FLC209, How to Deal with Public Debts - A Modest Proposal, 3rd June 2011, by Sean Gabb
Free Life Commentary,
A Personal View from
The Director of the Libertarian Alliance
Issue Number 209
3rd June 2011
How to Deal with Public Debts:
A Modest Proposal
by Sean Gabb
Every British Prime Minister since 1990 – John Major, Tony Blair, Gordon Brown and David Cameron – has presided over an explosion of state spending, and of the taxes needed to fund this. They have also borrowed heavily. For example:
Year National Debt (£bn)
There has been modest inflation over the past two decades, and so these figures show a large and continual rise in public debt. Even with interest rates at historic lows, the cost of servicing the national debt will be around £50bn in 2011-12. Much the same might be said of every other country.
This money has not been invested in any realistic sense. Even if it had, it is the business of private business to invest, not the government. The money has, for the most part, been spent on salaries and pensions for the ruling class and for its various clients. For example, there are 1,250 local authority staff paid more than £100,000 a year (The Independent). There are tens of thousands of others employed at the taxpayers’ expense whose salaries are similar or greater. In nearly all cases, these are people who might struggle to earn £30,000 a year in the private sector – some would certainly earn even less.
Their salaries are not the only issue. There are also their pensions. In London alone, there are over 100 local authority workers whose individual pensions funds – provided by the taxpayers – were over £1m (The Evening Standard).
Despite deep cuts in all public spending that benefits ordinary taxpayers, these salaries and pensions are unaffected. We are usually told that salaries must be paid in order to provide public services. In fact, public services are an excuse for salaries and pensions for the ruling class and its clients.
Here, though, is a proposal that will allow taxes to be cut, or the national debt to start shrinking, or public services to be provided – or a combination of all three.
No one in the public sector should be allowed to earn more than £40,000. No one in the public sector should be allowed to collect a pension of more than £20,000. This should include everyone from dustmen all the way down to Cabinet Ministers. Or it should include almost everyone. The grosser tax-eaters – we all know their names: Peter Mandelson, Trevor Phillips et al – should just be sacked and deprived of all pension expectations.
This is a proposal that might allow cuts to some of the more outrageously corrupt salaries, but fails, in itself, touch those pensions already granted. Everyone in politics seems agreed that the “public faith” should not be broken by arbitrary changes to contractual rights and obligations - as if the taxpayers have an obligation to pay every bill run up by our tribe of thieving politicians!
However, we could achieve the proposed reductions for everyone in the public sector by using the tax system. There is no need to unpick contracts and tear up old pension agreements. The Government simply needs to impose a supplemental tax on everyone whose income is derived from the State. The money could then be diverted to the purposes stated above.
Therefore, Rupert Snottleigh, former Chair of the Lifestyle and Social Engineering Directorate for the South West Region - this is, by the way, a made up name – may feel snug with his £120,000 a year pension. My proposed supplemental income tax would take that straight down to £20,000.
In the same way, the salary of the Prime Minister would be cut from £194,250 to £40,000 – would that cause any shortage of candidates for the job? Could it possibly reduce the quality of candidates?
Of course, “Dame” Betty Woad, Head of the England Walking! Initiative at DEFRA – another made up name – would see her salary cut from £247,000 to zero. She could also go sing for her pension.
Why should these people have pensions when ours have been made worthless by the burden of paying theirs? Or when our pensions have been made worthless by their regulatory efforts?
It might be worth imposing the same kind of tax on the management of all the banks we were forced to bail out the year before last. Certainly, my proposal is not restricted to those directly and wholly employed by the State. It also applies to everyone in the various executive agencies set up over the past quarter century. The test should not be formal corporate status, but the origin of an organisation’s budget. Therefore, the proposal also covers the BBC and the Church of England.
These people have spent their lives telling us that working for the State is far more noble and beneficial to mankind than working in the private sector. Well, here is a proposal that will put this claim to the test. By all means, let many of them continue in their jobs, but make sure they earn only small but secure salaries, and can look forward to small but secure pensions.
If we must pay taxes to our rulers, let our rulers at least be prevented from growing rich from our taxes.