So, economic stimulus

[fivemack]

VAT has gone down by 2.5% as of 1 December, which means the fancy camera I want to buy could conceivably cost 15 quid less in the New Year than it does now. Of course, fancy cameras being made mostly of microchips, it's likely to cost fifteen quid less anyway thanks to process optimisation in the silicon foundries of Taiwan, but hopefully these are cumulative.

But the purpose of an economic stimulus can't just be to move lumps of consumption around by a few months; I don't think that even in the current climate it's necessary to run a big sale in November purely so that you have the cash to pay the salaries for your shop workers in December.

So Alistair Darling's job is to make Britons more profligate than they are now for the next two years (despite the financial mess being, as far as I can see, a function of a decade of unbalanced profligacy) and more frugal than they are now for at least four years to follow. I don't see how subtle tweaks to the tax system can do this; indeed, I don't know if it can be done. Interest rates are the obvious instrument, but profligacy and frugality are functions of upbringing and circumstance in that order; after-tax interest rates on straight savings accounts are now below the rate of inflation, but this has meant that I grumble slightly, keep most of my money in just-as-insured short-term bonds, and devote slightly more to the stock market where there's a possibility of higher returns.

What government policy would make you go out and spend more in February?

Comments

[(Anonymous)]

You thinking it's probably healthy (in a very very indirect way through blood pressure etc) is a fairly weak justification for a government sticking its nose into how a company spends its own money. As I initially said, such a ridiculous level of interference in what is basically a matter of contract between two parties into which the government should not stick its nose requires a very serious, immediate justification; something along the lines of a clear and present danger to the employee's safety is required. 'Other people might be cross that this person is being paid so much and thirty years later have heart attacks' is hardly a present danger: there's not even direct causality!)

What's more it seems to legitimise envy as a policy driver, as your effectively saying that people's health will suffer because they are envious of those with more money, and the solution to this is to stop people being paid a lot rather than to tell those who are envious to get over it!

S.

[fivemack.livejournal.com]

I think we are arguing from very different axioms; I'm happy for a government to stick its nose into how people spend their own money - the entire thread is about what shape nose the government should use to convince people to spend more of their own money - and companies deserve much less protection from governments than humans do.

Why would you expect that telling people not to envy would work? Many organisations, including some with explicitly divine backing, have been attempting to discourage envy for at least three thousand years, and yet still we envy; envy's there all the way through the primates, it's something wired in hard enough that it's unrealistic to expect that telling people to get over it will work. At best you have just as much envy hidden by a thick layer of self-induced guilt.

[(Anonymous)]

There's a very big difference between a government making certain courses more advantageous than others to try to encourage people to take them, and punitive measures aimed at things it disapproves of -- and the tone of this suggestion was firmly in the 'punitive' category. How would you like it if the government capped the amount you could save per month so that you couldn't just increase your standing orders, and forced you to spend the excess?

Telling people not to murder or steal hasn't worked either, but that's no reason to stop trying.

S.

[fivemack.livejournal.com]

Once again, please could you tell me who you are; there are at least two people I can think of who might sign their posts 'S'.

The government caps the amount that I can save in accounts paying interest tax-free at £3600 a year, which I think is absolutely analogous to capping the salary disparity that can be permitted without an increase in the rate of corporation tax; this troubles me little.

[(Anonymous)]

It's not even nearly analogous: for one thing, the kicking-in of tax isn't intended to punish you for saving more, whereas the policy suggested was clearly from the tone meant to punish those companies with the temerity to decide for themselves how much they will pay their employees rather than what Monkey Hands thinks they should be paying. Rather the opposite: the lack of tax is there to encourage you to save more, but without any compulsion. You're free to ignore the if you want. In any case, the amounts involved are fairly trivial, and I got the impression that Monkey Hands would rather the punishment for those who dare to transgress the maximum allowable salary differential was sufficient to cause real pain.

S.