Hoong-Wai Cheah asks –What is fire and rehire? And why does it happen?
What is the effect of banning fire and rehire? Bad policies can make a bad situation much worse – we have to be careful to not let good intentions cloud our judgement.
Driven by Labour MPs (of course), Parliament is now talking about banning the employment practice known as “fire and rehire” – a method for employers to reduce the wages they pay their employees, by releasing them from their current employment contract (fire), and then re-employing them under a new contract with lower wages (rehire). Sounds like a reprehensible tactic, doesn’t it? It’s unfair that employers can do this to their employees, right?
“Sometimes businesses do need to reduce costs. Not just for the sake of profit, but it could be the difference between breaking even or unsustainable losses”
Why would an employer fire and rehire?
Sometimes businesses do need to reduce costs. Not just for the sake of profit, but it could be the difference between breaking even or unsustainable losses. Many big businesses will have bigger financial reserves, or are able to borrow money easier. But smaller businesses don’t have enough flexibility in their operational margins to weather losses for long periods.
“why is it fair for any employee to get paid more for their work than everyone else on the market who does the same work?”
Why would an employee accept fire and rehire?
If the employee can command a better wage elsewhere, why haven’t they gone to work for another employer, instead of coming back to their existing employer for a lower wage? Employees aren’t forced to stay with any employer. In a worst-case situation, the employee has to stay on the new lower wage only until they can find better employment elsewhere.
In most cases, unhappy employees facing an unfair reduction in wages should be able find another employer who pays them better. The only situations in which this is not true is if 1) there is a general economic downturn so wages are falling everywhere, or 2) the employee was being paid above market rate to begin with.
In both cases, why is it fair for any employee to get paid more for their work than everyone else on the market who does the same work?
“Alternatively, businesses can terminate existing staff, and hire new staff at lower salaries instead. This means existing staff are forced to become unemployed instead of simply having a lower wage”
What is the effect of banning fire and rehire?
Nevermind the issue of fairness. What’s more significant is the effect of banning fire and rehire on both employers and employees alike.
Without the ability to reduce employee wages, employers will not be able to reduce their operating costs as easily. More businesses facing financial difficulty will go out of business if they cannot lower operational costs whilst retaining the staff they need.
Alternatively, businesses can terminate existing staff, and hire new staff at lower salaries instead. This means existing staff are forced to become unemployed instead of simply having a lower wage.
It might feel unfair for an employee to be moved to a lower wage, but which is better, for employees to remain employed at a lower wage, or for the business to close down, rendering all staff and business owners without an income?
Bad policies can make a bad situation much worse – we have to be careful to not let good intentions cloud this reality from our judgement and decision-making.
The Libertarian Listener is a UK political podcast reviewing the week’s major news stories, current affairs and events whilst providing original insights, public opinions and perspectives from the nation’s freedom lovers and liberty seekers.
For the 18 November 2020 episode they spoke with Dan Heaton about – UK Second Lockdown, EU, COVID Vaccine, Trump Lawsuits.
The Scottish Libertarian Party a pro-Brexit and pro-Independence for Scotland, has recently reached an important political milestone. Back in April we interviewed Tam Laird the party leader. Now we are delighted to interview Aberdeenshire Councillor Sandy Wallace a first elected politician for the Scottish Libertarian Party.
I was the Councillor for Lower Deeside, where I live, from 1999-2007 under old one member FPTP rules. I was not re-elected when it went to multi-member STV wards at a time when the Conservatives went through a Hague/IDS/Howard period of being unelectable. I was talked into standing again by a close friend, Alex Johnstone MSP, who sadly has since died. The Conservatives won a mini landslide in 2017, which English readers will recall from Alex Salmond losing his seat in the GE a month after the Council elections. The ward is 20% Lower Deeside, rural farmland but in reality an upmarket dormitory for Aberdeen, then 80% Stonehaven, a gorgeous seaside harbour town. In England it would be rock solid Tory but we have tartan Tories to fight it out with
“I sit on the Communities Committee, which is Policing, council housing and social work. That is my opportunity to ask the police how their pointless war on drugs is going”
You sit on the Aberdeen Community Planning Board, The Regulation of Private Renting Sub – Committee and the Sustainability Committee, among others. What are you able to achieve in these roles, and what are the main challenges facing Aberdeenshire Council?
I have achieved the square root of bugger all which is why I flounced out of the Conservative Party. They have no interest in smaller government. Sustainability is enjoyable, mostly I draw attention to BS, and point out that the fluffy policies the council has merrily adopted actually have consequences. Planning has been fairly heart-breaking and was the camel back-breaking straw for me the council is run by anti-business NIMBYs. Gypsy Traveller Committee is good fun, the Chair likes having me there because I can give a pro-business and liberty perspective on the idea that perhaps we should stop trying to give gypsies services they don’t want but maybe just leave them alone to live on land they themselves own. I sit on the Communities Committee, which is Policing, council housing and social work. That is my opportunity to ask the police how their pointless war on drugs is going. Have they managed to bully anyone into choosing to give up drugs by threatening to take their kids into care or have them evicted? Yes, sadly, I have been reduced to that level of behaviour. The main challenges are that we have no money left and can’t get our head around doing less.
