A Tax on the Stupid

Y'know, a lot of people used to call the National Lottery a tax on the stupid. I don't think that's quite fair - it is a tax on the idiotically optimistic. Sure, you're pretty stupid if you enter the lottery but in the near impossible circumstance that you won, not many people would be remarking on that stupidity. Unlike, say, if you gave money to the last government in return for one of their pointless, invasive and pointlessly invasive ID cards.

Therefore, I've got no sympathy whatsoever for people affected by this:

Labour have failed in attempts to get compensation for people who bought ID cards, which are set to be scrapped.

They say thousands of people who voluntarily spent £30 on cards did so in "good faith" and should be refunded when next renewing their passports.

But they lost a vote in the Commons during a debate on proposed legislation to abolish the cards.

If you got an ID card before you had to, then you are either a Labour minister, utterly thoughtless or blindly obedient to the state. All of which suggest you are a person of limited intellectual capacity. Furthermore, if you paid for an ID card knowing that the opposition parties opposed them and that opposition party would almost certainly form the next government, then you are doubly stupid. Basically, you wasted your money. You lost out on the money you sunk into the ID card scheme. Boo-fucking-hoo for you.

Normally I support the government returning whatever money they can to the people. In this case, though, I don't - partly because they cannot afford to refund those stung by this scheme. The entire ID card folly cost the taxpayer millions - each ID card is estimated to have cost £20,000 each. This isn't just government waste - this is government waste pumped up on speed and steroids. The comparatively small amounts of money individuals have lost by signing up to the scheme is gone - as is the taxes of many others who had to pay the government under duress for this scheme, even if they didn't get an ID card and thought the whole thing was a shit idea from the very start. If you paid for an ID card, you don't deserve a refund. You're just a bit dumb.

Which is perhaps the sole achievement of the ID card scheme - it finally managed to create a tax on the stupid.

*That* Rescue Plan

And, as banks throughout the world failed and floundered, the nation looked for a new sort of hero. The right type of man for the situation. Some sort of true hero for difficult, trying and testing times. And at the point, from a dark corner in Downing Street, the least likely hero stepped forward. A shrivelled, contorted angry shadow of a man came blinking into the media lights, his wallet bulging, and he gurned his face into something vaguely resembling an arrogant smile. And he started to spend the money in his wallet, believing this was the way to save the banks, and therefore the market, and therefore the nation, and therefore the world.

And so, Generous, Gallant Gordon was born.

You could be forgiven for reading some of the headlines over the weekend and coming away with the thought that Gordon Brown has pretty much – single handed – stopped the crisis currently gripping the financial sector. The truth is somewhat different. This plan is nowhere near as philanthropic as it first appears. Which is hardly surprising, given it comes from one of the most controlling British governments in recent history. It also might not end up being as good as it first appears for Gordon, although the vast majority of this country don’t care anymore if Gordo suffers a wee bit. And finally, it really isn’t the perfect reason for further state control, despite the ramblings of the likes of The Guardian and its *columnists*.

The Plan

Here’s how it works. The government offers a shed load of cash for struggling banks to prop up their balance sheets. Therefore the banks don’t go out of business. Magic. Crisis averted?

Well, maybe, but there are a couple of points I’d raise at this point. First of all, let’s be clear on this. This is taxpayer’s money being spent on the banks. This is your money. The government is essentially being superficially philanthropic with your cash. Some people will favour the government using billions of our money, others won’t. But let’s be very clear on this. It is your money being spent here.

And whilst the government is pretty dumb, it is not quite dumb enough to go into what is effectively a business deal without gaining some sort of concessions from the banks in question. So they will gain shares in those banks, and will also gain influence. Over what those banks do, over whom they employ, and over how much those employees get paid. The banking market is already highly regulated; this plan is allowing the government to buy an even larger stake in the financial sector.

You can argue that the government had to take some action to shore up British banks. However, don’t be naïve about what this plan means. Effectively the government has taken a substantial amount of your money and bought itself a large stake in the banking markets. For anyone who questions the efficacy of the government at the best of times, this will be a deeply concerning move.

