Europe: stay or leave? Focus on fact - 2

I saw Boris Johnson on tv the other night saying he wanted an honest debate about Europe. So why does he keep telling lies? As the Treasury Select Committee found, Boris has no scruples about just making stuff up (which was what got him sacked by The Times, of course). http://www.theguardian.com/politics/2016/mar/23/very-interesting-boris-johnson-brexit-treasury-select-committee

Boris and his fellow Brexiters were up in arms because the government is going to send out a letter explaining some of the facts about EU membership. If we are going to have a fair referendum, this is, of course, vital, as the right wing tabloids spew out a relentless tide of anti-European propaganda, and have long ago given up any idea of covering the issue in a balanced, factual way.

But the Brexiters want to silence anyone who speaks up for Europe. They tried it on President Obama. His advice to Britain to stay in the EU was particularly inconvenient, because the anti-Europeans claim we will be able to cosy up to America once we leave Europe.

Boris also tried to ban anyone at City Hall from saying anything nice about Europe. http://www.mirror.co.uk/news/uk-news/boris-johnson-forced-humiliating-climbdown-7518231

Also interesting this week: the ‘Jagger backs Brexit’ claim (so apparently do the Queen, and probably God, according to the anti-European tabloids). If you actually read what Mick said, he argues that for the first 20 years, leaving will damage us. Then in the ‘long term’ it might be ‘beneficial. ‘ As the great economist John Maynard Keynes said: ‘In the long term, we are all dead.’

http://www.huffingtonpost.co.uk/entry/mick-jagger-says-brexit-at-eu-referendum-may-be-in-long-term-interests-of-uk_uk_5702ecdee4b0c5bd919b90d0

Panic on the streets of London

So I got it slightly wrong in my blog of February 23 – the Bank of England must have thought twice about cutting interest rates to minus 2.5%. Instead they just brought them down to 0.5%. In other words, suppose you lend someone £100, taking the risk you don’t get it back. For taking that risk of losing your money, you stand to earn yourself....50p! Interest rates have been slashed by 90 per cent since October, and Labour and the bank are astonished that nobody wants to lend.

Still, the bank’s governor Mervyn King gave a wholehearted defence of the policy. He said: "Nothing in life is ever certain, but these measures we think will work in the long-term." I feel better already! Who was it who said “in the long-term we are all dead”? Oh yes, it was the great economist John Maynard Keynes. Anyway, let me tell Mr King one thing that is certain – those who depend on interest from their savings – like pensioners, for example – are being hastened towards destitution, and they will do exactly the opposite of what the economy needs – they will stop spending.

Yesterday’s decision was another triumph of hope over evidence. Have the previous five interest rate cuts in five months got the banks lending? No. Why should this one? What effect have each of the previous five cuts had on the economy? Nobody knows, because nobody bothered to find out before making the next panic reduction.

All Labour’s economic policies – including the Mugabe option of printing money – are based on doing something, anything to get the banks lending, like the bizarre decision for you and me to take £325 billion of worthless assets off RBS’s hands so it would lend £25 billion (see my blog of Feb 27). It would have been cheaper, more effective, and more socially just for Labour to have simply given us the £25 billion.

There’s no point in basing an economic policy on prayers – prayers that the banks will lend money. Here’s what Labour should do instead – hand out an immediate tax cut or benefit increase to everyone receiving, say, twice average earnings or less. The pay-out should be on a sliding scale, with those earning most getting least, and the poorest getting most. This would stimulate the economy, as people who are less well off are much more likely to spend their money – and to spend it on local goods and services.

If Labour wish to be financially responsible (which I would advocate) the funds could be raised by an emergency tax levy on those earning more than, say, £100,000 a year. These people have benefited from huge tax cuts and pay increases over the last two decades, and are well equipped to help those less fortunate than themselves in what Mr King seems to be painting as the worst economic problems we have faced in the Bank of England’s 315 year history.