By Tim Montgomerie
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If I was to draw up a reading list to understand these troubled economic times I would recommend three people above all else; John Redwood and his brilliant blog, Andrew Lilico (eg here) and City AM's Allister Heath. If Allister's "Editor's Letter" is not already bookmarked in your browser's favourites I recommend you change that now. City AM prints its 1,500th edition today and on the front page is an intriguing story about the EU potentially vetoing the Coalition's banking reforms. The thing I always read first from its pages, however, is Heath's Letter. Today he makes a compelling case for reform of the university sector.
On the €uro rescue plan: "Greece’s debt to GDP ratio should fall back to a still unmanageable 120 per cent of GDP by 2020, back to the level it was just two years ago. And what are the €30bn of “credit enhancements” to the private sector contained in the fine print? We need answers. What is certain is that the bulk of the Greek banking system is now likely to be nationalised; and given the febrile political climate in Greece at present it is very doubtful that proper policies will be put into action. At best, Greece will be insolvent again in three years’ time, with another write-off required. It could happen much sooner than that."
US Republicans understand the need to cut taxes: "Even Mitt Romney, a lacklustre candidate who is vying with Cain for the opportunity to stand against Obama, wants to cut corporate tax from 35 per cent to 25 per cent. To their great credit, Republicans fully understand the need to boost incentives and improve the supply-side of the economy; the UK has much to learn on this front. But the US electorate increasingly wants ultra-low taxes combined with European-style levels of public spending, especially entitlements for the middle classes, a sure road to national collapse. Taxes are far too high in general across the Western world and especially in the UK – but the adoption of a sustainable lower-tax model will only become possible if we move away from our current addiction to public spending."
The consequences of inflation: "Had the government passed a law in Parliament to take money from one group and give it to another – to grab cash from people’s bank accounts to help pay down their neighbours’ mortgages, overdrafts and credit card bills – there would have been outrage. Had the government decreed a partial default on the national debt (most of which is not indexed to inflation), the markets would have panicked. Yet because this process is happening on the sly, without discussion, and with the Bank of England telling us that this is merely a short-term blip, hardly anybody is batting an eyelid – even though, once again, the prudent are being mugged to bail out the imprudent. Inflation is not just taxation without legislation and undemocratic: it is also the stealthiest of all taxes."
The creative destruction of capitalism: "As Daniel Mitchell of the Cato Institute puts it, capitalism without bankruptcy is like Christianity without hell. It’s just not the real thing. The problem with bail outs is that they delay fresh thinking and wealth and job-creating innovations. It is a shame those who criticise capitalism are so blind to its real nature."
Against HS2: "The crippling costs of the proposal, which would see a £32bn ultra-fast railway line built from London to Manchester and Leeds via Birmingham, are much greater than the benefits – and that is assuming that the final bill is not massively greater, as it surely would be. It would make more sense to concentrate on smaller, less grandiose projects that reduce journey times on roads and railways across the UK, rather than on this deeply flawed white elephant which would do nothing to boost the North of England’s economy."
How Allister writes this quality on a daily basis and edits the newspaper, I will never know. Follow him on Twitter.