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An Election Result

Few expected a Tory majority until the Exit poll. I didn’t dare hope until about 2am.

In Eastern England, a Region with a bigger population than Scotland, The Tories’ hegemony is greater than that of the SNP’s in Scotland, yet no-one is going to give these voters the indulgence which will be afforded to the SNP. Here, The Tories secured 50% of the vote, and all but one MP. The one non Tory MP was a Tory until less than a year ago. The Labour party lost ground everywhere, except London.

15% of Scots voted Tory, equivalent to the national UKIP share. No-one is talking about their “disenfranchisement”. There are now as many Tory MPs in Scotland as there are Labour or Liberal Democrats. The Tories advanced in Wales and devastated the Liberal Democrats in the South-West.
Looking at a map, Labour is reduced to inner London, Birmingham, Newcastle, Cardiff, Liverpool and Leeds. Scotland is monochrome SNP, and the rest of Great Britain is Tory Blue. The Tories’ closest allies, the Ulster Unionists did twice as well as expected in Northern Ireland. 
So. What happens next?
First of all, elections are won by parties with the positive vision for the country. The SNP has a vision of Scotland that resonates with Scots, if not with reality. That 8% deficit limits how “full” their fiscal autonomy can be. I can take Sturgeon at her word, that independence remains off the cards for the time being.
Labour on the other hand, spent the election campaign telling the country it was broke, divided, poor, unequal and some vision of victorian workhouse hell, lorded over by a “rich” elite. Given that inequality fell and “the rich” are paying more tax than ever before over the past 5 years, this clearly didn’t ring true. The Tory message: let us finish the job, resonated with England outside the big cities.
The economy is largely sorted. The coalition undid much of the glue Labour poured into the labour market. The self-employed who paid tax on earnings in 2013/14 paid more than expected. Their earnings will accelerate, and the deficit will close faster than expected. I expect there will be more money for Cameron’s second term. 
Cameron’s biggest challenge will therefore be constitutional. What to do with Scotland, giving the SNP as much of their demands as possible, without alienating England. His job is to come up with a lasting constitutional settlement. Constitutional settlements tend to be more lasting and stable when done under Tory governments, as unlike labour’s devolution in the 90’s there’s less short-term gerrymandering for party advantage. This will involve house of Lords reform, though I would regret this. The mountain of cant spoken about English Votes for English Laws comes from people who’ve got used to imposing the will of the Celts on the English, who’ve long voted solidly Tory. It’s likely there will be a more Federal UK. The community of the Isles is being tested more strenuously than at any point since Irish independence.
There will be a lot of nonsense spoken about the upcoming EU referendum, set for 2015. UKIPpers will not believe Cameron will deliver it. They can be ignored. The fact is, the UK will vote by 2:1 to stay in. Cameron will walk tall having secured an unexpected majority. The Eurocrats will have to give something for Cameron to take back, and Merkel has already said what’s on offer. 
Whatever the offer is, it will be derided by UKIP because free movement of people is a red line that will not be on offer. And quite rightly so. The crucial reaction will be the Tory right. Will they ‘rebel’ and make Cameron’s life a misery like the post 1992 “bastards”. My guess however is that Cameron has answered his Tory critic’s main charge: that he couldn’t win an election. This will mean this election has more in common with 1979 – the first majority after a period of unstable minority, than 1992, an unexpected victory by the fag-end of an administration. 
Labour, for its part, must find a narrative after a period of re-building. They must work out what they are for. If they can make peace with business, and more importantly, markets, then they can come back. Social democracy has a future in the UK, but not Socialism red in tooth and claw. Miliband was in this regard, a last hold-out in the jungle, still fighting after the total victory of Thatcher. Whatever happens, such is the scale of their defeat, especially in Scotland, the next labour PM will probably be beholden to the SNP for any majority.
This is the Second or third time the Tories have destroyed the Liberal party, and absorbed its supporters into the broad Conservative church. Perhaps the Tories should make an offer: Fight elections as the Conservative, Liberal and Unionist party? The liberal democrats had the naive belief that somehow being right, for example on Land taxation by council tax revaluation and extending the number of bands, will somehow translate into votes. There is a place for such a party, and I hope they come back. But this will be a generational project. 
Each of these issues will be the subject of a post in the future. We live in interesting times. Cameron has an enormous, difficult and delicate job. He can be the man who either presides over the destruction of the UK, or go down in history as the man who built the lasting constitutional settlement. He’s been underestimated by most. He has an enormous responsibility. But I am optimistic he’s up to the job. After all, he’s been quietly right, calmly ignoring his critics, and content to let his record speak for itself despite the hysteria of lesser characters. He’s steady under fire, to the point of insouciance. I like that in a leader.
Cameron is now proven winner. Holding the coalition together was a remarkable political feat, for which Nick Clegg deserves enormous credit too. And like Napoleon’s generals, Cameron’s lucky. So Far.
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Election Prediction

