Thursday, July 24, 2008
Hattersley's Recipe is Thin Gruel Indeed
Much of his piece is concerned with the Hattersley critique of New Labour and boils down to two suggestions: a windfall tax on oil profits and social justice. The former would not be too bitterly opposed by most voters so might be a runner but his second sounds less realistic:
If Brown could convince the public that, within the next two years, he would reduce the gap between rich and poor, his opinion-poll rating would dramatically improve. Labour's hope lies with the compassionate majority - the people who will not be impressed by the unemployed being required to pick up litter.
Oh dear! This kind of talk makes me realise how deep into 'defeatism' I have fallen. My heart would love to agree that we can still pull it back even from the present parlous position but my head, informed by all that I see and hear and read about opinion polls say this is not going to happen. After presiding over an expanding gap between rich and poor ever since 1997, how on earth can Gordon somehow reverse that tide during two years of what is almost certainly be a recession? And after the 10p tax band debacle, has Brown any credibility left even with core Labour voters? I'm sorry, Roy, but pigs really will be flying before your solution shows any sign of working.
First of, Labour have lost already. No political party has ever lost from the kind of position the Tories are in now. Their lead is unassailable and all indications are that momentum is and will remain with them(Brown's lack of rapport with the electorate, world economic direction and simply political gravity). Only Kinnock lost such a position, and while Cameron has many faults, he is not comparable to Kinnock in any way.
His "solutions" are even more ludicrous. As an employee of an oil company, I'll tell Hattersley what any sane person already knows. Oil companies and (just about any other company I dare say) pass on their costs. Their prices are a reflection of their costs. Increase their costs(ie more tax), and they will increase their prices. Thus the poor old consumer gets hit again. I can't imagine this will be very popular actually, bearing in mind they feel victimised enough under New Labour. I doubt Hattersley has the economic understanding of the average sixth former, which explains why he has never been trusted with a senior Government job.
"Social justice"? Depends what you mean. Most voters are very suspicious when they hear the term, because in Labour circles it often means taking money from people who work hard, and giving it to people who don't. Funny kind of "justice" that. If, as I suspect with Roy, this is punitive taxes on the rich and some feeble attempt at "redistribution", it won't be a winner. The British electorate have never voted for such a policy(and have declined several opportunites).
I suspect given a choice out of Hattersley and a tub of lard, most of the electorate would volunteer to canvass for the tub of lard(ie the one in a plastic container). In fact I would happily pay the tub of lard's deposit.
On your substantive point re oil profits, you imply they only reflect costs. But is it not true that Exxon-Mobil, Shell, BP and Occidental have all made record profits since the price hike, suggesting they are doing just a little more than pasing on cost invcreases?
I didn't say they ONLY reflect costs. They obviously reflect several things. But they will ALWAYS reflect any costs. More cost equals higher price.
Profits have risen of course. These profits reflect asset values. If the price of oil goes up, so does asset value and profits. But if you do the maths, the oil market is extremely competitive. In percentage terms(reflecting total costs and incomes), profits are very low. Considerably lower than the Government take, as most consumers are fully aware. Because of the nature of the industry(ie none of them are based in the UK), the tax will be seen as a hit on doing business in the UK. I don't think companies will bear the cost of this, and I would be surprised did. The consumer will pay. And this won't be popular.
I know it's fashionable, and very easy, to blame the big bad oil companies. But must people who do even the most superficial analysis know that the problems we are experiencing have deeper solutions than envy.
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