Monday, 28 October 2013

Russell Brand and Why He's Wrong

I've heard a lot about Russell Brand over the last couple of days, particularly an interview he gave following the New Statesman's decision to appoint him as a guest editor. So I thought I'd look it up. If you haven't seen it already, watch it here.

Brand is absolutely correct when he points out that our current corporatist model of governance doesn't work. It serves only a high-class elite, and pretty much ignores everyone else. He is also correct when he says that the vast majority of people are disillusioned and disenfranchised by the current system.

However, he is utterly wrong when he tells people to withdraw from the democratic process and resort to revolution. Revolutions kill people, and I can't think of a single example of a revolutionary movement that has produced a utopia. They produce war, death and starvation. They invariably involve replacing one dictator with another.
He is also utterly wrong when he makes broad-brush strokes describing his idea of this utopia - a socialist model based on the forced redistribution of wealth funded by heavy taxation of corporations. How many times does this model have to be tried, and ultimately fail, before people realise that it is a lie?

Every time such a system has been implemented, it has failed. Soviet Russia, Nazi Germany, Khmer Rouge Cambodia, Vietnam, Idi Amin's Uganda, and we're witnessing it again in North Korea. If you deprive the most productive people in society of the fruits of their productivity, they will stop producing. And then there's nothing to share out.

And that's not taking into account the fact that corporations don't pay tax. Ever. You can levy taxes against corporate accounts, but the incidence of the tax is borne by either their shareholders in the form of lower profits (which doesn't happen very often), their employees in the form of lower wages or their customers in the form of higher prices. So high levels of corporate taxation actually hurt the people that socialists profess to care about - ordinary people.

Brand is right that our current system is broken. I reject his proposed alternative, and his proposed means for establishing it. They've both been tried before, and have only ever ended in mass starvation and/or a giant pile of corpses.

Thursday, 24 October 2013

Energy Prices

So, as winter approaches, the main energy companies have kindly put up their prices by an average of 10%. That's nice of them.

This puts me in a very unusual position of being a proud capitalist, and yet finding the activities of companies operating in a market to be abhorrent. This implies a level of cognitive dissonance that is normally only reserved for Lefties when a few inconvenient facts are pointed out to them, which usually causes them to lose their temper.

And yet, I feel no such discomfort. Why?

I am a proud capitalist. The reason for this is evidence. All the evidence suggests that capitalism is the most successful,efficient and ultimately sustainable economic system ever devised. Its primary alternative - socialism, or communism in its extreme form - has failed every time it has been tried. Sometimes the results have been merely economically disastrous. Occasionally, it has entailed huge loss of life. This is the primary reason I am opposed to Leftist thought. Because it's usually wrong.

And yet, here we have energy companies ramping up prices at a time when people can least afford it. Labour tell us that this is justification that capitalism doesn't work. I disagree. Capitalism does work. However, the energy market is not an example of capitalism. It is an example of corporatism.

Capitalism is defined by companies operating in a minimally regulated environment, where there are very few barriers to market entry and trade. Customers are able to trade freely with whichever company they choose. Prices are transparent and easily comparable, allowing for competition between the market players which puts downward pressure on prices. The market has lots of players, and no single one holds a dominant position.

That's capitalism.

That is about as far removed from the energy market as it's possible to get, without actually nationalising it.

The energy market is dominated by only six major companies, which hold over 70% of the market share. Regulation and cost provide genuine barriers to market entry, making it very difficult for energy start-ups to get going. Customers face barriers to switching providers - companies won't accept them if they have outstanding bills to pay, and the switching process itself can be long and stressful. Prices are opaque and confusing, with different prices for different levels of consumption, standing charges and multiple tariffs. This makes it very difficult to conduct comparisons.

Let's face it - the energy market is a great big fucking mess.

Ed Miliband has recently suggested a cap on energy prices. This is not the answer. For all the energy market's faults, it is still a market, and still subject to the principles of supply and demand. The energy companies still have to import gas from overseas, and the unit price we pay is affected by that. Just because the State deems that energy is only worth a certain price, doesn't mean that it's actually worth that much. That's like the Pharaoh trying to control the waters of the Nile. It won't work, and eventually everyone winds up with wet feet.

