In Praise of David Cameron. Almost.

I am seriously in danger of agreeing with some of what David Cameron is doing. Notwithstanding the fact that he presides over a party that espouses an impossible and unrealistic moral code that they themselves can’t adhere to, he has actually done some good things in the past few months.

The first noticeable improvement in policy was the acceptance that Israel is the main obstacle to a two state solution in the middle east.  Then he came out in support of gay marriage, despite puerile whining from the rest of the Conservative Party. Then he even backs the Forfeiture committee’s investigation into making Sir Fred Goodwin back into Mr. Fred Goodwin.

As a Lib Dem I like to believe that all these things were forced upon Cameron by Nick Clegg, but realistically I realise that Clegg’s presence is probably tolerated in Cabinet providing that he doesn’t actually say anything. It would be nice if the Lib Dems did influence the Tories into a leftward shift, but it seems unlikely that Insaniacs like Dan Hannan MEP  would realise the idiocy of their ways and recant.

In any case, Cameron is looking thoroughly decent, if a bit foppish, on social issues. One could even consider voting for him (if one lived in Whitney), except for the fact that he is utterly, unforgivably, wrong on the economy.

Despite the rhetoric about a fairer economy, the current economic policy is anything but. In an effort to cleanse the hypothetical national debt the government is making people’s lives significantly worse. Until we establish who the money is owed to, how much it actually is and why the hell the government thinks that money is more important than, say, education, the people shouldn’t be paying.

What is truly galling is that we never asked for it. For the most part the British people pay the taxes we are told to in exchange for some basic services. We were never told that our taxes weren’t enough, and that several years later we would have to pay more for things we received ten years ago. The only equivalent is if you bought something from a shop in 2009, and in 2012 the shop informs you that you only paid for 20% and at the time the shop took out a loan on your behalf, but without your knowledge, to cover the rest, even though the price on the label was the price you paid. It is absurd. Had they raised the taxes to the amount needed to pay the bill people would have complained, but they would have paid. It may be that there was another party in power but it is irrelevant, all governments of all stripes do it, and we shouldn’t sit by and take it. Now we are paying for our current bills and the bills of the last two decades.

Instead of covering this massive cock up by asking the obscenely wealthy for a hand, the government has decided to cut services and raise taxes for low and middle income workers, as well as the unemployed. This is ideologically old Tory thinking. Ignore  that the average salary for a FTSE 100 director is roughly 100 times the average salary for the country, focus on the undeserving poor.

Austerity is an anachronism in the 21st century, and takes its place alongside mercantalism for failed economic concepts. The government has been cutting and raising for almost two years and what do we have to show for it? Mass insolvencies. In the last few months we lost Barratts, La Senza and Hawkin’s Bazaar from the high street. In the preceding quarter there were almost 6000 UK companies involved in some type of insolvency proceedings, as well as over 30,000 bankruptcies, IVAs and Debt Relief Orders. This does not seem to validate the theory that a reduction in government spending will improve the markets. It is also interesting to see this Conservative led, friend of the people, man in the street government isn’t rushing to bail out any of these companies. It seems if you work in a bank your job is safe even if your company is technically insolvent.

To counter this, the ConDems have recently pointed out that they have convinced certain big companies to take on more staff, mostly it seems in large supermarkets. However, these jobs tend to be menial, low paid and fairly degrading. Despite seemingly endless profits the supermarkets still pay their shop floor staff a pittance. One job is also not comparable to another. Whilst shop floor retail jobs are often the same between companies, someone who has been a manager in an IT company is unlikely to want to accept minimum wage, graveyard shift work. The government has missed the point that people don’t want jobs, they want careers. They need to know that they are headed somewhere, and that somewhere has a larger salary than where they are now.

The average salary is not a decent one. People only live once; they shouldn’t have to live in discomfort. We should be encouraging a major and if necessary forced redistribution of wealth in private companies. This needs to be coupled with a Financial Transactions tax and an end to austerity. It has been suggested that such moves will make the “best” directors leave. Good. They were a major cause of the recession and we don’t want them to stay. Liquidate the boards of all companies, I guarantee you the earth will keep rotating.

