Friday, 3 July 2009

Redistribution and 'recapitalizing the poor'

Phillip Blond - I think we may have written about him before on Next Left? - has an interesting article in today's Guardian on encouraging wider asset ownership. In a previous post, I argued that the Red Tory commitment to 'recapitalise the poor' was lacking in policy content. Blond is now setting out some of that content.

There is much to think about in the piece, but one issue which will loom out for anyone on the left is Blond's attempt to distance the Red Tory approach from 'redistribution'. Towards the start of the article, Blond writes:

'Assets must...come from somewhere, and since redistribution and expenditure via the state has such a poor record in alleviating dependency, a fresh approach is required.'

This is one of those 'Blondisms': a sweeping statement, possibly with a nugget of some truth in it somewhere, but nevertheless massively oversimplifying a complex reality.

Indeed, Blond himself can't really believe what he has just said. For at least some of his own proposals do involve redistribution. Take his proposal to fund matching deposits into the Child Trust Fund accounts of children in low-income families by cutting Child Benefit to more affluent families. That's redistribution, no?

Or take his very intriguing proposal to use the return on the future sale of state-acquired banking assets to fund 'investment vouchers' for those on low-incomes. Someone opposed to 'redistribution' by the state would seek to distribute this return back to society in a way that gives people a benefit in proportion to the tax they pay (so the rich, insofar as they do pay more tax, would get more). Blond's proposal quite rightly opposes this, and aims to focus the gain, in the form of new assets, towards the bottom of the income scale. Great: but that is, implicitly, redistribution, no?

So if Blond isn't really opposed to 'redistribution', what is the point of that emphatic rejection of 'redistribution' towards the beginning of the article?

The answer, one suspects, is to close down any consideration of taxes on wealth and/or wealth transfers. Blond is not opposed to redistribution as such, but to redistribution which takes this form.

Many people have enjoyed substantial unearned capital gains on their housing wealth in recent years (notwithstanding the recent downturn). Very low levels of taxation of gifts and inheritances enables this wealth to stay locked up in some families to the exclusion of others. If you want a society in which there is a much more equitable spread of assets, it is reasonable to pursue a two-pronged policy of taxing unearned accumulations of wealth combined with measures to promote ownership among the asset poor. One might even link the two, by softly hypothecating things like inheritance or capital gains tax to asset-building policies like the Child Trust Fund.

But of course, the Conservatives want to raise the threshold at which inheritance tax is paid to £1 million. Despite the good efforts of Ken Clarke, this unjust policy seems to have become totemic for them.

And, so it would seem, Red Toryism obviously isn't quite red enough to challenge it....

8 comments:

Sunder Katwala said...

Thanks. The core point here could make a good Guardian letter.

is this a new Next Left series - 'Blondisms'?

donpaskini said...

Philip Blond is certainly prolific at churning out this drivel, but for me the essence of Red Toryism is the following section (from the article that Stuart cited) :

"Councils have used their housing stock to generate cash income for benefit dependency for generations. By constantly raising rents, councils have created housing that the working poor cannot afford. Some sort of redress is required – a capital or asset credit, financed by a council bond, should be applied to those whose long-term benefit has, in effect, subsidised council receipts. This credit should be a tradable asset that, when conjoined with other new ventures such as community shares or social investment, can generate an asset effect for those whose routes out of poverty are presently so curtailed."

It's the combination of absolute ignorance about the subject, an atrocious writing style and incomprehensible-yet-utopian policy recommendations which is so characteristic of his entire output.

Stuart White said...

donpaskini: thanks for this. I didn't understand what Phillip Blond was saying in this part of the article, so just left it alone. I don't really know anything about council housing and interaction with the benefits system etc. If you have time, I'd really appreciate an explanation of what you think he is trying to say, and why it is wrong.

donpaskini said...

Hi Stuart,

It's not very clear, but I'll try!

Blond appears to think that council rents are unaffordable for the working poor.

This is total nonsense, because council rents are lower than those in the private rented sector, and anyway the reason why most people in low paid work can't get council housing is because there is not enough of it, so it has become an emergency service for those in the most desperate need.

Based on this analysis, he thinks that councils should borrow money to give a capital credit to people who have received housing benefit, because their benefits have subsidised council receipts. They can then trade this in order to lift themselves out of poverty.

I've got literally no idea how much this capital credit would be, or what it could be traded for, because Blond doesn't explain that bit.

But since the one statement of fact in the entire article is wrong, and the whole analysis is built on an erroneous premise, I'm not enormously interested in the policy recommendations.

Stuart White said...

donpaskini: many thanks - that helps, I think I get what he is arguing now (insofar as there is an argument in this case).

John said...

Actually, the idea of an investment voucher isn't a bad way of recapitalizing the poor, except, most people, regardless of wealth, don't have the judgement/education to make good investments, including yours truly. I wouldn't have a bloody clue where to start. I'd rather just get some kind of citizen's basic income instead.

Also, the NHS, minimum wage, child tax credit, free education, job centre plus and job seeker's allowance have all been monumentally successful in reducing poverty.

Charlie Marks said...

I wonder what Mr Blond thinks about cooperative ownership - of housing, enterprises, etc.?

John said...

The EMA student allowance for poor sixth former's is a good way of 'recapitalizing the poor' and is democratic republicanism in action... rights and responsibilities.