Thursday, 6 August 2015

Corbynomics is failed trotskyite economic theory by another name - and more people should be taking him on

The reality of economics, and politics, is that when something appears too good to be true it is too good to be true. The ideas that Corbyn is putting forward in his quest for the Labour Party leadership have been seen before in countries like Russia, Greece, Venezuela - all countries who have tested to destruction the theory that he now espouses. I will attempt a short appraisal, with help from a few sources:

1.Quantitative easing for people: in reality print more money for the people, and create more public debt. The reality is that this will have an inevitable impact on inflation and the examples of countries who have tried this is a salutary lesson.
This approach was also debunked by the Shadow Chancellor, Chris Leslie MP, a Labour MP who is not exactly a free market guru: Leslie said:
"I’m afraid some of those solutions, the policies offered on the hard left are not all that they’re cracked up to be. In fact, they risk hurting some of the most poor, the most vulnerable, those on the lowest incomes.
Take, for example, this suggestion that there should be the people’s quantitative easing – in other words, the Bank of England should be able to just turn on the printing presses and magically deal with all the public service and public investment needs that we have. 
Of course, at one level it sounds fantastically easy: if there’s a shortage of money, print some more; the difficulty is if that then provokes higher inflation, if that then means interest rates go up, who will pay the price for that? It’s the poorest and those on the lowest incomes who already find the cost of living very difficult. And I think it’s that sort of issue we now need to confront.’

2. Increase taxes for businesses: - strip out all of the tax reliefs and subsidies on offer to small and larger employers. These allegedly amount to "£93 billion a year – money which would be better used in direct public investment, which in turn would give a stimulus to private sector supply chains".
The full Corbyn quote is here:
‘You just cannot cut your way to prosperity so Britain needs a publicly-led expansion and reconstruction of the economy, with a big rise in investment levels. Under these plans Labour 2020 will make large reductions in the £93 billion of corporate tax relief and subsidies.’

- So why would you set up and / or expand a business in the UK? We are in a competititve global market. If a busniess is going to be taxed to extinction then why come to the UK? Again these poilices have been tried and failed. Remember the Labour chancellor Denis Healy asserting in the 1970's that he would "Squeeze business until the pips came out!" Britain went bankrupt and ended up needing an IMF bailout.

3. Bear down on small businesses: Corbyn wants to reform small business taxation to discourage avoidance and tackle tax evasion.
- So it is an attack on SMEs up and down the country as well, the corner shops, the small businessman and woman? Our country needs more help to SMEs not less; if every small business takes on another worker, another apprentice we will all benefit. The problem is that Corbyn is attacking those small businesses.

4. There is a call for greater regulation, a stonger and more powerful role for trade unions, and generally the state knows best on everything.

- I think that a country's economy and businesses are created by its people and their aspiration and entrepreneurship not by forced actions of the state - Corbyn definitely does not think this.

5. I don't even want to start with foreign policy issues, and the Corbyn friendships with everyone from the Hamas to Sinn Fein / IRA. But hopefully you get the drift.

It is a depressing sight that not enough people, even within the Labour party, are taking this claptrap on. I can only repeat that a win for Corbyn would be a disaster for the Labour Party, but also very bad news for the country. I, as a Conservative, want a reasoned intelligent opposition, not something led by a failed communist who is a laughing stock in the House of Commons.