Heroes: A Third-World Country 

‘You ain’t gotta feel guilt just selfless 

Give a little help to the helpless’ 

 
This week has been crime week for the Tories, however recent events beg the question, when is a crime not a crime? Of course, the answer is when the crime is a priority for the government. 

So join ‘Just Stop Oil’, ‘BLM’, or ‘Not my King’ protests, and ‘you’re nicked’. But if you are anti-ULEZ, feel free to cause anarchy. Fortunately Sid Viscous is dead or he’d be in the cabinet; probably a step-up on most of its members.  

Iain ‘I get pissed, destroy‘ Duncan Smith says he backs ‘a lot of people in my constituency [who] have been cementing up cameras and putting plastic bags over them. I am happy for them to do it because they are facing an imposition that no one wants and they have been lied to about it … People have had enough.’ 

Amusingly, or distressingly IDS told Nazi GB News that ULEZ ‘is a fund-raiser that will damage the lives of people, particularly the poor‘. He should know, as he has played a large part in making people into ‘the poor‘! 

Whilst IDS and his ilk fret about the impact of ULEZ on ‘the poor’, the real issues continue to be ignored. This week a survey by the food waste charity FareShare, showed that 26% of teachers personally provided food to at least one pupil in the summer term because they were worried about their welfare. They also showed a nine percentage-point gap between different areas, with 31% of those in more deprived areas of England bringing in food for pupils, compared with 22% in more affluent areas. 

Headteachers said it was ‘unsustainable’ to expect schools to keep stepping in to support desperate families. 

35% of the 9,000 teachers who took part in the poll said their school regularly provided food for children and their families, rising to almost half in the most deprived areas of England. 

Geoff Barton, general secretary of the Association of School and College Leaders, said: ‘The work that schools are doing, while hugely valuable, is not sustainable in the long term and is merely papering over the cracks of a deeply unequal society that it is incumbent on the government to fix.’ 

From starving schoolchildren we turn to disaster that is the NHS, where figures obtained by Labour show that > 120,000 people in England died last year while on the NHS waiting list for hospital treatment. 

This is yet another record achieved by the Tories, double the 60,000 patients who died in 2017/18. 

Hospital bosses said the deaths highlighted the dangers of patients having to endure long waits for care and reflected a ‘decade of underinvestment‘ that had left the NHS with too few staff and beds. 

Dr Emma Runswick, the British Medical Association’s deputy chair of council, said the fatalities were a ‘terrible indictment of this government’s mismanagement of our health services‘. 

One of the legacies of the last 13-yrs of Tory mis-government is meanness. In 2018, the UN’s special rapporteur to Britain, Philip Alston, remarked: ‘British compassion for those who are suffering has been replaced by a punitive, mean-spirited, and often callous approach.’ Policies such as the benefit cap, the two-child limit on child benefits, the bedroom tax and the extensive use of sanctions to punish those already in need of financial support are the embodiment of that approach.  

You would expect that a party seeking its first electoral victory in 18-years would seek to distance itself from the pain and hardship inflicted on the majority of the electorate over that time. 

Instead, we are seeing a Labour party that has been so cowed by electoral failure that is has turned to an economic policy that is proven not to work. Like the Conservatives in 2010, they are pursuing a political rather than an economic agenda – believing that by aping Conservative arguments on spending they will return to No. 10 

Perhaps not surprisingly, a YouGov poll shows that voters feel that both Labour and the Conservatives are out of step with public concern about the cost-of-living crisis, with fewer than one in four believing that tackling it was a priority for either party. 

Labour polled better, with 40% believing they were better placed to tackle the crisis, compared to only 21% for the Conservatives’. But only 23% and 21% of voters respectively believed tackling it was a priority for the two parties. 

The cost of living comes second in voters priorities behind the NHS, and with winter approaching energy bills are expected to be higher this year than last because despite them falling there is currently no government support. 

Only 15% of voters said they had a good idea of what either party would do. Among Tory voters in 2019, 11% rated Labour higher when asked who they trusted to bring down the cost of living. 

Traditionally, voters have always doubted Labour’s ability to manage the economy. I had hoped that it would be different this time, but, for all the wrong reasons, they seem as clueless as the Tories.   

