Why A Minimum Wage/Living Wage Is A Sticking Plaster Not The Solution To Poverty Pay.

It is a good thing that Ed Miliband is talking about a living wage and pledging to use tax breaks as an incentive to employers who pay it. But it isn't going to be enough to address the root cause of poverty - a massive widening in inequality.

Sadly even well meaning employers cannot afford to subsidise the poor having to pay rip off rents, exorbitant debt fuelled house prices and the rip off prices of privatised monopolies. Not to mention the unnecessary taxes that hit poverty pay hard.

Wages can only rise as far as productive value will allow. There is some scope as many jobs pay below their true value. The Tory horror stories of mass job losses from having a minimum wage have proved false.

But equally we shouldn't be taxing people earning less than the living wage. What we should be taxing are speculators, whether builders who profit more from sitting on land than building on it or casino bankers and traders who do nothing socially or economically useful.

It is time for a land value tax and a financial transaction tax to largely replace the stupidity of taxing things we should be encouraging - i.e. jobs, especially as only the little people pay income taxes and corporation taxes.

And despite the media onslaught, we should also help those with little or no work. In the US, attacking the poor is so advanced that even working 80 hours a week to make ends meet is not enough to avoid a "lazy" tag. The ideology where only the individual is king of their rise or demise has to be challenged. It is the lazy system that destroys lives not lazy individuals.

A basic income unconditionally paid to all will remove the financial disincentive to work. Pay workers the dole and no-one loses by taking a job.

But most of all we need a massive public housing programme to address an acute shortage that now afflicts 100s of thousands but in 20 years will affect 10s of millions.

Ed Miliband is right to enter this debate and it is progress that it is on the agenda, but the solutions require more than just scratching the surface of pay.

UK will never ask to leave EU, but they may be thrown out.

The likelyhood is that if Cameron proposes an in/out EU referendum, Labour will follow suit. The problem for Labour is any referendum is likely to happen on their watch & the usually hostile tabloids make referendums unwinnable for Labour governments.

Improbable as it now seems, both Labour & Tory establishments will make sure there is a tabloid campaign to stay in the EU. Some deal will have to be made with the Murdochs, Desmonds & Dacres. And I am sure that Miliband & Cameron have discussed a deal on this.

Even the Tories know leaving the EU is crazy. Much as they dislike the social creep that protects workers rights and also rightly complain about some of the EU's absurd inefficiencies and democratic deficit, ultimately, the UK needs the influence membership of the EU brings to inter-EU trade & world trade agreements. It also helps our 'special relationship' with the US. As a member we are a useful insider influence for the US. It was this US trojan horse factor that made France in particular, reluctant to admit us in the first place - delaying membership by 12 years. The discovery of strategically important North Sea oil and our desperate willingness to accept poor accession terms finally won them over.

However that does not mean our membership is secure. As Merkel indicates today, the EU is quite willing to kick us out if we demand better terms. We are not in a strong position to make demands.

I can already hear your objectiion that we have a binding treaty with the EU. We cannot be kicked out. Indeed, except the Scotland referendum provides one route. If Scotland has to renegotiate entry as a new country then surely the new country of England, Wales & NI could face a similar call. Scotland would create two new countries by splitting the UK. The new UK is not the same as the old UK. In the same way the Czech republic is not the same as Czechoslovakia. The EU would simply not allow the UK to join. It would only take one country out of the 27 to object.

Alternatively, if Scottish independence fails, as seems likely. The UK might remain nominally part of the EU while increasingly shut out of new trade and social integration. Does this matter? Well, it could be the worst of both worlds, diminished influence while still net contributors to the budget.

Whatever happens, we could be in for a bumpy ride.

What Is A Marxist State?

Famously Marx never really explained his post-capitalist state - the inevitable communism that history led him to believe we were heading for.

He talked of a transitional socialism with progressive income tax and 100% inheritance tax. He also wrote reams on the inherent contradictions of capitalism - how the drive for more profit would lead to higher inequality, ever greater crises and eventual collapse. But apart from 'proletarian dictatorship' and 'proletariat owning the means of production', little on what comes next.

To the dismay of his followers, Marx seemed uninterested in hurrying along the process. And since he thought it inevitable in due course, perhaps that was understandable. Marx never gave a specific date for his prediction though I doubt he thought it would take this long!

Marxism with its predicted capitalist apocalypse and communist heaven has replaced religion for a lot of Marxists, which perhaps explains some of the animosity between the two. For his part, Marx was sympathetic to religion, seeing it as an understandable though misguided crutch for the poor. An 'opium' giving relief from the daily grind or some hope for their future.