You had been a Conservative Councillor prior to moving to the Scottish Libertarian Party. What made you leave the Conservatives and what first attracted you to the Scottish Libertarians?
I did not join the Conservatives because I agreed with them, I joined because they seemed to be the party with the most chance of coming my way., They had dropped their stupid support for Clause 2a ( Clause 28 in England), dropped the poll tax and opposition to devolution. I had hoped they could continue the journey. They didn’t, but nobody else did either, so I have not been proved wrong. I am a very wet libertarian, I would say a Whig, a fanboy for Dan Hannan and Doug Carswell. Joining the Libertarians is my public expression of anger at the lockdown.
We speak at the time of Covid. How have you personally found the lockdown and what do you think of the Scottish Governments handling of the crisis?
Personally? I am one of the many people living the dream. Detached home, garden, financially secure, 80% salary on furlough, granted a pass for university work based on earlier marks. Who cares about the kids in the gig economy whose future is being squandered. Of course in reality, I am livid. Johnson looks like a rabbit caught in the headlights, but while Sturgeon is following identical policies, her motivation is totally different. This is what she dreamed of, an authoritarian regime that destroys people’s lives then calls them selfish for grumbling about it.
“The idea of letting somebody have a birthday party for a ten-year-old now seems like anarchy. We need to have birthday parties for ten year olds. With a magician. And a whole buffet of finger food that all the parents just sort of graze at”
As we move into 2021 what would you like to see done to help the economy and society recover?
It is a huge task because even if you lifted all restrictions tomorrow, 25% of people would still choose to follow some of them and every time you don’t buy a coffee, that is somebodies job at risk, and with it, perhaps her ability to stay in college. It honestly needs changes that are tantamount to revolution. The idea of letting somebody have a birthday party for a ten-year-old now seems like anarchy. We need to have birthday parties for ten year olds. With a magician. And a whole buffet of finger food that all the parents just sort of graze at. And car sharing. We have put society back 25 years, the only solution is to put government back 25 years.
My thoughts are barely printable. This is Humza Yousaf’s pitch for leadership when Sturgeon goes, his vision is a soft-focus form of fascism like Singapore or Malaysia.
If you we’re able to get more Libertarians on to Aberdeenshire Council what would you like to see done differently, how would you change the council?
Well if you mean Councillors of a libertarian frame of mind, most of what we do is defined by the Scottish government, so a tax and services cutting budget is not actually feasible. I would like us to run the planning system with a presumption in favour of development, whether it meets policy or not, unless there are actually constraints such as sewage. A neighbour with a bad attitude is not a constraint. a planner thinking the building is ugly is not a constraint. I would like us to seek to delist half our listed buildings so that people could afford to maintain them, including all the bridges the council actually owns. I would like us to regard the equalities agenda with the contempt it deserves, given that it is the bastard child of people who belong to parties that are actually institutionally racist
“I would like to see Scotland governed very lightly, more of it by local authorities than the Scottish government, with local authorities raising nearly all of their own revenue so answerable to the voter for value for money”
The party is both a pro-Brexit and pro-Independence for Scotland. What would be your vision for the future of Scotland. How would you like to see it governed in say 5-10 years?
I voted for the winning side in both referendums. I hope to see that the democratic mandate honoured. I would like to see Scotland governed very lightly, more of it by local authorities than the Scottish government, with local authorities raising nearly all of their own revenue so answerable to the voter for value for money. The UK government can carry on worrying about defence and foreign affairs, ideally not being involved in any foreign wars. More important than that, however, I would like to see us being a tolerant nation, one that welcomes economic migrants and treats asylum seekers with compassion but a bit of suspicion. I would like anyone who claims to be offended to be asked ” so what?”
Are there any thoughts you would like to leave our readers with?
I think George Foreman was a better fighter than Muhammed Ali, new Taylor Swift is as good as old Taylor Swift and John Stuart Mill should be core reading in states schools especially the bit where denounces the very concept of state schools
We are joined by Dick Delingpole as we discuss the US Elections Results, Lockdown 2, some “Despite Brexit” news and the fact that Croydon Council is now officially bankrupt. We then chat with Dick about his new found stardom and we play the Yes/No game with him.
On 11 November, Boris Johnson’s ally, Director of Communications Lee Cain, announced that he would leave his post, just 24 hours after reports suggested that he was in talks to become the prime minister’s chief of staff. Sputnik Radio spoke with Mike Swadling.
“This is a Government in turmoil. It has been this way since the start of the pandemic. It’s not clear they have control of what’s happening. They have a strategy for Brexit, but that seems to be dragging on and on and on”
“fundamentally, if you have a leader, it doesn’t matter what the lieutenants think of you. Know what the general thinks. No one ever thought with Gordon Brown, Tony Blair, Margaret Thatcher, Harold Wilson – no one thought that the lieutenants were making the rules. They knew there was a general in charge of them”
“you’re chief of staff, and you have to force through a policy, then a professional footballer makes you change it a few days later. Then they do that again, after another few days. Then it feels like you’re following the policy of the Welsh Government or the Scottish Government. Then you say, ‘No’ we won’t have another lockdown, then you have another lockdown, and so on, and so on and so on. You know, you’ll come out of that role with no credibility. Why would you go into it in the first place?”
