Author Archives: David Thorpe

Why politicians should tread carefully before using Quantitative Easing to build infrastructure

At a time when politicians grapple with how to use the tools at their disposal to reduce inequality of opportunity and outcome, quantitative easing {QE) can seem like an easy option.

To those blessedly unversed in the intricacies of the monetary policy tool that has dominated more than anything else the economy of the UK since the financial crisis, QE sounds like, ‘printing money and spending it on infrastructure.’

If only it were that simple. QE is a policy of central banks to buy the bonds  issued by their own governments, the aim being to push interest rates down and drive capital into assets more likely to make the economy grow.

So the first problem with any idea of using QE to increase government spending is that, well, the government doesn’t have the power to do it, Politicians can issue the bonds, the Bank of England can choose not to buy them, and the Bank of England is independent of government. 

Posted in News | Tagged | 6 Comments

Corbyn’s pay cap plan boosts the rich, not the poor

As usually happens when hard line Socialist utopias are created, Jeremy Corbyn’s maximum pay plan would help the rich not the poor.

That is because when employees reach the maximum, other ways would be found to reward them which would increase inequality and reduce the tax take from the rich.

In Soviet Russia access to the splendour of the Bolshoi Ballet was a perk for the wealthy. The poor weren’t helped, and no tax was collected on the perk.

So it would be if Corbyn got his way.  Employers would pay bonuses, perhaps in shares or profit share, when they can’t pay extra cash. The thing is, shares or profit shares, when sold, are liable to Capital Gains Tax, not Income Tax as wages are, and the capital gains tax rate is lower than the income tax rate above £140,000. 

Posted in Op-eds | Tagged , and | 23 Comments

What if productivity statistics are not truly telling the tale?

In the Autumn Statement, Philip Hammond spoke at length about the productivity crisis in the UK, and how he intends to address it.

And doubtless, the creation of higher skilled jobs, of better broadband, of better trains, will all make it easier for UK workers to do more, benefitting the workers and the economy alike.

But what if the productivity statistics are wrong?

Although they hardly belong to the same generation as me, I have three friends or acquaintances who have yet to reach retirement age, but have pension provisions sufficiently large that they are not seeking employment, nor do they claim unemployment benefit.

The government has such folk as a zero in the productivity number, they don’t appear in the unemployment data, nor in the wage data.

Posted in Op-eds | 7 Comments

Responding to the anti-globalisation backlash

Ever lost a lover and then spent hours replaying the whole of the time you had together back in your mind?

If you engage in such reflection it’s often possible to see with hindsight where the cracks started to appear, and the happiness shunted to a road leading to subsequent despair.

Liberals have been shell shocked by a 2016 that has produced a slew of political upsets, and created a stew of uncertainties about the prospects for a progressive future.

The elevation of Donald Trump to the White House is merely the latest in a long line of upsets that have confounded the pundits.

Posted in Op-eds | 60 Comments

With his Trident stance Corbyn shows himself to be no fan of ‘new politics’

Few words stir the heart of the politically interested than ‘a new politics’, and quite right too, for who on earth wants the status quo?

But the utterer of that rather normative phrase is immediately pitched a political challenge, to keep on board those who are the bedrock of their support, while also delivering something challenging enough to be new.

Jeremy Corbyn is a man with far less personal ambition than he has integrity and honour, and that may be ‘new’ for a politician in the UK right now, but it is not enough to qualify as ‘new politics’.

Posted in Op-eds | Tagged and | 13 Comments

The economic case is limited, but liberals should support Sunday trading anyway

 

As the years of my youth sweep by me, increasingly I am drawn towards the comfort blanket of nostalgia, but when it comes to public policy making, such vanities must be cast aside and answers framed by the chill of the contemporary, and the pragmatic must instead rule the roost.

It is this increase reluctance to fight the dying of the light and instead embrace maturity that has caused me to pause, and embrace the idea of Sunday trading.

For personal and professional reasons I tend to view all policy decisions though the prism of their economic efficacy , rather than the madrigal of sentimentality that sometimes frames Liberal Democrat policy making.

But despite there being negligible economic advantage to the UK from a relaxation of the Sunday trading laws, I believe the Liberal approach is to favour a change in the law.

Posted in Op-eds | Tagged | 61 Comments

The economic consequences of tuition fees 

 

Volumes have been written on this site and elsewhere about the political, moral and social impacts of the coalition government increasing tuition fees in the last parliament.

I do not propose to rekindle that debate, but rather to examine the emerging, and potentially very long-term economic consequences of tuition fees.

Whilst the UK economic recovery started to gain a genuine depth, public policy makers and private sector market participants alike commented on both the narrowness of the recovery (the rate of growth being pedestrian for an economy exiting recession), the lack of wage growth, the subdued level of capital investment and lack of productivity growth.

Some of those metrics, notably wages, have shown improvement more recently, whilst demographic changes and the impact of quantitative easing on asset prices carry much of the blame for some of the other structural ills that have haunted this economic recovery.

But it is the contention of this article that the tuition fee rise has had a direct impact on the progress of the UK economy in recent years and will continue to do so in two distinct ways.

Posted in Op-eds | Tagged and | 86 Comments
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Recent Comments

  • User AvatarGlenn 25th Mar - 1:20am
    Roland; I misunderstood you chap. I don't agree. Germany, France and even Italy all had and have stronger trade unions. Unions have not been that...
  • User AvatarCllr Mark Wright 25th Mar - 12:25am
    "The second problem is that the Bank of England itself takes the view that Quantitative Easing is regressive, because it pushes asset prices upwards, and...
  • User AvatarKatharine Pindar 25th Mar - 12:24am
    Dear Rebecca, As I was a Politics student and Union of Liberal Students member at Leeds University in 1966 I read your article with delight,...
  • User AvatarLorenzo Cherin 24th Mar - 11:23pm
    The article is overblown, the responses almost measured in comparison. The policy is a compromise. Yes those to the left of Ho Chi Min and...
  • User AvatarRoland 24th Mar - 10:23pm
    @Glenn - The trouble is that 'business' also includes the workers. Remember just how many of trade union call to arms has been about the...
  • User AvatarDavid Raw 24th Mar - 10:23pm
    @ Richard Underhill Yes, indeed. In fact why have a party at all ? It only causes vexation .