While some of us were melting in the Friends Meeting House in Manchester at the Social Liberal Forum conference on Saturday morning, Stephen Tall was telling us about the leadership’s motion on the economy to be discussed at our Glasgow Conference in two months’ time.
It’s to be noted that the biggest cheers of the day came when Vince Cable was talking about the need to differentiate from the Conservatives, calling George Osborne’s declaration that there should be no more tax rises in a new Conservative Government “cavalier and “ideological.”
Co-chair Gareth Epps was also applauded when he said that Liberal Democrats should not go into the election defending and pledging to continue Osbornomics.
With that in mind, Social Liberal Forum have published their response to the economy motion on their website. They say:
… While Nick Clegg and Danny Alexander’s motion contains a number of positive messages and policies, it paints an overly-optimistic picture at a time when living standards continue to fall and recovery is fragile and unbalanced.
In Manchester, we heard a very clear message from our members: that the Liberal Democrats must bring forward a coherent alternative to George Osborne’s economic strategy. Since the formation of the Coalition Government in 2010 the SLF has consistently stated that the Liberal Democrats must maintain independence as a political party, and develop policies that are distinctive, radical and progressive.
While it is indeed important to highlight Liberal Democrat achievements in government, our 2015 Manifesto must look forward and not be bound by the previous Parliament in its scope. George Osborne’s dogmatic approach to reducing the deficit distorts economic recovery by curbing the ambition of the very policies promoted in the motion to be debated in Glasgow. Hence the Lib Dems must not endorse this particular approach to fiscal policy, a compromise made for the purposes of this coalition, as Party policy for the next election. The only party going into that election defending Osbornomics should be the Conservative Party.
In the coming weeks we will be listening to Party members, as we hope the movers of the motion will too, on this important debate. It is crucial that Liberal Democrats demonstrate we are capable of independent thought – the future of our Party, not to mention the British economy, depends on it.
The SLF are owed quite a lot. Last year, a very credible amendment was rejected by Federal Conference Committee in favour of one that was easier to defeat from Liberal Left. In Spring, an SLF Emergency Motion was not selected for debate despite coming second in the ballot. Yes, conference representatives had been warned that FCC had decided it would take both emergency motion slots, but Conference only narrowly defeated a call to suspend standing orders to overturn that decision.
Do we want to go into the election with an economic policy that we can all happily promote, or do we not? I’ve said on occasions too numerous to mention that the leadership needs to engage constructively with members and activists. It would be good if the next two months were spent in constructive debate to build a policy we can all feel happy with.
* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings
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43 Comments
I don’t see how it is liberal to extort money and assets from people with tax rates that people find unfair and uncomfortable.
What exactly is Osbornomics?
Eliminate a deficit in 5-7 years = Osbornomics; 8 years = Ballsomics?
Anyway, even if FPC don’t accept your amendment, it would be worth debating it on Lib Dem Voice. Any chance of a preview? I’m guessing
-Mansion Tax as a net tax increase rather than balancing tax cuts for low/middle earners?
-More borrowing for capital spending? Probably a good idea, but perhaps too late to help us out of this recession by 2015/16 plus however long it takes to get projects going.
I think this sentence needs some more explanation: “George Osborne’s dogmatic approach to reducing the deficit distorts economic recovery by curbing the ambition of the very policies promoted in the motion to be debated in Glasgow. Hence the Lib Dems must not endorse this particular approach to fiscal policy, a compromise made for the purposes of this coalition, as Party policy for the next election.” I understand the sentiment, but all fiscal policy is a compromise between present demands and future debt. That’s not a point of difference between Osborne, Cable, Darling, etc: any difference lies in where you strike that compromise.
If the point is not to be dogmatic, I think we can probably all agree. If the point is to have a policy different to the Tories – well yes that will be hard to avoid. But I don’t really see how deficit reduction in 5, moving to 7 years is dogmatic, and, presumably, 8 years is not. That’s just striking the balance in a different place.
