Photo by Troy Mahr

In the news today is the resignation of Iain Duncan-Smith from his Government ministerial role at the Department of Work and Pensions. His complaint appears to be that the Treasury (i.e. George Osborne) is whittling away at all his plans for sensible benefit reforms so they can hand out ever bigger tax cuts to the already rich.

There’s an overwhelming priority in politics, and probably in life generally, to be consistently right about everything. Any departure from this saintly position, any failure to measure up to the necessary level of perfection, is unacceptable and will be punished in the harshest possible manner. Politicians will see their reputations trashed gleefully by the press, who love nothing better than to knock the high and mighty off their perches (when they’re not hounding benefit scroungers, of course).

The constant need to maintain such a position is at the heart of our adversarial political system. It’s not acceptable to seek the advice of others and to work in a collegiate manner; you have to be Right, with not a trace of doubt. Even if you know nothing of value about a subject, pick a position and stick to it no matter what happens around you. Reeds bend to the wind but oak trees stay firm. Right up to the point the wind knocks them over completely. Interestingly, in this crude analogy the press can probably be regarded as reeds, albeit ones that like to loudly trumpet the virtues of oak-ness. Siren voices, to mix the metaphors.

British politics across the parties is composed mostly of oak trees and the storms are getting stronger. The prevailing wisdom is little changed in decades; it’s still about high tax versus low tax and it’s still about what Britain thinks and does in a world that is increasingly dominated by mega-corporations. The solutions being presented are still the same, and they are still all about fiddling with the details, not examining the fundamentals.

The fundamental problem facing the British economy is we’re running out of ways to save money. The prevailing dogma, as espoused by the Conservatives and by the still-dominant Blairite wing of the Labour Party, insists that the way to balance the books is to trim a little here or there, raise this or that tax so we can incentivise the wealth creators to solve the problems facing us. This is the same dogma that was mocked by Edward Heath in 1989 when he likened Chancellor Nigel Lawson to a “one-club golfer” stuck in a bunker. But we’ve reached the point where there simply isn’t any money left to take without seriously degrading the services that so many of the population depend on.

In 1974, Shadow Chancellor Denis Healy promised that if he were in power he would “squeeze property speculators until the pips squeak”, but these days it’s the poorer sections of society who are squeaking. The tabloid press, run by barons with little affection or respect for the majority of their readers, instead preferring to exploit them to the limit, have seized on this discomfort and turned it into a witch-hunt against all things European. By discouraging any real analysis of the benefits or otherwise of EU membership they are able to loudly promote the views of people who have their own agendas, ones that will benefit from the isolationism that is driving the Out campaign. In our search for gurus we rarely stop to question the true motives of a stockbroker or a politician whose term is nearly up, especially if they can be relied upon to deliver an entertaining series of quotable statements.

However, the issue of EU membership is not the point. Leave or stay; we might be better off or we might be worse off. It’s all a temporary distraction from what’s really going wrong; the elephant in the room that is now getting restless.

The trouble is, for decades we got used to the idea of living standards rising steadily. They rose a lot more for some than for others and now they’ve stopped rising for everyone except the richest. We have a party in power whose natural inclination is to support those wealthier parts of society, and they are ably assisted by most of the press. Since 2008, living standards for everyone else have faltered, but so far the blame has been deflected onto outside factors, most notably the EU. Come the summer this will all stop. There will no longer be much political mileage to be had from blaming the EU, because we will have voted either to live with it or to walk away from it.

For the rise in living standards of the wealthiest part of the population to continue, one of three things must happen. The first, and least likely, is a sudden return to global prosperity. All the signs are pointing in just the opposite direction, so we can forget that one. The second is to continue the present policy of slashing expenditure, increasingly on services that people depend on. This is treading on dangerous ground. There’s a limit to how unpopular a Government can be with its own people and there are signs we are approaching that limit all too quickly. Maybe they can hold out until 2020 but their chances of re-election become slimmer by the day.

The third option is the one that the dogma won’t permit, and that is to rebalance the economy so that the people who do the best out of it contribute the most to it. This means reversing the growing inequality between rich and poor that has taken decades to build up. It’s actually quite simple to do if you have the political will; it’s even been tried by figures as unlikely-sounding as Winston Churchill, but vested interests have always defeated it. As things stand we tax income at a high rate but assets at a much lower rate. The one asset that carries virtually no tax is land. It is possible to balance the economy and ensure that anyone on or below average national income would be no worse off, by abolishing income tax and National Insurance and levying tax on land values instead. Ordinary house-owners would pay tax on the rateable value of their properties, but less than they currently pay in income taxes. If you want to know more about rent reform go to the blog of the economist Fred Harrison. But forget about any chance of it happening; it’s far too radical.

So I’ve come up with 3 scenarios, two of which can’t happen, leaving just the most destabilising one that may well result in a very left-wing Government being elected in 2020 and a very uncertain future thereafter. In the mean time we’ll have to undergo a lot more pain and a lot more being lectured by politicians who think they are always right about everything.

Actually there’s a fourth option. We could abandon the myth that we always know what to do, that we’re always right and that we don’t need to listen to anyone, that all we need do is stick by our tried and tested policies. We could seek a consensus, aim to be truly fair and to help the weakest in society by asking just a little more from the ones who can afford it. We could ask our newspapers to stop peddling messages of hate and to report honestly on both sides of every issue.

But that wouldn’t be a very British thing to do. After all, we’re always right.

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