Economists criticise Government economic plans

The debate over how to bring economic recovery continues with a letter to the Sunday Telegraph signed by 16 leading economists with the following :

"SIR - Further to your interview with Alistair Darling (October 19), we would like to dissent from the attempt to use a public works programme to spend the country's way out of recession. It is misguided for the government to believe that it knows how much specific sectors of the economy need to shrink and which will shrink "too rapidly" in a recession. Thus the government cannot know how to use an expansion in expenditure that would not risk seriously misallocating resources.
Furthermore, public expenditure has already risen very rapidly in recent years, and a further large rise would take the role of the State in many parts of the economy to such a dominant position that it would stunt the private sector's recovery once recession is past.

Occasional economic slowdowns are natural and necessary features of a market economy. Insofar as they are to be managed at all, the best tool is monetary and not fiscal policy. It is inevitable that government expenditure and debt naturally rise in a recession but planned rises in government spending are misguided and discredited as a tool of economic management.

If it is believed that this recession has features that demand more active fiscal policy, which is highly disputable, taxes should be cut. This would allow the market to determine which parts of the economy shrink and which flourish to replace them."

The Chair of the Commons Finance Committee John McFall has argued for tax cuts saying "There is a need for a focused approach, to reduce the tax burden of the lowest paid working people. Now is the time for further reform of tax allowances to take millions of low-paid people out of income tax altogether, and benefit many millions more basic-rate taxpayers."

One of the main features of this downturn is that it has been caused by easy credit and loose spending by not only the people (easy credit kept the economy ticking over through consumer expenditure) but also by the Government when it spent so profligantly. We all had a hand in this and the Government must not try to spend its way out of this.

TDC China Gateway vote

The always excellent ThanetOnline has a breakdown of which way the Thanet District Councillors voted on the recent decision to grant planning consent for the China Gateway development. If you dont know which Councillors are yours, check here.

Ministers abandon 42 days after Lords humiliation

As reported yesterday the Government were under tremendous pressure about what to do with the Counter Terrorism Bill if it were as expected defeated by the House of Lords. We got our answer after the Lords voted with a massive 191 vote majority against the Counter Terrorism Bill last night with a raft of prominent Labour Lords revolting against the party line.

Jacqui Smith made a statement to the Commons soon after the vote saying that the 42 day proposal will be removed from the Bill and will be set aside in a separate Bill to be introduced "should the worst happen". This brings back memories of the Patriot Act in the US, where no one read the Bill when it went through Congress but shoved it through at a time of national emergency because the political imperative forced them to do so. Parliamentarians must be wary of this tactic and the Government should just bury it and move on avoiding this underhand manner of enacting bad legislation which wouldnt pass otherwise.

In other Lords news, the Immigration (Discharged Gurkhas) Bill [HL] received its Third Reading and will now move to the Commons for discussion. The Bill is a very simple one, the amendment of the current Immigration rules to allow former Gurkhas indefinite leave to enter and remain in the UK whenever they were discharged. I hope our local MPs will support the Bill in its passage through the Commons.

Counter-Terrorism Bill Lords vote today

Today is big for Brown for reasons other than the bailout of the banks. The Counter-Terrorism Bill comes before the Lords and is expected to be rejected heavily. That will lead to the process restarting with the Commons and Lords voting a second time. Should the Lords refuse a second time, Brown could invoke the Parliament Act to force the Bill onto the statute books. The BBC has reported that is unlikely and if Brown had any sense he would abandon the Bill if today it falls. He wont get it through without the Parliament Act as thats been used too many times by Labour.

Unemployment

Yesterday in the Commons, Roger Gale spoke about unemployment and other associated problems in Thanet such as looked after children. He spoke out against the proposed closure of the Whitstable JobCentre as it will put extra pressure upon the Herne Bay branch and attacked the legislation surrounding empty property rates, an issue highlighted in the past by Laura Sandys:

"As the Minister knows, Thanet has suffered historically from the highest levels of unemployment and social deprivation in the south-east—among the highest levels in the country. The reasons are not hard to find. Thanet has suffered from an enormous amount of immigration. During the 1980s, the immigration came from around the United Kingdom in what was known as the “dole on sea” syndrome: the unemployed came to the seaside to live on the dole in hotels and guest houses, and Thanet took more than its fair share. That contributed to its unemployed base."

"Thanet has also been the dumping ground for cared-for children from London boroughs and, shamefully, from some of the home counties as well. Those young people have grown up. Very many of them have been damaged and found it extremely hard to find employment of any kind, so we are used to unemployment in Thanet."

It is clear as day that we are in recession, with retail and manufacturing already proven to be shrinking. The credit crunch isnt finished at all despite the package announced yesterday and there is a lot more pain to come. The Government must take a wider view rather than concentrating solely on the banking crisis, which while important in itself, is not the only problem. Unemployment will inevitably increase and the Government must recognise that more must be done to lessen the pain of that. The point about children in care is a pertinent one as these are people who require state support as a pre-requisite rather than it being a voluntary option they take up.

Libertarianism

David Cameron made a significant speech the other day at the Conservative Conference where he spoke for over an hour on a range of subjects. It was well delivered but one point really grates. He commented on political philosophies and in particular libertarianism saying "But freedom can too easily turn into the idea that we all have the right to do whatever we want, regardless of the effect on others. That is libertarian, not Conservative - and it is certainly not me".

Libertarianism is not that. While there are a number of forms of libertarianism around, as there are with say socialism or liberalism, the one he was rejecting is right wing libertarianism where people should be free to live their lives as they wish, so long as they do not interfere with the ability of anyone else to be free. Libertarianism exists on the point of voluntary choices and that coercion, whether individual or state backed, is wholly contrary to this belief. Being a libertarian doesnt mean that I do whatever I want and to hell with you lot. Thats anarchism. David Cameron is being wholly disingenuous about this and while its understandable why he does this, he really does need to engage brain before speaking like he did. The public may not care too much, but to the core Tory vote it will matter as its a matter of belief. This is even worse since he derides libertarianism even though he said a while back that he was an "instinctive libertarian" and at Conference preached so much libertarian thought about government getting off peoples backs and allowing the people to be free.

Libertarianism isnt a free for all. It is based upon individual responsibility and real financial prudence. Cameron's efforts to triangulate himself between the hardcore socialists and the extreme anarchists to appear moderate is a bad strategy and misrepresents those he rejects of his own party.