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Monday, 4 March 2013

Wall Street: Money Never Sleeps

I was reading the economist David Blanchflower in the paper this morning. He was blasting Piggy Eyed Osbourne (PEO) for screwing up the economy and suggesting that Ed Ball's would do a better job.  David is one of that fortunate group who can get a job anywhere - at the moment he's blocking a professorial chair somewhere in the States (New England way I believe).

Danny Boy David is quite upset about this Gov't austerity plan - as we all are. What is dressed up as a plan for growth appears to have nothing to do with any up side and is most definitely majoring on the down side. The penny appears to have finally dropped that there is a difference between reducing the annual Gov't deficit and reducing our accrued Gov't debt. The Osbourne carrion call that the deficit has been reduced simply means that our Gov't debt is growing less rapidly but it continues  to grow. Meaning that year on year more of the income the country generates in taxes etc is used up to pay the interest on our debt. A very bad idea.

The trouble is that there's a strong suspicion that the penny has only just dropped for the Government. The way Government statements and pronouncements have mixed and match "debt" and "deficit" suggests that either they don't know the difference or they do and hope to keep the ghastly, grizzly truth from us by deliberately confusing the  terms. It's even worse because the deficit is not shrinking.

And it's not shrinking because our economy stubbornly refuses to get off its arse. It's all the last Labour government's fault of course - pumping so much money into the public sector. So the first thing PEO did was to cut back the public sector. Except that businesses large and small up and down the nation had got used to public contracts - from the window cleaner employed at the town hall to the large companies supplying large gov't contracts. George's great idea was to cut off the public funding and those companies would instead re-vitalise the private sector - seek out new opportunities new worlds boldly go etc, etc.

Unfortunately this "Star Trek" scenario was just a piece of sci-fi. Reduced gov't spending, private household debt overhang, job losses, banks unable or unwilling to lend to businesses and businesses unwilling to invest their cash piles in new schemes, add all that to soft overseas markets and what you get is a dead cat bounce.

So here we are 5 years on and it is clear that the Pie Man has no idea what to do. In the up coming Budget it's a fair bet that his main concern will be not to repeat last year's farce. So don't expect anything special.

Which brings me to my genius idea for revitalising  our economy. It's a dead cert. It's called "The Great VAT Lottery".

The idea's so simple and so great I'm surprised it's me that has come up with it. Each week VAT on a number of VAT rated items would be reduced to zero for seven days.

I had thought of having a referendum on what VAT rated items should be included but realised that giving the general public the power to chose would be disastrous. They'd chose things like condoms, sexual aids and booze. All very noble and desireable, but not economically significant. So I'd first get a team of experts to come up with a selection of items, the spending on which would be good for the economy.

This is the genius bit. Each week Dale Winton  would host "The Great VAT Lottery" show. He'd be good 'cause he did Supermarket Sweep so knows about shopping and vatty things. You'd have the usual lottery paraphernalia - loads of numbered balls, large tumbler and a silly quiz to keep people awake. Each item selected by the team of experts would be represented by numbered ball. ( I envisage a politician or some such worthy calling out the numbers as they are drawn - Norman Lamont, Edwin Curry maybe, or even Tony Blair if he can spare the time and the show's budget is big enough).

Each week, six or seven numbers would be drawn and those items represented by the numbers would be exempt from VAT for a week.

Just imagine. No VAT on cars, home renovations, koi carp, oversized knickers, gob stoppers and restaurant meals. The boast to the economy would be tremendous - for a week. But the following Saturday there'd be six or seven new items to entice the great British public to spend, spend, spend.

It can't fail. Although there might be a bit of a problem if one week Vat was removed from holidays to Miami. Could see Essex emptied and those large,vulgar "Dallas" mansions  in Chigwell squatted  by  hoards of Rumanians and Bulgarians.

But other than that I can't really see any downside. All I need to do then is to sit back and await my Nobel Prize for Economics.



Anonymous said...

Danny Blanchflower is the man to bring back the glory days. Would improve the economy at the Double. Get those consumers out buying radiograms, linoleum, lycra trousers and 45s.

Marginalia said...

Dear Anon, how apposite! At the moment his old team are riding high after winning the North London Derby on Saturday and two places about Arsenal.

P.S. would that be stereo radiograms?

Nota Bene said...

I love the concept, and can see no downside. I live within spitting distance of Chigwell, and can see a business opportunity selling tickets to watch the eastern rabble take over the 'Dallas' mansions

Vince said...

The dead hand of the Treasury rules.

Males (mostly) in their ivory towers counting beans with no knowledge of the real world.

Your rant is spot on.

Marginalia said...

Dear Nota Bene, that's what we need the good old Essex spive spirit.

Dear Vince, it's not nice being bitter.

Steve said...

One problem. Dale would make me turn off my telly and not take part. Other than you're onto a winner.

Marginalia said...

For you Steve, we'll run a repeat on BBC iPlayer with Dale electronically removed.