I think the bottles of port, beers and cases of wine I’ve bet with twitter correspondents, friends and colleagues are going to bankrupt me if Labour win, and give me alcoholic liver disease if the Tories do. So, hot on the heels of my correctly predicting the outcome of the Scottish Referendum, AND the EU elections; I, the UK’s own Nate Silver using little more than reading, wishful thinking and guesswork am going to tell you what’s going to happen over the next 36 hours.

David Cameron will still be Prime minister, probably with help from DUP, and the remaining Liberal Democrats. The alternative, Prime Minister Miliband is too grotesque to contemplate. Tories will probably be quite comfortably the largest party; here’s why:

  1. Miliband is obviously a helpless, flailing git. In the privacy of the polling booth, this will matter, leading to
  2. The usual Tory out-performance of their polling, and labour underperformance of theirs.
  3. The polls are currently showing a small Tory lead.
  4. The polls may well be wrong, on a scale not seen since 1992, because the polling methodology hasn’t been tested with the rise of UKIP, the collapse of the Lib-Dems and the rise of the SNP.
  5. Labour will do a bit better than polling suggests in Scotland, as will Tories (but to little avail in seats)
  6. Liberal Democrats will retain 25 seats
  7. UKIP will have 3: Clacton, Thurrock and one other. Neither Mark Reckless in Rochester, nor Farage in South Thannet will be MPs on May 8th.
That is my prediction with my sensible trousers on. But I think a small Tory majority is possible. That this is wishful thinking cannot be discounted, but the polls have so many moving parts in this election, methodologies are likely to be strained. In particular, spiral of silence adjustments to take into account the ‘Shy Tory’ effect have been getting larger. Yet Tories ALWAYS seem to outperform. In addition, the late swing seen in 92 may just be even later this time.
I would like the Coalition to continue. But I’ll settle for a Tory majority and consider emigration should the emetic Mr. Miliband be Prime Minister.
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The Rise of UKIP Heralds a Return to Two Party Politics.

The Liberal Democrats have based their political offer on a number of things. First a certain honesty about policy. Remember “1p on income tax to fund education” for example, and a general willingness to “think the unthinkable”. Clegg coming out as an Atheist or, senior people openly thinking about the legalisation of Drugs. They hope with a child-like naivety, that being right will somehow get them elected. It didn’t, at least in the Euros. Their councillors think that being the best at getting potholes filled in and dealing with dog-shit, will somehow go noticed by their electorate. That too is naive. They lost hundreds of councillors in the Local elections. The tragedy of the Liberal Democrats is they’re an honest party with dishonest voters.

Liberal Democrat voters wanted to be able to say smugly “don’t blame me, I voted Liberal Democrat” when the talk turned political at dinner parties. The hard-working, realistic, decent centrists of the Liberal Democrat parliamentary party took to Government rather well. It’s the voters who couldn’t handle the compromises of Government. Not being in a position to deliver all your promises is not the same as “lying”.

And it seems Clegg, by obtaining power will destroy his party.

Which brings us to UKIP. UKIP’s proposition isn’t couched in policy terms. They have one confirmed policy: to get out of the EU. How exactly that would be achieved, is open to doubt. Some of the more intelligent ‘KIPpers (a low bar, admittedly) might say “repeal the European Communities act 1972” and hang the consequences. Of course this isn’t simple. We’d then have to negotiate trade terms with the EU from outside, and I doubt this would be as favourable as negotiated withdrawal. But these niceties are not important the offer from UKIP is deliberately vague. This enables their supporters to think the UKIP policy is the same as whatever they think, which on immigration might range from “send them all back” to “open door to the commonwealth“. Elected ‘KIPpers have said both over the last few weeks.

Why do politicians lie? Well they don’t. They’re reacting to changing circumstances and they’re not always in the position to deliver. Why do politicians not answer the question? Well they’re absolutely terrified of making a promise they can’t keep, and so need to dissemble because the media is unable and unwilling to distinguish between “what I think” and “this is policy”.

