Tag Archives: economics

Russell Brand and the Emperor’s new thong

Russell Brand holds aloft the cover to his issue of the New StatesmanSo, Russell Brand’s interview on Newsnight and New Statesman editorial has caused an awful lot of brouhaha, and I’d kind of like to join in. I find a lot of what he has to say on the subject of voting not only wrong but actually quite offensive. His assertion that my grandparents’ and great-grandparents’ generation were “conned” in fighting for the vote is simply factually not true, unless you consider the welfare state, universal education and a national health service to be a “con” (as far as I’m aware, Russell Brand is not an Ayn Rand aficionado).

The fact that we’ve just lived through the deepest recession since the Great Depression and not seen the level of starvation and grinding poverty that destroyed people’s lives in the 1930s suggests that, for the most part, democracy has actually worked out quite well for most people in a lot of ways. Combine that with Brand’s obvious hypocrisy (opting out of the political system he despises while very much opting into the capitalist system which he claims to equally hate – yet very much profits from) and casual misogyny, and you have a pretty loathsome end product. Instead of miscrediting Billy Connelly with the quote “don’t vote, it encourages them,” just once I would have liked to see him engqge with Gandhi’s equally miscredited “be the change you want to see in the world” – it is all very well calling for a revolution of the mind, but if that’s where it stays, what is the point?

Here’s the thing though. Siding against Russell Brand means siding with an awful lot of rather distasteful people. I might not agree with his prescription, but I agree with a lot of the sentiment and many of the people whose pious critiques of Brand’s position I’ve read over the last few days have been the very people who I think are part of the problem.

Piously telling Russell Brand that he’s wrong is one thing, but if you’re one of the people who subscribes to the view that the current voting system is fine and dandy, and that your political party should be slavishly attempting to fix itself in the centre ground, or jump on whichever populist bandwagon which might get you the next short term voting fix, then you actually have less credibility than he has. Voting and political engagement can make a difference, but in spite of such people not because of them. Most people in the political establishment are not democrats, but rather technocrats who spend their time actively seeking ways to shut down public debate, not open it up.

And voting, especially for young people, is a bit of a prisoner’s dilemma. For individuals, voting is a cost in time and effort. It’s only if a critical mass of a certain demographic start voting that they are likely to make an impact, and no-one knows in advance how many people it will take (especially with our broken and random single member plurality voting system). If like me you voted in 2010 in the hope that we were on the verge of seeing a fundamental shift in voting patterns, you can understand why it is hard for people get their hopes up that they are a part of something bigger.

The benefits of democracy are indirect, long term and fundamentally collective. It is ironic that a self-proclaimed lefty such as Russell Brand can’t get beyond the very individualist and consumerist mindset that he claims to want a cultural revolution to overthrow, but he is by no means alone. And the political establishment has done nothing but encourage precisely this mindset over the past 35 years. The fact that Brand and so many other wannabe revolutionaries are creatures of this atomisation of society may suggest that their ideas are not so radical after all, but it ought to give the establishment pause for thought because it has the potential to cause them a lot of problems.

Young people aren’t voting. More than that, it seems to me that an entire swathe of young people are effectively opting out. It’s no surprise as they are being systematically shut out of the economic system. Mainstream politicians are obsessed with forcing them to run in ever decreasing circles trying to find jobs which don’t exist, only to find that even if they succeed in that they will have none of the economic security that their parent’s generation take for granted. When I was turning 30, I was in a minority in my peer group of people who didn’t own their own house (admittedly, most of whom were dependent on their parents’ for support); now I don’t personally know anyone under 30 who owns property. I can however tell you tales of people forced to move out of their over-crowded HMO because the landlord insisted on putting the rent up by an exponential amount and the stress that substandard housing and long term unemployment is causing people.

All of this amounts to a massive deal for our society, yet if you take a gander on Twitter, you won’t find many mainstream politicians talking about it at all. Instead they are determinedly issuing blandishments with hashtags such as #ForHardWorkingPeople, #StrongerEconomy or #FairerSociety and, urgh, #coalicious.