“There’s nothing you can say about this Prime Minister or this Government that makes you think, ‘Oh, he’s the reason for their being, he is their raison d’etre’. Therefore, until they have a purpose, they’re going to be in constant turmoil”
“Every deadline they’ve given so far has been pushed back. A deadline has to be a deadline. A sensible negotiator would have said, ‘Business needs six months to roll in the new rules, whatever they might be, so let’s set a deadline in the middle of June this year”
What We Can Learn From Sweden, South Korea and Japan For Fighting Covid In 2021
Opinion Piece by Josh L. Ascough
It is now roughly 9 months into the Coronavirus pandemic, and the United Kingdom has been placed into another national lockdown.
It seems to be the case that Einstein was right with his definition of insanity: “Doing the same thing over and over again while expecting different results”; by that definition, it’s not just the UK to which insanity has overtaken; Italy, Spain, Germany, Australia and many other nations have taken the approach of trying to focus on cases, when this is a fool errand.
Due to the nature and the way in which Covid-19 spreads, everyone is going to get this virus at some point; just like how at some point, everyone is going to get the flu, a cold, chest infection, or any other form of virus that spreads person to person; but this does not mean everyone is at risk of dying from the virus, nor does it mean death from the virus is inevitable.
It is very similar to the boom/bust cycle and how the Keynesians wrongly view the bust as the problem, but ignore the boom; when it in fact is the artificial boom that should concern people, the bust is merely the inevitable effect; we’ve been trying to prevent the inevitable cases, to try and stop the preventable deaths; the way we should have been handling this virus, is to accept the inevitability of cases but have measures in place to prevent as many deaths as possible.
This does not mean people should actively seek to get the virus; unless they are not vulnerable and are looking to donate plasma, so further testing on anti-bodies can be done; but to not panic if cases rise or if you get this virus. Remember, we should be looking to reduce the preventable (deaths) not the inevitable (cases).
I want to address three countries in particular that have taken different approaches to fighting this virus compared to most “lockdown enthusiast” countries; namely Sweden (I can already hear the lockdown lovers screeching at that name), South Korea, and Japan. Before I get into that however, let us briefly go over what it is we, the United Kingdom did wrong.
“The NHS did neglect its patients; it neglected to allow cancer patients to choose whether they wanted to go through with their treatment, taking into consideration the risk of Covid; the choice was made for them, that Covid was more dangerous and more deadly than their cancer”
Covid – What We Did Wrong.
On the 23rd of March 2020, the United Kingdom went into a national lockdown. In hindsight it was a terrible choice, but considering the healthcare system we have, it is understandable to have seen it as the only option on the table at the time. The purpose of the lockdown was simple (though it appears forgotten): We have a lockdown to spread out the cases and deaths, so as to not overwhelm the NHS to the point we have to make the choice of who lives via treatment, and who dies by neglect.
The UK currently, at the time of writing this on the 10th November 2020, has 1.23 million cases, and 49,770 deaths related to Covid-19 (key word being related. This has been a problem since the pandemic first began, where if someone contracts Covid-19 then dies from a car crash, they are marked as a Covid “related” death; not from, related). With a population of over 68 million and an elderly population close to 12 million, the case rate amounts to 1.8% of the population so far being infected, and out of the UK population 0.07% have Covid-19 “related” deaths, and out of the percentage that have been infected 4.04% have died; again, “related” to Covid-19.
The lockdown was never meant to stop deaths or cases, merely to spread out cases so we didn’t have to neglect saving people. The problem is we did neglect people.
When the lockdown first came about, cancer treatments, diabetes treatments, and many others were cancelled to save room for Covid patients, so the idea of not neglecting people was a complete lie. The NHS did neglect its patients; it neglected to allow cancer patients to choose whether they wanted to go through with their treatment, taking into consideration the risk of Covid; the choice was made for them, that Covid was more dangerous and more deadly than their cancer. Sky News insultingly reported that roughly 1 million breast cancer screenings had been “missed” because of the pandemic. No, 1 million women didn’t “miss” their screenings because of the pandemic; as if there was a choice, 1 million women had their cancer screenings cancelled for them; not by them, because the government decided it had the authority to decide which conditions were worth treatment…so we could save lives.
It is very anecdotal, but I’ve had many conversations on this subject, and the response is always, “well my uncle’s friend has cancer and he was okay with his treatment being cancelled”. My response to this is always: okay, but what if they weren’t? What if they were more scared of their untreated cancer progressing and killing them? What about the people who aren’t okay with their treatment being cancelled; whether it’s cancer, diabetes, arthritis, or heart transplants?
The typical rhetoric against attempting to rationally consider the positions taken and use critical thinking skills is often the following:
“Well you just want people to die. You’re selfish.”
To that I say fine, we can play that game.
