Green Wage Subsidy - Turning a dead dole into a stimulus for the green economy

One of the weaknesses of free-market capitalism is its tendency to undergo periodic downswings, recessions and depressions, which cause widespread hardship through unemployment and poverty, together with the risks of political instability and war. In a recession, and also in a normally functioning economy, we must ensure that the economy is restarted in a green way. We can create a healthy and beneficial demand in the economy by addressing ecological needs (that is, the needs of environment and society) meaningfully, and at the same time prepare the ground for an introduction of Citizen’s Income by turning unemployment benefits into a Green Wage Subsidy (GWS) as set out below.



EC735 Every local authority will be required to set up Tribunals empowered to judge, systematically according to set criteria, whether the processes and product of public services or private enterprise who come before them are of net benefit to society and/or environment. 



Applicants would typically be operating in the following fields: 



1. energy conservation

2. renewable energy technologies

3. energy efficient goods manufacture 

4. pollution control technology

5. waste minimisation

6. repair 

7. recycling

8. water management

9. sustainable agriculture

10. forestry and timber use

11. countryside management

12. housing - new building and refurbishment

13. improvements to visual environment

14. public transport

15. education and training

16. counselling, caring and healing

17. community work

18. leisure and tourism

19. innovation, research and development

20. in some high unemployment areas, any ethical business which passes a certain threshold in its environmental audit.


EC736. Businesses and public enterprises who think they might qualify may go to the Tribunals seeking "Green Accreditation”. Any economic grouping may apply: public services including local authorities, co-operatives, and private enterprises. The sole criterion for acceptance is that the outcome of their work is to the benefit of society and environment. If successful, they may take on new workers (i.e. in addition to their present establishment) from Job Centres. New workers taken on under this scheme will be allowed to keep their unemployment benefit in their new job. This can be seen as an extension of the present “Earnings Disregard”. In this way, “Job Seekers’ Allowance” and other forms of unemployment benefit change from being a “dead dole” into a Green Wage Subsidy (GWS) which stimulates the green sector of the local economy.

An appeal process will be provided.



EC737 The new employees will retain their benefit payments on entering their new work, and the employer will  bring their remuneration up to the normal rate of pay for the job they are now doing.  The result is that the worker has work and a better income as a result of taking on work, and the employer has a bigger workforce for a smaller outlay than would normally be the case, as his payroll is now subsidised by the benefits agency.
There is no time limit for this arrangement, so that in this regard it behaves in the same way as a Citizen’s Income (CI). 


EC738 It will be illegal for employers to replace previous establishment with GWS workers, and if workers believe that they have been so replaced they can make a complaint to the Tribunals, who would have powers to reinstate the worker or, in the case of repeated offences, to revoke the offending company’s accreditation. Participation in the scheme will be entirely voluntary on the part of both employees and employers. The scheme will be outwith of any existent rules which provide sanctions for claimants who refuse work, and in the event of a claimant refusing work offered by accredited employers, there will not be any withdrawal of benefit.



EC739 In order to avoid unfair competition between established companies and putative start-up companies, those companies applying for accreditation must have been in existence for a five years. In special local circumstances, this rule may be adjusted by the tribunal.


EC740 The GWS money would otherwise have been given to unemployed people on condition that they do nothing, which is the present status of Unemployment Benefit, and is the cause of the present notorious unemployment and poverty traps. Therefore, in the short term there would be no cost to public sector finances, since the money would have been paid out in any case, as unemployment benefit. Some of the GWS money would come back to Government in the form of increased tax revenues, and yet more would come back to society in qualitative improvements such as improved services, diminished inequality and improved morals. Because the GWS is permanent (as opposed to being time limited, which is the case with similar benefits at present) there would be a long term cost analogous to that of CI. These costs are consonant with Keynesian doctrine of the state stimulating work in times of economic depression.

How can we address the causes of migration effectively?

The current migration crisis is a Green issue. In fact, it can be argued that it is not a "crisis" (in the sense of a temporary deviation from the normal) at all, but is the new normal, with climate change a key driver, both indirectly, and in the future, directly.

So, what is the solution?

First, the rejectionist Ukip/Tory solution is no solution at all. It is physically impossible to build a Berlin Wall around the UK, or even around Europe, and failing rejectionism will inevitably turn into hate speech and hate actions.

Building physical barriers is a simplistic solution to political problems that goes back to the Great Wall of China, Hadrian's Wall, the 700 kilometre Israel West Bank Barrier/Wall, and, currently, the Great Razor Wire Fence in Hungary. These barriers are symptomatic treatments, and like all symptomatic treatments, they will in the end, fail. The only real solution to the problem is the one that addresses the root causes of the problem.

The underlying causes are fourfold:

1. War
2. Governments that abuse human rights
3. Poverty
4. Climate change

War, and its aftermath, is responsible for most migration movements into Europe. Iraq, Syria and, Afghanistan are major contributors to the total numbers.

Eritrea's post-war military government with its totalitarian control drives many young Eritreans to leave. We must not forget also that Burma's military regime is driving the a huge proportion of the Rohingya people into boats.

Many others, especially Africans, are trying to escape poverty. It is wrong to believe Tory tabloid editors and Ministers when they portray these people as merely making a lifestyle choice. They are fleeing extreme poverty, and this pattern will increase as climate change places further pressure on food prices.

A study by Richard Seager of Columbia University shows that climate change  is a factor in the Syrian conflict, primarily through drought affecting food production.

So, migration is a symptom of war, governments that abuse human rights, poverty and climate change. There are two opposing conclusions that we can draw from this.

Some will just want to give up, or try with increasing desperation and anger to pull up the drawbridge.
The other approach, the humane and rational response, is to work out and apply global solutions to what is a global problem.

The Green Party, and indeed all rational thinkers, should be at the forefront of the second approach, which deserves a name to identify itself. I would propose simply to call it "the New Globalisation", in order to distinguish it from economic Globalisation which is well known, and lies behind much that is wrong in the world, as Caroline Lucas and Mike Woodin showed in their book Green Alternatives to Globalisation in 2004.

It is now time for greens, and indeed, all thinkers and politicians who prefer to deal in realities rather than knee-jerk reactions, to start looking at these global problems and coming up with answers. And answers do exist. The process will be long and slow, measured in decades rather than months or years, but the journey of 10,000 miles begins with a single step, and the time to start is now.

The majority of current wars are due to dictators, Islamism and separatism.

Dictatorships can be inhibited by the Green Party's Global Human Rights Index.

Islamism is a bit of a difficult problem that deserves a post all to itself, but the essential principle of treatment is that if we stop bombing Islamic countries, there is a chance that they will stop bombing us (and also other Islamic people: we must remember that jihadis kill far more Muslims than they kill "Christians" and Jews).

