Economics

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Tax is not essential: public services are. It’s time that election debates shifted their focus

Published by Anonymous (not verified) on Thu, 13/06/2024 - 4:29pm in

I have to admit that last night’s Sky Televisi9n debate with Keir Starmer and Rishi Sunak was, overall, disappointing and uninspiring.

Beth Rigby did her best to bring to life two boring candidates to be Prime Minister, but at the end of the day, she had to work with the material that she got. When the most interesting thing that Rishi Sunak could say about himself to increase his appeal to voters was that he ate a lot of Twix, the scale of her task was apparent.

That said, she fell into the trap into which so many journalists appear to be falling at this election. She pushed the question of tax time after time, after time. That was a mistake. What was clear from the audience reaction was that what people wanted to talk about were public services, their quality, and the quantity of their supply.

Like, it seems all journalists, Beth Rigby has not realised that taxes are not an essential part of life. They are only the corollary of the supply of public services.

They are not even a precondition of the supply of those services because government always pays for everything it sorbs upon with money newly created on its behalf by the Bank of England.

The quantum tax required from the economy is, then, always the balancing figure within the fiscal equation, seeking to find the appropriate compromise between controlling inflation and providing economic stimulus.

All this nuance was lost when focusing upon tax alone, without ever discussing why that tax might not be at an appropriate level given the demand for public services in the country.

I can only hope that during the remainder of this election campaign there might be an improvement in the quality of debate on this issue. It is clear that both our leading political parties are talking nonsense about tax, with neither presenting any honesty about what levels of tax might be required given their wholly unrealistic appraisals of the scale of costs that they will have to incur to supply the services that the country will undoubtedly need.

As a result I just hope that debate might now be focused on issues like the health service, social care, education, environmental change and other critical matters. What level of tax is then required to balance the required level of spending becomes an appropriate issue for debate. Putting tax first is, however, wrong. That is not what happens within the economic operations of government. That is not what happens within the actual priorities of any sensible government. And that is not what the public are most interested in.

it is time that journalists, and politicians, got this right.

Tax the bads

Published by Anonymous (not verified) on Thu, 13/06/2024 - 4:06pm in

In this morning's video, I argue that we all know what the ‘bads’ in our economy are -  tobacco, alcohol, sugar, carbon, plastics, and more. Some of them we tax heavily because we know they they are ‘bad’. But sugar, plastics and even carbon are still getting an easy ride. It’s time we tackled them properly

The audio version is here:

The transcript is:

If there is one tax policy that every politician in the UK should adopt, it's that we should tax bads.

Now, that of course needs some explanation. What is a bad? Well, of course it's something that is bad for us. That's why I give it the name.

What is bad for us? Well, tobacco is bad for us.

Very clearly, alcohol, at least in excess, is bad for us.

We now know that sugar is very bad for us because that is the basis of the ultra-processed food crisis that we have that is fuelling obesity in this country, reducing our productivity and creating a massive demand on the NHS, not least because of the significant rise in type 2 diabetes that it is causing.

And there are other bads as well. There's carbon. We know the consequence of the overuse of carbon. It is global warming.

And there are knock-ons from the carbon crisis as well. We know that cars are actually potentially bad for us. Not because of the fact they use carbon fuels, because they might actually not. They could be electric. But their tyres cause massive problems in terms of pollution as well. So large cars are a bad.

So, too, are plastics, of course. We know they are massively damaging to the environment as a whole, and especially to things like the sea.

These are all bads, things that ultimately undermine our well-being and cost us as a society a great deal of money.

Now we're used to the idea of taxing some of these bads.

Tobacco is very obviously heavily taxed, vaping not so much so, by the way, and it too is a bad.

Alcohol is very heavily taxed, but it doesn't appear to be stopping abuse by some, although Scotland is having a good go at addressing this issue.

Sugar? There is no such thing as a sugar tax in the UK. Instead, we have a big sugar lobby who are arguing against everything that the government is trying to do to prevent the abuse of sugar which is so addictive and so harmful to so many. So, I'm afraid to say we need a sugar tax to reduce the amount of it that is consumed.

And carbon? Look, we have certain degrees of carbon tax. Of course, we do. There are fuel duties and various things. But there's been an enormous reluctance to increase those. The car lobby is so powerful.

And talking about cars themselves, whilst there are taxes on cars, they are not progressive. In other words, they are not providing sufficient support to low-polluting and low tyre burning cars.

And they're supporting the use of SUVs, the rise in number of which has more than compensated for any savings from fuel efficiency over the last decade or so.

Plastics? Scotland has tried to do a returnable bottle scheme, and it's been killed. Why? Because the industry doesn't like it, because the government doesn't like it in London.

We are not taxing bads enough.

There are problems. These taxes on bads tend to be regressive. In other words, they are paid in higher proportion compared to income by those on lower income than they are by people on higher income. So, clearly, we need to compensate for that in the rest of the tax system.

