Saturday, April 17, 2010

Liberal Democrats Could Be Even Worse Than Labour

After Liberal Democratic leader Nick Clegg clearly outperformed his rivals Gordon Brown and David Cameron in a debate, the Liberal Democrats have surged in the polls and are in some polls ahead of Labour and very close to the Conservatives.

That is worrisome, because even apart from the fact that this increases the risk of a "hung parliament", the Liberal Democrats aren't a good alternative to Labour. Their "liberalism" is in the modern American-British sense (which is to say essentially social democratic), as opposed to the classical sense (which is to say moderate libertarian) still used in continental Europe and Australia.

Their deficit reduction plan can be summarized as a kind of Underpants Gnomes-style scheme:

Phase 1: Increase government spending and cut taxes for people with low income.
Phase 2: ????
Phase 3: Deficit is reduced.

Perhaps some would argue that my phase 2-characterization is unfair, as they do propose "closing loopholes that unfairly benefit the wealthy and polluters". But apart from the fact that they don't specify what "loopholes" they are referring to, not much more money can be raised by further increases in taxes on high income and carbon emissions (which I assume is what they mean by "pollution"). Further increases in the top marginal income tax rate (currently 50%, after having been recently raised from 40%) would help drive even more businesses from London and encourage increased tax evasion. Similarly, carbon taxes are already so high that it is driving manufacturing away from Britain, and further significant increases would destroy even more of Britain's dwindling manufacturing sector.

If one takes into account the negative effect on the tax base, the proposed Liberal Democratic tax increases would at best help fund their tax cuts and spending increases-and even that is probably too optimistic. The Liberal Democrats would thus likely send Britain further down the destructive path of higher government spending and higher deficits that it has experienced under Gordon Brown.