• A new economic policy for Great Britain

Heard this very interesting article - quite radical - on youtube....




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The decline of an empire is always ugly but the outsourcing of our national industrial and service capability to other competitors is arguably one of the greatest follies in living memory. If the price of global liberalization is state bankruptcy for Britain, all things considered, a little protection should be preferred!

There is absolutely no doubt in my mind that Britain needs a fundamentally new economic policy. We need to change the channel. We need a new business model. Among other things, many of us need to start producing again, not just consuming. If anyone disagrees, ask yourself what kind of policy leads a country from governing a quarter of the world to becoming one of the most indebted nations in a little under a century!

From a nation state’s point of view, liberalism, it seems, has a lot to answer for!

The economic storm about to rain upon Britain demands both urgent and radical reform. Britain leads the world in public debt and once private and company debt are included, we owe just shy of a thousand percent of what we are actually worth. A default on British National Debt - which last occurred in 1066 -would appear to many to be both unthinkable and impossible. It would also have considerable global ramifications. Default would also signal the end of London as the financial centre of the world and it would severely test our unrivaled sense of humor and passion for self depreciation!

Yet if and when interest rates begin to rise, Britain risks drowing in a mountain of debt. With interest rates already at a three hundred year low - the UK, like Iceland, may one day have to eat fish.

And what of Europe?

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The crisis across the Channel in mainland Europe will also not be fixed anytime soon!

Following the collapse of the Soviet Union in 1990 the European free market expanded ever outwards to fill the new footprint established by NATO. Short-term security considerations out-trumped the underlying logic of economic integration. Fiscal and monetary controls alone - which in many countries appear to have replaced coherence economic growth policies - are insufficient to address growth, revenue and unemployment concerns. Europe its seems, should not be run by bankers and accountants afterall.

The central revenue powers of Germany and France can also no longer finance Europe's debt risen periphery. An inconvenient truth has come knocking on our door. Despite dreams of establishing the world's biggest free trade block between Europe and the USA, for such integration to take place, Europe may have to devolve back to its multi-tiered history!

Why is Current Policy Too Little Too Late?

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Despite considerable efforts, Britain’s Coalition Government has yet to come close to tackling many of our most pressing problems, let alone solving them. This is not a recession, it is a de-leveraging recession at the wrong moment in history. Austerity on one hand is being offset with a massive increase in public borrowing on the other. Debt to finance consumers who no longer produce.

Our economic policy needs another revolution, and nothing less than shock therapy will be the medicine. Any new economic policy must seek to address the following three sets of concerns head on:

[[Firstly, how do we place Britain on a solid growth trajectory based on new competitive growth fundamentals? ]]

The World Bank Doing Business report provides an overall ranking for the UK of number 7 out of 185 countries for 2013. This ranking is a fair reflection but it measures ease of doing business and not competitiveness - and thats where the problem starts. GDP too has been flat-lined for decades, precisely because we are a country of consumers, not producers. Since the 1980s, Britain’s trade balance has been in steady decline, posting a record deficit of GBP 3.1 billion in March of 2013 alone. Repatriating parts of the industrial and service complex more in line with the German business would therefore be both good for GDP and bolstering our dwindling tax base.

Secondly, how do we re-balance both (i) public and private and (ii) on and off-shore relations to strengthen trust in Government and Corporations, boosting national unity and increasing a sense of pride and community? All of these are currently in short supply.Link title

Empires are always the outcome of elite group interests and the truth is that Britain was never anything more than a home for hugely wealthy investors who found and fostered an ideology and industrial capability suitable for making gains overseas, while also bringing people out of the dark ages at home. While some of these investors remain very committed to the UK, many are actively moving assets offshore and investing in emerging markets abroad, which impacts jobs and wealth at home. Nobody trusts government anymore, or politicians for that matter. When government's lie - which they seem to do on an almost daily basis - democracy appears an illusion. That needs to change.

In 2013, most Members of the UK Parliament would agree that it is bankers and the media who control government, not the elected representatives of the state, because money and opinion alone now determine election outcomes. This situation might appear acceptable if both of these groups support national interest over profit, but most don't.