“the biggest cheers of the day came when Vince Cable was talking about the need to differentiate from the Conservatives, calling George Osborne’s declaration that there should be no more tax rises in a new Conservative Government “cavalier and “ideological.”
Why? Does Vince believe the electorate is ready to turn around and say;
“yeah, we were okay with taxation at circa 38% of GDP for a generation, but now the crisis has forced it up to 42% we’ve decided we quite like it, and really quite fancy bumping it up another 4% or thereabouts!”
Lord Greaves is entirely right when he said that, if we pass the Clegg motion as currently set out, then the consequence of that-of basically supporting Osbornomics-is that the Tories will go into the 2015 General Election with Tory policies, Labour will go into it with Labour policies, and the Lib Dems will go into it with Coalition policies.
This is simply unacceptable.
Vince Cable was entirely right, on Saturday, at SLF Conference, to call for us to have a different economic strategy to that of the Tories, indeed an anti-Tory economic strategy.
He got huge cheers for it. The leadership and Ministers must listen to what the membership-the majority of whom remain centre-left progressive social liberals -is saying.
And quickly!
In theory Osbornomics is about eliminating the deficit in 5 years, but in practice it is unlikely to get the growth needed in order to do so, which is one reason why it should be opposed.
I know that there are signs of growth at this moment in time, generated by a bubble in the housing market timed to get the Tories elected in 2015 and then whoever does win will have to pick up the pieces afterwards.
There has been a lot of hot air about capital expenditure including from Lib Dem ministers. It is right that it happens whenever they get started but of course it would have been better if they started at the earliest opportunity, such as May 2010.It may be too late for the Coalition in 2015, but that is not the fault of the SLF who have consistently argued for this.
We are borrowing £500bn over 5 years. Surely that is enough of a Keynsian stimulus even for the SLF.
@ jebedefix are you serious??? Vince speaks to real people as do other political activists and he, like us, isn’t assailed by the electorate about the %GDP.
Actually Osbornomics is about meanness of spirit derived from a nasty politician for a nasty electorate 70% of whom still want more cuts in income from the poorest in our society. Did I also read that Nick Clegg claims to be in tune with the electorate?
I think we are missing a pressing issue here by focusing yet again on fairly slender differences in fiscal policy between us all. It deflects attention from a) the much more important issue of monetary policy and b) the approach to the operation of the Coalition by the Leadership – the continuing Rose Garden tendency.
The Liberal Reform motion – as I wrote here last week: https://www.libdemvoice.org/opinion-increasing-spending-on-british-stuff-35222.html included the call for “6. The effectiveness of monetary policy to be improved by:
a) Changing the Bank of England’s remit from an inflation target to a nominal GDP target for a fixed period.
I support this policy, have believed it appropriate for a number of years, have argued for it consistently here (for most part as a lone voice) and, despite signs of improved growth in Nominal Gross Domestic Product , believe that its adoption in the UK would support and enable continuing recovery in NGDP (the demand for British stuff).
It may be that the new Governor of the Bank of England shares this belief in NGDP level targeting at least for the present situation that the UK continues to find itself in. [For nerds he wrote this excellent review of options for his previous employer the Bank of Canada in December 2012 (http://www.bankofcanada.ca/2012/12/publications/speeches/guidance/ ) We shall know more when the bank publishes a review in August.]
The Leadership motion however echoes the recent Budget decision calling
“(to) monitor closely the progress of the Bank of England against its refocused mandate in order to ensure that monetary policy is focused on aiding growth”.
It could actually be that the Leadership is satisfied with this refocused mandate. But sources tell me that there IS support for an NGDP targeting mandate BUT the Leadership’s advisers think that to campaign for this runs the risk of making it “too political” for Carney. (How many times have you heard your chief executive use the same argument for not implementing a Lib Dem policy!!!)
Let us for a moment assume that this IS the case. This means that Liberal Democrat monetary policy is being determined not by what we believe is right and best for the country, but by the timid belief that it is more likely to become policy – via the Bank of England (through its Monetary Policy Committee) rather than because we campaign energetically and openly for it.
