Bill Carmichael: Nothing new to occupy me

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THE Occupy movement, which has swept across the developed world including several cities in Yorkshire, promises a new and exciting way of doing politics.

So this week I popped along to the “Peace Camp” that has sprung up in the shadow of Sheffield Cathedral, to find out for myself.

What I found, beside the odd passing wino, were people who were polite, enthusiastic, engaged – and utterly clueless.

If you are expecting fresh, innovative thinking to deal with the financial crisis, then I’m afraid you are bound to be disappointed.

The philosophy of the protesters can be summed up by a hand-written sign on a bit of soggy, disintegrating cardboard at the entrance to the ramshackle collection of a dozen tents: “Marx was right!”

Instead of the ground-breaking, unorthodox deliberations I’d been led to expect, what I heard was the same tired old Big Government statism that has characterised the blinkered authoritarian Left for the past century.

Whatever the question is, the answer is always the same – more power to the state to control the lives of ordinary people, more spending, and more borrowing.

Isn’t that what got us into this mess in the first place?

I genuinely tried to get beyond the platitudes. For example, the protesters say they are against capitalism and on the side of the poor.

I pointed out that capitalism has raised more people out of poverty than any system that has ever been tried.

Indeed, if you abandon capitalism the poor will inevitably suffer, as they have under every Marxist regime in the world from the Soviet Union to Zimbabwe. Blank incomprehension.

One chap told me that the richest one per cent should pay a fair share towards society. Fine, but what do you mean by fair? I asked him how much the richest currently contributed towards total tax revenues.

He hadn’t a clue, but added that whatever it was, it wasn’t enough.

Here, courtesy of the Office for National Statistics, are the actual figures; the top one per cent of earners pay about a quarter of all income tax and the top 10 per cent pay more than half – that’s a lot of schools, hospitals and benefit payments.

If we “eat the rich” as the protesters suggest, or more likely increase their taxes to even more punitive levels so that they simply move their assets to more friendly jurisdictions, we’ll have a huge hole in the country’s finances to fill.

This is precisely what happened back in the 1970s when the then Chancellor Denis Healey cranked up taxes to 83 per cent, relishing the “howls of anguish” from the rich. The result was the sort of economic collapse that we’ve become familiar with under every Labour government before and since, and by 1976 the UK had to go cap in hand to the IMF to beg for a bailout.

Three years later Margaret Thatcher became Prime Minister and her Chancellors, first Geoffrey Howe and then Nigel Lawson, steadily cut the top rate of tax, initially to 60 per cent and then to 40 per cent. Then as now the Left screamed that this was unfair and the rich should be made to pay more.

But here’s a curious thing – as the tax rates tumbled, the amount of tax paid by the richest one per cent actually increased, from about 10 per cent of total tax revenues under Healey to 14 per cent in 1988 and 21 per cent by 1997.

In other words by halving the top rate of tax, Thatcher’s administration doubled the amount paid by the top earners.

So the answer, unpalatable it might be to the protesters and their supporters in the media, the Church of England and the unions, is perfectly clear: if you want to the rich to pay more, then the best and simplest way of doing so is by dramatically reducing taxes.