The third most important cause of current wars, separatism, is an issue that can usefully be addressed by the United Nations.

There are many other actions that can be taken to reduce the impact of conflict on people. Peace Direct is an excellent organisation that supports local people who take action to stop conflict. There have been successful agreements that will inhibit the arms trade. Attention could fruitfully switch now to the control of ammunition. (See PD434 in Green Party policies here).

So if we wish to address migration, we need to address the problem of war and dictators with their attendant human rights abuses. What of the other promoters of migration, which are poverty and climate change? Again there are solutions available, and again the solutions assist each other.

Poverty is complex, intimately interwoven with environmental issues, but one of the key insights is that poor countries tend to be hot countries, that is, countries with plentiful resources of solar energy. Solar energy offers to help poor countries, not just on a small scale, but also on a large scale, since large solar arrays and Concentrated Solar Power  will turn hitherto poor countries into net exporters of energy.

Development patterns that promote equality will reduce the pressure to migrate.

The points made here are not exhaustive. There are many other issues to be considered, and as ever, if we do not manage to get a handle on human population growth we are not going to get very far with any progress.

In conclusion, the only way to manage the "migration crisis" is to address the global causes of migration - war, dictatorship, poverty and environmental degradation. These are global problems, but we live in a small world, and a new programme of action, a New Globalisation that addresses humanitarian and environmental issues, is the only effective way forward.

See also:
The Conservatives' cod psychology about migration
How to resolve the problem at Calais
Dictators are the main cause of war in 2015
Rohingya: getting to the source of the problem

The economics of building 500,000 units of social housing.

O dear.

I have just heard Natalie Bennett's interview with Nick Ferrari on the Green Party's housing programme. I feel for Natalie. It is not easy, but I wish someone would brief her before these interviews, and I wish the guys doing the costings would hurry up and bring them out.

Anyway, I have to face the Press this Friday and they're bound to ask me about it.

OK, here goes.

500,000 social housing units to be built over 5 years.

That's 100,000 units a year.

Let's say they cost only £100,000 each because they are on brownfield sites, often on land belonging to Local Authorities, can be converted from empty properties using Empty Property Use Orders, and built of new highly insulated and inexpensive materials such as Structural Insulated Panels.

So the programme will cost £10bn a year for 5 years. £50 bn in all.

If each house lasts 100 years the programme provides 50 million HRYs.

HRY is a concept I created in my book Bills of Health, and it stands for Household Roof Years.
One HRY provides 1 household with living space for 1 year.

So each HRY costs £1,000 in this house-building programme.

Now the current way for us to provide for these families is in Temporary Accommodation (TA).

When I last looked at this problem back in 1996, the cost of putting 1 family in TA was £10,000 a year. In 1996 it was a conservative estimate, and I imagine that the costs have gone up a bit over the last 19 years, but let us stick with the £10,000 figure for the sake of being conservative, to cover house maintenance costs, and also for ease of calculation. I am not allowing for discount rate because it is a dodgy concept.

For each £1billion spent on social housing, the country saves £9 billion over the coming century.

Therefore the full  £50 billion will bring savings of £450 billion overall, over the century.
£4.5bn of savings a year.

We get an 11 year payback, and a total profit of £400bn on an outlay of £50bn.

Not a bad deal for the nation. Let's do it.

So that just leaves us with the little matter of where we find the money.

We could of course borrow it from the banks, the same banks that we bailed out with £375 billion worth of QE, but they would charge us interest, and why should we pay them interest when we have just saved their sorry assets?

It would be far better to pay for it with a £50 billion of QE.

We could get it from a tax on private landlords, although that would diminish in time because private landlords wouldn't be getting as much from TA.

Or we could cancel Trident replacement which would bring in £15 bn over the 5 year term.

Or we could have a partnership with private investment.

In whichever way we find the money, the gains are so good for the country, not just in terms of direct TA savings but in terms of health and social service costs foregone (households in TA are not happy and healthy), that the spending, wherever it comes from can be seen as an investment - which is defined as money used in a way that may earn you more money.

It can be done. If it is physically possible and socially advantageous, the money can be found.

The Sugar Tax - Yes or No?

The idea of a Sugar Tax is being suggested by Sally Davies, England's chief medical officer.

I raised this in 1996 in my book Bills of Health, and put it to Green Party Conference. It was rejected, by the Handbrake Tendency, on grounds that it would put up the price of home made jam.

Sugar tax is a Pigovian tax that puts up the cost of an item that you want people to use less of. The item becomes more expensive, so people will buy less of it. The proceeds of the tax should be directed (hypothecated) to making better alternatives cheaper. Pigovian taxes are already applied to tobacco, alcohol and oil, although the hypothecation aspect is not well done. 

The problem is that when an item is addictive (as is the case for tobacco, alcohol, oil and sugar) the demand goes down for a short time each time the tax is increased, then bounces back as the addiction re-asserts itself. This is fine from the Treasury point of view, because the tax revenue keeps rolling in, but addiction trumps the idea that putting up the cost alone will solve the problem.

Therefore the tax has to be part of a more comprehensive and holistic treatment of the problem. The tax should remain, its proceeds should be hypothecated (directed) to remediation of the problems it causes, but other measures should also be applied. Carbon taxes should go to support public transport, energy conservation and renewables. Nicotine taxes must go to supporting nicotine addiction treatments, respiratory medicine, and the cost of the fire service. Sugar taxes should be hypothecated to NHS dentistry services, and to making healthy foods cheaper. This is the application of the Polluter Pays principle, which is one of the central elements of green economics.

Corporations that produce addictive products will of course resist any attempt to reduce demand for their product.

The tobacco barons held up the campaign by the medical profession to put health warnings on tobacco by about 20 years.

Only last year the alcohol producers bought off the Tories from introducing minimum alcohol pricing.

The coal, oil and gas corporations are of course waging a highly successful campaign against the findings of climate science.

As for the sugar corporations, they are playing a blinder.

The only battle that the sugar giants have lost is to the dentists. Sugar causes dental caries. Fact.

Sugar probably causes obesity, Type 2 diabetes, strokes, coronary heart disease and some behaviour disorders. But the causality is hotly disputed by the corporations, their paid spokesmen, and by people who have been unknowingly influenced by their propaganda. Some of the proceeds of the tax should go to pay for research into these effects. Why should the corporations get the profits, while publicly funded  research should have to scurry around to find what the effects are?

There is a fair amount of research into the behavioral effects of sugar taxes, mainly centering aroud "soda" - sugary soft drinks. As is always the case with health and economics related research, results vary, but there is an emerging picture that substantial price increases will cause reduced consumption. An 18% tax was found to reduce intake by 56 calories a day, which should cause a 2kg/yr weight loss among the population. Not bad.

