Useful arguments

What am I to say to people who tell me that we need to be in the EU for our economic welfare or, at least, in a greatly reformed EU? This question keeps coming up and it is important. We have not managed to get our message across as successfully as we ought to have done so arguments that we can use against the other side are important.

Here are some in a letter to the Grauniad, signed by many of the usual suspects (though they are not, thankfully, calling for that referendum).

1. We have 3m jobs exporting to the EU but it has 4.5m jobs exporting to us. We are its largest client. 2. The EU has free-trade agreements with 63 countries worldwide and another 63 on the way, so why not with us, on satisfactory terms? 3. Switzerland, not in the EU, exports three times more per capita to the EU than we do. 4. Only 9% of our GDP goes in trade with the EU (in deficit), 11% goes to the rest of the world (in surplus), and 80% stays in our domestic market. Yet Brussels overregulation strangles all 100% of our economy, and handicaps our exports to the countries of the future. Leaving the EU would create jobs, and restore our democracy.

While I have some reservations about the last sentence (leaving the EU will not automatically do either of those things), the four cardinal points made in the letter are not only true but are also useful arguments. Mind you, when one produces them, one still has to deal with the dubious facial expression and a muttered "yes, of course, but even so" from a lot of people.

Are we allowed to say sub-prime mortgages?

Come to think of it are we allowed to quote that bromide about people in power (not just the Bourbons) learning nothing and forgetting nothing? Those are the thoughts that go through one's head as we read the following:

The Prime Minister and his deputy, Nick Clegg, will unveil proposals to help first-time buyers of new homes by carrying part of the risk of their mortgages.

They also propose subsidising the construction of 16,000 homes by giving £400 million of taxpayers’ money to property developers.

In a further move, ministers are working on a scheme under which billions of pounds of money in pension funds will be used to finance the construction of power stations, wind turbines and roads.

Would it be too much to expect the people who blithely misuse taxpayers' money to do just a little bit of thinking? Yes, I expect it would. What will happen if those who take out mortgages that will be gaily handed out because the taxpayer will provide, find themselves too deeply in debt to be able to pay their interest?

James Delingpole has a more sinister explanation than just incompetence for this appallingly stupid idea.

Did you know that as part of his initiation for the Bullingdon Club, David Cameron had to steal a fluffy kitten from a kindly old lady called Mabel, barbecue it, and dance round the flaming kitty embers chanting: "Ra ra ra! I'm an Old Etonian and you're a filthy oik, moggy, and that's why I'm having you for dinner," before washing the charred feline down with a lovely bottle or three of Cheval Blanc '47 in readiness for the arrival of the Buller's harem of Russian whores?

Not, you understand, that I have any evidence that this story is true. But Cameron must have a skeleton in his closet of that magnitude, surely? It's the only explanation for the extraordinary grip exerted on him by the house building industry, which has just persuaded him to embark on the most harebrained scheme of his political career: the recreation, in Britain, of President Clinton's Community Reinvestment Act and of Freddie Mac and Fannie Mae.

Possible. For the moment I go with idiocy and economic illiteracy on a monumental scale.

Allister Heath, as ever, manages to connect his hammer with the nail head.

THERE are two ways one can address a problem caused by faulty policies: by tackling its root causes – or by addressing some of its manifestations, and risk creating more issues thanks to the law of unintended consequences which plagues all government actions. Regrettably, when it comes to house prices, the government is largely going for the second option, albeit with a small nod towards the first. There are massive problems in the housing market – but today’s announcement that the government is going to partly underwrite mortgages for first time buyers and move some risk onto taxpayers is a terrible, short-sighted blunder.

Developers will also be able to bid for public money to finish stalled developments: this implies yet more corporatism to fund projects nobody really wants. Have we all forgotten the sub-prime crisis in the US? Over there, politicians concerned that many poor people couldn’t afford homes forced and bribed lenders to lower credit standards and extend mortgages to those who couldn’t afford them. In the short-term, this boosted home-ownership; but it all ended in tears. It is good to care about the poor and young people who can’t get onto the housing ladder; but it is bad to give people false hope, to create moral hazard or to privatise gains and socialise losses in the housing market.

But they will not listen. It will all end in even bigger tears.

Who could have predicted it?

Just about everybody, that's who. Well, just about everybody apart from politicians and people who keep spouting stupid slogans because they believe that money grows on trees. Tax those rich bastards. Why shouldn't rich corporations pay their "fair" share? Fair share of what, one asks oneself.

