Larry Elliott taxes the rich a bit more - again

The most economically literate journalist the Guardian has - and it's not saying much - is Larry Elliott.  This morning he weighs into the debate about taxing the rich.  I wrote a couple of weeks ago ("Labour's missing billions and the privileged few") about the problems inherent in this.  Elliott unwittingly confirms my conclusion - which was that increasing top rates of tax for high earners won't solve our fiscal problems.

He reports the conclusions of an IMF report which suggests that the rich, particularly in the US, might be undertaxed, quoting the following passage: "The implied revenue gain if top rates on only the top 1% were returned to their levels in the 1980s averages about 0.25% of GDP, but the gain could in some cases . . . be more significant".

"Applying the IMF's formula to Britain", writes Elliott, "would mean that the exchequer would raise an additional £4bn from taxing top earners".  If the IMF are right (although, as my "Labour's missing billions" post pointed out, an HMRC report from 2012 suggests that putting up top tax rates to 50% might actually have lost the Exchequer money rather than raised any extra), "applying the IMF's formula to Britain would mean that the exchequer would raise an additional £4bn from taxing top earners, since 1% of national output is about £15bn".

In case you think this is a large sum of money, it isn't.  Even Elliott admits "This is not exactly a fortune". What he doesn't tell Guardian readers (assuming any of them actually read the economics page) is just how small a sum it is.  The UK has to borrow £4bn on the money markets about every ten days just to keep going.

So when you've taxed the rich a bit more, then what?

The idea that the massive gap between what it takes to run Britain (as currently constituted) and the nation's income can be filled by taxing the rich more is the political equivalent of one of those 19th century quack cures like Ward's Drop.  People want to believe it will work, but they don't want to know too much detail in case the detail reveals that it won't.  That's why Elliott left "This is not exactly a fortune" to his last para and didn't enlarge on the consequences.  He could for example have pointed out that even raising an extra £4bn still left a further £116bn unfunded at current deficit levels.

The maths imply only four choices for us.  One, tax everyone a lot more, and not just the rich.  Two, cut spending.  Three, a combination of one and two.  Or four, go bust.

Wilshere for England

The other day I watched from the Old Trafford stands as, late in a game against Liverpool, David Moyes brought on a late substitute, the young Belgian winger Adnan Janujaz.  A slight stick-like figure, uncannily similar in shape to the young Ryan Giggs, Janujaz received the ball wide on the right, faced the defenders in front of him with a wiggle of the hands as if to say, "Come and get it if you can", shaped left and right, then with a shift of his hips left them all standing.  He might be a wunderkind - it's too early to say - but he looks at the very least a good prospect.

And he might just play for England.

How can this be? Janujaz was born in Belgium, but could also play for Albania via his parents or Kosovo (if they had a senior team: they don't).  He turned Belgium down when offered, and has said he would prefer to play for Albania.  But Roy Hodgson has said the FA are monitoring Janujaz with a view to calling him up to play for England in due course, taking advantage of a 5 year residency rule - news which caused the Arsenal and England midfielder Jack Wilshere to comment a few days ago, "The only people who should play for England are English people . . . If you live in England for five years it doesn't make you English. . . If I went to Spain and lived there for five years I'm not going to play for Spain".

Wilshere is largely right (though I suspect that the unlikelihood of his playing for Spain rests less on personal preference and more on not being good enough to attract a Spanish domestic club in the first place).  But of course the key is, who exactly are English people?  Janujaz, who has been at Man U for two years, hardly qualifies.  But what about other British sporting greats?

Mo Farah came to England when he was 8.  That seems fair enough. Kevin Pietersen didn't come to Britain till he was 19, and opted to play for England to avoid the racial quota system in his own country. He's South African.  So are Jonathan Trott, who came here aged 20, and Craig Kieswetter.  Chris Froome has raced under a British licence on the basis of his father's nationality but otherwise has almost no personal links with the UK.  Bradley Wiggins on the other hand, though born in Belgium, went to school in North London.