In the UK, there is likely to be at least as many if not more preventable Cancer deaths than Covid-19 deaths, because of the diversion of resources into Covid. Richard Sullivan, Professor of Cancer and Global Health at King’s College London and Director for its Institute For Cancer Policy stated that:
“The number of deaths due to the disruption of cancer services is likely to outweigh the number of deaths from the Coronavirus itself. The cessation and delay of cancer care will cause considerable, avoidable suffering. Cancer screening services have stopped, which means we will miss our chance to catch many cancers when they are treatable and curable such as cervical, bowel and breast. When we do restart normal service delivery after the lockdown is lifted, the backlog of cases will be a huge challenge to the healthcare system.”
On the 6th October Matt Hancock stated:
“Cancer Patients may only be guaranteed treatment if Covid-19 stays under control.”
Even though the NHS was never overwhelmed, millions of cancer screenings were cancelled to “Protect the NHS” and to “Save Lives”. If this is the crowd that claims to care about people’s lives, and proclaim that sceptics of lockdowns are “selfish” and “want people to die”; I think it may be safe to say that pro lockdown individuals have some form of mental deficiency.
Let us turn to the countries I mentioned at the beginning; what exactly can we learn from them?
“Sweden never had a lockdown, nor did it impose really any restrictions. The government took an advisory position for the elderly and other vulnerable people, with social and moral pressure for individual self-restraint and responsibility”
Let us first take a look at the now most hated country, Sweden.
Sweden holds a fairly small population of just over 10 million. Out of those 10 million, 162,000 have been infected with Covid-19, which equates at 1.6%, and out of the population 6057 have died, which is 0.05%; out of the percentage of people infected, 3.73% of those infected have died. This may still seem scary, but remember lockdowns only postpone current cases and don’t do anything to prevent deaths overall, and these are deaths and cases overall so far. But if we expand the perspective a bit and look at the rates and the directions they have been moving in, Sweden is doing pretty well for itself. Sweden hit its peak death rate on April 15th at 115 deaths in one day, and just recently hit its cases peak on November 5th at 4766. Yet since April 15th when it had its peak death rate, Sweden’s death rate has been drastically decreasing, and continues to do so, with its current death rate per day at the time of writing being 3, and it has been on low double digits to single digits; sometimes zero, since the 3rd July when it was at 8 deaths per day.
Sweden never had a lockdown, nor did it impose really any restrictions. The government took an advisory position for the elderly and other vulnerable people, with social and moral pressure for individual self-restraint and responsibility.
Japan is another success story.
Japan is home to a population of over 126 million people, and an elderly population of just over 36 million. Out of its population of 126 million, 110,000 people have been infected with Covid-19, which is 0.08%, and out of the population 1840 have died, equating to 0.001%; the percentage of people infected who have died is 1.6%.
Japan as well, never had a lockdown, though they took slightly stronger measures than Sweden did with regards to masks, and recommending shops close and vulnerable people isolate; these measures however apart from mandatory masks, were not legally punishable.
Japan hit its peak in cases back on the 3rd August when it reached 1,998 infections per day, and currently from the time of writing this, on the 10th November was at 899 infections per day. The death rate is equally impressive. Japan reached its peak death period on the 22nd April with 91 deaths per day; on the 10th November these deaths had dropped to 11 deaths, and has continued to stay at a stable, low double digit level since around mid-July.
The last success story to mention is South Korea, which is most probably the closest to home in terms of population size overall and in terms of elderly population.
South Korea is home to just over 51 million people, and holds an elderly population size of roughly just over 7.6 million.
Out of its population of 51 million; at the time of writing this on the 10th November, 27,799 have been infected, which is 0.05%, and out of the population 487 have died, equating to 0.0009%; the percentage of people infected who have died is 1.7%.
South Korea, like the others mentioned, never had a lockdown. The nation did however hold very local restrictions in terms of isolation if infected.
There are a few additional pieces of information to give context to South Korea. Due to the wounds from the SARS virus still in people’s minds, the general public was very cautious from the start of the pandemic. In addition South Korea has a predominantly private healthcare system, and so with the profit incentive being allowed to function, mass production of testing kits and ventilators were produced and sold; the market process quite literally saved lives.
South Korea hit its peak infection rate all the way back on the 1st March; where it was at 1062 cases per day. Since then it has seen a dramatic decrease in overall cases, where they dropped to double to single digits as early as April. It has since late August however seen a rise into triple digits, however this has been on a decline since the 1st September; the current case rate in South Korea; at the time of writing this, stands at 146 cases per day.
South Korea’s death rate has remained impressive. the nation reached its peak in deaths on the 23rd March at 9 deaths per day, and began to see a decrease in April; South Korea has never exceeded single digit deaths per day throughout the pandemic. The current death rate in South Korea from the time of writing this, on the 10th November, stands at 2 per day.
“These three nations; Sweden, South Korea and Japan have shown that it is not the case rate to be concerned with; it is the death rate. They have shown that lockdowns are ineffective and do nothing to curb overall deaths or cases”
So what can we learn from these countries, and what can we do differently towards the coming new year?