I don’t for a minute accept this argument. I believe that the MPC memebers (and the Governor – old and new) does what they are mandated to do by the Chancellor (i.e. by the Quad). They look for that lead. They want that lead.
Political achievement is about the use of power, when you have it.
Somehow, Conference needs to give the Leadership some backbone. Dividing over fiscal policy won’t do that. In terms of Conference management perhaps it requires some canny wording that does not expose the continuing inability of the Leadership to get its administrative tactics right. A good suggestion given to me would be for Conference to call on the party to seek to build a consensus around NGDP targeting”. Good idea.
[And just to prove my status as contrarian, may I add that Simon is wrong and the IMF and others are right – we do have a policy of fiscal austerity at the moment BUT the US has a similar level of fiscal contraction. However, because the US has a policy close to NGDP targeting (the Evans Rule) that fiscal contraction is in no way holding back its recovery.]
Simon – I am not a supporter of crude Keynesianism, which can be measured by volume of borrowing in a set period of time. Indeed, Keynes himself wasn’t! I am with economists like Roberto Unger in rejecting the vulgar interpretation of Keynes as simply borrowing more for the sake of it, so please acknowledge that.
Joe – the point is that any set timetable that is insensitive to wider economic conditions that people care about distorts decisions on taxation and spending. You suggest that fiscal policy is a compromise between present demands and future debt, but you ignore key aspects – like private consumption/savings and corporate surpluses. Until such a time that private business invests some of its rather sizeable cash surplus – and I mean invests, not spends on share buybacks etc – there will remain a budget deficit. See Chris Dillow’s blogging on this. You also ignore the rubbishness of monetary policy – see Wren-Lewis and/or Britmous on why nGDP targeting would help fiscal policy and structural economic reforms be more effective.
So the idea isn’t “delay timetable for deficit reduction by a year or two,” which is the Darling/Balls plan – please do not mis-characterise my arguments, or those made by SLF, or any other respectable economist from Portes to Hutton to Wren-Lewis etc, as simply taking longer to do the same thing. It is more about doing the things necessary to fix the real problems in the economy whilst ensuring the deficit comes down in a manner consistent with real economic rebalancing and recovery.
On the point of what is Osbornomics, it is precisely as you say – the focus is on eliminating the deficit above all else as an end in itself. To George, economic success would mean balancing the Treasury’s books, virtually at any cost. I am yet to hear a convincing argument why it is liberal to insist on balanced budgets at a set date in the future if that arises at the expense of real social and economic outcomes, which is why I reject Osbornomics.
A social liberal approach to the economy – and, I would argue, a Liberal Democrat approach – is to bring about a balanced economy, which means innovation, investment, near-full employment and rising living standards – all underpinned by, and contributing to, healthy public finances.
back to the day-job 🙂
Of course it does not help when those who write speeches, briefings and letters for the Leader use just this crass terminology that Prateek rightly identifies with Osborne and Tory economic : “We need to balance the books …”
Eddie Sammon
I don’t see how it is liberal to extort money and assets from people with tax rates that people find unfair and uncomfortable
But they also find unfair and uncomfortable the cuts in services necessary for those tax rates not to be even higher.
Yours is Daily Mail politics. Look through a typical edition of the Daily Mail and what do you see? Moans about high tax rates, and “Why, oh why?” comment to which the answer is usually “Because you would moan like anything at the tax that would need to be raised to pay for it” or “It’s a consequence of the dog-eat-dog economics which you have heavily promoted”.
Your comment here is the mirror image of that of the silly left. They go on and on moaning about how bad service cuts are and how evil the government and local councils are for implementing them, without any mention of how all these things need to be paid for by taxing something. You and your like go on and on about high tax rates, without any mention of what the tax is used to pay for.
We need a serious national discussion on these issues, and we are not getting it due to the silly left and silly right.