It is supposed that product substitution would mean that people would take less taxed "soda" drinks, but might switch to sweet milky drinks and fatty foods. Therefore the sugar tax should happen in parallel with a fat tax, and measures to reduce car dependency and stimulate walking and cycling.

The key card played by the sugar corporations is that it would put up the price of food chosen by people on low incomes, which would be "unfair". As if they cared. This line has been swallowed uncritically by some on the Left, including the Browns (=red/greens) in the Green Party. I had a brisk debate about this a couple of days ago on Twitter with a person who is recent addition to the ranks of the Green Party who has quickly risen to a position of influence. The conversation is here.

He argues that sugar tax is regressive - bears more heavily on the poor - and therefore that it is unacceptable. He accepts though that subsidies should be removed from sugar. This would increase the price of sugar to the poor to some extent, but not by enough to be effective. He would prefer to command the sugar companies to introduce less sugar into the UK market, which would be great if we had a command economy, but we do not. So until the UK becomes a command economy, the Browns in the Green Party will ally themselves with the fat cats in the sugar corporations, defending the right of the masses to live in unemployed poverty and console themselves with sugary drinks until their teeth rot, until they can barely waddle to the table to get their diabetic medication, and until their misery is relieved by an early death.

Great.

Climate change: BEST, Watts, and a glimmer of hope

This has been a busy few weeks in the climate controversy.

Back in 2010 the Berkeley Earth Surface Temperature (BEST) project was launched to improve and re-check the datasets of land-based temperature records. It was part funded by the Koch brothers, who fund climate skeptic work, and Anthony Watts, the main skeptic blogger, said on March 6th 2011

" I’m prepared to accept whatever result they produce, even if it proves my premise wrong." 
[Should that link ever go dead, let me know, and I will pop his whole post up here, because I have copied and stored it.]

Richard Muller, one of the leaders of BEST, was reputed to be a skeptic, but his conclusion is that the data converted him. He has posted in the New York Times that he has "concluded that global warming was real and that the prior estimates of the rate of warming were correct...Humans are almost entirely the cause".


Sadly, Watts has gone back on his word, and not accepted the BEST results. Instead, he has produced his own paper which looks in more detail at the "urban heat island effect" in US temperature stations. The heat island idea hinges on the point that as urban development changes the environment around temperature monitoring stations, there may be  erroneous warming biases in some of the readings. This is an old problem, which has been addressed here. Essentially, most urban stations are warmer than rural, but the trends are similar. Watts' new paper challenges this. He claims that the urban trends are roughly double the trends in rural stations.


One of his claims is that NOAA adjusted the data from the more accurate rural stations upwards to match the less accurate urban stations. However, I read Victor Venema  here : "the introduction of automatic weather stations (the transition from Liquid in Glass thermometers to the maximum–minimum temperature system) caused a temperature decrease in the raw data of 0.3 to 0.4 °C. This temperature jump has to be and was removed by homogenization."

The increase in the temperature trend is thus not due to adjustment of stations with a low trend to the ones with a strong trend, but due to the change in the way the temperature is measured, the transition from LiG to MMTS and also probably due to a change in the time of observation. Homogenization removes these artificial jumps and because they caused artificial cooler temperatures, the homogenized data shows a stronger trend. There is no evidence in Watts et al. that the good stations are adjusted to the bad ones. Watts et al. does not even study how homogenization algorithms function."

It is too early to get the full professional view on Watts' paper.  There is a discussion of it on the link given above, but it is not very systematic. I am not dismissing him absolutely - there is too much of that on both sides of the climate debate, and it is undeniable that if you change the environment of a reading station its readings are going to change. In the end, Watts is concentrating on a small detail. Even if  some land stations are unreliable, the ocean and satellite recordings still show that global temperature is rising unacceptably. 


As always with sceptics, I wish only too fervently that they were right, that things were not so bad as the science makes us think. As usual, however, they are making the error or composition: looking at one part of the system, and extrapolating from that one part to the condition of the whole system.

So that is roughly and briefly the state of play. My view is that the BEST study has done a lot to confirm the climate scientists' case and weaken the skeptics' case. This, added to the gradual perception by ordinary people that the weather is changing locally and generally, in a way that is consistent with the theory of climate change,  is going to bring about a sea change in public opinion. 

Already, despite the worst anti-wind propaganda efforts of the fossil fuel lobby, acceptance of wind turbines outnumbers rejection by two to one. As the reality dawns that the political right has a more slender grasp on what to do in a recession than your average gastropod has of quantum physics, it is quite possible that the people will look to an enhanced Green New Deal as the way out of the prolonged UK recession. 

In short, the supertanker of the state may be beginning to execute a slow but magnificent 180* turn away from stupidity to intelligence.


PS Here's the Skeptical Science take on Watts' paper.

Corporate misbehaviour, aggregated

The G4S Olympic fiasco got me thinking about the general question of corporate failure and wrongdoing.
I tweeted a few off the top of my head, as follows -

G4S, Barclays, BP, Enron, Lehman Bros, Trafigura, Union Carbide, Dow. Who have I left out? ‪#corporatefail‬

 - and with the help of the excellent tweeps Zahra, Mike, Joel Benjamin, Guy Lambert, Sue and Mike Parker we rapidly assembled a decent list of corporate miscreants who have cocked up or ripped off in one way or another.

It falls to me to render them in some kind of order, with a brief note of what it was they did wrong. So here goes:

Government sub-contractors

1. G4S. Currently in pole position on the grid, for its self-confessed "humiliating shambles" in failing to fulfil its contract in providing security for the London Olympics.
2. A4E fraud in Government contract
   
   Undue influence over Police and Politicians
3. News International, Rupert Murdoch's outfit
   
   Banks and financial dealers
4. Standard Chartered, currently (7Aug2012) accused of laundering $250million to break Iran sanctions.
5. HSBC again in the news at number 2, for providing only-too-efficient money laundering services to drug barons. I'm told this is continuing their corporate tradition, because the Hong Kong and Shanghai Bank was the bank of choice for the British Opium Trade.
6. Barclays lies a close third, for its rigging of the Libor inter-bank lending rate - an act that undermines trust in the banking system itself.
7. Staying with  the banks, let us put Northern Rock in next, for their excessively clever securitisation scheme which borrowed money, lent it for mortgages, sold the mortgages on until they crashed, setting off the first UK bank run in 150 years. We should not forget that while they were begging for taxpayers' money, Northern Rock also had billions in a separate Jersey account, which, naturally, they were unable to share with the despised taxpayers.
8. There is insufficient space here to recap on the various scrapes that NatWest has been through.
9. RBS crashed in the credit crunch, successfully obtaining £1.1 billion from the people. In consideration of this success in hetting this undeserved handout, the RBS executives awarded themselves a bonus of £1 billion. Trebles all round! 
   
