Over-spending and Debt at Christmas - please try and resist the temptation

I rarely touch on personal domestic matters, but at this time of year many people will become increasingly "excited" over the coming few weeks in the run-up to Christmas or the Festive Season or the Holiday Season or however you choose to describe it. I have little or no religious faith (I hover between Agnosticism and Atheism), but I have felt since I was becoming a teenager and then young adult that the idea that there was some "power" overseeing humanity was so much superstitious nonsense. I try to be "nice" in my personal dealings, so I hope that not too many are offended by my cavalier viewpoint, but ultimately if you are offended I'm afraid you will have to live with it, because in reality I don't much care. You have your views and I have mine.

In any case, however you view the coming few weeks, many people including me look upon the forthcoming Christmas holidays/festival/celebrations as an opportunity to get together with friends and family, eating and drinking rather more than is usual during the rest of the year, also offering hospitality and gifts to various family, friends and acquaintances and receiving similar in return. However, the simplest thing I can urge upon you is to not overdo it, and remember that if you are incurring debts, or your friends and family are, to fund this annual extravanganza, that booms generally are followed by busts. Debts incurred to fund this period will fairly soon have to be repaid, somehow or other. I realise that for younger families with young children that they will want to provide their children with a happy and exciting Christmas and certainly will not wish their own children to feel they are less fortunate than some of their classmate contemporaries, who receive the latest "must have" toys, games, clothes and gadgetry generally at this time of year. I understand the pressures that people face in a "consumer" society. Most of us have budgetary limits in what we can do; some of us have more "discretionary" income, beyond the absolute essentials, than others. Some amongst us have almost no such "discretionary" income at all and whatever "joy" (if any) they can look forward to over the coming weeks will be dependent on the help of others, which I hope will be as generous as others' means will allow.

But for everyone, I would like to urge some level of moderation, both in the desire to "give" and expectation of what you may wish or expect to "receive"; we all want to enjoy oursleves, but not at the expense (surely) of subsequent weeks or months of actual or near penury to pay for it. I volunteered for some years, quite some years ago now, with a charity organisation that sought to help people in various personal struggles and I always remember that another volunteer, when we were both "on duty" around this time of year, tried to explain to me the pressures she was under not to disappoint her own children in their expectations, which she was barely able (if at all) to satisfy. I am not "wealthy", but I suppose I am "comfortable" in comparison to many others, so it's possible that I don't always understand fully the pressures that face some others, I don't deny it, but I am very aware that not everyone is so fortunate as me.

In Nairn we have a weekly newspaper, published every Tuesday, as I have mentioned a few times before - The Nairnshire Telegraph does not have any online presence, so it is not possible to link to their articles, but one item they carry every week is a sort of 'moral homily' from some religious bloke signing himself 'Sandy Shaw - Nairn Christian Fellowship' and they are usually pretty trite, apart from being poorly written and full of logical non sequiturs. I read them, or at least glance at them, every week when I am in Nairn, and usually indulge in a little derisive chuckle and have at least once before written about something I read in the column - for example, in November/December 2011 when I wrote this. The article today (Tuesday, 6th December 2016) is the usual mix of religious mumbo-jumbo mixed in with practical advice, so whilst I find the former risible I am happy to acknowledge that that there is considerable "common sense" in the latter. The article this weeks is pithily entitled "Debt" and I reproduce it below:

The Nairnshire Telepgraph Tuesday, December 6, 2016 - page 8

Whatever your views on "religion" (and I have already expressed my own scepticism and indeed scorn for these "notions" and "beliefs" as they are what I regard as fiction), there is I think a good deal of common sense in the linked article. Do with my article what you will. In any case, enjoy yourselves over the coming weeks, but don't overdo it in any sense.

"Morality" and the law as it relates to investment and taxation

Over recent days and the past few weeks a frenzy has developed in the UK about the "morality" of investing money outside of the UK; at least some of this frenzy has been as the result of a headline- and circulation-seeking media. Much of this relates, in my opinion, to base political point-scoring, with little regard paid to the likely economic implications for the national economy if some of the wilder ideas were to be carried forward into legislation. The article which follows is largely the text of a comment I placed this evening in another blog, but I think it merits being placed here too.

If a government, any government, wants to make what is currently legal, illegal, then all that needs to happen is for a majority to vote for it in Parliament. I really don't want differing views of what is "moral" or "immoral" to have any part of this. Tax evasion is a crime and if identified can/should result in punishment. So-called "tax avoidance" (whether "aggressive", or not, although I think attempts to classify some kinds of investment thus are completely spurious) has no legal status. Something is either illegal, or it is not. A government, this one or the previous one or the next one, could easily make various things which are currently legal, illegal, if it thought it worthwhile and it could command a majority for such measures in Parliament. Obviously, current notions of "morality", not to mention "easily malleable" "public opinion" will have at least some bearing on what tax legislation may be considered feasible and/or desirable.

Tax policy is however designed primarily to raise funds for government expenditure, not as some kind of "punishment" or "moral enforcement"; it has no other purpose. Having an ISA or owning Premium Bonds, for example, is no more (nor less) "moral" than having an investment in an overseas investment vehicle, although governments have often used legislation to encourage or discourage some behaviour or other. What were formerly PEPs, now ISAs, or savings bonds, premium bonds, etc, have traditionally been used as mechanisms to encourage the "habit" of saving amongst the general population, for example. What is crucial is that if one is a UK resident subject to UK taxation that one declares all taxable income to HMRC; not to do so is to "evade" tax and that is a crime. The UK (that's to say UK-resident individuals, organisations and companies registered in the UK) is amongst the largest overseas investors in various foreign countries and has been so for many decades and probably a few centuries; this is what helps to make the UK's "invisible earnings" so crucial in balancing the national accounts in the face of a long-standing (over at least many decades) trade deficit.

Some of the talk in recent days seems to want legitimate deployment of assets of UK-resident persons/organisations/companies outside the UK to be reclassified as somehow unacceptable or actually illegal. This is to display extreme ignorance of what makes an economy function and how the UK, somehow or other (with a fair bit of "borrowing" added into the mix) "balances the books".

Most people in the UK have traditionally had either a company pension or more recently a privately-organised pension plan, unions have such mechanisms too for pensionable employees, as of course do employees of public bodies. Most such pension plans have some of their funds invested outside of the UK (although pensions of public service employees, employed in the past, are generally paid out of current government tax revenue, just as those currently employed in public service will generally have their pensions paid from future current government tax revenue rather than investment income, when they retire). Is this wrong, or "immoral"? Merely to ask this question highlights just how juvenile has been much of the commentary on "financial planning", using perfectly legal mechanisms, in recent days.

The UK economy is closely integrated into the world economy, so unless it is being proposed that exchange controls be re-established and that a “protectionist” economy is reinstalled, the idea that the restriction of investment of assets outside the home country (in this case the UK) is in any way viable is “for the birds”. Not if we in the UK wish to be able to continue to buy goods and services abroad (for example an annual holiday abroad, just as one minor example). Such a society was accurately portrayed in the dystopian nightmare world of the novel "1984". That's where the current leadership of the Labour Party (and some other ideological bedfellows, eg the SNP, the Greens and the various 'socialist' parties, not to mention "Momentum") seem to be wanting to lead us, if their rhetoric is any guide. I hope calmer heads, able to see beyond the next headline, will prevail and help us avoid the abyss these economic ignoramuses seem to want to lead us towards.