That said, however wrong and misguided he might be, Miliband at least has a policy. Cameron seems to be pissing into the wind on this issue. So here's my proposals:

  • Toughen up the regulation. Either replace the existing regulator, Ofgem, or give it increased powers with a new remit to target anti-competitive behaviour and price opacity. Compel companies to provide a single composite unit price, so the amount people pay is directly linked to the amount they consume. This will also make price comparisons significantly easier;
  • Remove barriers to entry. Allow new companies to enter the market using micro-generation. Make it more attractive to build new power stations in the UK by reforming the planning framework. Reduce the paperwork and compliance burden, which only big companies have the economy of scale to handle. New blood means more competition;
  • Structural reform of the market. There's no sense in denying it - the big six energy firms are, in effect, a cartel. They've cornered the market and charge whatever they like. Break them up. Force them to divest assets and sell off chunks of their customer bank as separate listed companies, preferably to UK investors;
  • Supply side reform. Introduce statutory service standards and turnaround times for customers switching. Force energy companies to take on customers' bonds with other providers, up to £500. Introduce a maximum time limit for firms passing on their savings in the wholesale market to their customers. And roll back some of those green taxes, including VAT;
  • Windfall taxation. Build in statutory provision for windfall taxes. If, despite all the reforms, the energy companies still make bumper profits where the spread between wholesale and retail energy is beyond a certain margin, subject them to a windfall tax, which is ear-marked for reducing the rate of VAT applicable to energy.
That will actually deliver us an energy market which delivers the best outcomes for consumers. Like what markets are supposed to do, innit.

Tuesday, 15 October 2013

Arts Subsidies

So, arts subsidies. Always a contentious issue between Rightists and Lefties, on which my opinion has recently been challenged by a few of my friends. I, of course, welcome the scrutiny - I like my ideas and opinions to be challenged. It is the basis of intelligent, rigorous debate.

I do not support public subsidy of the arts. I find it morally wrong that people being paid minimum wage should have their wages forcibly reduced by taxation in order to fund opera tickets for the middle classes. In response to this, my friends have put several arguments to me. I shall list them below, with my responses.

1. If you subsidise tickets, you'll get more people getting the benefit and therefore not restrict the arts to the privileged.
Maybe, but it doesn't stop the fact that you are taking money off un-privileged people in order to fund the subsidy. Wouldn't it just be better to not take money off those people, and let them spend their money on what they want?

It's the old Leftist argument that energy bills were much lower when the power companies were nationalised. Well, of course they were - they were constantly being bailed out by the taxpayer. We still paid the same price for the energy, we just paid for it in tax rates rather than in energy prices. They're already paying higher prices, it's just that the fact is masked by the opacity of the State.

If people genuinely want to go to the opera, or to art galleries, or to theatre shows or whatever, a few quid on the price of a ticket isn't going to put them off, especially if their taxes have been cut to an extent where they feel they can afford it.

2. There are jobs in the arts and revenue from tourism by the UK maintaining a reputation for the arts.
And the vast majority of those jobs and that revenue would continue, regardless of public subsidy. Everybody in the country would not stop rehearsing plays, or painting pictures, or sculpting, or performing music, just because the Government decided to stop spending everybody's money on pastimes which are enjoyed by the few.

Throughout history, the greatest painters, musicians, composers and sculptors haven't required subsidy from the State. They were commissioned on a private basis to produce their greatest works. Of course, there are a few exceptions - Michaelangelo's work on the ceiling of the Sistine Chapel is probably a good example of a 'publicly funded' work. But for every example of a publicly funded work of art, there are dozens of privately funded ones, ranging from the poorest pianist grubbing out a living in a cafe in Montmatre (Erik Satie) to one of the world's foremost painters taking commissions from some of the wealthiest nobles in Italy (Leonardo da Vinci).

Whichever way you look at it, art has (and, realistically, continues to be) primarily dominated by the private sector. It is an expression of human will and emotion. It doesn't need funding by the Government, and it will continue to thrive without such funding.

3. If there is a good cultural offer, more people come & spend money, keeping shelf stackers employed.
Yes, a small amount of movement of money can cause a snowball effect, and considerably increase the economic activity in the area. This is the rationale behind virtually every State subsidy.

I'm not questioning that this happens. I'm questioning whether it is moral to take money off the poorest in society to fund activities enjoyed mainly by those who are considerably better off, or if that money would be better spent elsewhere. Especially in light of the fact that the arts would most likely continue to happily survive without such subsidy.

4. Public funding supports all types of art forms, not just those enjoyed by the landed gentry.
It is true that a wide variety of arts organisations enjoy public funding. However, that isn't really my argument - in fact, it is part of the problem. Does the Government fund every arts organisation? No. Does the Government fund every type of art? No. It targets its funding to what it considers is best suited to the money.

Which brings us to one of the fantastic things about the arts - they are subjective. Highly subjective. Some people find work by Tracy Emin astounding - I, personally, find it mundane. Some people can't stand Shakespeare - I think some of his works are amongst the finest things ever written. Any kind of art is subject to people's opinion and taste - as to whether it's any good, even as to whether it constitutes art or not.

So, given that art is not so much a question of appetite, but of taste, who the hell are the Government to decide what is art? Who the hell are they to play supreme arbiters of taste, to decide which activities are more worthy than others? Why is opera more deserving of funding than street dance? Why is cubic art more deserving of funding than brass bands? Some people will agree, some people will not. What I disagree with is a small group of people deciding, on behalf of us poor ignorant commoners, what art is. It's patronising, condescending, and smacks of the worst form of hubristic cultural supremacy.

