Taxation is a disputed necessity. In the United States it is the focus of struggle for the libertarian Tea Party. Everywhere it is the foundation of many taken for granted utilities & public services. And it has been the provocation of outrage.
The threads of many famous revolutions have been brought together; from the English to the American to the French; and civil unrest ignited by taxation of society's poorest to pay for the excesses of the rich and the imprudence of the state. In France it was the Estates' attempt to pay off war debts (Harvey, 2006), in England it was the struggle to reign in a monarch through control of taxation (Purkiss, 2006), and in American it was opposition to 'Taxation without Representation'.
In all of them, it has been an ongoing struggle to ensure that people maintain the right to regulate how their money is used.
A student of history, such as Chancellor Osborne, might be expected to be wary of the dangers of levying heavy taxes while cutting funding to services (PA, 2011; Vallely, 2011); particularly when those tax funds are redirected to paying off public debt to banks and insurance companies (Reuben, 2010).
What are the alternatives?
People do not object to taxation. Rather they object to tax funds being used in ways that are not properly justified, such as paying off financial institutions - some of which depended upon public funded bailouts for their survival.
So if austerity measures are as unpopular as they appear, both in the UK and elsewhere in Europe; what alternative methods might a student of history take into consideration?
Well the traditional rival to this classical libertarian approach of government austerity and low interference with businesses and their profits, is Keynesianism. Keynesian solutions are based around 'stimulus'. The idea is for governments to fund increases in spending to pick up private sector slack (Atkinson, 2011); for instance, increasing public sector employment to offset job losses from private company cutbacks.
Mr Brown's Labour Government used this kind of intervention through 'stimulus packages' during the financial crisis (Swaine, 2008), a policy copied around the world. This meant investing huge sums of public money into private institutions. The hope was that this would capitalise these businesses sufficiently to allow them to (1) avoid lay-offs - ensuring people have a means of earning an income and (2) keep prices down - ensuring people still spend the money they earn. In theory, this combination would keep confidence high and create the stable conditions that encourage people to invest their money in new businesses - something that creates new jobs.
Commentators such as Johann Hari have pushed the case for public financed intervention (Hari, 2011). They point to previous successful application of these Keynesian approaches, such as FDR's New Deal in the US of the 1920's and 30's and post-war Labour governments, in public projects such as the NHS.
Keynesian measures have however been criticised as insufficient to manage some of the realities of modern economics (Atkinson, 2011), much as the classical libertarian approach was denounced in the late victorian era - and again now - to be insufficient to address the unfair and imbalanced nature of the the market (Liberal Industrial Inquiry, 1928).
The current Labour leadership has tried to drive a moderated course so far in opposition, one between the cuts and the need to 'stimulate' the economy. The Labour leader Mr E Miliband has pressed this view, as has his Shadow Chancellor Mr Ed Balls (Owen, 2011). The former Labour Chancellor Mr Alistair Darling believes that the measured approach put forward by the party is a credible alternative, but one that faces an uphill battle for acceptance (Aitkenhead, 2011).
Other political parties have also shared Labour's slow down and 'stimulate' plans.
Liberal Democrats campaigned on a 'green stimulus plan [to] ...create 100,000 jobs', that involved:
'Investing up to £400 million in refurbishing shipyards in the North of England and Scotland so that they can manufacture offshore wind turbines and other marine renewable energy equipment'These plans carried much in common, not just with Labour, but with earlier Liberals who worked on the 'Liberal Industrial Inquiry' of the late 1920s. These proposals where later reigned in by the coalition with the Tories.
Conflicts of Interest
Whichever way public money is to be spent, the system must always be clear & fair. Taxation allows the government to intervene and curb the excesses of businesses in the pursuit of profits, but its processes must be transparent. Transparency helps to avoid embarressing incidents such as setting up a new system of administering schools, and then fast-tracking a lump sum of money to a close friend's business in that sector, which could appear to be a less than scrupulous use of public funds (Vasagar, 2011).
And the amount of collection and spending must also be tempered, in order to avoid the dangers pointed out by the last President of the Soviet Union, Mr Mikhail Gorbachev in the later days of the communist superpower (1987):
'It is natural for the producer to "please" the consumer, if I may put it that way. With us, however, the consumer found himself totally at the mercy of the producer and had to make do with what the latter chose to give him'
==========
References:
==========
+ BBC's 'New recession fears as weak US jobs data causes markets to fall'; 2 September 2011;
+ Robert Harvey's 'The war of wars: The epic struggle between Britain and France: 1789-1815';
chp 1, pg 9-15; Constable, 2006.
+ Diane Purkiss' 'The English Civil War: A people's history';
chp 4, pg 93; Harper Perennial, 2006.
+ Press Association's 'Public sector workers will have to pay up to £3,000 a year to keep pensions'; in The Guardian; 28 July 2011;
-See also:
The Telegraph's 'Public sector pensions: high earners face bigger rise in contributions';
The Telegraphs's 'Danny Alexander: public sector pensions must be rebalanced';
The Telegraph's 'Andrew Lansley attacks government's public sector pension reforms';
+ Paul Vallely's 'Are the Government's welfare policies creating more homeless people?'; in The Independent; 9 June 2011;
-See also:
The Guardian's 'Tory peer attacks government's welfare to work programme';
The BBC's 'David Cameron sets out Welfare Reform Bill plans';
Department of Work & Pensions' 'Welfare Reform';
+ Anthony Reuben's 'Who owns the UK's debt?'; 26 February 2010;
+ Rob Atkinson's 'The Trouble With Progressive Economics'; Summer 2011;
+ Jon Swaine's 'Gordon Brown hails £500 billion bank rescue plan'; in The Telegraph; 8 October 2008;
+ 'Britain's Industrial Future: being the report of the Liberal Industrial Inquiry'; also known as the 'Yellow Book'; chp 1, pg 5-8; Ernest Benn, 1928.
+ Johann Hari's 'The biggest lie in British politics'; 29 March 2011;
+ Paul Owen's 'Ed Balls sets out alternative to coalition spending cuts as he warns of double-dip recession'; in The Guardian; 27 August 2011;
+ Decca Aitkenhead's 'Alistair Darling: "You can't just tell half the story and still be credible"'; in The Guardian; 8 September 2011;
+ Jeevan Vasagar's 'Whitehall emails reveal the hidden costs of promoting free schools'; in The Guardian; 30 August 2011;
+ Mikhail Gorbachev's 'Perestroika: New Thinking for our country and the world';
Collins, 1987.
No comments:
Post a Comment