Last week, Rachel Reeves, the shadow chancellor, confirmed, ‘I don’t see the way to prosperity as being through taxation‘. This suggests that the party has no serious plans for reforming Britain’s regressive taxation system. There will be no new property taxes or wealth tax. Nor will tax rates on capital gains – unearned income from increases in the value of property or financial assets – be raised to match those on wages. 

There is an electoral rationale that supports her decision, as history suggests that Britain’s swing voters in marginal constituencies may be particularly averse to tax rises or reforms. Despite this, the economics of this stance are unambiguously flawed. Without major tax rises and reforms, it is difficult to see how Labour will generate the levels of growth that underpin its central missions when in government. 

This leaves us back with neo-liberal ‘trickle-down’ economics: encourage the ‘wealth creators’ by keeping taxes low and the cake will get bigger for everyone. With the exception of 1970s Chile under a military dictatorship, in the past 50-yrs all neo-liberalism has achieved is an increase in inequality. 

Reeves is purported to be a supporter of ‘Bidenomics’, which has rejected trickle-down economics, and in its place embarked on aggressive tax rises to support a massive fiscal expansion as part of the Inflation Reduction Act that has helped the US so effectively recover from the pandemic. 

If we persist with neo-liberalism we will continue to be a leading global example of an economy where the tax system incentivises a form of ‘wealth creation’ that doesn’t actually support growth. By taxing capital gains less than income (as much as 50%, less according to a recent study) and instigating a swathe of tax breaks favouring property ownership and housing investment, we have supported the creation of a sophisticated form of ‘rentier capitalism’. 

The majority of investment flows into the capture and ownership of assets such as property, infrastructure or financial assets, rather than being used for the creation of new businesses, inventions or socially useful infrastructure, nor rising wages for middle- and low-income earners. 

This misallocation of capital had led directly to the structural misalignment that has been the driver of the UK’s stagnant growth and low productivity. 

This structural misalignment caused by capital misallocation is currently exacerbated by inflation. If Labour are to deliver improvements in public services, and to undertake a green transitioning, inflation, which is proving persistent, makes delivering this more difficult. 

If Labour were to raise taxes on capital gains or other forms of wealth while increasing public spending and investment, they have a good chance of repeating what Biden’s administration appears to have managed: a progressive deflation where the wages of lower earners are allowed to catch up with those of the rest, and growth remains healthy. 

Labour’s apparent U-turn of taxation puts them out of sync with the majority of current economic thinking; the OECD, IMF, Institute for Fiscal Studies and Financial Times all favour higher taxes on property and wealth as a means to support public investment and growth and reduce inequality. 

What is so disappointing is that things could be so different. Post-Covid there is a true opportunity to reset the country, just as there was in 1945. 

Then, unsurprisingly after 6-yrs at war, the economy was on its knees. Debt had risen to 270% of GDP, 3x todays’ level. 

What followed owed much to the economic vision of Keynes, who argued that straitened economic times do not require fiscal conservatism rather a generous and ambitious package of public spending. This postwar economic investment, coupled with the William Beveridge Report, created a spirit of collectivism that delivered both growth and increasing equality. 

In 2019 a relatively radical left-wing agenda led to Labour being given a electoral thrashing, if they have learnt anything from this, it is the wrong things. 

The 2019 saw three unique events come together; Corbyn was unelectable, people wanted Brexit over, and Johnson lied, promising to solve what drove Brexit, inequality. 

Five years on, Labour have Starmer, yes he’s dull but after the excitement of Johnson and Truss that needn’t be a bad thing. Brexit is done and has been proved to be a disaster. As for levelling-up if things continue it might happen as London sinks down to meet the rest of the country. 

‘The definition of insanity is doing the same thing over and over again, but expecting different results’.  

If this is the best Labour can deliver, then, why bother? What’s the point? 
 

‘You don’t need no crystal ball 

Don’t fall for a magic wand 

We humans got it all, we perform the miracles’ 

 
No preamble required for this somewhat gloomy article; Philip tells it as it is – and its not pretty.

@coldwarsteve
 

Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

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