Saturday, 3 March 2012

Dear Sir

Cool letter to the Telegraph the other day

“SIR – Given the state of the British economy, we urge George Osborne, the Chancellor, to consider scrapping the top rate of tax in his forthcoming Budget. The tax, which is in effect a 58p tax after national insurance is taken into account, puts wealth creators like us in a very awkward position.”

Wealth creators – that’ll be the borrowed American rhetoric in full effect then (or is it job creators or both?), but to be fair “awkward position” is a wonderfully British response; you can imagine a Titanic passenger describing matters as “awkward” unless, of course, they’d already been shepherded onto a life boat due to their first class ticket. I digress …..

“We believe the richest should help the poorest in society”there’s lovely, so that’ll be charity then i.e. generosity on terms dictated by the provider with an eye to at least a mention in the New Year’s honours list as opposed to the systematic provision of a welfare state. Back to the letter ….

“One per cent of taxpayers are already responsible for 24 per cent of income taxes” – Crikey, is the distribution of incomes in the UK really that skewed, unfair and unjustifiable? I didn’t realise. And this is presumably the same economic inequality that led to the credit crunch in the first place (see later - 1)? The letter then says ….

“But penalising high earners through an unfair, politically motivated tax puts populist politics before sound economics”alternatively, this rhetorical flourish displays a profound ignorance as to what economics is, sound or otherwise. See later - 2.

“The 50p tax is set to reduce government income, and damages the economy, the public services and charitable giving”as the Daily Mash pointed out, according to its critics the 50p tax rate manages to cut revenues i.e. have little if any impact, at the same time as having, well a big impact. Logical inconsistencies eh? Dontcha just hate ‘em

“As business people, we want to see our industries, our economy and the Third Sector thrive. Repealing the 50p tax would demonstrate the Chancellor’s wish to celebrate British entrepreneurialism, stimulate industry and contribute to the Government’s growth agenda”well that or leave him looking like the toffee nosed upper class shit on us plebs with gay abandon cunt that he is. That and someone profoundly ignorant of politics and political and social forces (again, see later - 3). The letter then finishes with

“The sooner the top rate of tax is repealed, the better” - Huzzah!!!!!

The later bits:

1) An idiotic explanation of the credit crunch is to blame government, whereas government’s actual contribution was to be idiotic. Governments were idiotic because, to varying degrees, they believed the rich and powerful (or R’n’P) people who told them (a) trust us, and (b) give us everything we want, which was things like lax principle based as opposed to conservative rules based financial regulation, a shift away rom redistributive taxation, a tax system like a sieve at its top end and so on. The R’n’P then made themselves fortunes as a result, but unfortunately blew the global financial system and various Western economies up in the process.

This fact has profound implications. Like when a Liam Fox tries to get back into cabinet by positioning himself as a standard bearer of the right by saying “To restore competitiveness we must begin by deregulating the labour market …. (i)t is intellectually unsustainable to believe that workplace rights should remain untouchable while output and employment are clearly cyclical” you’re left gawping at the vicious stupidity of it all. Is he actually claiming there’s an “intellectual” link between the ability of say a Patrick Bryceland, director of Commercial and Industrial Cleaning Services Ltd (who signed the letter to the Telegraph), to hire and fire at will and the US sub-prime debt that triggered the credit crunch in the first place?

Or is he both nasty and dumb enough to be suggesting that giving Mr Bryceland even more discretion via even more “flexible” labour laws will help support our current credit rating given Britain is already an outlier in labour market flexibility terms to the extent that bods have talked for years about an Anglo-Saxon economic model as opposed to say a triple A German one? Like, seriously, is he?

2) Ach, where to begin with this one really. “Economics” as used in the letter to the Telegraph, is simply a rhetorical flourish. The word provides no more than an unthinking reference to one academic discipline's twentieth century methodological turn involving an obviously Comte-like notion of social science as science that became a fixation with clever sums impenetrable to outsiders. This change, the adoption of one approach and one set of methodologies by definition could and can only ever provide a distorted and narrow means of understanding what is better understood as a broader political-economy, a point made obvious by the economist's ceteris paribus caveat (and their failure to spot the credit crunch).

Prefacing “economy” with “political” is more realistic (or “sound”) and a reminder of how the political and the social are integral to economic life. The most obvious example of this are the laws governing property rights that make buying and selling possible. These laws vary over time and between nations because they're the kind of outcomes that illustrate how the political is the means by which an economy is achieved and functions.

3) This follows on from recognising the political nature of the economic. You could read this to get a sense of how economic change can have profound social and political consequences. Alternatively you could simply count the number of recent regieme changes that have taken place across Europe. Clearly, the economy is political and the current econopmic situation is already having massive political effects, something the letter’s dismissive reference to “populist”, by which they presumably mean “bad”, politics, misses at a profound level.

Rather, the 50p tax is about perceptions of fairness. Like Mr Goodwin’s knighthood, it’s the token quid government needs right now to legitimise its pro-quo economic policies. Cutting the 50p tax would undermine the legitimacy and therefore the sustainability of these policies. Without it more people would question and perhaps even start to challenge why they are now living in a new age where they are being forced to work harder for longer for less money while paying more taxes in exchange for fewer public services at the same time as the people who caused it all get away seemingly scot-free. I’m sure even Mr Bryceland would agree that from his perspective – is his a minimum wage, no employment benefits, chock full of Eastern European migrants company I wonder? - such a development makes even less “economic” sense than the 50p tax rate.

Actually hang on a mo, mebbe when you take this broader context into account cutting the rate isn’t such a bad idea after all. And as a fabulous person pointed out why exactly are all these company directors i.e. dividend earners as opposed to PAYE income people, complaining anyhow?

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