Some of our spivocrats have a bee in their bonnet. Some, a burr under their blanket. However, in both instances the irritant is the same: money in other people’s pockets.
The LibDem part of the coalition is mostly driven by the traditional socialist vice: envy, and the irrational hatred of the well-off it engenders. I must emphasise that this lamentable animus is indeed irrational, for anyone with a minimum of economic savvy will know that attacks on the top 10 percent of earners are tantamount to a broad-front assault on the economy as such.
Vince Cable, known among his admirers, such as myself, as Vinnie the Poo, possesses more than a minimum of economic education, so he knows this as well as anyone. Yet self-admittedly his viscera override his mind every time.
For example, when the area in front of St Paul’s was tastefully decorated with malodorous canvas dwellings, our venerable Business Secretary declared that he had ‘sympathy with the emotions that lie behind’ the tent city. ‘Some of their recommendations aren’t terribly helpful, but that’s not the point.’ I agree: never mind ideas — it’s emotions that count.
Driven by his noble feelings and nonexistent ideas, Mr Cable himself ought to have moved into one of those smelly tents, doing on the floor of St Paul’s what he is doing to the British economy. It has to be said that, in choosing emotions over thoughts, Cable has form. Not so long ago he defended the 50-percent tax rate by saying that, though the financial effect of it is negative, it does send the right message. Again I agree; it does. And the message is that in today’s Britain talent, hard work and enterprise will be severely punished — preferably by banishment out of the country.
These days, beaten over the head by the predictable fact that the 50-percent rate is losing the Treasury billions, he’s prepared to abandon it and punish ‘the rich’ in other ways. Such as the frankly idiotic ‘mansion tax’, punishing, among others, poor old widows, who bought their houses for a tuppence 50 years ago, without realising that one day they’d cost millions. Considering that over the last 50 years asset inflation has outstripped the money kind sevenfold, this situation isn’t so much exceptional as normal.
Consequently he wants to launch yet another raid on private pensions, and he’s joined in this iniquitous undertaking by — are you listening? — the ‘Conservatives’. Now this lot for the most part don’t share Vinnie’s phobias, at least not the ones I mentioned. Their motivation, also driving Vinnie and his ilk, is more profound and therefore pernicious.
Private pensions large enough to provide for people’s old age render such people independent from the state. Our spivocrats, regardless of what slogans they choose to appeal to what sections of the electorate, hate that. They don’t want Englishmen to be free, loyal subjects of the Crown. They want them to be the state’s clients and therefore slaves. Just as a slave’s livelihood, sometimes life itself, is at his master’s mercy, so do our spivocrats crave to create the same relationship between them and us. They don’t mind that we resent them; it’s not our respect they want but our docility. And, short of concentration camps, what better way to ensure that than keeping their hands on the taps through which our retirement money flows?
It’s not by accident that one of the first acts of Tony Blair’s New Labour was an annual £5-billion raid on private-pension funds. They are a soft touch for hard feelings. And although our Coalition is drawn from the other parties, the raid has since then turned into a rout.
A few figures, if you can bear with me for a second (I hate maths myself, but it’s useful when one wishes to make a point about money). Our pensions funds have lost 3.9 percent of their value since last July. As a result, annuity income from every £1,000 has dropped by 10 percent. The national shortfall in corporate schemes is a whopping £470.7 billion, and rising. And it’s not as if the state’s generosity made up for these catastrophic tendencies.
In fact, 30 percent of British pensioners live below poverty level, defined as less than 60 percent of the average income. The corresponding figures are 17 percent in Germany and 13 percent in France. In Europe, only Cyprus boasts a higher proportion than ours, so we find ourselves in good company. A few more years, and we’ll be sharing this ranking with Guinea-Bissau.
Much has been made of the increased demand for British bonds in the financial markets, hit hard by the domino effect of the EU on most European economies. Of course, it’s bonds that back annuities, so this ought to be good news for the pensioners. But it isn’t — they find themselves on the receiving end of the unrepealable law of supply-demand.
As the demand for British bonds grows, so does their price. Not only does this then reduce annuity rates, but the soaring costs lead to corporate schemes having to invest greater amounts, which could otherwise be used for jobs and productive investment. And our government’s incontinent quantitative easing, queasing for short, is pulling in the same direction. To prevent this fiscal incontinence from driving inflation into double, and possibly triple, figures, the state has to keep the interest rate at practically zero — hitting savers and pensioners with another whammy.
Everything is interconnected. For example, the higher the marginal tax rate, the less investment, the fewer jobs, the more economic emigrants, the greater the numbers and the fatter the pay cheques of the unproductive gang of those who devote their lives to helping others avoid — and, given half the chance, evade — taxes.
And so our spivocrats’ fiscal policy will affect people’s economic behaviour in all sorts of ways, few of them commendable. Saving, be it in private pensions or anywhere else, will dwindle away: the sacrifice will no longer be commensurate with the return. Instead people, most of whom aren’t natural-born investors, will be taking punts on variously wild get-rich schemes — or else relying on property as something that, unlike pension funds, is unlikely to disappear altogether.
Vinnie and his Tory accomplices will get those who succeed in some other ways: a version of their ‘mansion’ tax, wealth tax, the closing of tax loopholes, you name it. And those who fail will fall into the eagerly awating clutches of the state. Job done, the spivocracts can’t lose. We, however, can. And are. And will.