In fact it seems clear that something has kept capitalism going longer than Marx had in mind. The truth is there has never been as clear a dividing line between capitalists and the proletariat as Marx indicated. There is some overlap, especially in developed nations. The democratic process and the Soviet rival has curtailed some capitalist exploitation but as the dividing line again gets clearer and inequality grows, Marx's prediction of ever greater systemic crises seems prescient.

So, maybe we are closer to communism than we think, even in the ultra capitalist US, 30% or more of their economy is state driven. But of course, ownership and control by the state is not what Marx was getting at. The so called communist countries that gave Marx such a bad name much to western capitalists glee, were only ever state capitalist in reality. And there is no doubt that their version of capitalism was not as efficient at production as western capitalism proved to be.

What Marx was talking about was quite simply giving power over the economy to the workers, something that was as far away in the Soviet Union as in the US.

Communism, I think, simply means democratic control of the levers of power - workers on the board of every company deciding remuneration, truly democratic elections without bias and with every vote of same worth and parliament truly reflective and representative of the electorate. A society where the basics of life are evenly divided and those at the top are not allowed to exploit their position to further their wealth and status. Hopefully Marx was wrong when he said it would take a violent revolution to achieve this.

Politicians Face 4 Choices On Housing

1. The George Osborne/ Tory Business approach: -

Scrap restrictions on green belt and on affordable housing and increase profits for building firms and landowners. The wealthy get bigger housing in rural surburban sprawl despoiling countryside and angering rural nimbys and environmentalists alike. Tories are split on this.

2. The Ken Livingstone/ Public Housing approach.

Build more 5 bed council houses using higher taxes and more borrowing. Pays for itself over few decades and saves on housing benefit to landlords who provide overcrowded and overpriced private rented accomodation. Does nothing about under occupied private housing and empty homes or wealthy widows in 5 bed houses. Needs left-wing government so will probably never happen.

3. The Land Value Tax approach.

Developers are sitting on land with planning permission for 300,000 properties just waiting for most profitable moment to build. With LVT, waiting costs money, so it encourages quicker development. Also discourages under occupying of homes. Politically difficult as it involves taking on powerful landowners, wealthy homeowners and developers.

4. The Status Quo.

Watch as our European competitors such as France and Germany build a million more homes a decade thereby increasing their infrastructure assets and economic growth while decreasing social costs of homelessness and high rents. The only good thing about present policy is that high house prices improved the housing stock and environment especially as Labour concentrated 80% of newbuild in brownfield sites. Least politically difficult option so also most likely.

So no easy choices. Since the 1960s the UK population has grown by 10m and households by 9m. The decrease in household occupancy has stalled since 1980s when Thatcher stopped new public housing. We are stuck on 2.6 occupants per household and sq. meterage per occupant is also falling compared with our European neighbours.

The biggest problem is household inequality which has reflected the growth in income and wealth inequality. So poorer large families are left renting 1 bed flats while wealthy widows rattle around in 5 bed homes. Only the politically brave introducing wealth taxes can cure this.

Local Government Pension Scheme: Old v New

Basically anybody that works part-time for a few years then goes full time and maybe gets promoted to a good finishing salary is going to miss the old final salary LGPS. It is mostly women affected by this.

Also anybody under 55 who was due to retire at 65 or earlier might now have to wait till 68 or even later.

The new average salary LGPS does have a slightly higher accrual rate i.e. you can pay in for less years, but the revaluation by CPI inflation rather than by wage inflation will hit pay outs.

Also anyone earning over 21k might have to pay in up to 50% more contributions. A massive increase. Remember this scheme is currently entirely self financing. Only on future projections of extended longevity of lifespans can these changes in any way be justified. These are predictions with limited accuracy.

For those on under 21k the changes don't seem so bad, as long as they aren't promoted and remain full time their whole career. But of course the deal for them was already terrible because a lot of poorly paid workers will die before they reach 65, let alone 68 or beyond.

Some unions are making a lot of the fact that what workers have already paid in to the LGPS will be paid out on the final salary terms and only new contributions are affected (except of course the retirement age which is critical change). But imagine how outrageous it would be if that were not the case.

Already people have paid into this scheme with a promise of retiring at 65 or earlier. They have been conned. They are not even being guaranteed 68, it might be much later. This is the key disgraceful change and until 65 is guaranteed this scheme is not to be trusted and members should vote to reject it.

Building Houses Would Be Cheaper Than Paying Landlords.

In the 1960s we built 400,000 houses per year. In the 70s, 250,000. The 80s, 90s and 00s around 150,000 as council house builds disappeared. Now it is barely 100,000 a year.

