Tag: economics

Young People in Britain

You know, I find this argument so utterly tedious. Economics can be boiled down to old people verses young people. Polarising policy debates and setting one generation against another.

The UK Reform Party are pushing a commitment to the triple lock on state pensions. Not because they believe British pensioners deserve a good deal. No, it’s populist bandwagon to lock in the vote of one generation. Knowing that there’s a higher likelihood of older people voting for them than younger people [According to opinion polls].

It’s true that there’s a madness that has overtaken the British mentality. However, it’s not new. The value of land and property far exceeds its utility. The marketplace has been one of ever forcing a finite commodity to a higher price. The owners and inheritors of land and property have gained whilst its has become harder for younger people to get a foothold.

There have been different times. I remember my father talking about the inter-war period. It was of his father’s time. Practically farmland could not be given away. Estates were broken up. Labour was short. Taboos were challenged. The dynamic of marketplace for changed.

However, in the post-war period, the last 70-years, the cost of a modest dwelling, as a ratio of average earnings, has rocketed. Ownership of land and property has become concentrated.  

British humour addressed the situation in a famous TV sitcom. As said by the character Del boy over breakfast – this time next year, we’ll be millionaires. Only Fools and Horses captured the aspiration. Only that Del boy though it was second-hand cars that would lead to riches. Now, Office for National Statistics (ONS) data shows that roughly 27% of people aged over 65, in Britain, live in households with a total wealth of exceeding one million.

So, what do we conclude? That this pot of wealth has been taken from young people in a transfer from one generation to another. No, that would be playing a sectarian political card worthy of an unprincipled populist. A foolish strategy too.

Deep within British culture there’s an attachment to assets. This particularly goes for commodities that are restricted in supply. Remember Del boy got his wish in the end. Antiques saving the day. Now, amongst most popular TV shows is the Antiques roadshow.

Maybe it’s a latent mistrust of bankers. The shady image of people who hoard money for the sake of hoarding money. In Britain, holding land and property are seen to be a stable assurance of long-term security. I’ve heard it said about land many times – they don’t make it anymore.

The tragic element here is not that young people finding it harder to become just like their parents. To harbour the same attitudes towards land and property. It’s more a question of society undervaluing their contribution to prosperity. Now, and in the future.

It’s pure idiocy to set one generation against another. It’s a mean political trick. What does need to change are the rungs on the ladder, especially at the early stages of life’s journey.

For example, the law in respect of student loans is dire, unjust and unsustainable. Making young people pay a higher marginal rate of tax, when early in their working lives is abysmal. The government penny pinching of education funding and thinning out of courses is short-sighted in the extreme. Apprenticeships must be substantial not hollowed out routes to poor rewards. The world of work [and leisure] is changing more rapidly than it ever has in the past. It’s imperative that society equips young people with the tools needed to navigate a complex and dynamic world. It’s not generous to make a priority of all aspects of education and training. It’s absolutely essential.  

Rethinking Taxation Strategies

The whole subject of land value tax is not one to get into if you are looking for something to read while waiting for a bus or looking for a light-hearted story. Yes, that could be said about any discussion about taxation. Probably one of the reasons why so few people engage in conversations about the nitty gritty of this subject.

LVT (Land Value Tax) is not new. This idea has been on the block for decades. One of the underlying reasons for its popularity is that instead of taxing things society likes, like business, commerce and employment, this tax scheme aims at an asset value. In a country where land is a valuable commodity, at least in populated areas, here’s a tax base that this solid.

The part LVT could play in UK tax reform is a major one. That’s where this subject gets twisty. How to get from where we are now to a new scheme that is understandable, straightforward, and acknowledged as fair. That is, at least in comparison with the existing taxation schemes.

One provision needed is to distinguish between public land to private land. There’s no point in raising revenue to fund local government and then getting that entity to use those funds pay the same tax. If private organisations lease public land, then there would need to be a provision too.

Then there’s the difficult issue of revaluations of private land such that the result is fair and genuinely reflects “value”. A city car park and a golf course are very different in that respect. Fine there is a national land registry, although there are still packets of land unregistered.

Quite a bureaucratic set-up establishing a Valuation Agency. Even if most of the necessary information is already held by lots of existing organisations. Every set of accounts is going to have value for assets held or owned. The range of accuracy of these values can be wide.

I’m not making a case against LVT. What I am saying is that tax reform is not easy. Those proposing it must have a long-term perspective. Must be committed to getting away from making ever more complicated fragmentary changes to legacy schemes. Adding ever more complexity to an unreadable tax code.  

Tax reform is not easy. Facing up to those who gain an advantage from the status-quo is often one of the greatest pressures that a government faces. Making life simpler and less burdensome for small businesses, shops, pubs and restaurants is a great ambition. Facing up to the owners of golf courses and sprawling country estates, now that’s not so easy.

Now, when I wonder what the New Year will bring it doesn’t seem that the current government is not brave enough to make radical changes. Their approach, over the last year, has been one of cautious incremental tinkering. If they have core principle, no one is quite sure what they are.

Wealth and Power

No history buff, need you be. That’s Yoda speak for saying that there are one or two matters that bubble to the surface through human history. Let’s shelve the fact that the sun rises in the morning and sets in the evening. It’s a subject that a whole religion could be based upon.

