Jeremy Corbyn, candidate for the Labour leadership, has come up with a string of economic pronouncements. And they are all stupid, showing kindergarten levels of economic competence, at best.
Firstly let’s shoot down Corbyn’s backing from 40 “economists”. Any critical analysis totally destroys any credibility this claim might have. Here Ryan Bourne expertly deconstructs their claim: “Forty left-leaning economists can easily be rustled up to express support for a left-wing agenda in a left-wing newspaper with left-wing readers” and “this was not a group of “leading economists” by any stretch of the imagination……. it’s reasonable to note that none of the signatories is currently employed at Russell Group universities. Some aren’t even trained in economics, and others are retired left-wing activists.” And so on. Read the article.
Labour lie by using the word “austerity” to describe good housekeeping, of keeping government spending under control. In Britain there is no real austerity, our economy is the biggest it has ever been in history and is the fastest growing in the G7. More people are in employment than ever before and there are more job vacancies than there are job seekers. Even a Keynsian must surely recognise that this is the wrong time for government to stimulate the economy by spending more. Corbyn does not understand this.
Take a look at the graph above and you can clearly see how Gordon Brown lost control of government housekeeping and how George Osborne got this back under control, not by huge cuts in spending but by stopping the out of control rises in spending and then by increasing the tax take to close the gap. Corbyn does not understand this at all.
Corbyn has invented something called People’s QE, which is not QE, but he doesn’t understand that. His idea is to force the Bank of England to print billions in new money so that he can spend it on his nutty socialist ideas. Here are the problems with this lunacy:
- Printing new money like this devalues all existing money, so the pound in your pocket is worth less. You are being robbed. Labour tried this before and both Attlee (30.5%) and Harold Wilson (14%) were forced to devalue the pound as a result. Obvious really.
- Putting extra money into the economy kick starts inflation which then gets out of control with wage push and price pull. Once again Labour have got us into this spiral before and Corbyn wants to take us there again.
- To try to control exchange rates with all the extra money sloshing around and to reign in inflation there would be no alternative but to raise interest rates into double figures. House prices would collapse as the cost of borrowing became prohibitive and millions would be thrown into negative equity.
- The conceit of the man is amazing when he thinks that he knows how to spend money better than ordinary people do, than businesses do, than the market does. Corbyn really does not have this knowledge and ability. Nobody does.
- Corbyn says he will sack Mark Carney, the governor of the Bank of England, if he doesn’t do what he is told. So Corbyn knows more about central banking than probably the best central banker in the world and he wants to politicise our central banking functions. This is Stalinism, and we know how well that worked.
Corbyn’s manic ignorance about numbers includes proposing large reductions in the £93bn of corporate tax reliefs and subsidies. He got this number from the Corporate Welfare report by lefty Kevin Farnsworth, but didn’t look at what it was made up of. £16bn of it is working tax credits. So Corbyn is proposing taking this huge lump of money off the least well paid people in Britain! And much of the rest is capital allowances on investment in new equipment. Stop this and you cripple the economy. Farnsworth’s figure also includes £6.7bn that companies benefit from by the existence of the NHS and £29bn they benefit from by the state educating people. So Corbyn is proposing cutting both the NHS and education by huge amounts. Why aren’t the MSM reporting this?
Corbyn says he will magically raise £120bn in missed revenues from defaults, evasion and avoidance. But this figure was made up by Richard Murphy, yet another lefty. It is pure fiction. When you consider that total income tax currently collected is just £157bn you can see how utterly ridiculous this figure is. And collecting missed revenues is notoriously expensive, often it costs more in government administration costs than the amount collected. The Treasury themselves say that missed revenues, mostly in the “black” cash economy are £35bn. A more believable figure and the only way to reduce it is by getting rid of cash! So once again Corbyn is misleading those who listen to him.
Corbyn wants to create a National Investment Bank so that he can throw money at projects which the market doesn’t think are viable to invest in. The arrogance here is utterly amazing, there are a huge number of sources of finance from crowd sourcing and business angels through to the AIM market and corporate bonds. But Corbyn thinks that he knows better than all these people how to invest in our economy. And he is very evidently utterly wrong.
I remember the Wilson and Callaghan governments when the state owned many companies that provided us with goods and services. They were execrable, they had no need to look after their customers, so they didn’t. They had no need to be efficient, so they weren’t. Luckily for us many were returned to the market and now provide us with vastly better and more efficient services. Corbyn wants to reverse this. He thinks he can run all these major businesses better than the market can. The conceit is staggering. Pure Dunning Kruger effect. But, amazingly, he has hinted at renationalising without compensating the owners. In other words stealing. This would instantly stop any investment in the UK and lead to an exodus of businesses making sure they weren’t stolen from. The economy would be a train crash.
Now take a look at the graph above. It demonstrates the Laffer Curve. When Gordon Brown put up the top rate of tax from 40% to 50% the rich people refused to earn money and so the total tax take went down. When George Osborne reduced the rate they were happy to earn money again and the government’s tax take went up. Any economist understands this but Corbyn doesn’t, he wants to squeeze the rich by putting up their tax rate. But this will bring in less money for the government.
Lefties are driven by bitter envy, so they always seek to punish people more successful than themselves. This is why Corbyn proposes a maximum wage. Considering that it is only the rich (see above) who actually pay tax in the UK this would really hurt government finances. More than that it would force highly successful people to move abroad and to pay their taxes in other countries. Bankers who earn millions by putting together deals worth billions. Industrialists like electrical goods manufacturer James Dyson. And, perhaps most galling for Labour voters, the entertainers would go, such as premiership soccer players. Our clubs would become a joke with no good players. Once again Corbyn displays amazing economic incompetence.
And so it goes on. Corbyn is economically illiterate and would trash the British economy. I wrote an earlier article about how he admires Venezuela and wants to bring their disastrous brand of socialism here. Since when Venezuela has been forced to impose martial law so as to enforce privation and suffering on their unfortunate people. And still this is what Corbyn wants.