Why is any of this important?  Because international sportsmen represent their country.  When England run out onto the pitch we want to know that however rubbish they may be they are nevertheless a product of the same climate, language, diet, geography and culture as we are.  Otherwise we can't identify with them. Simple as that.  Even though Monty Panesar wears a turban and has a brown skin, he's very obviously much more English (ie, bad at fielding) than KP, who frankly I wouldn't have in my house.

In an attempt to refute Jack Wilshere the journalist Paul Hayward, writing in the Torygraph this morning, cites the examples of Mo Farah and Jessica Ennis, who, startlingly, is apparently "mixed race".  Who knew?  But as we've seen Farah came here when he was 8, and as for Ennis, she was born in Sheffield and no-one gives a bugger about race any more (at least not in sport, a results based business): truly I have never, not once in many years spent haunting football terraces, ever heard anyone say, "So and so shouldn't play for England because he's black".  Never.  So in a way it is heartening to see that Wilshere has reservations about Janujaz, who looks white to me, because he is not English.  

You don't have to be born in England to be English.  But having grown up here certainly helps.

Lady Chatterley, the Y-word and creeping censorship

I don't remember much of the 1960s (because I was too young, not because I was off my face all the time), but I know that until 1968 theatre productions in the UK were regulated by the Lord Chamberlain's office. That's to say, if you wanted to put on a play, you had to get a licence.  This seems extraordinary now, but it's all of a piece when you consider that Penguin books were prosecuted for publishing Lady Chatterley's Lover as recently as 1960.

How freedom of speech has come on! Now you can say - or show - pretty much anything you like.  Hard core pornography is available at the touch of a button, and Channel 4 puts on a show called Sex Box which, apparently, features couples having it off and then talking candidly about it on screen.

Oh that D H Lawrence should have lived to see this hour!  Oh Mariella Frostrup that your career should come to this!

Well not so fast.  I wonder whether in fact we have not reached the high watermark of liberty, and whether the tide is now ebbing.  It was depressing to read that at the weekend a Spurs fan was arrested for being one of thousands of Spurs fans shouting the word "yid" at White Hart Lane.  As I wrote a couple of weeks ago, the Y-word is not a racist slur, and in the football context it is not even anti-Semitic. Now a yobbo from Kent gets prosecuted for posting on Facebook a picture of a burning poppy captioned with the words, "Take that you squadey (sic) c---ts".  Now UKIP's crappy Godfrey Bloom gets booted out of the party because the media wilfully misunderstands his use of the word "slut" and Nigel Farage won't stand up for him.

We live increasingly in a world where you cannot say what you like, or at least not if you say something the chattering classes (people like me, in other words) find unacceptable.  The sad irony is that advances in freedom of speech were driven by the Liberal Left - the Conservatives lost that argument comprehensively around the time prosecuting counsel Mervyn Griffiths-Jones asked the Chatterley jury, "Is this a book you would want your children or servants to read?" - but it is the Liberal Left which is leading the charge back to censorship. It sometimes seems to me that there is a range of opinions which it is legitimate to hold, and within that range you can say what you like.  But should you stray outside, woe betide you.

Too many people in Britain fail to understand that there is no right not to be offended.  And that true freedom of speech involves other people being able to say things you really don't like.  That's a freedom worth having because it gives you the right to say things they don't like either.  That the decline from this ideal should be driven by the same political group that was instrumental in giving it to us in the first place I find desperately sad.

P.S. A couple of days ago at the LSE freshers week two students from the University's Atheist Secularist and Humanist Society were told to cover up "Jesus and Mo" T-shirts (you can read the satirical online cartoon here), on the basis that they were "offensive" and might be considered "harassment".  Yes, that's right.  The LSE founded by George Bernard Shaw and Sidney and Beatrice Webb, forefront of 60s student radicalism, telling a pair of students what they can and can't wear. The wearing down of freedom of expression goes on and on.

Life cycles

A couple of weeks ago some toerag broke into our garage and stole the family bike.  Eventually its loss began to be felt and I was sent to Halfords to buy another one.

