Crisis of statism, not capitalism

In search of that magic money tree

t might not have been the ‘crisis of capitalism’ which some have been waiting so long for, but it is widely thought that the last few years certainly represent a “crisis of capitalism”. But if you think of capitalism as a system whereby profits and losses acting unhindered by the hand of government guide capital to its most productive uses, this is difficult to sustain.

The sectors which blew up and took the rest of the economy with them were riddled with intervention. Banks have their capital adequacy rates set and their bad investments covered by government. The housing market is kept inflated with all manner of tax breaks and politically motivated distortions like Fannie Mae, Freddie Mac, and the Community Reinvestment Act. Behind it all interest rates are set by a small panel of political appointees, much as the price of alum keys was set in the Soviet Union.

But as we see violence on the streets of Athens and Madrid, the Occupy protests in the United States, and unadulterated rage on the pages of The Guardian’s Comment is Free (Cif), there is certainly some sort of crisis afoot. It is, however, a crisis of big government.

Over the last few decades governments throughout the western world have made extravagant spending commitments. In Ireland the welfare budget was tripled. In Greece pastry chefs, radio announcers, hairdressers, and steam bath masseurs were included among 600 professions deemed so “arduous and perilous” that workers could retire at 50 on a state pension of 95 percent of their final salary.

But it wasn’t just small basket case economies doing it; big basket case economies were doing it too. France decided that its workers could work no more than 35 hours a week and still generate the wealth to pay for everyone to retire at 60 and spend a third of their lives as state pensioners. In the United States the Bush administration launched the largest expansion of Federal spending since Lyndon Johnson’s Great Society program of the 1960s. In Britain the Labour government increased spending by more than half in six years.

As long as you didn’t look either too closely or too far ahead, these massive spending commitments looked just about affordable as long as there was plenty of money to spend. And there was. In Britain tax receipts rose by 40 percent between 2001 and 2007. In the United States, Federal tax revenues rose by 30 percent between 2000 and 2007. French tax revenue increased by 30 percent between 2002 and 2008.

But these were the effects of the bubble. These were taxes swelled by property values, house sales, and bank profits on those house sales and the myriad ancillary transactions such as securitisation. With the bursting of that bubble that wealth is gone, if it was even there in first place, and it is not coming back. Nor should it.

That does mean, however, that lots of the extravagant government spending promises made before the bust now stand revealed for what they are; unaffordable in the absence of bubble taxation. And given the undesirability of bubbles, that just makes them unaffordable full stop. No amount of general strikes, protesting, occupying, or posting on CiF will change that. We do not have a mighty oak of a money tree, but a bunce bonsai and, in truth, that’s all we ever did have.

Since the crisis hit we have seen both the unavoidability of this truth and the reluctance of electorates to accept it. In the last few years the voters of Greece, Spain, and France have voted out ‘austerity’ governments only to have ‘austerity’ visited upon them anyway by their replacements (at least they were asked, unlike the Italians). There is a very good chance that this November and in May 2015 the voters of the United States and United Kingdom will discover that reality doesn’t just disappear because you tick a box marked ‘Obama’ or ‘Miliband’.

The amount of money spent by the government has grown inexorably. We have reached its limit. In Britain, since 1964, whether top rates of tax have been at 83 percent, as in the 1970s, or 40 percent, the percentage of national income paid in taxes has never exceeded 38% of GDP.

Whatever the designs of the politicians, the social democrats, the Labour party, the Guardian, or Polly Toynbee, the British people, collectively and unconsciously, seem to have decided that they are not willing to fund a state sector any bigger than this. When the share of state spending as a share of GDP reaches 45 percent or 50 percent, as it has recently, the only way is down. That is where we are now.

If the extravagant spending promises of politicians outstrip both the capabilities of even a well-functioning capitalism to generate the necessary wealth and the public’s willingness to pay for it, that is not capitalism’s crisis, but a crisis of big government. Its time is up.

This article first appeared at The Commentator

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Public sector strikes: Unaffordable and unfair

Hands off my wages

And so the world keeps turning. An estimated two million public sector workers have gone on strike and the nation has kept ticking along.