The silly left is often criticised, rightly, for hand-waving gestures when it is pushed as to how it would raise the taxes to pay for what it wants, generally on the lines that there’s some rich people somewhere who can be taxed more and hardly anyone would notice. The silly right, if pushed, often raises expenditure which is tiny as a proportion of total state expenditure, and makes gestures as if cutting just that would save all the money needed for the tax cuts they want, when any bit of serious budget analysis would show that is nonsense.
Simon McGrath
We are borrowing £500bn over 5 years. Surely that is enough of a Keynsian stimulus even for the SLF.
No. I don’t think it is Keynesian politics to say that ANY borrowing is good.
We have now had decades of this – the idea “private sector good, public sector bad”, so cuts should be made in government services in order to allow tax cuts and the private sector to flourish. We had it under the Tories from 1979, and the New Labour government largely followed the same line. You point out the £500bn borrowing and suggest these policies haven’t worked so we need to pursue them to an even more extreme level. I think the £500 billion borrowing suggests thee policies haven’t worked in the way their supporters told us they should work, therefore we need to be far more critical of their ideology.
What has become very obvious to me is that all the effort to try and reduce state expenditure has caused misery and destruction which has resulted in forced state expenditure elsewhere. Make government cuts, throw out these bloated public sector workers, and what happens? You end out paying more in welfare support money for unemployed people, you don’t collect income tax from them, you have various consequent social problems resulting in more costs, and you end up saving very little government expenditure, or even having the net effect of increasing it.
We have not taken into account the way increased lifespans and much more we can do medically (at a cost) to keep people alive has a huge consequence on public expenditure. They are the biggest reason why if you want to keep a steady level of public services, you need to have a steady increase in tax. Or, if people won’t accept that, then instead a decrease in state support for the elderly, and an end to medical care paid for through the NHS.
Of course, we have already had this with university tuition fees. People wouldn’t accept the tax rises necessary to keep university education subsidised as it was. So instead we have had to make the students pay for it. Though what has actually been done isn’t much different from what would otherwise have been done – the state has borrowed money, and will repay it by extorting it from future generations. But it has been cunningly disguised so that it isn’t counted as state borrowing.
Higher spending on education comes about because we have a more complex society, resulting in people needing on average more education before they become economically useful. We can’t just send most people at the age of 15 out to work, as used to be the case. So either we must have more tax to pay for more education, or get those receiving the education to pay for it. Also we have a free-market economy where employers don’t want to invest much of their money into training workers, they expect the state to do it. Or, actually, other states to do it, then they can import the workers those states have educated, without having had to pay taxes to support that education. As for the British kids left unemployed, well let someone else deal with them. Which turns out to be those of us paying income tax in this country paying for misery payments.
I have not yet heard an argument that convinces me that increasing the money supply and raising inflation is a good thing. I don’t think that the UK will default on its debts and therefore they will have to be paid off eventually. When the Euro was set up, at Germany’s insistence presumably, annual deficits were set at a maximum of 3% and total debt at 60%. The problems in the Euro zone are entirely as a result of almost all countries breaking these rules, as did Gordon Brown big time.
I really hope the debate at conference doesn’t descend into a tired “austerity bad, spending good” argument (or even a more nuanced version). On the basis of the above I’m not massively confident. There is nothing distinctively liberal about a bit more capital spending here, or a slightly slower pace of cuts there, and in any event these arguments will be economically relatively unimportant by 2015.
Instead we should focus on areas where there is scope for being different, and to really make substantial changes: on housing, finance, monetary policy, trade, mutualism to name but a few.
David, this may not answer your doubts, but here’s how Nobel Laureate, Paul Krugman, satirizes the hawkish sceptical view. Let’s hope it causes you to reconsider your arguments against monetary stimulus.
