Promises, Promises
John Rentoul writing in The Independent pours a big bucket of cold on the latest election 'giveaway' which is just the latest in a long list of promises that a Labour Government led by Ed Miliband would be in no position to deliver.
He also suggests that Labour's shadow chancellor is well aware that this is all just empty political rhetoric, but with 'election fever' taking hold Ed Balls seems powerless to do anything other than watch as the madness unfolds.
Election catch-up: Just what the election needs – another superficially popular but foolish policy
Ed Miliband’s promise to abolish stamp duty for first-time buyers is the latest in a long line of economically ignorant gimmicks
By JOHN RENTOUL - The Independent
1. Just what the election needs: yet another superficially attractive but economically ignorant policy from Ed Miliband. A stamp duty cut for first-time buyers that will do nothing for first-time buyers and give a windfall gain to the sellers of houses worth less than £300,000.
Given that first-time buyers pay as much as they can for the houses they want, house prices will rise to make up the difference. So the taxpayer would lose the revenue (to be made up by “tackling tax avoidance by landlords”, if you really want to be upset), and sellers would be up to £5,000 better off, further inflating the prices of houses they go on to buy.
Oh it’s all right, say Labour’s defenders, because Labour is going to build lots of houses and anyway George Osborne started it. Just because the Chancellor introduced a populist (superficially popular but wrong) policy doesn’t mean Labour has to copy him. As for building houses, which would at least change the supply side of supply and demand, (a) biwisi,* (b) it would have a minimal effect as long as we are part of an EU single labour market, and (c) it would be hard and expensive to build houses in London and the south-east, which is where the high demand is.
*Believe it when I see it.
2. So far we have had, among other things: rent controls to shrink the rental sector; a tuition fee cut that would benefit only higher-earning graduates; a freeze for falling energy prices; and a promise to interfere in the work of the independent Low Pay Commission by raising the minimum wage, presumably to a level that the Commission thinks would cause unemployment.
What is the point of Ed Balls, an economist and top-class intellect, if he cannot stop nonsense like this?