The false argument about public sector pensions is put rather well by this which is going round on Facebook

“Remember when teachers, nurses, doctors, lollipop ladies and disabled people crashed the stock market, wiped out banks, took billions in bonuses and paid no tax? No, me neither. Please copy and paste to your status for 24 hours to show your support for the strikes against the government pensions”

It is hugely dishonest to try and make out that these reforms to public sector pensions are simply a result of the financial crisis. They aren’t. There were threats of strikes over the issue in 20042005 and an actual strike in 2006. Yes, the dire state of Britain’s finances has made dealing with public sector pensions more pressing, but the simple fact is that the current arrangements aren’t affordable after the credit crunch and weren’t affordable before it.

The issue of pensions is about the worst one public sector workers could choose to strike on. According to figures from the Office of National Statistics, reported in the Telegraph

“The calculations show that a mid-ranking teacher on £32,000 a year will receive a final salary pension that is the equivalent of having built up a £500,000 pension pot.

This is 20 times higher than the average private sector scheme, according to figures from the Office for National Statistics. Private sector workers would have to save more than 20 percent of their salaries for 40 years – more than £500 a month for a similarly paid person — to amass the same amount in a defined contribution pension”

This state of affairs was, just about, sustainable when it could be passed off as the reward for lower wages in the public sector. But the last Labour government richly rewarded its loyal clients in the public sector and, as a comprehensive report by Policy Exchange found

“On an hourly basis, the typical public sector worker is now 30 percent better paid than the typical worker in the private sector. On top of this, public sector employees have better pensions. The difference is worth an extra 15 percent of their salary. Over their lifetimes, people in the private sector work 23 percent more hours (equivalent to 9.2 years of a public sector employee’s working life) – where their public sector counterpart will either be on sick leave, holiday, strike or in retirement”

Union leaders like Mark Serwotka have derided George Osborne’s claim that “we’re all in this together”. As well they might, another Policy Exchange report found that

“Since the start of the recession, the hourly pay premium for the typical public sector worker has increased. After taking into account differences like age, experience and qualifications, the hourly pay premium for a public sector worker was 8.8 percent as of December 2010. This almost doubled from 4.3 percent two years earlier”

The public sector hasn’t been in anything at all yet.

The strikers have argued that the terms and conditions of their employment are being changed. So they are. But consider what happens to a private sector company which can no longer fund its pension commitments; it defaults and its members don’t get a penny. Renegotiation is a pretty good deal by comparison.

Of course, the private sector company defaults because it has run out of money. Governments, it is believed despite mounting evidence from the eurozone, don’t.

But this reveals the central fallacy and the central issue which lies behind this strike. There is no such thing as ‘government money’. There is only taxpayer’s money. When public sector unions say the government should pay more they mean the taxpayer should pay more.

The unions at least used to make a show of supporting things like ‘fairness’ and ‘social justice’. They are now, quite brazenly, simply trying to protect the privileges of a public sector labour aristocracy supported by the galley slaves in the private sector. They are worked until they drop to pay for these generous pensions and then thrown overboard.

This is not only unaffordable, it is unfair. That is what today’s strike is about.

This article originally appeared at The Commentator

The private origins of public institutions

Welfare before the state

This is the first draft of the introduction to a pamphlet I hope to have published soon titled ‘Galloping Horses – The private origins of public institutions’

Public policy and the microeconomic theory which underpins it is replete with justifications for state provision of a wide range of services. Under the general heading of ‘market failure’ concepts such as asymmetric information, externalities or public goods are all seen to be solved in modern mainstream microeconomics by some degree of state intervention.

The message is that state provision of these public institutions is a necessity if they are to be provided at all. Obviously, the flipside is that no more state provision of these services means the services will cease altogether.

This concern has animated much of the opposition to the Conservative Party’s ‘Big Society’ agenda. Along with the predictable opposition from producer interests, much of the concern with the Big Society stems from the notion that if the state doesn’t provide these services they won’t get provided at all. The influence of the market failure paradigm runs deep.

Away from the models of economic textbooks we see that this is not, in fact, the case. We see, all around us every day, the results of human action taken in the private sphere to increase our welfare. And just as often as we see this private human action working to reduce our welfare, we see some state action doing the same.

Indeed, the idea that human action can, in fact, provide the services which mainstream public policy microeconomics and market failure theorists say it can’t is seen in the very fabric of some of our most hallowed and cherished public institutions who’s continued attachment to government, microeconomics tells us, is so vital to their continuance.