These three nations; Sweden, South Korea and Japan have shown that it is not the case rate to be concerned with; it is the death rate. They have shown that lockdowns are ineffective and do nothing to curb overall deaths or cases, and merely postpone cases to a future time frame.
I’m sure there will be some mad raving lockdown loony, who will try to say I don’t take the virus seriously; to which I say I do take it seriously. I live with a vulnerable person, and funnily enough I’ve made choices that aren’t part of government “guidelines” which better suit my life and my circumstances; most of the time while travelling before the 2nd lockdown I took a taxi everywhere because it would limit who I had to interact with during my journey, meaning I could have better control of my situation.
What measures could be suggested that we take via influence from Sweden, Japan and South Korea? I believe the following would be the most pragmatic if we were to focus solely on preventing deaths rather than inevitable cases:
End the National Lockdown.
Localise decision making to local councils in terms of what restrictions they are to have in place based on demographics of age, medical vulnerability in relation to infection rate. For example if a local area has few elderly residents, few individuals who are medically vulnerable and a double digit infection rate, the local councils could set low restrictions. It would be similar to the tier system but on a much more localised scale, allowing local governments themselves to decide their own restrictions; not on their behalf by Whitehall.
Allow private establishments to choose whether to mandate mask wearing if they are capable of upholding social distancing.
Allow individuals who are consenting with one another to meet for gatherings unless they contradict with local measures.
Mandatory mask wearing in hospitals and care homes. These are vulnerable areas where people are seeking treatment.
Allow for the expansion in private companies producing and selling testing kits and allow individuals to purchase these kits outside of the NHS for home use. Allow businesses such as Boots, local pharmacies and such to sell these testing kits and correlate positive tests back to local hospitals and GP practices.
Allow for the expansion of businesses producing and selling ventilators and leave the decision of whether to purchase or not to local governments in correlation with hospitals within their region, with regards to their demographics of age, medical vulnerability and infection rate. This will ensure that we are not focussed on preventing cases but have the means in the local areas where they are needed to prevent as many deaths as possible.
Do not imprison residence in care homes. If the residence and their families would feel safer leaving the care homes to live with family, allow them to do so; do not make the same mistake of imprisoning care home residence to simply wait for death. In addition do not imprison students at university; if the students feel safer in returning home or staying, the choice should be theirs to make with advice from the student bodies.
Offer financial incentive to people who have tested positive to donate plasma so an expansion in testing on anti-bodies can occur; this should especially be encouraged among young adults.
Allow private establishments to decide the maximum capacity in one group they will allow, in relation to whether they can uphold social distancing .
Allow businesses and business owners themselves to decide whether to open or close. It is immoral for the government to decide who is essential and who is not; your livelihood is essential to you, it doesn’t matter if a politician thinks otherwise.
Allow patients to decide whether they want to take the risk of cancer and other treatments during the pandemic. It is completely abhorrent to allow the government to decide whether people should have treatment; that choice is to be made between patient and doctor alone.
The essence of these suggestions boils down to more decisions being made at the local level based on demographics, not one-size-fits-all approaches that may be needed in one location but are overboard in another. This approach allows individuals to make their own judgements of what is best for their circumstances, and what risks; if any, they are willing to make, while local governments who know their constituents better than the central government in Westminster to make the political choices and work with hospitals and the private sector for producing ventilators and testing kits. We’ve done the one size approach, and it has failed, we’re trying it a second time, and it is still failing; the nations that didn’t take a national lockdown approach; whether they took small measures of restrictions or no restrictions, they are showing success by having an ever declining death rate.
It is inevitable there will be people who say I’m being selfish for wanting to socialise with loved ones; but man is a social animal, and we know the mental and emotional effects prolonged isolation can have on people. If we are to believe that self-interest and selfishness are evil, what is more evil is believing everyone apart from yourself has to take responsibility for your health; the number one person responsible for your health, is you; not the man who decides to go drinking with friends, not the woman who wants to open up her small business to provide for herself, not the grandparents who nearing the end of their lives want to see their family and not be forced into isolation, and it is certainly not the responsibility of young people who have their whole lives ahead of them; who’s progress we have halted by force; it is your health, your responsibility.
“Life is about living, not simply existing and doing everything to remain “safe” so you can keep on simply existing. Yes, making choices to ensure you are safe from death is important; but the timeframe for living is very limited”
Life is about living, not simply existing and doing everything to remain “safe” so you can keep on simply existing. Yes, making choices to ensure you are safe from death is important; but the timeframe for living is very limited, and if you keep pushing that timeframe into a smaller and smaller margin, eventually it will expire, and sooner than you think.
“The Section 114 notice bans all new expenditure at Croydon Council, with the exception of statutory services for protecting vulnerable people”
“£17.7m of the £27.9m of the “new savings” presented to Croydon’s cabinet on 21 September and the full council meeting on 28 September were “incorrectly identified as new savings”
“Croydon’s financial pressures are not all related to the pandemic”. It is under a government review amid claims of “irresponsible spending”
Whilst we have been by no means alone. In the 2 and a half years the Croydon Constitutionals have been running we have regularly reported on what we have seen as irresponsible spending by the council.
