Saturday, November 15, 2008

Don't play on Labour's pitch

Gordon Brown is wrong-footing the Tories with his new tax-cutting policy. Having successfully led them to promise to match Labour's spending plans if they gained power and scorned any whisper of 'Tory tax cuts' as a threat to the funding of public services, he is now, due to the current crisis, shifting the goal posts again by egging on world leaders to cut taxes.

The danger of playing to moving goals is that you have to keep on running into areas that others choose. So why not roll up the pitch and play a different sort of game? The ideas launched in Southampton last week (see Blog: 8 Nov 2008) could well have an edge with the voters as well as being soundly based in financial probity.

Charles Goodhart said that an expansionary policy is needed in these rapidly deteriorating times. Traditionally this means governments borrow and spend on public works to counteract the tendency in hard times for most people and businesses to stop spending and to save. Richard Werner said that it was quite possible for the government to issue their own money. No borrowing from banks & no burden on future taxpayers, because no interest payments and no payback.

Some of this money could go to public works (very slow acting), but this is an ideal time to give a citizen's income directly to every individual (quick acting). This would achieve what a tax cut does (money to spend) but in a novel way. And the manner of achieving it could be in Werner's novel way: create the money 'out of nothing' just like the banks always do for their own benefit. Result: real money to households...most effective for the poorest and just what is needed to encourage private spending quickly as the recession start to bite. How's that for a new pitch for Tories or LibDems to force Labour onto? This one would really grab the attention of the voters.

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