So they’re all the same, right? Well no. The Public seems unwilling to understand just how unresponsive the economy is to the levers a politician might pull. While I think the Coalition is doing a good job, I certainly don’t credit them with the recovery, thought the fall in the deficit is welcome. “Nothing ever changes” the electorate say. Well not quickly no. But over 13 years, Labour massively increased the size cost and reach of the state. In four years since, the Coalition has shrunk the state headcount back again and undone about half of the damage done by Labour to the public finances. So things DO change. But most people are still in the same job they were in 2009, living in the same house, going to the same super-market, where things may or may not have risen in price faster than wages. That change is not noticeable day to day.

Politics matters. But it requires an electorate prepared to listen to arguments. Perhaps it’s not the politicians who’ve become dishonest, it’s the electorate? But this great yawp of dissatisfaction will pass. In many ways, the electorate have been reasonable. The Euro elections are pointless elections to a pointless chamber without power or influence. Sending a bunch of ignorant, clock-punching neanderthals to Strasbourg is a sensible response to a body formed as a democratic fig-leaf to cover “ever closer union” driven by the EU commission.

Perhaps the Eurocrats will finally get the message. ENOUGH! and David Cameron may find his renegotiation a little easier as a result of the parade of fascists, loons, time-wasters and bigots the European electorate have sent as representatives. It’s probable therefore that UKIP will be surprised by the General election when their “surge” falters. Do they really think UKIP are a party with actual governing ambitions, rather than just some suits sent to wave two fingers at Herman Van Rumpuy?

Turnout in the 2014 EU elections was 34.19%.  In the 2010 General election. which is the one that matters, it was 65%. I suspect 2015 will be higher still. Even if everyone who voted for UKIP did so in the General election, it’s still only about 14% of the vote. But they won’t. Many people return to their normal parties for an election that matters and this is probably around half of UKIP’s vote. Despite securing 16.5% of the vote in 2009 European elections, they got 2.5% in the 2010 General election. UKIP have indeed surged, but I think it unlikely they’ll get more than 8%, a level at which they will win no seats.

The Liberal Democrats will, of course be decimated. This isn’t the beginning of four party politics, it’s a return to Two party politics. And if you think Miliband’s going to improve his polling from here, I’ve a bridge to sell you. Many UKIPpers will drift back to their habitual parties, but which is going to have the stronger pull? The evidence suggests UKIP’s  initial surge, coinciding with the Gay Marriage debate, came mainly from the Tories. But the most recent surge in the run up to the Euro Elections came mainly from Labour. And I’ve a sneaking (possibly wishful) suspicion, the ex-Labour vote may stick around for the General Election, but more of the Ex Tory vote will head back to the blues, lest Miliband gets in.

It’s difficult to think of a better election strategy for Cameron than saying “we delivered a recovery, they’re led by Ed Miliband”. Apparently no leader has shown worse in focus groups, not even Gordon Brown. The more enthusiastic UKIP voters don’t want the grubby compromises of Government to dilute the simple appeal of the message. In this, they’re very similar to Liberal Democrat voters. Most of the rest know, deep down, however much they like having their prejudices stroked by Nigel Farage, UKIP are not a potential party of Government. It’s either Miliband or Cameron for about half of the 4.5 million people who voted UKIP, and I suspect the majority of those will choose the latter.

Every single pollster over-estimated Labour and underestimated the Tories in the run-up to the Euro poll, which means far from being neck and neck, I suspect the real GE 2015 polling position now is a small Tory lead. Governments enjoy swing back in the final year of Government, especially when there’s an economic recovery. And the UK is the fastest-growing major economy in the world at the moment. Napoleon once asked of a General, “I don’t care how good he is, IS HE LUCKY?“. Cameron appears to be.

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So the Liberal Democrats want to ban cars…

…which emit CO2, by 2040. Details can be found in this document. (PDF)

The main problem I have with this document is that it makes no mention of the biggest change to transport technology on the horizon, the driverless car. Instead, the Lib-Dems are wibbling about High-Speed Rail which will be almost completely obsolete by 2050 as everyone will be snoozing in their own autonomous vehicles. Such vehicles will run door-to-door on a vastly greater network of tracks (let’s call them “roads” shall we?) than any train network will ever be able to compete with.

It also seeks to pick the winner from the competing technologies, suggesting battery cars are the future when they probably aren’t.

Since the 1980s there has been a near perfect experiment in car design. The Americans used rules to define what emissions are acceptable, and relied on the motor-manufacturers to deliver more efficient cars. In Europe, a tax was applied to fuel, and pressure from consumers demanded more efficient cars. The Americans relied on state dirigisme, the Europeans relied on the market.

