When all you have is a hammer, every problem looks like a nail

Problem: Smoking is bad for your health.
Solution: Put a tax on it.

Problem: We need to increase availability of broadband.
Solution: Put a tax on it.

“Government plans for a 50p-a-month tax on households to fund super-fast broadband across the country have been criticised by an influential group of MPs,” says a report on Sky News, and quite right too.

The instinct of this government is to tax, however clumsy or counter-productive it might be. If the government wants to encourage virtuous activity, they should give businesses an incentive to do it.


I have to edit this and add the latest piece of insanity from this government. With a recession still ongoing and jobs, you would think, being a top priority, this government wants to increase the tax on jobs that is National Insurance. Not only will workers take home less pay, but employers will pay more too. So:

Problem: Low employment
Solution: Increase the tax on jobs

Fantasy Government and Fantasy Finance

We have elected an incompetent government that has presided over an ever growing culture of lies and greed. They have allowed lobbyists and special interests to influence policies for the price of an agreeable lunch and a few favourable headlines. Spin and deceit have replaced honesty and open government. And without giving it any serious thought, people are saying capitalism has failed. This has nothing to do with capitalism. It has no more to do with capitalism than the USSR had anything to do with socialism. The same people also say these financial institutions are the wealth creating sector of the economy. No they aren’t. The real wealth creators are the factories and the people who make things, and those who distribute and supply them.

By what twisted logic does it make economic sense to close profitable factories which give gainful employment to thousands, send those jobs overseas, knock down the factories and build houses in their place to sell at inflated prices to the now unemployed workers? If ever there was a formula for creating a sub-prime mortgage crisis, that has to be it. And that, in essence, and on a colossal scale, is what has been going on for years with the complicity of the government and all its regulators. Now, the institutions responsible for this merry-go-round of economic madness are clamouring for taxpayer aid from the government and blaming everyone but themselves for the mess. We have for too long rewarded failure, now we will pay the price.

More than two decades ago ICL, Britain’s last major computer manufacturer, had trucks ferrying unsold computers from one depot to another in a desperate attempt to give the impression of activity and mask how close they were to collapse. It didn’t work, but it’s uncannily similar to how some financial institutions have behaved in recent years. Smoke and mirrors; sleight of hand; cryptically-named financial products. Banks everywhere competed with each other to build the biggest market share in worthless investments, often having no idea what they were buying. Why did they do it? Because they paid themselves huge bonuses for doing so. Lehman Brothers, for example, paid out a staggering $9.5 billion in “bonuses” only nine months ago.

It’s hard to accept the term “bonus” as a fair description of the money they have looted, especially as in the case of Lehman Brothers it must have been crystal clear to those at the top the payments were entirely unwarranted and potentially fatal to the business. But such was their greed, they went ahead anyway. This is nothing to do with capitalism, or free market economics, it is the inevitable consequence of a corrupted financial system, plain and simple. President Nixon once famously declared, “I am not a crook.” I would like to see the leaders of the remaining great financial institutions say the same thing. And I want them to prove it because frankly I have no confidence in the regulators to investigate and prosecute wrong doing.

Who set the framework in which the institutions and the regulators operate? Step forward Gordon Brown, he was at the helm at the Treasury for a decade, making all the rules. Of course, he didn’t do it alone, thanks to “revolving doors” he had City people come and work at the Treasury where they shaped government policy before returning to the City to exploit the newly relaxed standards they helped bring about. Now as Prime Minister it is evident for all to see how completely incapable Brown is of leadership. Yet to listen to the government, their track record would seem to be above reproach. But the fact is, this government lives by deceit. It spins, it lies, and it has no shame because it lives in a fantasy world where it makes its own reality.

We need to go back before the second Gulf War for a measure of how venal this government is. Britain and America went to the court of world opinion and lied on oath. There were no weapons of mass destruction, there was no connection between Saddam and al Q’aeda. The phials of biological weapons, the drawings of mobile chemical labs, the intelligence documents reporting shipments of Yellow Cake from north Africa, they were all fake and Bush and Blair knew it. So instead of confronting the real terrorists, we have spent billions of dollars and pounds and laid down thousands of lives fighting the wrong war in the wrong place. However, it has been to the personal enrichment of many of those best connected with both governments.

Simply put, democracy has failed. This is not the failure of capitalism or of free market economics. It is our collective failure as voters to hold to account governments that lie and deceive, that allow lobbyists and special interests to overrule our interests. What goes on in Washington and Downing Street is a travesty for government. What goes on in Wall Street or the City of London is a travesty for an economy. Both should be working for the common good, not self-preservation and self-enrichment. We need change. We cannot be apathetic the next time we have an opportunity to vote, we must seize that opportunity and put an end to the politics of spin and the economics of greed. We must have honesty and open government.

Joined-up thinking by Labour and the Conservatives

Two relatively minor news items today offer an insight into the approach of the two main parties.

Labour have announced they want to give every woman a £120 cash bonus for getting pregnant. How will that help deal with the problem of unwanted pregnancies? Now we’re going to pay them to have babies? The fact that the cash is intended to be used to buy fresh fruit is risible and shows complete ignorance of the demands of modern life. £120 will buy a very nice iPod, thank you.

The Conservatives, on the other hand, want to impose car parking charges at out-of-town supermarkets. They claim this will allow councils to subsidise local bus services. But as with the young mothers, once they have their hands on the money who knows what the councils will choose to spend it on. It certainly won’t be on subsidised bus services.

Labour has always wanted to hand out taxpayers’ money, and the Tories always used to want to reduce taxation. Now they are keen to impose a tax on parking at supermarkets, something that will hit almost every voter in the pocket, and something that will not go unnoticed by those voters.

The irony is, these two policies would effectively cancel each other out. With many hospitals already charging for parking, a pregnant woman could easily spend £120 in parking fees in just six months with supermarket parking charges on top. That would leave nothing for the fresh fruit, if that was what she was wanted to spend it on in the first place. Did the two parties collude over this?