Imagine you have a stone in your shoe. It’s uncomfortable, possibly painful every time you put your foot down. It’s impeding your gait and walking speed. What can you do about it? Stopping to remove the stone will mean delaying your progress, and possibly inconveniencing other walkers; removing your shoe will mean other people see your foot and no one wants to see that. You resolve to keep on walking and hope that eventually you just grind the stone to powder, without going out of your way.
This is, of course, a totally ridiculous scenario. You would take the temporary inconvenience of stopping to remove the stone, and then continue on, unimpeded and faster than before. You would not ignore the obvious solution.
But ignoring the obvious solution seems like a trend lately. The pandemic has cost millions, with the government, and the public purse, having to pay for PPE and Vaccines and furlough schemes to keep people going and grants to keep businesses going. All of these and more were absolutely necessary expenses to prevent mass unemployment, mass homelessness and mass death. But now we have to pay for it.
The obvious solution in this case is a Wealth tax. A 5% tax on assets over £500,000 would raise £262 BILLION. It would cover over half the expense of the pandemic without serious damage to the economy and if you’ve got assets over £500,000 you are unlikely to miss any meals without that 5%. Closing various tax loopholes so that companies like Starbucks and Amazon actually pay some taxes would probably cover the rest of the cost.
The UK government is addressing the problem by cutting benefits to low income people; cutting public services; cutting foreign aid. Apparently, they think a wealth tax is unnecessary. And by unnecessary, they mean upsetting to their donors.
The famous, or infamous, bank robber Willie Sutton was asked why he robbed banks. His reply: That’s where the money is. We need to tax the rich. Not because rich people are evil and poor people are virtuous. we need to tax the rich because they have the money. And they hoard it. They sock it away in off-shore accounts and hedge funds and the like. They remove the money from the economy.
The best thing you can do to stimulate the economy is give money to the poor, because they will spend the money. After years of a ‘Make do and Mend’ mentality, they will upgrade their appliances, their furnishings, their clothes. Go out to dinner. Go on holiday. After the first lockdown, there was an idea floated to give every UK adult a giftcard worth between £200 and £500 pounds; money that couldn’t be saved, it could only be spent on non-essentials and only in shops, not online. The Idea was to give retail a boost.
They didn’t do it. Many shops, even some high street chains, did not survive the second and third lockdowns. I don’t know that the giftcard scheme would have saved them, but it might have helped.
The UK economy, any economy, will not recover, will not thrive, will not survive on benefit cuts alone. The government is leaving the stone in the shoe, preferring to grind the poor under its heel. The Tories are already limping, and that stone will outlast the shoe.