Monday 10 November 2014

CBI demand ever more subsidy for Business

Now as a Capitalist site, you may be surprised about what you read below, thinking we would always back the CBI.

But you would be wrong. The CBI is a useless institution - cheerleaders for corrupt corporatism rather than capitalism. Ably demonstrated by their insane demand that we sign up to more Europe rather than have a referendum or leave the broken project.

Today, in this traditional manner, they are demanding that the Government offer free childcare to working mothers and take more people out of tax, whilst raising the threshold of National Insurance tax so as to remove more people from tax.

All the while of course, the Government deficit of £100 billion a year needs to be tackled

All this because average families are struggling as businesses hold down wages. But surely with inflation at only 1%, wages cannot have fallen too much.

Sadly, as we know, inflation is not 1%. House price inflation, which drives rents, has been over 5% a year. Energy price inflation, once you include Green Taxes to pay for our wayward energy policy, is also around 5% a year.

So no wonder people are struggling. However, for companies to demand more Government assistance to help with low pay is to completely miss the point. The economy is not struggling because mums are not going back to work quick enough - a Dickensian approach to the world anyway, to be expected of the Bosses Lobbyist perhaps.

The economy is struggling as a low inflation wage environment is matched to a mis-matched supply of key resources such as property and energy. If these costs could be lowered, people would have better standards of living and they would also have more disposable income.

To suggest more subsidy for jobs when one of the main drivers of the deficit is exactly the tax credits issue which is already a huge subsidy for jobs is to pile insanity onto recklessness.

Still, a good rule of thumb, if the CBI are saying something needs to be done and this is a good idea, then you know they have it all wrong.


BrianSJ said... on EU energy policy - favourable so need to read between the lines.

Nick Drew said...

Not if we have to put up with this, Brian:

" I am in favour of a European debate leading to a consensus in order to give a mandate to the European Commission to negotiate international agreements on behalf of the EU with third countries" - he includes buying gas

(Maroš Šefčovič, "vice president for energy union" in the Junker dispensation)

this is a charter for grotesque corruption (back to CU's theme) & secrecy & 'commissions': we've fingered this before

andrew said...

There was a bloke on from the FT at some point between 6-7 AM on R4 Today who pointed out that all this EU stuff is a sideshow and that we need to close up a 100 Billion per annum deficit in public spending between now and 2019 if we want to balance books by then.

This means

(a) another 30% spending cut
(b) massive tax rises

Looking at it like that it seems all the heat and light about EU or Non EU (come back the Mitfords - all of them) is a case of nuclear bike sheds

100bn pa is not far off the whole education budget, or two-thirds of the NHS or twice the defense budget

It led me to read parts of the March OBR report (pdf)

I can see why no politician wants to talk about this.

Makes me want to emigrate - except the ROTW looks to be in a worse state.

Jan said...

The debt should be brought up every time anyone suggests more state subsidies, especially emphasising the amount of interest we pay on said debt as a country and how much less the tax take could be if we didn't have any debt.

the true state of affairs is very rarely alluded to by anyone.

CityUnslicker said...

Andrew the FT have a lovely DIY how would you cut the deficit too. Handily not allowing you to say cut all overseas aid but only 10%.

£100bn is doable over 5 years. Firstly, the economy is likely to grow and all the new jobs we have will start to pay some tax. That takes is to £80 bn. From there you can freeze in work benefits and make NHS prescriptions and GP visits have a nominal cost.
Then we can scrap trident too.
Then we can leave the EU.

£100bn - wasn't so hard.

Demetrius said...

I have the feeling that there is something nasty in the woodshed, but I do not know what it is.

CityUnslicker said...

I note that O'Flynn of UKIP has nicked this post for an anti-CBI piece too!

Electro-Kevin said...

100% in agreement with your post, CU.

Such subsidy will drive accommodation inflation. And then what ? Send the kids up chimneys ???

Graeme said...

it's late father was very pro-market and so, in the 1970s, I was always surprised when he scoffed at anything said by the CBI, sinc I was young and thought that the CBI and Wilsonomics were incompatible. Now I am older, I nrealise that he was right. Anything said by the CBI and the IoD is obviously stupid.

Raedwald said...

The alliance of interests between the UK megacorporates who dominate the CBI, their chums on the ERT with the inside track on EU policy and the corporate trade unions would be astonishing to anyone used to the status quo ante 20 years ago.

Employment is no longer homogenous; those employed by the State and the European corporates will enjoy stability, wealth and enhanced in-work benefits including education and training - and there will be consensus on this between the EU's social objectives, the Unions' power and the socially responsible HR policies of the corporates

The other 40% - 45% of the European workforce will be on casual work, zero hours contracts, no contracts, agency arrangements or be the new 'self employed' - wages without any benefits, with no sick pay, no redundancy.

Hysteresis means that firms never re-employ to previous levels on the upswing of the economic cycle - it's always fewer workers than they had previously for a given TO.

And I suspect it's not zero wage growth across the UK economy but +5% in cash and kind for those within the magic circle and -5% for the lumpenproletariat outside it.

It's capitalism, Jim, but not as we've known it. For our fellow citizens outside the magic circle, future life will be shit.

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