WHILST WAITING FOR THE RAIN TO STOP

I had plotted this morning to go to the Parco Cafe in Vauxhall Park to compose the next outdoor blog, but owing to rain - slightly heavier than usual - I have decided to give it a miss today; however there are still some thoughts brewing. 

There is a piece in the Guardian headed  “Apparent exodus of super-rich suggests UK is no longer billionaires’ playground”.  About two months ago there was another article  titled “Wealth tax on UK’s super-rich could raise £10bn a year, Andy Burnham told”.  In the meantime at the Conservative Party Conference, the party leader is touting major tax cuts  including a plan to cut inheritance tax, as well as trimming the welfare budget. She claims that the increased productivity as a result of lower tax, will so stimulate growth that it will generate more Government revenue to cover the cost of the cuts.  I am not quite sure I understand the logic. If you cut income and expenditure it is believed you will increase your income? Is it that the lower tax on the increased productivity will  be greater than the tax received from the previous productivity at the higher rate? If that is the formula, then why is it necessary to cut welfare as well? 

In the piece about the super rich leaving the UK, there are a couple of quotes from multimillionaire Dale Vince: 

Dale Vince said ultra-wealthy individuals need to “stop whingeing”. He confirmed he will be     staying in the UK, and added: “The tax system is already skewed in favour of rich people. We have so many allowances, loopholes and exemptions.”
“It’s pathetic. Sit Jim Ratcliffe and anyone else who leaves here to not pay tax should be stripped of their honours” Dale Vince.

Dale Vince

Here is another quote from financier Ben Goldsmith:

“If I want to organise a gathering now, I have to take into account a lot of my friends are not here any more,” said the financier Ben Goldsmith. “How the hell are we supposed to pay for health services and everything if we are driving out the highest rate taxpayers?”

So there appears to be a clear divide between some of the very rich about the payment of taxes. It seems to me, and no doubt Mr Vince, that if one has assets in excess of £1bn (which at the very minimum just sitting in the bank would produce £10 million per annum) tax of even 90% on that income would leave one with a million pounds per annum. That’s about £5,000 per day on which to make do for the rest of our life. The reality is that in effect billionaires have such wealth at their disposal, that under taxation in any country across the world, £5000 a day is pocket change.  The disparity between certain individuals assets and the ‘ordinary’ citizen can be likened to the grand canyon. Yes, rich people spend a lot of money, and some are instrumental in employing lots of people, and they sometimes take financial risks, but they do so because they can regardless of the tax burden. Money tends to make money. There is no trick to making lots of money if you’ve got lots of money, and all you want to do is make lots of money. As Dale Vince says “stop whingeing”. 

As an adjunct to considerations of wealth, October is the season of party conferences. The various paid up members and grandees of the various political parties find a suitable sea-side venue and get together to reflect and dash out manifestos and proposals about how to sell their ideas of government to the electorate. Overall policies are put forward, priorities discussed and solutions are proposed as to how to make things better and in what order. An overall vision and direction for the nation is submitted for consideration by the electorate as whole. 

As mentioned above, the Conservative Party keeps harping on about lower taxes to stimulate growth in the economy. I do not see that the mere fact of lowering taxes induces people to become more productive, or is it perhaps the idea that if people have a bit more cash in hand they will spend more, and by spending more the economy will grow? This idea that putting a couple of pounds extra on a pay cheque will induce people to spend much more money so as to increase business sales is pure fantasy. The extra two pounds won’t even pay for half a pint of beer in the pub or a box a cereal, or a pad of butter,  or a couple of pieces of chicken at a supermarket. It barely pays for a litre of petrol and certainly not a litre of diesel.  As to the extra income on sales for businesses, should there actually be any, the profits supposedly meant to be reinvested to create further growth is a myth. Any extra profits in pubs and supermarkets will clearly be pocketed by the pub landlords and shareholders. Trickle down economics has long been discredited. 

On the other hand what will benefit growth is substantial house building. Getting people into homes and easing the possibilities of obtaining and securing ownership or tenancies, is essential. One million homes is one million fridges, one million washing machines and dishwashers, air fryers, pot and pans, several million plates, cutlery, beds, carpets, sinks, loos, curtains, sofas, wardrobes, etc etc. plus growing families, more school places, textbooks, teachers plus all the clothes they wear. One can go on and on with what is attached to and emanates from the places we live. Giving people a couple of quid isn’t going to cut it. Investing in housing and people will increase growth, employment and everything else that goes with it. Sticking to fiscal rules is bullshit. You have to create the wealth first in order to be able to afford to stick to fiscal rules.  Stability and a balanced budget is a nonsense if you’ve got no budget to balance.

As you can gather, I am not an economists. Perhaps what little logic I have is flawed but I believe housing is pretty much a baseline from which to predict growth of any kind.  Political parties are after all made up from people who have come together because they share a more or less common point of view as to how a government should be run. People generally pick up their political views from within their families. Those views may be very similar to their parents views or indeed in complete opposition, depending upon their experiences and education growing up.  The ideas and social consciousness we acquire as we develop is clearly very much influenced by those we are attracted to and those with whom we form friendships and with whom we become intimate. Of course that does not prevent us from being friends with and close to those who may have very different views. Open minds and human relationships can vary a great deal. We observe, particularly during the Conference season, that even within the same political party there can be very different views on policy, priorities and solutions. The current Green Party is going through a particularly unsettling and difficult decision on policy and direction, sufficiently to have caused some members to ‘consider their position’ (what a wonderful phrase) “Is it time to consider your position, Minister?” I wonder how often one has hear that in the corridors of power?

In the meantime the world seems to be in hover mode, as if waiting for something of real significance to happen. There are upcoming elections in the USA, Israel, Germany and France which may prove some sort of catalyst for something we know not yet what. Wars rumble on with no end in sight. It is perhaps the bringing of these outstanding hostilities to a close that is painstakingly expected. Hence the sense of hovering. We may all have to reconsider our position.
Hopefully back outside tomorrow.