Class war vs economic policy

Not for the first time, Shuggy has got it spot on. The rise in the top tax rate to 50% is, he says, “pure symbolism.”
I agree. It might or might not raise revenue (two pdfs). But in the best or worst case the sums involved are peanuts in the context of a £1000 billion public debt. As a way of shrinking the deficit, the move is, to a first approximation, irrelevant.
Nor is it likely to affect our general economic performance. Nigella’s dad’s cut in top-rate taxes had no discernable effect on aggregate labour productivity. So why should a tax change that affects far fewer people do so?
But it’s not just Darling who’s guilty of gesture politics. David Cameron is doing the same. He told the Today programme - admittedly as an afterthought - that it is “necessary” to reduce welfare dependency. But getting a few people off the dole and onto tax credits will do very little to improve the public finances. And dragooning the most idle people into work is not going to significantly improve overall economic growth.
In both cases, we see a similar thing. Both men are appealing to their supporters gut hatred of “the other” - welfare claimants in one case, the rich in the other. But such attacks are mere grunts.
Or at least, they are in the way Darling’s practicing it. A genuinely socialist policy would not so much tax the rich as aim at reducing demand for very highly paid people, for example by getting rid of exploiters and chancers who masquerade as managers. Who knows, such a policy might also be economically rational too?

Comments

[Luis Enrique]

£1000 trillion?

[nm]

Even for you Chris, that's a spectacularly gratuitous shoe horning in of a picture of a woman with an ample cleavage

[ben]

Public debt of £1000 trillion? Fuck me!

[The Welsh Jacobite]

"A genuinely socialist policy would not so much tax the rich as aim at reducing demand for very highly paid people, for example by getting rid of exploiters and chancers who masquerade as managers."

Not just a "genuinely socialist policy" but excellent Toryism too. Down with such jumped up canaille!!

But Toryism (in the traditional, pre-Peelite sense) is inherently socialist (much more than most "leftism").

[chris]

Sorry gents, I meant - of course! - £1000 billion, or £1 trillion. Correction made.

[Diversity]

Cymbalism, perhaps? A loud noise injected to wake up the Budget audience.

However, Darling expects to recieve a symbolic sum of revenue for it. It is to be hoped that Dillow expects (or has received) a symbolic increment of revenue from Sara Lee.

[Bob B]

"U.S. bears 'substantial' blame for crisis - Geithner"
http://uk.reuters.com/article/marketsNewsUS/idUKN2237347420090422

Oh dear, I'm not understanding this. I thought that David Cameron is telling us that Gordon Brown is surely to blame. And it gets worse: Geithner (US Treasury Secretary) and the EU Commission are both in the news saying something will have to be done to regulate the remuneration of bankers.

I've no problem with putting a ceiling on bankers' pay or really linking their pay to performance but I've also been reading how raising the top rate of income tax to 50% and the rate of NI contributions for top earners is going to have all sorts of dire consequences downstream for us all.

Will restricting the pay of bankers mean that banks become much less efficient than they used to be and start to make losses? But just a minute, haven't the banks just been making horrendous losses - and when bankers' pay wasn't restricted?

Free Market Capitalism is all very confusing.

[kinglear]

Brilliant way to get the cleavage in!

[Bob B]

All very uplifting.

[Mr. Divine]

Need more uplifting stuff .. hurry

[Matthew]

Also on the symbolism thing if the Tories believe it will raise less revenue they could say they'll scrap it immediately (indeed they could argue for a lower rate than 40p unless 40p is the absolute optimum rate, which seems unlikely). In fact didn't you Chris once argue for lower marginal rates on high earners?

[Alderson Warm-Fork]

"But Toryism (in the traditional, pre-Peelite sense) is inherently socialist"

That reminds me of section III.1.a of a certain famous manifesto...

[Bob B]

"Need more uplifting stuff .. hurry"

There's an obvious explanation in terms of evolutionary theory for the prevalence of mammary attraction. But how then do we account for prevailing social cultures and traditions which have promoted dess modes that de-emphasise or suppress display of the female bust - such as the traditional kimono in Japan?
http://www.japanesekimono.com/

Least anyone is inadvertently misled into thinking that Japan is therefore inclined to puritanical ways about sex, try this clip from a TV show in Japan (warning - explicit content):
http://youporn.com/watch/50403/japanese-tvshow/?from=related2&al=2&from_id=199886

The late Mary Whitehouse would have gone apoplectic.

[Bob B]

Well worth reading this by John Kay in Saturday's FT on: Labour’s affair with bankers is to blame for this sorry state:
http://www.johnkay.com/politics/606

[Bob B]

Japan's income distribution is more equal than that of other affluent countries - see these Guardian charts on: Inequality - the mother of all evils:
http://image.guardian.co.uk/sys-files/Guardian/documents/2009/03/13/inequality.pdf

[divine]

Bob B
That was a bit too uplifting .. still thanks for the thought.

[Matthew Cain]

As another example of the posturing you mention, Cameron attacked a random list of high earners in the public sector over the weekend, naming and shaming them.

http://blog.matthewcain.co.uk/angry-at-camerons-hypocrisy/

[Bob B]

" . . a bit too uplifting"

I visited Japan several times in the early 1980s. They have regular late night programmes on commercial TV networks there which would cause public outrage in Britain but which cause little public response in Japan, perhaps because there is a long historic tradition of mass produced erotic art through woodcuts (ukiyo-e):
http://en.wikipedia.org/wiki/Shunga

Our conventional wisdom is that such art - or TV - would inevitably promote violent sex crime here but the crime rate in Japan is low. However, the recently published book on income distribution (Richard Wilkinson and Kate Pickett: The Spirit Level) argues - with much supporting evidence - that societies with more equal distributions of income tend to have lower crime rates.

We have yet to hear of David Cameron's response to this research on income distribution.

Btw given Harriet Harman's notions on banning protitution by making it illegal to pay for sex, I can't imagine what she might have to say about Shunga - or about sex on TV in Japan.

[John Freeland]

"A genuinely socialist policy would not so much tax the rich as aim at reducing demand for very highly paid people, for example by getting rid of exploiters and chancers who masquerade as managers. Who knows, such a policy might also be economically rational too?"

How to reduce demand for highly paid people? As I see the consulting business, those that bring in contracts get paid most, not those with science or engineering skills, but, rather, those with the "soft skills," i.e., people skills. Shmoozers who also play golf, and love money and club loyalty. Sorry if that's stereotypical.

The big contracts with the really big dough are those that have access to appropriations. Government dollars.

To eliminate these contracts, we'd need to grow, or re-grow, the civil service.

[Masquerade Masks]

These governments are getting scary...100 trillion is too large to even imagine!

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[masquerade masks]

looks like things never change, there always happens to be a class war and the same people always lose out.

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