Prof Danny Blanchflower and I had a brief Twitter exchange last night on the subject of cancelling the planned national insurance increase, due in April, about which there is some speculation in the media:
I think that the view from the Mile End Road is clear and is that this increase is entirely unnecessary.
The government is raising more revenue than it already expected this year. There is no reason in that case for it to raise more.
There are also very clear indications coming from the Bank of England that the quantitative easing program is to be put into reverse very soon. That is also the clearest possible indication that the government does not need more funding when over the last two years QE has almost exactly funded all government deficits, as data from the New Economics Foundation shows:
There is in that case no reason for those on low pay to be asked to increase their contribution to government funding.
As I noted, increasing the cost of labour can also only create additional problems in recruiting the people that are needed by many businesses in the UK, so increasing supply chain disruption and, in due course, inflation.
As Danny notes, there is something more fundamental in this, which is a deliberate attempt to re-orientate returns in society through labour towards capital.
However looked at, this increase is not needed. Johnson might offer it up as red meat to his backbenches, but the reality is that the Treasury were always wrong to demand this increase which has nothing to do with the funding of the NHS or social care, and everything to do with the imposition of austerity on those least able to afford it.
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This sort of thing reifies what the Tories are actually up to and it seems SO obvious until you look at how divided society is and how it cannot/is unable to coalesce around such facts to make the Tories pay for it and kick them out.
Richard,
‘Twas ever thus. Making people poorer in real terms makes them more reliant on credit, which directs money, guess where.
It has other advantages for the really wealthy and their government enablers.
Telling people that their tax pays for everything has the following advantages:
People on a low wage who pay tax are easily persuaded that people on benefits are getting a free ride, and are therefore scroungers.
People on a modest to good wage are wealthy, ignoring the fact that amongst those people are the consultant surgeon who is going to do your heart bypass when the shit hits the fan health-wise, and therefore doing well.
Direct attention to them and don’t ever ask why so many people are getting crap wages. Crabs in a bucket spring to mind. Now the majority, who are feeling the pinch, have two groups to feel are getting a free ride.
Really wealthy people are blessed with some, unsaid, virtues which make them deserving of it, unless it is convenient to throw one of them under the bus to appease the crowd.
This stuff has been going on for ages, the only difference being how it is presented.
In this way, the money accrues to those who are part of the “elite”, and the rest of us get made poorer and more easily persuaded to blame each other. Consequently masses vote for those who they have been conned into thinking that they have their interests at heart.
Divide and conquer is their modus operandi, has been for millenia, and, sadly, still works just fine.
Raising NI whilst the cost of living is becoming a crisis for a very large proportion of the population would be very dumb if you look at it rationally, but makes perfect sense if you see it as a way of futher distracting the population’s attention from those who are shitting upon them from a great height.
For sure, I’m a cynic; feel free to trash this comment if you don’t agree.
I am happy to share it
Richard,
Thanks for letting me vent. For illustration, my marginal tax rate is 61%, the highest in the UK (being in Scotland).
I’ve been, in the past, worrying how I can pay for food, or to keep the heating on, it really is not fun. I’m not in that position now, but despite the fact I’ll be ok (and can see through that crap), it’s not hard to see how impoverishing a large section of the population plays to a narrative we’ve seen before.
Your more recent posts hit the nail on the head – distract people with imaginary enemies who are the threat, having first set the conditions in place to make them fearful is a tried and trusted strategy.
In the most famous case of fascist takeover, austerity was imposed from outside, courtesy of the post war settlement in 1918. That did not end well.
Our own government inflicting it on the population is, I think, a new one, though increasingly common.
Your view that this is a corporatist takeover is, I think, not wrong. Just like they did 150 years ago, they need workers, working for a pittance with no job security, or people paying rent, to uphold their profits. Yet a large number of voters have been persuaded that this is the country they want to live in.
I have a good friend, living in Surrey, who votes Conservative. They are on Universal Credit and have very little hope of a job that will actually do what it says on the tin, but see Labour as a threat (and they don’t particularly impress me either).
I’m glad you keep writing your blog – I do appreciate your ideas and considered opinions about economics: how to get these ideas across to the majority of the population, however, considering how misinformed they are, must really seem an uphill struggle.
Thanks