Source
And as you can see, the State can drive the low-hanging fruit, but it takes a market solution (like a tax on fuel) to drive the technological changes which allow some cars to do 80-90 miles per gallon. Furthermore, rules can be gamed, which is why not included in the graph above are the grotesque pickup trucks which are popular in the USA as they are not included in the emissions regime.
The Liberal Democrats appear to want to use the bad American approach to vehicular emissions, and not the winning European one.
This document is being presented in the news as “silly lib-dems with unworkable proposals”. Actually it’s far from blue-sky thinking and merely a re-hash of old dogmas. It’s arguable the oil price may fall. The lib-dems assume it will rise. VED is a VERY blunt tool to drive emissions compared to fuel duty. Road Pricing is likely to be insanely unpopular, and achieve little more than fuel duty does currently, and drive people off trunk-roads and onto smaller, more dangerous roads, increasing deaths and congestion. 
All the approaches in this turgid little document have been tried elsewhere, and been shown to be either useless at best, or counter productive at worst. The Weird Beards at Conference will love it.
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In a War on Drugs, Why are Humans Going to Gaol?

Read this excellent post. Ewan Hoyle is a Liberal Democrat from North of the Border, likely an endangered species. But at their best, the Liberal Democrats are prepared to say what they think, hoping in vain that being right somehow correlates with being electable, which in the main, it doesn’t. In doing so, he asks one pertinent question:

The passage up the lower slopes of the political mountain is getting increasingly smoother, as can be seen in the substance of the Home Affairs Select Committee report that was published last Monday. But when the arguments reach the political pinnacle, they are met with the usual intransigence and a gentle nudge off the nearest cliff-edge

The reason is of course the cost-benefit analysis. The UK is a signatory to the UN conventions on Narcotics. Much of the Popular press is extremely hostile, as is the majority of the (voting) public.

As soon as something other than the simplistic ‘war on drugs’ is suggested, Leah Bett’s parents will make damn sure that which ever politician introducing the changes will be Personally associated with front pages like this.

Never mind that the Rachel Whitear was killed in an environment where the strictest penalties are enforced for supplying heroin, and that it seems likely that while there may be more users (and in a liberal drug environment, I doubt even that), there is a simplistic cause/effect narrative that will be played upon HARD by opponents of reform.

Ewan argues passionately in his post that a new narrative is needed and that confronting the political class with the need to admit failure is the stumbling block.

I disagree.

To take an extreme example: The German people collectively admitted guilt after WWII, and now they are model Global citizens, dominating others only with the excellence of their engineering the hardness of their work-ethic, economic prudence, and environmental concern. The drug warriors need to be demobilised, just as completely as the Wermacht in 1945 because they are WRONG, and nearly as murderous, destabilising entire continents in a utterly futile attempt to stop people self-medicating.

So why don’t I think there would be more Rachel Whitears in an environment of legal and readily available supply? Because she died because of an overdose due to an unusually pure dose of street smack. This isn’t going to a problem with a legal supply chain producing medical-grade products of known and predictable strength. But won’t there be more people tempted to experiment? Ask yourself this: If you could get cocaine or opium, why would you experiment with injecting yourself with Heroin, something that is associated with catastrophic social outcomes? Very few people want to become junkies.

Ultimately the reason there are 330,000 problem heroin addicts in the UK is the highly efficient criminal supply-chain which sees mid-level users recruiting new addicts in order to fund their own use. There weren’t this number before the misuse of drugs act. If you cut out the criminal supply-chain, remove the profits and the incentive to recruit new users, we would go back to Heroin being an addiction of a small number of people, most of whom in pre-prohibition days became addicted in Hospital. Opiate addiction used to be known as ‘the soldiers disease’ for this reason.

 Where Hoyle skillfully deploys libertarian arguments, I agree wholeheartedly with him.

The 21st century war on drugs should instead take inspiration from ancient history and adopt a distinctly Roman style of capture and enslavement. It should be defined by the goal that drugs can be be our slaves but never our masters

Yes. Why do people share a bottle of Chilean Merlot after work. Because the alcohol is a relaxant. A bit of alcohol in the blood feels nice. Funnily enough, that’s why people smoke pot too.

