Amidst all excitement about potential cuts in mortgage rates (for that is all they are so far) it seems churlish to point out that the economy is heading to hell in a handcart but as John McCain has shown- the right aren't in this game to be popular.So here goes:
First up- the interest rate cut. Expect to hear calls from generous government ministers (they are so good at giving other people's money away) for banks to pass on the interest rate cut to householders. Neither the proper banks nor their nationalised emasculated counterparts will pass anything like the full cut on- they've got to make up their losses somehow. The government will howl with outrage about this and subsequently blame much of the downturn on the banks (and of course on Norman Lamont, Dominic Lawson, Harold MacMillan and William Pitt)
Next- the pound. Having lived in a country whose currency was so weak that even some official bodies refused to accept it I can tell you that what is going to happen is not pretty. The government's excessive borrowing, the public's excessive borrowing, the absolute unproductivity of the UK workforce (more regulation anyone?) leading to a pathetic balance of payments situation means that there will be very little demand for pounds but huge oversupply. For anyone who doesn't understand economics out there or who is a Prime Minister who pretends to- that is what we call a BAD THING. It leads to a collapse in the price of the currency. This in turn makes it very very expensive to buy things from overseas. In the UK that is everything unless you were wondering.
Currency value induced inflation has historically been subject to constant fluctuations. Not any more. The weak pound is here to stay for as long as economy is managed the way it is.
OK, so that's the mild part out of the way. Now for the real problems:
All that borrowing needs to be paid for- we need to borrow from someone. Most UK national debt is now held overseas. To increase borrowing we need to persuade lenders that it is worth their doing so. The thing is- with government interest rates so low and the pound being the currency equivalent of a man walking round town with a sick chicken fewer people will want to lend to the government.
This leaves the government with the unthinkable option of cutting spending, or the Brownite solution- raise taxes. This is of course bad in its self. It will be worse because it will further undermine productivity and enterprise.
And just around the corner is the real kicker- inflation. It takes a special kind of genius to achieve both recession and inflation at the same time. It is called Stagflation and we had it in the seventies and it is not pretty. Friedman demonstrated it to be the inevitable result of Keynesian economics, common sense reinforces this. The trouble is that a lot of left wing politicians and economists had already fallen in love with Keynes and big government by then.
Reflating the economy on credit as the government is trying to do is just the same as printing money- it won't mean that any more goods or services are produced. Unfortunately, as the economy tanks more people will end up on benefits- leading to ever more government spending which we can't afford.
The result= we end up where we also end up under Labour- going to the IMF cap in hand. Mark my words- it is now a matter of time. Start your clocks now...
Thursday, 6 November 2008
Monday, 27 October 2008
Taxation- My views explained
One of this blog's regular readers- Jo has pointed out that my last post might imply that I am in favour of a universal poll tax to replace income tax. For the sake of clarity I thought it would be best to state out the Lyon Tax Plan in full:
I operate from two clear principles:
1. Taxation is a bad thing. It might seem surprising to have to state as much but given recent governments' addiction to expensive programmes and their unerring certainty that they must be the best people to decide how money is spent.
We must never forget that people work hard for their money. We are able to tax them because government has a monopoly of organised violence in a country. We don't know what they would spend it on otherwise but I'm sure we would all agree that violence is a bad thing and that we should avoid using it, or threatening to use it, whenever we can. We should therefore tax only when absolutely necessary.
Taxation is most reprehensible when it denies people the means to pay their own way, or when it endangers economic activity that could allow people to do so.
2. We do need some taxation. This is unfortunate but we need a police force, courts, armed forces and various other odds and ends. These cost something.
We must therefore:
CUT- Capital Gains Tax, Stamp duty and similar (these are a tax on enterprise and investment)
INCREASE- VAT, specifically on goods and services which have "negative externallities," that is, things which damage other people as a side-effect.
