A former Soviet Republic and the once-Socialist Sweden get it right on economics. They will save their young form decades of economic malaise. It might even prevent a lost decade…do read on O Blogmocrateers! Its a tale from our long ago re-released for the Estonian and Swedish audiences:
It may be a little early for Christmas songs, but we still packed in about 160 Spectator readers to our carol service on Wednesday night. It was held in St Bride’s, Fleet St, an immaculate Wren church filled with the sound of perhaps the best choir in London. As we milled around at the back afterwards, with the warm cider and mince pies, I noticed a board where parishioners had anonymously written their intentions. At the top was a prayer you wouldn’t have seen five years ago. “Pray for my son to find a job,” it said. “Please.”
A million other mothers will be making the same plea this Christmas, and there was precious little in George Osborne’s Autumn Statement on Wednesday to hearten them. The Chancellor’s political positioning was deft, as ever. But the economic outlook contained in his forecasts is dire. Britain has now been plunged into a Japanese-style “lost decade”; the average wage in 2018 will be the same as in 2008. And that’s if all goes as planned. Even these figures don’t account for the worst of it: youth unemployment is at a scandalous 963,000. It is becoming a national emergency.
Yet there was no real feeling of emergency, or even urgency, in the Chancellor’s statement. Osborne often behaves as if he is playing a game of chess with Ed Balls rather than trying to save a country. The policies in his mini-Budget – lifting the tax threshold, a tough welfare settlement, cancelling the 3p fuel duty rise – were all astute political moves. The Liberal Democrats will boast about their manifesto going into “people’s back pockets”. Mr Balls will be tricked into voting for benefits going up faster than wages, unpopular with his target voters. So politically, the mini-Budget was a roaring success. But economically, it made almost no difference.
It is said that the greatest trick the devil ever pulled was convincing people he did not exist. In the same way, the greatest trick Gordon Brown ever pulled was convincing George Osborne that economic alternatives do not exist. The four key points of Osborne’s plan are slow-motion deficit reduction, mild spending cuts (averaging about 2.5 per cent a year), a 60 per cent surge in the national debt and printing money to lower artificially the cost of all this debt. Each of these points was in Brown’s re-election plan. Osborne is borrowing just as much, but with a heavier heart.
This plan was never going to work under Brown, and it’s not really working under Osborne. He has been tinkering, and his changes are mostly all welcome. But even his own Office for Budget Responsibility judges that none of his Budgets have significantly improved the economic outlook. Voters, of course, don’t need statistics. This is evident from the 130,000 users of the food banks now scattered across Britain to the prayers stuck in church halls. A new plan is needed. And although the Chancellor speaks about being at the mercy of international affairs, he has more options than perhaps he realises.
Take Estonia, a tiny country at the mercy of its much larger neighbours, which has ample reason to blame “global forces”. But throughout the crash, it defiantly kept its taxes low (at a 21 per cent flat rate) and took the tough decision to cut state spending by a tenth. It is now celebrating the fastest growth in Europe. The much-larger Sweden responded to the crash with a permanent tax cut for the low-paid. This encouraged so many people back to work that the extra revenue covered the cost of the policy. Socialist Sweden has proven the existence of a phenomenon that the Tories had been taught no longer exists: a self-financing tax cut.
The more we learn about America’s recovery, the more the Keynesian analysis (demand is the problem, spending is the solution) is being disproven. A recent University of Chicago analysis suggests that most American job losses are accounted for by the change in relationship between taxes and welfare. From Tampa to Tallinn, a new thesis is being etched out: high taxes are retarding the recovery. Austerity, when combined with high taxes, will not help. But if you rebalance things in favour of job creation and work, magical things can happen.
This is what Osborne should have said in his Autumn Statement: that the Conservatives are the new workers’ party, so every penny taken from welfare payments will be used for encouraging work and cutting the taxes of the low-paid. Iain Duncan Smith is working on overhauling the benefits system, but this will take the best part of a decade. Measures like the (welcome) corporation tax cut will come in 2014, but young lives are being wasted right now. So an emergency package is needed to address this.
The Treasury, of course, has an institutional bias against new ideas. Its officials are at their happiest dreaming up wheezes like the pasty tax and reject what John F Kennedy once described as the great “paradoxical truth” – that lower rates can mean more revenue. I understand that ministers had been looking at another continental pro-growth idea: German-style mini jobs where anyone can take any number of £400-a-month contracts tax-free. But this seems to have been left on the cutting-room floor. The Treasury still seems to prefer reforms which sound radical, but aren’t.