But we know how to do that, and in the Taxing Wealth Report that I have written  I have explained that there are plenty of ways to tackle that problem and reallocate income to those who are on lowest earnings to make sure that they can continue to actually live despite these additional taxes. So, we can tackle that issue, but what we can't tackle are the long-term consequences of not addressing these issues.

Because if we don't tackle those, well it may just be too late in the case of carbon and plastics and other things because we won't be able to solve the mess we create.

And it may also be late for some of the other issues as well. In particular, when we look at type 2 diabetes, from which so many people now suffer. That's a deadly disease, and I want to see it solved. And it can be cured by reducing sugar consumption.

So why aren't we taxing the bads?

When asked who to favour, banks or children in poverty, Rachel Reeves chose banks

Published by Anonymous (not verified) on Wed, 12/06/2024 - 5:30pm in

As the FT has reported this morning:

So, given a choice, Rachel Reeves has chosen to favour banks when there is near universal agreement now that some saving could be made in the payment of interest on central bank reserve accounts with the effectiveness of monetary policy (if that is necessary) being maintained.

Her choice favours banks, while she claims there are no funds available to end child poverty. She could do this for maybe a million children hit by the two-child benefit cap at a cost of less than £2 billion a year, which could be provided many times over by just limiting these interest payments.

Reeves would rather favour banks than. children in poverty. That's what we need to know about the forthcoming Labour government.

But that is also why it will fail.

The neoliberal show is out of road

Published by Anonymous (not verified) on Wed, 12/06/2024 - 5:11pm in

The Office for National Statistics has posted this tweet this morning, which says all that needs to be known about the new GDP data, out this morning:

GDP is stagnant, again.

No wonder we have opinion polls like this, published yesterday:

Nor is it a surprise that we get a prediction for seats won like this:

If you are a neoliberal party - and the Tories are - then growth is your goal. That, and upward redistribution of wealth,  is all there is to their politics at the end of the day. And they have failed to deliver.

And that is not just now. As the FT notes this morning:

Brexit has destroyed growth in the UK. If that is the aim, it has proved impossible to deliver post 2016.

The consequences are socially clear. As the same FT article notes, associated penal policies are having a big, negative, impact:

So, we face a crisis.

And we have a Labour Party that says that not changing anything is good (because what else does 'stability is change' mean?). And they have said all progress in public services is dependent on growth in which it is very obvious they will be refusing to invest.

The possibility that neoliberalism has run its course is not being discussed, but I think this election might be its last laugh. Next time, the alternative of another party offering yet more failure is not going to be viable or tenable. And there is no way that Labour can succeed based on its plans. The neoliberal show is out of road.

The Tories, ‘fully-costed’ plans and the back of fag packets

Published by Anonymous (not verified) on Wed, 12/06/2024 - 4:51pm in

The Tories have delivered their 'fully costed' manifesto. It is, like the Liberal Democrats' plan before it, far from an adequate explanation of what they intend to do in government. In fact, it's worse. This one was written on the back of a fag packet.

The funding is supposedly:

Those are random numbers picked to make their exercise balance. There is no way on earth anyone might believe them, even if I know I could deliver those tax savings - but only if more was spent on HMRC, which figure is not included in the plan. The social security savings are simply a measure of cruel heartlessness. I did check to make sure I could find no reference to workhouses in the manifesto, and could not, but the mentality is present throughout it.

Meanwhile, the savings are specified in absurd detail:

Does anyone really think that the Tories have worked out quango savings in. that detail?

Or that they know the precise cost of the exact 5,000 managers they are going to be rid of in the NHS, which is already under-managed, albeit that too many managers are working on the internal market and not in supporting healthcare?

Come to that, do they really know how to index the farming budget in that detail? I like their claim of clairvoyance, but I really do not believe it, so all of this is nonsense as well. The same can be said for most of it.

And then there is tax:

NI cuts give the most significant benefit to the well-off - so that number might be reasonably stated.

The plan for the self-employed is simply about encouraging lax labour standards and tax abuse - whilst the claim that the self-employed will get a credit for an old age pension based on not contributing makes a mockery of the whole system that is surely designed to pave the way for the abolition of the pension itself, as was discussed on Channel 4 News last night by an incredulous Krishan Guru-Murthy.

The rest is again very largely biased to the well-off. Of all the major flaws in the tax system, it seems that none will be tackled.

The Tories should have saved themselves some time, effort and embarrassment. This is not a plan. It does not add up. And most especially, the savings it suggests might happen are ridiculous and undeliverable.

If they are going to present documents like this they have to show their detailed workings. As it is, they are just opening themselves to ridicule for presenting documents that are so obviously meaningless and as far from a 'fully-costed' plan as it is possible to get.