“Current monetary policy is just like in the 1970s, except for the lack of inflation thing. It’s completely ineffective, which means that we must stop it immediately, or else this ineffectual policy will somehow have vastly negative effects on something or other (not clear what). But the trouble is that people think stopping it would be too costly, whereas in fact it would have no cost, as illustrated by the really bad things that just happened when the Fed indicated that it might indeed stop the policy.”
“Also, the sluggishness of the recovery somehow proves that money has been too loose.”
“I have to admit that at this point the arguments against quantitative easing have become unanswerable — because they’ve become incomprehensible, and there’s nothing to answer.”
In full here: http://krugman.blogs.nytimes.com/2013/07/12/the-monetary-debate-enter-chewbacca/
Matthew “we have a free-market economy where employers don’t want to invest much of their money into training workers, they expect the state to do it”
Extending this point – employers don’t want to spend any of “their” money on the reproduction of society, although without a society, there would be no-one to create the value that creates “their” money. So women are expected to care for children for nothing, while the state funds education, unemployment, old age pensions, health, elderly care, roads, justice, policing, general infrastructure, and so on. There’s every justification for tax on those who benefit from this, and clearly the amount required should bear heavily on those who benefit most. Not poor people on welfare, but the rich people benefitting from the state’s commitment to the reproduction of society.
Matthew I stopped reading your long post when you said “Yours is the Daily Mail politics”. My politics are nothing to do with the Daily Mail, I’ve been very respectful to you recently but you just keep trying to make out that I’m ignorant and selfish.
I agree with Thornsby :-).
Point is Nick, that if govt policy is to have a real effect on areas you mention, then on occasion it may have short-term fiscal impact. If we ditch action the economy needs because we want to adhere to a pretty arbitrary target for balancing the books, the ambition of policies to tackle real problems becomes diluted – that’s why fiscal stance matters, not because fiscal expansion in and of itself will cure all our ills.
@ BrianD – Vince speaks to real people as do other political activists and he, like us, isn’t assailed by the electorate about the %GDP.”
Let me simplify the message then to a message the lumpen proles will understand:
“I want to tax you more.”
@Jenny barnes “There’s every justification for tax on those who benefit from this, and clearly the amount required should bear heavily on those who benefit most”
Very true. You must be pleased that with the top 1% paying 28% of all income tax and the top 5% just under 50% we have this situation already.
Prateek,
I like it when we agree 🙂
I take your point in as far as you are calling for some flexibility in fiscal policy. Where I perhaps might differ is in the extent to which more spending might be necessary to achieve some of those good liberal ideas that I mention.
Housing is probably the most notable example (and I’m sure you agree with this rather technical-sounding line in the motion: “…examine urgently whether PSND could be brought into line with definitions of other EU countries so that the liabilities of trading corporations (such as council housing operations) are off balance-sheet…”). And in fact it’s a critique I’d make of the motion as it stands that it focusses just on the housing that government can in someway facilitate, whereas actually what we need is the sort of levels of private housebuilding that we saw in the 1930s, and as Nick Crofts has argued that can be linked to monetary policy.
So on housing I’d rather focus on planning and where finance is going wrong, because I think fixing those can have a bigger impact than more spending on social housing.
“What exactly is Osbornomics?
Eliminate a deficit in 5-7 years = Osbornomics; 8 years = Ballsomics?”
I think this misses the point. Osbornomics is, first and foremost, a declaration of rigidity in policy. It is “There Is No Alternative”. It is the declaration at the outset of this parliament that everything else had to be sacrificed to placate the fury of the bond markets, which were supposed to be on the verge of a collapse that would make Greece look like Switzerland. It is the use of bloodcurdling exaggeration to drive through a right-wing policy agenda, going way beyond the purely financial into social change and service privatisation.
Whatever Ballsonomics means these days – and I am not a fan – it isn’t that. Darling (of whom I’m more of a fan) didn’t just want to go a bit slower. He wanted to not panic, to not use economics as a great frightening bogyman to drive through Tory policy changes. Nowadays, you can’t vote for Darlingonomics. You can vote for Balls, if you think you know how many more twists and turns he will make before he gets to 2015.
