Sunday, 13 September 2015

If you think Tories are heartless, you should try socialists


A few years ago it would have been considered impossible that either the SNP would win 56 seats in Scotland or that Jeremy Corbyn would one day lead the Labour party. If I had been able to place a bet on this combination of events happening what sort of odds might I have obtained? I’d, no doubt, have been able to retire on a ten pound bet. Yet somehow both these events have occurred in the same year. This year. What’s going on?

I’ve tried to keep this blog reasonably impartial with regard to Labour, the Lib Dems and the Conservatives. This is not least because I’ve voted for each of these parties at one time or another. I thought the country needed change in 1997 and so I voted for Blair. I may well have done so a second time. I voted this year for the Lib Dems in Gordon, not only to keep out Alex Salmond, but because I thought they did a good job in coalition. I’m not one of those Scots who uses the word “Tory” as an insult, because, Judas that I am, I preferred Thatcher to Michael Foot in 1983.

Mainstream UK politics has always been rational. There is a sensible debate to be had about what works best economically. Reasonable people can disagree about how best to regulate free market capitalism.  I would like the markets to work for everyone, so that each of us has a reasonable chance of sharing in the wealth of our country. Even if I accept that pure laissez faire capitalism would  be best for economic growth, I’m not sure that I want to live in the society that this would create. After all, the Wild West was dangerous for everyone.

The reality however in the UK is that no major party is offering anything approaching pure right wing economics. The Conservatives are not even letting the market determine wages. Rather they prefer to steal a policy from Labour’s last manifesto and introduce a living wage. They are trying to prevent the inexorable growth of spending on benefits, but this would be the job of any sensible party in power. Balancing the books should not be considered right wing. Rather it’s mainstream, centrist politics. The reality is that the Conservatives are somewhat to the left of the Democrats in the United States. They support state spending to an extent that is contrary to true free market economics. If there are voices in the Conservative party that wish to cut state spending to 20% of GDP, I haven’t heard them. But such a voice from the margins would be the Conservative equivalent of Jeremy Corbyn.

Given an ideal world and the chance to do everything that he would like, what percentage of GDP would Jeremy Corbyn like the state to spend? Well true socialism would require approximately all of GDP to be made up of state spending. Socialism is not what the Labour party has been campaigning for since Neil Kinnock began his programme of reform and modernisation. The big ideological change that Labour made that culminated with Blair was that capitalism was the only game in town, but that it could be better regulated to benefit everyone. This is usually called social democracy. There are sensible countries where this form of government works rather well. Again there is a mainstream debate to be had about how we can make economics work for everyone, so that no-one is left out. But let’s be clear. This is not a debate about socialism.  It’s a debate about regulating capitalism.

What’s the defining characteristic of socialism? In my view it’s the idea that what matters most is eradicating inequality. For a socialist it’s fundamentally offensive that some people earn millions while others earn hardly anything. Their aim is to eradicate this inequality. I think this is fundamentally the wrong approach. It ends up with not only the rich being poorer, but the poor being poorer. It is simply contrary to human nature to try to eradicate inequality. To do so leads to poverty, because the motivation people have to create wealth is either to raise themselves up from being relatively poor or to extend the gap between themselves and someone else. If everyone in the UK earned £15,000 pounds a year whether they were a company director or on unemployment benefit, why would anyone strive for success?

If we all lived on a tropical island where all we needed to do was to pick fruit from the trees in order to live in perfect contentment, we would be in something close to a socialist paradise. There would be no inequality. We would all have equal access to the fruit. But there would be no progress either. We would remain stuck in our perfect equality just as if we had never left the Garden of Eden. Progress, economic growth and everything our society has created in the past centuries is because of our fallen nature. Trying to eradicate inequality is trying to bring man back to his state of nature. It is Utopian and like all Utopian ideas can only happen by means of coercion.

Let’s imagine a company director earning £200,000 a year, while his next door neighbour lives on unemployment and housing benefit. Let’s say this person is paid £10,000 per year. This is a great inequality. How do we reduce it? Well we could tax the company director and pay more benefits to his neighbour. But the rich person might naturally reflect that if a thief came into his house and stole half his earnings he would be prosecuted, but if a government does so they are praised for being socialists. He might try to take steps to avoid this government taking his money. How could he do so? He could move elsewhere to place that doesn’t want to bring him down to the level of someone who doesn’t work at all. How could he be prevented from doing so? Well Mr Corbyn could introduce a law that prevented rich people from travelling and he could introduce capital controls preventing rich people sending money abroad. It is in this way that socialism inevitably begins to damage freedom. We’ve known since 1991 that given the choice between state socialism and capitalism, people will vote with their feet. The Berlin Wall was the condition for the possibility of socialism.

Let’s say we have succeeded in taxing all the company directors so that they earn no more than the average.  Let’s say that we pay everyone more or less the same whatever they do. What sort of effect will this have on our economy? What incentive would I have to start a company and run it well? None at all. Moreover why even sweep roads, when I can go to the doctor and describe some non-visible symptoms that prevent me from doing so? The trouble with socialism is that it causes the economy to stagnate. Eventually even the poorest person ends up receiving in benefits far less than he would have done with the capitalist model.