Having dashed his hopes of selling me a £1,000 model, the young sales assistant and I fell to discussing the cheapest and second cheapest instead.  Pressed about the difference, he said, "Well this one's got 21 gears, whereas that one's only got 18".  I had to laugh.  "When I was your age", I said, "we had Sturmey and Archer three-speed and thought we were lucky", shocked to find myself sounding, and not for the first time, exactly like one of the Four Yorkshiremen.

The shop assistant wouldn't have been thinking this, because he was far too young to know who the Four Yorkshiremen were.

The other day my son went away to University.  I don't remember much about my first experience of going away to school, aged 11, except there were many moments when having to hold it together was almost overwhelming; and some when it actually was.  But I do remember going away to University, less traumatic for the experience of boarding school, and I am therefore all the more bemused to be in the same situation thirty five years later, except this time playing the role of Father instead of Son.

Truly I have become my Dad.

What to make of this?  Life is not exactly a circle.  If it were, I'd be the Son still.  Perhaps more like a shallow spiral, where, having come all the way round, you find yourself tantalisingly close, unreachably close, to where you were decades previously.

No doubt these thoughts, perhaps true, are cliches.  But being cliches none the less true.

George Osborne and balancing the books

One striking thing about George Osborne's Tory conference speech yesterday was his pledge to run a budget surplus in the next Parliament.  You would imagine no Chancellor would have to say such a thing.  It would be the obvious aim of anyone in control of the purse strings, just as it would be the obvious aim of any footballer to try and win a game.  And yet years when budget surpluses actually happen are as rare as hen's teeth.  Since 1963 British governments have only managed it seven times.  It's a measure of how used we have become to living on debt that Osborne can make this announcement and people act surprised.

I hope Osborne can make it happen, amongst other reasons because it will flush the Keynesians-lite out of the woodwork. Since the financial crash it's surprising how many people who remained silent on economics during the Brown boom have been telling us that they were Keynesians all along, and that the solution to our problem is Keynesian deficit spending.  They forget that there are two parts to Keynes, the easy and the hard part.  The easy part is the spending bit.  The hard part is saving money during the good times so that when recession comes the Government can pump-prime the economy.  Where was Ed Balls during the Brown boom?  At Gordon Brown's right hand, is where.  Running a deficit, year after year.  How dare he urge deficit spending now.

It was an aide of Ronald Reagan who delivered the surprising apercu that what cannot go on forever must stop.  Deficits can go on for a long time, but unless the economy is growing dramatically the aggregate of debt to GDP balloons as well.  When Labour came to power in 1997 the ratio was 40%, widely regarded as manageable.  But because of the credit crunch and Labour's spending it has risen to about 90%, considered by economists to be not far below the level from which it becomes impossible for a state to recover, as rising interest payments increasingly dominate a government's spending.  Don't forget that QE money has been poured into buying up UK gilts, keeping the prices down.

Osborne was right to warn yesterday of the risk of another recession - considerable, if the wheels come off the Euro wagon - and the consequences this would have for the UK's debt stock.  In a recession we would be running a deficit again, like it or not, with an effect on debt-to-GDP which can only be imagined.  As I've said repeatedly, I think Labour will win in 2015.  I don't expect Chancellor Balls will be aiming for a budget surplus.  The rest of us had better hope we don't have another recession.

Ed Miliband - a rising tide of folly?

"Now the rising tide just seems to lift the yachts", said Ed Miliband in his conference speech.  It marks another step in the progress of Labour's criticism of Coalition economic policy.  First austerity would kill growth; then when growth returned it was the wrong sort of growth; now it is growth which is making the rich richer but not the rest of us.  Living standards are not rising, goes the complaint, gilded with a little class war to get the faithful's juices flowing.

There are several things to say about this.  Firstly, the economy has only been growing modestly.  Secondly, it's only been growing for about six months or so.  Thirdly, real living standards haven't been growing for some time, and in fact for young workers started to fall about ten years ago, when Labour was in power.

But it's the fourth point that's the most important.  Why does Miliband (and everyone else) assume that living standards must rise inexorably?