The peak year was 1968, with 425,000 completions, nearly half of which were privately built - so much for the public sector 'crowding out' the private sector. It seems in this case at least, the opposite is true.

Around 20bn pounds is given to landlords every year in housing benefit. Average house prices are around 170k. Build costs are about half that, the land already in government hands.

20bn pounds could build 220,000 houses per year. Construction is in recession and tradesman are under utilised. This is the perfect time to build as costs are low.

The government could not only solve the housing crisis, massively boost the economy and boost employment, but also sell at a profit! Even if they borrowed the money!!

So, why hasn't it happened? Too many votes in the housing bubble, perhaps? It is time someone other than property speculators was given a share of the national wealth gleaned from land price increases that are largely due to taxpayer expenditure.

Nor, is population growth the cause of our problem. Population has grown 9m since 1960, yet we have built 10m homes. Occupancy has fallen from 3.3 per home to 2.3.

The problem is unequal ownership. Inequality of wealth. Too many one person occupants of family homes.

Incidently, housing benefits expenditure is due to increase. As unemployment rises, the extra demand will outweigh the coalition cuts. The government is moving claimants from the bottom half of properties to the bottom third. Side effect of this is that London will become out of bounds. The Tories say get on the bus. Not only do they move the low paid and unemployed further away from where the work is, they cut bus subsidies, cut reliability and increase fares. There is a long term cost in a lost generation of people. Tories create welfare dependancy.

Housing benefit was brought in by Margaret Thatcher and is another example of short-term Tory cost cutting costing the taxpayer a fortune in the long term. Thatcher gave all the profits from council house sales, north sea oil and utility sell offs in tax cuts to the rich. Money they used to make a fortune from property. What a scam! How do they get away with it?

Sources: http://www.insidehousing.co.uk/news/housing-benefit-bill-rises-by-%C2%A313bn/6517592.article

https://docs.google.com/viewer?a=v&q=cache:Q2sT-tCII2sJ:www.lloydsbankinggroup.com/media/pdfs/research/2010/50_Years_of_Housing_UK.pdf+uk+house+completions+1969-&hl=en&gl=uk&pid=bl&srcid=ADGEESiubISWvadRLltwX3DX1TGX_35SQcf2FQ0z2x2PUvqSoOGcqroDIrzNMKL8VBWYo1FSGAf6DDVoyHgNcXLfW3fbkzvd_76wO47tBNZdRJOBDkiVwBowrxSzKDM7I7Di-W9oUcVB&sig=AHIEtbQZg_Iz9WUwsciFBMKAnnbXK530Zw

How much blame does Germany deserve?

It's very easy to forget how rosy the European economy looked in 2000 when the Euro was born and 2001 when Greece was admitted.

Every country in the EU, including Britain, was experiencing strong growth. The fringe countries on the periphery - Ireland, Portugal, Spain and Greece - growth was astronomical.

Of course, everybody knew the construction boom in these countries would cool and may even burst. But nobody really foresaw the sheer idiocy of the banks and the how US consumer debt would swamp the whole world's financial systems.

Greece was a small country with a fraction of Eurozone GDP. Any normal recession in the future could be handled. But the sheer scale of this recession just wasn't foresaw.

It is very easy for accountants to write some numbers and say publuc spending needs drastic cuts and more tax increases for the only people who pay them - the bottom 90% of people. But the vast social unrest and consequences are not being assessed.

These debts have accumulated over 30 years of weak financial regulation. It will take a similar timescale to put right. Also inequality cannot be ignored. It is well known that when inequality reaches high levels, financial crashes usually follow.

In short, investors become fewer and wield more power and wealth. They skew government policy in their favour and increasingly chase a fast buck. As the majorities' spending power decreases, it becomes more difficult to sell mass products, R&D falls and loans to the poorest to continue to consume bridge the gap until the inevitable collapse.

When Germany and France etc designed the Euro, they did try to place strict limits on government debt. But they ignored consumer debt and it was far too easy for all nations individually to bend the rules and cheat to please their national electorates when elections loomed. Supranational parliaments like in Brussels/Strasbourg were too weak and EU decision making in general was undemocratic and too nation based. This will have to change and there will also have to be aggreement on how to deal with the regions and countries of the Euro that fail to compete.