This pamphlet will take a critical look at some of the key concepts of market failure concepts. It will then look at three public institutions in three very different sectors; unemployment insurance, the National Health Service and the London Underground. The standard theory tells us that these could not exist without government but we will see that their existence actually predates state control and that the state did not create these public institutions, it simply took over what human action in the private sphere had already built. Or, as EG West wrote of the state intervention in education, “it jumped into the saddle of a horse that was already galloping”

Finally, we will look at the theory of the evolution of money developed by the nineteenth century Austrian economist Carl Menger and apply it to the evolution of public institutions more widely. It will help us to explain what the standard theory cannot; how unemployment insurance, healthcare and underground railways can be provided without the state.

For exactly 100 years, since the National Insurance Act of 1911 elbowed many perfectly good private arrangements for insurance against unemployment, injury and old age out of the way, the trend of British public policy has been that the state steps in and people step out. Reversing that trend is the goal of the Big Society. It is a large concept dealing with deep issues of psychology, sociology, history and economics. It has proved difficult to communicate which is one reason why it has proved so difficult to get off the ground. This pamphlet aims to go some way to redressing that.

Striking out

Unfair and unaffordable

I don’t know about you but I haven’t noticed any signs of the country coming to a shuddering halt yet. 750,000 public sector workers (though none from my office) have gone on strike and the nation has kept ticking along.

The false argument about public sector pensions is put rather well by this which is going round on Facebook…

“Remember when teachers, nurses, doctors, lollipop ladies and disabled people crashed the stock market, wiped out banks, took billions in bonuses and paid no tax? No, me neither. Please copy and paste to your status for 24 hours to show your support for the strikes against the government pensions”

It is very dishonest to try and make out that these reforms to public sector pensions are simply a result of the financial crisis. They aren’t. There were rumblings of strikes in 2004, 2005 and an actual strike in 2006. Yes, the dire state of the national finances probably has made dealing with public sector pensions more pressing, but the simple fact is that the current arrangements which aren’t affordable after the credit crunch weren’t affordable before it.

The issue of pensions is about the worst one public sector workers could choose to strike on. According to figures from the Office of National Statistics, reported in the Telegraph

“The calculations show that a mid-ranking teacher on £32,000 a year will receive a final salary pension that is the equivalent of having built up a £500,000 pension pot.

This is 20 times higher than the average private sector scheme, according to figures from the Office for National Statistics. Private sector workers would have to save more than 20 per cent of their salaries for 40 years – more than £500 a month for a similarly paid person — to amass the same amount in a defined contribution pension”

Such a state of affairs was, just about, sustainable when it could be passed off as the reward for lower wages in the public sector. But the last Labour government richly rewarded its loyal clients in the public sector and, as a comprehensive report by Policy Exchange found

“On an hourly basis, the typical public sector worker is now 30% better paid than the typical worker in the private sector. On top of this, public sector employees have better pensions. The difference is worth an extra 15% of their salary. Over their lifetimes, people in the private sector work 23% more hours (equivalent to 9.2 years of a public sector employee’s working life) – where their public sector counterpart will either be on sick leave, holiday, strike or in retirement”

Union leaders, such Mark Serwotka, have been deriding George Osborne’s claim that “we’re all in this together”. As well they might, another Policy Exchange report found that

“Since the start of the recession, the hourly pay premium for the typical public sector worker has increased. After taking into account differences like age, experience and qualifications, the hourly pay premium for a public sector worker was 8.8% as of December 2010. This almost doubled from 4.3% two years earlier”

The public sector hasn’t been in anything at all yet it still expects the recession ravaged private sector to continue paying the same amount to it as before. The trade unions, who at least used to make a good show of supporting things like ‘fairness’ and ‘social justice’ are now, quite brazenly, simply trying to protect their privileged status as a labour aristocracy kept going by the galley slaves in the private sector who are worked until they drop to pay for these generous pensions and then thrown overboard.

This is not only unaffordable, it is unfair. That is what today’s strike is about.

Strikeballs

Tomorrow’s strike looks set to cause more hilarity than anything else. I’ll be putting any rib ticklers I find here.

The Facebook page of Sean Rillo Raczka, head of the students union at my old uni, Birkbeck, has a couple of gems on it today.

“Solidarity with the Greek people, and victory to their courageous resistance! #Greece”

When he says “courageous resistance” he does, of course, mean the attempt by the well paid Greek public sector workers to get German workers to pay for them to retire at 50.

“Let’s strike hard against David Cameron and his scum government #j30”

Mr Rillo Raczka doesn’t have a job so it is difficult to see how, exactly, he will be on strike.
————————————————————————————
Over at Coalition of Resistance we have the following comment…

“Defend the Poor and Vulnerable and to Hell with Company Greed and Profiteering”

This appears to be a close relative of the age old, ever stupid slogan “People before profits”. Where does this cretin think the money to “Defend the Poor and Vulnerable” is going to come from if companies don’t make profits?

