Month: November 2019

As Theresa May had her turning point in 2017 when her campaign came off the rails over social care, so I witnessed yesterday the most comprehensive annihilation of a political leader ever when Jeremy Corbyn was interviewed by Andrew Neil. It has to be a major impact on his credibility amongst those watching directly or even just viewing clips or reading press reports. My mind had been changing over the last week or two on my tactical voting plans, and that interview was the final straw. I will be voting Lib Dem after all and nothing right now could convince me to add my X to a Corbynite Labour candidate regardless of the risks.

The headlines are mostly concerned with Corbyn’s inexplicable failure to apologise for past anti-semitism in the Labour Party. That simple act might have closed down that entire line of questioning but he chose not to.

However, his inability to grasp that bonds are debts subject to interest was appalling. Technically if I buy a house on a mortgage then I have a debt and an asset that hopefully becomes worth more than the debt. They cancel each other out. However, that relies on the house value not going down and me keeping up the repayments. Buying train operating companies and Royal Mail are major risks, not dead cert profit makers with a guaranteed future value. Most of the energy companies make only very small profits and some make losses – hence many many failures in that market.

And then let’s move to Labour’s tax-raising plans. As Neil proved, those plans don’t just involve the most wealthy, even if they stay and pay, but will put up taxes for those on low incomes too, those claiming the married person’s allowance, those reliant on dividend income. He will put up taxes on small companies and on online sales, mostly small businesses run from spare rooms. Anyone who might inherit their family home in London and the South East will be paying up to £60,000 more in inheritance tax. Labour is targetting everyone . The policies disincentivise small business, entrepreneurs, high earners, and homeowners.

Overall, when you add together the failure to properly tackle anti-semitism, ridiculous nationalisations, and the intention to attack small businesses, entrepreneurs and pensioners reliant on modest dividend incomes, it is clear that a vote for Labour is a vote for economic collapse far in excess of what the Tories can achieve with their Brexit plans. Corbyn will turn us towards the Venezuela economic model. In the meantime, Labour moderates are letting Corbyn get away with this, presumably hoping a drubbing in the election will bury him and Momentum forever. It’s a dangerous tactic.

I only hope Mr Neil does the same hatchet job on Johnson, although I am resigned now, I think, to leaving the EU being the only way of lancing the boil and making the case for rejoining quickly, maybe not completely but along Norway lines. Johnson has to fail spectacularly in his Brexit to close the argument down for all time. Nevertheless, the way the polls are working at present, as Labour drops, the Lib Dems rise so a steep Labour decline at this point will only help us. Maybe Jo Swinson won’t be PM but she has a much better chance after last night of perhaps making major advances in Parliamentary numbers. The Lib Dems might be able to stop Labour extremism if Labour end up as the largest party.

That and £15 billion in extra taxes. £100 billion over 5 years to tackle the effects of climate change and protecting the environment. That’s an extra £1300 in national debt for every man, woman, and child in the UK. Tackling climate change is a laudable policy. Bankrupting the country and indebting future generations in a futile attempt to reverse it is anything but laudable. It is reckless.

The UK cannot, on its own, influence climate change. We can prepare, we can lead, we can mitigate within our borders, we can’t stop it as we don’t control the globe. There is plenty that can be done for a fraction of that money. You can spend £1 billion on reversing deforestation of the Amazon. You can change building regulations to make all future buildings zero carbon. You can invest in renewable energy technology and electric vehicle development – affordable conversion kits for all cars, vans and trucks. You can cancel HS2 and spend the cash on local public transport improvements. You can put VAT on meat to cut demand for farting cows. I could go on and on. But it doesn’t add up to £100 billion over 5 years.

This borrow and spent recklessness, wiping out every single benefit of debt reduction austerity we’ve been suffering for 10 years, makes it very difficult for me. I couldn’t stand on a doorstep and try and explain this degree of irresponsibility to a potential voter. It is almost as if we have returned to the days of making up fantasy policies justified by the knowledge that we’d never get anywhere near having the power to implement them. We can promise fairy dust powered flying carpets to solve congestion problems to get a few votes. But this is serious. We could, like in 2010, actually hold the balance of power and be held to account for failing to implement absolutely crackpot ideas. And in 2015 we were severely punished for that kind of failure.

I despair, I really do.

Added: 17/11/2019

I have received a response to the above post. It reads:

You don’t seem to understand what the National Debt is. The Government is essentially a huge bank. On the one hand it creates the currency by spending money into the economy. On the other it takes in savings in that currency and in the process creates a so-called National Debt. So if you buy £100 of Premium bonds you are adding to the National Debt.

So its not something our children and grandchildren would ever pay off. It is their asset.