I could encapsulate the phenomenon in the words: “Let them eat cake”. An example of a stratified society where those people that the top have completely lost sight of the lives lived by the majority. There’s a recognition that others exist but no great empathy or care.

That detachment can be exhibited in signs like gold plated panelling, crystal chandlers bedecking breathtaking halls and spare no expense expressions of power and wealth.

That’s one of my memories of my one visit to Russia. A port of call during a Baltic cruise itinerary. A trip that highlighted fascinating contrasts but shared histories. A good reminder of dramatic events. The Winter Palace in Saint Petersburg[1] is truly stunning. Lavish in every sense. A sign of the last century intense competition between major European powers.

To top a list, the Palace of Versailles[2] is the premier example of draw dropping magnificence. Naturally, these are global statements of power and wealth that are celebrated as part of our common heritage. They are, however, a lesson that history has posted for us to read.

What do both have in common?

Today, Kings and Queens are familiar with that lesson. Possibly apart from a small number who haven’t yet embraced modernity. If I must write it in the minimum number of words, it’s that distance that can grow between those who have great privilege and those who don’t. Then what happens when that becomes truly unstainable.

Revolution is bookmarked in any history book. These are moments, and their consequences are when a break point is reached. Although signs are there in hindsight predicting such events is a fraught with uncertainty. It’s usually thought that the price of destruction and devastation are a dam that keeps thoughts of revolution at bay. Change that happens, as if a dam breaks, are notoriously difficult to predict and cost. Not only that but such thoughts are rarely in the minds of any revolutionaries and their opponents.

Let me be clear. We are no where near a breakpoint in this moment. If I must write something, it’s more about the subtle signs that the direction of travel is not a positive one. Fine to dismiss my point of view as being that of a dyed-in-the-wool liberal. I get that.

It’s the consequences of the concentration of power and wealth that’s concerning. The rise of the global billionaires and their reach beyond national boundaries is of the age. Nation states are no longer the biggest players in the writing of the story of the future. This is not always entirely bad, some are altruistic, but growing economic inequality[3] is bad. Outcomes from situations where inequality exceeds certain limits, that’s not where anyone sane should go.

[1] https://www.historyhit.com/locations/the-winter-palace/

[2] https://whc.unesco.org/en/list/83/

[3] https://sites.manchester.ac.uk/global-social-challenges/2022/07/12/widening-of-the-wealth-gap-the-rise-of-billionaires/

Embracing Uncertainty

Imagine siting under a great wide spreading old oak tree. Acorns falling all around. The ground littered with whole ones, crashed ones and half eaten ones. It’s more the half-eaten hazelnuts that the squirrels leave behind that I’m thinking of. On one of those cool days, like this morning, when the rain has abated and the sun beams are streaming across the glistening fields. It was lower than 2 degrees, early this morning, so a heavy drew rests on the grass and leaves.

Think of title for a book or film that sums up the state of current affairs. I’m tempted to say “All the President’s Men” but that’s been well done in the 1970s. Not only that but the word “scandal” may have lost its meaning. Political fiction and reality are melding into one. Anyway, I don’t want to follow the crowd and obsess about America.

Was there ever an age when prosperity seemed assured and the population was happy. When men and women of honourable intentions and wisdom, judicially ruled the land? Maybe not. Or when it happened, to some limited extent it didn’t last beyond a generation.

Any title for a book or film would have to encompass the persistence of change. Nothing upon nothing ever stands still. In fact, that’s one of the few things I can write that is an absolute. A real natural absolute phenomenon. Everything we know of moves relative to something else and movements mean change. We never breath the same air.

In a storage box of my books there’s a title: “Thriving on chaos[1]“. That’s more to do with an attitude to change. It doesn’t sum up the moment although it does imply that chaos is normal. I’m not going there fully since not all change is chaotic. Life is punctuated with regularity. It’s the traditional saying about death and taxes. Those two are regular occurrences.

A financial crisis or stock market crash or bursting bubble seem to hit us as an unexpected instant of violent change. Unexpected that is until hindsight kicks in and we all wish we’d listed to siren voices. Analysis streams from the outcome of a crisis[2].

A title for a book or film would need to include the recurrent nature of both good and bad consequences. It would need to emphasis our inability to accurately predict what’s going to happen next. That is even if one or two of us may get it right.

All this leads me down the road of a manner of thinking that’s all too common to me. That’s the world of probabilities. Addressing that slippery ell called uncertainty. So, what could be better as a title than: “The Age of Uncertainty.” Oh look, that’s been taken back in the 1970s. What could be better than the title chosen by John Kenneth Galbraith[3]?

He looked at the chaotic but repetitious nature of our common history. Going way back. Unsurprisingly a little cynical and monosyllabic at times. I’ve been rewatching his BBC television series. It’s impressive.

Acorns are falling all around. An unusually large number, this year. Next year – who knows? If I could find some reliable data, I could do some probability calculations based on past seasons. But with certainty, I can say that we are in an age of uncertainty. Acorns will fall. How many – well that’s the question isn’t it.

[1] https://tompeters.com/thriving-on-chaos/

[2] “The Storm” by Vince Cable, the Liberal Democrat politician, looking at the 2008 global economic crisis.

[3] https://www.bbc.co.uk/iplayer/episodes/m002l6sc/the-age-of-uncertainty