Duncan’s Economic Blog

My mate Fred

Posted in Uncategorized by duncanseconomicblog on April 8, 2009

Oxfam has launched an excellent campaign about ‘Fred’:

Forgotten by those in power.
Ripped-off by taxes and the benefits system.
Excluded from opportunities.
Debt-ridden because they can’t afford to get by.

As part of this they have produced a six point plan to rescue plan for the economy.

Cut Taxes for People on Low Incomes.

This makes a lot of sense – these people have a higher marginal propensity to consume, i.e. tax cuts here will make more of a difference to demand and hence the economy than tax cuts elsewhere.

Create Sustainable Jobs.

Direct fiscal stimulus through spending. I completely agree with this. The New Economic Foundation have a good paper on this.

Raise Benefits and tax Credits Now.

Yes, yes, yes. Again high marginal propensity to consume.

Reform the Welfare System.

Specifically make it easier to move from welfare to work. Hard to disagree with.

Protect People at Work.

I.e. Enforce the minimum wage and other rights. I’d go further and aim to protect jobs. But again hard to disagree with.

Fund Low Cost Credit.

This is an issue close to my heart. I met, in a previous job, the management of Albemarle and Bond, the UK’s largest pawnbrokers and payday loan providers. This is a disgusting business, charging annual interest rates of over 400%, to the poorest in our society. Most worrying of all the lending is usually secured (so the lender bares little actual risk, despite charging such high rates).

These six policies represent a good start on any recovery programme.

As I have said before we face a deflationary recession, the answer is to boost demand by spending more. Once we are out of the deflation danger zone, we can then get to work on rebuilding and restructuring the economy. But the task now is to prevent a deflationary slide.

Oxfam are certainly displaying a lot more economic sense than the Irish Government.

3 Responses

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  1. tory boys never grow up said, on April 9, 2009 at 12:58 pm

    Totally agree with you views on pawn brokers and other usurers. When the Farepak business collapsed (have their directors been disqualified/put in prison yet?) I thought that was a time for a real attack on these people who seek to prey on the weak and vulberable. Surely it wouldn’t be hard to place a ceiling in the interest rate that can be charged especially given the requirement to publish APRs – and given that the public has to underwrite the banking sector perhaps the least we can do is to place some legal limits on their immoral behaviour. Even some Tories might think that there good grounds for this – such limits are common in the US and wasn’t usury a sin in the Bible?

  2. camilla said, on April 16, 2009 at 3:50 pm

    It is a ridiculous report, and it barely disguises the fact that its been written to embarrass James Purnell and the Blairites, not to mention that it opposes Conservative proposals to reform the welfare system. The Oxfam report has the blessings of Tom Watson, the qunitessential Brownite and Cabinet Office minister: he plugs it on his blog.There is something rather fishy, wouldn’t you say, about a Government minister agreeing with every recommendation that Oxfam is asking the Government to act on in its campaign report, and something even fishier that this report is being given high billing in the said Government minister’s blog? Welcome to the murky world of Councillor Antonia Bance and Tom Watson, both Labour ideologues, podgy fingered, and Brown allies….Is Oxfam being used by Antonia Bance one can’t help asking?

    • duncanseconomicblog said, on April 16, 2009 at 3:56 pm

      Personally I think it’s all very sensible and I’m glad that ministers agree with it. I find Purnell’s (Freud’s) ideas repellent. They are premised on growing employment, which is not something we have at the amount. Implementation now would be a disaster.

      I certainly don’t think Oxfam is being use by Antonia Bance, I think that rather overstates her power. Antonia doesn’t strike me as Brownite, just Labour.


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