Kindergarten economics: Labour’s moronic policy list is an insult to the electorate

The Labour Party has published a series of policies leading up to the publication of their manifesto. At least, that’s what is claimed. It is hard to tell if the announcement is a joke, because the list are leftist policies of envy, kinder-garden economics and farcical financing proposals. It is an affront to the voting public, an insult to their intelligence.

This is the list of policies and associated sources of financing:

It should be unnecessary to point out the fallacies underlying this preposterous list of pledges, but let’s degrade ourselves to examining them one by one:

  • Not raising, but cutting corporation tax has proven a popular policy for governments across the world in recent years, as it is widely recognised that corporation tax deprives corporates of resources for capital investment, reducing economic growth and productivity. In addition, revenues from corporation tax has actually been increasing as rates have been reduced.
  • Free school meals for all served no purpose other than wed the electorate to the welfare state, as we argue here. The increase in cost of private education from VAT on private school fees will force parents to transfer their kids to state schools. The tax payer will have to stump up.
  • A £10 minimum wage is to be introduced ‘within months’ of a new labour government, instantly increasing the level by one third from the current level of £7.5/ hour. While minimum wage in general is poor economics, as we argue here, the idea that an extra 2.5/ hour for 5.5 million workers can be paid for (admittedly in part) ‘by private sector bosses’ is a laughably naïve soundbite. The bill comes to in excess of £24 billion, quite a drag on the ’fact-cats’. The result is of course fewer jobs.
  • The increase in unpaid carers allowance is funded. But as inheritance tax is effectively a tax on saving for retirement, expect an adverse effect on the pensions bill. Besides, inheritance tax is notoriously easy to avoid. An increase will lead to more avoidance. Don’t spend the money too quickly!
  • Renationalising the railways may not cost the government anything, but a return to the misery of National Rail will be a cost to the economy. Rail travel has doubled since privatisation. The UK railways have the best safety record in Europe. A lot to expect from a government run corporation with a lamentable track record.
  • Halting NHS outsourcing will not lead to savings. While difficult to understand for socialists, profit is a proof of value for money, not a ‘tax’ on the customer skimmed by ‘fat-cats’. The policy will of course cost, not save money.
  • 100,000 council homes are to be paid for by borrowing. Sending the bill to future generations has been a policy of welfare states for years, but allowing councils to borrow against their assets is a dangerous path to go down.
  • 4 new public holidays are supposedly revenue neutral because people spend more on days off. This is supposedly backed by the Bank of England, but only a madcap Keynesian can with a straight face claim that lost production can be compensated for by more consumption. 120 million lost working days per year will cost £16 billion in lost production. Hard to believe!
  • Zero hours contracts are hated by the left. But they offer flexibility and removing them will have a cost in terms of efficiency. In addition, zero hours contracts are quite popular amongst many workers. In one survey, almost two thirds of workers on these kinds of contracts preferred them to fixed hours.
  • Banning certain companies from bidding for government contracts is NOT a zero cost policy. The level of economic ignorance needed to make this argument is staggering. Everyone who does the weekly food shop knows that more choice and competition is good for the consumer.
  • Halting Free Schools and Grammar schools is an ideological vendetta, but to be fair does not come with a moronic financing proposal: it is cost free.
  • Tax ‘sweet-heart deals’ seem unfair, but is in fact a boon to the public coffers, as they are made to encourage companies to register profits and pay tax in the UK. Tax revenue is likely to go down, not up if these kinds of deals are banned.
  • The gender pay gap doesn’t exist, as we argue here. It is a pay gap based on choices, not gender. Government dictate of wages does not increased productivity. There is no magic extra money that can suddenly be taxed. Unemployment amongst women will go up if the cost of employing women cannot reflect the career choices they make. Increased unemployment will cost the tax payer money.
  • Cutting business rates is welcome, but the whole premise of ‘small business good, big business bad’ is leftist non-sense at its worst. The policy will of course cost money to the treasury.

 

All in all, the proposals are so badly thought through, so naïve, so patently unworkable, as to be an insult to the voting public. It is a wish list for a bunch of hard left ideologists, which is fair enough: that is what the top of the Labour Party consists of. But the underlying economics are idiotic, for lack of a better word. It is a recipe for destroying not only the public finances, but the country. That these proposals are funded is a blatant lie. If a private company over-promised in this way, they would be sued for false marketing. All we can hope for in this case is that the public sees thorough the unfathomable naivety of the proposals and rejects the dream of a socialist la-la-land the Labour Party hopes to deliver.

One comment

Add Comment

Required fields are marked *. Your email address will not be published.