In Paul Mason’s response to Russell Brand’s intervention, he predicts that we will see increasing social unrest over the next decade. It isn’t a new prediction; the BBC produced a documentary 10 years ago saying broadly the same thing. Such dire forecasts don’t have to be 100% correct to be a cause for concern and it certainly looks to me as if we are starting to see signs that it could be happening.

So, ultimately, it isn’t enough to dismiss Russell Brand’s views. If an idiot child starts proclaiming that the emperor has no clothes, expending so much energy to point out that, in fact, he is wearing an extremely snug bright pink thong is to badly miss the point.

What’s left of what I believe

XKCD strip on nihilism
NaBloPoMo November 2012The main reason I’ve allowed this blog to fall into misuse over the past couple of years is that I stopped writing about politics. While my original concept behind this blog was always to write in the intersection between politics and geekery, at some point – specifically in May 2010 – I decided I could no longer really afford to vent my undiluted spleen about the state of the nation and had to start being a little more diplomatic and careful about what I say.

The problem is, I’m a little all-or-nothing and being careful quickly lead to me saying nothing at all. I figured it would get easier once the spotlight was off after the AV referendum; it didn’t. I figured I could be much less careful after I’d quit the party and thus my views became instantly irrelevant in the media’s eyes, but at that point I acquired a new problem: how can I write about politics without it either coming across as or actually being score settling following my resignation? I exchanged one set of anxieties for another and sclerosis quickly settled in once again.

And so, here I am, writing a blog about politics – which once again is really all about me. This is my problem in a nutshell. All I can do is plead for sympathy from you, dear reader: after 16 years, quitting a political party really is a big deal. It’s a wrench. It is no surprise at all that nearly eight months on I’m still a little defined by it. But at least you now know why it is that I’d much rather be writing about comics or, if you’ve seen my tumblr, even more esoteric things.

My article in September about quitting the Liberal Democrats had an interesting response. It was surprisingly positive, but I found it strange how so many people told me that they either loved or hated it but didn’t really engage with the issues at all. I had several Clegg loyalists tell me how much they loved it; curious given that I was not exactly nice about him. My favourite response was from a friend who told me that he agreed with “35% of it”. It was a strangely precise figure, yet he wouldn’t expand on what he actually meant by it.

Most of the negative feedback I did get from it, other than the abuse, centred around the accusation that I was being cynical and didn’t have anything constructive to say. I think the latter was fair comment and pretty much sums up where I am politically at the moment, but there is a difference between cynicism and nihilism. I don’t think I am cynical – indeed my decision to quit the party was about as far from cynical as it was possible to get. I took the decision to walk away rather that to stay on the inside and just feel bitter about things. The fact that I don’t have a fully worked out alternative to what the Lib Dems, and for that matter, politics more widely, doesn’t make me a cynic – it just makes me average.

But yes, I am a political nihilist at the moment, and as someone used to having a cause I can assure you that’s far more of a problem for me than it is for anybody else. All I have is a few scraps of ideas about what a possible way forward might look like, and they can be summed up as follows:

  • Triangulation is a doomed strategy for any political party – doubly so if you aren’t either Labour or the Conservatives. The people leading the political debate right now are the outliers who are working outside of the political mainstream but are successfully shifting the centre-ground to their direction simply by being well organised and disciplined. Right now, sadly, for the most part that means the weird axis of economic libertarians and social authoritarians who are exemplified by the Tea Party in the US but operate in different forms around the world. They aren’t succeeding electorally, but they don’t really need to. Everyone else is dancing to their tune.
  • Capitalism as we know it needs to die. Not trade, not commerce, but the system which commodifies and seeks to squeeze wealth from everything from people to ideas and natural resources is utterly anathema in terms of what humanity needs to do to survive the next millennium. That means critically reassessing what we regard as capital and property and thus what we believe can and cannot be owned. I feel I’ve just used a load of meaningless words there, but it makes sense to me. In terms of specific examples this means a fundamental shift from income and sales taxes onto things like land value taxation, and a massive global crackdown on the drift widening intellectual property laws to mean that every aspect of our culture ultimately becomes owned by a corporation out to make a quick buck.
  • It’s too bloody easy to blame the politicians. Our politico-economic system and media have infantilised the public, but as information technology spreads so does the onus on individuals to accept responsibility for the health of their democracy and culture. We have the tools to create a much better world, yet most people just sit there like good little consumers waiting for someone else to do it for them, and consider passively shrugging about it to be the mature response for when they don’t.

