My mate Fred
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.