No Richard, they haven\’t

Is the government adopting my pension proposals?

No, they\’re really not.

There is a remarkable similarity between  what I wrote on pension investment there (and in the Green New Deal) and in what is being proposed.

No, actually there isn\’t.

There\’s a good reason for this too: Vince Cable\’s SpAd is an economist whose view of you is almost as sulphurous as mine is.

So here\’s the difference between the two proposals.

The Murphmeister proposal was that pension funds should, at risk of losing their tax breaks, be forced into investing in infrastructure projects or \”new business\”.

The problem with this proposal was as I pointed out at the time. There\’s no mechanism by which pension funds can make a profit, a return, out of said infrastructure investments. Nor from the social gains (like lower CO2 emissions) touted in the Green New Deal.

As I then went on to point out, what is needed is a structuring of a method by which investors (not just pension funds by any means) could in fact profit from making these possibly desirable investments. Once you have done that, say, by allowing those who build a road to charge a toll on it, then you\’ll find that investors (not just pension funds by any means, MacQuarie Bank has been big in this for years) will be happy to invest in these possibly desirable investments.

So, what has Vince and his SpAd thought up?

No, they haven\’t gone the Murphmeister route to forcing pension funds to invest in loss makers at risk of losing their tax breaks. They\’ve instead suggested changing the rules so that those who invest in such projects can charge for the output of such projects through, say, charging a toll on a road they\’ve built, thus making investors happy to invest in such possibly desirable projects.

I could go on and point out that Vince\’s SpAd does read this blog: in fact I know absolutely that he read my critique of the Murphmeister pension investment proposals. And agreed with it. It would be possible to thus claim that the current proposals are actually the Worstall proposals rather than the Murphy ones: but that would be far too much personal aggrandisement for me. For the reason that the problem with the Murphy proposals was blindingly obvious, obvious to even a politician, similarly, the Worstall proposals were blindingly obvious, even to a politician.

For if you want people to invest in something you\’ve got to give them a way to make money out of that investment. Exactly what Cable\’s proposals do. You know, carrot rather than stick.

8 comments on “No Richard, they haven\’t

  1. Murphy’s idea – forcing UK pension funds to invest in UK investments (or lose their tax exemptions) sadly runs into EU law problems. In particular, it’s contrary to state aid rules and the freedom of establishment (and perhaps freedom of movement of capital as well). This has been pointed out to him on numerous occasions – but he prefers to simply ignore the point.

  2. It doesn’t much matter Tim.

    The question that the end result is similar makes him RIGHT, got it?

    The means radically different? Not relevant.

    The fact that any mo*on or warm body can see that infrastructure investment might be a good thing is also irrelevant.

    The need for more medals than a North Korean general is a powerful pair of blinkers.

  3. But Tim, Ritchie would have thought of incentivizing the investments if he’d thought of it. And because he would have thought of it, he did. Ergo… it was his idea all along. You gotta remember this: Ritchie’s a supergenius, and them folks don’t think like us folks.

  4. Just a thought.

    Would offering NHS hospitals for sale induce anyone to invest knowing they had a State underwritten guarantee of a return on the investment from the fees that could be charged to the State for treating patients?

    Is it possible this would…
    a) lower the budget deficit by getting all the NHS payroll costs off the public accounts, and thus stop adding to the national debt

    b) result in a massive cash injection from all the inward investment straight into HM Treasury to be spent on – who knows – reducing borrowing and the national debt
    c) result in efficient running of the service keeping costs down and delivering a better “patient experience”
    c) reduce waiting lists as increased through-put = increased revenue = increased profit
    d) increase the number of places offering health care, increasing employment, etc

    No surely better to carry on as in and bitch and moan about the NHS all the time.

  5. Tim,

    you really should cut and paste your comments on Murphy’s book into the Amazon reviews web site. In fact I would encourage everyone who reads this to do the same.

  6. Would offering NHS hospitals for sale induce anyone to invest knowing they had a State underwritten guarantee of a return on the investment from the fees that could be charged to the State for treating patients?

    Superficially attractive though it may be, I think this would be destined to fall at the twin hurdles of NHS Ts&Cs through TUPE and the NHS staff’s blind worship of St Aneurin of Ebbw Vale.

    And these are unlikely, to mix my metaphors, to be the only bungs in the arsehole of progress.

  7. @John B

    I’d say that the political risk of confiscation later would outweigh any possible return.

    Far better to invest in the Greek Government.

    >that would be far too much personal aggrandisement for me.

    Get a grip, Tim. That doesn’t count.

    If you have given a presentation to Tent City Uni we might be impressed.

Leave a Reply

Name and email are required. Your email address will not be published.