...a blog by Richard Flowers

Wednesday, July 31, 2013

Day 4590: Moneylenders in the Temple


You have, presumably, heard how one of Britain’s biggest landowners is to use its enormous capital reserves to try and bankrupt a recent successful start-up company.

Although you MIGHT have heard that reported as: “Church of England to force Wonga out of business”.

This initiative from everyone’s favourite establishment theocracy comes after the Government announced that the monthly interest that credit unions can charge will increase from 2% to 3%. That’s an increase of 26.8% APR to 42.6% APR.

So it looks like the Church only got interested when credit unions went from being CHARITABLE loans to PROFITABLE ones.

Is it necessarily a BAD thing that the Church might bankrupt Wonga? Mr Dr Vince doesn’t seem to think so. Competition is, after all, supposed to be HEALTHY and – we’re told – result in a BETTER outcome (in this case lower interest rates) for the consumer.

But I’m concerned.

Firstly, Wonga charges such high interest rates because they accept a high degree of RISK in the people that they lend to. Will the CofE be willing to sustain very high levels of losses, or will they be offering loans only to much safer borrowers? Will they, in fact, not be competing with Wonga at all, but rather with existing credit unions?

Secondly, is the problem of debt not that people are getting into more debt than they can afford? Offering them CHEAPER loans will encourage MORE borrowing, people who might have been DISCOURAGED by Wonga’s high interest rates might be encouraged to take out borrowing with a lower “Church” rate. Cheap lending, after all, is what fuelled the BOOM that led to the BUST of the Mr Frown years.

But, perhaps more importantly, I’m worried about setting a precedent of letting a religious organisation – ostensibly one with the power of the state behind it, too – decide to eliminate a legitimate, legal, if slightly odious business on ostensibly dogmatic grounds. Would we be as sanguine if the Church said it was going to use its property portfolio to start blocking planning applications for HS2? Or that they were to begin buying up buildings used for “immoral purposes” (whatever the Church decided that might mean) in order to put a stop to that?

Or it could all turn into an incompetent mess...

To move the story completely into “you couldn’t make it up” territory, within 24 hours the newly created Arch-Banker of Canterbury, Mr Justin Wibbly, had to admit to EMBARRASSMENT when it turned out that the Church is in fact an investor in Wonga.

Perhaps the DAILY MASH covers this best: “Bible story of Jesus and the moneylenders is still on his ‘to-do’ list.”

Tuesday, July 30, 2013

Day 4589: More Jane Austens to Circulate


The good news is that there has been a small but significant increase in Great Britain’s output in the second quarter, meaning that there will be call for more of the new tenners when they come in.

Unemployment remains at almost exactly the same place it was when the Coalition entered government, and inflation has been at about 3% for the last year (a bit too high, but – crash of 2009 aside – lower than it’s been since before Mr Frown was Prime Monster).

We’re even a little HAPPIER than we were last year!

And in a reversal of a trend that’s lasted nearly thirty years, income inequality has got LESS under the Coalition: average household incomes have dropped since the economy went to pieces under the last government, but the largest fall has been for the richest 20%, while the least well off 20% has actually seen an INCREASE in average income after tax and benefits, as a direct result of LIBERAL DEMOCRAT policies such as targeting tax cuts at basic rate taxpayers and expecting the well off to pay a proper rate of capital gains tax.

Clearly, as Liberal Democrat Voice reports, Liberal Democrats in government do better than Hard “intensely relaxed about people getting filthy rich” Labour.

And, as a reminder to those people calling for the return of a “punish the rich” 50p tax rate, it seems that asking the better off to pay a range of FAIR taxes raises MORE money which means that we can CUT LESS or TAX LESS. Mr Neil puts it well in his letter to the paper here.

If you want to “clamp down on tax avoiders” you don’t do it by hitting the people who DO pay for an extra 5%; a LOWER tax rate seems to mean FEWER avoiders too. And call me a practical old lump but I’d rather have 45% of something than 50% of nothing, because I put REDUCING the burden of tax and cuts on the least well off AHEAD of the dogmatic pleasures of stiffing the rich for 50p.

As with the earlier news that Hard Labour’s recession was deeper than thought while the Coalition’s “double dip” never happened this was NOT headline news, because it was not a DISASTER.

Welcoming the news, Shadow Chancer Mr Bully Balls was spitting teeth.

Day 4587: A Liberal Tax versus The Problem of Inheritance


The arrival of a BABY* who is going to receive the entire United Kingdom in spite of not even writing a FAMOUS DIARY begs the question: is it RIGHT that so much of the wealth of this country is bound up in a few families and handed down generation after generation?

The PROBLEM isn’t whether this is SELF-EVIDENTLY WRONG (it is) but that the people who HAVE all the wealth have a VERY GOOD trump card when anyone dares to suggest taxing them:

“People who’ve worked hard for their money should be allowed to give it to their children!”

It’s a CLEVER and TRICKSY argument, which tries to hide the fact that very often these people have NOT worked “very hard” for their money, but have – like the young princeling – merely got it because of who they were born... and from people who merely got it because of who they were born... who got it from people who… Laziness, cascading down the generations. Instead they CO-OPT the hopes and aspirations of millions of people who DO work hard for their children to provide cover for their own enormous unearned benefit.

However, I have a suggestion that would neatly get around this: the Inheritance Tax rate should be ZERO for all money earned, but 100% on all money inherited during your lifetime.

That way, people who DO work hard, and improve on what they start with – whether that is a fortune or nothing at all – will have money to leave, but those who receive great good fortune and fritter it away or even just sit on their laurels, will see the taxman claim the lot of it.

Inherited wealth and privilege are strong barriers to equality of opportunity, and as such traditional Liberals should be opposed to them instinctively. Additionally, economic Liberals will tell you that wealth bound up in portfolios of property and stocks is money that is not circulating in the economy and therefore losing us opportunities for growth. Keynesians will say that the receipts from such a tax can be used to pay down the national debt or invest in capital assets. And Christians will tell you that this is 100% in keeping with the Parable of the Talents.

*Meanwhile, a Happy NOTHINKTH Birthday to George Alexander Louis – named for three emperors... or did your parents secretly want a G.A.L?

Monday, July 29, 2013

Day 4586: Mr Balloon versus Porn


Dear Prime Prude,

Can it be only a year since the LAST time that the No Sex Please We’re British Brigade tried to censor the Internet?

If you want to reduce the “damage” that might be caused by online images, you want to be making young people MORE comfortable with the idea of naked human bodies, rather than flapping about saying how BAD it is to see them; and breezily conflating the terms “child abuse” and “things a child might see” and “things that make me squeamish/things I cannot admit to liking” is only going to make matters worse.

Nevertheless, and setting aside the ENDLESS HILARITY of introducing “POP-UP warnings” for your Microsoft, or whether or not sheathing your old “Lads” mags in a plastic cover could provide some PROTECTION, might I recommend that, as a first step to reducing the demeaning of women, all search engines stop reporting any searches for the terms “Sun”, “Daily Mail”, “Telegraph” and “that fatuous nincompoop who leads the Conservatory Party”.

Happiness will be hugely increased at, I think, very little cost.