I listened with interest, as I often do, to radio 4's business round up today. It contained two or three very contrasting views on the economy and the concept of responsible citizens.
Firstly, not content with the concept of small , weak government, now the Tories are gambling with all people's futures on making pensions effectively a mid term ISA. You will not only be able to manage you own anuity upon a pensions plan's maturement, you will also be able to take out money earlier to not only sensible alternative investments, but also to CASH.
This reeks of anarchy, and irresponsibility. What have we learned from Black Monday 1987 and Darker September 2008? That consumer credit and a liberal attitude to liquidity personal and institutional is irresponsible. For liberal you can often read just anarchic, or to my mind "trickle up".
The problem with this scheme is caused by same class myopia as the conservatives have always had in the UK, which is shown most prominently in Scotland where they are almost a political irrelevancy, so out of touch with the classes. Their own 'people' are conservatives with a small "C" and those others are just folk who see that lower taxes or higher defence and police spend will suit them just fine. The problem is in the second group, in that the masses are really not responsible enough nor will they ever become responsible enough to manage their own pensions. They will all too often take-to-cash and have a live now, sod being old approach to that big pot of cash at the end of life's long monochrome rainbow that is working life for most of us.
This actually affects mostly the richer top half of society anyway, because the lower third have rather poor pension provision so far., often like me having had several employers and disjointed pensions which would have been better served by state PAYE. This also plays into the more dynamic sectors of the finance industry and the stock market, where of course the biggest losses were made after 2008 collapse.
In essence these policies are very anti pension company, which are by nature small c conservatives and have made historically boring investments. Freed partly from "with profits" pensions it means that they can now cut off more of the pie from those boring investments for their profits instead of actually taking responsibility for furbishing inflation busting pension funds. They claimed that it would enable higher returns from more balanced risk taking, rather than the need to "bank" high growth into pensions, but from my analysis this does not benefit the small guy like me.
Nigel Wilson of legal and general. one of the UK's largest domestic investors, no doubt will have some comments on this. However here is the next conflict in that more lumps of money in the economy will benefit London first, and not the regions. More people seeking get-rich-quick with lumps of cash taken out their pension pots into high risk city invesments is not good for his company, and not good for the regions.
Nigel sees that devolution to the regions brealks the hunger of London for power and its mypoia on spending. This is of course epitomised by HS2, which so far is planned to be built SOUTH -NORTH. I would propose a North-south, starting in fact in York such that the NE-NW can get a benefit. His company stand on a strategic cross roads where the divergence of commercial property prices between the great metropolis and the regional cities could be stark and in fact there is a risk for negative equity if the regions continue to be dominated by post industrialisation, and low wage, low tax return jobs.
London Myopia, City Self Importance, South East Over Heat. London forgets very quickly that it is in all likelhood a wealth and tax vacuum from the rest of the country. It demonstrates that there is no such thing as trickle down, rather it is all about trickle-up. The privatised utilities and railways got a City centric, soft cushion which limited competition and subsidised the edges of areas the private sector did not want to take responsibility for. Now these deliver profits to the city based on above base line cost growth and Retail price inflation. Then there is of course the property market, where growth in house prices and commercial property sites across the UK has fuelled London while in fact since 2008 and before that too, the market has been failing the new generration of adults born in the late 70s through to the 90s.
If you take London then and all its institutions and departments, its public transport and its civil service, and then add the South East, from Cambridge and Oxford down and towards Dover, then it probably is a net importer of income taxes, and in terms of operating companies which create value, the most taxes are generated outside London but reported on the LSE or Companies' House.
Pensions and the future of the country are much more sensibly managed in Norway where I live now, from many perspectives. We have the same employer contribution private pension and a revised yet still generous PAYE state pension. But of course Norway has as a country put money aside from its large oil economy into inward and international investments. Also Norway has a common agreement that its people will all share in the oil boom by having high salaries, that there will be relatively high taxation on those salaries and that people will get good public services. Further common sense with the cut backs in some public budgets being called in relation to running the multi billion dollarr 2022 Winter Olympic Games. Democracy killed that idea, cocktails with the King and Queen for the IOC Aside.
Now we come back to my little nippy pet animal in the cage, Scottish Independence. The BBC and the rest of the partisan, traditional media had decided for themselves that this would be the decisive vote for the whole generation, that it will take 30 years for the next one. Well what has happened is that the runway is opened up more by there being more transparency on wealth creation in Scotland, in that more powers are coming to Holyrood regardless, and that Labour may be marginalised from UK power even more by the West Lothian Question being answered as is discussed in parliament today. Labours only chance in the UK is then to go the Proportional Representation route in a first coalition government, and then sit in an eternity of PR coalitions as we have in Scandinavia, for better and for worse. With UKIP now in full nationalistic sabre rattling flight, with their latest MP trying to sound like Socrates or King George the sixth, they cover a lot of flag waving, xenophobic bases, while the Scots have never voted against the EU in any numbers rather supporting by around 70% and more parties and policies which are pro EU.
Where do UKIP want to go? Renegotiating with an EU who will be pleased to be rid of their constant need for special exemptions and some amount of fillibustring of policy. The EU will want to keep the UK in an uncertain place such as to attract the major investment banks over the waters to EU countries. That is a once in a lifetime, perhaps once in a century possibility to gain more share of inward investment for the continent and weaken the LSE and the City.
Do they want to try and stand against America, where the billionaires can decide what is in their interests in dealing with the UK on what will be a very minor, assymetric trade deal, especially with the Continental stock exchanges becoming more interesting for investors. Or do they want to turn to BRICS, with all the wierdness of dealing with Brasil and China thinking of the UK as a tiny, silly little island who lost their empire and ability to be a power long ago? Or of course then the EU through the cosey back door of EFTA? Well Norway and Iceland would not want a right wing, London City Centric partner. Whereas Scotland with her common maritime and sub sea interests would be a happy bed fellow in EFTA, the UK as a whole would be an elephant on the matress, demanding a huge amount of room by simply the act of getting into bed.
In all this there is the basic common sense of putting by for tommorrow, spending within your limits of income and mortgage, and building a stronger house and mind for the future. The march towards this is for me, the Scandinavian model and Scottish Independence, the march away from this is the isolationist, London Centric tax haven UKIP and back bench conservative view. Wealth creation is vital, and not just the funny-money, but also wealth retention is vital to the regions, which means private investment, private wage levels in what is taken out from the region, and of course government mediated wealth distribution via education, infrastructure and good public services.