Fiscal transfers within countries that compensate their own poorer regions are many times the EU budget. Germans and Greeks will have to find a common cause and migration and fiscal transfers will have to be bigger between countries. There also needs to be recognition that migration between countries with different languages is far harder than between say, US states. For that reason the Euro has to be seen as a long term project of political integration and Germany will have to give generously in the short-term, it would have been naive to think anything else. I am confident that Germany will or has already decided this course of action. The benefits will be huge for Euro members and mark my words smug Euroskeptics will have once again left Britain trailing in Europe's wake.

Cameron Lectures EU - Like A Drug Dealer Lecturing An Addict

If you owe 5000 pounds you have to worry. If you owe 500 billion pounds the bank has to worry. It's like the situation with Murdoch in the late 80s when Sky TV was losing billions. The banks had no choice but to keep lending.

Europe's leaders, particularly Germany, are trying to hold a gun to Greece's head. They threaten that if Greece tears up the austerity package they will kick it out the Euro.

Greek voters were never consulted on austerity and 70% of them have now voted for parties that reject it.

As I have previously explained it would be economic madness and cost far more to Germany et al to kick Greece out. Who thinks the markets would stop at Greece? No, me neither. For this reason I believe the Germans are bluffing, just trying to scare Greek voters to back the bankers medicine.

Also Greece will not leave the Euro voluntarily. The 17 nations would have to break European law and break their treaty with Greece to kick it out.

Of course the IMF, ECB and EU could refuse to loan Greece any more money. But as Alex Tsipras of the left party expected to gain victory in Greece's June elections says; Greece would simply default on its current loans. It would be impossible for them to do anything else. Greece has more power than most think. The markets can throw a hissy fit but ultimately governments have the power to overule.

As to Cameron, he is trying to play the statesman - it briefly worked the Gordon Brown. He is an annoying heckler from the sidelines to EU leaders. But he is also a powerless irrelevance. Even the Tory media will struggle for a positive spin.

Media feeding on Germany's Euro bluff.

Troops on the street. Full scale riots verging on civil war. ATMs closed. Massive amounts of Greek capital already moved abroad which defeats object. People searched for Euros at borders. Greek default anyway. Massive runs on banks across Europe. The impossible task of persuading the markets that Greece is special case. Grexit would mean Eurexit for all. Multi-trillion cost for Germany.

Alternatively. Greek elections happen and new government seek new deal. Germany writes off 200 billion Greek debt. Greece remains in Euro.

The markets and media can believe what they like. I know what I believe. Ultimately Austerity is killing growth. Borrowing is too risky. But no-one is talking about the third option - tax the rich. I wonder why the media owned by 4 billionaires would choose to ignore option 3?

Germany Trying To Influence Greek Elections.

Greece look certain to rebuff Germany and the markets. I am certain that once elections are over, Germany will make deal to slash Greek debts and keep it in the Euro. It would be madness to do anything else.

If Greece leaves, there will be bank runs in Spain, Portugal, Italy, Ireland. It would mean financial suicide for the EU. Far cheaper for German banks to write off debt. There is a game of bluff but once Greece decides the real bargaining will begin. No country will leave the Euro.

Empty threats against Greece are part of brinkmanship from Germans.

Would the Germans really force Greece out of Euro?

Listening to the British media you would be mistaken on thinking the Euro was finished long ago.

But they are either wrong or mischievous or both. The British establishment has always poured scorn on European co-operation. And every time they have been wrong. The anglo-saxon markets are doing their best to destroy the Euro. But the continent thinks differently. Ultimately the politics of the Euro will beat the markets.

It is in no-ones interest to break the Euro. The Germans would suffer. Italy & Spain would be vulnerable and the Greeks won't leave voluntarily. In short it won't happen.

What Poverty Is Really All About

Poverty is manmade. In Scandanavia and Germany the gap between the average wages of the  top 10% and lowest 10% is around 6 times. In the UK its around 12 times. In the US 20.

Yet GDP per capita is similar in all these countries, companies do just as well, CEOs just as competent. In fact it is arguable that economically the Germanic countries do better. Their public services are certainly better funded. Where is that bigger pie that right-wing ideology claims will provide for all when you lavish the rich with better rewards?

In simple terms it comes down to how you treat your less productive members of society.

There will always be a certain percentage - millions of people, who you could argue are never going to be economically viable. In the US they lock up 2.5m people, millions more are destitute, homeless. 50m unable to afford healthcare. It seems one thing inequality does do is make the poverty pie bigger. As Wilkinson and Picket demonstrate in their book 'the Spirit Level'.

Ultimately the political & economic system is refusing to offer these people a decent living wage. But the rightwing have a problem. They can drive wages down to subsistence level for many, but what do you do when economics says they are worth less than subsistence?