These concerns have been validated by the recent audit report:
“There has been collective corporate blindness to both the seriousness of the financial position and the urgency with which actions needed to be taken”
We host a forum on the Future of the BBC. Croydon Councillor Jeet Bains, Sofia Svihurova, former Brighton Group Leader of the Libertarian Party, and Harry Fone of the TaxPayers’ Alliance present their views on what’s next for the Corporation.
We then hold a panel discussion with questions from our online audience.
Hoong-Wai Cheah asks – What’s the harm in feeding the poor? Why can’t we just print more money and make everyone a little bit richer?
File:US Navy 111123-N-HW977-185 Sailors weigh Thanksgiving food drive donations before delivery to the Corona-Norco Settlement House.jpg
What’s the harm in feeding the poor?
What’s the harm in regularly giving people money, with no strings attached?
Have you heard of the saying “give a man a fish, you feed him for a day. Teach a man to fish, you feed him for life”?
Was oxygen ever so scarce for you that you’ve had to conserve it, else you suffocate?
Have you ever had to work hard to receive your regular exposure to sunlight?
Maybe you cannot see the relevance of all these to the initial question…
“The resources which supply welfare isn’t unlimited. Someone had to grow the food, and people have to work to produce and distribute goods and services”
Taking resources for granted
Even though oxygen is a limited resource, our ready access to it means we don’t treat oxygen as if it is somebody else’s resource. We not only consume as much of it as we want, we even indulge in escalating our consumption of it, when we participate in any form of physical exercise.
If a man had free access to money or food on a regular basis, it will no longer be a blessing, but an expectation. That means he becomes dependent on it, and perceives it to be a resource that he does not consider to be scarce, much as we take for granted that the sun will rise everyday to give us our daily dose of sunlight.
The resources which supply welfare isn’t unlimited. Someone had to grow the food, and people have to work to produce and distribute goods and services.
“Someone who was able to buy 10 bushels of food, is now only able to buy 2 bushels of food. This is the effect of printing money, a practice that many modern governments engage in, under the guise of “quantitative easing”
Printing money does not create wealth
But what about money? Why can’t we just print more money and make everyone a little bit richer?
The problem is, money is just a medium of exchange. It is not a resource in itself, so producing more money does not produce more food or goods.
Let’s illustrate what this means: say you have a tiny economy that produces 100 bushels of food a year. In circulation in this tiny economy is exactly 100 silver coins. The people in this economy use these 100 coins to trade for the food each person produces, such that each coin buys exactly one bushel. So you can see that increasing the number of coins in circulation does not increase the number of bushels available to buy.
What happens if someone decides to produce 400 extra coins for himself? With a total of 500 coins in circulation, this person will initially own 80% of all the coins, which makes him able to buy 80% of all the goods available. But the number of bushels available to buy hasn’t changed, it is still 100 bushels. This person doesn’t create more wealth for himself, but actually steals the wealth that other people have produced, by devaluing the coins that the others have: Someone who was able to buy 10 bushels of food, is now only able to buy 2 bushels of food. This is the effect of printing money, a practice that many modern governments engage in, under the guise of “quantitative easing”. Sure, those who had more will have more taken away, but those who have little will have even less remaining.
“The rich and poor aren’t two homogenous groups. People exist on a continuous spectrum of wealth, and individuals travel up and down it throughout their life. When government prints money to spend, all they achieve is to pull EVERYONE down”
Where does free food and money come from?
Coming back to giving people food and money for free. Since food and goods have to be produced through effort, the only way you can receive them for free is if somebody else sacrifices their payment for it. This is easy to accommodate if we are producing in surplus, but it is not safe to assume that production will always be in surplus. If a government creates more money than what is already in circulation, all it is doing is robbing from those who have, hitting the poor the hardest, adding to the numbers of those in poverty. To feed the new ones in poverty, the government can create more money, but the cycle then repeats, eventually creating a whole nation of poverty. This was the phenomenon of runaway inflation that plagued Zimbabwe and the Soviet nations.
But surely just as there will always be poor people, there will always be rich people? Not necessarily. The rich and poor aren’t two homogenous groups. People exist on a continuous spectrum of wealth, and individuals travel up and down it throughout their life. When government prints money to spend, all they achieve is to pull EVERYONE down. If they keep printing money, eventually even the wealthiest will be pulled down. By that point, everyone will be so poor that the resentment toward the few remaining wealthy will be so powerful that they will be brought down by the force of mob rule.
Modern methods of taxation are designed to ameliorate this. By taxing a proportion of people’s income and consumption, we mitigate the effect of reducing everyone’s wealth. But taxation has its limits: taxation will reduce a person’s income. So if a person’s income is so low that after tax they earn less than welfare payments, it makes little sense for them to be in paid employment. The higher the levels of tax, the worse the problem gets. Likewise with the levels of welfare payments. This means that increasing tax beyond a certain level will actually reduce the overall tax take for the government.