REDUCE AND SIMPLIFY- We should take as many people out of income tax as possible but not use the tax system to hand out "credits" as the current unelected regime does. The band below which people do not get taxed should be raised to well above a living wage (say £20k) and a flat tax should be instituted on those above it.
Ideally we should not tax anyone on income at all (A tax on work? Which brainbox thought that one up?) but as long as we need one lets reduce and simplify it. This may put a load of pointless civil servants out of a job (kind of like how living longer puts undertakers out of work) It will however cut costs, allow further tax cuts and make it easier to calculate how much tax you owe- thereby further raising the tax yield.
As this applies to the story below it would lead to cuts in the bills for all payers (even the big earners) and mean that fewer people had to pay it.
The sooner we accept that taxation is a bad thing the sooner we will come round to my solution of reducing it for everyone and eliminating it for as many people as possible.
I operate from two clear principles:
1. Taxation is a bad thing. It might seem surprising to have to state as much but given recent governments' addiction to expensive programmes and their unerring certainty that they must be the best people to decide how money is spent.
We must never forget that people work hard for their money. We are able to tax them because government has a monopoly of organised violence in a country. We don't know what they would spend it on otherwise but I'm sure we would all agree that violence is a bad thing and that we should avoid using it, or threatening to use it, whenever we can. We should therefore tax only when absolutely necessary.
Taxation is most reprehensible when it denies people the means to pay their own way, or when it endangers economic activity that could allow people to do so.
2. We do need some taxation. This is unfortunate but we need a police force, courts, armed forces and various other odds and ends. These cost something.
We must therefore:
CUT- Capital Gains Tax, Stamp duty and similar (these are a tax on enterprise and investment)
INCREASE- VAT, specifically on goods and services which have "negative externallities," that is, things which damage other people as a side-effect.
REDUCE AND SIMPLIFY- We should take as many people out of income tax as possible but not use the tax system to hand out "credits" as the current unelected regime does. The band below which people do not get taxed should be raised to well above a living wage (say £20k) and a flat tax should be instituted on those above it.
Ideally we should not tax anyone on income at all (A tax on work? Which brainbox thought that one up?) but as long as we need one lets reduce and simplify it. This may put a load of pointless civil servants out of a job (kind of like how living longer puts undertakers out of work) It will however cut costs, allow further tax cuts and make it easier to calculate how much tax you owe- thereby further raising the tax yield.
As this applies to the story below it would lead to cuts in the bills for all payers (even the big earners) and mean that fewer people had to pay it.
The sooner we accept that taxation is a bad thing the sooner we will come round to my solution of reducing it for everyone and eliminating it for as many people as possible.
Thursday, 23 October 2008
Taxation
I have just received this as an email forward. I am genuinely impressed. This is a point that really needs to be made a lot more often and a lot more clearly:
Bar Stool Economics
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers, he said, 'I'm going to reduce the cost of your daily beer by $20. Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes, so the first four men were unaffected. They would still drink for free.But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings)
The sixth now paid $2 instead of $3 (33%savings).
The seventh now paid $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free.
But once outside the bar the men began to compare their savings.'I only got a dollar out of the $20,'declared the sixth man. He pointed to the tenth man,' but he got $10!
''Yeah, that's right,' exclaimed the fifth man. 'I only saved a dollar too. It's unfair that he got ten times more than I!
''That's true!!' shouted the seventh man. 'Why should he get $10 back when I got only two? The wealthy get all the breaks!
''Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor!'
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
Bar Stool Economics
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers, he said, 'I'm going to reduce the cost of your daily beer by $20. Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes, so the first four men were unaffected. They would still drink for free.But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings)
The sixth now paid $2 instead of $3 (33%savings).
The seventh now paid $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free.
But once outside the bar the men began to compare their savings.'I only got a dollar out of the $20,'declared the sixth man. He pointed to the tenth man,' but he got $10!
