A global archive of independent reviews of everything happening from the beginning of the millennium
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21 January 2023
Over-virtuous posturing on abstracts like inequality (rather than concrete concepts like poverty or 'misdistribution of the pie') are not going to solve much.
Much the greatest way that extreme wealth is produced is through how financial markets value wealth as a multiple of corporate profitability. Halve corporate profitability and you approximately halve extreme wealth concentration.
Look at how Elon Musk's fortune has doubled in a short spell of time and then halved again.
Twitter is not seen as a profitable company going forward so far from being worth $44 billion it is probably not worth very much now at all.
It is not so different from what we have seen in the past - people buying newspapers that proved to be financially worthless.
Twitter and the newspapers struggle on but the aura of financial muscle and representation of wealth has gone for these media properties. Yahoo! and AOL once had greater perception of financial muscle than Twitter.
In the medium term the move has to be away from taxation of people to the taxation of business systems.
Other than global shocks like pandemic or war most of the world's economic problems are now caused by business systems. People, unless they run government, are relatively powerless to do economic harm.
Napoleon hated the business community for being a brake on achieving things.
He had a point. Listening too much to business interests this millennium has produced incompetent politics and low growth in most places other than China and petrostates.
Do not indulge them. Do what is politically creative.
Net zero is full of fudges to favour business systems.
Some fossils fuels and their products are environmentally less damaging than others.
Natural gas, petrol and kerosene cause limited environmental damage. Plastics, heavy fuel oil, diesel and coal are very damaging, producing killer chemical particles.
Little has been invested in business systems that can screen out some of these and put them back into the holes in which they were found.
It would be costly so all will continue to be used at full scale - whilst more money than that will be wasted on unscaleable carbon capture and storage and turning expensive-to-produce electricity into hydrogen.
Coal is being 'phased down' so is worth looking at.
Assume for a moment that a tycoon owns the greater part of a set of coal mines that makes him a billionaire.
Tax him to reduce inequality is the kneejerk reaction but even if it were possible given that the assets will soon not be held in his name how does it help?
You take a cut of a business system that is causing environmental and health damage and it continues. Some business systems heavily exploit workers and that may continue even if you change the owner.
Of course, a rich person should bear a greater burden than a poor one but since everyone wants more tax on anyone richer than themselves it becomes ethically difficult to draw lines between people as to who is deserving. Everyone who has a car might, for instance, have to switch to one half the price so that those without a car in poorer continents could have one as well.
Better simply to take measures that reduce excess corporate profitably and switch taxation to production. It would reduce 'inequality' automatically.
The U.K. North Sea once had a 12.5% petroleum revenue tax that could serve as the model. The OECD has started the ball rolling by moving to a minimum 15% corporation tax rate.
In the not too distant past competition ensured excess corporate profitability was kept within bounds. In today's world of corporate monopoly and oligarchy that is not obvious.
Corporations are a pain to deal with and the trend is to deal with fewer at a time to get out of their way and the rules they try to impose on consumers instead of treating the customer as always right and providing a service, or even goods, people want.
No one might care if you did not question the business systems, supply chain difficulties or moves to increase profitabilty that make the price of a bottle of non-discount mineral water rise 25% in a week.
THE EMERGING SCENARIOS
Reviewed by ANDRE BEAUMONT
10 January 2023
The decision of the Farageistes to field a candidate in every constituency will hit Labour the hardest. [It never came about].
The Conservatives need to draw a line under austerity in no uncertain terms within 18 months of Rishi Sunak's accession and return to tax cutting for those who actually vote.
The markets were willing to let the crisis pass rapidly if Kwasi Kwarteng's budget were reversed. Three aspects riled them. The tax cuts of an unprecedented scale of a type that Rishi Sunak had already identified were not capable of increasing investment; Labour's conspiracy with some of the Tories to remove the earlier national insurance rises showing it would not be able to maintain budget rigour in the face of corporate lobbyists turning nasty if it came to power; the energy subsidy regime was going to be far too generous after the winter, as if scribbled out on the back of the envelope, and comparable in scale to the corporation tax cuts. Only one of these three irritants now remain.
There was minimal point in coalition austerity to blow the same sum on HS2. There will be minimal point in tax rises to blow it subsidising business energy costs.
Interest rates for Britain will be significantly tied to those set by the Fed. Of the four major traded currencies the euro and the yen might be able to beat a different drum but the past incoherence of British economic policy does not permit sterling to do so at the moment.
The Farageistes will be taking votes already destined to be leaving the Tories amongst those looking for an alternative and preferring a destination that is not Labour. It is Labour ideology that mainly dictates this.
Even if Labour emerges as the party with the most seats in a general election it will struggle to have an overall majority. Without one it will be putty in the hands of the SNP with its greater attention attracting instincts and none of Labour's patina of weakness. The union could be in danger.
It has taken decades to realise Jim Callaghan was quite a decent man given the circumstances. Ted Heath had been bolder. Margaret Thatcher was to be more radical. Callaghan's weakness in foreign negotiations, especially with Helmut Schmidt, put off many younger voters. He and his Chancellor could not get a grip of inflation in the way Margaret Thatcher was to. Once in the driving seat he was continually undermined by the left of his party. The optics were bad as were the perceived levels of taxation. You get the feel that some of this could be repeated by today's Labour.
In the main there was little deception and no perception of suppression of democratic discussion. The heyday of the press had not yet arrived either.
3 August 2024
It is a pity that when you come to Chancellors of the Exchequer you have to personalize - but it comes with the territory.
For what it's worth, I think Barber, Lamont and Clarke have been the best Chancellors in my lifetime but politics can overemphasize events that may unfairly damage reputation.
No country sets crackpot fiscal rules as we do. They are totally unnecessary. The markets want to know a Chancellor is up to handling a market crisis, if it ever comes. Norman Lamont was, Kwasi Kwarteng not.
All three of Boris' Chancellors had enough understanding of markets or business - and they are two separate things - not to worry the markets even though Boris borrowed a great deal at minimal rates of interest.
The Labour party in opposition showed its inexperience by adopting the Tories' fiscal rules. The Tory party used fiscal rules to cover up that particular Chancellors were not enthusiasts in getting to understand economics.
Gordon Brown invented them but to cover up something else - that he was going to overspend and overborrow - after all, PFI was outrageous borrowing loaded on future governments to pay.
Rachel Reeves' emphasis on fiscal rules covers up something else - surprising for someone who worked at the Bank of England - she does not understand markets.
The markets do not care that there is some borrowing overshoot. It was in their anticipation. They are rather pleased that the inflation rate was brought down from 10% to 2% before Labour took office and like the good coupon they are getting to lend a little more to the government.
They are pleased that the economy is doing better than expected, are not convinced Labour knows how to get growth through its own efforts, and would rather not see a deflationary budget, which tax rises would make it. Let the growth continue unchecked for now.
Animal spirits would have been raised by replacing inheritance tax with something less set against human nature but the electoral bribe was squandered on a 4% cut to national insurance that no one opened an eyelid for, showing the very poor fiscal and electoral advice the last Chancellor got from his advisors.
The markets do not care that Reeves has paid up for NHS staff but would rather she did not introduce tax rises that would drive trading from the City to Amsterdam (which does not have CGT). It is far from just professionals that use any market. Drive out the independents who provide liquidity and the entrepreneurs who take losses in pursuit of unanticipated visions and you have no market.
Just wait for the crisis, which will not be like the last, by which time a Chancellor might or might not have worked it out.