Thirdly, how do we address the seemingly intractable problems of retirement, welfare, pensions and the taxation of UK national incomes abroad without unleashing the wrath of millions who have dedicated much of their working lives to a perceived set of entitlements that may not actually exist. Link title

The cost of the British welfare system is undermining growth. Total UK debt is expected to reach GBP 10 trillion by 2015. 10 Trillion would buy you Africa Five times over! People need to retire much older than the age of 65, but then jobs will also need to be created for retirees. The mounting cost of servicing our debt will one day drive us broke; interest rates will force us over the fiscal abyss. Pension funds sit idle while our infrastructure becomes uncompetitive and there is no sovereign wealth fund in place that invests national wealth at home or abroad. A new policy with new players is needed, because there is absolutely nothing that the fractional reserve system can do about it unless the very centre of our business model is radically reformed.

So What Must be Done? Link title This is not just another boom and bust cycle. This is Lehman Brothers for Government! What is being tested now is the old empire’s power to survive at home not abroad!

A radical new-hybrid economic policy is needed and could, in part, be pursued through:

1. Providing Incentives to Repatriate Parts of the Industrial and Service Complex: Offer tax incentives for industries who produce on-shore while taxing those producing off-shore, slowly repatriating core parts of a productive industrial and service base.

2. Undertake Massive Welfare System Reform through Real Public Dialogue: The costs of the welfare system are driving us down, and if Government does not tackle this problem, a special commission will need to. Retirement ages, welfare support programs, and immigration and emigration policies must be carefully reviewed.

3. Establish UK Sovereign Wealth Funds: Now is the time to establish a UK Sovereign Wealth Fund to invest in emerging markets, taking stakes in economies and companies alike. A second sovereign wealth fund, perhaps financed from the many billions in under-utilized pension funds, could drive an infrastructure revolution.

4. Renewing our Commitment to Innovation, Creativity and Entrepreneurship: Efforts to promote scientific and technological genius must be doubled if not tripled. Our education system needs to be revamped and a strong incentive framework put in place.

5. Bring back National Service to Build Much Needed Infrastructure: Any able bodied individual receiving benefits should be required to undertake national service to turn a major drain on national spending (unemployment benefits) into a comparative advantage - subsidized infrastructure. This will be unpopular, but so be it. How can able bodied people be paid to sit at home when our public infrastructure is in a state of such rapid decay. This would not be a return to army-based national conscription, which impacted people’s education, but a system of better utilization that would, for one thing, remove risks from our streets in times of crisis.

6. Tax UK Citizens on their Global Incomes, Perhaps Starting with a Flat Tax of 5%: With gross national product increasing, but with domestic production flat-lined, introducing a 5% tax on foreign earnings would be a painless beginning to one day taxing citizens on their global earnings.

7. Overhaul Overseas Development Assistance and Increase FDI: International aid does not work and it can be corrupt and nepotistic. Decades of support to countries such as India and Ethiopia have failed to impact poverty rates at all. Focusing on increasing UK FDI abroad will provide a significant counter-balance and the Government could sub-sidise political risk insurance to minimize the risks, similar to OPIC or MIGA.

8. Support Europe, Because it is an Important Market, to Restructure Around a Tiered System, and to Minimize Risks of Fragmentation: Europe will fragment, sooner or later, unless its entire business model changes. Controlling fiscal and monetary policy alone will not work. A Europe-Wide Sovereign Wealth fund could also be established, making the kind of strategic investments that China and the Middle East are currently able to do. Though the UK will never be in a position to bail Europe out, and even though a referendum on Europe is wholly justified, we have regional and security obligations that must be met.

9. Emigration Remains the Greatest Single Indicator of Weak Incentives: Even though immigration rates are slowing, for a decade people have been leaving Britain in their hundreds of thousands. It is not just the food and weather; it is more fundamental than that.

Citizens of the UK are by nature creative, innovative and extremely entrepreneurial, but the burden of excessive taxation makes it virtually impossible for them to compete against other economies with much lower costs of doing business. Government has become both unaccountable and oversized; banks and the media have too much power and any sense of national pride has been badly degraded. It is precisely because our Gross National Product continues to grow that we need to review who is taxed and where, in the interests of home, not just in the interests of global capitalists.

Change is urgently needed. It will however probably be born out of crisis and not the rules that bind the current status quo. The dice will need to be rolled, and strident steps taken, if this beautiful island of mine is to survive the rigors of the 21st Century.

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