Sunday, 10 October 2010

The Economic State of Emergency

So Cameron has been using patriotic military rhetoric and continuing the "we're all in this together" theme. (All except the hordes of breed-like-rabbits benefit scum who refuse to take up all those unfilled vacancies, of course).

I am slightly surprised at the crassness of it, but otherwise this is what I expected - below is what I was saying in Crooked Timber comments just before the election. In particular: Under the pretext of an economic state of emergency, there is the prospect of further near-irreversible moves toward the ‘free-market’ paradise that the Conservatives are obviously so keen on – while of course, as ever, being intensely relaxed about people being dirt poor.

Meanwhile, some people seem to view the recent exaggerated outrage at the proposal to remove child benefit from high earners as indicating a failure by Osborne. Not at all.

1. Getting a name for making high-earners pay (ahem) their bit is going to be handy in the next few years of relentlessly grim and brutal cuts.

2. This kind of figleaf is great for filling up the papers, panel shows and blogs with what is essentially a distraction.

3. It provides a reminder to those high earners about which side their bread is buttered on, at an early stage in the process of dismantling the remains of the welfare state: don't start gettng all compassionate on us; it's you or them.

4. none of those high earners is going to be bothered in the slightest in 4 years time, especially if the tax system handily (and with less fanfare) compensates them for this piffling amount.

5. Possibly most importantly in the long run (and this Parliament is going to be a long and gruelling run unless the coalition can somehow be brought down), removing universal benefits helps to eliminate the last vestiges of a 'One Nation' commonality of interests between the haves and the rest.

So I think reports of a 'child benefit fiasco' are, shall we say, somewhat overstated. In fact, I think the Telegraph, read closely and discounting the speculative bits, has more or less got this right.

That Crooked Timber comment in full:

Tim Wilkinson 05.05.10 at 11:33 am

I’d too would like to ‘punish’ Labour for the GWOT/Iraq business. Brown may not have been enthusiastic about the whole business, but keeping quiet and wishing it would go away while signing off on every penny is of course nowhere near good enough. On the same grounds, I’d like to reward the Lib Dems (as well as liking their noises about Trident and ‘illegal’ immigrants, for example). The Tories, who were in lockstep throughout and would have done nothing significantly different – or at least nothing better – if in power, certainly haven’t earned any rewards, of course.
But retribution and reward are not top priorities at this point, even they could plausibly be seen as a necessary part of a system of long-term incentives. (The war has already had electoral consequences in prising Blair out, of course.) In the close 2-way race in my constituency, for the first time since Kinnock I don’t see any alternative to voting Labour. Like CB, I would have considered voting for the Greens if I lived down the road in Pavilion, but that would probably depend on whether I thought they would be likely to vote for Brown and against Cameron in any confidence motions (or whatever exactly it is that would determine the governing party).
BTW, given that every seat counts – and possibly, as CB points out, even every losing vote, though I think Gordon might actually be the man for the job of facing down any attempted power grab from Cameron on the basis of PR-as-tiebreaker, considerations about the individual candidate seem to be pretty irrelevant. The dominant decision is which party to back, whatever the constitution may imply about characters and constituencies. An attempt to assess the likelihood of an individual Labour candidate’s defying the whip in a net positive way seems a bit beside the point in these circs. The urgent imperative is to keep Cameron out.
The Conservatives have done nothing at all to suggest they have moved toward the centre in broadly economic terms – even with a rightward-bound centre. They are run by a bunch of Etonian Bullingdonians, led by a particularly scarily dead-eyed specimen. There is not even the tiny comfort of a Thatcher who was at least (not that it made much difference of course) somewhat opposed to City dominance. There is certainly nothing like a Brown who for all his errors, fudges, compromises and sell-outs from PFI to playing fields (PE, anyone?) to untrammelled monetarism, does appear to have run a parallel benefits system from under the Treasury counter, and evidently does have at the very least the self-image of compassion to live up to.
The Conservatives have, even before getting in, the most hawkish about spending cuts, and flagrant in their ambitions for top-rung tax cuts like inheritance, for example. Their real intentions have to be guessed at, but they won’t have been understating their brutality.
Even the line of verbiage they’ve chosen to fill the ominous silence is actively repellent. All this wittering about voluntarism is familiar enough stuff, now elevated from a weak debating point to a supposed philosophy: ‘other things equal, wouldn’t it be nice if everything were done voluntarily, out of, er, benevolence?’. Other things equal my arse. Tell it to Adam Smith’s baker. Making obligations and liabilities voluntary – repudiable – has only one purpose, as every instance of self-’regulation’ testifies.
The City is openly salivating at the prospect of Cameron in no 10. If he does get an effective working majority – even with the help of the right-wing of the Lib Dems – he will have the deficit (which must of course be paid off in double-quick time) and the recession as the perfect cover, right at the start of his honeymoon period.
It’s not just the hardship – though that would be bad enough. Under the pretext of an economic state of emergency, there is the prospect of further near-irreversible moves toward the ‘free-market’ paradise that the Conservatives are obviously so keen on – while of course, as ever, being intensely relaxed about people being dirt poor. A spoonful of medicine helps the poison go down.


