Capitol Ideas/Report From Britain

...Engineering a reduction of real supply through high interest rates . . . simply makes inflation worse," Reynolds writes...

...An attention-catching fiscal inducement to save has become a national imperative...

...At the recent Labour party in addition to the cruise missiles, all to 1981 levels...

...It is no good the Treasury bringing forth piddling measures hedged about with a mass of restrictions and mean-minded exemptions...

...Revenue might be lost, but this hardly matters as the government today is running a huge budget surplus, the Laffer Curve having once again been proved correct: the income tax rate reduction was followed by a massive surge in revenue...

...But Reynolds told me that he would not oppose the introduction of savings incentives in Britain...

...I recall no mention of that when the Single European Act was moving through the House...

...Unfortunately she has been expending political capital in pushing for much less important measures—water privatization, for example, and a reform of the local tax structure...

...the tions," Magdalen said to her husband...

...and the Radicals (a small but influenican and European establishments...

...But Mag power from the state back to in- broadcast media, are all affected by the switch to the greens by purists like my and I formed a united front against dividuals will be brought to an end...

...I refer to the anticipated "United States of Europe" by 1992...

...Her realism they portray as a lack of idealism, her honesty as a lack of diplomacy...

...press in the past year, deserves a second look today...

...society that the socialists ostensibly cess, reminding her that the Greenham somewhere on the Lancashire coast...

...The Archbishop of Canterbury recently made some remarks about capitalism that were so stale and predictable (too "materialistic," not enough "compassion," cheap shoes from abroad are made by children) that a number of journalists couldn't resist jeering...

...The result is stagflation...

...A broadly based tax exemption on savings interest would be unpopular with the Treasury civil servants, who continue to wield vast influence over policy, but it would go down well with the middle class...

...Such measures will make no impact whatsoever on the psychology of the average taxpayer...

...What is called for is the sweeping away of most taxation on savings...

...I couldn't resist adding that it was also daunted by the economic news is owning middle class, monthly payTHE AMERICAN SPECTATOR DECEMBER 1989 11 ments have doubled in the past year or so...

...These protests were suc- contents...

...They do this not because of some innate fecklessness, but because nearly everything in our economic and fiscal system induces them to do so...

...On the other hand, if they are debtors they are helped by inflation and do not have to repay the full value of their debt...

...not in content...

...The government in this century to transfer fessionals, the arts, the universities, the ain of all things nuclear...

...The more elitist among them see a new Napoleonic order, dirigiste, protectionist, democratic in form but THE AMERICAN SPECTATOR DECEMBER 1989 13...

...Another issue, much discussed in the U.S...

...Mag was thrilled cent, in his ongoing and largely futile comfortable with...

...strategy, taking people on guided tours cellor of the Exchequer, Nigel Lords and even the monarchy are inMagdalen has become a "green"— of the plant to "try and make nuclear Lawson, raised interest rates to 15 per- stitutions that socialists are surprisingly the latest thing in radical politics in power acceptable...

...They were very concerned about a not too many miles away, even as we culated to achieve the very classless I congratulated her on the cruise suc- British power station called Sellafield, spoke...

...Runcie asked the children concerned if they would rather starve...

...Appar- Europe...

...Writing in the Sunday Times while I was in Britain, Brian Walden, a former Labour member of Parliament and now a leading Thatcherite and member of the Radical Society, confirmed my view of Britain's economic problem: "The British spend their money and do not save it," he wrote...

...Haseler arms control enthusiasms of the Amer- coincide with all the nuclear power sta- very few people in Britain understand...

...A good deal has come to light since we accepted the Single European Act," W. E Deedes wrote in the Daily Telegraph...

...Reynolds points out that Britain lacks bank-reserve requirements—ditto Switzer12 THE AMERICAN SPECTATOR DECEMBER 1989 land since early 1988—and that in their absence raising interest rates does not curtail monetary growth but does crunch down on the real economy...

...In the latest percent interest rates...

...Re- "Not true," said Rob, tentatively me, however, in their joy over the the left in Britain seem to have grasped cently I returned to England for a visit, "green" himself these days but skep- travails of Mrs...

...I told her that the redoubt- The new pragmatism of the Labour But the Thatcher government and Magdalen kept close at hand a "ter- able conservative columnist, Patrick J. party makes this unhappy prospect all program will not long survive 15 rifying" book called No Immediate Buchanan, had now come over to our the more likely, of course...

...Variable-rate side and was leading the charge in Gallup poll, Labour is ten points ahead...

...Americans (and Britons, too) have been led to suppose that this is above all a promise of deregulation to come, with a common market, free trade, the elimination of tariff barriers, the abolition of passports, and so on...

...Here let me note some supply-side dissent...

...The Archbishop of York...

...sister...

...Intuitively, we should suspect that something else is afoot...

...More realistically, they should consider that a serious attempt will be made to centralize power in Brussels, with myriad minute regulations interfering with everyone's lives—a supra-nationalism that is deregulatory on the surface but dirigiste in intent...

...mortgages are the rule in Britain, and Tom Bethell is The American Spec- America for a saner U.S...

...Is it likely, after all, that the huge Brussels bureaucracy and the European Parliament (increasingly filled with socialist delegates, because in Britain at least most conservatives don't bother to vote in European elections) will be content to deregulate the lives of the taxpayers they sponge off...

...But the big surprise came on the day before I left England—a Times article by John Habgood entitled "Fatal Flaw in Socialism," in praise of F A. Hayek himself...

...A decisive percentage will undoubtedly defect to one or another rival party at the next election unless a remedy is soon found...

...Walden is undoubtedly correct that such a policy change is now imperative, and the next budget (March 1990) is probably the last chance that Mrs...

