Day 2872: Mr Balloon's Pledge – I'll Protect Your Jobs… By Making It Cheaper For The Corporations To Employ Someone Else!

Tuesday:


Last week, the Leader of the Liberal Democrats, who is calling* for tax cuts for average earners, asked Mr Frown if we should follow the Leader of the Free World, who is calling for tax cuts for average earners, and try to rescue the economy by offering tax cuts for average earners.

And, amazingly, Mr Frown is hinting that he might do just that!

This leaves the Conservatories with a DILEMMA. Will Mr Balloon stick to his PRINCIPLED (if wrong) position that "The Cupboard is Bare", or will he jump on the passing bandwagon?

Oh, what do YOU think?


(* and has been calling for months

You know, just to make the POINT that some people can have PROPER thought out economic rescue plans that DON'T require last-minute back-of-a-fag-packet spur-of-the-moment guesswork.)


What is PARTICULARLY bizarre is that Mr Balloon has chosen to hand over fistfuls of cash to BUSINESSES rather than giving the money back to PEOPLE.


Well, at least in keeping with his "principle" of: "Look! Rich people! I say, chaps, have some free money!" (see also: tax cut for dead millionaires)

But this is NOT a very good use of the money.

Remember, the KEY danger to the economy is that growth has stalled.

For some years, the British economy has been kept afloat by people who kept on SPENDING because they had easy access to money through cheap BORROWING. The Credit Crunch has put a stop to that, so in order for people to KEEP ON SPENDING the Government needs to put more CASH into their POCKETS.

Cash going into BUSINESSES is more likely to be used for SAVINGS, or rather REDUCING BORROWINGS, especially with loans being difficult to obtain at the moment.

Reducing the COSTS of businesses (labour in this case) is more likely to increase their profits, paid out in dividends which, again, is more likely to go in SAVINGS (most dividends being wrapped up in pension funds).

All of which is to say that business tax cuts is money straight into the banks (ha ha ha) and not out on the high street oiling the wheels of the economy.


Now, getting jobs for people who want to work is a good thing in itself, and no doubt Mr Balloon has some vague hope that if more people are in work then they will have more disposable cash and spend a bit more and start up some growth.

But times are tough and this is a DREADFULLY inefficient way of going about it.

Not least because, as Mr Chris Dillow points out, many businesses will take on staff anyway – and so get free money for nothing!

(And a hat tip to Mr Tristan)


Having WARNED Mr Frown against the DANGERS of making tax cuts without knowing where the money is coming from you would expect the Conservatories to have WATERTIGHT proposals for how to fund their own tax cuts.

Oh, you wouldn't?

Well, of course not. The money for their little cashback wheeze will come from "savings in unemployment benefit".

Just THINK about that for a moment: in order to stop unemployment going up, Mr Balloon is going to spend the money that he wouldn't have had to spend if unemployment hadn't been going up.

Let me just be clearer: if unemployment goes up, the Government will have to spend EXTRA cash.

Instead of spending that extra money on benefits for the unemployed, Mr Balloon wants to spend THE SAME EXTRA money on benefits for businessmen.

He isn't saving ANY money at all; he's just SPENDING MORE differently.

Sooooo, how does this work? The plan involves giving £2,500 in readies to Mr Fat the Business Cat TODAY which Mr Balloon SAYS he can afford because he won't have to give Ms Worker her £60.50 this week*… hang on, that's not right.

(*yes, we know that Benefits are paid fortnightly.)

Mr Balloon CLAIMS that it costs the taxpayer £8,000 when someone goes on unemployment benefit. Perhaps this is some sort of average over all time ever, or perhaps he is counting in costs of administering them coming into the system. But since his scheme only applies to people who have BEEN ON UNEMPLOYMENT BENEFIT FOR THREE MONTHS, he can only make savings from the ONGOING COST of remaining on JSA.

So even if we're talking about MITIGATING the impact of higher unemployment, rather than ACTUAL cash-neutral tax cuts, you'd STILL only make this add up if Ms Worker WOULD HAVE BEEN unemployed for another TEN MONTHS.

And that's assuming she's over 24.

And that the job she gets isn't so badly paid that her wages need topping up by one of Mr Frown's Working Family Tax Credits.

And that the benefits don't taper off after six months… which they do.

And on top of that, everyone knows that the longer you are out of work the less likely you are to get employment; so, conversely, the people who DO get jobs are less likely to be needing public support for the sort of long periods that Mr Balloon needs to make his figures add up.


But never mind all of that, here's the kicker: what is to stop Mr Fat from laying off twenty workers from his factory in West Slaving and then hiring twenty "completely different" workers doing "completely different" jobs (terms and conditions apply) at his factory in East Slaving?

He trousers fifty grand and has no extra workers to pay.

Oh I am quite sure that Mr Balloon has thought of all sorts of checks and balances (or CHEQUES and balances) that might make it difficult for a small business with few employees to get away with that, but large companies that hire and fire ALL THE TIME will be almost impossible to police, and will certainly start to coin in free cash for doing no more than they would have done already.

In fact, Mr Balloon is INCENTIVISING them to sack existing workers and replace them with cheaper labour.

So much for this week's promise to "protect British jobs".

"The Conservative Party will not stand aside and allow unemployment to claim livelihoods and destroy lives," said Mr Balloon. "We will not walk on by while people lose their jobs..."

"...We will go over there and MAKE SURE they lose their jobs," he might have added.

As Daddy Alex says: it's an excellent soundbite, but soundbites are not enough to live on!

Mr Balloon's latest shabby scheme does NOTHING WHATSOEVER to protect existing jobs but in fact endangers them as well!

I guess that promise goes the same way as Mr Balloon's promise "not to offer tax cuts".

If you want to fix the economy, you need a BETTER ANSWER.