Baroness Scotland: The facts

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It can only be a matter of time before Baroness Scotland is reshuffled into oblivion. The most interesting point – Red Rag made this point clearly yesterday – is that if the cleaner was in the UK illegally, she would not have had the right documents as specified in the Home Office regulations. So Baroness Scotland could not have 'seen the documents but neglected to copy them'. She could not have seen them at all, because they did not exist.

Failing to copy a document that you have seen and satisfied yourself is one thing. We can accept it as a 'technical' breach of the law (though a law that the Attorney General introduced, and a law that the country's leading law officer ought to understand – which might be grounds enough for her to resign). But failing to demand the right documentation in the right place is more serious.

The political class have closed ranks on this because they wonder how many of their own home helps have overstayed their student visas. But now, stories are coming out of small businesses that – for quite minor, unintended, and first-time oversights – have been raided by body-armoured UK Border Agency heavies and whacked with business-busting £10,000 fines. Give bureaucrats the power to bully us, and they will do so. The Baroness got off lightly.

If businesspeople – or baronesses for that matter – unwittingly break over-complicated rules, they should get a warning, not a visit from the Border Gestapo. If ministers invent rules that are so complicated they can't even follow them themselves, they should resign.

And these absurd rules affect all of us. For example, it's almost impossible now for a UK think-tank to hire interns from other countries thanks to Baroness Scotland's regulations. So much for cultural exchange.

The future of pensions

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The Royal Society of Arts, run by Tony Blair's old adviser Matthew Taylor, has come out with a plan to rejuvenate the UK pension system. It builds on the government's new pension initiative, whereby employees will be automatically signed up for a no-frills workplace pension in an individual account, which they can take with them as they move between jobs. But the RSA report's author, David Pitt-Watson of Hermes Equity, says that people should be able to put in as much money as they like, not just the £3,600 annual limit proposed by the government which, says Pitt-Watson, makes the government proposal unviable and unsound.

The RSA report also says that these personal accounts have to be invested in safe assets, so that people can be reasonably sure that their savings will be secure for when they retire. And with that in mind, there should be only a limited number of providers, who can guarantee such exacting standards.

Personal and portable pensions with simple rules and no complications? It sounds like a great idea. And it is. That is why Chile did it thirty years ago, and why it has already spread to dozens of countries round the globe. And it's why we did a report, The Future of Pensions on it as long ago as 1983.

It takes time for ideas to get through the sausage-machine of politics. But perhaps this is one that is just about to make it.

Now, if only we could get personal and portable health savings accounts too...

Image isn't a public good

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Abercrombie & Fitch is being sued by the Equal Employment Opportunity Commission for not hiring a Muslim teenager because she wears a hijab. A garment that doesn't fit in with the 'image' that A&F is trying to portray while selling its branded style of clothing.

In these multicultural, omnipotent public sphere times a private company is a fantasy. Only after government imposed laws and regulations have been put in place can you legally trade. Playing by their rules not the consumers'. Any person living in the real world is aware of the 'image' that A&F tries to portray. It's preppy and extremely homo-erotic. Given that their advertising is practically everywhere you'd have thought it would be noticeable that it's not aimed at certain market sections. Yes A&F is exclusionary: they wilfully choose not to sell to certain parts of the marketplace. Why then should they be forced to employ someone who, let's face it, isn't part of their ideal customer base?

Private companies have a right to choose. They should be able to decide based on any reason as to why they don't employ someone, be it religion, sex, race, skills, education, attitude etc. When a person isn't chosen for a job they have been discriminated against, that's an unfortunate consequence of competition. It happens on a daily basis across the globe. There is nothing that can be done to stop people being different from one another. It's those differences and their continual impact that makes life interesting. Cases like this and others retard our individuality and seek to impose a blanket of sameness upon us all. In the meantime let people discriminate. Without it we end up with burqua'd waitresses in Hooters...

The end of capitalism?

