Some food for thought for Polly Toynbee and the Occupy London protesters 15

Jonathan Isaby Economics 101

In her piece for today’s Guardian, Polly Toynbee describes her trip to the protest camp outside St Paul’s in the City of London on Sunday night, shortly after her “fierce argument” with me on Sky News on the subject.

I’ll overlook the fact that she misquotes me in the piece – and for branding me “disgraceful” in a Tweet yesterday – in the hope that she can be persuaded that not only are there more useful responses to the economic crisis than setting up camp in the City, but also that there is much on which all of us frustrated about the situation should be able to agree.

In the initial statement agreed by Occupy London – which Toynbee commends – there are key points on which the TaxPayers’ Alliance can find common cause, namely in our opposition to bailing out the banks and in wanting “regulators to be genuinely independent of the industries they regulate”.

At the time of the last Government’s £50 billion bank bailout, we expressed our opposition to the move, not least because of the increased risk to which taxpayers’ money was being exposed. Why didn’t the politicians instead look at making deposit protection more credible, changing broken rules that were making the crisis worse, or push for faster interest rate cuts?

Moreover, there are big questions to be asked about the regulatory framework in the City and the mistakes made by politicians which led us to the position in which we find ourselves today. Again, the TPA has done work on this, as published in our comprehensive report, How inept regulation and poor policy decisions drove the financial crisis.

Why did ministers encourage off balance sheet debt, whilst driving up borrowing – and claiming to have put an end to the economic cycle of boom and bust? Was it not wrong that the Bank of England didn’t have the information it needed to work effectively as a lender of last resort? Why were concerns about the FSA’s incompetence and ineffectiveness ignored? Were there not regulations in place that made the crisis worse – including those emanating from the European Union?

Considering all these questions and more would be far more productive than merely condemning bankers and the capitalist system which has doubled people’s wealth every generation around the world, lifting countless millions out of poverty. Moreover, I fear that this new wave of protests has already lost its focus, with all manner of other causes tacking along to campaign against the military, in favour of the NHS and so on, which distorts the message they were trying to get heard.

Furthermore, the protesters are signalling their support for the nationwide strike on November 30^th, whilst refusing to accept the Government’s cuts as “either necessary or inevitable”. On these matters, I’m afraid they are they are starkly out of step with public opinion – as evidenced by ICM polls for The Guardian, no less.

There is not majority support for strikes: people recognise that as we are trying to harness economic growth, the last thing the economy needs is for the country to be brought to a halt for the day. And on the issue of the cuts, only 8% of Britons believe that the Government should not be cutting public spending at all, whilst there is massive net support (66% to 12%) for the statement that the government has been spending too much [of our] money.

So the 500 protesters in the City purporting to represent 99% of the country ought to not only spend their time a bit more productively by establishing the lessons to be learned from the economic crisis, but also considering the evidence, as published in The Guardian, which shows that the British people by no means share all of their views. We can differ on what needs to be cut and when, but most people understand that spending cuts are right and necessary. The Government can’t keep living beyond taxpayers’ means.

Jonathan Isaby

Jonathan is Political Director of the TaxPayers’ Alliance and never tires of reminding people that there’s no such thing as government money - only taxpayers’ money.

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Anonymous

Q) Do you think taxes are too high? Answer for most people is yes.

Since government spends far more than the taxes it raises, the yes answer is in fact an answer that says cut spending.

The real problem isn’t banks its governments spending too much.

Newsfromnowhere

“The real problem isn’t banks it’s governments spending too much”

One of the most idiotic comments I’ve read in a long time. The GLOBAL crash was caused by contagion from the collapse of sub prime mortgages in America i.e. banks and their greed. Nothing to do with whether one government or another spent too much.

Anonymous

So why haven’t you tarred and feathered those that borrowed money and didn’t repay it? Ah yes, we can’t have a go at people unless they are bankers.

Now, the banks aren’t lending. Doing the reverse of what you blame them for doing in the first place. Far from being greedy, being stingy.

Watch what happens now. They are going to go bust and need recapitalising or consigned to the dustbin.

So why is it then that lending too much, and not lending both produce the same result?

A small handful of retail banks in the UK went under. The vast majority didn’t. No UK casino bank went under (Lehmans is a US bank)

The answer is that the fault lies elsewhere. It all goes to people not paying their debts, and that triggered a liquidity crisis because other banks didn’t know who was exposed to whom. A lack of transparency on credit risk.

1. Mortgage borrowers
2. Credit card borrowers

Both of those are tiddlers compared to the third

3. Governments.

The real problem is borrowing and not paying the money back.

The banking crisis was a tiddler. You’re now going to experience a real crisis. Governments defaulting on their debts. Both borrowing and debts to the citizen such as pensions.