The left still thinks money grows on trees.

————————————————————————————
The picture at the top of this post comes from the Facebook profile of a prominent student activist. She hasn’t got a job so she’s half way there.

A public sector strike over pensions will neither elicit public sympathy nor especially inconvenience us

Hands off our wages

The news that the Deep Thought computer would be programmed to unravel the great questions of existence was bad news for the philosophers in Terry Pratchett’s Douglas Adams’ classic Hitchhiker’s Guide to the Galaxy. “We demand rigidly defined areas of doubt and uncertainty” shouts one, another warning that “You’ll have a national Philosopher’s strike on your hands!” Deep Thought pauses then asks: “And who will that inconvenience?”

You might have felt a little like Deep Thought this week reading the various warnings of mass public action emanating from the public sector unions. “It will not be one day of action”, warned Dave Prentis of Unison, “it will be long-term industrial action throughout our public services to prevent destruction of our pension schemes”

A period of prolonged and extensive strikes could be bad news for a government battling to get runaway borrowing under control. So far the muted support for the coalition’s fiscal programme outweighs the noisy opposition. But, given that with high inflation and interest rate rises on the way we probably haven’t seen the end of the downturn yet, this could change.

But you can never underestimate the stupidity of trade unions.

If they were choosing to strike in opposition to the coalition’s fiscal programme they might garner some wider support. But they aren’t. They are striking over pensions. They are striking in defence of their right to retire earlier than their private sector counterparts on pensions higher than anything on offer to their private sector counterparts – and all paid for by higher taxes on their recession ravaged private sector counterparts. Almost every story about the threatened industrial action has been illustrated with pictures of banners reading ‘Hands off my pension’. Taxpayers should say ‘Hands off my wages’. The idea that unions will attract much support on this battlefield can generously be described as fanciful.Not only is the union leaders’ rhetoric divorced from morality, it is also divorced from reality. June 30th is being hyped up by some as a General Strike intended to bring the country grinding to a halt, taking its inspiration from the 1926 General Strike.That Britain came to a standstill in 1926 is not in doubt, but back then the strike included railwaymen, iron and steel workers, dockers and transport workers. Many of those jobs, in as much as they are performed in the UK any longer, are no longer heavily unionised. This is part of a more general trend of deunionisation which has seen the Trade Union Congress lose half of the 12 million members it had in 1980.And the makeup of the general strikers of 1926 indicates another force telling against today’s unions; their work is simply far less vital to the day to day working of the British economy than it used to be.

The public sector contains workers, such as health workers and teachers, who undoubtedly do important work. But the last Labour government created 849,000 public sector jobs and it is doubtful just how many of these do anything really useful or cover their opportunity cost. In 2006, 1.2 million public sector workers staged a one day strike over pensions in what was described as the largest industrial action in the UK since the General Strike. Nobody noticed. Indeed, strikes could backfire spectacularly on the likes of Unison. If the economy continues to rumble along regardless even at its current feeble rate it could show just how easily the UK could get along without a lot of these workers. With private sector job creation roaring ahead David Cameron might well whisper ‘Bring it on’.

So next time you hear someone like Prentis or the even more ridiculous Mark Serwotka, who rants like some modern day Mick McGahey while leading the Public and Commercial Services Union, warning of industrial chaos, do what Deep Thought did: pause, then ask “And who will that inconvenience?”

This article originally appeared at ConservativeHome

Bob Crow vs Ronald Reagan

Students new to London ought to get used to this. On the evening of Monday September 6th London Underground workers headed out on strike. London ground to a halt and was not back to normal until Wednesday evening. Similar strikes are expected to continue for another few months.

Tube union leader Bob Crow (as close as London has to Public Enemy Number 1) claims the strikes are in response to the proposed reduction of ticket office hours at outlying tube stations which will lead to the loss of 800 jobs. He claims this will affect tube safety.

Crow’s safety concerns can be doubted. Back in 2004 he shut the network to protest the sacking of a number of maintenance workers who had been caught boozing on the job. So much for safety!

In truth Crow is simply indulging in the age old union trick of cloaking sheer self-interest as concern for the public, the very public he and his union plan to screw next week.

It needn’t be like this. It would be entirely possible for Crow and the RMT union to turn up to work as normal and simply open the gates; hit Transport for London in the pocket but leave the rest of us out of it. What Crow calls ‘industrial action’ is, in fact, industrial inaction.