For example: it’s all very well to increase the tax allowance and say (as Nick Clegg did) that it will benefit 20 million people. But given that the tax cut amounts to 90p a week, it is not clear what these workers will go out and buy in celebration.
When the Swedes cut tax for the low-paid, they made it amount to an extra month’s salary a year. When they cut corporation tax, from 26p to 22p, they did it in three months – not phased in over half a decade, as Britain is doing. Tax cuts need to be sharp, noticeable and immediate. Any tax cut worth its salt will contain an element of risk.
This should be the perfect coalition mission: tax cuts for the lowest-paid would be true to the spirit of the Lib Dem manifesto. The easiest way of financing it would be to lower the new annual benefits cap, currently at £26,000 per person. But there are all too many savings to be made in a government machine whose spending, even now, is just 2.7 per cent below its peak.
The mini-jobs proposal (tax-free for employers, too) would be in the same vein. The minimum wage for the under-25s could be lowered, creating more entry-level jobs. The policies don’t matter as much as a new guiding principle: to move financial support away from welfare and towards work. And place this, not hawking cheap debt, at the heart of the Government’s growth strategy.
Osborne recently observed that Barack Obama was re-elected after years of dismal economic progress, because he succeeded in blaming the other guys for the problems. His implication was that the Conservatives might get away with doing the same in 2015.
But there is another option: to achieve economic success, and then promise more if re-elected. There are four months to go to the next Budget, which may be the Chancellor’s last chance actually to make a dent in the economic trajectory he inherited. He should be optimistic about his chances of doing so. If Estonia can overcome a sense of economic fatalism, then Britain can too.
Sweden may have it right economics wise but it’s still a liberal multi-culti p.c. hellhole.
No lessons to be learned there. Move along, move along…
Slow morning, ain’t it? I gotta change hotels here in a very few, so I’m out.
We collectively decry the “lack of sustainability” in programs like Social Security and Medicare, even while we continue the “payroll tax holiday”, thus effectively severing their funding.
Now, someone please tell me how the American electorate isn’t comprised of sand pounding idiots.
And so Obama is adamant that he is going to raise taxes! Does anyone still believe that Obama wants an economic recovery? Obama wants a permanently unemployed class of people to further expand the Democrat base. He is doing everything he can to ensure that he gets it.
MacDuff wrote:
Obama was re-elected with high unemployment and recrd deficits. It is clear that a majority of the electorate are sand-pounding idiots.
@ MacDuff:
@ Iron Fist:
The great Obama boom continues!
Here is the key:
.
But the majority of Americans think the economy is good.
Iron Fist wrote:
They likely provided much of the margin of victory on 6 November.
@ MacDuff:
It is which is why the Right needs to learn how to manipulate people. But I am one lonely voice calling for this.
@ Iron Fist:
Absolutely! That is why he wants to go off the fiscal cliff. The media will blame Republicans and a crappy economy means more people on government benefits, hence more Democratic voters.
Rodan wrote:
This is what Obama wants. Those people that exit the labor force, whether they go on disability, they “retire” early, or they go on welfare, all represent people joining the Democrat constituencies. Obama wants a nation of paupers on handouts that he and his people can be lords over.
@ Rodan:
Come On. I don’t think you really believe that crap. You’re too smart for that.
MacDuff wrote:
Mfff Mffffff, I just cant speak those words.
We need a reduction in regulatory compliance costs.
That would be like a free tax cut.
Plus it would allow American businesses to create jobs.
Energy production, refineries, pipelines on and on.
How about a national sales (consumption) tax instead of a tax on income (production).
A national sales tax would tax goods made overseas at the same rate as goods made in the USA.
That would make our industry more competitive.
But we have to suffer for a time to learn the value of freedom.
theoutsider wrote:
Do you collect any form of government assistance? We already know how you vote.
Iron Fist wrote:
And as Quantitative Easing ramps up inflation, that government check will be barely keeping them from starvation, they will vote democrat in every election until the day they die.
theoutsider wrote:
Ok, why do you think the Progressives are destroying our economy?
Prebanned wrote:
1. Make people dependent on government
2. Make people beholden to government
3. ???
4. PROFIT !
theoutsider wrote:
I do believe it. It helps Obama politically. Why would he not do it?
@ Iron Fist:
That is the end game. Obama would love another recession. Think about this, people think 146,000 jobs are good. That shows how much lower expectations people have.