In the interim, UK government spending has grown in excess of inflation. Such much for cuts. There aren’t any overall.

Dunie

You are misinformed.
You are also unable to understand cause and effect.

The banking crisis
was not a “tiddler”, it directly caused the financial problems facing
the economies of the USA and Europe.
Only a handful of outspoken academics and economists predicted the
financial crisis. The major global financial institutions predicted continued
growth, and “business as usual”. Most countries were spending well
within the limits deemed economically sustainable.

But, banks on both
sides of the Atlantic were overleveraged. Bankers were acting
“irrationally” in their pursuit of profits, their positions had
become dangerously exposed; any tremor, economic, political or even a natural
disaster that demanded high insurance pay-outs, could have caused a seizure in
the financial system. It just happened the catalyst for the credit crunch was
the sub-prime market. This absurd situation arose because the banks were
“self-regulated”, or in plain English: “unregulated”.

The deregulation
began under Thatcher and was continued by successive Conservative and Labour
Governments, and rightly so. The banks appeared to be wildly successful, on
paper at least. They were held up as the poster project of free marketeers and
the political right. The Conservatives were demanding even less regulation
right up until the banking collapse in 2007.

No casino banks went
down in the UK because the Government threw a few hundred billion pounds of tax
payers money at them.

All members of the
Taxpayers Alliance should be backing the protesters and demanding an end to the
bail-outs. If a bank becomes insolvent it should simply be nationalized, run on
a non-profit basis until it clears its books and then dissolved.

Mattbucks

Nothing to do with Gordon Brown removing the regulation from the banks preventing them from investing too heavily in one particular sector, such as sub-prime? Banks have a responsibilty to invest in what brings the best returns. If Brown’s deregulation allowed them all to over-expose themselves to sub-prime then it is Brown & New Labours fault.

Blarg1987

It is partially goverment fault for poor regulation and partially buisnesses fault, yes buisness is there to make profits but they did not have to invest in sub prime because eveyone else was doing it so that is their fault not a goverment policy.

I do agree consumers are a big cause of this but so are the people who decided to lend to people expecting the ever increasing proprty bubble to cover the default should they not be able to pay that would be the fault of the buisneeses themselves knowing all economies go through cycles.

Yes our goverment did borrow and I think they should have instead increased taxes to pay for the infastructure that was necessary, and it should also have ben better managed and maybe, if taxes were slightly higher the standard of living may not have improved as quick as it did, but it may have reduced the credit card culture that developed so reduced our banks risk to the finanical crisis, I do accept I could be wrong.
Steve Collins

It’s perfectly legal for you to bet all of the money you have on the Duke Of Edinburgh having a number 1 hit on the US Billboard Chart.

But you won’t, because it would be a financially suicidal thing to do.

No-one forced the banks to do anything. They made the decisions which led to their exposure to toxic debt which precipitated our current crisis.

It is insidious, yet tiresomly predictable, that the TPA and its apologists are trying to shift the blame for the recession from the greed and poor decision making by financial institutions to governments and individuals.

Womblekerr

WHAT IF i PAY TAX, AND SUPPORT THE OCCUPATION#?

Richard Long

what if you don’t

Richy

q) If every pound issued into the economy has to be repayed at interest, where does the extra money come from to pay the interest off?

… and welcome to the shady world of private central banking, about which the media and the majority of seemingly ‘educated’ people know nothing about.
Tory

Its interesting to find out what Tory HQ really thinks, thanks for that. You assume the real people of Britain (99%) as are stupid and naive as the American public. Your argument could be taken straight from a fox news piece. You are a relic of the past and your days are numbered. The fact that it took you 24 hours to produce this regurgitated ideological rubbish is a sign you are out of touch and out of ideas. Oh and by the way, we know you (the Tories) are funded by the city and all the banks so its hardly surprising you are spouting this crap.
M Leam

If you’re using popular support to back up your case for cuts then why not mention the overwhelming support for a Robin Hood Tax on the banks? Or the massive public support for the NHS? That’s the problem with the TPA – you don’t actually represent taxpayers. Polly Toynbee was right about that bit.
Dunie

I’m surprised the Taxpayers Allience isn’t behind the protestors 100%. The banks have cost the UK taxpayer more than the Second World War, that took us nearly 70 years to pay off.
David Hodd

This article reads like an after the event defence from a bad loser knowing they have lost a debate pretty decisively: vascillating between claiming the winner has no support or clutching to his opinion and dressing it up as fact.

Lets face it Jonathan, you did not overlook Toynbee’s tweets and branding of your line as disgraceful. You made a point of mentioning it.

TPA are widely adrift from the public mood on this one. What sort of alliance of tax payers are you really?
Maca090

Sorry Jonathan, but your outrageous comments about protesters in designer labels doing more good for the economy by getting jobs were a disgrace.