And that goes for all drugs. When a hard-working citizen returns from work on a Friday night and demands a soothing head massage from their servant drug, who are we to dictate whether that drug be a glass of red wine or a cannabis joint. The state has a role in educating on how a drug best be handled, and if a drug looks like it has ambitions to become a citizen’s master, the state and citizen need to be able to work together to put that drug back in its place

However where I part company with Holye is where he takes the prohibitionists “research” at face value. The link between cannabis and psychosis is a correlation for example. Cum hoc ergo propter hoc? Are people prone to psychosis drawn to cannabis? Certainly people get psychotic without regular cannabis use, and many smoke daily without significant harm. However everyone who smokes cannabis who gets psychosis, you KNOW his family will be sure to blame the drug, because it’s easier to believe than the other options. Cannabis use starts in adolescence, as do many mental health issues. Without research which isn’t funded by governments desperate to prove that the war on Drugs is justified we’ll never know if correlation implies causation.

Likewise, the evidence that “skunk” is uniquely wicked and is not the “mild stuff”your parents smoked is extraordinarily weak. Well maybe, but that’s as likely due to freshness of domestic supply rather than the imported, dried and…old stuff our parents smoked. The figure of 33 times stronger, oft cited, doesn’t bear scrutiny.

The fact is, without research  we won’t know. But accepting the prohibitionsts lies and exaggerations without question makes it unlikely we’ll ever get answers, until we change the environment in which research is conducted.

The inertia that led to Nick Clegg being slapped down for calling for a Royal Commission on drugs, is the total buy-in of a medical-regulatory complex and total capture of of the debate by law-enforcement; people who simply don’t see the need to examine the evidence. Drugs are a social evil in their view, and must be fought. All “experts” have until recently been drawn from this community. Even Professor David Nutt, who’s said some sensible things on drugs, often seems more intent on banning Alcohol.

Where I really disagree with Hoyle is the trust of the state, and the mistrust of private enterprise.

the problems that might arise if there were companies who would profit from the artificial promotion of cannabis, or particular strains. It might therefore be wise for commercial interests to be excluded from the market altogether. The best way to prevent advertising and marketing encouraging consumers to make decisions against their interests and those of society is to as far as possible ensure that nobody’s wealth would be dependent upon continued use of the drug or of particular forms of the drug.

It is quite possible a state monopoly is the only model that can demonstrate to the voters that legalisation is a process we are embarking upon with appropriate care, with the highest regard for the health and happiness of the nation.

I simply don’t trust the state to set the price appropriately, supply efficiently, and conveniently enough to deny a market to the criminal enterprises which will seek to maintain their market. It is unlikely a state supply of MDMA would be available where it’s wanted: civil servants don’t attend nightclubs on a Saturday night. Dealers do. By all means tightly regulate the market in terms of quality, and supply to minors. But let the market do its work. Trust people to make decisions based on what they want. What they want, often isn’t the alcohol which is the cause of much blood and vomit on a Friday night. They also don’t want to become junkies. So I agree the state has a role in education, research into effects and quality control, and the provision of addiction services, but leave the supply to people who might actually make it more convenient than the illegal supply-chain.

Until there’s a mature debate around why people take drugs from Cannabis to Cocaine – because they’re fun – and can play a part in a productive life, people will continue to die unnecessarily from dirty drugs of unknown quality and strength. Skunk treated with fungicides without regulation may even be the cause of some of the psychosis. Who knows?

Drug policy reform is not about liberating drugs. It’s about liberating people from ignorance, persecution and the drugs that have power over them. Can we please finally declare a war on drugs so that we can capture and enslave them and put them to work easing our pains and helping us smile. Without a proper war on drugs with sensible, realistic goals, too many people will be left to fight and lose their own personal battles without the knowledge, help – and in some cases drugs – that they need to triumph.

Thanks to the Liberal Democrats, and countries like Portugal with successful decriminalisation experiments, drug legalisation is now firmly on the agenda. It will be a hard push. But first we must persuade people who read the Daily Mail that it’s the Drug war that’s killing kids, not drugs. And we won’t do that by accepting lies told by people who’re totally invested in the status-quo and who believe they’re doing God’s work. Ultimately, decriminalisation is an utterly unsatisfactory half-way house, because it will leave the supply-chain in criminal hands, and THAT’S WHERE THE PROBLEM IS. Decriminalisation should be resisted, lest it discredit what might actually work. And let’s not beat about the bush: The war on drugs has failed, and the collateral damage isn’t worth the outcome. Let’s put the blame for the tens of thousands of deaths worldwide where they belong.

