(Reuters) The OECD’s chief economist Klaus Schmidt-Hebbel ‘advised’ governements drawing up more stimulus packages, to target the low to middle-income consumers. The simple reason being that these are the people who are more likely to spend a larger portion of what they earn rather than saving it. It’s no secret that consumerism is what keeps much of the economy afloat and a large share of that is the purchase of unnecessary items by people to whom these are like short-term ‘investments’. A criticism was levelled at the across-the-board VAT cuts suggested by the British chancellor yesterday, as not radical enough, cutting tax across the board rather than targeting those who will actually spend.
Orthodox economists are allergic to government ‘spending’, rather than consumers spending, so the firm advice was that these measures be considered: ‘Targeted, Timely and Temporary’. Or, in plain English, only left in place to a point where a recovery looks like it is on the cards. After which they should be withdrawn, as a firm committment. This again demonstrates the ‘recession-socialism’ being practiced by the economic-governmental community. They are not interested in lowering tax for low-income households except under extraordinary circumstances, and only as a measure to funnel these particular people into consuming. This is not about making it easier for workng people to put food on their tables or buy clothes for their children (although it will have that effect temporarily), it is about consumer spending to ensure that money can roll back into the coffers of those who hoard it.
All the people who receive tax-breaks as a result of measures like these should not expect to be treated like the corporation bosses who manage to keep their tax-breaks in good times and bad. For the low-income and middle-income earners it’s a temporary phase to get them consuming again. To get people filling their bags with rubbish again in the malls in the name of ‘trade’ and that swelled, fickle monstrosity – the capitalist market economy.