Pleb's College
137, Priory Street, Carmarthen, Dyfed SA31 1LR 16 8 1992

IN MY VIEW
There are lots of financial and economic articles, all written by well qualified and articulate people. They are almost all wrong ! There has not been much sense written since Harold Wincott's articles in the Financial Times.

The belated realisation that Lawson was an economic disaster begins to spread. But it is not understood that the adoption of bigoted income tax cutting policies is a guarantee of asset inflation and a balance of payments crisis. The fragility of a Service Economy is ignored.

In the Observer of 16 Aug 1992, Gerald Lyons writes that to have growth we have to cut debt, and to cut debt, we must reduce interest rates to below the rate of inflation. In other words, reward the greedy borrowers whose reckless policies have brought the country into this awful situation. The application of only part of Keynes' Theory, followed by the ignorant over application of the neglected part by Monetarists who incredibly also continued inflationary policy, makes a great potential for economic chaos worse than any previous.

The immediate and simple remedy is to reintroduce adequate progressive taxation to ensure about two years of noticeable deflation. If that is not done in time, then the economy can get into such bad shape that the government will have to introduce a progressive tax on wealth to maintain its ability to keep order to protect the wealth.
To remedy that:

Stop tax relief for home owners. Building Societies should only lend to established savers able to pay a twenty percent deposit. Abolish rent rebates, which drive up rents making huge profits for landlords to accumulate as surplus capital to take overseas, burdening our balance of payments. Vicious taxes on underutilised property will prevent homelessness much better than rent rebates.

There should be no tax concessions for investing in the stock market, or pensions. The artificial high level of the FT index maintained by tax concession bribery means that a prudent saver has to pay an unrealistic price to invest his savings. Such schemes maintain an army of financial parasites draining the resources of the industrious producers.

Utilities, Water Gas, Electricity, telephones, should be dividend capped, if they are to have such secure index linked profits based on Monopoly, then their current yields, on the price at which they were denationalised, should be no more that the yield on British government index linked gilts. Americans were so ripped off by Water and Electricity monopolies in the 1920s that they introduced severe controls on the companies dividend policy. It is clear that the present British monopolies are being profligate with their revenue.

It must be made unprofitable to be a lawyer, accountant, etc. Brains are needed in design and production. We are oversupplied with professional incompetents, because the professional bodies have used Parliament to grab so much business to themselves that the competents cannot cope with the volume. Competents and incompetents live too well with statutory protection.

All welfare state benefits should be cut by about two percent, and all top state salaries, judges and suchlike, should be cut by twenty five percent, with a sliding scale between. These cuts reverse the scale of cuts the Government made in 1931 which led to the Invergordon
Mutiny. By cutting in plenty of time, and by ensuring that no one freezes or starves, or is without shelter, we may be able to avert the worst and start a recovery in three or four years.

Notice should be given that no new Child Benefits will be paid out after one year from now, and there will also be an increase in tax payable when a second child is born. Workers who are stupid enough to oversupply the Labour market create unemployment, and are no longer needed for 1917 style trench warfare. Overpopulation will destroy the world's ability to support life.

Shareholders should see to things for themselves. Their managers used to say that such high salaries were essential because of the very high tax rates, but when the tax rates were slashed, instead of reducing their pay to maintain a parity, they doubled and quadrupled their salaries.. and ruined many companies as well.
There must be more but that is enough for now.

A big problem is that no one, least of all professionals or academics, has come up with policies or economic theory for managing the economy properly in a post-misused-Keynes world. The economic theory behind a conspiracy I discovered in 1954, before it turned into Thatcherism, matches that in "ABC of Economics" It took forty years to happen on a copy of that book, used by one of the original conspirators (now very senior management Sir!) to evolve his ideas. That book was written by the American Fascist they locked up in a loony bin rather than try as a traitor after WW2.

The priority is to restore economic health to the country without wrecking everything. There is no politician who is prepared to face up to the new reality, they all parade yesterday's answers. But we are back to the day before yesterday.. There have to be different answers. No more destruction of factories to partially pay off creditors. No more setting up Bank financed Capitalists with new grant funded factories to bankrupt and then buy up the new machinery very cheap at the auction for export overseas to their new cheap labour areas.

So where are your clever economists who are going to show us how to have the necessary two year deflation without bankrupting the Building Societies and the Banks. Perhaps those institutions will have to go, appropriate punishment for gross mismanagement. Economists have had long enough to foresee all this, even future inflation will not save those financial institutions dependent on house prices being high once AIDS starts cutting into the housing demand.

This country could now feed itself, and could manufacture all we need. The niche we had in the EEC is now better filled by East Germany. Trying to be Great in Europe will be a disaster for this country. International Market Capitalism is in deep trouble, if we are to preserve the market mechanism and some capitalism, we will have to retrench within our own borders.

So it is a new ball game. I have seen this coming for years, and am losing faith in democratic institutions where people are so ill educated that they vote their own selfish interest at the cost of destroying the welfare of their community and country.
Ilyan 16 8 1992