The Impact on Gordon

With the likes of Polly Toynbee rushing to hug Brown again, you can probably forgive our Prime Minister (at least a little bit) for feeling quite smug this morning. He is playing up to the Labour loyalists with this plan, and is earning gushing praise from Old Labour. But after weeks of being about a popular as a leper at a child’s swimming pool with everyone in the country, Gordo is probably relieved to be getting praise from some sections of Britain. However, his attempts to buy a large stake in a number of banks with someone else’s money may yet come back to haunt him. Here are (come of the) reasons why:

1. Banking decisions: The government will win influence in the banks it helps to subsidise. Which means that, even if they don’t have an impact on the day to day lending decisions that the banks make, there will be a perception that those banks’ decisions are made in tandem with the government. So when the man on the Clapham omnibus doesn’t get his mortgage, or his loan, or to get to open a new bank account, he will not just be railing against the bank, but also the Brown.
2. The anti-bonus rhetoric: So, when the government buys a stake in a bank, there won’t be any bonuses paid. Some would argue that this is fair enough. But only some people within those banks will be responsible for the decisions that have put their institutions on the government breadline. Which means that those working for the banks part owned by the government will suddenly be being paid one hell of a lot less than those who aren’t partially in government employ (and therefore can still offer bonuses). The problem should be immediately obvious – talented people within the banking industry (who let’s face it don’t work for love of the job, but for the cold, hard cash) will go where it is most profitable. Which means that as government buy into banks in this country, they may well be forcing the best of people in their banks into the employ of the competition. And sending talent to the competition never makes business sense.

3. Taking the flak for the good times: Gordon has been very quick to criticise the banks now the shit has hit the fan. But for many years, the banks took risks and paid out big bonuses. Their lending decisions kept the property market afloat, and the economy booming. The bonuses paid out helped shore up the coffers of the Treasury. All of these elements, now being declaimed by the government as a “bad thing”, were either ignored or tacitly condoned by the government for over a decade. And who was the Chancellor in those years? Let me consult my Ladybird book of Chancellors… hang on… hang on… just skipping past the badger Chancellor… hang on…. oh, wait, it was Gordon Brown. Gordon maybe right to legislate and regulate now… but where was he when the seeds of this banking crisis were being sewn? Oh, he was loving the revenues and the economic boom, and wallowing in the fortunes heading in the direction of the Treasury like a pig wallowing in seven different shades of shit. Gordon had better be careful that none of his newfound cheerleaders scrutinises the causes of the crisis too much, lest they work out he is partially responsible as well.

Finally, I’d love to hear where the billions being spent to support the banks are actually coming from. As far as I was aware the government doesn’t have tens of billions of pounds hanging around in bank accounts, waiting to be spent. So, Gordo, where does the money come from? It will be less than popular if it becomes clear that the money is going to come from crucial government projects. It is going to be about as easy to swallow as cyanide if it becomes clear that taxes will have to go up to pay for this rescue plan.

Intervention isn’t the answer

There will be left-wingers crowing on for quite some time about how the government had to step in to rescue part of the private sector, and how such interventions could and should be the future. The reality is somewhat different.

The government has bought itself a massive stake in a number of previously much more autonomous organisations. The government has bought itself a massive stake in private organisations that were struggling. There is no evidence that this part-nationalisation will lead to an increase in profitability for the organisations in question, and no evidence that it will be that easy for the government to recover its money. In fact, government run organisations if anything tend to be less efficient (and therefore less profitable). Left wingers hoping that this government share grab is going to make the case for more government acquisitions in the private sector may end up being very disappointed. Historical precedent would suggest that this is not going to make the case for government intervention, but rather illustrate just how much money the government can waste when it sticks its oar into the private sector.

Ultimately, we need to be very clear on what this rescue plan is and what it means. It is a power grab by the government into the financial services sector using taxpayer’s money. It is going to mean an increase of regulation and government intervention into a sector already struggling to stay afloat. There is no real evidence that this rescue plan will save those organisations who take advantage of it, or make those organisations more efficient and profitable. Rather, this feels like an oppressive and draconian move by an increasingly socialist government to buy influence in a sector it fundamentally dislikes. It is like a doctor trying to remove an ingrown toenail by lopping off the patient’s foot. I don’t know how this rescue plan will end up playing out; I do know there is a lot to be concerned about as billions of pounds worth of our money is being spent like it is going out of fashion.