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If I were to describe something in a single statement and then ask you to determine what I was describing, what would come to mind with the phrase, “A heavy progressive or graduated income tax"? Like me, you would probably answer that it was a description of the tax system within the country you reside since most European and American government tax systems are indeed based on this principle. Would it surprise you to find out that this statement is in fact the second most important step towards a communist state, second only to the absolute abolition of private property, as presented by Marx in The Communist Manifesto?

The makings of a communist state are still alive and well, nesting inside the hollowed out remains of once proud capitalistic nations. No matter how much government paints itself up to be a supporter of the free market it is at the same time undermining it.

A frog will most certainly jump out of a pot of boiling water, but put him in the same pot and slowly heat the water until it boils and the frog will never notice until he is dead. Are we simply enjoying the warm waters so much that we don’t realize what is happening? Communism is a parasite. The system is designed to benefit all, but it cannot function with being able to drain the wealth out of those that produce it. If you remove the wealth it feeds on then it will die. We have a parasite problem, and it is killing capitalism with progressive taxes and over regulation. But no one will do anything about it because they are too busy swimming.

Inflation?

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So, what will they do? I fear they will resort to an age-old favourite of monarchs in a fiscal tight-spot and debauch the currency. Because the outstanding balance of a loan does not inflate with the currency, inflation decreases the value of debts. That is good news for debtors and bad news for creditors. Inflation raids the wealth of savers and gives it to borrowers. When the government is heavily indebted, and has no fiscal room-for-manoeuvre, the chance of inflation must be high.

– Jamie Whyte, 'Inflation is likely – but not because of current monetary policy' Telegraph.co.uk

Baroness Scotland should resign

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A couple of days ago, I said Baroness Scotland, the UK's Attorney General, should not lose her job for employing an illegal immigrant as a cleaner.

Now I think she should lose her job. Not for employing someone who's visa had expired five years earlier. But for helping to push through Parliament a law so heavy-handed and obtuse that not even the nation's top law officer can follow it.

Baroness Scotland has been fined £5,000 simply because, while she checked her cleaner's documents, she did not keep copies of them. It's a mere technicality, of course – as she and her government colleagues have been so anxious to point out. And it's exactly the sort of technicality that trips up ordinary, law-abiding people.

People who run small businesses, in particular, live in fear of falling foul of employment regulations such as this. And since there are so many regulations when you employ anyone, no small business can actually ever read them all, or know what the rules actually are. And then the UK Border Agency, a quango, slaps them with a £5,000 because they made a mistake on a form – or even just forgot to take a photocopy. That £5,000 might not matter much to Baroness Scotland. Who knows, it might even appear on her next Parliamentary expenses chit. But it could easily ruin a small business.

It's a rotten law, just like the UK-US extradition treaty that Baroness Scotland also steered through, and which headling-grabbing American prosecutors have used against British businesspeople, rather than to snare terrorists (as the Noble Baroness told us was its purpose). She should be ashamed of serving up such a legal dog's breakfast. She should resign.

The economy is still bubbling along

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The London stock market has been soaring. Another sign that the recession is over, business is thriving, and investors are piling back in? Or evidence of a bubble?

The Bank of England has pumped £175 billion of new cash into the UK economy through 'quantitative easing'. Basically, it's been buying government securities hand over fist. So government IOUs look a lot healthier than they should be – given the profligacy of the public finances. Investors have had to look for other assets – like shares.

Go back to your Milton Friedman and you'll understand that the world is full of different sorts of 'assets', from government stock to shares, to houses, to machinery, to bank accounts, to cash. A monetary expansion, he thought, does not occur all at once all over the economy, but spreads from one lot to another. That is exactly what is happening here. New money is being pumped in to the financial markets, so financial asset prices are rising. House prices are also starting to rise, as investors seek something better than a bank account paying less than 1%. And the money will have to spread down through other assets too before it has much of an impact on the real economy. So the stockmarket is booming, while shops and factories are still closing down and laying off workers.

