Liberal Democrats don't have a market anymore

This weekend has seen the conference of the Liberal Democrats held in Birmingham.  Of course as the junior coalition partner in government one might think it is a chance to celebrate success - which is, actually, what those who are Ministers have been doing.  Yet it is all in the shadow of record low polling results, as hoards of Liberal Democrat voters have abandoned the party they supported - whatever reason it was that they supported it.

Indeed, that is the crux of the problem for this party.  Having been the third party in one form or another for over 80 years, government was almost always never on the cards since Labour usurped the Liberal Party as the major second party.  However, the Liberal Democratic Party is not the Liberal Party, it is a slut of a mongrel that has hobbled from election to election in the last 30 or so years finding whatever gap it could see in the market, bringing along its disparate parts to heel. 

When it was the Liberal Party, it had a market.  It rejected the social conservatism of the Conservative Party that had resisted the social revolution of the 1960s, but also rejected the Marxist planned economy approach of Labour.  It supported the EEC as a means to reduce barriers to trade with Europe.  Bear in mind that until Thatcher, the status quo was socialism, with the Conservatives hoping to contain industrial action whilst the unions made mischief when Labour wasn't in power.   In fact, in that ossified climate, there was a period when the Liberal Party looked like it was in revival, getting 19% of the vote in the first of two elections in 1974 under Jeremy Thorpe (who was easily the best performing party leader at the time, until scandal ended his career).   The election of Thatcher changed all that.

The Liberals merged with a breakaway wing of Labour - because Labour in the early 1980s was a party of neo-Marxism, with policies such as withdrawal from NATO and nationalisation of industries and unilateral nuclear disarmament.  The SDP comprised Labour MPs who wanted none of that, and they took the Alliance, later the Liberal Democrats on a slalom ride over the years.  Initially it was easy, while Labour was old Labour and the Conservatives were the party of Thatcher, but then New Labour came along and the Liberal Democrats took a swing to the left.  Free university education, abolishing taxes for the poor came along with hopping aboard the environmentalism agenda, supporting interventions to address global warming, and so being part of the movement against fossil fuels, in favour of wind and solar power, against aviation and roads, and in favour of trains.  It opposed replacing Britain's nuclear deterrent.  

The Liberal Democrats became the party of the left.  On domestic policy it was all about having more for free, for more regulation of businesses, for more spending on education and higher taxes on the wealthy and no taxes on the poorest.  On foreign policy the biggest boost was opposition to the invasion to overthrow Saddam Hussein, and a high profile given to human rights, as well as enthusiasm for the EU.  The Liberal Democrats once advocated Britain joining the EURO for instance.

So in the 2010 election, Liberal Democrat voters were comprised of a lot of people for whom New Labour wasn't leftwing enough.  Refugees from New Labour who would never vote Conservative.  Some Liberal Democrats float between the three parties, but the party built itself up as a party of protest.  No to tuition fees, no to war in Iraq, no to Trident, no to Heathrow expansion, no to Euroscepticism, no to climate change. 

Most Liberal Democrat voters don't expect the party to be in power, so when it chose to go with the Conservatives, it burned off its protest vote credentials, and for many its leftwing credentials.   

Meanwhile with New Labour buried along with Gordon Brown's political career, "Red" Ed Miliband reclaims the left back for Labour.  So where do the Liberal Democrats go?

As they have hitched their wagon to the Conservatives, they believe in addressing the budget deficit.  They believe in having a reduced burden for business, and have gone along with the "free schools" idea.  Yet they have also stymied modest reforms for the NHS, effectively delayed the renewal of Trident and are now vetoing a cut in the top income tax rate.   