That’s why we must be against Osbornomics. That’s the first point. All the detailed stuff, NGDP etc, matters too – but it comes second. It comes second because, (a) the voters don’t understand it, (b) the detailed arguments will change and evolve with time anyway, so we can’t nail ourselves to the mast on them, and (c) it’s the non-financial Tory agenda that our voters want to reject.
“@Jenny barnes “There’s every justification for tax on those who benefit from this, and clearly the amount required should bear heavily on those who benefit most”
Very true. You must be pleased that with the top 1% paying 28% of all income tax and the top 5% just under 50% we have this situation already.”
What Simon McGrath’s statistics mainly show is what a huge proportion of the national income is earned by the top few percent. Given that income tax rates are now pretty flat and that it is the wealthiest who are best placed to use avoidance schemes, I suspect that the top 1% earn about 28% of the national income. If they gave their surplus away to everybody else, therefore, everybody else would see their individual earnings rise by more than a quarter!
Cleopatra, Genghis Khan, Croesus, eat your hearts out, you’re a bunch of plebs compared with our British oligarchy!
@Jedi
“Does Vince believe the electorate is ready to turn around and say;
“yeah, we were okay with taxation at circa 38% of GDP for a generation, but now the crisis has forced it up to 42% we’ve decided we quite like it, and really quite fancy bumping it up another 4% or thereabouts!”’
I really don’t know where you get this idea, which you repeat a lot, that the public are even remotely aware what the tax burden is.
Back in the mid ’80s, most people in Britain were under the impression that taxes had gone down under the Tories, when the reality was that tax burdens were at their highest ever. Even I had been completely taken in by it (well, the paper in our house was the Daily Mail…), and fondly remember my astonishment when my A Level economics teacher showed me a Treasury bulletin which revealed the true picture. When he first told us that Thatcher had increased taxation, I thought he was crazy.
A quarter of a century on and the Lib Dems are trying to repeat the exact same trick, with their endless talk of a £700 “tax cut”. They obviously believe the public can be conned again, or they wouldn’t be trying it.
Let me simplify the message then to a message the lumpen proles will understand:
“I want to tax you more.”
@ Bill le Breton
Having read your article of 8th July and it is not clear until you read the posts that when you talk about Nominal Gross Domestic Product you are really talking about ‘aggregate demand’. I note that you state 4.5% growth allows 2% for inflation and 2.5% for growth. While I have no problem with this idea it has to be linked to government intervention as well or it could just result in a higher inflation level. Just using money supply might produce 1% growth and 3.5% inflation. Plus there is the problem that increasing the monetary supply recently has just helped the banks improve their capital ratios and gearing.
I would therefore support changing the Bank of England’s remit to include a nominal GPD target as a tool to stimulate demand. However maybe Bill is right and all we can seriously hope for in calling “on the party to seek to build a consensus around NGDP targeting”.
We should promise to use the EU definition of Public Sector Net Debt and scape Council borrowing limits and then promise to take action to increase house building to above historical averages.
Simon McGrath
“Very true. You must be pleased that with the top 1% paying 28% of all income tax and the top 5% just under 50% we have this situation already.”
This is very misleading. Income tax only accounts for 27% of the tax take. Add in all the other more regressive taxes and the top 10 percent pay just under a third of their income in taxes whereas the average household pays just over a third.
Almaric, may I come back later in the day to illustrate the process between declaring a level target for NGDP and the response of people in the economy.
Technically here is the link between NGDP and Aggregate Demand (AD)
MV = PY= NGDP=AD
The reaction of people and firms to the 2008 crisis (and again in 2010/11 to the stirring up of concern then) was to increase people’s demand for money to hold: I’m worried I may lose my job so I’ll rein back on spending: I’m worried my customers are going to rein back, I’ll delay that new investment etc. It shows up in the equation as a reduction in the velocity of money (V) … that is why NGDP plunged 8% in 2008. The disequilibrium takes the form of the demand for money to hold is GREATER than the supply of money.
