Labour re-writes the past – their economic management

by Robert Henderson

The Labour hierarchy has worked out its narrative on the economic mess they created. It runs like this: NuLabour in power may have made some mistakes, but these were minor and apparent only with hindsight, while the real culprit is the global economy in general and the USA’s obsession with sub-prime mortgages in particular. This is not only a grotesque lie but a stupid one because it can be readily exposed. Continue reading

Warren Buffett’s Financial Incentive to Push for Higher Taxes

by Stephan Tawney on August 17, 2011
Did I say “financial incentive”? Why yes, yes I did. It turns out that Mr. Buffett — new liberal hero thanks to his push for higher taxes on the “rich” — isn’t really a disinterested party: Continue reading

Bitcoin: More Important Than You Realize

by Kevin Carson

Neal Stephenson’s “The Diamond Age” was set some years after encrypted currencies and e-commerce removed most economic transactions into darknets beyond the government’s capability of monitoring and regulating, and thus caused tax bases around the world to implode. This followed, in short order, by the collapse of most nation-states.

Encrypted currencies and darknet economies have been promoted as a real-world model for resilient communities, in the impending age of hollow states, by such thinkers as Daniel de Ugarte and John Robb.

So you can imagine my reaction to recent news of Bitcoin, “a Peer-to-Peer Electronic Cash System.” Continue reading

The EU Euro stability fund draft press release…

Christopher Houseman

Found in the memory hole.

In the wake of widespread pessimism and protests in Europe regarding the very existence of the Euro, the European Commission and the Council of Ministers have agreed that a permanent Euro stability fund will be established shortly.

All Eurozone members will be expected to pledge impressive sounding amounts of money, which won’t in fact be anywhere near enough to cover the gaping hole in the heart of our wonderful would-be global reserve currency. And we won’t actually expect them to pay anywhere near as much as they pledge – unless they urgently have to.

The existence of a permanent Euro stability fund will reassure the gullible citizens of our glorious Union that all is well – until they actually have to buy something more valuable than our promises about their future earnings and productivity. In fact, the very existence of the stability fund means that:

1) We have no intention of trying to turn the Euro into a sound currency, and we probably wouldn’t know how to do so anyway.

2) We won’t be able to stop Eurozone members overspending in the future. Why else do you think we need this fund? Besides, we know every such crisis provides the justification we need to centralize even more money and power in our hands, so why would we even bother to try?

3) We will pay no attention whatever to calls for repudiation of national debts and a return to national currencies by Eurozone members. Any politician who tries to do this had better have very good life insurance and first-class bodyguards. Our message to the little people is simple: Shut up, pay up, and trust us to spend more money than you can possibly imagine. We’re a government – what else do you expect?

We note that UK citizens have been assured that non-Eurozone countries won’t have to contribute to the fund. We’re glad you like the eyewash, and rest assured that we’re working hard to address this state of affairs.

David Webb on Pension Reform

Doh – I sent this directly via e-mail. It was stripped out. Apologies to all, and here is the post as it should have been.

Dear Dr Gabb,

I am on holiday in China, but want to send you some comments on pension reform, but I couldn’t find a thread on the LA site to post it in. Would you consider opening a thread on this topic?

I am totally opposed to the government’s decision to force all companies with more than 50 employees to have a pension scheme and to auto-enroll all employees in it. While it is good for everyone to have a pension account, a scheme run by your company is not yours to manage and control – and in times of economic downturn it can leave companies nursing large pension deficits for people who no longer even  work for the company, requiring extra money to be put in just at the wrong time.

In Hong Kong, all employees contribute to their Mandatory Provident Funds, and I think their employers either can or have to contribute too. I would like to see a system whereby national insurance was totally scrapped, and everyone on PAYE (as long as it lasts, as libertarians would scrap income tax altogether) be required to contribute 10% of their monthly salary into their own SIPP, self-administered personal pensions. The company could also contribute more (but not be forced to), and all these SIPPs would be up to you yourself to manage. You could make the decision to invest in commodities, emerging markets or whatever yourself, and your pension scheme would be your own – and also your own problem. There would be no pension debts in company accounts (or only for already retired employees as the existing arrangements are phased out), and no public sector pension deficits either. Quite simply, all public servants would also pay 10% of their salaries into their SiPPs too.

There would be no 200k pension for ex-police chiefs – quite simply police chiefs would pay 10% of their existing salaries into their SIPPs and manage the assets themselves thereafter. For most people, the abolition of NI would largely cover this scheme, and it would eventually free up the population from total reliance on the state in their autumn years. I would not increase civil service pensions to cover the fact that they were now having to pay into their own SiPPs – the abolition of NI (which would require cuts elsewhere) would cover that – and existing pension monies, where they existed would be distributed to the pension members as contributions to their SIPPs. Quite simply there would be no pension assets other than the SiPPs, which everyone would hold.

I would then abolish the state retirement pension as an entitlement. Those after 65 whose SIPPs had not earned enough could apply for income support (a benefit, not an entitlement). Clearly we have to think about getting out of the whole social security arena, but that would be easier to do in the future when everyone had saved up a bit in their SIPPs.

I would also make pension assets fully inheritable with no inheritance tax. Currently that is only the case between spouses. I would also totally remove the requirement ever to buy an annuity, which is just one way of making sure there is nothing left of pension assets when you die. I would also look again at the 25% lump sum that can be taken out of your pension at 55. As long as the pension assets remaining after a lump sum was taken out were enough to finance a retirement, there would be no need to restrict the lump sums to 25%. Eg if you had 1 million in your pension, why should you only take out 250K as a lump sum? As 750k is more than is required to finance your retirement, assuming a 400K pension paid a 28K pension at a 7% annuity rate. In other words, I am saying anything over 400K should be available as a lump sum free of any tax. And some access to pension monies earlier than 55 years of age, eg to buy houses, should be facilitated, as long as there was enough left in the pension fund to reasonably expect to fund your retirement.

I know libertarians want to get the state out completely, but I think what I outlined above would be a good stepping stone. It would make it easier to fully get the state out later on, as people would have assets. The point about abolishing the trillion-plus public sector implicit pension debt at a stroke would be a huge improvement in our country’s finances.

Regards, DJW

Strategic Offence and Insecurity

Christopher Houseman

So, the great threats du jour are cyber-terrorism and international terrorism in the style of al-Qaida. Hmm… I can see why we’ll need a couple of new aircraft carriers to fend off those evil beasties, especially if HMG can’t afford to put any planes aboard them. Still, at least nobody’s talking about renting the (not yet completed) aircraft under a PFI scheme, along with the refueling tankers.

Meanwhile, in the name of “not giving in to the people who’ve been angered into action by our previous intrusions into their lives terrorists”, HMG has either got to carry on with business as usual (which means buying enough kit and posting enough troops in the right places abroad to placate the US government) or at least reassure everyone that’s what it intends to do as soon as it can print enough new money convince the markets it’s solvent again.

Personally, I doubt a mere 8pc cut in the MOD budget (while everyone else takes a hit of up to 25pc) will be enough to woo foreign creditors back in their droves. But at least as Remembrance Day draws near, we can all pause a while to give thanks for this country’s glorious victory over the evil Nazi supporters of “Guns before butter”, and encourage ourselves with the thought that the British people are far too noble and wise to fall for that old lie.