Does this mean I am a philistine? Far from it. I love the arts - anything that takes an inherent ability to produce, or to re-produce, is art. I am a lover of literature, music, drama and art. I just don't necessarily see why the Government should patronisingly deprive people of their own money in order to fund activities that it thinks constitute art. Why not just let them keep it, and spend it on the art that they like?

Thursday, 10 October 2013

Cleggie Does It Again

I see that insufferable pillock Nick Clegg is once more jumping on the Hyperbole Bandwagon. In response to Iain Duncan Smith's measured suggestion that perhaps the State should, in some circumstances, stop giving money to people merely for having children (which, incidentally, is not spent on the children but wasted on beer and cigarettes), Cleggie says that such a policy has 'echoes of China'.

Actually, Cleggie, removing a State subsidy which gives people an incentive to have children is NOT the same as the State forcibly abducting younger siblings from their family. You disingenuous prick.

Give me strength.

Wednesday, 25 September 2013

Ed Miliband's Policies

So, we finally have some detail from the Labour Party about what it would do in the event of it being elected in 2015. We have some major policy announcements from it's leader, Ed Miliband, which leave no doubt as to Labour's direction for the foreseeable future. And that direction is Left.

Miliband has proudly stated that he wants to bring socialism back to Britain. I imagine many people are meeting that declaration with raised eyebrows. For anyone who's old enough to remember, it didn't work out particularly well last time. Price controls, power cuts, strikes, record-level interest rates and inflation, three-day weeks, riots, rubbish piling up in the streets and bodies going unburied. Such was 1970s Britain. It took the most radical and determined Prime Minister since Churchill to turn the country around - Margaret Thatcher.

But Ed has pressed ahead with that theme, and put some meat on the bones. His speech at the Labour Party Conference contained several major policy announcements:
  • Cutting business rates for small businesses to the tune of £800m per year, funded by an increase in Corporation Tax for larger firms;
  • Changing planning laws so that local residents have less say in major developments. Seizing property from developers which the Government feels are not using their land banks properly;
  • Reform of the energy market, by breaking up the larger firms, instituting a new, more powerful regulator and most importantly, the introduction of price controls for at least 2 years.
I will now explain why all of these policies are utter rubbish.

Whilst I agree with the notion of cutting business rates for smaller firms, there is a major problem with the approach of this. Firstly, this is not an attempt to reduce the burden of taxation, it is simply shifting it from one element of the business community to another. Given that the problem with our public finances is that we are spending too much, entailing a chokingly high tax burden, we shouldn't just be shifting taxes around, we should be cutting them.

Next, the effect of this policy is a shift in taxation of £800m per year. Given that total business tax receipts were £66billion last year, this change in policy represents 1.2% of total business taxes. In other words, the square root of fuck all. The difference it will make is negligible to the overall business economic situation. It's a token gesture designed to create an emotional response in voters, not a serious attempt to make a difference.

In terms of reform to planning laws, this desperately needs doing. Our Soviet-style planning system where you have to apply to the local council in order to put up a fence across the front of your property verges on the ridiculous. However, watering down locals' ability to object to major developments on their doorstep is the wrong thing to do. If anything, locals need a greater say in such developments - they, after all, will be affected by them the most. The reforms need to take the form of less State involvement in planning, not more.

In terms of Ed's proposal to seize private land if the Government deems it is not being used by property developers in the way it should be, this constitutes a primal and vicious attack on the concept of private ownership. It is utterly disgraceful. What makes Ed think the State is best-placed to utilise land banks effectively? Especially when a recent investigation by the Office of Fair Trading found no evidence that property development companies were restricting the supply of development land to drive up prices. He's trying to solve a problem that doesn't exist and creating a load of new ones in the process.

Whilst I cautiously agree with the proposals to break up the major energy companies and introduce a tougher regulator, price controls are a ludicrous proposal. They have never been proven to work, and are more likely to backfire, resulting in company closures, scarcity, rationing, brownouts, blackouts and eventually, nationalisation of the energy industry in order to prevent complete chaos. The solution to the energy problem is increased competition, transparent pricing and practical steps to allow customers to move suppliers easily.

It's also interesting to note that Labour still haven't announced anything on subjects like education, defence, health (apart from a throwaway line to 're-nationalise' the NHS - newsflash guys, it's not been privatised), benefits, tax or... THE DEFICIT. That giant black hole which THEY CREATED that inconveniently won't disappear.

But there we have it. Labour have provided an alternative (a bit) at last. Not exactly what I'd hoped for. In fact, the prospect of Ed actually enacting some of these proposals scares me a bit. The only thing now standing between Ed Miliband and No. 10 Downing Street seems to be David Fucking Cameron.

God help us.