   There now follows a list of names of other corps who need to be named and shamed. Since I am on holiday in France with shortened online time, I am just going to list the bastards, and add short details of their sins in coming days. Or indeed you can look them up on the Wikipedia.
10. Equitable Life  big cock-up in which thousands of clients lost large amounts of money.
11. Enron hid billions of debt. Shareholders lost $11bn.
12. Lehman collapsed through false accounting and the sub-prime mortgage crisis.
13. J P Morgan Chase - multiple failings
14. BCCI - mismanaged, money laundering.
15. Goldman Sachs
    
16. Jarvis - Railtrack sub-contractor responsible for 7 deaths due to substandard points maintenance
17. Farepak folded Oct 2006, leaving thousands of savers out of pocket
    
    Polluters
18. BP 
19. Shell in Nigeria - pollution, collusion with state murder of Ken Saro Wiwa
20. Trafigura
21. Exxon (Valdez)
22. Union Carbide/Dow - Bhopal
    
    Tax Avoiders
23. Vodafone
24. Amazon
    
    Miscellaneous
25. Blackwater
26. GSK
27. Bayer
28. Dupont
29. Monsanto
30. Distillers, Diageo - thalidomide
31. Nestle - selling baby milk powder to poor people
32. Anderson Consulting
33. Polly Peck
34. Southern Cross
35. Occidental Petroleum - Piper Alpha
36. CSC
37. EDS
38. McDonalds (because - see comments)
39. Starbucks
40. Rio Tinto (slave labour)
41. Asia Pulp and Paper a.k.a. Sinar Mas for chopping down the rainforest. And anyone who does business with them.
42. Koch Industries for polluting and suborning democracy
    
    People
    This list overlaps somewhat with the above, but we should remember some special individuals

1. Rupert Murdoch
2. Bob Maxwell
3. Conrad "Lord" Black
4. Sylvio Berlusconi

Feel free to ad any suggestions in comments. I will add well-chosen comments to this post. There are many other historic events. There are also other cases which have not yet reached the light of day.

The importance of all this is to demolish the simplistic meme that is running at the moment -
"Private good, Public Bad" The fact is that error exists both in the public and private spheres, and a mature democracy and economy has room for both.

Last but not least, look here for a set of proposals on how to bring the mega-corporations under control.

Depression, suicide, Unemployment - and the solution

I've been on LinkedIn for years, never used it, but there is a discussion on depression and suicide on the European Green list here, and I've finally jumped in, to see if anything happens. This is my bit:



"The main point is how to fight the crisis, not just reduce its cost." Agreed. Economic depression and psychological depression are interlinked. As Greens, it is up to us to try to change the socio-economic conditions.

We know that there is an immense amount of work that needs to be done to heal and improve not just our environment but also our society. It is totally irrational to have a significant proportion of the fit and able workforce standing idle while all this work needs to be done. It is not just the well-known work in energy conservation and renewable energy technology that we speak of in the Green New Deal, but also work in many other areas of the green sector of the economy:

1 energy conservation
2 renewable energy technologies
3 energy efficient goods manufacture
4 pollution control technology
5 waste minimisation
6 repair
7 recycling
8 water management
9 sustainable agriculture
10 forestry and timber use
11 countryside management
12 housing - new building and refurbishment
13 improvements to visual environment
14 public transport
15 education and training
16 counselling, caring and healing
17 community work
18 leisure and tourism
19 innovation, research and development
20 any business which passes a certain threshold in its environmental audit.

A simple minor change to welfare benefit rules can transform welfare into a Green Wage Subsidy, as suggested here: http://www.greenhealth.org.uk/GreenWageSubsidy.htm

Is it possible that the Greens in Europe could come together in pressing the EU and our Governments to make the necessary changes to get Europe, especially Europe's young people, into good, constructive, effective work, and thus address the epidemic of hopelessness, depression and suicide?

Reith Lectures: How Niall Ferguson and the markets diverge from reality

Niall Ferguson Protector of the City

I've been listening to the second Reith Lecture on BBC Radio 4, The Darwinian economy, by Prof Niall Ferguson, summarised here.


This is my comment:


Niall Ferguson's central thesis is that deregulation of banks did not cause the crash. However, he needs to establish this thesis in face of the work of David Moss at Harvard Business School.
His key finding is expressed in a graph here:


It relates income inequality measured as share of income held by the top 10% of the pile compared to bank failures going back to 1917. There is a very clear correlation between income inequality and bank failures. It is strong backing evidence for the position of the Equality Trust -  that greater equality is better for social cohesion. 

Of course, correlation is not causation, though causation must always be accompanied by correlation.

Naturally Niall Ferguson will wish in to deny causation, because it negates his free market assumptions. He has an easy task, because it is always impossible to "prove" causation, because it is not a matter of irrefutable positive logical deduction, but rather a matter of inference, of pattern recognition. This recognition is very much related to our basic assumptions, as well as a mounting body of evidence. Neo-liberals will be far slower to recognise causation in David Moss' observation than someone who understand the scientific truth that man is a social animal.

One of the elements necessary for recognising causation is finding a plausible mechanism to relate cause and effect. So the question is, how could income inequality cause bank crashes?

There is a possible mechanism in the capacity of humans to suffer from biolar illness - manic depression as was. If we look at the financial markets through the lens of a psychiatrist, it is very easy to see the parity between the individual mood swings of the bipolar sufferer, and the boom-bust mood swings of the society of market traders.

This idea is developed on this blog here:

The root problem with Niall Ferguson's reasoning is trying to isolate the banking sector from the real economy, which is, or rather, ought to be, founded on ecology. He, as a free market fundamentalist, has come unstuck from reality, just as a bipolar sufferer comes unstuck from reality.

Cameron's Benefits Cuts: what is the alternative?

David Cameron has tapped into a rich seam of political support with his new outburst against "the culture of entitlement". It is music to the ears of the Mail-reading public and to his disaffected right wing, but above all, it is popular with the electorate. A YouGov poll shows 74% believe the Government hands out too much in welfare, and even among the poorest, 51% agree with that sentiment. (Turkeys, Christmas). This is not surprising given the daily diet of welfare scrounger stories drip fed by the Mail/Express/Sun axis, but even so, there is a real problem if even small numbers of unemployed households live more comfortably than those who work all the hours God sends, but in low-paid jobs.

So it is difficult. The Left can legitimately point to Cameron's privileges, to his own £24,000 claims for a second home prior to moving into No 10, and his father's immoral tax avoidance schemes, but even so, none of these valid points address the key point. It is difficult.

Lao Tsu said: "All difficult things have their origin in that which is easy, and great things in that which is small".