As with most right wing thinking, austerity is born from a lack of thought. It is a simple fact that cutting services means fewer jobs and raising taxes means people are worse off. The more unemployed you have the greater the drain on the economy, as the Government has to pay benefits but receive no taxes. The unemployment benefit is so laughable that people on it can’t usually spend anything outside of the basics, and so the economy loses out on sales, and the government loses out on VAT. Next, because the media constantly tells us we are in recession again, those people with jobs save their money. When they don’t spend, the shops lose out and in the worst cases have to enter insolvency, thus throwing another group of people out into unemployment. Cut, paste, repeat.

Unfortunately the Labour party are incapable of thinking up anything else and so democracy will essentially be a choice between party A (Blue, policy is to make people poor quickly and get it over with. Not sure if the economy will recover after but we jolly well hope so.), party B (Red, gradual poverty because we don’t want to look like we aren’t accepting fault, but we have no idea what to do after that.) and party C (Yellow, no policy. On anything.). The government and the opposition chose austerity measures because they believed that the “Markets” would dive if they did anything else. We have done austerity for 2 years and all the markets have done in response is close companies and give ever increasing bonuses to the already insanely wealthy.

Throughout history the only successful way to beat a recession is through huge tax and spend programmes. The most famous example of this is Roosevelt’s New Deal. The principle is very simple: the more people in work, the better off the country is as a whole. Even if it is the government employing them, the economy is better off and the government actually recoups the money through taxation eventually. However, Osbourne wouldn’t be seen dead near a Keynesian policy and, despite the lack of evidence to back up his theories, many leading economists seem to favour Hayek’s conservative economics.

There is another way. Rather than arguing over which economist was wrong (they both were, since you ask), it is time the British people forced their elected representatives into action. Instead of playing by already established economic rules, we should be making our own up.

For example, to protect jobs in troubled companies the rules need to change about layoffs. When a company is floundering, the Board should take a pay cut, and continue to do so until their either reach the salary of the next rung down, or they solve the problem. If the problem isn’t solved then the senior management must again reduce their salary and so on. If, by the time the Board is being paid minimum wage, the problem is not solved, the Board is automatically fired and the next most senior person takes their place. Again, this keeps going until there is no-one left, ensuring that a) the people that do the work stay in work for the longest and b) the majority keep jobs, rather than the minority at the top.

Then, to ensure personal and nationwide prosperity, top level salary must be linked to bottom level salary. This could be any figure, but if we use a multiplier of 10, this would mean that a director who wants to pay himself £1,000,000 would have to pay his most junior administrator £100,000. In reality of course the director probably would just lower their salary, but it would make for a significantly fairer economy.

Legally, Parliament can legislate on anything it wants. This is a principle laid our by the constitutional theorist A.V. Dicey in the 1800s, and so following on from this the government could just pass a law stating that the UK owes nothing. Obviously our creditors would probably not be very happy with this, so how about suggesting to the world that we have a conference the aim of which is to set up a hypothetical float in every country’s economy. This float is accepted to be something like 40% of GDP of each country, and from this amount they are allowed to pay for education and healthcare only. They do not need to raise the money to do it, and so taxes can be dramatically lowered in most economies. This would also remove a major contributor to nation’s debt. The nation and the individual will be better off, but with the benefit of core services surviving. This would also aid healthcare in poor and developing countries.

These are three ideas that the government seems to have completely missed in its aim for a “fairer” economy. Of course, thee is nothing fair about a cabinet of millionaires in the first place, so I won’t be holding my breath for a change anytime soon. They will continue to blunder on and Cameron will look you apologetically as he takes the keys to your home to pay another RBS bonus. At least he got the Gay Marriage thing right at last.

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Posted on January 22, 2012, in Coalition Government, Comment, Conservative Party, General, Labour Party, Liberal Democrat Party and tagged , , , , , , , . Bookmark the permalink. 3 Comments.