What I am getting at, is the strict limits (at least there should be anyway) of using only economics to justify political decisions. The morality of the poor so derided by the rich actually highlights an absence of morality at the top. When the rich blame the poor for poverty, it is the morality of the rich that should be questioned.

An economic model may suggest that even education spending is a waste of money when at the end, the product is unemployable. (A side point is that the US and UK sponge on other countries education systems through the 'brain gain' - paying higher wages by not spending on education/training, i.e. cheating those states that invest more).

And of course this all assumes that your economic model is determining wages fairly in the first place.

As anyone who has studied even basic economics should know. There are many distortions in markets, especially in the labour market. There is no such thing as a free market. But even where the market is as free as it can be and wages do reflect roughly what a person is worth to a company, are we getting a fair wage?

Wayne Rooney is paid a thousand times what the poorest professionals in the lower leagues get. Is he really a thousand times better footballer?

In terms of winning games he may be. In fact maybe even more. But in terms of skills, passing ability etc?

The problem is, Rooney only needs to be fractionally better than most to be able to command a market wage thousands of times better.

To the football club that wins, attracts crowds and has the resources, paying astronomical wages makes sense.

And, as the market distorts wages it also pressures politicians to move the burden of tax down the income scale. Inequality has grown fastest in the UK for both these reasons.

The market has no morals. It can pay what we all know are absurd amounts for negligible difference. And that is when the market is not rigged by nepotism and other corruption.

Social class inhibits opportunity for millions in poverty. The more unequal the society, the more inefficient the economy as potentially productive people stagnate.

Examples of distortion? Global capital allowed to move at will but not labour. Start ups impossible when a few companies dominate a market, can underprice or cartel to put barriers in place. So no perfect competition and no infinite firms then.

Competition stifled by political/media control. Lack of regulation can be more restrictive than lots. And economists remember the concept of perfect knowledge.

Then there are bigger distortions such as educational achievement. It is not just about what happens in the classroom.

Even if state schools had the resources of the private schools, things such as poor housing, violence in the home and in communities hold back the poorest. Indeed, building a million decent homes would do more for educational attainment than doubling spending in the classroom.

All these factors and many more allow companies to distort wages. Workers need income, capitalists can survive with their capital. Marx highlighted the importance of collective action. Capitalists like individualism because individuals are weak.

Neither is it correct to say the wealthy don't have enough wealth to make a difference to poverty. The top 10% have 53% of the wealth. The bottom 10% just 1.3%. You don't need clever maths to see that you could double the wealth of the poorest and barely dent the wealth at the top.

All this emphasises the importance of groups like Occupy raising awareness. Today in St Pauls London and around the world they are having a 'meet the 1%' day to highlight inequality.

Solutions? Surprisingly I make the case from the left in agreeing with the right that income and corporation taxes should fall. Taxes that ultimately increase prices indiscriminatory hit the poorest the most. We should not tax beneficial activities like productive earnings. I am a pigouvian tax man. To encourage employment we should only tax excessive income and wealth. Only profit taken out of a business should be taxed.

From the Greens to Ukip there is support for a Citizens Income. A non means tested basic income for all that guarantees a living. Best of all no financial disincentive to work.

Land taxes and environmental taxes would make up the shortfall from losing income and corporation tax. Half of wealth is in land and land prices rise and fall because of government action not individuals. This speculative profit is most in need of tax.

Above all, taxes need to redistribute more and a citizens income will ensure jobs pay. Employees on company boards should curb top pay. Regulate media ownership to ensure better diversity of views. If people learn to trust more, society will prosper. Heres hoping.

An Idiots Guide To The Credit Crunch.

Basically, a load of rich people lent a load of money to poor people never likely to be able to pay them back.

Pre-crunch, rich people were getting better returns from these loans than from 'real' investment in business.

What made things worse and more complicated was that rich people channelled these loans through their ownership and control of banks and big business, and this was done on a global scale.

Because these banks and corporations were 'too big' to fail and would have caused upheaval for us all. Those of us on moderate incomes had to underwrite these loans to the poorest.

Not only did the rich want their money back, they also demanded the tidy interest they were making and to maintain the big bonuses for their henchmen in the City.

Not only have the rich faced down tax rises on their substantial wealth they have also continued to avoid paying any taxes due for this.

And this is where we are. Hopefully when voters fully appreciate how they have been shafted they will rebel against all this.

Tax The Rich To Pay Deficit

This is what the media will never say. They go on and on about austerity, how cutting public services is the only option. They also go on and on about the 'burden' of taxation. This is because the media is controlled by the rich and powerful. But voters are making it clear - by all means hurry to pay the deficit, if you must, but don't hit the poor with service cuts and tax rises. Hit the rich.