The Liberal Democrats are seeking a middle ground, which doesn't really exist.  While Ed Miliband has turned Labour back to the left, it is not the days of Foot and Kinnock, but looks more like the Liberal Democrats.  Rejecting the war on Iraq, supporting a green agenda. supporting more money on the state sector, Labour as the party of opposition with no competition, can now accumulate all opposition to the government.   The Conservative Party, having swung to the centre under David Cameron is now fighting in the middle ground, which despite the shrill rhetoric of the unions and Labour, is not engaging in some major culling of the state, nor radical reforms on any scale.  What do and can the Liberal Democrats stand for?

The quasi-religious environmentalism doesn't get much support in a time of economic malaise, especially with some households harassed by the recycling police and motorists fed up with punitive fuel taxes.  The anti-war rhetoric is worth little now that there has been withdrawal from Iraq and military spending cuts are more an embarrassment than a source of pride.   Claims for spending more money on the state don't wash at a time of modest austerity.   The past EURO enthusiasm is not something Liberal Democrats want reminders of.

Chief Secretary to the Treasury, Danny Alexander, spoke at the conference of cracking down on tax evasion, he told of a half billion pound "infrastructure fund" to "create" jobs  and support infrastructure projects in financial difficulty, whatever that means.   Does he mean projects council have cut back on, or those that have gone wrong - like Edinburgh's tram abortion?

There was a project at the beginning of the coalition to cut unnecessary laws - a "Freedom Bill" - of which there has been little heard, primarily because when the public were asked what laws to abolish, they responded in droves.  The Liberal part of the Liberal Democrats is rarely heard of.

Having opposed serious reform of the NHS, the Liberal Democrats cannot be seen as a party of rational reform.  Having continued to push the green agenda, with calls to limit executive pay and a shrill line of banker bashing and blaming, it is hardly a party that is pro-business.  It can't hope to reclaim its Liberal credentials when it happily supports more government in so many areas.  Yet, it can't be a party of the left while tied to a party of the right.   

There could be a future for a Liberal Party that embraced smaller government, free market reforms and social liberalism, but not much of one.   There isn't a future for the Social Democrats, who are indistinguishable from old Labour - the party of envy, arrogance, belief in the state, belief in forever taxing the successful, and delivering monopoly social services.

It's rather simple after all - the gap the Liberal Democrats once filled were as the "other" protest party against government.  As part of it, they don't stand for anything other than restraining the ruling party.   Yet when 2015 comes along as people want to support the government, why vote Liberal Democrat instead of Conservative?  Whereas if you oppose it, why would you vote for a party that supported it the whole time?  

The ONLY future for the Liberal Democrats is if Labour makes itself so unelectable that Labour voters choose Liberal Democrats to constrain the Conservatives.   Yet that would be self-defeating for them.  For it would simply result in Labour winning less seats and in more cases than not, it would mean MORE seats for the Conservatives, increasing the likelihood of being able to govern in their own right.  

Given that electoral reform as a saviour wont be on offer again for many many years, the future is bleak for a party without a coherent philosophy or an identifiable market.   As a libertarian I hope it splits, and a Liberal Party can once again assert less regulation, social liberalism (including drug law reform), less government overall and lower taxes.   It would also mean rejecting EUphilia.  

Both major parties will be helping to give the impression that the Liberal Democrats are a third wheel.   They'd be right.  It is.  The Greens and UKIP both fill gaps in the market.  The Greens for the far left and UKIP for the Thatcherite Eurosceptic/somewhat libertarian right.  

The Liberal Democrats fill no gaps any more, and if they stay on their present course, face year after year of decline.

Eurodelusion

Greece is going to default.  It is absolutely inconceivable that it is able to cut spending and raise taxes sufficiently to give confidence to lenders that it can service more debt.

The likelihood that German or French governments will make their taxpayers prop up the Greek profligacy is low, with Angela Merkel simply trying to bluff her way into ensuring there should be confidence in Greece.   Finally, the Free Democrats in Germany have started talking about alternatives to bailouts - whilst the CDU/CSU remains wedded to bailouts and the parties of the left can't think outside the box of European solidarity.