If a central bank/chancellor declares at that point that they will increase the money supply until NGDP is rerstored to trend levels and is CONVINCING, the reverse takes place. Firms have the confidence that people will be spending again and gear up. The demand for money to hold falls. Money is like a hot potato. As soon as you have it you spend/invest it. NGDP growth rises. This uses the spare capacity in the economy.
The proportion of the NGDP that is the price level returns to the long term trend (2%) and no more provided everyopne remains convinced that the central bank/chancellor will raise interest rates if the target rate of growth is exceeded or seems as if it will be exceeded. Why spend/invest if rates are going to rise and make that decision an error?
We must find a way of articulating economic policy which is un derstandable to ordinary people. I like the approach of people like Bill le Breton and wish that other centre-left experts in the party had the opportunity to engage properly with our leaders, but I get lost in the detail. I just about understand that we need a policy which deals with government deficit, takes account of market forces and uses taxes, cuts in government daily expenditure and, importantly, investment in capital projects for economic growth to set us on a long-term sustainable path.
We must also go for policies which are fairer to the less well off; where has our principle of redistribution of wealth gone ? My basic assumption is that after what happened previously, we must all tighten our belts, but those at or near the bottom should not have to bear so much and the rich should suffer even more.
Vince at the SLF conference pointed out that in his SW London constituency there is still much affluence (apart from a few tiny pockets) but across much of the north of the country it is obvious we are in recession. This shows that our coalition has not got it right and ALL our leaders and MPs should be saying that.. Nick’s rose garden sounds are betraying our principles and saying to the public that we have lost our identity.
Vince also said that our ministers are surrounded by large numbers of ideologically driven conservatives; that I found to be a clarion-call for Nick to be shouting that we are ideologically different from the conservatives, are not happy with Osbourne’s economic policy and look forward to putting to the electorate something quite different. If Nick is not prepared to do that we should campaign to get him removed.
Eddie Sammon
Matthew I stopped reading your long post when you said “Yours is the Daily Mail politics”. My politics are nothing to do with the Daily Mail, I’ve been very respectful to you recently but you just keep trying to make out that I’m ignorant and selfish.
I have given my reasoning. If you have no reply, then it just proves my point.
@ Bill le Breton
I am not convinced that if a central bank declares it will increase money supply (M), velocity (V) will also increase because people do not make decisions with regard to the money supply they make them because of concerns about the economy and confidence. I am not sure that even businesses would invest if money supply grew they would still base their decisions on confidence. Also even if velocity did increase I am not sure it would be a good thing as it may just mean an increase in price level (P) rather than aggregate output (Y).
I can accept that velocity will decrease with an increase of interest rates. However I haven’t seen any evidence that price level has a trend to be 2%.
Matthew I agree with you that there is such a thing as the silly left and the silly right, which is why I joined the Lib Dems!
I resorted to “the silly left” argument because I think the country is at the stage where increasing taxes to the level that the Social Liberal Forum wishes would amount to sillyness. I have reasons to back this up but I don’t want to open a can of worms on the right amount to tax the rich.
I’m not against radical innovation! Just ill-thought out spiteful policies that wouldn’t do any good.
PS, Matthew in fact I’m not even against ill thought out policies because no-one should be afraid of suggesting ideas, it’s just the hatred wing of the party that wants to divide the public into good and bad that I can’t stand.
Eddie Sammon – what ‘silly’ and ‘spiteful’ level of taxes are you saying SLF has recommended?
Or are you merely making a sweeping generalisation without evidence?
Gareth, I could list a whole host of tax increases that members of the Social Liberal Forum and MPs who are popular among the Social Liberal Forum have suggested. There is nothing wrong with sweeping generalisations, I don’t have to provide academic references every time I make a comment.
Regards
Oh I give in, here’s some examples Gareth, considering you are co-chair:
Who came up with the idea of taxing dividends and capital gains at the same rate of income, even though they have already been subject to corporation tax?