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Ed Balls’ “Wealth Tax”

In an Independent “exclusive“, Ed Balls has said he’s going to impose a “proper wealth tax”. Wealth taxes are window-lickingly stupid and anyone advocating them is an economically illiterate moron. here’s why:

  1. Moral hazard. It penalises those who save for retirement, pay off a mortgage and seek to not be a burden on the state, against those who spent their surplus income on Beer and Cocaine.
  2. As Tim Worstall points out, a well-off retiree might face a wealth-tax greater than their annual income.
  3. Real wealth is very mobile. No-one is going to stick around or let their money stick around to be taxed by the government. The left hand side of the laffer-curve on wealth taxes is very short. For this reason, the super-mobile top 1%, who pay 25% of income taxes will leave for Switzerland, Monaco or the Carribean. You end up therefore not taxing the 1%, but the less-mobile upper-middle income retirees instead. Even here, a wealth-tax increases the attractiveness of the Costa-del-sol, where retirement property is currently cheep, like a budgie. The wealth tax may, and probably will, therefore end up costing the exchequer.
  4. For the reasons laid out above and many more, wealth taxes are very hard to collect. Dennis Healy, former Labour chancellor of the exchequer during the ‘winter of discontent’, no rich-pandering neo-something he, said in his memoirs “in five years I found it impossible to draft one which would yield enough revenue to be worth the administrative cost and the political hassle“

    5. Though to be fair, that the hapless Healy thought something impossible does mean it actually is.

Wealth taxes are so utterly stupid that even Gordon Brown’s lickspittle, Ed Balls is not actually proposing one. He appears to be entering negotiations with the Liberal Democrats by suggesting a mansion tax instead. He’s just appeasing his own moron supporters by calling it a wealth-tax. I’ve no problem with a mansion tax, but it would be best imposed putting a few more council tax bands on at the top, rather than designing another silly, gimmicky tax with its own bureaucracy of Labour-voting trades unionists. However increasing council tax, even on the rich is political suicide because of the Daily Mail.
So. Everyone’s wrong. Democracy: doncha love it?
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Is Vince Cable Right?

The 50p rate is a silly tax and raises little if any money, so needs to go. Osborne appears to want this. Both the Tories and Lib-Dems want to raise the income tax threshold to £10,000. This makes sense too. Why tax people earning less than a “living wage” and make them beg for some of it back? This seems perverse. This tax cut offsets any benefit cuts suffered by low-waged workers and makes a great deal of sense and seems fair. Politically, I can see why “the rich” need to be seen to pay more, even if I disagree they do.

Economically speaking cutting the 50p rate is a free win for the exchequer because it’s raised a great deal less than expected and may actually raise more money at 40% (the jury’s still out on this one, though I suspect the IFS will show the 50p rate has cost the exchequer…). Raising the tax threshold however is a genuine tax cut. As such, we at this blog are not punk-Keynesians who believe that more deficit is any form of “stimulus”. This means a raising of the tax threshold to £10,000 either needs to be matched by spending cuts (the best option) or a tax raise elsewhere.

Given that further spending cuts are not on the table, the question is what to tax. I am in favour of cutting income and payroll taxes, as well as those on capital and profits in order to raise taxes on consumption. I am also persuaded by the economic rationale for land value taxation, which is why council tax doesn’t get much abuse on this blog.

According to the BBC news, the options are extra council tax bands at the top, an increase of stamp duty, or a mansion tax on properties worth over £2m. A Mansion tax is silly. Why introduce a new tax, when there are land value taxes in place which could be modified? Although this was in the manifesto of the wooly-inbetweens and will probably be the most politically easy to implement, it’s not the right option. It’s distortionary, creating an arbitrary cut-off at £2m and will hardly raise any money at all, and with an additional bureaucracy for a new tax, is gratuitously inefficient.


There are not enough of these to make a “mansion tax” pay

An increase in stamp-duty on the most expensive homes is probably the next most politically likely. After all, you only pay it when you sell or buy which for most voters is far enough away to be ignored. Gordon Brown did this, and the result was a much less efficient market, one we’re still suffering now. Transaction taxes like this reduces liquidity in the housing market. A Tobin tax is a silly idea for shares, and houses are no different. Such a tax will encourage people to hang on to homes they rattle around in, thus increasing prices of four bedroom family homes for those, young families, who need them most, but can’t afford them. They’re paying income taxes, effectivly subsidising grandma’s three spare bedrooms in which nick-nacks gather dust. Transaction taxes are stupid. They decrease liquidity and predictability of markets, and therefore increase volatility. These are not good things in a market as central to an economy as residential property.

