In which we solve John Harris\’ moan

If you\’re old enough to remember the Thatcher years, you may have an answer to this question, but it\’s still worth asking: in living memory, have thousands of us on the left ever felt so bleak? Every day, I seem to have at least one conversation that ends with sighing expressions of fatalism about where Britain is headed, and how disorganised any opposition seems to be. Cameron is supposedly triumphant, and it certainly feels like it: even if the Tories failed to win the last election and now see some of their most treasured plans tumbling into disrepute, it\’s the right that is setting the terms of the argument.

Across Europe, the crisis of social democracy continues apace: now Portugal is added to the list of countries where the key effect of a supposed crisis of capitalism has been a thumping defeat for the centre-left. And what have we got even to keep us warm?

There really is a very simple retort to this sort of moaning.

If you\’re going to have anything like a capitalist (or even market based) socio -economic system then better to have it run by those who understand capitalism/markets.

If you don\’t want that sort of societal structure then great, vote for the socialists, the Galloways, Richard Seymour and the varied groupuscules of the gallopingly insane. Watch as society descends into a welter of blood spattering, as it did everywhere else anyone did this.

If you do though, if you like the wealth that that capitalism/markets mixture produces, that ever onwards surge of technological innovation, then the one group of people you don\’t want running it are the British left. Because they don\’t understand it: and by left I don\’t mean just those idiots reading Socialist Worker or the Morning Star. This ignorance extends well into the leftier parts of the Tory party and certainly includes the likes of Polly etc.

For they look at societies they admire, desire the UK to be more like, and fail to understand what makes them work. Places like Denmark and Sweden, for all their high tax rates and redistribution, for all that lovely subsidised child care, are more capitalist, more market based, than the UK is.

Take, for example, taxes. The classical economics of taxation tells us that for whatever amount of money we raise, we\’ll get more economic growth by taxing property and consumption more highly and capital and corporations more lightly. This is about the tax mix, not the level of taxation.

So, what does Sweden do for example? They have a high VAT (25%) with very few lower or zero rated items (Denmark is also at 25% and they\’ve even fewer let outs), low corporation tax, low capital taxation and no inheritance tax at all. Nor a national minimum wage even.

Now if you said to your average Brit leftie that that\’s how you run a social democracy they\’d look at you as if you\’re mad. No! VAT is regressive! Well, yes, it is, but it\’s still one of the best ways to collect tax money without destroying future growth. Low corporation tax? But the bastard companies must pay! But companies don\’t pay, ever, they\’re just a convenient place to collect the burden that falls upon others. A burden that, the more open the economy, falls more upon the workers.

And so on and whatever und so weiter is in Viking.

In my saner moments I realise that the British left isn\’t in fact evil. Desiring free child care isn\’t even immoral. But they are entirely ignorant: for they have failed to understand what it is that makes the places they admire actually work.

In order to have all of those lovely state services you\’ve got to raise the money to pay for them. Something you want to do in a manner which doesn\’t crucify the productive economy underneath. Which means that you\’ve got to run the economy along even more classically liberal lines, not less.

In order to be able to afford to heal the wounds of capitalism red in tooth and claw, cuddle them with those wondrous services, you\’ve got to have a capitalism even more red in tooth and claw underneath to pay for them.

Until the British left understand this pretty basic point they will continue to be incompetent at running a capitalist/market based society. Because without understanding it they will never be able to find enough money to get all thet prety shinies they see and desire but have no friggin\’ idea how to pay for.

15 comments on “In which we solve John Harris\’ moan

  1. Agreed. Another factor is that the left falls for the temptation of parading its alleged moral superiority. That provides a warm glow of self-satisfaction that is so powerful that it smothers everything else, including (as you say) the need for attention to detail and to technicalities.

    Some Muslim said that the same problem afflicts the Muslim world. That is Muslim countries tend to vie with each other to be “more Muslim than thou”. And if adopting a clearly absurd position enables one to be “more Muslim than thou”, that doesn’t matter.

  2. “In my saner moments I realise that the British left isn’t in fact evil.”

    “By their works shall ye judge them”.

  3. Mmm, many admirable qualities, but Scandinavia’s economic record is nowhere near as good as you think it is, remember?

  4. Same here.

    The ‘right’ are taking over the Castilla-La Mancha autonomous region. They have been saying for days that the accounts are dodgy (they haven’t got them yet). They are accused of disloyalty by the ‘left’ who have governed for many, many years.