Gordon isn’t a saviour – he wasn’t when he was Chancellor, he hasn’t been whilst he's been Prime Minister, and he certainly isn’t now. The fanfare around this rescue plan shouldn’t disguise the fact that there is no guarantee of qualitative success, or that this plan will make financial and political sense for those who have paid for it (yep, you and me) in the future.

The Stamp Duty Farce

Fresh from his guest star billing at the Angry Baby Man's blog, The Moai has sent a couple of interesting links to me. To quote one of them:

'..Estate agents suggested yesterday that buyers might step away from sales amid the uncertainty over stamp duty, stalling the market between now and when any such decision is taken, which could be as late as October...'

The Moai says: It astonishes me that, through dithering, GB's govt is making things even worse, even when they try to help.... can they get ANYTHING right?

Any regular readers will know my answer to that question. No.

But seriously, just how fucking dumb is this government and the badger faced turd who represents it? I posted yesterday about how this policy probably won't work - now it becomes clear that not only might it not work, but it is actually fucking up the very market it is trying to help. Fuck me, how fucking stupid is that?

To say this government is incompetent is a massive, massive understatement. They are the shittest government in living memory; the very definition of utter crap. We would literally be better off with having a brain dead person as Chancellor. A brain dead person cannot, by very definition, do anything. Whereas Darling can - and with his inverted Midas touch, everything he goes near turns to absolute shite.

So a plea to Darling, and Brown, and any other cockwad in the Cabinet who is thinking about announcing or implementing a policy - don't do it. In fact, don't do anything. Please, for the sake of the nation, stop doing stuff. Every time you do, it goes wrong. The country will be better off if you stagnate and literally don't do nothing.

And you'd probably be more popular if you do fuck all, as well.

Election 2008: Intelligence is a plus, not a must

A victory each for Clinton and Obama in the Democratic primaries. So the race drags on. Increasingly the reporters must be enjoying what is effectively an extended holiday for them. I mean, as long as you put “Obama in the lead”, “No knockout blow”, “Narrow victory for Clinton” and “still in the race” into your article then you can pretty much send in the same piece, over and over again. Even the participants seem increasingly bored by the contest. The fight seems to have gone from them.

So we have to take comfort in those smaller stories. Those little encounters. Particularly the ones which embarrass those candidates wishing to fight an election campaign against a daft old man in the winter. Take this little moment for Obama, campaigning at a café:

“At the coffee shop, Obama got a bit of a surprise at one table. While talking to a trio of men eating breakfast, one handed him the bill. "This will seal the thing,'' he said. Obama accepted it, and later took it to the cashier and paid it. The only problem for Obama — he picked up the tab for Steve Czajkowski, a pastor at the local Community Church of Greenwood, and a Canadian citizen who can't vote.”

Magic stuff. Obama ends up buying coffee someone who can’t even vote for him. I suppose you could argue that he had no choice but to buy the coffee – after all, he would have looked tight had he asked for proof of their right to vote before putting his hand in his pocket. Still, fair play to the guys who effectively fleeced him. Although they may regret it if he becomes the most powerful man in the world.

Onto Hillary, who has been casually placing her foot in her mouth:

“Clinton fared no better at a morning event at the Indianapolis Motor Speedway with race car driver Sarah Fisher, one of the top females in the sport. Clinton tried out an analogy, comparing the economy to a race car, saying "if you want to go forward, put it on D - if you want to go backwards, put it in R.'' It was left to Fisher to tell the New York senator that Indy race cars do not have a reverse.”

In fairness, I didn’t know that those sort of cars don’t have a reverse gear either. But then again, I’m not heading up a multi-million dollar campaign that could afford people to do this, very basic, research for me. And when you think about it, it is fricking obvious that these sort cars wouldn’t have a reverse gear. You’d be a piss poor racer if you were driving backwards…

But until the Democrats actually put themselves into gear and work out who they want to contest McCain in the autumn, this sort of anecdotes are the best this campaign can offer. And for one of the two Democratic candidates, these stories will be all they have very soon. Because the time is drawing near when the race will be over for definite, and one of them will have to retire into relative obscurity. Or the US Senate, as it is sometimes called.