All this new cash must, of course, eventually have a reviving effect on the real economy. But now put your Friedman aside and read F A Hayek. The problem with new cash rippling through an economy is that price rises ripple through too. Prices rise, then fall, in one sector after another. So people invest, first here, then there, on the prospect of high returns, only for their hopes to be shattered by the ensuing fall. So real resources are wasted on investments that don't ultimately work. That is the real human cost of inept, boom and bust monetary policies. Policies of the sort that Gordon Brown told us he'd saved us from.

Property taxes

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As Tom commented here yesterday, ahead of his party conference speech, Vince Cable announced that the Lib Dems' plans for a 0.5% annual levy on homes worth more than £1m.

No-one explains why this is such a terrible idea as well as the Lib Dems themselves, who have long campaigned against a Council Tax based on property values. As their own website convincingly argues:

The tax "is based on value of your home and takes no account of a person's income and their ability to pay," whereas “fair taxation is based on ability to pay or income."

The argument applies just as well here. A levy on expensive homes would not target those most able to pay. It would target those who happen to live in London and the South East. It would target those who get caught up in property booms, and feel no positive effect from a rise in the nominal value of their house. It would target those who have previously worked hard and prefer to stay in their lifelong homes after they retire. It would target those who choose to live in larger houses with an extended family. And inevitably, it would force some of these people out of their homes.

More generally, the question we should ask is this: should home-owners, who have paid taxes on their income throughout their lives, and who will pay tax on their estate when they die, be made to pay a yearly sum to remain in their own homes? The Lib Dems' website is right: of course they shouldn't.

What's more, according to the Lib Dems, the tax "is costly to collect and administer."

In order for the tax to be levied, homes must be regularly and accurately valued, a laborious and expensive process. Valuations would have to be made for many homes that would not even reach the threshold, and could at best be an informed guess of what a home would really fetch on the market. Protestations and appeals over valuations would no doubt be commonplace. The Lib Dems are quite right: property taxes are deeply unfair and extremely costly. They would do well to listen to themselves, and drop the idea.

The Brixton pound

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Last week, Brixton realised its own ‘alternative’ currency: The Brixton pound. Decorated with local celebrities such as Eddy Grant, David Bowie & The Clash (I notice that John Major has been excluded), I’m sure this will get Notaphilists salivating and provide locals with a few days of amusement. The B£ has come about through Lambeth Council’s support of the Transition Town Network, a decidedly bourgeois organisation aiming to help communities “respond to the challenges, and opportunities, of Peak Oil and Climate Change". How a local currency is supposed to help fight the environmentalists’ crusade against global warming is not entirely obvious, especially when it seems that the currency itself is unlikely to take off.

Money, in its most basic sense, is something that is accepted as payment for goods and services, as those on either side of the transaction believe it to be a legitimate store of value. The problem with the B£ is that many of the people most vital to Brixton’s economy and distinct culture deem the currency almost worthless. While the money is supposed to encourage a feeling of civic pride and unity, the Caribbean shopkeepers and stall-holders view it with suspicion and contempt, believing it to be a pet project of the middle classes that will saddle them with counterfeit, valueless notes which they cannot bank or pay their staff with. Whether this is the case or not, the reluctance of the heart of Brixton to support the B£ makes it unlikely that its velocity will be particularly high. A movement of cultural and economic solidarity has to be made from the grassroots in order for it to be successful, not imposed by a project manager who has returned fresh from Sweden with a degree in climate change adaptation.

The concept of the B£ is also based on suspiciously protectionist principles. Branded as money that ‘sticks to Brixton’, it aims to keep money within the community, giving a boost to local businesses. Were it to be successful on any great scale, it is likely that the surrounding neighbourhoods such as Camberwell and Peckham would receive a fall in business. Consumers may feel morally compelled to ‘Buy Brixton’, which would lower their economic choices, and could result in them paying higher prices for goods than they otherwise would have done. It is also ironic that such a multicultural community with access to goods from across the globe is being discouraged from shopping outside their immediate area. The trade and immigration which has given Brixton its unique identity would not be possible without the movement of goods and people across the world, whereas the B£ stands for a form of localism that attempts to confine the spread of economic activity.