Crow complains about the effects of coalition cuts on the London economy but his strike is estimated to cost London £48 million pounds. But, as Crow once said, “I’m not one of those union officials who continually say they regret the inconvenience caused by industrial action”.

Indeed, it needn’t be like this. In 1981 the American air traffic controllers union went on strike looking for higher pay and shorter hours. President Ronald Reagan gave the 13,000 controllers 48 hours to get back to work. When they ignored him he sacked them.

It worked. With help from military air traffic controllers Reagan kept the skies open, broke the union, and freed the average American flyer from their whims.

Perhaps this points a way forward in London? First, see if the RMT will agree to limit its industrial dispute to the disputing parties; itself and the RMT. Failing that, bring in trained personnel to operate the Underground network so that a resource we all pay for cannot be turned on and off by workers who earn around £30,000 a year and get 35 to 40 days holiday (the average in London is £26,000 and 20 days each).

So, as you fight your way onto a bus during a tube strike, lets hope the capital’s answer to Reagan isn’t far away. In the meantime, welcome to London.

Written for Caerulean, October 2010

Why the Labour government is crap


(Written in response to something pro Labour)

Ill be voting Conservative (no shock there). And Ill be doing it on policies, not half baked second hand opinion masquerading as original thought like ‘Oh, theyre a bunch of toffs’. Flip this silly inverted snobbery round; would you say “I wont vote for her, shes only a grocers daughter!”

Were also reminded about Thatchers “decimating” of industry. Well, decimating means (coming from the Latin ‘deci’) a decline of one tenth. In fact, under Thatcher, UK manufacturing fell from 25.8% of the economy to 22.5%; indeed, decimation.

But lets take a look at this Labour government. In 1997 manufacturing accounted for 20% of our economy. By 2007 that had fallen to 12.4%. The Romans never came up with a word for that.

Labour have been an utter economic disaster for this country. Between 2002 and 2007, before a single bank needed bailing out, Labour were running budget deficits. Lest we forget, the economy was growing at the time (based on borrowing). Unemployment was low. Tax receipts were rising. Yet Gordon Brown still managed to spend more than he had coming in.

So, when the storm hit, we were buggered. Someone once described a recession as being like when the tide goes out and you find out who’s been swimming naked. We were well and truly in the bollocky buff.

And we are nowhere near out of the woods. True, the economy has returned to weak growth, but if you throw £175 billion of borrowed cash at a problem youre bound to have an effect. But what effect? Despite the ludicrous assertion above that Labour have “reduce(d) the number of unemployed and (got) people back in to work” we actually have more people unemployed than at any time since the hated Thatcher. We have a rate of economic inactivity which is higher than its ever been before.

Trouble is that you cant go on doing this and you need to stop. If you dont and you keep borrowing then you will see your interest rates go up. Put simply, the Conservatives can deal with this looming meltdown, Labour cant.

And lets not forget the disastrous role the Labour government had in bringing about this recession. In 2003 we switched the inflation target for the Bank of England from the RPI measure (which includes housing costs) to the CPI measure (which doesnt). If wed stuck with the RPI wed have had interest rates go up sooner and choke off the bubble before it reached the stratosphere. Theres alot further to fall from up there.

The economic story of this government can be simply told. They inherited, from the Conservatives in 1997, the best economic climate since before the First World War. They will leave them, in 2010, with the worst economic climate since World War Two.

We are told that Labour “are becoming tougher on immigration”. Phew, well, it only took them 13 years! But this points system only applies to those coming from outside the EU. If you are worried about Poles taking jobs then this points system wont make a blind bit of difference.

We were told about Labour’s shiny new school buildings. Bravo. Sadly the teaching that goes on in them has got worse. The Programme for International Student Assessment compares students from a range of countries. In 2000 the UK ranked 7th in reading, 8th in maths and 4th in science. By 2008 we had slumped to 17th in reading, 24th in maths and 14th in science.

I will agree with vote Conservative “if you want to pay less tax and National Insurance”. Of course, if you want to keep paying high taxes to bail out bankers, then vote Labour by all means.

Which brings us to the NI increase. Why, with unemployment high, do Labour want to put a tax on jobs? They put a tax on fags and cider because they want people to consume less fags and cider. They put a tax on jobs, however, and dont expect employers to consume less labour.

