Economic theory, how to deal with banks. 3

The revolutionary government will allow the bank of England rate to rise by up to 0.5% per month for the first year if market conditions require such an increase. Artificially low interest rates for the banks are a major cause of economic bubbles. Quantitive easing is another. Payday loan for you 4000 % or more, loan to a bank 1% or less. The Revolutionary government policy of 6% for banks and an absolute maximum for you of 26% is, apparently, truely revolutionary. The maximum rate for paying of you credit card will be 1% per month, around 13%. It will be the lenders job to check your ability to repay any loan, and this will be retrospective. If they should have reasonably known that you would be unable to pay the loan, when they gave it to you, and you have made reasonable efforts to pay, then the amount you owe will be fixed as though the rate was always 13%, the rest will be written off by the loan company.
So what is the Economic theory?
Wholesale Interest rates should lead to a balance of savings and loans, and stability of the currency. Usuary should be illegal. The solution to unemployment in the longer term is to be found by providing stable conditions for industry, reasonable levels of taxation on industry and workers, savings to be encouraged and loans to be directed to productive use  and not to speculation.

Economic theory, how to deal with banks. 1

This is intended as a guide for the leader of the revolutionary governement. He or she will need some understanding of economics in order to stand up to the banks and the rich in general. It’s not that hard, but they will try to convince you that it is. Banks have the power to create money and charge interest on it when they lend it to you. They just have to lodge about 10% of the amount they loan with the central bank, (Bank of England). They gamble with your savings on the markets. They collude to rig the markets, remember the LIBOR scandel. Banks were accused of lying about the interest rate for inter-bank loans.
There are 2 main economic theories, one says the government can manage the real economy by borrowing in the bad times, adjusting interest rates and printing money.
The other theory is that anything a government does is almost certain to make things worse in the medium term. Leave the free market free and it will work. Both have a point, though neither work well, but the UK has tried both at different times, and seems to be trying both at once at the moment. It is also cutting normal peoples incomes, robbing their savings with inflation and  interest rates of less than 1%, whilst allowing companies to charge 4000%  interest on loans to the poor, and now needs to make further cuts in govenment spending so as to lend money to the international monetary fund, yes really.

Railways and coal mines 4

The success of the project requires that when complete that it runs profitably. Much has changed since the 1960s when many of the lines were closed. The price of oil has risen greatly and will very likely rise more, and certainly it will rise faster than coal, as oil is in short supply but coal is not. This should allow fares to be set at a reasonable rate. Businesses will be encouraged to locate at or near the stations. Any travel that is subsidised or given tax breaks by the government will be required to use the railway. The holiday scheme will include very low priced rail tickets. The rolling stock will be new and of a modern design. Employers will be able to give their workers train tickets to travel to work and this will be free of tax and national insurance. The railway will operate a station to station parcel service, and also carry the royal mail. Provision for a rail connection will be a  consideration for the granting of planning permission for large new developpments.
It will be very desirable to get freight currently carried by lorry onto the railways instead. Just building facilities for this and hoping that it will arrive is not enough. Supplies for supermarkets are perhaps a good starting point. A rail-link could be built to connect with the central depot in the midlands and gradually rail links could be built to the major suppliers and major destinations such as shopping complexes. The existing haulage firms and the supermanket chains would have to participate and perhaps would own their own rolling stock, even engines.

Railways and coal mines 3

It is important for the new railway to have a good ticketing system. It must be possible to go to any station and buy a through ticket to anywhere in the country, and to major places in Europe. This should also be possible on the internet, and of course to be able to buy a through ticket from Europe. The prices need to be reasonable, I would think about 10 pence a mile on average, except for peak times.
All government aids and tax breaks for travel will be confined to train travel where this is possible. Pensioners free travel will of course be allowed on the train.
The post office will use the train, and will offer a service of 2 day delivery, by train and not by air. The railways will offer a parcel service for collection at the station. This is a great convenience  when no-one is at home all day for a parce to be delivered, much easier to collect it from the station on the way home from work. All professional internet and catalogue sellers will be required to offer this service as an option. They will have to arrange to deliver their parcels to their nearest station. Foreign sellers can just send by post as normal, addressed to the customer c/o the station selected. There will be a requirement for coal to fuel the trains and this will be provided from British mines, private or publically owned if neccessary. The investment neccessary for the building of the railways and purchase of the Engines and rolling stock can be financed by the issue of a railway bond by National savings, paying interest at 3% free of tax, with a limit per person of 50000 pounds. The railways will be owned by a company whos share will be wholly owned by the government, so the bonds will be a loan to the company but guaranteed by the government.