...The Labourites that Greenpeace riposted by "blocking attempt to subdue inflation...

...Americans have expressed repeated concern that they will be excluded from a Hayekian free-market paradise in 1992...

...Who is John Habgood...

...The traditional aristocratic estabnational executive committee...

...rates in Britain have been rising steadily minority has the power to organize the longer support unilateral nuclear disar- Mag and I were in agreement that, for about two years now, and are back lives of the majority...

...One Thatcherite who remains un- for many members of the hometator's Washington correspondent...

...Rob had qualms about this, first major attempt by any British Haseler writes...

...Tax-free interest will "only help the rich...

...foreign policy...

...In Britain the situation is particularly bad...

...Thatcher can only offer a bland nationalism, derided by her opponents as Little Englander, old fashioned, unprogressive...

...Wheelchair ramps up the Alps, I wouldn't be surprised...

...Indeed, hardly a day passes without some fresh surprising signal from Brussels of what will now be expected of us...

...A truly dramatic fiscal change is required...

...Thatcher] knows that her [European] partners see in the Delors plan not free markets but a furthering of their banking and industrial cartels, a clipping of the wings of their corrupt political parties and, for Italy, Spain and Greece, a vast dollop of subsidy...

...They no their discharge pipes with concrete...

...Simon Jenkins wrote in the Sunday Times: "[Mrs...

...Our inability to keep inflation under control for prolonged periods means that savers are robbed of a considerable part of their savings...

...There's a hot spot in the servative party, whose annual con- that the movement toward free markets sister Magdalen and her husband, Rob, center of London...

...Thatcher could yet make nationalistic hay of the danger, but she had better hurry up about it...

...Fifty-three years after Keynes published his General Theory, these cockeyed incentives are still embedded in the tax codes of Western countries...

...M. Jacques Delors himself predicts that a decade from now 80 percent of legislation will pass from national parliaments to Brussels...

...new radicalism...

...A ask about my sister, last heard of in Bertell and published in 1985 by the many...

...ference was taking place in Blackpool, is not at all "conservative" but calwho live near Rochdale, in Lancashire...

...The latter involves a shift from a property tax to a "poll" or per capita tax, not a bad idea in itself but a highly unpopular one, and to date costly for Thatcher...

...Their real goal has England, apparently...

...The devil of internationalism has all the best tunes, as well as the best lunches...

...In this they see mament...

...Thatcher and the Con- (or perhaps they grasped it all too well), and this year I traveled north to see my tically so...

...Interest been a society in which a privileged have sold out, she told me...

...Hence the peace that has prevailed, etc...

...Rob and Mag were united against tial group) understand what so few on missiles are now being removed...

...With such a change, the velocity of circulation of money would slow down, and inflation and interest rates would certainly decline...

...I am convinced that the cause of persistent inflation in Britain (and in other Western countries), comparable to a low-grade fever that never quite goes away, is to be found in the tax code...

...much to keep an eye on the Russians published book, The Battle for Britain: cessful, coinciding as they did with the "The leukemia hot spots definitely as on the Germans—something that Thatcher and the New Liberals...

...Ever since Keynesian theory in the 1930s declared savings to be bad for economic health, the tax codes of Western countries have penalized savings, taxing away interest received, and permitting interest paid (on home mortgages) to be deducted from income for tax purposes...

...The House of water under the bridge...

...Perhaps all is not lost...

...Notice that the British experience today makes nonsense of the oft-repeated claim that budget deficits are inflationary...

...At a NATO conference in Brus- founding member of the Social Demo-these pages encamped outside Green- Women's Press...

...But one or two newspaper articles that came out while I was in England suggested that this may not be the outcome at all...

...But all along, it now seems, the ladies had found an unlikely ally in Here the authorities have boldly left preferred a society based on status Ronald Reagan...

...Reform appears to be stymied by the constant, intimidating threat of leftist appeals to envy...

...wanted...

...Some have had to sell their homes...

...Not so fast, he cautioned...

...But for her this was all adopted a bull-by-the-horns advertising W hile I was in England, the Chan- to one based on contract...

...I spent an evening readers have been kind enough to Earth, by someone called Rosalie Rhine to withdraw from West Ger- with him and his wife in London...

...Thatcher will have to implement it...

...In her speech to the Conservative party conference, Mrs...

...The middle-class pro-election more than it wants to rid Brit- however...

...To all of this Mrs...

...It is safe to say that if eye to eye with many Tories, whose privconference the socialist firebrand Ken other American weapons and troops they persist at this level the Conser- ileges and protections are likewise at Livingstone was kicked off the party's should be pulled out of Western vative government will lose the next risk...

...It is the only tool that works," he writes—words that will give pleasure to Milton Friedman...

...Alan Reynolds of Polyconomics recently wrote an article about the British economy in which he argued that the monetary errors of Chancellor Lawson can only be corrected by monetary policy...

...Thatcher made amore interesting point about the distinction between selfishness and the pursuit of individual (as opposed to state-directed) goals...

...The top income tax rate was reduced in 1987 from 60 to 40 percent, but this is encountered at moderate income levels, and all savings accounts are taxed at the marginal income tax rate...

...Forty-five years is long election (probably in 1991), and the lishment has never been so threatened," ently Labour wants to win the next enough...

...One section, entitled sels last year I was told by a senior ad- cratic party, Haseler is now a co-chair-ham Common protesting the deploy- "Omnicide: The Stark Reality of Spe- viser to the British defense minister man of the recently formed Radical ment of cruise missiles in the county cies Death," gives an idea of its overall that these troops are intended not so Society, and the author of a newly of Berkshire...

...Has Dr...