''Yeah, that's right,' exclaimed the fifth man. 'I only saved a dollar too. It's unfair that he got ten times more than I!
''That's true!!' shouted the seventh man. 'Why should he get $10 back when I got only two? The wealthy get all the breaks!
''Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor!'
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
Wednesday, 22 October 2008
Fireworks!
For anyone interested in attending, St Peter's Church, Farnborough, will be having a fantastic fireworks display on Saturday 1st November behind the church. Tickets are available from The Triangle bookshop in the town centre.The buildings are a thousand years old so they are really showing a lot of faith in one of their elected representatives in letting me help with firing the rockets- I can't give any guarantees about which direction they'll be flying in!
It would be great to see you there. There will be huge bonfire too and some great food.
One quick point is that is you see me running around with a fuse this should not be taken as a sudden conversion to the views of Guy Fawkes!!
Tuesday, 21 October 2008
Neighbourhood Watch
As promised in my election materials- one the top priorities that I and my fellow councillors have is to secure 100% Neighbourhood Watch coverage for Empress. The benefits of this will be not just safer homes but also closer communities and a stronger deterrent effect against petty crimes and anti-social behaviour.
I have already started going round the Marrowbrook and the streets off it and have been impressed at the levels of engagement shown. We are also starting from quite a high level of coverage and I do think that this aim is
In many areas people believe that they have a Neighbourhood Watch because they have signs on their streets but a lot of these have died off as people have left the areas.
Neighbourhood Watches are exactly the sort of community involvement that I have been arguing for over recent years- they show that people can take responsibility for their own areas and do things effectively without the need for government legislation. For this reason, as well as all the benefits they can deliver, I am determined to make this succeed.
So whilst I'll be going round most evenings and weekends there is also a challenge to you. Can you be a coordinator for your area? If so let me know and I'll link you up to our excellent beat officers who will do all they can to help.
I have already started going round the Marrowbrook and the streets off it and have been impressed at the levels of engagement shown. We are also starting from quite a high level of coverage and I do think that this aim is
In many areas people believe that they have a Neighbourhood Watch because they have signs on their streets but a lot of these have died off as people have left the areas.
Neighbourhood Watches are exactly the sort of community involvement that I have been arguing for over recent years- they show that people can take responsibility for their own areas and do things effectively without the need for government legislation. For this reason, as well as all the benefits they can deliver, I am determined to make this succeed.
So whilst I'll be going round most evenings and weekends there is also a challenge to you. Can you be a coordinator for your area? If so let me know and I'll link you up to our excellent beat officers who will do all they can to help.
Monday, 20 October 2008
Break's Over
Dear Reader,
As you may have noticed, things have been pretty quiet on this blog of late: between password difficulties, an amazingly busy couple of months and various internet problem this blog has been about as much use as a nationalised bank. But there is one thing we can learn from politicians of the left- relaunches.
I prefer to talk about positive, inspiring and useful things- so will not refer to the Prime Minister, there is a better example out there anyway...
Thats right... break's over, big issues to tackle- Neighbourhood watch to set up in Marrowbrook, parking reforms needed in Union Street, a town centre to finish and unfunded mandates to fight and a need for new cycle routes.You'll hear about it here first.
Thursday, 12 June 2008
Taking a Stand
I can't help but admire the principled stand that David Davis is taking against the government's uber-authoritarian decision to grant themselves the power to lock people up for six weeks without any kind of charge.
To be honest I was utterly lost for words. I think most people were. Nevertheless, our gallant media have stepped in and not allowed the fact that they have nothing sensible to say to get in the way of their saying it.
As a liberal democracy we either stand up for justice and due process or we are lost. We have sacrificed enough liberty to the incompetent scare-mongers in Whitehall and Mr Davis recognises this. On ID Cards, surveillance and detention without trial we have reached a turning point. It's time to stand up and be counted.
I for one will be backing David Davis.
Subscribe to:
Posts (Atom)