By far the best, most economically efficient tax, with the fewest economic side effects and one or two positive effects too is to simply increase the number of council tax bands, increasing the council tax on the biggest, most valuable homes. This will encourage empty-nesters to move down the property ladder, freeing family homes for, well, families who need them. It will encourage a more liquid, and therefore less volatile and more predictable property market. The act of downsizing your property will free vast amounts of capital currently tied up in property, to be redeployed elsewhere in the economy. It will increase incomes for pensioners who downsize.

One of the biggest structural flaws of the UK economy is the love affair with bricks ‘n mortar. By taxing property to pay for an income tax cut you replace a damaging tax (high rate income) with a less damaging tax (property value), and improve the liquidity and assortiveness of the UK property market into the bargain. You also increase the amount of tax raised locally, increasing the power and prestige of local government, which fits the Government’s localism agenda.

However. This isn’t what will happen. The arguments in favour of raising council tax are too difficult, the tax too unpopular to be the vehicle to replace the taxation of income between £7,000 & £10,000. What will happen is that a “mansion tax” on “the rich bugger down the road” will be levied and an opportunity to reform council tax will be lost. There will be a tax cut. There will be a replacement tax, which won’t raise as much as income tax on income between £7,000 and £10,000 and therefore the deficit will go up. The property market will be made a little more complicated and a little less liquid.

The Tories are half right. (actually a bit more than half). The Liberal Democrats are half right (actually a bit less than half). Half times a half, is a quarter, so I suspect the coalition will be a quarter right. This is why tax systems should not be designed by a committee.

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Ground of Your Choosing: The Benefits Cap.

In battle, a successful commander will draw the enemy onto ground of his choosing. At this, Tony Blair was a master. By drawing the Tories to fight on ground, like Europe or the NHS, where they were weak, they were made to seem out of touch. The result was three election victories. Indeed New Labour’s vilest policy, the plan to lock innocent people in gaol for 42 days before telling them what they were supposed to have done, was merely an attempt to discomfit the Tories. Propose a policy so vile that the Tories would have to oppose it, and then say they’re “weak on terrorism”. Of course that was a policy so vile even the lobby-fodder of the Labour party couldn’t wear it and the Labour government went down to it’s first defeat.

Yesterday, Labour, Liberal and cross-bench peers inflicted another defeat on the Government, by supporting an amendment exempting child benefit from the proposed £26,000 benefits cap. Let’s not forget that a tax-free income of £26,000 is equivalent to you or me earning £34,000. You can support a family on a salary of £34,000 so I suspect the Government is delighted.

Who are we talking about? Mainly this benefits cap will hit people living in hugely expensive areas, mainly in London, who have large families. The elephant in the room is Housing benefit, paid directly to Landlords and inflating rents for the rest of us. Obviously people will have to move out of Hampstead, Chelsea and St. John’s Wood to somewhere grotty in zone 4.

So you’ve had to move? This is the world’s smallest violin & it’s playing just for you.

The other group of people are those with large families. I think lefties will be surprised at how people who’d love to have three or four children and who don’t because they simply couldn’t afford to have them, feel about people who’ve never worked, pumping out kids on the tax-payers’ expense. Most people feel we need to end the subsidy for people who’ve never worked to breed people who’ll never work. In any case, you can bring up plenty of kids on a salary of £34,000. You just might have to move to a cheaper part of the country. A family of eight children could potentially forgo income of £5933.20 a year, equivalent to £8725 pre-tax & NI. So in essence, the Labour & Lib-Dem Lords want to pay £42,000 a year to people who’ve decided to make you pay for something many working people have decided they couldn’t afford. Good luck selling that.

Working people on this kind of income, £34,000 a year, are called “middle class” often in a sneering way, and are not helped in any way by the benefits system. Indeed because I EARNED less than this in several previous tax-years, 6 of them, during which I held down 2 jobs while building a business, my Fiancee was denied any benefits at all when she lost her job. So what if people are forced to move to grottier areas of town? Working people have to do this all the time, when their income falls. So what if their kids have to move schools? My friends in the Army have the same problem. There are plenty of Private soldiers in the army dodging bullets in Afghanistan who have families subsisting on less. There are people starting businesses earning nothing who are nonetheless excluded from the benefits system. Do you think these people feel any sympathy for someone paid more than many people earn to do nothing?

The idea that an income equivalent to a salary of £34,000 “will thrust families into poverty” is absolutely abhorrent to the people who are forced, by the threat of expropriation and violence, to pay for it, people who are sneered at as “middle class”. I would not be surprised if the Government quietly persuaded enough of its supporters in the Lords to stay away from yesterday’s vote, to ensure a right royal battle on ground on which it is absolutely certain of the public’s support.

