Words ought to be a little wild, for they are the assault of thoughts on the unthinking
- J.M. Keynes

Tuesday, 4 December 2012

UK’s Grand Experiment


This FT piece shows that a grand experiment in bastardised capitalism is underway in the UK. This is capitalism where plutocrats are magically endowed with automatic economic growth giving power. It is capitalism where politicians worship at the altar of wealth without understanding how it is created. It is capitalism where Adam Smith is quoted without being read and understood. UK’s idiotic immigration policy of welcoming wealthy migrants while turning away skilled but penurious labour is a shining example of this brand of capitalism. The best which can be said about this policy is that it is consistently retarded.

UK promptly gives long-term visas to individuals with at least £1m to “invest”. Now there is nothing wrong with encouraging investment in the economy. Unfortunately, the investment for the purposes of a visa is not necessarily required to be in productive assets. Property (upto £250k) and secondary market assets such as shares and bonds qualify. The message is clear: For no hassles, quick visa processing boost up house prices (owned by the elite), boost up shares (consequently their pension and investments) and help the UK government fund cheaper. Also, recently changed rules mean that the more one “invests” the faster the award of a visa.  The government takes five years for £1m, three years for £5m and just two years for £10m. For the third-world isn’t this sanctimoniously labelled as “grease money”? Maybe legal sanction and institutionalisation subtly change things.

Alongside the red-carpet laid down for sterile money, a barbed wire fence is being put up for skilled migrants by the same economic geniuses who cover their lack of intellect with passionate support for failed ideologies. Toughening up on student visas is not only a surefire way to hobble UK universities in an internationally competitive market and negatively impact an already weak economy (foreign students account for 32% of universities fee income and contribute £5bn a year to the UK economy) but it is also a great way to damage future growth. One reason for the rise and continuation of USA’s international power is the worldwide pool of talent which gravitates (so far) towards its universities and then contributes to the wider economy (Silicon Valley is just one example).

In the UK, foreign student arrivals fell by 8% in the year to March 2012 according to official statistics. Meanwhile visas for the rich jumped 78% in the year to June 2012. (The bases are vastly different but they are clearly going to be given the number of global rich versus the number of global students).

This is a grand experiment in the field of policy and one whose results would be interesting to watch.

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