France's new president elect - Francois Hollande proposes 75% tax on the rich. The Right scream that their rich will leave, lets see what happens.

The rich have the money, the poor (as the credit crunch has demonstrated, mostly do not).

Currently, those on moderate wages are being asked to pay to the rich what the poor couldn't afford to.

I say the rich shouldn't have pushed these loans on the poor in the first place. A one off 20% tax on the wealthy would pay off the deficit tomorrow. Eventually people will hear this message whether the media like it or not.

Low Wages Are The Reason People Are On Benefits.

You will struggle to find a studio flat in Brighton for less than £500 a month. A one bedroom flat will cost over £700 a month. Yet if you are on the minimum wage you will only take home around £650 a month. There are over 10 million people in the UK who earn less than £7 an hour, that's a third of the total workforce. So twice as many of the poor working class prefer a subsistence existence in work than the 5 million of working age subsisting on benefits. Not only do these two groups constantly interchange but most of the poor are in work and most getting housing benefits are in work (so to label one group as feckless and the other as saints is misleading) as these crap jobs not only pay poorly but are insecure with high turnovers of staff due to the high demands and poor treatment of staff by employers. We must remember that any benefits and or wages mostly go to landlords to pay the rent. We cannot pay people less than it costs to keep a roof over their head (or can we?). Also we should remember that Tory governments actually increased the number of genuinely disabled people with their vindictive policies. Yes, nobody made people more ill than the Tories in the 1980s - welfare dependancy started with Thatcher.

Tories are incredulous that there are people in the UK who go without food to enjoy a night out or feed their kids. Edwina Currie echoed the views of most Tories when she said it was just plain poor housekeeping. But how many of these silverspoon Tories have had to survive on these sort of incomes? You would have to be a saint not to end up in debt when over 90% of your income goes on basic bills like rent and utility bills with nothing left for life's luxuries. Just one piece of bad luck or 'fecklessness' and bingo you are in debt. A mobile phone or TV means you are not poor in Tory eyes, but these are now small change to buy compared to the massive amounts going on the basics.

And debt is the stick the rich use to whack the poor. This is the stem cause of our current recession. As inequality has grown, the wealthy have lent more and more money to the poor, who surrounded by goods they couldn't afford gleefully accepted it. Those of us on average incomes - the median being £21,000 a year will have to pay back these debts (including the high rates of interest) to the rich that the poorest were always going to default on. Who is more immoral here? Those on the breadline accepting the loans or those rich who dangled these easy loans in the first place? Shouldn't the rich be made to take the hit on these loans? Since letting the banking system collapse would hurt us all, surely taxing wealth is the option we should really be taking not taxing those caught in the middle.

The wealth of the country is around £10 trillion, of which around £5 trillion is in the hands of the richest 10%. The £1 trillion of national debt could be paid off instantly with a one off 20% tax on this wealth. The poorest 10% with just £13 million could never pay this debt off. Of course, countries never pay off their national debt completely (to do so would destroy the City bond markets and pension funds) and current deficit repayments are less than John Major faced in the 1990s in GDP terms so there is no rush. See FALSE-ECONOMY. But until we recognise that taxing the rich is a better way to deal with the deficit than sacking workers and destroying services the poorest will suffer. Apart from defence and law and order we spend less on every public service than our European neighbours.

The Banker's Budget

At least the Lib Dems managed to get people to talk about wealth taxes, though nothing came of it.

When even land and property can be placed 'offshore' for tax avoidance purposes, you have to admit the government can't be trying that hard to tax the rich.

The richest 1% in the UK get 13% of income, have 23% of the wealth and own 60% of the land.
The top 10% have 53% of the wealth, the bottom 10% just 1.3%

These are the stark figures behind this budget giveaway to those earning over £150,000 a year.

The media consensus led by the Sun and the Mail and assorted right-wingers is that giving £42,000 every year to someone on £500,000 a year while shrinking the minimum wage in real terms and cutting £4,000 tax credits to low wage earners is good business. Good for whom?

The Tories are funded by bankers and obviously know a lot of accountants who can massage down the importance of the 50p tax rate. In its first year accounting tricks eroded the £2.7bn it would have raised in year 2. The Tories are in a hurry to abolish it before that can happen and can now claim £1.6 billion is not a lot of money when it is taken from the rich, but a fortune when it is benefits fraud. The media forget these contradictions and also forget that tax avoidance costs £40bn a year, we'll target all our resources at 'clamping down' on people claiming housing benefits which only just about pay for a roof over someone's head (if they are lucky).