Good luck, lefties, trying to persuade anyone that an income equivalent £34,000 a year salary is going to thrust anyone into “poverty”. I suspect the Government is absolutely delighted to have this in the news for a few more weeks. “Labour wants to pay its voters more than you earn”.

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Farewell to the Devil…

…So the Devil has joined Mr Eugenides in throwing in the Towel.

There’s still all manner of socialist lunacy to oppose at all levels of Government. Even if I am broadly in agreement with this Government’s approach, there are councils, there are celebrities, there are unions, there are people who’ve lived high on the fat of a profligate government now bleating about “cuts”. They are parading the bleeding stumps of the poor, in many cases kept poor by those policies they’re bleating about cutting. These are the people who need opposing – the needlessly entitled client state that Labour built – help the Coalition smash it.

Of course if your demands are “dismantle the entire edifice of the state by next tuesday” you’re always going to be dissapointed. If you cannot see any benefit from the EU, and think it THE MOST IMPORTANT ISSUE, and see plots and betrayal where I see a pragmatically skeptical Government which has more important things to do than tilt at the EU windmill, you’re always going to be angry. The election, as far as I am concerned produced a result which may, in time, result in a good government. So I too am losing the rage and throwing rocks at opposition politicians (metaphorically speaking I don’t want to end up prosecuted for “threatening communication”) is less fun than it was when they ran things.

The oppositional mindset of the Blogger prior to May was about the savage assualt on civil liberties. Now, its about whining that you have to stand on your own two feet once more as the state removes the comfort blanket. The blogosphere is going to be a much diminished thing if Liberal Conspiracy is in the vanguard and all it is bleating about is ‘cuts’.

Of course, I will miss the Devil’s cathartic ranting ond forensic foul-mouthed fisking. He’s a good mate in meatspace too. However as someone somewere said “Blogging is like the Hotel california: you can check out, but you can never leave”. The devil will return, of that you can be sure.

Some of you may have noticed a drop off in the volume of posting here. Of course when I am inspried, I write, when I am not, I don’t. At the moment I am busy and Travelgall is away for a couple of weeks. Rest assured, we will stay in harness at least until the Labour corpse stops twitching. I may not be directly opposed to the Government, I am, after all, a card-carrying Conservative. I am, and always will be opposed to “the state” insofar as it affects me and my life, whether by enabling corporate fuckwittery, or by rapacious taxation, or by poor, illiberal law-making.

The Government is not libertarian. The state is still consuming over 50% of GDP. Tax is over 40% of GDP. The civil liberties outlook is, like the country’s finances merely getting shittier at a slightly reduced rate. There is still much for the Libertarian blogosphere to do.

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Protection on the Left Flank

The Labour party demonstrated its attitude to the Liberal Democrats after the election: They thought that the other left of centre party was theirs for the taking, and any Lib Dem votes could be added to theirs in an ‘anti-Tory alliance’. This was true for about a third of Lib Dem voters. Tories make the same mistake with UKIP.

When asked what they wanted to see from the election the voters seemed to indicate that a hung parliament was their favoured option, and that a Lib-Con alliance was what they wanted to see. Whilst I wanted to see a big Tory majority, I am disgustingly satisfied with most of what’s come out of the Government since the election. This poses a problem for the Political blogger. I have no-one to rant against. I am reduced to apologising and defending government actions against people that disagree. So If you think you’re going to see right-wing firebrand ranting against the CGT raise, you won’t. I don’t agree with the policy. But as it’s (1) Temporary (2) a simplification in that it’s a tax at the same rate as income taxation & (3) ‘paying for’ a rise in the income tax threshold to £10k, I think I can let it slide.

And this is the point of Coalition. If I can be persuaded that some dodgy policies are necessary, at least in the short term, imagine what the Liberal Democrats in Government are doing to the left. As I mentioned above, the Labour party HATE the Tories. But they will not be able to muster the passion in their activists against the EVIL Tories because their fellow-travellers have got into Government too.

Maybe it will force the Labour activist base to reappraise their view of Tories as evil, rich class enemies. Many Labour people assume Tories are naturally authoritarian. We are not. We are only interested in ‘the rich’. We are not. We are bigoted. We are not. And perhaps because the Liberal Democrats have seen this, eventually the Labour party will too. In the mean time, the leftist opposition will be blunted by the presence of genuine left wingers, albeit ones who see what needs to be done to fix the country, in Government.

Maybe, just maybe, we’ll see gentlemanly politics return to Westminster, and freedom to the country.

Or am I just demonstrating a hopeless optimism?

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