Greece will default, it may leave the Eurozone (as other Euro states fear contagion of the Greek effect), and will face a painful few years as its public sector is shrunk, its economy shrinks, lots will be out of work, then it will export, tourists will come and it will start to grow a real economy.

Allister Heath at City AM is blunter:

EUROPE is in a phoney war. The establishment is still in a denial about the inevitability of a Greek default; the markets don’t believe the politicians. The result is ever higher yields on Club Med debt, growing fears, extreme volatility in the pricing of banks’ securities, tensions in the money markets and a constant and destructive war of words. This chaos, and the dramatically lower share prices of many financial stocks demonstrates the uselessness and idiocy of the short-selling ban in parts of the Eurozone. It achieved absolutely nothing at all. The Eurozone needs to learn that grand gestures and propaganda don’t work. It should listen instead to the former president of the Argentinean central bank, Mario Blejer, who took over in the then devastated country in 2001 after its $95bn default. He thinks Greece, if it ever wants to salvage its economy, “should default and default big. You can’t jump over a chasm in two steps.” Argentina’s GDP collapsed by 10.9 per cent in 2002 before bouncing dramatically back.

A Greek default will be cataclysmic – but attempting to delay the inevitable threatens an even greater catastrophe.

Rugby World Cup public transport success story

Large numbers of people arrived for the Rugby World Cup with nary a problem using some public transport. They were using the commercially driven public transport, that doesn’t need subsidies to operate or to reinvest in capital. It has vibrant competition and a wide range of services. It’s called aviation.

The airline industry has had a few years to plan for the Rugby World Cup and has managed admirably. Air New Zealand delayed retiring aircraft it would have sold, in order to provide more services on routes between the main centres, displacing turbo-prop aircraft to provide some more to provincial centres. It is also using mothballed Boeing 747s for two additional services to London via LA when it ends. It had increased services on its London-Hong Kong-Auckland route. Qantas has done similar keeping aircraft it was to retire to provide additional services for the Rugby World Cup. Other airlines have increased the size of aircraft flying to and from New Zealand.

You can’t pretend the airline industry is in a healthy state. Qantas is undertaking a substantial restructuring of its international services to stem huge losses, and Air NZ is undertaking a thorough review of long haul services given its own losses. Yet they and their competitors all are able to deliver people internationally (and the pair domestically) at a time of peak demand. The corollary of it is that at certain times on certain routes air fares are high, but then so is demand and people prepared to pay get seats, they get a generally consistent level of service. The airports too, all run on a commercial basis, handle the crowds with little fuss.

Contrast that to a mega local authority co-ordinating a rail service that it owns, sub-contracted to a management company on tracks owned by the state.

Finger pointing all round given it is the silly season (election), as the railevangelists blame the Government – because it isn’t completely craven to their endless demands for other people’s money to gold-plate a service that costs more in subsidies than it generates in fare revenue.

The Government blames the council that IT set up running on a network that IT owns. For years the ARC complained that it didn’t have enough control or authority over transport in Auckland, that there were too many agencies. Now it is the Auckland Council contracting Kiwirail, both government bodies. The railevangelists protest that a fortune of your money (well your children’s, they would borrow now and make you pay later) should have been spent years ago building a gold-plated system that would work like clockwork and handle peaks (don’t talk about the subsidies to run them – because we’ll just manufacture figures to claim roads are worse), ignoring that the current socialist administration has spent a fortune to electrify the network (but it doesn’t happen overnight) to meet their dreams. The socialist administration chooses to impose a benign martial law over the Auckland waterfront and blame the Council it set up, cravenly following almost the entire model it inherited from a Helengrad inspired Royal Commission.

Should this not all demonstrate how the incentives to perform for government are so abysmal compared to commercial organisations? Even partially government owned companies like Air New Zealand and Auckland Airport are models of efficiency compared to Auckland’s quaint little commuter railway.

