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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The economics of outrage: Why you haven't seen the end of Katie Hopkins

Her distasteful tweet may have cost her a job at LBC, but this isn't the last we've seen of Britain's biggest troll. 

Another atrocity, other surge of grief and fear, and there like clockwork was the UK’s biggest troll. Hours after the explosion at the Manchester Arena that killed 22 mostly young and female concert goers, Katie Hopkins weighed in with a very on-brand tweet calling for a “final solution” to the complex issue of terrorism.

She quickly deleted it, replacing the offending phrase with the words “true solution”, but did not tone down the essentially fascist message. Few thought it had been an innocent mistake on the part of someone unaware of the historical connotations of those two words.  And no matter how many urged their fellow web users not to give Hopkins the attention she craved, it still sparked angry tweets, condemnatory news articles and even reports to the police.

Hopkins has lost her presenting job at LBC radio, but she is yet to lose her column at Mail Online, and it’s quite likely she won’t.

Mail Online and its print counterpart The Daily Mail have regularly shown they are prepared to go down the deliberately divisive path Hopkins was signposting. But even if the site's managing editor Martin Clarke was secretly a liberal sandal-wearer, there are also very good economic reasons for Mail Online to stick with her. The extreme and outrageous is great at gaining attention, and attention is what makes money for Mail Online.

It is ironic that Hopkins’s career was initially helped by TV’s attempts to provide balance. Producers could rely on her to provide a counterweight to even the most committed and rational bleeding-heart liberal.

As Patrick Smith, a former media specialist who is currently a senior reporter at BuzzFeed News points out: “It’s very difficult for producers who are legally bound to be balanced, they will sometimes literally have lawyers in the room.”

“That in a way is why some people who are skirting very close or beyond the bounds of taste and decency get on air.”

But while TV may have made Hopkins, it is online where her extreme views perform best.  As digital publishers have learned, the best way to get the shares, clicks and page views that make them money is to provoke an emotional response. And there are few things as good at provoking an emotional response as extreme and outrageous political views.

And in many ways it doesn’t matter whether that response is negative or positive. Those who complain about what Hopkins says are also the ones who draw attention to it – many will read what she writes in order to know exactly why they should hate her.

Of course using outrageous views as a sales tactic is not confined to the web – The Daily Mail prints columns by Sarah Vine for a reason - but the risks of pushing the boundaries of taste and decency are greater in a linear, analogue world. Cancelling a newspaper subscription or changing radio station is a simpler and often longer-lasting act than pledging to never click on a tempting link on Twitter or Facebook. LBC may have had far more to lose from sticking with Hopkins than Mail Online does, and much less to gain. Someone prepared to say what Hopkins says will not be out of work for long. 

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