Letters to a great-granddaugher (5)

I sent a card today to Spain for my great-granddaughter's 2nd birthday.   It is three weeks away, but the time post takes to reach rural Spain is unpredictable.   I am looking forward to seeing her when I get married in May.

I think that parenting is much more difficult today than in the analogue world of the 1970s and 1980s.  Social media poses challenges for parents that I didn't have to deal with and my great-granddaughter will live in a world in which AI will probably rule supreme.   Like all technologies, it has benefits and disadvantages, but it will be challenging to regulate effectively.

I also think that a lot more is expected today of parents in terms of intervening in the lives of their children.  My approach was rather laissez-faire, 'whatever'.   There were scrapes along the way, but that is unavoidable with teenagers.   It's also easier to deal with them when you are relatively young yourself which is why I was pleased when my granddaughter had her daughter at the age of 22.

Unfortunately, though, I was still hard at work when my grandchildren were growing up which meant I wasn't able to give them as much time as I would have liked.  

One threat in the modern world that I haven't really been able to deal with (I am not a criminologist) is the rise of global criminal organizations.   Of course, they have been around for a long time but one increasingly sees them challenging the power of the state in Mexico and increasingly in France, for example.

I am not convinced that drugs policies that focus on the supply side rather than demand really work, but lifting prohibition has its many risks.  However, is cannabis really more dangerous than alcohol?  Interesting that the younger generation consumes much less alcohol, but zero or law alcohol beers have improved considerably.

All these challenges demand better political leadership and the trend towards populist authoritarian regimes is worrying and will be the subject of my last letter.

Voters do believe in the big money tree

A survey published in the Financial Times ahead of the Spring Statement is rather concerning as it shows that many voters do believe in the big money tree: https://www.ft.com/content/1581a348-41b4-4a01-b900-b7310522794e (unfortunately it is behind a pay wall, although some universities have access).

As Rob Ford of Manchester University, it shows that voters have a 'cake and eat it' approach to tax and spending.  It has long been observed that British voters want Scandinavian levels of public services and American levels of taxes.   The result is public debt at 100 per cent of GDP and a £20 billion a year bill just to service that debt.

47 per cent of voters believe that it is possible for government to reduce taxes and debt while increasing spending.  This suggests an alarming level of economic illiteracy.

What is more alarming is that younger voters are more inclined to believe this is possible: 63 per cent of 18-24 year olds and 62 per cent of 25 to 24 year olds.   The figure for those over 65 is 35 per cent as against 50 per cent who this is not possible.

What this suggests is an increasingly ungovernable country whoever is in office as voter expectations clash with economic reality.   Inflation would be one partial way out but has all sorts of economic and social costs.

Labour's fiscal dilemma

A distinguished group of economists has written to the Financial Times advising against further spending cuts and any return to austerity: https://www.ft.com/content/4b0d4ec3-cfb8-44fa-93a6-4474866dc917

They advise that further taxation is going to be necessary, but beyond stating that it should fall 'on the broadest shoulders' do not specify where it might come from.

Meanwhile a discussion on BlueSky showed Labour supporters disillusioned with what they saw as a Labour government offering more effective implementation of Tory policies.

Some argue that the fiscal rules should be abandoned, referring to what has happened in Germany.  However, that country's ratio of debt to GDP is in the low sixties in percentage terms whereas in the UK it is not far short of 100 per cent.   Abandoning the fiscal rules would certainly force up the cost of government borrowing.

The cost of benefits has risen by something like 40 per cent in real terms since 2013 and is projected to rise further despite recent policy changes: harsh on the most vulnerable or tinkering at the edges, depending on your perspective.

Labour has to exert some fiscal discipline, otherwise the cost of the welfare state will become unsustainable.  Clearly many of those unable to work need more systematic support to enable them to do so.

The left's answer is a wealth tax but the Government has no mandate for that, it would deter investment in the UK and the really wealthy would find ways of evading it.

Personally I would have increased fuel duty, a small increase would have yielded significant revenue and would have been bearable.  I would also have reversed Jeremy Hunt's unfunded cuts in employees national insurance, but Labour boxed itself in before the election.

Labour faces some difficult choices, but a large majority means rebellions will be embarrassing rather than fatal.