OK, so we appear to be in the early stages of a major recession, which may well go on for years. A whole load of people may well lose their jobs, pay rises will be a thing of the past for people who keep them, and overall incomes from working will fall substantially.
Meanwhile, inflation has fallen to pretty much nothing. Falling fuel and food prices are among the main drivers of the fall in inflation. Imported consumer goods, of the sort that kept inflation low during the boom, have risen in price due to the pound’s devaluation.
So let’s think about the people who’re left worst-off by this. Are they:
1) people living on fixed incomes (ie pensions or savings), who’re seeing their living standards remain pretty much flat, who have no chance of a catastrophic decline in incomes, and who spend disproportionately on heating;
2) people not living on fixed incomes, who’re seeing their living standards fall, who’re at risk of losing their jobs, and who’re much more likely to spend on imports, but who have relatively large savings to cushion the blow if anything bad happens;
3) people not living on fixed incomes, who’re seeing their living standards fall, who’re at risk of losing their jobs, and who’re much more likely to spend on imports, but who have debts to service that will utterly crucify them if bad things happen?
The answer, fairly obviously, is group 3. People with decent net savings are just fine: if they never had jobs, they’re insulated from anything bad happening anyway; if they have jobs now, then they can afford the time taken to find a new job if they lose the current one.
So the new Conservative party policy of punishing people in group 3 to reward people in group 1 [*] can only be viewed in two ways: either breathtaking, witless stupidity, or the intergenerational equivalent of class warfare, deliberately screwing over economically productive people even more than the recession will do anyway to give money to the elderly, who the recession won’t have any impact on. [***]
[*] in group 2, where I’m lucky enough to sit, we’ll gain slightly on the tax breaks but lose out from the spending cuts [**].
[**] To “they’ll be funded by cutting waste not productive spending”-ists, that’s not the point. If you’ve got a plan to cut waste, great – but you still need to explain why the benefits from that plan should accrue to people who’re doing fine, rather than something sensible like a rise in the income tax allowance to benefit the working poor.
[***] Of course, the working poor are busy either working or drinking themselves into a stupor to forget their miserable lives, whilst pensioners spend their time talking to Edna in the post office about absolutely nothing, and therefore voting rates for the latter group are far higher than the former. This is another reason why democracy is A Bit Pants, Even If It’s Better Than The Alternatives.