Vote Labour if you want 42 day detention and ID cards. Vote Labour if you want more dodgy wars. Vote Labour if you want more lies about European referendums. Vote Labour if you want a bloated, unproductive public sector to strangle the economy. Vote Labour to see a continuation of mean politics, with attack dogs being turned on everyone from a Conservative MP’s wife to Joanna Lumley and a survivor of the Paddington rail crash. Vote Labour if you want a CCTV camera in every home. Vote Labour if you want five more years of Gordon Brown.

The Lilies of the Field

Cheap at half the price

“Consider the lilies of the field, how they grow; they toil not, neither do they spin” – Matthew, 6:28

A friend of mine was recently given a grant of £50,000 by her employer towards buying a flat costing £130,000. Good on her you might think, until you realize that, as an employee of the public sector, this money came from the taxpayer, you and me, many of whom are unable to afford houses for ourselves.

The money is given as a grant to what are known as ‘Key Workers’, those whose work is deemed so vital to the public wellbeing that they have to be given housing subsidies at public expense to be attracted to an area. Given their generous pensions and holidays it might not be unfair for the taxpayer to ask just how much of an incentive public sector employees need to work in an area and whether the heavy cost is worth it. When the scheme was launched, John Prescott said “High house prices often drive them (key workers) away from the neighbourhoods where they work”, but this is the case for everybody everywhere. The arguments against the key worker housing grant fall into practical, moral and economic categories.

The practical argument rests on the idea that key workers need to be close to their employment. True, nurses and social workers may have to be on call, or may have to work shifts. But the same applies to security guards, bar staff and the traders who work at places like New Covent Garden market. A bar worker in a pub will kick out the last drinkers at 11:20 and probably wont have cleaned up until close to midnight, is it fair that they should be expected to bear the burden of late night travel while a key worker is paid up to £50,000 to avoid the inconvenience? The traders at New Covent Garden lead an almost nocturnal existence yet no one is throwing money at them to buy them a house by Battersea Bridge.

This leads on to the moral argument, namely, is it fair that someone, somewhere, should be deciding whose jobs are more important than others? It doesn’t matter so much, the argument goes, if a fruit sales man from New Covent Garden is put off by the journey into work because society can afford to lose him more than the pediatric nurse who doesn’t fancy the grueling trip from Barking to the Royal Free in Hampstead. Indeed, very few of us would deny that nurses perform a more immediately useful service than a bar worker, and these are the terms in which the debate is usually conducted.

But lets look at some of the other beneficiaries of this generosity with our money. In Bromley (maximum grant £50,000), key workers include Speech and Language Therapists, Social Workers, Educational Psychologists, Occupational Therapists and Probation Staff. West Sussex (maximum grant also £50,000) defines key workers as including qualified Occupational Therapists, Rehabilitation Officers for the visually impaired and Speech and Language therapists. In Basingstoke, the list of those deemed so necessary to the public well being includes Rehabilitation Officers for the visually impaired, Speech and Language Therapists, Local Authority Planners, Educational Psychologists, Occupational Therapists and qualified Social Workers.

This leads us to the economic argument. According to John Prescott, who launched this scheme, key workers “are critical to thriving, sustainable communities”. I wouldn’t deny that this is true of nurses, fire fighters and the Police, but it is also true of the halal butcher, the paper shop owner, the accountant, the estate agent, the publishers assistant, the electrician…as I walk down Walthamstow High Street it is the market traders selling clothes, toys and food, the café owners selling fried breakfasts and tea and coffee, and the 24 hour internet cafes full of homesick immigrants who create the wealth and the activity, the employment and opportunity and, lets be right, the tax base, that supports Prescott’s “thriving, sustainable communities”. Next to these the contributions of Speech and Language Therapists, Local Authority Planners and Rehabilitation Officers for the visually impaired look pretty thin.

It’s a question of wealth, who creates it and who spends it. The Local Authority Planner may, in actual fact, do a very important job which has positive effects for all in the community. Social Workers undoubtedly do good work as may the Probation Officers. But they do not create any wealth, they only spend it. Without the private sector, made up of the market traders who are unable to afford a mortgage and the secretary I know who faces a two hour commute each way, there would be no public sector at all. No nurses, no firemen and no Police. They do not, for the most part, create wealth, they spend it and wealth has to be created before it can be spent. Ask yourself, who are the real key workers?

NBThe Starter Home Initiative, launched in April 2004, is expected to cost the taxpayer £5 billion. Think about that when youre struggling to keep up your mortgage repayments.