Government does not have unlimited resources
All this is to say that government spending is not without limits – government can neither increase tax nor print money indefinitely. Which means the government has to choose to prioritise how it spends its budget.
In the UK, the two biggest spends for the government is 1) its national healthcare service, and 2) social welfare provision. With limited resources, increasing spending on one of these necessarily means reducing spending on the other. Yet socialists are perpetually calling for ever higher increases for spending on both the NHS and on social welfare benefits.
Sure, doing this bit by bit won’t immediately destroy your country – you’ll get away with raising tax a little bit, or printing a little bit of money every now and then. But every little bit adds up – when the movement is gradual, you don’t notice it happening.
Printing a little bit of money will not immediately cause massive inflation, but over time the cumulative effects of printing money means everybody’s spending power is gradually eroded: savings lose their value, those on low incomes will have even lower incomes.
In the same way raising tax a little bit might temporarily increase the tax take, until those who are just about managing to balance their bills find themselves with even less spending money, putting them below the breadline. This also applies to corporation tax: corporation tax is identical to income tax, except the income is a business’ profits. Businesses already struggling to break even will be driven to shut down.
As a socialist, you may think that your demand for increased spending won’t be enough to tip the whole edifice over, but how will you recognise the straw that breaks the camel’s back?
The push to spend more, to print more money, is precisely what leads to mass poverty. This has been the experience of every nation in human history which chose to indulge in socialist ideals.
“The only way out of this trap is to not rely on government spending to feed the poor. Feed the poor yourself, out of your own surplus. Contribute to food banks, give the homeless a meal and a sheltered place to rest, and do your own part”
Why shouldn’t we feed the poor?
But shouldn’t we feed the poor and hungry? Of course we should!
Unfortunately, any welfare system will create dependents, meaning it becomes unethical to reduce spending on welfare. Which means that the social welfare bill will only keep going up. At some point, somebody will need to say “no more”. Unfortunately, socialist ideologues will jump at this opportunity to condemn the ones who are brave enough to call for a stop to overspending.
The only way out of this trap is to not rely on government spending to feed the poor. Feed the poor yourself, out of your own surplus. Contribute to food banks, give the homeless a meal and a sheltered place to rest, and do your own part. Don’t rely on government spending to do it.
In conclusion: If you want to feed the poor, do it yourself. And if you can’t keep it up indefinitely, then we should teach a man to fish, thus feeding him for life.
Image credit: By U.S. Department of Agriculture (Fruit-bar-pic—Web) [CC BY 2.0 or Public domain], via Wikimedia Commons
External Auditors are under a duty to issue a report in the public interest when a significant matter comes to their attention which they believe the Council should consider or the public should know about i.e. it is in the public’s interest to know about this.(Source)
Croydon Council’s external auditors Grant Thornton have issued a damning ‘Report in the Public Interest’ on Croydon’s “deteriorating financial resilience”.
The full report available at Report in the Public Interest 2020 | Croydon Council, details the past few years of the worsening financial position at the council and more worryingly the lack of response from the borough to resolve the problems, which statements like these demonstrate:
“There has been collective corporate blindness to both the seriousness of the financial position and the urgency with which actions needed to be taken”
“Had the Council implemented strong financial governance, responded promptly to our previous recommendations and built up reserves and addressed the overspends in children’s and adult social care, it would have been in a stronger position to withstand the financial pressures as a result of the Covid-19 pandemic”
I have written many times over recent years about what I saw as the council waste of public funds, be it on BoxPark, Cultural events or the Surrey Street Market refurbishment. But these are political disagreements. When the council has run out of reserves and is threatened with a Section 114 notice it is mismanagement, but still working withing the guidelines of the system. With an Audit report, with the statements that follow, it is unclear if the council took notice of guidelines:
“Having a company dissolved by compulsory strike off is a failure of governance and we have not identified evidence that the dissolution of London Borough of Croydon Holdings LLP has been reported to Cabinet or the General Purposes and Audit Committee”
“Minutes of the Scrutiny Committee noted that the paper (explaining the Council’s proposed decision-making matrices) was produced after the first bid had been lodged and with this paper it would not have been possible to judge the soundness of the acquisition. Whilst opportunities can arise at short notice, good governance would require the strategy to be approved prior to the first purchase”
The full report is well worth reading, it makes 20 recommendations which we should all hope the council fully implement. A number of themes come out in the report of systemic failure in the councils actions, which I have grouped as follows:
Lack of oversight
“The reports were accepted by Members without an appropriate level of challenge to continued service overspends”
“There was insufficient challenge from Members on the financial risks in the budget, credibility of the planned level of income from third parties and deliverability of the savings plan. The Council’s governance over the budget setting and monitoring has not been good enough.”
“In our view this was a failure of governance and showed a lack of understanding of the urgency of the financial position.”
“The strategy for investing in properties was approved at Full Council using guillotine procedures meaning there was insufficient time to discuss and challenge the strategy and the first purchase was made two months prior to approving the strategy”
“There has been collective corporate blindness to both the seriousness of the financial position and the urgency with which actions needed to be taken.”
