Who is the economic sunshine shining on?

It’s an election year and the politicians are promising us all the earth again, whoever you are whatever you want they will deliver it. Old allegiances are coming out and those well worn sayings like “You have to vote labour if you want to save the NHS” and “You can only vote conservative if you want to reduce the deficit and improve our  economic outlook”.

It may come as a shock to many that governments don’t actually have control of the economy. They would like us to think they have but global economics eats governments and spits them out as Greece has found to it’s cost.

As with all economies we have some good some bad and some conflicting and even confusing economic indicators. Will these change significantly if there’s a change of government? For Britain as a whole we have “the best of times and the worst of times”

I worry that a conservative government on it’s present course if its re elected would continue some of it’s harsher policies against groups in society in should support more. However I worry if labour get in they will revert to tax and spend. Neither of these are good for the country and cohesion in the long-term. Of course if we end up with another coalition that may give more uncertainty for business and individuals.

We have fractured groups in society there are many at the top like Malcolm Rifkind who think they deserve everything because they have worked hard. There’s another group at the bottom who believe they should be able to do what they want when they want to and the rest of us should pay for it. Both groups sense of entitlement is unjustified and a little disgusting.

Some want an economic model that relies on the free market without minimum wages where the majority of us scramble for what we are thrown. Some want salaries and benefits that they are not skilled to attain. We have debacles over zero hours contracts and charities paying below the living wage. Many in work on reasonably good salaries struggle with debt whilst small business owners struggle with mountains of bureaucracy.

Whoever gets into power they need to be mindful of the squeezed middle they are educated and starting to realise the current system is actually working against many of them. The next five years will be interesting politically and economically. Will wealth continue to trickle upward or will trickle down finally begin to happen and make society a little more equal? Government can have put vehicles in place to support this but will they?

The great divergence identified by economists and academics has been talked about by President Obama. This divergence is gaining in momentum here and even some of the super rich see that business as usual cannot continue if people do not have the disposable income to buy goods and services. Long term I believe this will ultimately drive economies downward. As super rich Nick Hanauer says he may earn 200 times more per hour than the average employee but he doesn’t go on two hundred holidays, buy 200 houses or pairs of jeans. So he is not spreading or trickling down his wealth.

Is their a different way?

According to the Billionaire governor of Minnesota there is and he isn’t just saying it he has proved it. The previous governor didn’t raise taxes as he said businesses and people would leave and the state would become bankrupt. Exactly the opposite has happened it has attracted more businesses and has substantially increased the numbers of rich and super rich living there. For those on average incomes they have gone up around 10% and employers in the state pay above the minimum wage.

Whoever ends up in government here for the next term maybe they should give Minnesota governor Mark Dayton a call. They might just learn something useful.

Whilst you ponder here’s a happy ditty about money and one about the economy courtesy of Peter Cook at The Academy of Rock

Fiscal Cliff  –  A Hard Rock song about Hard Times and the Hard Road to Revovery

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