Friday, March 17, 2006

Winning ways

"That government is best which governs the least, because its people discipline themselves." Thomas Jefferson

This may not be a bad watchword for the modern British Liberal Democrats- for certainly it would be good to see a clearer intellectual discipline behind their policies. In fact it is now becoming critical. The Liberal tide in British politics seems to be rising- with the prospect of good local election results this year and very good results for the Holyrood elections in 2007. If the party is to gain momentum, then the intellectually lazy aspects of taxation policy have got to be eliminated. It still erks me that too many Liberal Democrats confuse the nominal rate of tax- say 40% with the actual tax yield. The work of Arthur Laffer demonstrated as early as 1974, that there is a peak nominal rate of tax, which if nominal rates are raised further will actually reduce the total tax yield. A 50% top marginal rate of tax will not work- even aside from the morally dubious right of the state to take so much a proportion of anyone's income.

Soaking the rich does not work as either a moral or an economic proposition. I would far rather have a simple tax code- if not a flat tax, then certainly not more than two marginal rates of tax. I would prefer to see the poor kept below the tax threshold, than to force them to claim benefits. The fiscal drag of Gordon Brown's "robbing Peter to pay Paul" policies is now unsustainable. Clarity and simplicity should be our watchwords- no grandiose and unworkable micro management and over regulation.

We need to apply a simple discipline in every policy discussion: how are the rights of the citizen and the consumer protected and advanced?

We need to do it now- the time may not be far away when we are ensnared in government, with little time to think about basic principles in the face of the realities of the civil service and the state. Make no bones about it: the Liberal Democrats really could be in power within a fairly short time. We owe it to ourselves and our country to make sure that we are ready for the responsibility.

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