So let's make it easy. Imagine what life would be like if the FMFs (free market fundamentalists) achieved their goal, and we had a really small state. One, say, that was equipped with armed forces, a police force, and prisons, and nothing else. Everything else was up to the market.

In this state the indigent poor would procreate, but their children would die. They would live and die in cardboard boxes under bridges in noisome conditions, die like flies, and heave their rotting corpses into the river - that is, such corpses as went uneaten.

It was to put an end to a mild version of this scenario that the Welfare State was introduced. It has grown in extent into a huge rambling edifice which nobody, not even the professionals, fully understand, one that is shot through with absurdities.

It needs reforming. IDS has been creating some careful reforms. Which raises the question of why the Prime Minister has taken it on himself to grab a megaphone and rap out some reforms of his own. Did he agree this with IDS first? It seems that the latter is framing Cameron's splurge as "Questions raised".

It is fair to raise all manner of questions around this topic. Not just the crowd-pleasers that Cameron is raising, but also others, such as,

• Where do young families go when they cannot afford housing? On the streets? Back to their families,  to be overcrowded and disease generating conditions? 
• Will it increase child poverty? 
• Why do we not bring the vast stock of empty housing back into use? 
• Why are we punishing the poor for using benefits, when benefits for the rich are filed under legal tax avoidance, and never get mentioned by the tabloids?
• Does everyone know that only one in six of those claiming housing benefits are unemployed?
• Why is there not a New Deal job creation scheme in refurbishing houses, and building new affordable housing?
• Does Cameron understand that it is not open for some under 25 year olds to go back and live with their parents, since they were being abused there?
• Does Cameron understand that teenage pregnancy is one of the many factors that relate to income inequality?

But as ever, the key question in the Tories' (and LibDems') hysterics about benefit abuse and the entitlement culture is this:

It is totally and utterly pointless to train, motivate and force claimants to seek work, and to facilitate their passage into said employment if there is no bleeding work out there for them to take up.
This is the elephant in the room, and the point that I shall continue raise whenever benefits are mentioned.  And I will continue to raise the obvious answer: convert benefit from a dead dole to a stimulus for the green sector of the economy.

Big Green Week was great - but needs to connect with the economy

Over the last week, I have been to several talks at Bristol's Big Green Week. It has been good, listening to thinkers and do-ers in the field of bringing mankind to its ecological senses. In fact, yesterday, after listening to Fiona Reynolds and Dan Pearson talking about Nature Deficit Disorder - the malign effect of separating humans from nature, and the benign effect of re-connecting them with nature - I actually felt the stirrings of primary optimism in my chest.

Primary optimism is distinct from my chosen optimism. A few years ago, I was suffering one of those times when you wonder if it is all a waste of time, that our rulers are hell-bent on exhausting the planetary resources in the name of profit, and that there is nothing that we can say or do to affect this process. At that time, I decided to deliberately choose to be optimistic, to keep looking for solutions, because the alternative was not just pessimism and inactivity, but also personal depression.

But yesterday, I realised that there are many many people who are quietly and successfully beavering away at making a better world, in every aspect of life, and that this is cause for optimism. I also realised that we have moved on immensely since I began doing green politics. Of course, it is happening much too slowly, but it is happening. Peoples' minds are changing, and only the immutable ideologues and free market fundamentalists remain fixed in denial, as is demanded by their root belief.

So the Big Green Week was good. But it has one big flaw - its disconnectedness from the current political situation. Apart from one reference from Caroline Lucas, I heard nobody dealing with the economic crisis that is engulfing the UK, Europe and the world.  At the same time, yesterday, in the session with Caroline Lucas Patrick Curry and Polly Higgins, chaired by Jonathon Porritt.

In this session, the question was raised, on the platform, of why these issues, so obvious and so important to us, the middle class intelligensia, are of so little interest to the mainstream? Why, knowing what we know, do we not act? How do we raise the popular energy to make the transition to a green, sustainable economy? How do we change the culture, generate a groundswell of opinion that supports a way of living that does not wreck the planet?

I believe that the answer lies in solving the problem of unemployment by creating good work in the green sector of the economy. Philosophically, this means understanding that true work means increasing the order in our surrounding world, applying ourselves to oppose entropy. In practice, it means facilitating work in these areas of the economy :


1 energy conservation
2 renewable energy technologies
3 energy efficient goods manufacture
4 pollution control technology
5 waste minimisation
6 repair
7 recycling
8 water management
9 sustainable agriculture
10 forestry and timber use
11 countryside management
12 housing - new building and refurbishment
13 improvements to visual environment
14 public transport
15 education and training
16 counselling, caring and healing
17 community work
18 leisure and tourism
19 innovation, research and development
20 any business which passes a certain threshold in its environmental audit.

In political terms, it means changing the benefit system so that it behaves more like Citizen's Income.

I believe that these changes, as part of a broader anti-austerity package, an economic Plan B, This should be raised as a standard that everyone who disagrees with austerity can rally around.

By showing that ecology is about action, not just words, we can transform peoples' understanding of what Nature means for them. By showing that household incomes can rise, that people can actually create a happier world, and get paid real money for it, we can get a hearing.

I was unable to get this point across in the one brief question that I was able to put at the beginning of the week. At present, I am incubating a plan to actually create, with others, a pilot of the Green Wage Subsidy.  This intent is again down to what I heard at a Schumacher lecture in the Big Green Week. Tim Smits said Just Do It. He also said that he is angered by negative people - the people who just love to say it cannot be done. In future, I am going simply to ignore these naysayers. They do not matter. What matters is that we should take practical, non-violent, action, to make the situation better.

Is there a solution to the economic crisis?

On the Guardian, the tousle-haired Suzanne Moore is rightly having a moan about the incompetence of economists. My comment:

Agreed, the mainstream herd of economists are a shower. It is possible that the whole house of cards may come tumbling down, whereupon we will will have to rebuild it from the bottom up, starting with the fundamentals of real ecological economics - obtaining our water, food, housing, energy and waste disposal first through barter, then through local currencies, and all the time hoping that civil disorder and/or global warfare does not break out.

Since this is not a pleasant prospect, we must look for valid economic solutions to the current mess. It is generally agreed by anyone outside of Osborne's circle of absurd influence that austerity is as much a solution to the present crisis as leeching is a solution to a case of anaemia.

The alternative to austerity could be labelled Green Keynesianism, an economic stimulus centered about creating demand for energy stability. The solution has many components, chiefly work creation in the fields of energy conservation and renewable energy (a field that Osborne is currently trying to hack to death), but also in housing, visual amenity work and many other sectors. It has been shown that changes to the benefit system to facilitate getting into good work could lead towards full employment.