Beyond that? I’m lost. I have no idea about how you take those notions and turn them into something tangible which has any chance of being implemented. But I’m thinking about it – a lot. And perhaps I should write about it here a bit more often.

More BBC pro-Labour propaganda

John Rentoul is outraged that the BBC have chosen to cover the publication of the government’s new report on equality with the headline “Rich-poor divide ‘wider than 40 years ago’.” He is of course correct to point out that the main increase in inequality over the past 40 years took place during the Thatcher years.

But the Harriet Harman approved wording that he picks out of the report’s executive summary is equally misleading:

The large inequality growth between the late 1970s and early 1990s has not been reversed.

It certainly hasn’t been reversed, but that suggests that it has at leasted been reversing. The reality is somewhat different.

I would refer you, dear reader, to page 9 of the report which has a handy graph showing both the Gini coefficient and the 90/10 factor from 1961 to 2007. What this graph shows is that both measures of inequality peaked in 1991, dropped a bit as we came out of recession and then hovered around the same level in the years following. Indeed, while the 90/10 scale shows a slight dip in inequality since 1991 (to 1989’s levels), the Gini coefficient was at an all time high in 2007.

Since 2007 of course, we have had a major recession. Inequality spiked in 1991 for this reason and so we have every reason to believe it will have spiked again between 2007 and 2010. It is quite possible that both scales will exceed the 1991 levels.

So not only have Labour failed to reverse Thatcher’s increase in inequality, they’ve failed to make any impact on it at all.

The BBC should indeed change their headline. I would suggest that it reads “Rich-poor divide ‘wider than 1997′”. John Rentoul won’t like it but it would accurately reflect the real failings of this Labour government.

Reporting back from the Fabians: What not to spend

The Fabian Society kindly gave me a media registration for their new year conference and I spent last Saturday at Imperial College mingling with the Labour Party faithful. I sadly missed Gordon Brown’s morning address but sat in on two discussions: “What not to spend” – a discussion on what public spending cuts the government should make; and “Tribes or causes: Can we campaign across party boundaries?” Both featured Lib Dem speakers, and I attended the former to keep an eye on Vince Cable and the latter to support Evan Harris (or should that be the other way around?).

What not to spend was, of the two sessions, the most frustrating. This was partially because there was no Labour Minister there to give us their perspective, partially because the Nigel Stanley and Janet Daley failed spectacularly to stay on topic and partially because Vince himself was being incredibly cautious. My hope that Vince might give us a tantalising glimpse of what he thought needed cutting, beyond that which the party has announced and reannounced over the past few months ended up dashed (despite his tantalising flash of leg in Parliament the preceeding week). And because the Cult of Vince seems to have extended as far as both the audience and the other speakers (I don’t think anyone breathed a word of criticism of him during the entire 90 minutes), he wasn’t even pressed on the kite flying list of spending cuts he flagged up in his Reform pamphlet last September. A man suggests means-testing child benefit and doesn’t elicit even a single squeak from a Fabian audience; what is going on? Indeed, the one area there did seem to be some tentative agreement on was the rolling back of middle class welfare.

Instead of talking about the current economic situation, Stanley and Daley preferred to continue a traditional left-right ding-dong which you might have heard in any political meeting at any point over the last twenty years. Both, I have to say, were much more nuanced and less dogmatic than they might have been, but neither seemed interested in really addressing what savings government needed to make. To be fair on Stanley, as a TUC staffer, it wasn’t really his job on the panel to do that, but I did expect to hear something substantial from Daley. She made a dig at the start about “not defending David Cameron’s economic policy because I don’t know what it is” yet pretty much the alpha and omega of her own economic policy seemed to consist of one word: “vouchers”.

“Vouchers” – whether they are vouchers for education, healthcare or whatever – have been a real rallying cry for the right in recent years. The aforementioned Reform think tank was for a while obsessed with them. Speaking personally, I’ve always felt it is a bit of a cop out of an argument. We’re constantly invited to believe that the key to the success of the Swedish education system lies in the voucher system, not in the amount of cash each of those vouchers represents, and to believe that, somehow, a voucher based on UK spending levels would have the same effect. I don’t buy it. I can see how they could be made to work in, say, an inner city area where the population density is sufficiently high enough to create a genuine market, but how it would work in a rural area is something I still haven’t found a satisfactory answer to.

