Thursday, October 11, 2012

Overhaul for Democratic Socialism

In stark contrast to the media rhetoric, from a media  which by the way has been paid to extract the very terminology in any positive context, democratic socialist values are alive and thriving amongst euorpean populations.

However it is time for a major engine overhaul in left wing politics as we saw before in the successful Blairite and Clinton years, and in the revival of France in the 1980s. Socialism became a dirty word, and below the right wing owned media, at grass roots level so has capitalism become a dirty word. The truth is that market economics and social democracy are yin and yang.

The papers and the politicians have been bought out, the message is "market economics must rule every part of our lives".  But by the very freedoms that democracy inholds, and by the very same market mechanisms for ideas, socialist values are on the rise again as an antedote to the capitalist cure for the capitalist failure caused by the sub prime collapse.

Just as capitalism has now shown it's shortcomings when let run too wild,   so  had democratic socialism hit it's own buffers previously, especially at the end of the 1970s.  Post sub prime scandal and the western recession, raw capitalism has shown aslo that it can't " keep most of the people happy, most of the time " any more.

Both systems picked up enough bugs and lack of sensibility in control, checks-and-balances if you like. As the new-right comes to a rather inevitable end of what can be privatised, marketised and otherwise pseudo liberalised then it will be time for the left to not just appeal to voters, but to have a realistic agenda of policies for change which move society forward.

So below I outline some overhaul points or actually modernisation to tap into the societal, community values as a synthesis to household-, micro- and macro economics. There are many other societal benefits to be found in rejecting the individualistic, small-weak government, laisez-faire politics the media have been hood winked into expousing. In fact the reverse is often true, that in some areas of politics there has been more public spending and less choice

In France, Germany and Scandinavia, social democracy grew out of the harder line socialist planned economics and allowed freedoms which made it possible to keep enough of the people very happy most of the time, that the media could be bought out and the ideology of the church of capital rammed home to new worshipers and previous disbelievers. In the UK and USA, this went much further, exacerbating poverty.

Here I come to my first point about the overhaul that democratic socialism needs to bring it back to the popular centre stage, and in so doing, swing social democracy away from being so bought-a-bed-fellow to capitalism.

Overhaul Point 1 : That some people become richer and prosper should not be a contradiction or a counter-target in a democractic society. On the contrary. Taxing the rich more per se does not solve poverty or address inequality. Taxing the rich effectively in terms of raising net revenues for national budget, is what Obama, Hollande, Labour and the Liberal Democrats aim to do.

The point is that the rich have done very well out of social democracy and the 14 years or more of public spending tracking economic growth, and now they can afford to pay their share to balance the books stop western economies declining further into recession. This should not be punative, but rather to a level which does not make it realistically worth moving assets and income sources.

Rasing new net tax income is sensible right now to help circulate money down through the economy and slow up the recession fueling decline in public spend in the national markets. The wealthy are accessible through their property as suggested in the mansion tax, but also through making personal share dividends subject to effective income taxation levels, which raise net revenues.

Higher net revenue from the top 12% of society can be acheived by engaging to the principle of just-noticeable-difference over several income and wealth points. This will be more effective than setting an arbitary level of say 33% on all banked income, or by calculating how much you want to earn based on x% more on top rate tax. In essence as the UK tories have done with the consumer society, you use stealth tax rises : Luxury goods  Luxury Services VAT at 33%; 2% on personal dividend income; 2.5% on income tax; remove tax loop holes and control money coming into personal bank accounts - another 2%.

Every major recession including in part the western decline in the late 70s, has been reversed by keynsian economics. Post 1979 the right wing government in the USA and UK used massive spends on weapons, policing and the space programme while being able to liberalise financial markets at the same time that data technology allowed for an explosion in trading on these markets fortuitously to the righ. In Europe, emerging center-left and left wing governments modernised infrastructure and industry.

This said, however,  the connection between wealth creation and poverty creation should be severed. this links to point 2. Sound like double think and oxymoron? Think about it.