We have to continue to think and discuss ways to transform our economy into a rational system that takes account of the fact that we are not self-existent beings but an integral part of a delicate web of live on a beautiful but much-abused planet. We may or may not be successful in influencing a ruling elite who are in the grip of a malign orthodoxy, but activism is like a parachute on a hang glider - it may not save your life, but it does give you something to think about on the way down.

Don't Let Osborne Break Wind!

Osborne plans to cut subsidies to wind farms by 25% according to the Observer. This will, of course, kill the UK wind industry, what is left of it, stone dead.

This is an insane decision, and it must be stoppped.

Osborne is aiming a wrecking ball at house our children are going to live in. We must draw a line in the sand over his general destructiveness. His plan is unacceptable. It is economically and ecologically illiterate. He has no concept of investment, of putting money into a project today so that the project will give more money back to you in the future. I wouldn't trust Osborne to run a street party, let alone a national economy.

By killing off  UK wind energy development, Osborne is making certain that in the future, we will be dependent on foreign companies for all aspects of wind energy development.

This will make our balance of payments (ratio of imports and exports) worse than it actually is - and that's bad.

Osborne as Chancellor should know this, so either he is badly informed, unable to comprehend what he is told, or is deliberately trying to sabotage the UK economy. Take your pick.

The fact is that we have the biggest wind resource in the EU. But now that the idiot Osborne is taking anti-windpower propaganda seriously, it is time for us, the Green movement, to force him into another U-turn. Here is the authoritative counter to windpower myths.

There are two strands to the anti-windpower movement. One is that it is a branch of the AGW denial lobby, Quixotically (or psychotically) tilting at windmills because they are a visible manifestation of the low carbon economy. The second strand, exploited by the lobby, is the natural NIMBYism of people in the vicinity of wind farms. This second strand is easily managed by introduction of compensation schemes for neighbours of wind farms. They get lower electricity prices, dependent on how close they are. It's a fair deal, compensation for loss of amenity, that is, for noise and visual intrusion, and is a standard instrument of environmental economics.

Osborne's ill thought out slash at the UK wind industry is a symbol of his total incomprehension of the ecological situation that we are in. He must be stopped. 

Electrical vehicles as an aggregate storage facility

I've just sent this email to Ofgem

Dear colleague

I would like to open a discussion on the merits of distributed, small scale electricity storage, and its capacity to help grid balancing operations.

I am a retired medical practitioner, innovator, and an environmentalist with an interest in the expansion of renewable energy sources.

The National Grid will face increasing problems with balancing supply and demand as more renewables come onto the grid, with the intermittency characteristics of wind, wave and PV creating a need for large storage capacity. 

There are of course a few sites with large scale pumped storage, and large scale flexible demand operations are in use.

My proposal is that plans should be made for use of multiple, micro-storage units, typically domestic, to assist in balancing operations. 
Please note that the proposal is for a partial, auxiliary storage capacity, as it would be unrealistic to suggest that it should act as a full full storage facility. Large scale storage capacity will be needed in the future.

I have discussed my proposal with an officer in the National Grid. He saw no technical objection to this proposal, but the idea of micro-storage was unfamiliar to him, since the Grid prefers to operate using large scale processes. He therefore suggested that I should discuss the proposal with your good selves.

As an enthusiastic early adopter of  3.4KW installed PV capacity, I am contemplating the installation of a bank of batteries to enable me to cruise through the blackouts - some four per year -  that we get up here on Mendip.
I could also adapt my Honda Insight hybrid to connect to the house system.

Therefore I could offer a small potential for electricity storage. In future, there may be tens of thousands of householders in the same position.

Now, when there is oversupply in the grid, frequency goes up, and vice versa. Domestic storage systems could detect these fluctuations, store electrical power in the batteries when the grid frequency rises, and deliver power back to the grid when frequency goes down.

One single contribution would be insignificant, but if the technology were spread out among thousands of households, it would become significant.

As you know, there is increasing interest in electrical vehicles, with technical and design improvements occurring week by week. It is likely that there will be a rising demand for electrical vehicles, especially as their usefulness as second vehicles used for short local trips becomes more well understood, as well as the price advantage of their fuel compared to petrol and diesel.

The outlook for electrical vehicles (EVs) is positive:
The report "Electric Vehicle Forecasts, Players, Opportunities 2005-2015" reveals that the EV industry is large and prosperous with $31.1 billion sales globally in 2005 at ex factory prices excluding electric toys. It is growing strongly and, by 2015, the EV market will have grown to 7.3 times its value in 2005. However, much of this growth will not derive from today's technologies or take place within today's leading applicational sectors. 
(Market Research.com)

To be honest, the market in EVs has proved sensitive to recession, not least because of their high cost due to their novelty, but we live in hope that the present recession will not last forever, and indeed an increasing number of voices are suggesting that it will be the green sector of the economy will be the engine that powers us out of the recession.

Therefore, it is to be expected that a widespread battery storage resource is about to become available.

Roll-out of distributed micro storage from the point of view of the Grid will no doubt take two or three years, by which time the recession should be over, and sales of EVs will be picking up. The UK electricity supply industry should therefore position itself to take advantage of this new wave. In taking advantage of this storage capacity, Ofgem and the Grid will also be providing a stimulus for more widespread purchase of EVs - a fine example of technological and market symbiosis.

I hope that I have explained clearly what it is that I am suggesting.

In essence, it is that a source of aggregate supply and demand is likely to present itself in the next few years. By going out to meet this resource, Ofgem be taking part in an elegant win-win situation for both suppliers and consumers.

I understand that as a relatively novel idea there will be a host of questions arising, and I am ready to come to answer these directly.

I would be very grateful to receive your response.

With best wishes for a sustainable, secure supply of electricity for the UK.


Dr Richard Lawson

Green-Free Marketeer debate: the legacy of debt

Continuing the Green/FreeMarket Fundamentalism debate, Mark Littlewood writes:

I often make the (ever so slightly flippant) remark that if someone is at all concerned about the environmental legacy we are leaving for our children and grandchildren, they should be absolutely apoplectic about the economic legacy we are leaving them in terms of the public finances.

Estimates vary, but once we factor in liabilities such as public sector pensions and the like, the real national debt is around £5 trillion (or about £80,000 for every man, woman and child). This is a colossal burden being shuffled on to the next generation - and the unborn and unconceived - for precious little reward. Much of the spending isn’t on infrastructure/investment, but on consumption.

It’s not as if I will be able to take my grandchildren to one side in thirty or forty years’ time and point to many bridges, railways, hospitals and new university buildings and say “I’m a bit sorry, little ones, to saddle you with an enormous debt burden, but look at all these wonderful things you have at your disposal for the rest of your lives. I hope you agree that my generation made the right decisions on your behalf and you can cope with paying off most of the bill.”