Furthermore, while they might be a suitable topic for discussion in a debate about getting value for money from public services, I just can’t see how introducing them during an economic period where we are having to make cuts makes much sense at all. It won’t address any problems in the short term, and indeed the cost and bureaucracy that would be involved to establish the system would make it harder to introduce cuts.

The other area that troubled me was the aforementioned apparent consensus around the idea of scaling back the “middle class welfare state”. Some of this, I have very little trouble with. Creating a shorter taper for tax credits so that people earning £50,000 aren’t entitled to some tiny amount which is eclipsed by its own administration costs makes perfect sense. But that is the trouble with means-tested benefits. By contrast, there is a real danger in means-testing what few universal benefits we have left in the name of cutting costs. Partially, this is because you end up having to establish a whole new bureaucracy to administer the scheme, partially because it means that those most in need often end up failing to claim for it precisely because of that bureacracy, but also because it helps create a sense of solidarity between the comfortably off and the poor. As Sunder Katwala himself said at the Lib Dem conference last September “services for the poor will always be poor services“.

I hope that my concern about the comfort with this rhetoric proves to be unfounded and that things like child tax benefit won’t be regarded as low hanging fruit after the general election. But the way this idea seemed to be supported in the generality at the session did cause me some discomfort. It was the elephant in the room.

The Littlewood Effect… twelve months later

Mark Littlewood has articles on Liberal Vision and The Telegraph reminding us of his pamphlet The Cameron Effect last year.

That’s fair enough. It’s equally fair enough for me to point you in the direction of my rebuttal of that pamphlet.

What has changed in the previous twelve months? Mark is right to say that one thing that hasn’t, frustratingly, is the opinion polls. Nonetheless that is to ignore the fact that they went up for the local elections in June (and down for the European Elections). We have every reason to expect those figures to pick up as we head towards 2010 all else being equal. In fact, I think we have a lot of reason to be confident that things will pick up quite well during an election campaign. Clegg has finally moved on from his “calamitous” period and Vince Cable continues to get good press.

Does that mean that I am prepared to revise my prediction that the Lib Dems will finish the election with roughly the same number of MPs that it started with? No. I don’t see any evidence of a breakthrough this time around. But equally, I continue to regard Liberal Vision’s pessimism as misplaced.

Mark, it has to be said, has subtly shifted his position. Last year the focus was all on tax cuts; this year he has replaced this with more ambiguous language about “winning over those who are flirting with David Cameron’s Tories.” But the people switching to the Tories this time are not the ones clamouring for the Tories to adopt a small government, low tax agenda; indeed they are coming to the Tories precisely because they don’t think that is what Cameron is offering (they may be in for a surprise considering what the new Tory intake looks like). Ultimately, I don’t follow the argument that this is some kind of zero sum game between the Lib Dems choosing between soft Labour and soft Tory voters at all. Instead it is a mad scrabble for floating voters who are up for grabs by any party.

Mark may not have got his wish of the party adopting a position of overall tax cuts, but he should be consoled that the party is in favour of reducing taxes for low and middle income owners and that the party is united behind this position. This isn’t a policy aimed at the left or right (although the right may quibble with the tax increases we propose to impose to pay for them); it has far wider appeal than that.

Talk of tax cuts right now would almost certainly scare people right now and be scarcely economically justifiable; Mark knows this. So the question is, what buttons should we be pressing that would appeal uniquely to people currently in the welcoming arms of David Cameron? Should we be bolder in our talk about spending cuts than Vince Cable has been this week at a time when all Osborne can offer us is flummery and his characteristic whingeing? It is hard to believe that would make us especially popular.

The main thing that has changed is that the economic situation has got a lot worse. That’s bad news for those of us who would like to see greater investment in specific areas and bad news for those who would like to see overall tax cuts. I suspect the all out hostilities over the heart and soul of the Liberal Democrats will have to wait for at least another conference, something which is good news for the hedges outside the Bournemouth Conference Centre.

