Ed Miliband: Cretin

Boy oh boy, could someone have Ed in for a little sit down and explain some basic economics to him?

He will tell delegates in Liverpool: “Let me tell you what the 21st-century choice is: are you on the side of the wealth creators or the asset strippers?

“For years as a country we have been neutral in that battle. They’ve been taxed the same, regulated the same, treated the same, celebrated the same. They won’t be by me.”

Asset stripping is the very definition of wealth creation you twat.

At root, wealth creation is the moving of a resource or asset from a lower to a higher valued use. This is as true of labour as it is land, capital, machinery, a building (to whatever extent these are not the same things).

If we move a human worker from a job where we value their production at £5 an hour to one where we value it at £10 an hour then we\’ve created wealth. £5 an hour of it actually.

True, how that new wealth gets distributed can be \”good\” or \”bad\”, dependent upon your prejudices, but it\’s inescapably true that we\’ve just created that £5 an hour more of wealth that can be variously shared.

This is also true of a piece of land. That old car factory lost money each and every year. That new supermarket on the same site will make it. The value of the land as a supermarket is greater than the value of the same piece of land as a car factory. Moving the land from being a car factory to being a supermarket is both asset stripping (or at least can be) and increasing wealth. By definition it is, wealth has increased by the profit made by those doing the asset stripping.

If you\’re incapable of grasping this point then sorry but you\’re simply ignorant.

Hmm, no, OK, there is a way out of that: you think we\’re ignorant which might be worse.

And get this bit:

While not spelling out the detail of how venture capitalists in particular could be assessed, Mr Miliband believes that a tougher tax regime could be imposed on some firms deemed less responsible than others.

How much tax you pay will be dependent upon the whim of Ministers. Of whichever Ministers are in power at any one time.

OK, hands up, who can think of a better way of introducing widespread corruption into British life?

Anyone? Bueller?

Yes, yes, I knew I wasn\’t going to like whatever Mr. Adenoid blathered about what he was going to do but really, this is just outright crass stupidity, unusual even for a politician.

11 thoughts on “Ed Miliband: Cretin”

  1. There is nothing to be added to the Daily Mash’s take:

    “THERE should be more good things and less bad things, Ed Miliband will announce today.

    The Labour leader will tell his party conference he has thought ‘long and hard’ about the difference and has decided that good things are better.”

    Of course the Daily Mash is right: this a witless wolfwhistle to people who would rather not grapple with the underlying ambiguity of life.

  2. To be fair to Ed (not that I’m suggesting we should be), all this Smithian economics ignores the point that even business owners and managers (probably most of them actually) can be economically irrational. Asset stripping can be destructive of wealth when it is done by, for example, the stereotypical 3-year CEO. These guys are brought in to a company that’s losing money. They spend one year blaming their predecessor for the financial mess, one year firing half the staff and scaring the rest into working ever harder, and one year basking in the great increase in profitability that has resulted, and collect a nice bonus/redundancy payment when the company is sold on to new owners impressed by one year’s margin. The company subsequently collapses due to being understaffed since the great margin was an artefact of reduced capacity rather than higher sales, and Mr 3-years goes and does the same thing to another company.

  3. JamesV:

    that seems as the perfectly rational thing to do for the CEO.

    Seriously, this is not something that is ignored in economics, it’s called the principal-agent problem and there’s lots of research done on it.

    Seems to me that it applies more to politicians hanging on to useless assets so that they can dash out favours to the electorate and send the bill to the future taxpayers than to private equities and CEOs though

  4. Also from the Daily Mash:

    “Mr Miliband will also say that wealth creators are good and asset strippers are bad, but probably won’t give too many concrete examples because it is actually quite difficult to tell the difference.”

    Which is more or less what Tim said.

    I’m sure Mr Richard Murphy can tell the difference. He should be appointed Head of Business Social Responsibility.

    Tobacco and pornography companies obviously go in the sin bin. But where do you put BAe, nice people making nasty things for the fuzzy-wuzzies to kill each other?

  5. Imposing a tougher regime on companies deemed less responsible means that you have to have a relatively easier regime on companies deemed responsible.
    So in other words, you’ve increased the opportunities for tax avoidance.
    And, incidentally, a more irresponsible business owner should be making lower profits, overall, than a more responsible one. So a tougher tax regime on irresponsible companies implies people paying less tax the higher their profits are.

  6. Tim,

    Yes, yes, I knew I wasn’t going to like whatever Mr. Adenoid blathered about what he was going to do but really, this is just outright crass stupidity, unusual even for a politician.

    On the contrary, it’s rational for him to say such things because they appeal to his audience, which is what politicians must do to acquire and retain power.

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