The delusion of economic 'recovery'

The notion of 'recovery' assumes we can return to business as usual. We can't

Hamish McRae is one of the few economic commentators to emerge from the financial crisis with his reputation enhanced but his column on 'recovery' in today's Independent falls foul of a common delusion.

The whole notion of 'recovery' is predicated on the belief that the current economy can return to its previous heights. But the current economy cannot return to the methods that triggered the crisis in the first place.

The springs of wealth, as Marx called them, will only flow more abundantly with the birth of a new economy not with the resurrection of the old.

Elsewhere in the piece, McRae reflects the new consensus that a mixture of spending cuts and tax rises is needed to plug the deficit. He writes:

"We should probably expect some kind of temporary increase in income tax, and not just for top earners. And other smaller taxes will go up too."

There is certainly scope to increase the basic rate of tax, which currently stands at 20 per cent, its lowest level for 75 years. But both Labour and the Conservatives will surely want to avoid this politically toxic option.

A far better choice is to raise taxation on unearned income, notably inheritance and capital gains. The Conservative pledge to raise the inheritance tax threshold to £1million appears increasingly unsustainable and Labour should also now reverse its decision to raise the threshold to £600,000.

There is a strong, meritocratic case for increasing inheritance tax and it is one best articulated by Warren Buffet and other US entrepreneurs.

Buffet is keenly aware that dynastic wealth saps initiative and productivity and as such has pledged not to leave a significant proportion of his fortune to his children.

As he once noted: "I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing".

A coalition of 120 American billionaires successfully campaigned against the abolition of the 'death tax' in the US. We desperately need a similar coalition to throw their weight behind inheritance tax here.

George Eaton is political editor of the New Statesman.

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France to bulldoze Calais Jungle days after child refugees arrive in the UK

The camp houses thousands. 

Refugees and migrants in Calais began queuing up for buses this morning as the French authorities plan to demolish the "Jungle" camp.

But activists fear that, unless France significantly speeds up its asylum process, the displaced people will simply move to other camps along the northern French coast.

Meanwhile, the first children of Calais brought to the UK under the Dubs Amendment arrived at the weekend.

The camp known as the Jungle, in a wasteland by the port of Calais, is actually the latest manifestation in a series of camps established since 1999, when a French reception centre became too crowded.

However, it has swelled as a result of the refugee crisis, and attempts by residents to sneak onto lorries entering the Channel Tunnel have become daily occurences. The French authorities bulldozed part of it earlier this year.

Ahead of the latest demolishment, which is expected to happen on Tuesday, Clare Moseley, founder of Care4Calais, said: “In February this year over 50 per cent of the camp was demolished and yet six months later the camp is bigger than it has ever been before. 

"This is clear evidence that demolitions do not act as a deterrent.  The refugees come because they have no choice."

Future refugees will go to other camps with even less facilities, she warned.

The camp houses thousands of residents, but because of the authorities' unwillingness to legitimise it, there is no official presence. Instead, the residents must rely on volunteer aid services and have little means to stop intruders entering. 

Although conditions in the camp can be dire, residents have created a high street with basic tent shops and restaurants catering to the needs of its displaced population. Many of those in the camp say they are there because they hope to be reunited with family in Britain, or they have given up on ever being processed by the French authorities. 

After the UK government was pressurised into passing the Dubs Amendment, which provides sanctuary to unaccompanied child refugees, some children from the camp have arrived in the UK. The first group is reportedly mostly girls from Eritrea, who will be processed at a UK immigration centre.

One of the MPs crucial to ensuring the Dubs Amendment delivered, Stella Creasy, said many more still needed help. 

Children reunited with their families under the Dublin Convention arrived in the UK last week, although their arrival was overshadowed by a debate over age checks.  

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.