The attack on Child Benefit is nothing but scandalous. All the talk by the right of simplifying the tax and benefit system and they decide to drown the simplest benefit there is in a sea of bureaucracy. Why not just increase the top rate of tax if you want to hit those on higher incomes? Far simpler and more targeted.

The only explanation is they actually WANT to means test people. Means testing hits the poor not the rich. It is the poor that have to work their way through the labyrinthine benefits system. Universal benefits are fairer because there is no stigma and take up by those that really need it is near 100%. There are only a handful of millionaires, excluding them from small flat rate benefits saves little that is almost all swallowed up by added bureaucracy of means testing anyway. Thin end of the wedge, where does this means testing stop, you could exclude the rich from the NHS if you really wanted to destroy that too. The Tories know excluding the rich from a universal system erodes their support which is crucial if your real agenda if to get rid of it.

Like the added bureaucracy added to the NHS, the Tories get a double whammy of political rewards by destroying welfare and public services. If the NHS becomes too expensive because private companies are reaping off excessive profits at taxpayer expense and service levels fall. The right just shrug and say the NHS will never work anyway. There is no political reward for them to make these reforms work, especially when the media slavishly follow the Tory line.

And it gets even better for the Tories. Local democracy has been so eroded since the 80s that it is almost meaningless except in taking the blame for the cuts. Devolve all the cuts down to local authorities especially to poorer urban areas and Labour councils take the blame for Tory/Lib Dem cuts. It's ingenious. Councils are so restricted on what revenue they can raise, with taxes capped. Almost all their income comes from central government grants they have no control over. Yet voters will blame councils for cuts, especially as the Tories own all the local press that will push that line.

Of course with smarmy Ed Balls the only figure allowed to contradict the media and government consensus, Osborne could probably get support for the slaughter of the first born in the name of slashing 'Labour's deficit' - i.e. the global financial crash that was obviously caused by one political party in the UK.

Finally, the tax allowance increase gives a tax cut to every basic rate taxpayer, so someone on £40,000 gets the same cut as someone on the minimum wage and those not working get nothing at all. So what is important is what you do to reclaim the lost tax revenues and cutting benefits and tax credits for the poorest while giving money to those on £150k plus show the regressive priorities of this government. The Lib Dems may think they are helping the poor by doing this, but 0% tax on more income means less money to fund public services and nothing helps the poor like decent universal public services and welfare.

I can have sympathy with moving tax from income to wealth - but not if you cut tax on income and don't   tax wealth like this budget. Stamp duty is a tax on moving house, not a proper tax on property and wealth. Really rich people tend not to move that often once they have got their mansions.

When even Tim Montgomerie of Conservative Home writes that the Tories shouldn't help people that made a fortune from the property boom at the expense of everyone else, we can see that even the new right can reach consensus with us on the left that the Tories are not really the party of aspiration.

Why The Euro Will Not Collapse.

I didn't explain clearly in the last post why I think the Euro will survive, so here goes.

The Euro is a political project first and an economic one second. This is both a strength and a weakness. It is a weakness because there will always be a reluctance for individual nations to commit financially to the project. So the stability and growth pact was broken - even Germany and France failed to stick to the rules on borrowing, yet alone the 'club med' countries.

There was never a recognition (or large enough central fund to redistribute) that could cope with very different economies, cultures and languages. This was always going to restrict the mobility of labour needed to allow for a single market/currency zone. But it is also a strength because ultimately when it comes to the choice between a united Europe or a fractured one, from Italy to France, Germany to Spain they will choose the former. Germany certainly played a brinkmanship game over funding Greek debt but it had too much to lose by any country leaving.

And that is the crunch, leaving the Euro wouldn't solve any debt problem. Yes they could devalue but the power to set your own interest rates is overstated. Interest rates would still follow the major economies anyway (that is why from the US to EZ to UK rates only vary 0.5%. The costs of leaving the Euro would be astronomical. The markets may wish for a Euro crash, but it just ain't going to happen. Cameron has just bet the UK economy on a Euro collapse. Both him and his Daily Mail, Murdoch Tories are going to be sorely disappointed and every Brit except perhaps a few hedge fund managers are going to suffer as a result.

The odds that the Euro will collapse are virtually zero.

Even the bookies are giving odds of 3-1 against and we all know they take no risks. The truth is a Tory leader has been here before. Knowing that a European bloc off its coast cannot be ignored but by wishful thinking just hoping it will be a failure and go away. We walked away from the Treaty of Rome. But eventually we realised that of you can't beat them better join them. Only on the inside could we at least shape the direction of this monster devouring our power and influence.