This is easy to illustrate. People on benefits in the UK earn far more than people who work in Eastern Europe. This is precisely because those countries tried to eradicate inequality.

It is time to recognise that capitalism depends on inequality. Inequality is not a fault. It’s a feature. What matters moreover is not trying to change human nature to such an extent that we can get rid of inequality. This can only happen anyway with some sort of re-education programme that will fail, but at huge human cost. What matters is gradually striving to raise the standard of living of everyone.

Free market capitalism has raised the average standard of living in the UK to such an extent that someone who doesn’t work is far better off than someone who did work fifty years ago. The standard of living of someone who receives the living wage will be such that they will be able to do things that were way beyond the reach of their grandfathers. So long as I earn enough to live comfortably I couldn’t care less that someone else earns millions. Rather I’m grateful to such a person for the fact that his taxes improve my standard of living.

There is some sort of mass hysteria going on in the UK, but it has the same root. In Scotland the left sees nationalism as their path to a socialist paradise. This has now spread southwards so that the Labour party has elected someone who likewise wants to create a socialist paradise. I’ve lived in a socialist paradise. It was called the Union of Soviet Socialist Republics. Don't try to tell me it wasn't socialism.  Really you don’t want to go down this route. If you didn’t work, if you were found out on the streets during working hours, you were liable to be sent to a psychiatric hospital. The streets were paved with re-education.  If you think Tories are heartless, you should try socialists.


   

19 comments:

  1. Nicely put. I worry about the spread of the politics of envy which, like socialism, I had assumed was dead.

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  2. Someone earning today's calculated living wage (outside London) working full time is taking home roughly £13800 a year, on minimum wage it's somewhat less, it's not a lot even with the nhs etc as a safety net. It roughly equates to around £2 a week in 1901 which would have been a low wage then. I'm not sure you can honestly say someone on the lower end of the pay scale has a substantially better quality of life now than their grandparents would have. As the gap between rich and poor widens it can hardly come as a surprise that those who don't have enough, by which I mean less than a living wage, want at least enough to live on. We're subsidising businesses to pay less than a living wage to keep prices artificially low. It's not a sustainable system and something has to be done about it.

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    1. "I'm not sure you can honestly say someone on the lower end of the pay scale has a substantially better quality of life now than their grandparents would have."

      Why do you equate quality of life with money?

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    2. Money usually determines your housing situation and housing and heating combined are the biggest cost percentile for people on lower wages.

      Therefore if you earn crappy money you usually live in a crappy house , in a crappy area and its usually older, poorly maintained and poorly insulated and so your heating costs are higher....

      You can see how that viscious circle runs.

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    3. If you earn crappy money housing benefit tops you up so you can rent somewhere desirable.

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    4. Desperate Reader, you are not factoring in tax credits and additional benefits such as housing benefit, do a benefits calculator on-line to get a true income for someone on just £13800.

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  3. Good blog Effie. Well written and spot on...

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  4. People on benefits in the UK earn more than those working in Eastern Europe ?

    Really ? What are the corresponding cost of living between UK and Eastern Europe.

    I have local Polish , Hungarian and Czech guys in my team all earning substantially more than even UK average wage. In some cases more than double.

    What benefits do you imagine the UK give out ? Jobseekers allowance is 72quid a week if over 25. Maximum DLA is 82 per week..... The facts don't seem to match the rhetoric.

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    1. Tax credits (working), tax credits (child), child benefit, housing benefit, council tax benefit.

      The facts speak for themselves, why you would choose to go on about jobseekers allowance while talking about immigrant workers remains a mystery.

      Its not uncommon for immigrant workers with a couple of kids to cream £20.000 + in addition to wages from our system.

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    2. What do you mean by its not uncommon ?

      Is there not a max limit on benefits now of 25K ?

      Is it only immigrants who get this ? I would say why do you go on about immigrants specifically but I can work out from your comments where you sit.

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    3. I never mentioned immigrants, you dived straight to that dark spot my friend.....I was talking about benefits versus wages in Eastern Europe.

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    4. So I put my own details in and took an annual wage of 14K PA.

      1 child under 18 and taking full 108 per week housing allowance as that is max my council will pay and I get a 2 bed flat. Its entirely possible to rent for that in my area but it won't be the best area and its not great anyway.

      Spouse not working.

      Result is that I get 150 quid a week extra in mixed benefits. which is 7300 a year.

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    5. I've made a comeback and now I have 5 kids,still on 14KPA, non working spouse and I'm entitled to a 3 bedroom house. Housing allowance is163 per week.

      Tax credits 16K.
      Housing benefit 5.6K
      Child benefit 4K


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    6. Running Man, yes 25.6K (tax free) plus your wages, please dont moan about our benefits system again!

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    7. but to be fair you need balls of steel to have 5 kids under 18

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    8. Running Man, I have 8 (eight)!

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  5. Haha, I tip my hat to you in that case.

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