Archive for Politics

Children are our best hope for growth

The IMF thinks cutting interest rates and VAT will grow the UK economy.

Not in the long term.

VAT is one of the better taxes because it acts as a break on consumption – the root of our greatest problems. It also generates the revenue needed for the state to pay back our debt mountain.

Cutting VAT will only channel money that would have been used to pay back public sector debt to paying back private sector debt. The IMF advice to cut VAT and encourage greater consumption fails to tackle the root cause of the issue.

True growth comes from invention, creativity, working smarter, getting more out for putting less in. Growth comes from using our brains to make things better, faster, easier, more efficient.

We must find ways to foster that. Fixing the root causes of our problems – being patient and investing in the future.

Children are the future.

Why does Britain have such high youth unemployment? Children are sponges. They are dynamos. They are imaginative. They have incredible potential. We invest billions in education yet millions of children are leaving school unable to find work or start a business. Their parents have failed them. Our system has failed them. This must end.

Every child from the age of 6 to 16 should learn about business. Business is fun. It's creative. It's rewarding. It gives people the feeling they are doing something useful, productive and valuable. Which they are.

By providing children with the experience of running their own enterprise, no matter how small or simple it may be, we will be nurturing millions of little growth-engines of the future and empowering every child to choose their destiny.

We must develop the belief in every child that they can do whatever they want with their life. That the world is there to be changed, by them.

Business can do that. Business does do that. It is not exclusive to a minority – everyone can change the world. Whether it is profit making business or a non-profit, our economies were grown through enterprise, yet we shield our children from it until the age of 16, 18 or even 21.

We've wasted precious years, providing little or no exposure to children in something empowering, something magical, something of lifelong personal, social and economic value. We should have been exposing them from an early age, feeding their natural hunger for creativity, experimentation and trade.

By the age of 13, every child should have started at least one enterprise. They could sell lemonade, wash cars, build iPhone apps, service bikes, shoot stock photography or one of a million other things. It doesn't matter what they do or how they do it, because it is an age of experimentation.

Children have nothing to lose, everything to gain. They have time on their side, they are not stuck in a comfort zone or tied down by mortgages or children like many adults are. Their enterprise may not even be trying to make money, the purpose is to let them create something of their own and experience the basics of enterprise.

Children are young, energetic, fearless and hungry to take on the world. When you let them loose at 16, 18, 21 or whenever, with the experience and knowledge they will have gained from their many childhood enterprises, they will be well equipped to make positive change in the world and do a lot better than our generation did.

That means growth. Lots of it. And I expect it to be good growth too – disruptive, creative, ground-breaking, environment-fixing, peace-making growth.

Here's Cameron Herold sharing his experiences on childhood entrepreneurship:

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Government regulation of Google

Google logoA top executive has argued that government regulation may be required over the position of search results in Google.

Bad idea.

Government regulation is the absolute last resort. It might start with good intentions and the Government might have a light touch, but it would open the floodgates. Regulation only becomes more onerous and cumbersome over time. It stifles businesses ability to innovate, it slows progress and it takes some of the fun out of business.

In the free market, if Google screws up, we can go to Yahoo or Bing or another search engine. If they all screw up, a new competitor will rise. It is a self regulating system.

I trust an honest company (such as Google) more than any government, sadly.

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A well executed assassination of Gordon Brown

It's reassuring that the UK is still producing high calibre politicians. People like Daniel Hannen (MEP). Watch his 3 minute assassination of Gordon Browns' failed economic policies and wasteful expenditure of money we don't have…

Daniel Hannen became Britains' youngest ever MEP in 1999 and even now is only 37 years old. He has authored 7 books, most recently The Plan: Twelve months to renew Britain. If his actions can match his words, he would make a worthy Prime Minister. Read more about what he has to say on his blog.

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UK crumbling under Labour

The Labour government has today proposed the creation of a state bank so that UK businesses and citizens can go deeper into debt by borrowing directly from the state.

This is an extraordinary idea from a government experimenting with ever more wild and expensive ideas. A state bank with loose lending criteria would only prolong this recession.

It's too late, there is nothing the government can do to stop this recession. It could do things to limit the damage, but so far none of its policies or bail-outs have given confidence to the people (a cut in income tax would have) and our currency has plunged at its fastest rate in history.

If there are two essential requirements of a government, they are to foster a stable economy and avoid war. This government has failed on both counts. Brown became "Mr Boom then Bust" and Blair took us into an illegal war against our will. The UK is crumbling under Labour.

Gordon Brown did nothing to prevent a giant property bubble from inflating since Labour came to power in May 1997. Property prices tripled in the 10 years to September 2007 (Nationwide). The collapse of this bubble is the primary cause of our dire economic predicament.

What goes up must come down. But Labour won't accept that. They want to return to the days when getting a £X00,000 mortgage was as simple as signing on the dotted line. That's why they might create a state bank. But it will do more harm than good. This government wastes money on everything it does, be it IT projects, special advisers or general inefficiency let alone ID card and civilian spying projects that have no place in our civilised nation.

The solution? Laissez faire. The private sector should provide banking services, not the government. The banks lent too much money during the boom and now they are compensating for that by lending more carefully. This is a good thing: it helps existing borrowers concentrate on paying back their debts and requires new borrowers to properly justify why they deserve a loan.

This will be a severe recession. But we are British – we'll deal with it and we don't need government interference.

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Prime Minister: cut income tax, not VAT

Gordon Brown continues to make decisions that will deepen/lengthen this recession.

He is now planning on cutting VAT from 17.5% to 15%. Bad move. VAT is one of the best taxes in a Governments armoury. It is cheap to collect, it raises a massive amount of money and it discourages consumption by making prices higher.

Cutting VAT will reduce prices for most goods in the UK will by around 2.1%. Is that going to make you go out and spend more? I didn't think so. But what it will do is increase government debt by another £12.5 billion per year.

Government debt eventually has to be repaid by the taxpayer, so the Labour government is effectively lumping another slug of debt on our shoulders that we must pay back in the years to come (either through higher taxation or fewer public services).

I would prefer to see the government raise funding / reduce spending by:

  • Increase VAT to 20% (like most of the rest of Europe).
  • Slash public sector spending which has ballooned under Labour and is highly inefficient compared to the private sector.

With the extra money in the coffers, I'd like to see the government:

  • Cut income tax to increase people's take home pay and encourage people to work.
  • Cut corporation tax or give some other tax break to businesses.

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