British Election Headlines

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The UK is currently enduring the general election campaigns of its political parties prior to the vote on May 7th. Needless to say this is provoking the usual raft of daily daft headlines where the balloted buffoons attempt to outdo each other in promising us endless rounds of goodies paid for with our own money. This is exacerbated by the fact that the total lack of fundamental ideological difference between the main contenders makes a hung parliament the most likely result. This essay comments on a number of them that have appeared over the past few weeks.

Healthcare

“We’ll find £8bn more for the NHS!” (Conservative)

£8bn makes for a pretty fantastic headline. Unfortunately the only thing that the NHS will be nursing with it is itself, as this crippled corner of the welfare state experiences spiralling costs which claim an increasing proportionate share of the UK’s GDP and whose waiting times for operations have hit a seven year high this month.

Taxes

“End the non-dom status!” (Labour)

This refers to the non-domiciled tax status where certain foreign UK residents can exclude their non-UK income from their tax liability. The allowance is seen to be a bone of contention among the less well-off British public who had the misfortune to be born in the UK and hence have to pay tax on all of their worldly income. Needless to say, creating “tax fairness” is about increasing the taxes of the rich instead of just cutting them for everyone else. Talking of tax loopholes…

“Labour will raise an extra £7.5bn a year through closing tax loopholes and imposing bigger fines on tax avoiders”

Politicians seem to be promising endlessly to “close tax loopholes” in order to either increase revenue or induce tax equality. By their own standards, we have to wonder what is taking them so long to do this. Aren’t we going to run out of loopholes at some point? Or maybe if you set up a compulsory monopoly of violence the wealthy will always have the greater wherewithal to infiltrate it and tune it to its benefits. Yet again there is also the blurring of the legal distinction between tax evasion, which is illegal, and tax avoidance which is legal. So a Labour government would believe that it is OK to fine you for behaving legally.

“Raise the inheritance threshold to £1m for family homes” (Conservative)

Undoubtedly the reduction of any tax should be applauded, particularly the especially egregious inheritance tax as it is a charge on accumulated capital. You can tax income all you want but so long as there is enough left over to replenish the capital stock then the standard of living will be maintained. When you start taxing that capital stock itself, however – as any kind of wealth tax does – you destroy the very machinery of production. This measure by the Conservatives would therefore appear to be welcome, although not quite as welcome as abolishing the entirety of wealth taxes altogether. Unfortunately, it is designed to be “revenue neutral” and will be “paid for” by reducing tax relief on the pension contributions of people earning more than £150K. Although this proposal is supposed to alleviate the fiscal drag of rising house prices, it is likely that inflation will push those who benefit from it into the £150K tax bracket anyway.

“The Liberal Democrats will eliminate the deficit by 2017/18 by raising taxes by an additional £12bn, cutting public spending by 12bn and cutting welfare by £3bn.”

Kudos to the Lib Dems for at least making the (probably empty) promise that spending cuts will exceed tax rises. Unfortunately the figures are altogether too miniscule. The problem is not just the deficit – the discrepancy between the government’s revenue and expenditure in any fiscal year. It is the enormous debt to which that deficit contributes. The UK government’s official debt is £1.56trn. The total saving of £27bn from this proposal amounts to a mere 1.7% of that debt. Even if we were to assume that this figure will amount to a budget surplus, it will still take another two generations to pay off the debt. However, that is not what the Lib Dems are proposing and it also ignores the unfunded liabilities that do not form a part of the official debt.

Housing

“George Osborne [Chancellor of the Exchequer] promises to get 2.4m first-time buyers onto housing ladder with property ‘revolution’ (Conservative)”

Will this so-called “revolution” involve cutting the incessant inflation of the money supply that blows up housing bubbles? Probably not. Labour’s turn…

“£5bn for funding 125K homes” (Labour)

It seems that both parties feel that a government solution is necessary for a government created problem. Far better to remove the source of the problem.

