March for the unthinkable alternative

The first I heard of the March for the Alternative was this post from Tom Paine.

Through Twitter, I then discovered this post from Sam Bowman at the ASI. The TUC video he links to is something special.

I also found this post from Tim Worstall, in response to some ridiculous tripe from Richard Murphy, who seems unconcerned that interest payments on the national debt are rising.

The 2011-12 budget predicts spending of £710 billion against income of £589 billion — a deficit of £121 billion. When the government is already living beyond its means, it takes a warped mind to suggest that increased state spending would somehow leave our children and grandchildren in a better position.

The budget shows £50 billion for debt interest — more than Defence (£40 billion), "Public order and safety" (£33 billion), and Transport (£23 billion). I find it incredible that those who purport to care about the working man would wish to see an increasing portion of his hard-earned income confiscated, and handed over to the holders of government debt.


The government has no money of its own. Everything it spends, it must seize or borrow. What the government takes from taxpayers, they cannot spend. What the government borrows, businesses cannot borrow.

Daniel Hannan put it brilliantly:

I’ve just watched the soi-disant “March for the Alternative” snaking its way across London. It is clear enough, from the banners and slogans, what the protesters are against: spending restraint, open markets, private enterprise, property rights, free contract, Tories, bankers and Nick Clegg. Fair enough. But what are they for?

Their website suggests that they think the answer to our debt crisis is more spending. In fact, they don’t think we have much of a debt crisis. They want higher taxes, particularly for the rich, whom they expect to wait around meekly to be fleeced. And they insist that higher state expenditure (”investment”) will create more jobs. Why so half-hearted, comrades? Why not go all the way, nationalise every business, place every adult on the state payroll and confiscate all income? By your logic, it would surely make Britain the most prosperous country on Earth.

Quite.

After “No Cuts!” the marchers’ favourite slogan was “Fairness!” Alright, then. How about parity between public and private sector pay? Or job security? Or pensions? How about being fair to our children, whom we have freighted with a debt unprecedented in peacetime? How about being fair to the boy who leaves school at 16 and starts paying taxes to subsidise the one who goes to university? How about being fair to the unemployed, whom firms cannot afford to hire because of the social protection enjoyed by existing employees?

The truth is that the marchers care not a whit for fairness. They seek only to preserve their public-sector non-jobs, at our expense. We would be far better off if they sought employment in the private sector, responding to what consumers actually want. Some of them, no doubt, are so incompetent and unprofessional that nobody in the private sector would hire them, but that is not an argument for preserving their non-jobs. On the dole, they would cost us less, and do less harm.

Hannan: Britain's share of the Portuguese bail-out could wipe out half of all the government's spending cuts

Daniel Hannan writes:

The Treasury boasts, in its budget statement, that all the government’s spending cuts put together will save £6.2 billion. Now we learn (hat-tip, Open Europe) that Britain’s liability in the event of a Portuguese bail-out could easily reach £3.2 billion. Half of all the savings – the cuts to housing benefit, to child benefit, to local government – swallowed up in an instant. Small wonder that, despite everything, overall government spending keeps growing.

Littlewood: small crumbs of comfort

The IEA have posted their response to the 2011 budget. Mark Littlewood wrote:

As a budget that was intended to be about encouraging growth, this is a disappointment. Even on the areas where the Chancellor is doing the right things, his reforms are tiny. He committed himself to simplifying tax rules, but has only eliminated 100 pages from our 10,000 page tax rulebook and has added many more.

He stated a desire to relieve business from the burden of regulation. But even on his own numbers, the burden is only being decreased by 0.4%. That’s not a slashing of red tape. It’s barely even a trim.

The 2% reduction in corporation tax is a welcome step. As is the change to income tax thresholds. But these are small crumbs of comfort – what the country really needs is much lower taxes across all areas and much less regulation.

Philip Booth noted:

When it comes to promoting economic growth the coalition's inheritance was grim; regulations imposed in the last 13 years cost the economy £90billion a year; we have the longest tax code in the world; and taxes have been rising rapidly. The action that the government has taken – especially with regard to corporation tax – is welcome but nowhere near the scale of what is required.

The budget is perhaps summed up by the measures for small business employment regulation – there will be a moratorium of new regulation for three years. This will not apply to EU regulation and will not roll back existing regulation – there will simply be a pause, for some businesses, in the imposition of new regulation.

Merging Income Tax and National Insurance?

In my previous piece on National Insurance, I wrote:

NI contributions are expected to bring in £97 billion for 2010/11 — almost twice the £50 billion held in reserve in the National Insurance Fund.

In this same period, £117.2 billion will be paid out in pensions alone. Pensions are paid not from previous savings, or returns on investments, but by current contributors. Most people would recognise this as a Ponzi scheme.

I was delighted to read a few weeks ago that the OTS recommended integration in their "Small business tax review interim report" (March 2011).

Melanie Phillips recently wrote about the impact this could have

Almost from the very beginning of the Welfare State in 1948, the claim that tax and National Insurance — first introduced in 1911 — are quite different and separate arrangements has been a deeply misleading fiction.

There is a widespread belief that, all their working lives, people pay into a National Insurance fund from which they then draw a pension and other social security benefits.

This in turn has created the impression that National Insurance is a principled bargain between the individual and the state based on reciprocal responsibility.

And this means that National Insurance is therefore regarded as a Good Thing; whereas income tax, which involves rapacious governments making off with people’s hard-earned cash in order to pour huge volumes of it down a series of deeply incompetent or objectionable drains, is very much a Bad Thing.

The fact is, however, that none of this is now remotely true about National Insurance — if indeed it ever was.
...
National Insurance is simply taxation by another name. The purposes for which the two imposts are used are now pretty well interchangeable. So the true basic rate of tax should be acknowledged not as 20p but 31p.

She notes that previous suggestions for harmonization have been dismissed a politically infeasible, but speculates that

remarkably, according to the advance briefings from George Osborne’s camp, it is precisely in this jump in the basic rate that lies the political attraction.

If people realise how much they really are paying in taxes, it is argued, they will be more inclined to vote for the political party that promises to lower them.

So in addition to the savings to be made from merging two alternative tax-raising bureaucracies, electoral support would be swung behind the idea of a smaller state.

We'll find out later today. Anthony Evans of the Cobden Centre will be live blogging the event. His recent Spectator article, Three principles that should underpin the Budget, is well worth reading.