http://www.digitaljournal.com/article/331752

Op-Ed: Nick Clegg's foolish u-turn on taxation

Posted Aug 29, 2012 by Alexander Baron
Deputy Prime Minister Nick Clegg has said the rich should pay more tax. This will be popular with the man in the street, but is it wise?
Nick Clegg  the Deputy Prime Minister of UK
Nick Clegg, the Deputy Prime Minister of UK
by Liberal Democrats
Earlier this week, it was announced that young people leaving school without going into higher education or work would be required to complete 30 hours per week of "voluntary" work or lose their benefits. The story was reported by the Daily Mail in its usual alarmist fashion, and clearly voluntary work with a big BUT is not voluntary at all.
This amounts to workfare, and we know who benefits from this. As the people at the bottom are squeezed even more, the unemployed, the unemployable, low earners...it seems to them only reasonable that the people at the top of the pyramid should pay more, which is what Nick Clegg has suggested.
Like so many things that sound reasonable, it isn't, rather it doesn't take into account the law of unintended consequences. Obviously he hasn't read Ayn Rand, who speaking of the American housewife said “...the businessman’s profits are the only protection of her home, her family, her life - and that if the erosion of profits were to force businessmen out of production altogether, the only alternative would be a ‘nonprofit’ industry run by the government...” as happened in the Soviet Union, from whence she fled to the Promised Land as a young woman.
While Rand's assessment is spot on, Clegg's aim - to pay down the deficit - is totally misguided. What he is saying is that the government should take money from the super-rich and give it to the banks. It may be the super-rich first, but then it will be the rich, then the simply well off. Does anyone see where this is leading?
Taking money from the rich reduces their investment capital. And what will happen to this money paid to the banks? As Major Douglas pointed out before any of us were born, every loan creates money, every repayment destroys it. Paying down the deficit too fast reduces the money supply, and as virtually all money in existence is bank-created debt, totally repaying the deficit - if that were possible - would mean reducing the money supply to zero or near zero. This is what happened during the Great Depression. So what should he and the British Government do?
They have to tackle the real problem, the banking system, anything else, whether forcing the unemployed into low paid jobs or soaking the rich is simply rearranging the deckchairs on the Titanic. Perhaps a better analogy is giving a man with a broken leg morphine then sending him home; there is little point in alleviating the patient's pain if by doing so you cripple him. The medicine "Dr" Clegg is prescribing is not only crippling the patient, it isn't even alleviating his pain.
The Duke of Bedford proposed a workable solution to the national debt more than half a century ago, namely, the British Government, and by implication all governments, must take the power of credit creation away from the banksters, but while our leaders are swanning around the world with them at our expense preaching austerity for the masses and yet more taxation for the rich, that ain't gonna happen.