By D. J. Webb
I haven’t had much time to write on politics recently, for which I apologise to readers of the LA blog.
I want to address a problem today that I see frequently. You can call it the Daily Mail mentality, or big-C conservatism, or the smug middle class. This mentality is even exhibited in some of the pro-free market think-tanks that rail against the fecklessness of the benefits scroungers and the young in general, hoping that, by cracking down on benefits, a tax cut for the well heeled can thereby be afforded. This sort of thing can often pass for libertarianism.
Let me use the example of my mother to illustrate the problem. She condemns her grandchildren for not getting jobs and running up payday loans. Apparently, the young people today don’t want to get on the hard way, by working for your living. They want it all now, handed to them on a plate, without having to work for it. I think many readers of this blog will recognise the theme, which appears to be a regurgitation of some of the worst articles on the Daily Mail website. Warming to her topic, she has been known to wax lyrical on the social obligation to pay the council tax. Is she a budding libertarian?
Yet—and despite having five children—my parents did have it relatively easy, in that good jobs were easier to come by in the past, and house prices were much lower relative to incomes. You could make it back then. It has become a cliché to remark on the fact that the next generation will not have it as easy as their parents and could well be poorer.
This is despite the fact that we have had something of an aspirational revolution. At one point, large swathes of the working class lived in council housing, which was simple to obtain. Now we are pushed into the freehold market—freeholds we don’t need as none of us lives forever—and called upon by the prime minister and others to buy overpriced housing to bail out the banks. In educational terms, aspiration has been encouraged, to the detriment of the quality of education, as the state lowers standards to enable all to gain qualifications. Self-reliance has been encouraged—ostensibly a thing libertarians favour—by the fact that huge loans are now required to gain a university education. Parts of the health service are now routinely topped up by private provision.
But all this means is that house prices have gone up, to the extent that even middle-class people are being forced out of London and into commuter towns, and people are being pressurised into spending years clocking up debts for qualifications that are relatively meaningless, simply because everyone else has them. The Thatcherite aspirational revolution seems to have run its course, as none of this has transformed Britain into a land of opportunity; quite the reverse, in fact.
A free economy is not one where the state encourages aspiration, but one where the state restricts itself to the most basic functions (e.g. defence, the courts, etc). What was needed was for the state to be rolled back as a percentage of GDP under Margaret Thatcher—not maintained at around 40% of GDP. No policies encouraging home ownership or university education were required. Indeed such policies prevent a reduction in the state, by simply making it more expensive to live (mainly due to property prices), thus encouraging many to just give up and rely on handouts instead. All that was needed was for the state to stop the absurdity of personal taxation and let people manage their own lives as they see fit, all the while controlling the money supply with an explicit aim of preventing a property price bubble. In the event, all this aspiration-mongering (which had the semi-explicit aim of stoking a property price bubble) has imposed huge costs on us all, in the form of accommodation costs and university debts, which, when added to high taxation, absorb a shockingly high percentage of incomes today. Many people have little in the way of discretionary spending once income tax, national insurance, council tax, mortgages, student loans, utility bills, house and contents insurance, the TV licence, road tax, M.O.T and petrol, and basic food and clothing are accounted for. Yet this situation has been contrived by free-market think-tanks calling for pro-aspirational policies that have left us where we are.
Is it difficult to see why young people and people on benefits are trapped? The pro-aspirational property policies have produced a surge in social-security spending as higher rents need to be covered. In turn, those in receipt of housing benefits cannot fail to have noticed that the “baseline” is getting higher and higher, in terms of the minimum they need to earn in order to cover their rent, council tax and other outgoings. Libertarians who think this is best addressed by slashing benefits are two a penny, but they haven’t answered the question of how the bottom decile of society can survive in an economy with rocketing property prices.
Incomes are another problem. Incomes are stagnant at the moment, while basic living costs are soaring, even if the government’s inflation indices don’t seem to wish to capture it. The problem here is immigration, which prevents the labour market from functioning properly. Theoretically, as jobs are created, the labour market tightens, improving the bargaining power of labour. This should mean that over the long term, workers can demand wages they need to pay for their accommodation and food and raise families. Unfortunately, one of the key reasons for immigration is to prevent the tightening of the labour market. We hear nonsense about “skills”, as if people from Afghanistan and Somalia are nuclear physicists, whereas, in fact, what is being done is the trafficking in of lower-end labour to keep the labour market flexible. Yet libertarians who think free immigration is an important freedom are also two a penny, for some reason. Maybe they haven’t thought it through properly.
Ask yourself why in-work benefits should be needed in a properly functioning labour market. It is no solution to say that in-work benefits should just be scrapped with no further changes to our society and economy. Not unless we allow shanty-towns to develop on the fringes of our urban areas. Most of the rest of the things libertarians argue for would be similarly negative to society without more comprehensive change. Just delete education funding, Mr Libertarian says. OK! Great! Shall we close down the NHS while we’re at it? I suppose you could balance these by reducing taxes, but most people on the minimum wage do not pay much tax anyway. They would lose vital services—things that they have to have and can’t afford to pay for—while gaining relatively little in the reduction in taxes. Bear in mind that low-end people earn as little as £1,000 a month, a salary that requires them to pay £85.19 a month in tax and national insurance. The reduction in the burden of the state is almost an irrelevance to them compared with reducing house prices and allowing the labour market to function properly. We could possibly take everyone under 25 out of personal taxation altogether in order to incentivise them to move up from minimum-wage jobs—we should do this—but the problem still remains that high property prices are now a significant hurdle to anyone who wants to get on.
So we come back to the spiteful views of people who made their money relatively easily by buying property cheaply in the 1970s, and sneer at people, especially young people, who don’t wish to slave away for £1,000 a month (£914.81 after tax and national insurance) in order to cover rocketing rents, energy bills and the like. It makes no sense not to realise that this has become a country almost devoid of opportunity. Some people do do well, it is true, but there is a distinct pull-up-the-drawbridge mentality to the middle class.
I’ve made the case here before for a more holistic approach to a free economy than just slashing benefits and reducing taxes. These simply divert more money to the well-heeled and make a country that has even less opportunity for the new generations of young people. Without a fundamental readjustment of land prices, almost nothing libertarians advocate can promote a free economy. Do we want a free economy, or do we just want the existing middle class to become richer? Libertarians have to address cost-of-living issues and stop issuing policies that would push up the cost of living in a way that make jobseeking almost pointless for teenagers.
We should be calling for:
Measures to lead to a large fall in land values, including the introduction of a land value tax and five-year leases to replace six-month assured shortholds.
An end to all immigration unless of a highly skilled and specific type.
Immediate withdrawal from the EU, to facilitate the end of immigration and a deletion of many pointless regulations.
An immediate halving of the size of the bloated university sector.
An end to all pointless “green” taxes.
Immediate abolition of the council tax, the one tax that low-end workers’ pay regardless of income.
A restriction of all social-security benefits to people of mediaeval British Isles ancestry.
A large increase in family allowance payable to families of British descent where the parents are married and living together with the children.
While an elimination of all personal taxation is an ultimate goal, we need to recognise that young people and “the poor” don’t pay much in the way of income tax anyway. Unless we can address basic living costs, the free economy will be pointless. So this is why I don’t deprecate my nephews’ failure to find a job, and to a large extent I agree with them that the opportunities are just not there today.