As an anonymous French diplomat said; Cameron is like a guy who wants to attend a wife swapping party but refuses to bring his wife. So the EU is dead, or to be precise now only has one member, the other 26 will form the super EU. Cameron is hoping that his hedge fund buddies are safe, but even in putting these elite few who constitute less than 1% of GDP, he is going to prove disastrous. A financial transaction tax will stabilise markets from their destructive behaviour. When Cameron realised he had no allies he could have set the level very low, rather than the higher level we will eventually have to accept. This whole episode will prove to be very costly for all of us in the UK. Cameron has sold us down the river.

Labour Will Struggle Unless They Shoot Down Deficit Lie.

It doesn't matter how right Labour are proved about the Coalition's slash and burn approach to the deficit if people believe that the deficit was Labour's fault in the first place. As Cameron and Osborne persist in destroying public services under the guise of responsible deficit reduction, the economy is going into a downward spiral. Reduce demand by sacking hundreds of thousands in the public sector and far from stimulating the private sector, it not surprisingly drags it down. And without growth, the deficit won't go down either. Labour will win the argument that the Tories and their Lib Dem sidekicks have cut too fast and too drastically. Labour might even win the argument that this was an ideological decision. But they will struggle to win support if people believe the deficit was created by Labour in the first place.

It actually wouldn't be that difficult for Labour to argue their case, but strangely they have given up the ghost and allowed the media and government free reign to claim that Labour overspent so therefore we have to tighten our belts. On first inspection this sounds very plausible to most voters, but as soon as we consider some actual facts it quickly looks very absurd.

1. In 2008 when the financial crisis hit, both the Tories and Lib Dems were still claiming they would maintain Labour spending on public services. Strangely this fact has disappeared from the media. If they believe Labour had overspent why would they claim to match their spending?

2. Just before the banking crisis hit, the national debt was actually lower than Labour had inherited off the Tories at around 37%!

3. The financial crisis has hit the entire developed world, even the most die hard Tory would struggle to claim that Labour spending policies in one small country off Europe - i.e. the UK have affected the whole world. So to blame Labour for the crisis just seems wierd.

4. Finally, government debt only ballooned when it had to take on the private sector debt of the banks. You can blame Labour for not regulating enough, but the only voices advocating that were on the left, certainly not from the hedge fund bankrolled Tories.

Imagine if Labour had not increased spending AT ALL on public services in its 13 years in office. Well for a start I don't imagine that would have gone down well with voters who in 1997 were crying out for investment in health, education and the rest. But leaving that aside, the maybe 200 billion Labour might have saved in expenditure, would still only have made a small dent in the trillions of bad debt the banks had racked up by buying up US and other bad debt in casino style deals.

Which ever way you face it, the problem is not that Labour overspent on public services (we still spend less than the EU average). Yet that Labour spent too much on public services is what most people believe, and until that changes, Labour and Miliband are in real trouble. They have to be clear about this and absolutely refute it when the media and Tory led government try to pin the blame on them. It is rubbish and people need to be told.

The Local Government Pension Strike

Just a few things to mention.

1. The LGPS is currently in surplus by around £5-6bn, i.e. it is fully funded for quite a few years to come. Yes, predictions of future returns on investments and increasing life expectancy suggest that in decades to come, there might be a shortfall of several billion for the taxpayer to find. But these are predictions, not certainties and surely the overall savings to the taxpayer of having people on occupational pensions rather than claiming benefits in their old age more than make up for this.

2. When people sign up for a pension scheme they are doing the country a favour by providing stable finances to companies and government and expect the government to honour agreements in the long term. Already the government has put people off the LGPS by not keeping their promises. Those who decided not to join have been proved right - paying into a scheme where the terms can be changed on a whim of government policy is no advert for joining. People are gambling not only that they are going to live to 67,68 and beyond but that they are going to be in any sort of health to enjoy this money when they get there. Personally I think anyone on less than £21,000 a year (which is the average wage) is not getting that good a deal (paying £100 a month for 40 years for just £13k p.a. on retirement), when their life expectancy is only around 71-73. They need to live this long just to get their money back (and the government are going to make the scheme worse. Remember life expectancy is lower for people in lower wage jobs. They are generally subsidising those on top salaries who not only get a better return, but live longer as well. Those on £40k plus are rightly kicking the door down to get on and stay on this scheme.

3. Saying public sector pensions are better than the private sector is hardly saying much. Putting your money under the mattress would have been better than most private pension schemes.

For these reasons and the fact that this is an attack on pay and conditions make the strike perfectly reasonable in my humble opinion.