Two ideas to illustrate a simple truth: the government has no money of its own

Two simple ideas that would illustrate to the whole country a truth that appears to have been completely forgotten: that only the private sector creates any wealth and contributes to the economy

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Public sector workers on strike yesterday in London
Donna_rachel_edmunds
Donna Rachel Edmunds
On 1 December 2011 11:16

Yesterday morning I played a fun little game whilst watching the news channels cover the strikes. It’s called “It’s not fair”, and I think you can guess how it works; if it were a drinking game I’d be nursing a hangover of monumental proportions right now.

The union members are absolutely right – it’s not fair. It’s not fair that a private sector worker on an average income would have to pay 37 percent of their take home pay into a pension pot to receive the same pension as a teacher who pays just 6.4 percent.

It’s not fair that low paid private sector workers with no pensions pay the generous pension pots of public sector workers, despite having the same pressures on their incomes as everyone else.

It’s not fair that public sector pensions should be ring-fenced whilst private sector employees, who are actually paying down our deficit, have seen theirs disappear over the years.

Nurses, teachers and civil servants may not have caused the financial crisis – but neither did hairdressers, butchers or secretaries. So why should one group take a financial hit and not the other? Far from the government creating a divide between the public and private sectors, the unions are responsible for that divide by insisting that their members deserve special consideration.

The unions and their members appear to think that they hold a hallowed position in society by mere virtue of being in the public sector. They are showing contempt for the private sector employees by demanding that they continue to pay out regardless of their ability to do so. So perhaps it’s time that the private sector illustrates that, without the wealth creating sector of the economy, the country would quickly grind to a halt.

Close all the supermarkets, turn off all the utilities and stop all the petrol pumps. Builders: stop building those starter homes that so many younger people wish to buy. Bankers: don’t fill the cash machines this morning. Bakers: why bake bread for a nation that demands you do so to pay the salaries that buy it?

Most importantly: pay no taxes. Too often over the last few years we have heard ever more shrill demands that the government pick up the bill for all sorts of preferential treatment for the public sector, with apparently no realisation that it is not the government footing the bill, but ordinary people on average wages. A tax strike by the private sector would soon illustrate how depended the government is on the private sector.

Which brings me to my second idea: that the government announce that from now on, anyone in a public sector job pays no income tax or NI. Rather, these employees should just be paid their current take home pay in full, so a payslip that currently reads:

-          basic pay £2,166; total deductions £496; net payment £1,670

would now read:

-          basic pay £1,670; total deductions £0; net payment £1,670.

As the salaries from which these taxes are deducted are paid for by the public purse, this move should be entirely neutral for the treasury. However, they would have the great advantage of preventing public sector workers from protesting “but I pay my taxes too!” and would illustrate to the whole country a truth that appears to have been completely forgotten: that only the private sector creates any wealth and contributes to the economy. 

Donna Edmunds is Director of Research at Progressive Vision (@ProgVis), a libertarian think-tank. She tweets at @DonnaInSussex 

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