Sunday, September 18, 2011

What is the Tory party for - really?

This time round with the Conservatives, it seems to me more obvious than ever that the party is, like the Republican party in the US, in essence nothing more than an organization devoted first and foremost to helping out the very, very rich, and big business, often at the expense of everyone else.

The real expertise of the party lies in dressing up policies designed to favour what the rich/big business perceive to be in their short-term interest as really being about "fairness".

This was masterfully done in the case of the Higher Education reforms, which stuffed the middle classes financially, saved the highest rate tax payers a fortune for generations, offered big business all sorts of opportunities, but dressed it all up as "Why should a postman have to pay for your university education?" That was quite brilliant PR.

Ditto the ongoing cuts which were 50% higher again than even Darling wanted (who was in turn much more pro-big-cuts than Balls and Brown), which were widely predicted to cause a double dip recession for obvious reasons, and which were nevertheless pursued on the basis of very little economic evidence (indeed pursued in the teeth of much historical evidence to the comtrary). Why? Because the very rich saw their opportunity to slash away at services that cost them a great deal in tax.

Now that the economy is in trouble, apparently as a direct result of that slashing away (as are many other economies, for much the same reason), the proposed solution, is of course, to now pump money in to the economy - by, er, cutting taxes for the very rich.

Ditto the NHS reforms. See my earlier post.

That this is the Tory party's ultimate reason d'etre seems to me transparently obvious. They may fiddle around with other policies too, of course. But, when it comes to serious money, that's what they do: stuff it into the pockets of their rich mates.

But perhaps I am in an intellectual black hole that blames Tory self-interest for most things. Perhaps I am being unfair? So set me straight. Can you Tories out there point to some examples where Government policy has been changed in such a way as to introduce a serious financial cost that falls primarily on the very rich and/or big business and benefits the rest of us? Other than when they've had a gun put to their heads?


wombat said...

No idea what they are for other than to get elected - pretty much the same as any other political party it seems (orbiting my own black hole perhaps?)

Does this following event count as an example where the reverse happened?

Why Nigel Lawson was the most redistributive Chancellor of the Exchequer

Did Lawson really mean that to happen or was it accident? It's directly relevant to your pumping money into the economy point. Tax rate is obviously not equal to tax take. Fair enough if there is a commitment that e.g. no-one should earn more than n times the lowest paid then by all means argue the case for that but one has to accept that the price of such a commitment might be a lower overall tax take. The Lawson experience doesn't show where the optimum point is though or instantly refute any case for limiting income inequality but it does raise the bar a bit in putting the case for higher tax rates. What are we going to give up elsewhere?

Can't really say much about the current lot of Tories. I suspect in some instances it's too early to tell what the real result of it all is going to be. The usual cautions about the law of unintended consequences suggests that at least some policies designed to help their mates will backfire, and you will get your examples.

"Fairness" is a word that politicians should be prohibited from using. After all we have an adversarial electoral system in which each party promotes its own sort of "fairness" to get votes without ever troubling to ask if there is, or even can be, a universally accepted objective definition - or perhaps they secretly know of one and realise that it is either unpalatable to the electorate or otherwise against their interests!

FWIW I got the impression that the historical evidence for successful recoveries from recessions related to budget deficit problems was actually skewed a little more in favour of greater cuts to state spending as compared to tax increases. The proportion that boy George chose seemed a bit borderline. I'll see if I can dig out links etc. Informally of course one could point to the Blair/Brown years where State spending increases didn't stimulate growth enough to reduce the deficit and at the Bush era tax cuts which left the USA in a worse position too. It sort of suggests that if the problem is an inefficient state (big,small or whatever) that inefficiency must be tackled.

wombat said...

A couple of references

Wall St Journal - SEPTEMBER 15, 2010
"Tax Cuts vs. 'Stimulus': The Evidence Is In" by ALBERTO ALESINA

and also

a paper here

which has some more refs and detail.

Edward Ockham said...

I'm not with you here. I'm not sure how you quantify 'very rich'. Taxes have gone up for anyone earning more than £100,000, both with the 50% rate and with the removal of the allowance. The Conservatives are in this strange marriage with the Liberals, who have some very strange ideas indeed (e.g. the London ‘garden tax’). The middle classes (I’m not sure if you are counting them as ‘very rich’) now have to fork out vast sums of money to educate their children.

You mention cuts, but cuts are different from taxation, surely.

Conservative said...

Iain Duncan-Smith wants to ensure that when benefit claimants get a job their benefits get reduced at a rate that ensures that earning more money means you have more money.

How would you classify that?

CraigL said...

You frame your last question with the classic Labour misunderstanding that wealth distribution is all that matters, that a government is deemed more successful the more money it taxes from people and throws at a problem.

I lose count of how many times a Labour spokesperson has been asked a question about what they did to help improve a given public service and respond by quoting pounds spent.

The idea of a low tax economy is certainly beneficial to the rich but that should not, in itself, lead us to conclude that the idea is wrong if it also leads to a better country overall.

If real social advances can be made and public services can be improved then who cares about where the pounds and pence end up? It's real quality of life that matters.