“The budget was approved without evidence of challenge on whether the revised level of reserves was appropriate or whether the history of delivering services within the budget or delivering savings as planned had impacted on setting the appropriate reserves”
“it is difficult to determine how Members reached the view that the savings plan within the budget being approved was achievable. We do not consider the Council’s governance over the setting of the original 2020/21 budget to be good enough”
“Members of the Scrutiny and Overview Committee accepted the responses received and did not refer the matter to Full Council. In our view this did not demonstrate an understanding of the urgency of the financial position.”
Masking the problems
“The impact of the overspends has been masked by both the accounting treatment of the Dedicated Schools Grant deficit (which we disagree with) and the use of the flexible capital receipts. The Council has failed to deliver real savings in children’s and adults’ social care.”
“In 2018/19, the Council chose to account for the deficit amount as a debtor at the end of the financial year which we disagreed with as the Council’s approach was based on the view that the Government ought to refund the excess spending rather than any evidence that this would be the case.”
“When UASC service costs were seen to exceed the funding available, the Council’s response was to lobby government for increased funding”
“The 2019/20 Quarter 3 financial position reported to Cabinet in January 2020 reduced the in year overspend by £8 million. This is an unusual movement and there was limited explanation in the report and no evidence of challenge to understand the validity of the adjustments to achieve the revised position”
Lack of control of spending
“In the past three years, the Council has reported significant service overspends of £39.2 million within children’s and adult social care”
“the Council focused on: improvements in service delivery without sufficient attention to controlling the related overspends”
“the Council has not demonstrated that it can take effective action to either manage the cost pressures or establish appropriate budgets within Children’s and Adult Social Care services.”
“The Council failed to address the underlying causes of service overspends which during 2017/18, 2018/19 and 2019/20 had a combined overspend of £59.3 million. The overspends were reported in budget monitoring reports but there is little evidence of Member challenge or holding officers to account for the underlying reasons for the overspends or for taking action to address and mitigate the impact in future years.”
“The 2019/20 Quarter 2 financial position reported to Cabinet in November 2019 showed an in-year overspend of £10.4 million. There was no indication that Members understood the implication of using the remaining general fund reserve on in-year pressures and this in our view contributed to the lack of urgency”
Brick and Brick and Investments
“The Council’s approach to borrowing and investments has exposed the Council and future generations of taxpayers to significant financial risk. There has not been appropriate governance over the significant capital spending and the strategy to finance that spending.”
“Despite heavy investment from the Council, the Council has not yet received any significant return.”
“The savings plan in February 2020 included additional income sources that were in our view optimistic including £3 million dividend from Brick by Brick, a company the Council has already lent almost £200 million to and for which the Council has yet to receive any dividend or any interest owing on loans”
“The interest receivable amounts continue to increase however the outstanding debtors indicate that Brick by Brick has not made any interest payments with £5 million owing at 31 March 2019.”
“The investments in The Colonnades and Croydon Park Hotel were not grounded in a sufficient understanding of the retail and leisure market and have again illustrated that the Council’s strategy to invest its way out of financial challenge rather than pay attention to controlling expenditure on core services was inherently flawed.”
“The Council has established a complex group structure and we found little evidence that the complexity and associated risk to the Council’s financial position is understood by members or officers”
“Based on our review of the loan agreements, £110 million of those loans were due for repayment by the date of this report and had not yet been received by the Council”
“At the Cabinet in July 2020, the Council made a decision to incur an additional £30 million of borrowing to purchase properties from Brick by Brick to increase the affordable housing supply available. This is not in line with the original business case for Brick by Brick approved by Members in March 2015.”
“The increasing complexity of the group structures, the interaction between different subsidiaries, the longer-term financial impact for the Council and how to safeguard the Council’s interests is not clearly understood.”
“London Borough of Croydon Holdings LLP was dissolved by compulsory strike off due to a failure to file accounts. The facts or progress in remedying the situation have not been reported to Members or subject to scrutiny”
The above are by no means all of the adverse comments in the report.
Where does this leave us?
We have a new Council Leader, a new cabinet and a new Chief Executive, all of which are to be welcomed. All of those at Croydon Council, both Councillors and senior officer need to ask themselves how we have got into this position. Within the new cabinet the 6 (of 10) members who are long standing cabinet members really need to step up and explain their part in these debacles.
No doubt much blame will be moved to those who have left and to the council officers. Here I am reminded of a speech to house of commons by Diane Abbott. Back in May 1998 the house was debating government policy towards Sierra Leone. Ms Abbott was questioning the Labour Governments Ministers actions, and went onto say:
“In the tit for tat and media frenzy about the issue, a number of questions have been asked over and again. What did Ministers know and when did they know? I would ask a third question, which is why did they not find out?”(Source)
As the repercussions of this report become clear and further questions are raised from the newly published draft 2019/20 Annual Accounts, I expect we will see a focus on new changes, not the past problems.
To have confidence, to believe that Croydon Council will do better, what we need to know from the Councillors in office during this period and now serving in a new cabinet is simply – If they weren’t told about these problems, why did they not find out?
