Wednesday, 30 September 2015

McDonnell's economics not from Planet Zog


In an earlier post I've used this quotation from Owen Jones's excellent book, "The Establishment":


Those policies that challenge the position of the Establishment . . . are dismissed as a recipe for ruin: businesses will leave, capital will flee, tax revenues will collapse, and so on.

After his speech to the  Party Conference  on Monday Labour's new Shadow Chancellor, John McDonnell was interviewed on BBC 2's "Newsnight" by Evan Davis.

Now, I have a great respect for Evan Davis.  He used to come to day conferences  for sixth formers studying economics and give us easy to understand talks on the state of the nation's economy, was a presenter  on Radio 4's "Today" programme, and has recently replaced the aggressively rude Jeremy Paxman as chief interviewer on "Newsnight."

Maybe I'm getting paranoid, but when he asked McDonnell about the possibility that a Labour Government might introduce a Financial Transactions Tax  or Land Value Taxation he did so with what seemed to me an air of incredulity  - "Surely you can't be serious?  Do you really mean that?"

Yes, I know, he didn't actually use those words, and even had he done so they are  well bellow the level implied by the Jones quote.  But a lot can be deduced from body language and facial and vocal expression.

In fact there  is nothing outrageous  or even novel  about either of theses taxes.  The idea of a Financial Transaction Tax was first put forward by the American economist and Nobel Laureate James Tobin  way back in 1972 and some of us have been advocating it ever since we heard of it.  The European Commission considered introducing one  in 2014 and is to make another attempt in January next year.  So there is nothing from Planet Zog about it: it is mainstream, and that the Labour Party should be giving it serious consideration is perfectly sensible.

And as for Land Value Taxation, we Liberals have  been banging on about it for over a century. (We used to call it Site Value Rating)

But, as Jones points out, the media, perhaps unconsciously in the case of Davis, is skilled at regarding anything that might upset the City, or the owners of prime pieces of land, (or land banks hoarded by builders and supermarkets) as outrageously beyond the pale.

Fortunately Mr McDonnell remained cool.  He is to set up commission to examine these, and other proposals.  Liberal Democrats should volunteer to contribute.  We have a lot of experience of  good ideas.

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