Transport

Freeze Rail Fares for Five Years” (Conservative)

This will be the same railway that is nominally privatised but whose track, signalling and infrastructure is owned by a statutory corporation and the train operating companies are geographic monopoly franchises that are parcelled out to private companies by the government. In economics it is of course a travesty that a good can be both overpriced and overcrowded, yet somehow government – including a £4bn subsidy from the taxpayer – manages to achieve this and so the age old remedy of price fixing is brought out of retirement. Making the railways a true free market enterprise by selling them off completely is not considered.

Jobs

“We’ll create a 1000 new jobs every day” (Conservative)

They’ve been in government for five years – why haven’t the been doing it already? That aside however, will these be genuine, productive, free enterprise jobs that genuinely meet the needs of consumers? Or will they be a part of the bloated public sector and paid for through loot mulcted from taxpayers?

“An end to zero-hours contracts” (Labour)

Apart from the fact that zero hours contracts (previously known as “casual labour”) are likely to be a beneficial arrangement for some employers and employees, perhaps their abundance is less to do with corporate greed and more to do with the fact that the government has made it so ridiculously expensive to hire low skilled workers for a committed number of hours per week?

UKIP has proposed a UK-controlled fishing zone to replace involvement in the EU Common Fisheries Policy to revive the British fishing industry”

What would benefit the British fishing industry is government leaving it alone and opening areas of the sea to private ownership so that fish stocks can be cultivated through a genuine aquaculture industry. Although UKIP’s replacement of the words “EU controlled” with “British controlled” may appeal to voters it doesn’t hide the fact that an industry will be still be subject to the stifling interference of government.

“£800m to protect 10,000 police jobs (Labour)”

Why? How do we know that these jobs are needed? Does Labour have any profit and loss statement to show that these jobs in the security industry benefit the consumer through their protection?

And Finally…

“Lib Dems promise £1bn to ‘build a better Wales’”

As we noted above, the Tories are dredging up £8bn for the NHS. The Liberal Democrats think that one eigth of that figure is enough for an entire country.

Give “respect” to teachers” (Labour)

This stunningly innovative piece of education policy alludes to the alleged breakdown in the relationship between education ministers and teachers. Far better would be for that relationship to be severed altogether rather that the government have any further wherewithal to indoctrinate the next generation of voters.

“UKIP hopes to woo women with plan to scrap the Tampon tax”

No doubt all of Britain’s female voters will be delighted to learn that UKIP believes that the contents of their underwear is the most pressing political issue burning away in women’s minds. It is no small wonder that, amongst other things, UKIP is seen to be sexist.

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The False Dilemma

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Current, conventional thinking about social, political and economic subjects typically narrows the options available to a set of policies advocated by two, may be three political parties or scarcely dissimilar ideologies. Consequently any genuine radical or lateral thinking about these topics is abandoned and it is assumed and accepted that the fundamental questions of the state, the government, and of tackling the biggest societal problems of the day are already settled. Seldom are alternatives to these entrenched matters – such as whether the state should have any positive role at all in anything – given the light of day, let alone the opportunity of being debated. This phenomenon, which presents a distinct challenge to libertarians, is known as the “false dilemma” – the illusion that the only choice is between a very constricted range of possible options, preserving the status quo in favour of the state and its cronies while at the same time bestowing the illusion of control on a gullible electorate.

In the UK the “false dilemma” is playing itself out in such a way as to completely obliterate one of the basic truths (understood by Austro-Libertarians) that all humans can flourish and co-exist peacefully. Those on the ideological right such as supporters of the Conservative Party believe that business should be helped in order to boost economic growth, while cuts should be made to welfare and to public services in order reduce the government “deficit” (a much overused term given that the overall debt and not the deficit is the real problem) and to slim down the cash cow that the benefits system has become to the allegedly lazy and unproductive. Those of the ideological left believe that a strong welfare state, heavy taxes on the wealthy and increased government spending are needed to end the scourge of poverty. Both of these ideologies contain kernels of truth and genuine, honourable concerns that make their particular preoccupations seem plausible. It is true, for instance, that business needs to flourish if there is to be any economic progress at all, and that government needs to reduce its profligate borrowing, taxing and wasting with all due haste. On the other hand, it does not seem fair that a society should allegedly produce vast wealth for a few while leaving others to languish in stagnating poverty, nor is it necessarily true that wealth creation is “top-down”. The continuing result of this for UK politics seems to be that political action is becoming a choice, or a very false dilemma, between two broadly defined groups of people in society – a choice between those who are “rich” and those who are “poor”.