Overhaul point 2 : Public money should not be used to support private profit by indirect means by subsidising poverty. Too much government money goes on wage subsidies ( including housing benefit which we will come back to)  and low value job creation.  In other words, government should focus on fixing the skills people have and the help make better general market conditions, not create possibilities for profit by supplying cheap, subsidised labour.

Overhaul point 3: Remove false, distorted  artificial markets created by governments. Come back to some inflation limits nad outright market controls where public money is used and virtual monopolies or price parity in amenities reigns.  More can be subject to price control to protect the public from excessive profiteering and inflation. For instance housing benefit. Rather than build housing or buying and freeing up land for "location subsidised" private housing, states have moved towards subsidising segments of the house market, particularily unsuccessful apparment blocks, by the back door. This is through housing benefit pouring into private captial. A lack of ceilings on housing benefit has made this a huge budget in many countries, coupled to laws which require local authorities house people in the "free market".  Market controls for for example energy exist in many lands. Limits to housing benefit exist in many lands. Countries without housing benefit have often lower housing costs, which can be then covered by fixed social benefits and by lower wages rather than inflation  prone housing benefits. 

Overhaul point 4. Taking directly from three: plan the housing market and free up planning permission for the type of housing most needed, not that which is most profitable. To appeal to the middle classes, let planning take into account loss of light, loss of amenity and loss of value. Let local communities in more modern, spacious areas take democratic decisions to lock the area into limited "garden " development and same type of architectural houses. Let local populations in dense housing areas decide on free spaces and use of public money.

Overahaul Point 5: shift away from employer contributions for social costs: remove these for new employees placed in permanent contracts (after 3 to six months trial) ; give greater tax incentives for training

Overhaul Point 6: Liberalise Education More and ALSO Plan Education more. Make education a more employer market and less of a 17 year old decision maker market. This includes state as an employer. Encourage planning. Reduce places when there is large amount of unemployed graduates in a discipline. Make vocational courses have two starts each year, august and february. Ecourage day release and summer school learning. Reduce the number studying academic and low employment rate societal and political studies. Increase access to business skills and tools on all courses

Overhaul point 7: encourage development and use of express public transport to key employment areas and the use of short journey to park-and-ride facilities. Plan all new industrial areas and  business parks must have collectively organised or public transport plan or in fact be built preferentially with walking distance access to major arterial transport routes. Encourage collectively organised maxi taxi as a tax break for employers of more than 10 employees.

Overhaul point 8: reduce tax on the basics of life and enjoyment. Conversely increase taxes on luxuries. Simplify tax to different levels of applicable VAT instead of "extra tenner taxes". Continue to reduce taxes for the lower part of income and increase accessibility to pensions

Overhaul Point 9: bring back in tax breaks for businesses which involve spending money in the local service economy and investing in people. This includes yes, wining and dining customers and suppliers in your own nation: it includes training; it includes acts and actions of charity; it includes a better,safer, more enjoyable work environment; It includes pensions; it includes relocation and even housing for workers. Increase also access for personal tax breaks on much of the above!

Point 10: Encourage employers to employ full time, permanent. Make part time and temporary employment hour-for-hour the same "on-cost" including immediate pension contributions as . Have a european  wide minimum on job security but also a maximum. In effect the government as above, subsidises a flexible labour market by paying for benefits when temporary employees are laid off, and also for social housing in many countries where they will never get a foothold on the housing market. This even applies to six figure salary paid London consultants I have met who get annual contracts, take it or leave it, and through the last ten years have not been able to get mortgages.

Point 11:  Enforce laws which mean bad employees cannot be supported by unions and technical legalities : but ensure that dismissal is on proven sound economic reasoning, people are not replaced by cheaper labour, or other grounds for dismissal are well documented and actually go through an ombudsman and union even if the person is non unionised.

Point 12: Bring in quality assurance into public services and private/charity NPO provision in the public sector spend. ISO, new EN's, new local and national standards, quality checking. By all means employ private consultancies, as the BSI, DNV, Price Coopers etc to advise, accredit, police and even lead implementation.

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