Instead, I’ll be pointing to lots of retired nurses, doctors, teachers and police officers and have to say “You see all these guys? Well, they are retired now. They treated me when I was sick and made me better. They protected me from crime and violence and they taught me many of the things that helped my career prospects and expanded my horizons. In return for that, I voted for you to pay for their pensions. My thanks and my apologies”.

Interestingly, there is an inter-generational moral imperative shared by environmentalists and by those concerned about the debt/deficit (there may be a differences on which is worse, but the argument that the unborn are not being fairly represented or treated seems similar)


My reply:

Yes, there is a shared concern about the debt (financial and physical) we are passing on to our children. Mark is right to point out that much of the spending isn’t on infrastructure/investment, but on consumption. It is clearly wrong to spend more than we are earning. This is the point made by E F Schumacher in "Small is Beautiful": We may use capital resources only if the wealth they produce is used in rendering us independent of those resources. This sound economic principle has been totally ignored by all non-green "economists".

But let us look more closely at the nature of the legacy. Ecological deficit is far more of an existential threat than an economic deficit. Debts can be forgiven, repudiated as odious, or melted away with inflation. None of these things can be done to ecological deficit.

Extinction is forever.

Always remember: Food can get you through times of no money better than money can get you through times of no food.

However, there is an interesting interaction between ecological recession and economic recession, in that real efforts (as opposed to superficial) to cure the ecological recession will provide the needed economic stimulus that the recession needs.

The classical Keynesian response to recession is investment in the nation's infrastructure.
Some infrastructure yields a better dividend than others.
Bridges and roads may help the economic efficiency at the margins, but energy conservation is far more productive, since it not only

• provides many jobs (as a rule, the green economy is labour intensive), but also 
• it takes people out of fuel poverty, thereby 
• loosening up their purse strings to spend in the local economy, and last but not least, 
• it helps with our balance of payments problems, insofar as we are importing gas.

Mark rightly raises the question of our legacy, but wrong to set hardware (universities &c) against software (pensions).

First, he is mistaken about the situation with doctors' pensions. They are not paid for out of general taxation, but out of contributions made by people currently employed by the NHS. I know, I was a contributor, and am now a recipient.  I believe the same applies to some other public sector workers.

Second, our legacy is not just physical deliverables, but also intellectual capital such as education,  knowledge - and, indeed, humanity. There is such a thing as social capital – a stable, tolerant, integrated society, relatively crime- and corruption-free.

So by treating our elderly with kindness, we are handing down a tradition of humanity which is valuable, although not easily costed. (Who was it that knows the cost of everything but the value of nothing?)

Moreover, not all state expenditure is generically the same. Money laid out in pensions is not the same as money made available to heads of financial corporations. Pensioners recirculate their money in the local economy, whereas money given to corporate bosses is saved in offshore bank accounts, lost forever from the national economy.

More about pensions from Left Foot Forward.

This response is running on longer than I intended. I will stop at this point, and the next blog post will look in more detail at the UK debt position.

What is the alternative to austerity?

France and Greece have voted against austerity.
This is fine and dandy.

But what is the alternative to austerity?

We're buggered if we do austerity, and buggered if we don't, because basically, mainstream economics is buggered.

It is very simple. We all know the story: the Government has huge debts, so we must cut public spending, but this puts up the unemployment benefit bill which makes the debt worse, and also the cuts in public service has an impact on the rest of the economy (e.g. firms which service the public sector), so the whole economy slows down, so tax revenue falls and the debt gets even worse.

So austerity doesn't work.

The alternative prescription is classical Keynesianism where the Government "borrows to invest" in infrastructure building which creates employment which stimulates economic activity and starts a virtual circle of recovery.

This is more promising, but is blocked by Osborne when he says that we have already borrowed too much, therefore we cannot borrow to get out of a debt problem and the Markets Will Come and Get Us If We Do.

Sadly, our commentariat is too naive, dim and weak to challenge him

This despite the fact that the IMF,  OECD, World Trade Organisation and World Bank warned against relying solely on cuts to cure the UK economy.

So we are caught between a rock of austerity and the hard place of borrowing our way out of debt.

It looks bad. But there is a solution.

The key is in the emphasised phrase above: Government borrows to invest.

Government does not have to borrow from the banks to get money.
It is irrational to say it must borrow from the banks.

Government saved the banks in 2009 by covering their stupid debts (which is the main part of the problem of the UK economy, though Labour is too thick to say so) and has since saved their sorry asses since by creating  a total  of £275,000,000,000 (£275 billion) of Quantitative Easing (QE) money.

The banks have a bipolar problem.

Pre 2009 they were manically lending money to all comers.
Debt was not a problem: it was all "Leverage". 


Post 2009 the banks are depressed. It is all too too awful.  They have no confidence to lend.
So businesses cannot get money, and the recession continues.

The answer is for Government to exercise its sovereign ability to create money through its agent, the Bank of England (BoE).
The BoE can issue new money for real economy projects like energy conservation,  renewable energy projects, housing and a Green New Deal Plus, based on the Green Wage Subsidy.

Real investment in real economic projects that save the real environment from the real problems we face.

The BoE can provide the money by spending it into circulation - providing it directly to Green New Deal contractors.

Of course, this is where all the tinfoil hat orthodox believers blow their lids and start shouting about hyperinflation.

Hyperinflation comes about if there is more money in the economy than goods and services for it to buy, and it usually comes about in extreme circumstances like civil war.

The fact is that the BoE does create money, through notes and coins, just 3% of the total.
The fact is that the BoE also creates money through QE (see above).

BUT - and here's the killer fact - the very mainstream economists who will be screaming hysterically and hyperventilating over the suggestion that the BoE could take over and create the money for the required Keynesian stimulus, these same economists believe that money is created exogenously. That is, they believe that at the end of every trading day, the high street banks go to the BoE and say "We have given out £x million in loans today. Can you create the money for us please to balance our books?"

And they believe the BoE says yes, OK, and does it. Creates the money for the banks, retrospectively. Every day.

They have to believe this, because otherwise they would have to believe in the endogenous theory, which is that the banks create money at the point they make a loan.

And if they believed that, then the Positive Money campaign, and all the other students of money who have been isolated  and ignored over the years would have been proved right.
Banks create money when they make loans.
Governments also can create money, and they should do, in the present dire economic circumstances, provided that the projects they are investing in have positive ecological value.

Related posts:
How to get rid of unemployment
Globalised economy needs a global tax framework

Free Market/Green Debate: the Rich-Poor Gap

I am debating with Mark Littlewood of the IEA, a free marketeer. 

