Tuesday, November 18, 2008

Fraser Nelson: Perceptive on PMQs, Less So On The Economy

Fraser Nelson has just posted a further insight into the Economic understanding of the commenting classes HERE. Hangs head now for a brief moment in case he has a starred double first in the subject from a top University. He doesn't? History and Politics at Glasgow? As economically qualified as GOO you say? I didn't really think he did.

Here's a sample:

Yvette Cooper doesn’t like Cameron’s announcement that he’d spend less than the £680bn Brown intends to in 2010/11. “Unlike the Conservatives, we refuse to abandon people in tough times. The British economy needs a shot in the arm, not a slap in the face.” Except giving people their money back in tough times – as I suspect Cameron will do with the money he saves – is the very opposite of abandoning them.

Fraser's alright. He was bang on the money I think when he pointed at the childish "bet you don't answer" sneer tagged unto Cam's Baby P question last Wednesday. That's what triggered the clenchy jawed exchange. Not the idea of an independent inquiry which was obviously about to be ordered. Perceptive, though sadly he didn't really follow through.

Fraser was however very wide of the mark recently with some twaddle about the top 1% of earners and the tax they pay. This time too - remember this is real economics not emotional intelligence he's commenting on - he misses the boat I think. Though who knows perhaps "positioning" as tax cutters will persuade the workless and the work-light that the Tories are their best bet?

The thing is Fraser: which "people" is "people"? The people who disproportionately lose out when tax is cut and services are too? These are non tax payers. Those experiencing the greatest levels of complex multiple deprivation. Those needing the most state support to be as successful as they can be.

It is Labour's historic mission to look after those people. Even during the NL years this has been honoured. Even if the middle classes have also been pursued.

Cam's proposals to date on tax breaks have the air of (a) billowy flannels and (b) different beneficiaries than this.

Small business owners, large business owners paying corporation tax. In other words those still making excess profits over what they need to pay their cost of sales, finance, basic drawings.

These people will not be given back much of their money in any Tory tax cut scenario yet explained to the great british public. Even though the TPA quite rightly pointed out that as these people tend to spend their money before it touches the sides they are the best option in terms of boosting demand.


Fraser Nelson said...

Chris, I dont claim any great expertise in economics but you don't need a PhD to know that people are better-off when they're taxed less.

I suspect DC's tax cuts will be directed at the low-paid who have suffered the most from this government.

Chris Paul said...

People in the lowest layer of society are not taxed at all Fraser. And the proposals that DC brought forward so far were NOT targeted at the low paid, even though this was one of the TPA observations, and one which THEY said would be most effective in boosting spending.

But this idea:

"people are better-off when they're taxed less"

is very simplistic and easy to reduce to absurdity.

Suppose there were no tax at all, and no collective services provided by the state or any smaller unit of government.

Would people then be better off when they're taxed less? Or would only the rich who can buy their own doctoring, schooling, retirement needs, means of transport be better off?

And would that be sustainably better off or not.

Wasn't it Lido Anthony Iacocca aka Lee, CEO of Chrysler who was taught a lesson about economics by the boss of his union?

He showed the man his robots. The man thought for a moment, having been more or less told he and his members will be surplus to requirements.

He simply asked Lee who would be buying his cars when the robots took over.

Capital needs customers with money in their pockets, which is a fortunate brake on lay offs etc. And Capital also needs healthy and well educated talent and workers to pull the levers and turn the knobs.

People ARE NOT necessarily better off when they're taxed less.


Obviously with my A Level Economics and my Undergrad options in this and cognate areas I'm no PhD either. But the worrying thing really is not your own slightly missed analysis but the baa baa sheeple like poor Iain who assume you are some kind of expert.

The top 1% tax analysis was way wrong also.

But very good spot on Gordon and Cam and the Baby P debate. Right on the money with that. Worth following up more I thought.