Quality of Life (2) – work and unemployment

This is the continuation of my series of posts in response to the Lib Dems’ Quality of Life consulation paper, the first of which can be found here.

Taking the next three questions in one go next:

6. Should there be compulsory limits to working hours? Can employees make a genuinely free choice to opt-out of the European working time directive? Is it liberal to restrict how much we work?

7. Would a more flexible approach to working make a difference to people’s happiness? How would this be achieved without creating unnecessary bureaucracy?

8. Should we incentivise part-time jobs through NI or other employment tax breaks, especially to encourage employers to create senior part-time roles?

I have to admit that I don’t have much of a problem with the current working time directive (i.e. 48 hours). Most countries have worked perfectly well without the opt-out and the 17-week reference period stops the rule from being silly. There might be a few areas where we might allow for some exemptions but the current blanket opt-out option, in practice, seems as meaningless as the rules of shop workers working Sunday shifts (I worked in a shop full time when these rules were introduced. I was formally told I had the right to opt out but it was made very clear that anyone who did would be looked at unfavourably in the future). If a compromise could be brought forward between the opt-out and compulsory options I’d be open-minded about it, and I would certainly be sceptical about a France-style 35 hour week, but I would have little problem with the current European law.

With all that said, I do think there is a lot we could do to make it easier for both employers and employees. Fundamentally, we tax work far too much in this country while leaving wealth almost untouched. While this is the case there will always be pressure on employers to employ fewer people for more hours (as opposed to more people for less hours) and pressure on staff to work whatever hours they can. The right to flexible working is all very well, but are making it has hard as possible for people to be flexible. A liberal government would consider changing this to be a priority. The poor record of the Lib Dems in this respect has been deeply disappointing.

The party’s move towards lifting the poorest paid out of taxation is a long overdue step in the right direction (it should be noted that this was party policy in 1997) but I would like to see us go much further.

The 1992 Lib Dem manifesto, which more than anything else is the document which made me join the party, contained a commitment to a modest citizen’s income. I believe we should revisit this policy.

How would all this be paid for? The only way I can conceive is by establishing a national Land Value Tax, something which has been Lib Dem policy for a long time but which we have been very lukewarm about in recent years. Instead of cravenly following public opinion on this one, it is time we started to make the case for a fundamental shift in the burden of taxation. I really do believe it is an argument that can be won.

9. Are they ways we can promote greater employee responsibility for their work, and/or involvement in deciding how they work? How could we encourage staff stake-holding?

All the evidence I’ve read – and personal experience – indicates that greater democracy in the workforce leads to a happier workforce and greater efficiency. It would almost certainly also help control out of control executive pay in a way that crude mechanisms such as a “maximum wage” could not.

Again, in the not so distant past the Lib Dems had much stronger policy on this and the time is right to rediscover our passion for “industrial democracy.” This means much more emphasis on obliging companies to consult their workforce, share ownership schemes and mutualism.

10. How could quality of life thinking shape our approach to education, training and career choices?

This is a huge topic and I am not an expert in education. I certainly think we need to broaden apprenticeship training in this country. A shift away from income taxes would encourage this, as would greater workplace democracy.

Vocational qualifications such as MBAs can be fearfully expensive. Some employers are better than others at helping staff cover the cost of these. A great many employers are simply too small. I certainly think there is a case for government subsidising these qualifications through small businesses and non-profit organisations.

11. Should we have more public holidays or increased holiday entitlements? Or even statutory education and training days where employees would be free to pursue skills related either to their current job or future employment prospects?

A few more public holidays would bring us up to the European average. I’m not convinced about the need for statutory training days as the need for these would vary enormously depending on the employee and employer.

12. Technological developments have changed the way we work and at times can contribute to unemployment as companies need fewer people to do the same work. Would it be better for wellbeing if we reversed this trend?

I didn’t realise Ned Ludd was on the working group! Technological developments certainly can lead to structural unemployment in the long term but if anything the experience of the past 250 years points in the opposite direction: we are working longer hours than ever and are able to afford a welfare state. Technology also creates new types of work and will continue to do so in exciting ways. The fact that fewer people are working themselves to death in factories and farms than in the past is a good thing.

