Just a thought

About this continual series of statements that the Lib Dems are a party of the left. That the great tragedy of British politics has been the splitting of the left in this manner leaving the Tories to win power with a minority so often.

I really get rather confused when people tell me that Orange Book Lib Dems like Clegg are on the left. It\’s true in one way and simply not so in another very important manner.

The OB crowd are possibly the closest to classical liberals we have in British politics today. Now as a classical liberal myself I agree that historically we\’ve been on the left of British politics. We want the poor to be richer, we can see that Government can indeed aid in making things better, we really are liberal, progressive and radical.

But there\’s another meaning of \”left\” in Britain. A meaning that almost doesn\’t exist in such countries as the Nordics which are, to some extent, leftier than us and also as or even more successful (depending upon how you view \”success\”).

This secondary meaning of \”left\” relies not upon desired outcomes, that poor getting richer, fluffy kittens and baa lambs for all. But upon the processes by which society should run. A very deep suspicion of markets (vide, Neal Lawson\’s continual and extraordinarily stupid comment that \”markets create winners and losers\”), a similar deep suspicion of business, of capitalism, of individualism. Added to a near perfect ignorance of really rather important points like tax incidence (\”Companies must pay their fair share\” in just about any Guardian piece you care to mention, entirely ignorant of the way in which companies don\’t actually pay taxes.) For this left a good outcome (say, a growing economy leading to the poor getting absolutely richer) is less important than the structure of the tax system so that companies are highly taxed (nominally, see incidence) while consumption is lowly taxed. Something which leads to a not growing economy. Which is why the Nordics, who largely follow the classical strictures of economics about taxation, low capital and corporate taxes and high consumption taxes, are able to have growing economies and also large amounts of redistribution.

We can\’t do that because that certain part of the left insists that we should have high capital and corporate taxation…regardless of whether this allows growth to continue so as to continue to make things better for all.

In this second sense of \”left\” the OB Lib Dems are most certainly not of the left. They\’re of the right: do what is necessary to get the economy right, use markets wherever possible, get the economics of taxation correct and then, if desired, start redistributing. As opposed to this \”left\” desire to not use markets, ignore the economics of taxation and use the structure and restrictions on the economy to get to the desired economy.

This isn\’t, I agree, how left and right is usually seen. But it is a very strong distinction in British politics. Those who are left by results (including me) and those who are left by processes. And the OB\’s are simply not left in that second sense.

All of which means there\’s a possible surprise in the future. Assume that the election does play out as currently the polls say it might. We\’ll get PR. And parties will split at that point. And I have a very strong feeling that we\’ll end up with not, as some seem to think, a permanent centre left majority ruling us. What currently calls itself the left, those left by process, will find themselves entirely marginalised as a rump on the left of the political spectrum. The centre, the ruling heft, will be those who may or may not be left by result but who are at least result orientated. Leading to a lot more of what is currently considered \”right\”…markets, consumption not capital or corporate taxation and so on.

Something which, if I\’m honest, is to be greatly desired. Now all we\’ve got to do is wean the Lib Dems off their insane infatuation with the EU and we\’re home and dry.

5 comments on “Just a thought

  1. Tim, I’m afraid you’re wrong about the nordics here, in fact the economic growth in the nordics has been despite the retorics of its left wing parties. I’d say that they have been pushing equalities of outcomes (i.e. that all should be worse off) a lot harder than anywhere else, which has also lead to about every successful entrepreneur/professional as well as every company of a decent size moving abroad (just try counting the number of highly educated Swedes that live and work in London)

    The actual politics enacted by the left in the nordic countries have however been largely disconnected from their retorics – at least since the 90’s onwards.

    Tim adds: leave aside the rhetoric for a moment and look at their actual tax systems. They are much more neo-classical )or neo-liberal if you wish) than our own. That was my point. They do tax high incomes, yes, but their capital and corporate taxation is rather lower than ours, their consumption taxation higher. That’s what I meant. They’re using the best way to both finance a large State and also get economic growth. As opposed to what is usually proposed here which is a bad way to finance a large State because it chokes off growth.

    For example, the standard trope here is that we shouldn’t raise VAT because it is regressive. Maybe so, but high VAT restricts growth a lot less than high corporate or capital taxation, meaning you can still have lots of redistribution withough choking off growth. Which is why the Nordics do what they do.

  2. Let’s hope you are right, Tim. Very interesting comment and food for thought.

    You are right about the EU angle, though. The Gladstonian/Orange Book wing of the LibDems does not seem to cohere with the idea of a centralised superstate. If the EU were just a free trade zone with reciprocal recognition of national rules and some common standards, then it would not be a problem. But the EU project as it is today really undermines some of the bona fides of the OBookers to be real liberals as we understand that term.

    But even so, it might be healthy if the political categories that have dogged political debate in the UK since the First World War get shaken up. We need a proper liberal party in this country.

  3. Tim, I believe you are wrong about taxation in the nordics (at least in Sweden but I believe also in Denmark and Norway).

    Capital gains are e.g. taxed 30% in Sweden (see http://www.nordisketax.net/main.asp?url=files/sve/eng/i07.asp&c=sve&l=eng&m=02) while http://www.hmrc.gov.uk/cgt/intro/basics.htm tells me that it is 18% in the UK

    Corporate tax on the other hand indeed does seem to be lower in Sweden (26.3%) than in the UK (28% according to Wikipedia)

    Ps. I’m aware of the fact that tax rates don’t show the full amount of tax actually raised (excemptions, etc) so there’s obviously still room for you to prove me wrong.

    Tim adds: You ask and I shall provide.

    http://worthwhile.typepad.com/worthwhile_canadian_initi/2007/06/doing-it-by-the.html

  4. I was expelled from the party on the grounds that wanting growth, Irish style, through cutting business taxes; wanting the market to be freer to build houses, using modern technology; & wanting the market to be free to build nuclear plants rather than depending om massive subsidies of windmills to keep the lights on.

    Such views were & still are described by the party as “to right wing” to be discussed & “illiberal”. The party has redefined “liberal” to mean its opposite.

    Occasionally they make noises as if they were liberal inclined but that is simply for electoral purposes. If you look at their policies (windmills, eco-fascism of every stripe, banning smoking, higher taxes, opposing growth, lower speed limits to force us all onto bicycles) they are in no way liberal. They are far more fascistic than the BNP & nearly as much so as the Greens.

    However I hope they do well. This country desperately needs PR to lower the barriers to entry to new ideas in British politics & they would midwife such a reform.

  5. Pingback: Left By Outcome v Left By Process - Charles Crawford

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