Railways and coal mines 2

It is of course important that the new branch lines to be built will be finacially viable, and to encourage investment in both the lines and the engines, that a clear plan is presented.
The research  that was done before the lines were closed was seriosly flawed, many of the lines were in fact viable, or could easily have been made so.
The stations even in the smaller towns must be brought alive. Space must be provided for free parking, at least for the passengers. The ticket offices could be run in the same way as sub-post offices work, that is the person who sells the tickets runs another business the rest of the time, or a library could be installed at the station and the tickets sold by the librarian. Government departments will be required to have offices for the public in small towns, to allow people to have information or resolve problems with pensions, benefits, tax, etc. These services could all use the same space each one present at a different time of the week. The receptionist could perhaps also sell railway tickets. Where possible there should be a cafe. If this is run as a traditional English cafe, the revolutionary government will provide incentives, such as very low rent ant rates. The steam Engines will be an attraction for touristes, and it is important to present English culture to them, not least because having sampled English sausages, bacon,  cheese, scones, pork pies, Cornish pasties and so on, I’m sure it will encourage exports of these items.

Railways and coal mines.

It is clearly neccessary to revitalise the English economy. The revolutionary will take direct action by re-creating an industry totally owned by the state, or you could say, owned by the people who have to pay the government debt. Much is said about about global warming, but the key issue is to reduce the consumption of fossil fuels and especially oil, as it is already in short supply, and the price will rise until people buy less. There is a fuel in ample supply, both world wide and in England. Britain has 400 years of known reserves. Coal. It would seem obvoius to use coal to replace gas and oil, especially oil. The problem is that it contains a little more carbon than oil. Trains use much less fuel than road transport. So if at least some of the branch lines axed by Beeching were replaced, and run with new, efficient, coal fired  (steam)-engines, and carried freight and people, the total carbon output would be reduced.
The engines will be manufactured by private English companies if possible. This should lay down a good future for manufacturing in England. Universities will be orderd to help in the research, they get government grants and it won’t hurt for them to do something directly useful. Coal is competitively priced compared to oil now, and I’m sure it will become more competitive in the future. Steam engines were always cheaper to build than diesel, and so I’m sure there will be an international market in the future for steam locomotives if they can be made competitative. There is plenty of oportunity for private enterprise to open new coal mines as required. The building of the new railway lines is a major project and will be undertaken directly by a government agency in some cases, mainly where the new line can be seen as a community sevice. This will allow for some of the labour to be provided by the, half-time working for people on the dole, scheme, and by immigrants who’s present status doesn’t allow them to work. Also by people on rehabilitation schemes, and disabled workers. Basically anyone who is being funded by the Government, and who are able to work, can work on this project.

Getting out of recession

Much has been said about Keynsian economics recently. Keynes is the economist who proposed government spending on capital projects with borrowed money to boost economic activity. There is an important point point the Brown government missed, and that is, borrow to spend “on capital projects”. The coalition seems to be cutting back on spending shrinking the economy and still borrowing. Banks cannot be described as a capital project. Railways and coal mines can. I will explain in the next post.

Supermarkets to be made to sell in small quantities.

It is clear that too many people have weight problems and that supermarkets are resposible for some of this problem. There are problems with the food they sell, and with the packaging, and with their attempts to encourage their customers to buy more.
One of the causes of weight gain is eating too much. One of the causes of eating too much is buying too much. So it seems highly reasonable to say to supermarkets that  they must encourage their customers to buy in the type of quantities they would have bought before supermarkets existed. The revolutionary government will ban all offers on food that offer a lower price for buying more, and all mulipacks. Butter and substitutes, will be sold in 250g packs, all butter substitutes will be subject to VAT. Cheese will be sold at a counter, and cut to the customers request. Bacon similarly by the slice. All vegetables and fruits will be sold loose, so that the customer can buy exactly the amount the wish. Crisps will be sold in 25g packets only, and of course the price per pack is the price, whether you buy one or 10. The same will apply to pringles or doritos. Dried fruit will be sold loose or in small packs. Soft drinks of all kinds will be sold in bottles of no more than 1 litre, and carry a returnable deposit.
Alcohilic drinks will be sold at a separate counter, like cigarettes are, and must be paid for by cash or debit card, seperately from other items.

Creating jobs, holidays in England

The revolutionary governement, is concerned about keeping communities together, and showing that workers are valued. The olympics has been used to promote the idea that people of all backgrounds can come together to celebrate the great history and culture of Britain and London in particular. Eating together is a very important way to unite people in a common purpose. The revolutionary government will provide a subsidy for a weeks holiday each year at a holiday centre in England, with all meals, trips and entertainment included. The food to be cooked on site from fresh local ingredients, the trips and entertainment to include elements of local history and traditional culture. All workers and their families and pensioners with incomes under the threshold for higher rate tax, will be eligible. The cost will be £140, the employer will contribute a similar amount.

Job creation, repairs.

Repairing goods has many advantages over throwing away the old and importing new. Unfortunately it can often appear to be uneconomic.

The new government will legalise anyone in full time employment to do part-time work  unrelated to his emplyment without paying tax or national insurance contributions, providing the work is not advertised, and that all customers are personally known to the worker and that they are aware of his status. You will be able to give a mate a few bob for giving you a hand with your home improvements for example.

Repairs to movable goods and building repairs will be subject to a 5% VAT rate providing the value of any goods supplied doesn’t exceed two thirds of the price.

This, together with the workers supplement should maintain the competitiveness of computer repair firms,  garages, builders etc.