With that said, it does bear repeating that while companies are free to make whatever capital investment they wish, labour costs come with a deadweight cost. We should be less concerned about technology putting people out of work and more concerned about ensuring that the two are put on a level playing field. Once again, this means taxing labour less.

13. How can we tackle the stigma of unemployment?

14. Should employment policy be refocused on creating a more flexible employment market with more active government intervention, like Denmark, where it is easier for the unemployed to find new work and consequently less necessary to have high job protection? How would this be achieved?

15. Can we better use unemployment as an opportunity for people to retrain and gain new skills?

Unemployment should carry a stigma and there are too many parts of the country where it doesn’t have enough of one. That isn’t to say we should ever write people off – quite the opposite.

Again, I think a shift away from taxes on labour would help increase the fluidity of the labour market (I know I sound like a stuck record here, but this is the problem with answering each question in turn). This, combined with a citizens’ income would reduce the disincentive within the benefits system to take on low paid work.

We also need to remove the barriers for internships and volunteer work. Currently in my experience the system all but discourages these by forcing people to do less than 16 hours a week and insisting on a paper trail. Yet such activity ought to be encouraged – even incentivised. We could even extend this to political parties: there are much worse things people could be doing with their time than actively working within their communities.

I don’t know enough about the Danish system. Since the working group is clearly looking at this model, it would have been useful to have an explanation, or at least a footnote for us to explore in more detail.

The week in Georgism

I still haven’t got my post-election blogging groove back. In the meantime, here are this week’s news referencing Henry George out there in the internets.

First, “The Silent Consensus” has a piece on the Daily Kos. He begins by quoting Thomas Paine:

“Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds.”

See also FDR’s Second Bill of Rights and the Progressive Mission and Resurrecting Henry George: The Case for National Housing Assistance. George also gets a brief namecheck on the Huffington Post this week.

Old Henry also appears to have been the inspiration for a sculpture garden in Fairhope, Alabama.

Over in New Hampshire meanwhile, Professor Richard England is making the case for a land value tax.

I’ve noticed a slight increase in talk about LVT stateside recently. Is it the start of a post-crash trend? Time will tell.

Nine wishes for 2009 #4: An end to “money for nothing”

I’ve spent days resisting blogging this wish because, quite frankly, I don’t think it will happen. But it certainly is a dearest wish, so it makes the cut.

What I mean by “money for nothing” is the tendency of the late 20th and early 21st century to look at everything as if it were capital to be exploited, and yet at the same time to think that capital doesn’t behave like capital any more. When the classical economists wrote about capital, they were, in the main talking about widgets – things you build. They can make you a lot of money but they always break, rust or wear out in the end, and then you have to buy new widgets. Stocks and shares were part ownership of big widgets, and ultimately behaved by the same laws.

(As an aside, my reading of Locke’s definition of “property” is that it informed and is essentially the same as the classical economist notion of “capital” – it is one of the reasons I despair about this modern vogue for rightwing libertarianism in which people invoke Locke only to insist that when he talked about “property” he was referring to everything you might happen to “own” even though it contradicts his whole argument about rights to “property” coming about due to self ownership.)

We’ve been moving away from that model for 200 years, but in the last two decades it accelerated. Everything, from homes to public services to loans, became capitalised. Intellectual property, at the same time, has become less like capital as the limitations of copyright get extended and patents become renewable (I ended 2007 by declaring the 21st century to be dominated by IP Wars – we ended 2008 with the government capitulating and agreeing to extend recording copyright). Speculation, speculation on speculation and even speculation on speculation on speculation has become a central part of our finance system. All talk about “value” – financial value never mind ethical or social value – has become lost.

I’m not convinced that much will happen to change. The Lib Dems’ Green New Deal is very welcome indeed, but we don’t appear to be saying very much to ensure that the economy changes course – we aren’t arguing for much more than a greener, kinder version of the status quo. Brown just seems to be firing off in entirely random directions and even though I’m not convinced that piling up the national debt is the big problem the Tories keep claiming it is, my mind does boggle how he can keep coming up with more and more spending commitments with no idea how he intends to pay for it all. As for the Tories themselves, well, they appear to have looked at Japan in the nineties and said to themselves “we’ll have some of that!” Having got us into this mess, dragging the rest of the political class in the mire with them, their new approach seems to simply be to wallow.