Anyway, as City AM reported today,

THE CHANCELLOR was forced to defend his surprise tax raid on oil firms yesterday after energy giant Statoil announced that it was suspending a $10bn (£6.2bn) investment in the North Sea in response to the hike.

Well, we couldn't consult them all, whined Georgie-Porgie. Of course, they don't like being taxed. What do you mean they can take their money somewhere else? That was not in the script.

The real problem lies in this paragraph:

The government hopes to raise more than £10bn over the course of the current Parliament, to fund an immediate 1p per litre fuel duty cut and a fuel stabiliser to cushion motorists from rising oil prices.

There is no thought behind any of these cuts. The assumption is that we can cut a bit here and a bit there but, basically, the state retains all its powers and portfolio of activity. Therefore, if we cut taxes in one place, the government will not have enough money and taxes will have to be raised somewhere else. How about asking whether the government actually needs all that money in order to do (very badly) many things that it ought not to be doing? Then we can start working out what it is the government does need to be doing.

Some decisions will have to be taken

We are to have a ring of steel for the royal wedding in a month's time. Goody-goody. Then again, what else can one expect when a few hundred spoilt brats, calling themselves anarchists can destroy quite so much property, terrorize people who are going about their business, in fact, running businesses that bring in the money badly needed by this country? In the meantime, the Met is going through its usual agonizing self-analysis. Did they know this was going to happen and when did they know it? Why did they not warn the likes of Fortnum and Mason about the impending occupation? And so on, and so on. The only cheerful aspect of it all is that there is a good deal of agonizing among those who were on that march and those who organized it. Should they support the idiotic and self-indulgent UK Uncut and other suchlike juvenile manifestations or should they actually stick to the point they were trying to make, which is that any cut in the public sector, however miniscule will reduce this country to the lowest depths of Dickensian hell? There is no possibility of them actually understanding basic economic facts, I fear. Meanwhile, Chris Blackhurst of the Evening Standard has written a couple of excellent articles. In one he doubts that "Britain is open for business" if business is going to be treated the way it was on Saturday.

The message from business after these latest riots is clear and unequivocal: the authorities must get a grip. That comes not just from those directly affected by the violence - though the voice of one of them shook with anger when I spoke to him yesterday - but from all commerce.

There is already sentiment enough that somehow in this country we're anti-business. Standing back and letting this happen reinforces the case. Whatever the argument about tax avoidance - and it is worth remembering that avoidance is entirely legal, evasion is not - the proper forum for the debate is not in Oxford Street or Piccadilly, with thugs and their sticks and cans of spray paint in attendance.

There is a feeling in the business community that the Government's response was not as condemnatory as it could have been. And bosses are not so much concerned by the loss of earnings or damage to their property - they can cope with that; what most bothers them is the trauma suffered by their staff.

Let's face it, the louts who are so upset about tax avoidance and the possible effect that might have on the "wretched of the eart" are not going to be bothered by the trauma suffered by hard-working staff. Mr Blackhurst also has a go at Miliband minor and his ridiculous pretence that people demonstrating, however peacefully and legitimately, for their salaries and pensions are, to be compared in any way with those who had fought for civil rights and against apartheid. (Or for some kind of basic freedom in Egypt or China.)

That would have been fine, Ed. Except Saturday was not caused by a revolt against discrimination but the result of squandering of the public finances by your Labour predecessors.

Not only is it not in the same league, but the very thing of which you were complaining was brought about by your party and - as a former minister in the Labour Government - your colleagues. You acknowledged as much when you said "some cuts" were necessary to balance the books.

Because he is not in power, Miliband does not have to spell out those measures. He can leave it to others to take tough decisions, hoping that every move they make bolsters his standing in the polls.

He said: "David Cameron, you wanted to create the Big Society - this is the Big Society."

Not true, Ed. Of the private sector that actually creates the wealth in this country, there was neither sight nor sound.

Of course, up the road from Hyde Park, businesses were being trashed - and not just the ones that arrange their tax affairs perfectly legally to minimise payments. Anything marked "profit-making" was fair game for the braying mob. "Class War" they sprayed on windows and doorways, while less than a mile away, Ed Miliband (son of an academic, Oxford University and virtually his entire career at the coalface of the Westminster political village) was rousing the faithful.

Apart from the academic parentage the same can be said about the Conservative and Lib-Dim leadership. No wonder business is feeling beleaguered.