  1. But isn't some of the outrage over Osborne from 'traditionalists' who see it as discriminating against families with 'stay-at-home' mothers? The Conservatives have, for a long time, abandoned genuine support for the traditional family, esp. when it comes economic matters. If social conservatives were to try and resist this forcefully, then Osborne's move might be seen as liable to result in failure. However, I fear you're right, especially in light of the inanition of the aforementioned social conservatives (on the 'left' as well as the 'right').

  2. Actually it is a fiasco, and I'm surprised by how many people haven't spotted this (interestingly mums on mumsnet mostly have).

    The Tories have managed the following:
    1) They created a benefits trap! for people on the cusp of higher rate tax. Seriously. %500 marginal rate if you're really unlucky.
    2) They didn't target higher earners, they targeted higher earners with children. If you earn lots of money, but have no children, hey you're fine.
    3) This is also going to increase the cost and complexity of administering child tax benefit, particularly when you take into account dealing with people whose income changed through the year (wait for the outrage as families are asked for a couple of thousand back...).

    They've also managed to target swing voters in marginal seats (a significant proportion of those hit by this are living in those kinds of areas). Politically this was dumb. Politically they've laid a series of time bombs that will explode over the course of this parliament.

    What they should have done, was to have raised income tax for higher rate tax payers. Easy, clearly fair and trivial to administer. But that would be ideologically wrong...

  3. Tony, yes I suppose so - though I'm not sure how many of those (overwhelmingly) mums who don't go out to work whose partners are on higher rate are going to be start going out to work to make up the - what? 1-2K pa shortfall? Esp when quite a few will already be using their tax allowance, and poss. some basic rate earning, for nominal stuff like company secretary, etc.

    Nor that this will be much of a disincentive to have children. But I see this as a side issue really in relation to what is really going on.

  4. Cian - none of these affect the points I made - all are side-effects of the desire to cut benefits for the rich - and what other benefits do they get? (Same point applies to Tony).

    I don't think it's a fiasco from the Cons point of view, in short. Even any effect on marginals is, er, marginal: this will not be a big thing in 3-4 years time (I suspect it might even be quietly shelved before coming into force, and that may have been considered to be a possibility from the start). But it is important at the moment, for positioning purposes.

  5. none of these affect the points I made - all are side-effects of the desire to cut benefits for the rich - and what other benefits do they get?

    Which is why its a stupid thing to do. You can't get rid of a benefit like this without either creating a ruinously expensive (administering it) system where it tapers out with income, or by creating a tax trap.

    People hate tax traps. Particularly ones where if you earn £2,000 more, you end up with less take home pay. People aren't stupid, they've already worked this out. And it will affect one of the key groups that the Tories apparently think they need to persuade to vote for them. Which is nice.

  6. I don't deny th point, but the Cons are (a) able to reverse this later if it is still an issue at the next election, (b) perhaps even able to meet the objection by turning this into a tax credit/supplement to means-tested benefits, or accept the costs of means-tested tapering of this one (c) possibly able to front out the opposition of the particular demographic you mention, on the grounds that few of them will be flocking to labour.

    In any case, I think the whole attitude of this govt seems to be to make th most of the first term, and lety the chips fall where they may - i.e. the opposite of 1997. Focussing on a task rather than office for its own sake way well be justified, perhaps on the grounds that Labour won't have rebuilt in time, or that the Cons are unlikely to be turfed out after only one term, or that there are just too many imponderables to worry about that until nearer the time.

    And though this seems to be regarded as outside the realm of the possibly relevant, actually neither the PM nor his freakish little chum are necessarily that keen to hang around in office for all that long anyway.

    I've often reflected (cue speculative tangent) that though politicians are - correctly in one sense - often accused of being short-termist, that's not exactly right, since they are almost always thinking in terms of medium-term electoral effects - i.e the next election.

    For a party singlemindedly focused on getting results in one Parliament, with a working majority of MPs and the willingness to exert Parliamentary sovereignty, almost anything can be achieved. The only issue is de facto entrenchment. And to the extent that the things to be acheieved are largely destructive, that is less of a problem.

    In a way Blair provides a blueprint for high office as merely episodic in, rather than culminative of, a career - he has decades of active life left, and no sign that he's interested in the Labour Party or what happens to it. He's moved on. I can imagine Cameron and Osbourne seeing things in that light - I mean an ex-PM who has dismantled the welfare state at a stroke is going to have a lot of very rich friends, and a place in the history books. Why drag it out?

    This is not so much a hypothesis as a comment about the logic of the situation. I don't know what these people have in mind really, but they're not exactly old-school politicos are they.

    And they make it as clear as they could, short of a way to tell us that's spelt out in words of one vow'l, that they want at last to get rid of the state as we have known it since the war.

    Well, it's a thought.