapable political class of cronies, who do shit like piss money up a wall paying aristocractic landowners to build ugly wind turbines that are next to useless. (I'm a "lukewarmer")

I'm not a communist! I guess maybe social democrat would best describe my leanings. The first step of that would be an accountable government, I've always been a fan of primary elections, so that the parties can't parachute someone into a safe seat. Anyone can run for the nomination for a party at any seat. Money out of politics, politics out of science.

I would see the situation we have today as an inevitable consequence of a capitalist system. Yes I know we don't have a pure free market system, but in a completely free system there would be nothing at all to stop the siphoning off of wealth to large interests. Look at how well the banks have done even when they technically are "regulated". There would be a massive tendency towards monopolisation, which in turn would drive small businesses out of the market. Free market capitalism starts as a vibrant place for entrepreneurship but it will inevitably lead to corporatisation as one entreprenuer consolidates his success and drives his smaller competitors out of business, especially as technology becomes more advanced and technical and barriers to entry grow ever higher. As we see nowadays with the top 1% of our society increasing their wealth by 100s% in the last 20 years, while everyone else gets poorer.

Steve Perrett said...

But don't we have a monopolies commision? Banks are businesses, they will take advantage of any situation that benefits them, as has been the case over the past decade. I see nothing wrong with big businesses? They usually employ a lot of people, they need to make a profit to stay in business! It's only when businesses fail and are then bailed out, or incentivised that it all goes to hell in a hand cart. They should be aloowed to fail! Now that might be harsh on the empoyees, but, usually, when a business fails, another comes along to fill the void! THAT is capitalism. If somebody manages to build a business from nothing, and end up with a huge empire employing thousands of people, is that wrong? Is there something you see in that that I don't? If it's a succesfull business, then it's where it should be! If other, smaller businesses are falling by the wayside, maybe, just maybe they're doing something wrong!I know that's not always going to be the case, and genuine small businesses will go under. A little bit like now! and throughout history! But you can't set levels of wealth or attainment. Who are you to judge who should earn what? What gives you the right to decide that person A should be paying X amount of tax? There will always be poor people. I grew up in poverty. But my father would never dream of 'claiming' anything! Because that takes something away from somebody else. Now you might have this grand vision that it would be taken from some rich cocksucker with squllions of pounds in the bank, but the reality is, it always comes from people like me. Who would struggle, even in a good year to earn £24,000. But for all that! I'm generally happy with my lot! And I have a sneaking suspicion that a lot of 'poor' people are happy with their lot as well. There are those that will never want to work while they can get free handouts from the 'State'. There will always be those who will feign a bad back just to get signed off for another month! I have a mate who used to be a physiotherapist at Torbay hospital in Devon. He left because he was so despondant with his everyday clientelle! Scroungers and wasters! Again, there will be exceptions to this general view! But I see what goes on first hand. I hear it from people who have to deal with those in poverty!

I find it interesting that the word 'Social' i.e. as in your claim to be a 'Social' Democrat, always appears to want to level the playing field at the lowest common denominator! Labour wants to Abolish Grammar schools, why? Aren't they good places? Do they not turn out bright, confident citizens? I went to a crappy comprehensive school in Bristol. I left at 15. Not because I was stupid or an under acheiver, but because it was a crap school with a turnover of teachers almost as high as the pupils! And those teachers appearing for a term or two before they went on to something better, appeared not to give a toss! But that's what the Socialists want. They want everything to be fair for everyone. Except those who are a little brighter, or a little better off! Well that isn't fair. Not all of us are clever enough to get to grammar school. Not all of us are wealthy enough to get there either! But is it fair that those who are clever enough, or who's parents are wealthy enough, should not have that opportunity? Socialism isn't fair. It takes away from the talented and the achievers and the risk takers, and makes it disappear into a void of immense proportions;

I've worked up a thirst now!