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

[monkeyhands.livejournal.com]

In response to S:

1. I'm not talking about capping the highest salary in a company. I'm talking about linking it to the lowest salary in a company. Companies would still be free to pay whatever ludicrously high salaries they like to the people at the top; it's just that they would then be forced to raise the salaries of the people at the bottom too. So it's not a "maximum wage" at all.

2. I think fivemack's point about heart attacks may well be valid, but it hadn't occurred to me when I made my original comment and it wasn't a reason for what I proposed at all. I think you've been focusing way too much on arguing about the heart attack thing (probably because it's the least-easily-proved bit of what fivemack says) and ignoring his broader point that low salaries and income inequalities do have a broader impact on wellbring.

3. I don't agree with fivemack that humans necessarily strive for status or that this status is necessarily related to earnings. I also don't believe that the stress you get from working in a company where pay is unequal is to do with "envy" as such; it's to do with regularly being shat on and being aware of the total unfairness of your situation.

4. I do believe that the income inequalities created by a company's decisions on salary are an externality which government has to clean up. Income inequalities have a direct and negative effect on various areas which government deals with: crime and health, for example. So I believe it's completely fair to force a company to pay for the consequences of its own decisions through tax.

5. I don't believe that forcing a chief executive to accept a maximum of, say, 200 times the salary of a company's lowest worker can be seen as "pain" or "punishment" for the chief executive.

6. arnhem has made many of the other points I would otherwise have made myself.

7. I refuse to continue discussing this with you since I don't know who you are and I don't believe you are arguing in good faith. You have ignored fivemack's two requests to say who you are.

[(Anonymous)]

I don't know what you mean by 'arguing in good faith'. You think I'm just playing the devil's advocate?

(What does knowing who I am have to do with anything? I don't know who you are. Well, I'm assuming you weren't christened 'Monkey Hands'.)

It's not a maximum wage, but it is a punitive system designed to hurt those businesses which do not act in the way you approve, is it not?

And while it's quite a complex change to work through the implications of, I wouldn't be surprised if it did act as an effective cap on top-end wages because companies which raised the lowest wages in order to allow their top-end wages to rise higher would find themselves uncompetitive. Indeed, I suspect this is part of your reason for suggesting it; is it not?

Income inequalities may have an effect on crime, but the solution to that is to deal with the crime. Yes, it's a classical view, but that's the way it is.

As for health, I don't see how income inequalities, as opposed to income absolutes, have any effect on health whatsoever. The areas of the country where life expectancy are lowest are not those with the greatest income differentials, they are those where the absolute income is lowest. That someone in Knightsbridge earns £500,000 pa is not what causes Glaswegians to die in their forties, and if that high-earner was to have his salary slashed it wouldn't make the health provision in Calton any better.

I never suggested that capping a chief executive's salary (and now you admit it's meant to be a cap, do you?) was 'pain' or 'punishment'. Just that it was none of the government's business.

S.

[arnhem.livejournal.com]

(What does knowing who I am have to do with anything? I don't know who you are. Well, I'm assuming you weren't christened 'Monkey Hands'.)

I think that the point is that fivemack probably knows who 'Monkey Hands' is, but doesn't know who '(Anonymous) / S.' is.

And although not fully transitive, friends-of-friends relationships inform the way we interact with people.

[(Anonymous)]

If you're going to put stuff on the public internet, it's in the public arena. That means people you don't know are going to see it. Indeed, it implies rather that you want them to see it, that you think that what you write is worthy of a global audience.

S.