    So today, we hear the region can only pay June’s salary for the 74,000 civil servants by NOT paying hospital bills and other suppliers.

    Seville apparently has invoices in pesetas (what 10 years in the Euro) unpaid and the favourite trick is to receive and register bills, but not include them in the official accounts. That way nobody can see them.

    I don’t want to jump to conclusions but this could be sickening over the next few weeks.

  5. It’s true that Sweden doesn’t have a gov’t set minimum wage, it has minimum wages set in each industry by negotiation btw the relevant labour union and the employers organisation. This means the minimum wage varies depending on what kind of job it is, but that the workers’ own reps are involved in the decision.

    There may be a low corporation tax, but there is a huge employer tax. For every employee, a company must pay almost as much as the salary to the gov’t in tax. So if you are making 20k, the company is paying almost 40k to have you there.

    These different tax devices for reaching the same goals make it different to compare countries.

  6. I guess you had to have been around in the ’70s to appreciate the context of the Thatcher years…the former were really bleak years, for both Left and Right. I seem to recall ‘Life beyond the bottom line’ was in vogue during the late ’80s, and we know where that led. It’s like watching the reinvention of the wheel all over again.

  7. It’s not that the ‘left’ don’t understand who, or what, pays the bills. It’s just that they can’t be seen to publicly acknowledge that they understand, for fear of alienating the idealists, and union bloc, who form such an essential part of their support.

    Why do you think the word ‘betrayal’ is so prevalent in so much leftist dogma.

    Demands – Ability to pay for those demands = level of ‘betrayal’

  8. “Places like Denmark and Sweden, for all their high tax rates and redistribution, for all that lovely subsidised child care, are more capitalist, more market based, than the UK is.”

    Capitalism is about more than instigating economic growth, surely. Using the methods of capitalism to run a socialist state does not make them capitalist societies.

    “In my saner moments I realise that the British left isn’t in fact evil.”

    Of course it is. The left – in Britain as everywhere else – wants some people to benefit from the effort of others. Isn’t that called slavery? And do we not agree that slavery is evil?

    “Desiring free child care isn’t even immoral.”

    So it’s perfectly fine for the state to take my earned wealth by force, and give it to others? It’s irrelevant what those others spend it on, whether it’s child care, crack, puppies or whatever; it’s my wealth because it’s the product of my effort.

    I can see what you’re saying, that only by nurturing a productive economy can there be sufficient wealth to support the non-productive, but to characterise such a society as capitalist seems a rather unorthodox use of the term.

  9. VAT is not regressive, can we kill that zombie?

    If you do an income distribution analysis, you get a bunch of students and people who are temporarily unemployed in the bottom decile, who have very low or zero wage income but are in no means “poor”. The fact that VAT is charged only on mostly discretionary, luxury goods and services should demonstratate that; the truly poor (rather than income-poor) will not buy that stuff.

    So look at the expenditure distribution analysis when deciding whether taxes on expenditure are regressive… and lo and behold… it is not.

  10. “The left – in Britain as everywhere else – wants some people to benefit from the effort of others”

    99% of the right believe that too, so it basically means everyone in the country is immoral. O tempora, o mores!

  11. It’s true that Sweden doesn’t have a gov’t set minimum wage, it has minimum wages set in each industry by negotiation btw the relevant labour union and the employers organisation.

    Every country without a government mandated minimum wage has its minimum (and in fact, all) wages set by employees negotiating with employers. I believe my own salary was negotiated between my employer and me.

  12. “Every country without a government mandated minimum wage has its minimum (and in fact, all) wages set by employees negotiating with employers”

    Or by unions negotiating “on behalf of” employees.

  13. I suspect (hope) that the net has opened people to seeing how other countries do things so that Labour politicians can no longer tell us Singapore is doing well because they all get paid £1 a week. That plus the fact that world growth has never been higher so differential growth has never been higher and it becomes imposible not to see that China and India are doing something we aren’t.

    On that line I note that China-Taiwan has just achieved a higher per capita income than Britain.

  14. According to Wikipedia, Taiwan has 50% the GDP per capita than Britain using actual figures. In PPP terms they have a slightly higher GDP per capita. i.e. by implication the cost of living in Britain is double that in Taiwan.

  15. Pingback: What is good for business, let alone General Motors, is not necessarily good for all of us « Left Outside

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