He writes:
What sort of contribution from the top 1% or top 10% would be considered “fair”? 
If Mr X earns £1m per annum and Mr Y earns an average salary of £25K per annum, when (if ever) should the next marginal £ of tax be charged to Mr Y? 
Only when Mr X’s and Mr Y’s post-tax income are identical? 


I don’t pretend to have a perfect answer here – although I probably lean towards proportional rather than progressive taxes on income, anyway. 
But then I’m not the one crying out for the rich to be taxed more. 
Those who think the present contribution of the rich is patently unfair and a greater burden should be placed on their shoulders need to ask when this burden is sufficient.


To my mind, if the top 1% earn 12% of income but pay 28% of income tax, this isn’t obviously and transparently too small a burden.



My response:

Mark, I think you should be crying out for the rich to be taxed more, and I will try to show why.

There is huge scope for confusion in the realm of taxation. Accountants can produce wildly different analyses from the same set of figures. To start from a hypothetical individual and work out from that does not strike me as a promising method, so I am not going to try to answer your points, but to establish a framework.

The best way forward is to look for some sound scientific facts and work from there.

In their book the Spirit Level, the epidemiologists Wilkinson and Pickett (among others) have shown that more equal societies are more healthy societies.

We therefore need for economies to tend towards more equality, need our societies to tend to become more equitable.

This is not to say that we seek perfect equality of wealth and income, but that at least, inequality should not be continually increasing, as is the case at present.

I glean, from Injustice Facts, (10th April) that the income hap between the richest quintile and poorest quintile was
                             108:1 in 2007
                               74:1 in 1997
                               60:1 in 1990
                               30:1 in 1960

We have a very clear divergence tendency here. Are you content that this should continue?

We believe that, over time, there should be a tendency for rich and poor to converge, rather than to diverge.

There is an innate divergent tendency in our economic system.

This comes at least in part from the role of lending at interest in the production of money. The owner of surplus money can lend it out, and will will see his wealth grow, while the borrower will have to pay for his access to money. This leads to a net flow of money from poorer to richer.

This divergence, carried to its logical conclusion, means that the poor will tend to the point of starvation. Before they get to that stage, there will be food riots, leading to general riots, arson, repression, and civil war, ending either in revolution (usually resulting in dictatorship) or repression (more dictatorship).

Therefore enlightened self interest should tell the rich that divergence  is not sustainable, that divergence must end, and that convergence must replace divergence.

Progressive taxation levels is one of the instruments needed to bring this about.

Therefore it is desirable for all, including the rich, for the rich to pay a greater percentage of their income into the common wealth.

Quod erat demonstrandum.

Debate: Green vs Free Market Ideology

I have been having a very long and enjoyable debate with @MarkJLittlewood, CEO of the Institute for Economic Affairs, which aims to disseminate of free-market thinking. He was up against @RichardJMurphy, the excellent tax analyst, on Newsnight. They had a brief interchange on Twitter, and I poked my stick in.

The debate began back on 11th April, and has continued since. I am reviewing it here, on the grounds that the 21st century will be a battleground between two ideologies - that of the Greens (political ecologists), and that of the Free Market Fundamentalists. I am doing a certain amount of paraphrasing, to smooth out the note-form of Twitter, and naturally I will be able to expand my own point of view better than I can expand MJL, but I will do my best to be fair.  Unusual for a free market fundamentalist, Mark (MJL) was polite and reasonable. I am happy to edit the text here if I have misrepresented.

This section is on taxation.

It began when MJL said that the top 1% earn 13% of national income and pay 28% of the total income tax take - implying (I suppose) that they are overtaxed.

I countered that the Institute for Fiscal Studies says that the top 1% pay 12.8% of income tax. The top 10% (less the top 1%, confusingly) pay 27.6% of the total income tax take. But they have 31% of total income. So they're not over-taxed.  

MJL came back with Office for National Statistics figures, which have the top 10% paying half of the IT take. The top 1% earn about 13% of income and pay  about 28% of the tax (the latter % has been going up for 10+ years).

[update]
To which we could add these data from the nef site:
Net property wealth: the 1% own more in property than the 99% put together.
Total aggregate wealth (housing + financial + physical + pensions)
Top 1% of households: £1.3 trillion
Bottom half of households: £1.0 trillion
MJL was dealing in incomes, but absolute wealth puts things into better perspective.
[update ends]
  
That's accountancy for you. Confusion. Even so, when you are bringing in telephone number amounts of money, you can afford to pay more. It's just numbers, compared to people who are struggling to make ends meet. The rich benefit from being taxed, if the money is spent wisely.  They get less crime, less risk of rebellion, arson, mayhem &c in a more equal society.

MJL: The issue is whether we really want the state to spend about 50% of national income. That's way too high. (He later sets the aim of the state having 29% of the national income - which is a massive 40% drop in the state's income). He is open minded about the rate at which the state's funding is cut - which is good, because one of the factors in Greece's collapse is the high flow of loan money which followed Greece's accession to the Euro, followed by the sudden cessation of the same flow after the 2009 crash.

Now this is the rub. The Small State Ideal. This is what George Osborne is all about - cutting down the State.  The hullabaloo about the deficit is a smokescreen for his crazed chainsaw maniac attack on the British economy.

I countered: It's not so much the amount the state spends as the efficiency of its spending. We could cut down Trident &c, and go for real investment. I could have added the Green Wage Subsidy, which is a far more efficient way of managing welfare benefits - while getting people out of unemployment and greening the economy at the same time.

I advance @richardjmurphy's proposals (Anti-avoidance rule, Transparency, Increase HMRC staff, Reform small business tax, Close Tax Havens) which claim to be able to bring in an extra £25bn/yr to the UK economy. 


MJL doubts they would produce that much.

I say Osborne himself says tax avoidance costs UK £5bn p.a. He is bound to underestimate, because Osborne is a tax avoider himself, to the tune of £1.6 million.

MJL says a lot of tax avoidance is positively encouraged. For example you can pay £11K into an ISA every year.

I say this is weak. ISAs, charity giving and other breaks does not mean that super-rich should use havens and  accountants to avoid tax. ISAs are aimed to encourage saving, charity breaks to encourage charitable giving. Tax avoidance for the mega-rich is just tax avoidance for the mega-rich, a haemorrhage of money away from the public purse. MJL says it is private money. I say It is clearly not reasonable that Warren Buffet pays less % of his income than his cleaner.

MJL: We need to stop believing the problem is too little tax - it's too much spending.

RL: Osborne keeps on about how awful the deficit is. That cannot be addressed by cutting spending alone. We must also staunch the haemorrhage represented by mega tax avoidance. And we need better, more wisely directed investment - primarily into energy conservation.

This opens up a whole new area of discussion, which I will review later. I hope this gives a flavour of the debate between a Green and Free Marketeer, which as I say, is the major debate of our age.