Saturday, April 17, 2010

Greenpartywatch: the manifesto

Recently I blogged on the difficulty Greens have reconciling their disdain for economic activity with their policies on public services that seem to involve unlimited public spending. I concluded that by failing to support economic growth, the Greens would have to be, before too long, the biggest cutters of public services of all.

Their manifesto has now been published, so let's see if it challenges what I said.
In contrast, the Green Party is open about what we would cut, what we would defend, and about the fact that we need to raise taxation from 36 per cent of GDP in 2009–10 to around 45 per cent in 2013. This would halve the gap between Government expenditure and revenues by 2013–14 (as the Labour Government proposes) and progressively close the gap thereafter.
Wow. It's different, I'll give them credit for that. Increasing taxes overall by 20% is courageous, minister. Is it true that this would halve the gap between expenditure and revenues? Yes, if economic growth happens as forecast. Government forecasts, remember, rely on future increases in tax revenues due to economic growth.

But would that growth still happen under the Greens plan? Or would the 20% tax hike dampen it? Would the Greens' disdain for growth kill it off altogether before they even implement any policies? Is in fact a 20% tax hike designed to reduce growth? That would make some sense in a parallel universe of strange priorities.

And even if growth was unaffected, is this the right idea?
Unlike Labour, we would not focus on encouraging consumption but protect public services, spend on investment in the new green economy and create greater quality. Labour’s approach will sow the seeds of future crises by encouraging crippling debt and unsustainable consumption.
What seems to be said here is that money in your pocket is consumption and therefore bad, whereas public spending brings equality and is therefore good. And yet this consumption, we commit with the lucre in our pockets, is how we feed, clothe, and house ourselves. A tough challenge for millions of hard working people, who would pay more taxes under the Greens, however much they aim the bulk of their tax rises at the better off.

It's an understandable position. The Greens, like all parties, are pretty much middle class, and don't really get this, just as Paxo wasn't impressed at a tax cut of £300 for somebody on £8000 under Lib Dem policies.

And a lot of people on £8-20,000 don't use a lot of public services, face high food and fuel bills, can't afford housing, and aren't getting an awful lot for the taxes they pay. Equality through public spending can ring very hollow. The problem is a lack of consumption.

Now let's look at a few of these new taxes:
End the zero-rating of VAT on new dwellings, putting them on a level with conversions and renovations of existing dwellings, raising £5bn in 2010 and £7.5bn by 2013.
Oh, but won't this reduce the supply of housing when we could do with more housing really? (Although there is a policy to increase social housing.)
No longer offer zero VAT rating to financial services and betting duties, which are of limited value to the real economy, raising £5.6bn by 2013.

Gradually increase alcohol and tobacco taxes by about 50% to match anticipated increases in expenditures on the NHS, raising £1.4bn in 2010 rising to £5.6bn by 2013.
Ouch. Gambling, smoking and drinking all to be hammered. Won't the effect of this be just a tiny bit regressive? Not that the Greens are joyless puritans or anything.
Levy eco-taxes on non-renewables or pollutants, in particular pesticides, organo-chlorines, nitrogen and artificial fertilisers and phosphates. [amount not specified]
Tax on food. Who'll that hit most? Not all of these things are even big environmental problems.

I've not added up all the other tax increases but you can probably guess the sort of thing. I dare say the numbers add up to the promised(!) increased tax take, but ignore the economic impacts of all these extra taxes.

So was I justified in saying the greens would be the biggest public service cutters of all? Certainly if my reading of the economic chicken entrails is correct - and if it isn't the Greens should come back and fully explain their attitude to economic growth and its role in deficit reduction. And even if not they may be something even worse - the biggest ever cutters of consumption at all earnings levels.

That's not to say the manifesto is all bad. Some of the eco-taxes hit important environmental problems, and some of the extra public spending would be useful to many people. On the other hand a lot of it is more based on the Greens' peculiar sense of what is virtuous than any concrete environmental or social impact.

They are making a strong pitch for the hard left tax-and-spend vote. I expect this to fall flat because they do not understand the aspirations of the left, for working people to earn more, not less. Greens celebrate that wind creates many times more jobs per TWh/yr than other similarly priced forms of energy. That's almost equivalent to celebrating that those jobs are much lower paid. And the idea of economic progress through abandoning labour-saving technology would end with us all as dirt poor peasants. Would we peasants then still enjoy great public services? Nope.


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limestone cowboy said...

but what are you in favour of, then, Joe?

Joe Otten said...

I'm in favour of lib dem policy: fairer taxes, not deliberately thwarting economic growth, and a deficit reduction timetable driven by economic indicators rather than dogma.

Rosa said...

The issue the Greens have with growth is that it is environmentally unsustainable. On a planet with finite resources, it's asburd to assume that growth can continue indefinitely. As far as I know, the Green policy on this is to consider the possibility of having a working economy that provides jobs etc on a zero growth basis. All the other parties (and most economists) won't even consider this, instead they bury their heads in the sand and hope that science will make everything OK. This 'disdain for growth' you refer to isn't dogmatic, it's entirely sensible given the reality of the environment and its resources. Aiming for growth in itself is absurd. It's just a number on a piece of paper. Aiming for full employment on the other hand is, of course, the right thing to do, but growth for its own sake is not really worth that much for most people.

If the Greens are in favour of a large state, it's not because they WANT a large state, its because they believe that it is through their policies that their aims will be met, i.e. greater equality and environmental sustainability. You may disagree with these aims, or that these policies will be effective, but don't try and argue the Greens are any more dogmatic or ideological than the Lib Dems.

Joe Otten said...

Rosa, thanks for your comments. I think there are problems with your analysis of growth but that is for another occasion. My point here is that without growth, you need much bigger spending cuts and tax rises to balance the budget, compared to what the other parties need.

Also I remember in the 80s the Greens being in favour of a smaller state. What happened to that?

limestone_cowboy said...

the issue the Greens have with growth is that it is environmentally unsustainable. On a planet with finite resources, it's asburd to assume that growth can continue indefinitely.
Yea RIGHT but
a more pertinent issue with Rosa's comment and with the Green Party Manifesto this election, is:
If they still find economic growth unsustainable (rightly,
as it uses up the Earths finite resources,) why has the Green's party not really made this a theme of their 2010 manifesto?
In the eighies I recall the Green Party were for decentralisation of power, rather than a smaller state. But this would not have to be dispersing the state to the regions. Behind it was the objective of maximising conservation of finite resources by
promoting local production for local needs;~local and regional economic self reliance
(so our homeland no longer will keep reaching to take from around the globe and have us consume 14 times as much Per head as the two thirds of the world population living in the Third World)
It is to be mourned that the themes of decentralisation and the
green economic motives for it are no longer running through the 'Green' election manifesto. So it may be questionable whether the Party still has its purpose of opposing an economic growth which is spending the earths limited resources as soon as possible.