Like I say, I don’t expect this wish to be fulfilled. Yet strangely, almost every day I seem to hear a new person expressing it. Are we looking at a longer term shift in attitudes? Either way, we won’t know for sure by the end of 2009.

Cutting tax is not a zero sum game

I’m cautiously optimistic about the rumoured plan of a 2.5% drop in VAT. It sounds like a good move to me, for several reasons.

One thing a VAT cut won’t do is lead automatically to a reduction in prices. Most food isn’t VAT-rated and it is hard to believe that a CD priced £9.99 this week will be priced £9.78 next week. However, taken together those 11ps start to add up. At the top end of the scale, being able to shave a bit more off the asking price for that plasma screen might just make the difference between whether it sells or not. If spending on the high street is down a couple of percentage points, dropping VAT by about the same amount could save real jobs. That means more people paying NI and income tax (and VAT) and fewer people claiming JSA. Looking it in that way, we have to ask ourselves the question: would it cost the Treasury more or less to keep VAT at 17.5%?

Gideon Osborne is not this blog’s favourite Shadow Chancellor, but I will give him credit for one thing: he has managed to get the media to completley buy into his claim that tax cuts now – any tax cuts – will automatically lead to paying a greater price in the longer term. The truth is much more complicated than that. VAT is a deadweight cost – a tax on commerce which is generally seen as a good thing. In my personal utopia, we wouldn’t have it in the first place. Dropping it at the start of a downturn has a real chance of softening the landing. It isn’t a magic feather, and there is certainly a point where the cost of dropping it outweighs the benefit, but it is a practical measure.

Vince Cable has broadly welcomed it, while emphasising the Lib Dem’s own policy for a tax switch (both policies are compatible). Cameron and Osborne have rubbished it. That should surprise no-one because VAT is the tax of choice for the Conservatives. It was Mrs T’s favourite tax. Raising it still further was one of Norman Lamont’s first acts as Chancellor. Ken Clarke, keen not to be outdone, expanded it to gas and electricity (Clarke has now come out as a VAT-cutter, suggesting his common sense now outweighs his dogma). Tory ginger group Direct Democracy – the closest the Conservatives get to genuine localists – envisage a world where council tax will be replaced by, you guessed it, a sales tax.

Once you remember that the Conservatives are not a pro-business party but a pro-entitlement party, it is easy to see why: piling the VAT on the proles means that you don’t have to pay for things by taxing unearned wealth. So for future Baronet Gideon Osborne to recoil at the merest suggestion is no surprise. The only tax cuts he will consider are on things like inheritence tax for millionaires.

The Tories have decided they are back in 1992, and have relaunched their “tax bombshell” posters. Labour should follow suit. Anyone remember VATman?

What do the Scottish Greens and Guido have in common?

Both today are calling for Land Value Taxation, or at least they seem to be.

The Scottish Greens certainly are. Municipal tax reform in Scotland remains in deadlock and dependent on at least one other party agreeing with the principle of local income tax. That seems unlikely at the moment, even if the Lib Dems capitulate over the SNP’s insistence of greater centralisation (which does not look likely; what would they gain except appalling policy?).

Meanwhile, Guido is raving about the reprinting of Fred Harrison’s Boom Bust: House Prices, Banking and the Depression of 2010 (Guido also pats himself on the back at his prescience for predicting the housing crash in September 2007; modesty prevents me from mentioning that my first blog post on the subject was July 2006 and frankly I could have told you what was going to happen a long time before then).

Fred Harrison? You might remember me linking to this video earlier in the year. Harrison, aka the renegade economist, is a keen exponent of land value taxation and regards it as a crucial tool in the armoury against boom and bust cycles (actually, as the video indicates, he goes a lot further than that).

So yes Guido, Gordon Brown was very very wrong. But somehow I doubt your mate Gideon Osborne is going to be interested in Harrison’s prescription. The son of a baronet and Shadow Chancellor for the Conservative Party, it is his job to protect vested interests, not challenge them.