Thursday, October 07, 2010

Mad benefit proposals and House Prices

If you have one huge glaring anomaly in an economy it distorts every other area of national life and eventually results in extraordinary distortions of common sense over simple principles. Yesterday morning on the LBC radio programme, phone in listeners were asked to suggest what could be done to immediately reduce the benefit bill for a married couple both unemployed with four kids claiming combined benefits of thirty six thousand pounds a year. Only one caller hinted at having a vague recognition as to the real villain - housing costs. Last evening on BBC Newsnight, a Government Minister gave the governing coalition's response, namely to cap the benefits and place a ceiling on the number of children for which benefits can be claimed. Benefits have to be set so high because house prices have become so out of line with ordinary wages that workers can no longer really afford to live and house themselves on typical wages. Housing benefits go to feed the 'buy to rent' Rachmans, forcing taxpayers, albeit indirectly through the unemployed, to subsidise greedy private landlords while the fattened middle classes for the main part rest content to sit on their fat overvalued property portfolios at the expense of their children and society at large, if necessary refusing to move pending a return to house price hyper-inflation. The IMF in its World Economic Outlook issued ahead of the meetings with the World Bank today, recognises this British reality and cautions on its threat to future growth, but also feeds into another fairyland, that where sovereign nations are not about to default en masse, read the section of their report on Europe from this link.

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