If we have learned anything from the credit crunch it is surely that the West has used debt to plug the gap left by reduced national income. In Britain, manufacturing industry went overseas - more than a million jobs in manufacturing lost during the Blair years - to people that were willing to work for a dollar a day.  These people had far, far lower living standards than we did (although, interestingly, they still thought it better to live in poor conditions and work in a sweat-shop than labour in the paddy fields all day - Apple's critics please note).

Here, our living standards carried on rising, defying gravity, but only because government, house buyers and consumers took on eye-watering quantities of debt.  In Britain the level of personal debt when Labour came to power was about £500 billion.  In the following fifteen years it trebled to £1.5 trillion.  That's £1,500,000,000,000.  There is a limit to how much more we can take on (although surely we will try).

Actually it's possible to argue that we got into difficulties precisely because we wanted higher living standards.  In the post-war years this demand made our wage costs higher, and our industries less competitive. The newly rich economies of the Far East, looking for somewhere to park their money, were happy to lend it back to us so we could carry on buying their goods.

So I don't expect to see living standards rising much any time soon.  And I wonder whether they would be a good thing anyway. Consumerism is shallow, and its devotees boring.  I used to think that prosperity would make people cultured and civilised, but it actually just makes them go out and buy the stupid tat they fetishised before they had money.  Perhaps that's capitalism's fault.

Moreover, the higher wages are in Britain, the more difficult it will be for us to keep the manufacturing jobs we have and perhaps even make new ones.  I would much rather see living standards stagnate but more people have jobs, and I sometimes think the best hope for us is that people in the Far East have living standards which gently rise while ours gently fall to meet somewhere in the middle.  It might mean that people would turn their faces away from consumption a little.

But falling living standards is the cri du jour.  Expect to see many more cries for higher wages from the economically illiterate before 2015.

Why I love . . . #10 Jennifer Aniston

I know you're expecting me to come up with something trite about Jen's turn as Rachel Green, the sexy girl next door in Friends.  And for a while in the 90s my wife and I did watch the show religiously, splitting a bottle of wine on a Friday night and hoping two very young children would stay asleep upstairs.  It was well written, for all its fakeness (no blacks, no drugs) and for all that it told you as much about TV production values at the end of the American century as it did about human nature.

But no.  I love Jen because I think she is a really good comic actress.  Last night, during the two hours we had to kill while our daughter - not even born in Friends' heyday - was in a rehearsal, we went to see We're The Millers.  The fact that Aniston's name was on the poster was off-putting rather than the reverse, because she has repeatedly appeared in the dreckiest rom-com rubbish opposite sleazeballs like Vince Vaughan.  But We're The Millers was really good (if you are amused by people being bitten on the testicles by a large spider; I am).

Aniston plays an ageing stripper (she's 44) who is lured into taking part in a drug deal by a small-timer who needs the cover of an All-American family to get a trailer full of cannabis across the Mexican border.  An awkward teenage boy is recruited to play the awkward teenage son; a homeless girl is the rebellious daughter.  The film riffs on their burgeoning attempts, being alone in the world, to form family ties of their own.  It could have been excruciating, but it's very funny (very crude) and actually quite touching; and a lot of this is down to Aniston.

Surgery or no surgery, her face has worn well.  It lacks the freshness of the sit-com years, but Aniston uses the certain gauntness which has now set in to good effect.  I never noticed before that she has rather a mean mouth; actually she probably doesn't have a mean mouth; she probably made it look mean; but it works for the character.  And as always in Friends, her timing is impeccable. For those who doubt whether We're The Millers is quite the thing (and it isn't), the moment in the closing credits when the crew surprise Aniston with the Friends theme tune is by itself worth the price of admission.

It's an enduring mystery to me why someone so famous, for whom all Hollywood doors must have opened, could have ended up making so many turkeys.  Bad judgment?  Bad advice?  If you're reading this, Jen, take it from me - Shakespeare is the way to go.  I would pay good money to see you as Beatrice in Much Ado. Or Kate in Taming of the Shrew.  Come to England.  Do some theatre.  It worked for Kevin Spacey.