Rodan wrote:
Therein lies the problem. When there were decent jobs and the possibility for advancement, there was some incentive to become a maker instead of a taker, but even then the lure of “the dole” was pretty strong. Even during more prosperous times, generations of minorities had already been convinced that success was either treason to their ethnicity or just not worth the effort. The minorities were just the foothold, though, now that mindset permeates our culture, regardless of ethnicity.
I collected unemployment for a brief time when I left the Navy and felt humiliated and remarked at the time that “work was far preferable to the shame of feeling like I’m on assistance”. Food stamps were once something that were embarrassing. No more, we’re a culture that has no shame and you can see it in the way people dress and behave -- “The People of Walmart” has become the rule instead of the exception.
@ Rodan:
You really think that the president want’s a crappy economy, and more people on government benefits? That’s crazy.
theoutsider wrote:
Crazy? Besides rampant vote fraud it’s the only way Dems can get elected.
@ Rodan:
Why would Obama love another recession? Please be specific?
theoutsider wrote:
You have to admit that the first one’s been pretty good to him, right?
@ MacDuff:
Good point. Now it is acceptable to be on the dole. One way to counter this is by calling Democrats Feudal lords oppressing people. Tell people they are being scraps while the elites live good. Make people resent the Left.
theoutsider wrote:
Absolutely. It helps the Democrats politically. Why would Obama not want more Democratic voters?
theoutsider wrote:
If another recession happens because of the fiscal cliff, The Media-Entertainment Industrial complex will blame Republicans. With more people collecting unemployment and food stamps, they will be receptive to the Democratic message of Government taking care of people.
theoutsider wrote:
Power.
@ MacDuff:
Last night, O’Reilly had a story about the PA Dept of Social Services advising a woman to take a job that pays $29,000 rather than one that pays $69,000, because she would actually come out ahead with the lower-paying job. She would pay little or nothing in taxes on the $29,000, and would still be eligible for most state welfare programs.
This is what we’ve come to today.
@ theoutsider:
Specifically, what has Obama done to alleviate the first recession? He used it as an excuse to pilliage the treasury in the name of “Stimulus”, but even you have to admit that that did nothing to help. He has borrowed more money than every president from Washington to W combined, and spent it in crony “loans” to now bankrupt “Green” energy firms and the like. What makes you convinced he is even trying to make things better? And speaking of that, what do you plan to do when the deficit hits 150% of GDP? As an interesting aside, what do you think is going to happen to the economy when our creditors will no longer loan us money for effectively 0% inerest? Obama is borrowing more than a trillion dollars a year right now, and shows no interest in anything like a real reduction in that.
Rodan wrote:
For that to be effective though, there must be opportunity. There must be options. As long as there is high unemployment and low opportunity (such as now) people will choose the path of least resistance.
Therein lies the conundrum, people won’t turn away from statism if there isn’t alternate opportunity and statism tends to quash that opportunity.
@ Iron Fist:
He has refused to answer that question.
@ MacDuff:
The Soviet Union didn’t fall from internal revolution. It economically collapsed, and then the generally peaceful revolution came. That is what I see happening to us in ten or fifteen years (at most). We really are two different nations, with different dreams and asprations. There isn’t a uniform “American” viewpoint anymore.
theoutsider wrote:
Why would Obama lie about Benghazi?
Please be specific?
Would You ever lie to us?
Be specific.
More great “progressive” math:
And of course the only reason we had that “surplus” in the first place was because Clinton raided the Social Security “trust fund.”
theoutsider wrote:
Because in order to complete his mission of “fundamentally transforming” America, he first has to destroy the existing nation.
Storagemanager wrote:
Then it will be Europe in its entirety, and then…the two Americas, and even Eastern Europe, to quote a Hamas cleric.
@ MacDuff:
It’s damn if you do or damn if you don’t.
@ Iron Fist:
I think we are more than 2 different nations. I think we are really 4 or even 5.
theoutsider wrote:
What’s crazy about it? It worked for FDR, after all. After his idiotic policies prolonged the Great Depression for 7 years, not only did he manage to be re-elected 3 times, but to this day, people actually consider him to have been a great president who saved the country.
@ Philip_Daniel:
Most people don’t even realize that Hamas is a branch of the Muslim Brotherhood and a sister organization to al-Qaeda.
@ lobo91:
As evidenced by her string of electoral victories, she’s a credit to her people.
@ lobo91:
It’s worked for Obama. As more people are moved to disability and food stamps, an anemic economy helps Obama politically.
