Blog 2023 Malcolm Blair-Robinson

The President’s Visit.

With almost no warning President Obama popped up in Afghanistan. Security was given as the reason for the minimal notice of an hour. I suspect seeing things as they are, before bad stuff could be hidden, was much the more powerful motivation for the sudden arrival. When dealing with one of the most corrupt governments in the world you have to be savvy. 

This vist has enhanced the President’s stature still further. The troops loved it. There was tough talk for the Taliban, though both they and the President know they will sooner or later have to talk together. He knows too the greater the military squeeze his Generals can exert the more pliant the Taliban will be as partners in a peace deal. The blustering about Al Qaeda was just jingo to soothe the ears of Sarah Palin’s supporters. He knows that the terrorists can just go somewhere else. She, who had never heard of Afghanistan until she put herself forward for national leadership, will not counter that. She is too busy saving freedom. Freedom to go bankrupt trying to save the health of a loved one. This is just the same freedom needed to keep slaves or operate segregation. Palin who knows so little, does not know that. 

Her President knows that freedom brings the responsibility to care for the plight of the less fortunate and  to act to ease their burden. Otherwise freedom fades away.

Tory Tax Plans

At last we have a policy to look at. The plan to halt the rise in National Insurance on middle earners is a bold move to please employees and employers alike. It falls within Tory philosophy, as a low tax party. It is not a cut. It is a rise stopped. The question is how to pay for it. There is a shopping list of savings planned, but how real or how imagined is not at first clear. Making the sums add up credibly will be critical in determining whether this plays as a bold move well received or another mess up from a team lacking experience.

The whole economic world proclaims that our level of Government borrowing has got to be reduced. There is argument about sooner or later but none about if. There are two ways open. Increase taxes or cut spending or do both to some extent. This is not quite right.

What is required is revenue.  What the tax rate is and upon which group the tax falls is of political, not fiscal, significance. What matters is the flow of money. If taxes go up but people work and spend and save less, economic activity will stall and the exchequer will be no better off. It is possible (for example Howe in 1979/80) to cut taxes and increase revenue. Howe managed this by reforming the relationship between tax on incomes and tax on spending. In my book I have proposed a major simplification of the tax system which would have great revenue increasing possibilities, yet would make millions better off in real terms. None of the parties really have put forward any radical ideas, so we are bogged down in efficiency savings, empowering people and so on. In fact voters just worry about their jobs and wonder who to trust.

We also do not properly explore this fallacy that going on borrowing more and more somehow lets the economy off the hook lighter than if we cut sooner. More borrowing means a much higher interest bill in future years, which has to be paid first, before everything else. As this proportion of government expenditure is forced upwards, it draws money out of the domestic economy to overseas creditors and exerts significant downward pressure of spending on everything else. Less and less of each tax pound is free for the government to use for our benefit. This is exactly the same as any over borrowed consumer. Lose control of this now and the result will be years of austerity. Current figures take us very close to the edge, if not over it.

It should be possible for the Osborne team to set all this out and show how they can do a better job than Labour. We are still waiting. Telling voters they will axe a few dumb programmes and empower enterprise is not enough.