The government spends money into the economy and gets some of it back in taxes. But it can’t get back more than it has created in the first place. The difference is the deficit. That’s quite normal.

If the Government always ran a surplus then it would, in theory pay off the National Debt after a time. But a surplus takes money out of the economy. When it paid of the ND there would be none left and we would be reduced to a barter economy.

Firstly, thank you for taking the time to respond; it is appreciated. I’m not an economist, but there again neither are 99.99% of ordinary voters. So I make no apologies if I have used incorrect terminology. If you borrow £85 billion through bonds then you create a debt of £85 billion that someone someday will need to pay back. Comparing a Government with a bank doesn’t work in my opinion. This Lib Dem proposal involves borrowing £85 billion. In the absence of information to the contrary this will involve lenders – individuals, countries, banks, institutions. The asset belongs to the lenders, not to the nation. It will need to be paid back by the debtors, the nation. It is a national debt even if it isn’t The National Debt. If I am misrepresenting how £85 billion will be found to fund this policy then the fault lies with how the policy is communicated because I suspect 99.99% of voters interpret the announcement in exactly the same way as I have. If it’s too complicated to explain to 99.99% of voters then drop it because others will tell them what it means and you won’t like their explanation.

Corbyn is also using the same cost neutral argument to explain how mass nationalisation costs nothing. If I take out a loan to buy a house for £200,000 on a 100% mortgage (they did exist once), technically I have a debt for £200,000 and an asset worth £200,000. But the asset is only mine when I’ve paid off the debt. Until then the asset really belongs to the lender. And the lender will want interest so I will actually pay £400,000 for my house. If I don’t look after the house and spend more money on maintenance and repairs it might lose value so maybe I pay £400,000 for a house that then gets sold for £100,000 or falls down and it costs me more money to clear the rubble. You could also argue that since I could make do with a £100,000 flat (I do live in the North), I’ve borrowed and spent £100,000 plus interest and maintenance more than I actually needed to. I’ve gone short on essentials and worked longer hours to make those repayments when it wasn’t actually necessary. The idea that you can buy things through borrowing and it costs nothing is absolute nonsense, arguments to fool the fools. That applies to Corbyn and also to Lib Dem excesses.

I would also add that if I borrow £10,000 to plant 5,000 trees with no intention of harvesting them ever for their wood, it isn’t a realisable asset and I haven’t increased the land value. It’s just nice to look at and good for carbon capture. I don’t mind any Government promising to borrow and spend £500,000,000 to plant 250,000,000 trees, great. Just don’t pretend it won’t really cost anything.

Labour’s 32 hour week proposal is amongst their most dangerous policies. Currently full-time employees work on average 37.3 hours a week. This proposal would reduce productivity by over 16%. The economists can grind that number to determine the reduction in GDP and profitability but I think we can guarantee that it won’t be a positive outcome.

The proposal will also create significant gaps in essential services – healthcare, policing, fire fighting. It is hard enough right now to access healthcare due to staff and skills shortages, let alone if their hours are cut.

The Labour suggestion is that this change would be phased in over 10 years. That isn’t really a consolation other than giving big businesses a fairly long lead time to pack their bags and leave the UK for more sensible, more productive, and more profitable locations. They haven’t got far to go – Ireland is close by.

The country could not afford to pay pensions at 60/65 and it is now rising to 67, an additional 11,500 hours for women, 3,300 for men. For younger workers retiring at 68, add a further 1,600 hours to that. So we all have to work longer to pay for our retirement. It’s a policy backed by all the main parties. McDonnell is now saying we can take off 10,000 hours by working 4 day weeks throughout our working life. What was the point of that? He can’t add up, clearly, and that’s pretty dangerous for a Chancellor.

There is an interesting article on Lib Dem Voice at the moment where Eddie Sammon makes a case in favour by using voluntary tax breaks for employers. It’s a better approach but some of the comments are not quite as supportive. I particularly chime with what has it got to do with the Government what hours I work. Preventing exploitation is the Government’s job so progressively reducing the maximum working week from 48 to 45 hours, and including all NHS workers, is a good idea. For environmental reasons, working your average 37.3 hours over 4 days instead of 5 makes sense and a lot of people already do that. Neither require a 16% reduction on the average working week.

If I may quote Eddie’s final line: “I still believe that GDP growth is desirable, but as Jacinda Ardern and Jo Swinson have said, a country’s prosperity cannot be judged on economic growth figures alone.” I completely agree with the latter sentiment although I am not convinced GDP growth is that desirable in a stable and wealthy economy as it sucks up natural resources in creating ever more growth. What we should be looking at is distributing GDP somewhat fairer than we currently do.