Nowhere to turn


When [unproductive hands are] multiplied to an unnecessary number, they may in a particular year consume so great a share of this produce as not to leave a sufficiency for maintaining the productive laborers, who should reproduce it next year.

Adam Smith, Wealth of Nations 

The UK generates 1.2 trillion pounds worth of wealth each year. Of this, the State confiscates 600 billion pounds. The balance remains in the economy and generates, the next year, the next 1.2 trillion pounds of wealth. 

Where markets and so sales have weakened from recession, the profitability of the economy has been reduced; there can no longer be generated so much from so little. To maintain itself, the economy now needs a larger initial sum; which is another way of saying taxation is too high. 

The upshot of this is that we have -  finally - reached a limit on State spending, for the State cannot extract a greater percentage of wealth from the economy, because to do so will reduce the wealth created by the economy to such an extent that total tax revenue will be lower. 

And it is here now upon this marginal stage that our scene unfolds. 

The UK is heavily centralised. Central Government taxes and then allocates funding, sometimes requiring a local contribution for a fund to be granted. It is so in Nottingham City, today, where a major transport infrastructure allocation requires a 25% local contribution. 

The City obviously has a huge incentive to provide those funds. Will it reduce spending to do so? Will it increase taxes? If taxes increase, there is a fundamental problem, for this money is all coming from the same economy. 

Within that City, there are as you would imagine a wide range and large number of businesses. These businesses own or rent their buildings and the land around them. As you would expect, many drive to and park at their work. 

The Council intends now to provide their local contribution by charging companies a fee, which they must pay, or they will be denied the use of their own, privately owned parking.