Gillian Tett and Paul Mason sem to suggest there are three solutions to our economic crisis in their discussion in the Guardian today. They are inflation. to write off the debt; default which writes off the debt, or forgiveness that is in effect consensual default.
The alternative, they seem to agree, is war.
I'd add a fourth option, which is, of course, collecting tax that is due which has much the same effect as when during the post war period growth and debt repayment were managed in no small part by collective saving in government bonds.
A fifth option would, of course, be redirecting £80bn of pension saving a year in the UK into such bonds, in no small part (which would also give a higher rate of return and substantially lower investment cost for pensioners than they have enjoyed for a decade or more). I think both ptions can be, and should be, added to Tett and Mason's option list.
But the real point is a vey simple one. The risk of war as a result of the current chaos and a resultant increase in far right nationalist protectionism built around dogmatic pursuit for ideological reasons of the extreme austerity of the sort Osborne proposes is very real: it is something I mentioned on this blog recently.
In the face of that it is the duty of politicians to be courageous. They have to now tackle feral finance. They have to push through measures that constrain out of control markets. They have to take radical action to claim control over some capital made in the course of creating the current chaos as a price of containing it, whether that be by wealth taxation, direction on pension fund investment, the introduction of capital controls to constrain bank abuse or direct measures to reclaim illicit funds in tax havens through direct actions against the banks based in London elsewhere that knowingly control those funds with the deliberate intent to undermine democracy in the interests of the 1%.
When this crisis has reached the stage where serious discussion of the breakdown of society into social chaos and war has hit the mainstream news pages then action to defend ordinary people, democracy and the mixed economy that has overall served us so well is essential.
Politicians who fail in that task now fail us all.
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I have to say that I prefer your options! My mother was in Italy during WW2, decoding signals. She has always said how appallingly quickly the infrastructure of a high functioning society fell apart. It is not a good thought.
My solution would be this ,
Leave the companies or pension providers with the current scheme until the person hits 67, adjust tax relief as seems fair, But then rather than the punter buying an annuity from the insurance company or the sponsoring company dribbling out a pension not knowing if the fund will survive, the risk and funds are all passed to the government who take the money and issue a government index linked pension, they are already the largest provider of pensions so they have some experience and they also are backstopping the risk of the insurance companies or company pensions going bust anyway, so plenty of funds are passed to the government for infrastructure investment rather than insurance companies giving them to hedge funds or buying gilts anyway, and all pensioners get a government index linked pension, and companies are forced to face up to underfunding quicker than otherwise as as soon as a person retires they must stump up the funds they hold for that person …
Neat…..
To paraphrase, is war tax collection by other means?