It’s worth noting that there is plenty of public transport in New Zealand that operates efficiently, commercially, without taxpayer subsidy (the Air NZ bailout was unnecessary and the fault of government intervention in the first place) and handles peaks and troughs quite adequately. It also has very high capital requirements, is exposed to extremely volatile changes in input prices (aviation fuel) and exchange rates (affecting costs of capital and fuel, as well as demand). It’s called the airline industry.

On a more modest scale, the entire intercity bus operation also operates efficiently, commercially and without taxpayer subsidy, meeting the needs of tourists and people without cars, with little fuss and no state planning (and also maintains individually unprofitable services because they contribute to the network, such as Napier-Gisborne). The movement planners who are obsessed with using other people’s money to prop up the modes they like, but to take from the ones they don’t, who want to tell landowners to build higher densities because they think it is “good for them and society”, ignore all of that. For it would appear than when governments stop planning so obsessively how people get about, businesses and their customers rather remarkably, seem to manage quite well.

And if you think cities are different, ask yourself why freight seems to move with little effort in cities, the only problem it faces is when bottlenecks of infrastructure or poor pricing mean that the government owned networks stop functioning efficiently.

Vileness appeared today

It had to happen.  The London Metropolitan Police has today protected about 100 protestors who in Grosvenor Square - the location of the US Embassy to the UK - held placards proclaiming "Islam will dominate the world", calling for an Islamic Caliphate for the UK and the US and celebrating that Afghanistan is a graveyard of US soldiers.  They deliberately broke the minute of silence held to commemorate the dead and are now celebrating the same on their website.  They burnt the US flag.

Their website makes it bold:

This is a war between ideologies, namely between those who stand on the side of Islam and those who stand on the side of democracy and freedom. In the West they use different terminologies, they call it a war between freedom and terrorism, it is strange though that all the "terrorists" are Muslim and all those Muslims have as there ideology Islam.

The claim is that the US has lost the ideological war.  They are worshippers of a death cult of slavery and depravity, they openly despise freedom, openly believe laws cannot be created except in the shadow of their misogynistic violent death cult.   They use the freedom of the West to fight against it,

It is worth noting that two groups counter-protested.  A group of Muslims appeared holding placards saying "Muslims against Extremism", "Keep the Silence" and "If you want Sharia, Move to Saudi".  Good for them.  The more British Muslims confront the Islamists the more it will be accepted that the majority of them live in the UK because of freedom, not to destroy it.   According to the Daily Mail one said "If the moderate Muslims all came out and spoke out, that would defeat them..I am proud to be British. I love my country. All these people are doing is breaking Britain apart."

Another group comprised the English Defence League, a group commonly described as fascist/far right, which is largely a bunch of working class men who are loudly and usually rather bluntly against Islamism.  The Police moved them so that the Islamist misogynists could have their protests.  For all of their faults, the EDL is at least NOT against the freedoms and secularism of modern Britain.  Indeed, treating them as being as bad as the Islamists will simply encourage recruitment.

What's most telling is that today, of all days, those who would destroy our way of life were allowed to be unspeakably disgusting and vile.  It makes a profound mockery of so called "human rights" laws that don't allow people to express offensive views based on race, sex, religion and sexuality, when people who hold those very views, are protected by the state to express them.

Now I would not stop people expressing those views, but would also not stop others counter-protesting, and would not move peaceful citizens on to let people protest.   Islamists sought to protest outside the US Embassy, knowing how inflammatory and offensive it would be, and got state protection to do so.  Would anyone who dared go to Muslim majority parts of Britain expect the same protection if they wanted to protest for a secular state, freedom and equal rights for women?

Why should the UK's 50p tax rate be cut?

Gordon Brown introduced the 50% top tax rate in the UK close to the end of his term as Prime Minister.  It cuts in at an income of £150,000, and the excuse was to help the public finances, the real reason was to tap the envy and class hatred of his voting base - the people who hate success, who wish they could earn that sort of money, or rather be given it.   The Daily Mail reported that the Institute of Fiscal Studies has said the 50p tax rate may not have raised any extra money because of the incentive it created to rearrange income sources and investment to avoid it. 