Tim Farron wants the 50% tax plus a mansion tax
I’m sure you guys support the 7% stamp duty rate, I doubt it was the Orange Bookers who wanted it.
You wouldn’t have reduced corporation tax to 20%.
You see, when you add it all up, higher corporation tax, higher dividends tax, higher capital gains tax, wealth taxes, VAT, carbon taxes, stamp and transaction taxes, it becomes very high indeed.
If I’m more successful and I sell financial advice in the future for an hourly fee, I will have to pay VAT at 20%, then costs including regulatory fees and national insurance (albeit I could claim VAT back on supplies), then corporation tax at 20% and then dividend tax at 31.1%, it just becomes impossible to make money and I know the total tax is less than the sum of the parts because of the way it is calculated but it is still high.
Not to mention the government have launched a free financial advice service that is paid for by financial advisers, and the Social Liberal Forum want to make our plight worse. But you probably aren’t bothered about that because you are all into the class warfare where the rich don’t pay any tax.
If the above doesn’t apply to you then it certainly does to far too many other people in the party.
Also, what’s with the distinction between entrepreneurs and shareholders? All shareholders should be taxed the same, it’s not fair to say “entrepreneurs” pay all the taxes whilst “shareholders” only pay the dividends and the corporation tax. All shareholders pay all the taxes on economic activity and then potentially wealth afterwards. It’s not more righteous to be an entrepreneur than a shareholder, and I’m supposedly an “entrepreneur”.
Yes you are getting the blame for all the anti business policies because the Social Liberal Forum represent the left of the party.
Eddie Sammon
I resorted to “the silly left” argument because I think the country is at the stage where increasing taxes to the level that the Social Liberal Forum wishes would amount to sillyness.
The silly left goes on about public expenditure without giving a thought to where the money for it comes from.
The silly right goes on about taxation without giving a thought to what the money is being used for.
Your comment to which I responded fell in the latter category.
Eddie Sammon
I resorted to “the silly left” argument because I think the country is at the stage where increasing taxes to the level that the Social Liberal Forum wishes would amount to sillyness
Now, I have explained in detail that there are reasons why public expenditure is rising, in particular the rapid growth in lifespan. If we wish to keep the sort of pension level and health care we provide at a steady state, we will need to increase taxation to pay for it. The increase in taxation will not, however, give any improvements to services. Neither the silly left nor the silly right are honest about this. The silly left always suppose there are some rich people somewhere else who could be taxed to pay for it, so no-one else would notice. The silly right supposes that the tax rises are just due to bureaucracy and left-wing attitudes, and refuses to acknowledge the real reasons.
If its silly to raise taxes, fine, but then we need to acknowledge we can no longer have things we took for granted in the past, such as a tax-funded National Health Service. If that is your position, to escape charges of sillyness, you should be honest and acknowledge it.
Of course, even if it is not paid for out of tax, it still has to be paid for. Either that, or people die of things that are curable.
Matthew, I now understand your silly left and silly right definitions more. I would be in favour of introducing a net-wealth tax but only if it coincides with a reduction in other taxes. The revenue from the net-wealth tax can be greater than the reduction in other taxes, but I think we need to show that we don’t just want to perpetually increase taxes.
I think replacing a net-wealth tax with reductions in other taxes would be good for social mobility. However I think it is important to show that we do not believe in high income taxes plus wealth taxes. Talk about a 50% income tax (52% once NI is included) plus stamp duty, plus a mansion tax seems too much of a burden in my mind.
I also understand how the tax question is related to things such as increasing expectancy, so we need to sure we can deal with a broad range of concerns and not be afraid to look at the costs of some kinds things such as low skilled immigration, just because people will say we are trying to villainise immigrants, when we are not.
Eddie Sammon – please do not try and ascribe a serious of diffuse tax initiatives, some of which we do not support, some of which are existing Party policy, some of which SLF has never even discussed – as being endorsed by an organisation. It is simply dishonest.