Since winning the Labour leadership nomination, Jeremy Corbyn has started announcing his appointments to his Shadow Cabinet.
Most notable of these is Hayes MP John McDonnell as Shadow Chancellor of the Exchequer. This is a man who last year joked about lynching a Tory MP, and has praised the “bravery of the IRA”. In addition to this, his economic policy is absolutely bonkers.
Although nobody expected Blairite policy from a Corbyn administration, the mind of the new Shadow Chancellor is worryingly state-heavy to say the least. On his website three years ago, he laid out what the now chief economic manager of the Labour party would consider as rational economic policy. This is the type of person we are dealing with:
- A wealth tax on the richest 10% (technicalities and definitions withheld, of course), land value tax and financial transactions tax. These taxes are not dissimilar to what the Hollande administration has undertaken, not exactly a great economic model to mirror. Taxing capital is one of the most destructive ways to ruin the supply side of your economy. (In addition to not being particularly effective)
- 60% tax on all incomes over £100,000 – Lots of delicious capital for the State that will
- Clamping down on tax avoidance and evasion. Whilst few disagree that illegal tax dodging is not worthy of merit, from a libertarian perspective this has to come with tax simplification and clarity, which is unsurprisingly not present. Clamping down on tax avoidance, however, seems far more insidious. The image of the state employee snooping around and trying to fiddle with people’s behaviour to extort more money out of them comes to mind.
- Mass public housing projects. While admirable, they don’t do anything to reform the fundamental stranglehold that public policy has put on housing market. The relationship between this and immigration has been covered here
- Creating one million climate change jobs with tax money, ensuring certain companies and firms survive completely arbitrarily at the taxpayer’s expense, with no way to tell which form is needed and where.
- Creating a “national investment bank” to ensure “no shortage of funds” for manufacturing development. I.e. Centralised and unlimited credit in the hands of the state to arbitrarily fund ventures that have been deemed to be completely redundant by the modern market, creating gross malinvestment in the economy. Similar shenanigans happened in the United States with Fannie & Freddie, where the government generated huge lines of credit which resulted in a massive housing boom and bust. (5th plank of the Communist Manifesto, by the way).
- Banning salaries that are 20 times that of the lowest paid member of any organisation. A sure fire way to utterly screw up the labour market
- Reducing the working week to 35 hours, completely removing individual choice.
- Closing the gender pay gap by force, despite the fact it is naturally closing or doesn’t exist in a significant manner, causing members of the workforce to be arbitrarily cut out
- Rent Control, I.e. making cities look like bomb sites
- Guarantees of jobs/apprenticeships/university for EVERYBODY, with ALL FEES removed; driving the already bloated education and training sectors further into bureaucratic dust.
I hate to be the typical libertarian here, but this stinks of communism, pure and simple. This is no state support project for the poor in a modern Western market economy, this is a systematic takeover of the entire set-up the central planning board of the state. A complete seize of control at the ownership and regulatory level.
These people honestly believe that a small group of people have the capacity to organise the lives of millions of individuals at the micro level and come out the other end with socially just ends whilst also promoting innovation and wealth creation. McDonnell is fixated with the idea that all the wealth is “locked up” in the hands of the few and it just needs to be fiddled around with instead of cutting back the state. Sorry John, but Britain isn’t a petri dish where you can just pick and choose where things go and how people act, and if you ignore the processes that generate these resources, you may find that you run out of juice.