  1. Excellent article once again Mr Southern, I would like the opportunity to comment if I may…

    I have worked for several high street shop chains that went through insolvency during my life time the most memorable of which was Our Price Ltd. They suffered from problems concerning other companies using loop holes in the law to bypass certain forms of taxation and therefore sell top 100 chart CD’s a lot cheaper while still making similar if not better profit margins (sound familiar?) as well as the rise of the internet and its very convenient bonus of people being able to shop from home – why spend the petrol/bus fare when that could be spent on more albums? As you pointed out with a lack of new ideas this seems to be a continuing issue (if not worse) 10 years on. You may have noticed in recent news articles that HMV is going through the same motions and although I rarely used them I am sorry to see them go. The thing is – It’s much easier to have something delivered to your door for half the price even if that means barely any of the money you paid will hit the treasuries coffers. I mean who needs a national health service or welfare system when you can save £4 on the latest One Direction album?…

    We have the government trying to tell us that the “shirkers/overweight plebs” are to blame as they drain our economy. The fact remains that the real “shirkers” unwilling to work are a tiny minority of the people unemployed and a “drop in the ocean” financially compared to the amount of tax “avoided” by the multinationals (Amazon, Play.com, Boots, Topshop etc) undercutting companies like HMV – who are now only going to add to the unemployment numbers. HMV actually complained to the treasury of these companies bringing in stock “laundered” through the Channel Islands in 2004 – I guess it fell on deaf ears. I have also noticed that quite a few articles have been written about Amazon not being to blame for the demise of HMV but it being a change in the way people shop. Surely the way people shop has been changed by companies like Amazon?

    Perhaps part of the issue is that people are unable to deal with the reality that during their lifetimes, taking into account the way Messrs Cameron and Osbourne are dealing with our economy, they will never be able to afford the products or lifestyles constantly advertised to them through our relentless media and so try to find an “easy-out” by laying their futures and financial hopes on lottery tickets or a three legged donkey in the 3.30 at Chepstow. When the stark realisation kicks in that the wrong lottery numbers/horses were picked and now there isn’t enough money to pay the rent don’t panic! You could always take out a pay-day loan with a repayment plan the Mafia would have deemed “a bit much”. It also interests me that now that Wonga are making £60+ million a year they are going to move their head office abroad to Switzerland or Ireland in a move to avoid tax and make the ludicrous totals of interest they earn from their loans another lost income for the treasury.

    The sensible ones of us know that the lifestyles portrayed to us in the media are a complete fallacy but would, on the odd occasion, like to be able to treat ourselves to a bottle of the fancy perfume the semi-naked lady brandishes while Brad Pitt “orally vomits” some really badly written “poetry” into our ears leading us to believe that supermodels would be clamouring over each other to sleep with us if only we smelt like him… Or the shiny new piece of technology that will enable us to post pictures of the snow outside/make inane updates about what we had for dinner on Facebook at twice the speed that the last shiny device (that was released last week) did but we can’t because the cost of living is constantly in ascendancy and wages have remained largely the same. We have rent at record levels, utility bills expected to continue rising at twice the rate of inflation for the next 10 years and banks unwilling to lend even to those able to afford the repayments.The “shirkers” our government are trying to punish by cutting benefits are mostly families with full time work having to claim due to being unable to afford living costs. If the Tories want to “Make work pay” then surely a plan should be put together to bring wages more in line with the cost of living? You can’t incentivise something just by making the other option seem a little bit worse but with ultimately the same outcome or we end up with the court scene from Dark Knight Rises – “Death or Exile?” “Death!” “OK! Death by exile!”. Luxury items aside if this trend of rising living costs outweighing wages then who will be able to afford to buy a house? Or plan for retirement? We will have generations in the near future with no hope of retirement – especially if private healthcare comes in as the combined cost of living and healthcare would outstrip any pension anyone outside of the Bullingdon Club could afford. And that’s if the retirement age isn’t 105 by then…

    I don’t lay all the blame on these companies that avoid tax or the banks that lent us all the money to get us into this position because we are, for the most part, the ones to blame. No-one forces us to buy products from tax shirking internet shops or borrow money we would never be able to pay back but placing blame, however popular it seems to be, doesn’t help anyone. It has gone on for years and we need to change – if not the next 10 years will be even worse. The ideas you put forward for handling lay-offs and structuring company salaries are country miles better than the complete lack of ideas the government currently have but where can I vote for someone who would back or enforce these ideas? You mention yourself that we have 3 clueless major parties so who, as a nation, can we turn to?

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