There are plenty of good reasons to scrap it, primarily because it is one of the highest top tax rates in Europe.  The UK already has the highest corporate tax rate in Europe.  The main problem it creates is being a disincentive to entrepreneurs staying in the UK and investing here.  What great incentive is there to taking risks in the UK if you face losing more than half of your income (including "National Insurance", which is another income tax) to the state?

Of course as Harry Phibbs at the Daily Mail says:

There will be plenty who will shout about fat cats and bashing the rich. The merchants of envy will always have a crude populist appeal.

It sends a message that Britain isn't a friendly place for making a lot of money.  Yet it is obvious that there is only one reason why it likely wont happen - the class envy that somehow people on higher incomes "aren't paying their fair share".  

Allister Heath of City AM points out some real facts to show that, unlike the distorted image spread by the Labour Party, trade unions and leftist media, the truth is that the British government is dependent on the "Atlas" of high earners.   The idea that the "rich" have never had it so good, is proven as nonsense.

1% of income tax payers reach into the 50% tax rate, in that they earn over £150,000 a year.   Many of them are not paying more on most of their income (as the tax rate is marginal), but together than 1% pay 27.7% of the income tax in the UK.   The equivalent top 1% of taxpayers in 1982 paid only 11% of all income tax, by 2000 they were paying 21.3% - so much for the Tories being the party of the "rich".

14,000 people in the UK earn more than £1 million a year.  They together pay £14.2 billion in income tax.  They pay almost as much income tax as the 13.9 million people who earn less than £20,000 a year. 

In other words 14,000 pay as much in income tax alone to pay the entire Home Office budget, which covers Police, prisons and the entire criminal justice system.

The top 1% of earners together pay enough income tax and national insurance to cover half of the NHS budget, but the legions of worshippers of that religion (the UK's largest) are hardly grateful for that.

Heath concludes:

All sections of society already pay far too much tax. A wealth tax would be a moral and economic disaster, double or triple taxing income and making a mockery of property rights. We need growth and jobs, not hate and punitive taxation. It is time to halt the war on wealth.

Indeed, the disgusting lie that somehow everyone on higher incomes is some banker who made a lot of money out of bankrupting the economy should be confronted.  I heard it again this morning on the BBC.  The UK's budget deficit (heaven help those who don't know their deficits from their debts) is NOT caused by "bailing out the bankers" because not a penny has been spent on bailing on banks this year, and the proportion of public debt attributable to that is less than 10%.

The long term goal of UK fiscal policy should be to reduce the overall tax burden.  The 50p rate should go, but concurrent with that, in part to placate the envious, but also to contribute to the reduction in tax, the first £10,000 everyone earns should be income tax free.  I mean everyone, not clawed back from higher income earners by lowering thresholds, but make so everyone knows that the first £10k a year is their own money.   Workers, students, employers, entrepreneurs, the retired, everyone.

The only moral argument ever put for the 50p rate is to claim the "rich" should "pay their share", yet with 1% of taxpayers paying over a quarter of all income tax, means they do far far more than that.

Yes some have high earnings because of luck and inheritance, but many more do so because of the career path they chose, the businesses they set up, the investments they made and besides all of that, it is their money.  If you haven't stolen or defrauded people, then you are morally entitled to the fruit of your efforts.  

As the Adam Smith Institute says of tax avoiders:

" Rather than harass such people, we should give them a medal for public service, in pointing out just how stupid our tax laws are... It's time to make tax simple and certain. And to ensure that our tax officials are public servants, not public inquisitors."

Part of that is to lower taxes across the board, whilst abolishing complicated rebates and exemptions, whilst putting a serious effort into cutting spending.   Nothing else will give the British economy a chance to be more than anaemic whilst the Eurozone looks to become the world's biggest welfare state economy, and the US remains addicted to borrowing from China to spend its way to depression.