@ lobo91:
I think they were counting on a continuation of the dot com bubble capital gains as well.
She is flat out lying about the 5.6 trillion because the stupid democrats believe and the evil democrats go along because they have no moral compass.
theoutsider wrote:
Has the economy not become demonstrably worse in the last four years and was Obama not just reelected?
theoutsider wrote:
This is how it works/worked in many European countries.
Rodan wrote:
people like outsider have np clue and are uninterested in getting one….he’s been duped about Israel/Hamas/MB, and is happy his POTUS supports a hostile, blood thirsty mob…this shallow, intentional ignorance is his badge…life and liberty are meaningless to him
@ Rodan:
So you are basically with Ann Coulter on how the fiscal cliff ends up?
Prebanned wrote:
I don’t think she was lying about it. This is the same woman who asked if the Mars Rover would be able to visit Neil Armstrong’s footprints, after all.
She’s clearly an idiot.
theoutsider wrote:
You ask a lot of questions but never answer any.
@ Philip_Daniel:
Religion of peace!
Believe it Or WE KILL YOU™
@ Prebanned:
Sheila Jackson Lee does serve one purpose, though: As a graduate of both Yale and the UVA Law School, she proves that such diplomas don’t actually indicate intelligence.
O.’s goal is the administration of poverty and this means the ultimative power for the government over the people.
lobo91 wrote:
How do these people beat us?
Motivation???
@ lobo91:
I graduated from Arkansas State University!
Prebanned wrote:
outsider and his minions…the make believe turds
Prebanned wrote:
Their secret is “acceptable racism”.
If I only could find this analysis.
@ MacDuff:
Ask me one?
MacDuff wrote:
He has no answers, only questions that waste time.
theoutsider wrote:
I would just pass a bill keeping tax rates lower for people who make less than $500,000 and a 30% tax on Movie studio profits. I would leave town after that. Then when the debt ceiling comes up, propose cuts and make Obama veto them. Then I would not renew the debt ceiling unless Obama gives in.
Check Mate.
But it will not happen because Boehner and the GOP leadership don’t have any tactical skills.
@ MacDuff:
He just asked another question, ha ha ha.
theoutsider wrote:
Use some initiative and go upthread.
@ heysoos:
The sad part is many on our side also support the MB in the name of Democracy. See John McCain and Ms. Lindsey.
@ Rodan:
I would just not renew the debt limit, let government figure out how to live like the people who have to pay for thier idiocy.
@ Prebanned:
renew = increase
MacDuff wrote:
That is not his game, he is a very soft delicate troll.
Prebanned wrote:
No doubt they would slash Social Security payments while saying “see, Republicans hate old people” and much of America would buy it because they’re stupid.
something to keep an eye on…see how the liberals handle Detroit’s epic failure….maybe the outsider can provide some color from a donk point of view…might be a blueprint for CA’s cities in the same pathetic situation
http://www.detroitnews.com/article/20121207/OPINION03/212070365/State-laying-groundwork-managed-bankruptcy-Detroit?odyssey=tab|topnews|text|FRONTPAGE
@ MacDuff:
No.
theoutsider wrote:
in trillions of dollars, how much debt is too much?
@ theoutsider:
Ahhh, the troll remains in control of the discussion.
Prebanned wrote:
I’m pretty sure that failing to increase the debt limit would have little effect on them.
Remember, the last time the debt limit came up, a bunch of left-wing “experts” claimed that Obama could simply ignore it, claiming some sort of mythical authority under the 14th Amendment, of all things.
@ heysoos:
Since Harry Reid refuses to let us use Yucca Mountain to store nuclear waste, how about if we put it in Detroit instead?
@ lobo91:
I think so, too.
Obama promised to go over the budget line by line in 2008 and hasn’t had any interest in cutting spending since.
Instead He never passed a budget, keeping the stimulus in the automatic baseline budget increase.
He will change America forever.
@ Philip_Daniel:
Long time, no see.
Missed your posts.
Someone talking about the protests in Egypt on FNC brought up the point that Morsi only got 51% of the vote, and that 48% of the voters “wanted someone else” as an explanation for what’s happening there.
Gee…I wonder if he could think of another country in a similar situation?
//
@ theoutsider:
Well, you and Obama drink the same Kool-Ade. Where do you think the crazy comes from, anyway?
theoutsider wrote:
Obama wants the rest of the world to gain by doing away with the USA; to him it is a zero sum game and the only thing he knows is destruction for those who know how to be productive.