This impression is exacerbated by the fact that the political parties whose rhetoric represents these ideologies never achieve their aims, or never really carry them out. “Austerity” is proving not to boost economic growth nor help the plight of the poor simply because government spending is not, in fact, decreasing. Bank bailouts and cartelisation of businesses will not do the same either as they simply perpetuate malinvestment and economic waste. They do, however, save the politically connected rich from the consequences of their actions while leaving everyone else to foot the bill. On the other side, increased government spending and a burgeoning welfare state only siphon funds from the productive sector to be consumed and wasted by government. Both sides, therefore, in failing to ever be able to achieve their stated aims provide plenty of ammunition for the opposition, ammunition that is fuelling this apparent basic choice between “rich” and “poor”.

If we are ever to have any hope of recovery from the current economic malaise we must seek for a repudiation of this false choice and a restoration of the understanding that both economically and ethically the rich and poor can prosper side by side. At the heart of the problem, the false axiom accepted by each ideology, is the notion that government must help somebody in order to create a better society. There is curious mixture of economic and ethical arguments that are used in order for each side to select whom government should help and to whom it should deny the same. Take, for example, the supporters of big business. They will say that it is right to use taxpayers’ money to bail out the banks in order to avoid a complete financial meltdown. Conveniently “their chums” in the city will reap fat rewards from doing so. But they then deny this very same method – the diversion of taxpayers’ money – to welfare programmes to help the poor because people should work for what they earn without leeching from the productive and the so-called “benefits scroungers” should get off their backsides and find a job. In other words they are using primarily economic arguments to justify bank bailouts while using ethical ones to deny welfare spending. Their “lefty” opponents will argue that throwing cash at the rich who made mistakes is unjust and that they should be left to foot the bill for their own mistakes. Yet they then state that welfare spending is needed to eliminate poverty and fuel growth from the “bottom up”. So they too, deny the flowing of taxpayer’s cash to certain groups based on ethical grounds but then promote it to others based on economic grounds. Each side, will of course, pepper their ethical arguments with economic ones and vice versa – the right, for example, will, as we have said, argue that welfare spending needs to be cut in order to reduce government outlays, and the left will argue that alleviating poverty is a just and noble cause. But the main thrust of each side’s opinion cannot be denied.

If we unscramble all of this and look at the ethical and economic arguments separately we will find that there are no grounds whatsoever for any state involvement. If it is unjust to violently confiscate tax revenue from innocent citizens to fund the lifestyle of bamboozling bankers then it is equally unjust to do the same to fund the lifestyles of those who are poorer. The difference is one of degree rather than of kind. Nobody, whether he is a prince or a pauper, a saint or a sadist, or a capitalist or a labourer has the right to wrestle away the property of other people for his own benefit. And from the economic side, bailing out bad business will simply perpetuate the moral hazards and malinvestments that need to be eliminated, while continuously funding the poor through welfare spending will only exacerbate poverty as it makes being poor relatively more attractive, reducing any incentive for people to do more to lift themselves out of that position, while squeezing the role of benevolence and charity for the genuinely needy. Furthermore, government would do a lot more for the poor if it stopped interfering in wealth creation in the first place with all of its burdensome laws and regulations that make the exercise impossible but for a few large and politically connected corporate favourites.

The real choice is not between “rich” and “poor”, “left” or “right”, “Conservative” or “Labour” “employer” and “employee”, and whatever other faux selection that the establishment throws at us. The real choice we have to face is, on the one hand, whether we want to continue with a political and economic system that, whomever’s interests the particular delegates of the day purport to promote, will only result in a parasitic existence for the politically connected at the expense of the stagnation of the standard of living for the rest of us. Or, on the other hand, we could choose a system where nobody has the violently enforceable right to live at the expense of everyone else and that everyone is free to trade and produce whatever he wants with his property, a system that will raise the standard of living for everyone and not just a select few. Only by considering radical options and overcoming the assumption and acceptance that the fundamentals of our society are beyond debate can we hope to build a world that is both truly just and economically prosperous.

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