In England’s green and pleasant – or is it grubby and dying? – land

Published by Anonymous (not verified) on Wed, 12/06/2024 - 4:27pm in

My short video this morning laments the lack of green policy from our major political parties at this election. In it, I argue that William Blake might have written about England’s green and pleasant land, but it seems that most English politicians are intent on ignoring green issues during this election. That’s going to leave us with a whole pile of problems - and a grubby, unpleasant, and even uninhabitable land in time to come.

You can see the video here.

This is the transcript:

Most people watching this video will be familiar with the hymn, ‘Jerusalem’ and Blake's poem all about England's green and pleasant land.

So why haven't the Liberal Democrats put anything in their manifesto costings about green policy?

Why has Labour dropped green policy from its agenda?

Why are the Reform Party so opposed to Green policy that they attack it?

And where are the Tories? Well, nowhere as usual. 

What is it about this ‘green and pleasant land’ that we hate so much that we won't actually try to preserve it?

When we make it our second national anthem, in England at least, what is it that then inspires us to loathe the very thing we aspire to?

I wish I knew, because I can't answer that question, but what I do know is that we definitely need green policy, or we are all in very deep trouble.

There is no black hole in government funding

Published by Anonymous (not verified) on Wed, 12/06/2024 - 4:23pm in

I published this video this morning. In it, I argue that while politicians might talk endlessly about black holes in government funding, in reality, there can never be any such thing. All that actually exists are choices about how the government might fund its spending—some of which options those same politicians are refusing to consider, at a cost to us all.

The audio version is:

This is the transcript:

There is no black hole in government funding.

I know that our politicians like to claim that there is.

I know that they are obsessed with trying to avoid it.

I know that they claim they are presenting 'fully-costed’ manifestos at the forthcoming general election.

And all of that is utterly unnecessary.

Why? Because there can never be a black hole in our government's finances.

Let's be clear how our government is funded. There are only three options available.

One is taxation, and we know about that.

The second one is borrowing, and they are obsessed about eliminating that, but for no good reason, because there are hordes of people queuing up who would like to save their money with the government, if only they had the opportunity to do so, but the government doesn't want to welcome their cash.

And thirdly, there is government money creation.

What is government money creation? Well, we used to call it turning on the printing presses, but that's an absurd analogy now because turning on the printing presses is almost irrelevant when the usage of cash is falling in the economy. So, what this really means is that the government creates more electronic money, as it did in 2008 to bail us out after the global financial crisis, and as it did in 2020 to bail us out during the course of the COVID crisis when they created, between those two events, something like £900 billion pounds of new government created money.

So, all of those three options are available, but for reasons of their very own, and utterly unnecessarily, the government has decided that government expenditure must be balanced by taxation and they are as a result, ignoring the opportunities that borrowing and money creation provide.

Now I'm not an advocate of money creation for its own sake. It is a reserve tool, but we should never forget that it's available to us, whenever we need it.

But borrowing? No, borrowing is really powerful. Borrowing is what we all do if we ever want to buy, well, very often a car or a house or other major items.

Why wouldn't the government want to do that?

But more than that, why wouldn't it sometimes want to borrow to stimulate the whole of the economy by taking less tax back than it injects into the economy by way of cash? Because that's what delivers growth. So why wouldn't it do that?

I don't know. It's acting against your economic well-being by having this obsession with balancing the books and claiming that otherwise there's a black hole in government funding.

That's nonsense. It's untrue. What other words can I use to express how badly I disagree with those politicians who claim this?

There is no black hole.

There are just choices to be made about the right thing to do at the right time.

And when we have, as we do in the UK at present, serious under-employment of people in our economy, people who could therefore be put to - it's a rather crude way of putting it, but - better use at better pay to produce better outcomes for us all, then of course there is the opportunity for the government to spend to create an increase in well-being, not just for those people, but all of us, by running a deficit.

And that could be funded by borrowing, or if necessary, by money creation, and we'd all be better off. And there would be no inflation as a result because we would be using unused resources that are available in our economy at present and putting them to use for mutual well-being.

That's why there's no black hole.

There's only opportunity, and our politicians aren't reaching out to grab it.

20 miles per hour is what government should be all about

Published by Anonymous (not verified) on Wed, 12/06/2024 - 4:15pm in

I noticed a report in the Guardian this week that suggested that insurance companies providing policies for drivers in Wales have noted that the cost of car repairs in that country have fallen by 20 per cent since the introduction of a mandatory 20 mph speed limit in urban areas.

I am aware that there are petrol-heads who are deeply opposed to this speed limit. I know this from my own, local experience, where  such a limit has been introduced after a local consultation which almost everybody in the local community ignored, except for those who seemed to wish for such a limit, me included.

What I hope is that three further pieces of data might now be provided.

The first would relate to the quality of urban air in Wales. We know that this has risen in London, which may be because many of its roads have 20 mph limits.

I would also be keen to see figures  for the  number of accident and emergency admissions as a result of road accidents. I very strongly suspect that these will have fallen. If cars are suffering reduced damage as a result of urban road accidents, I have little doubt that people are as well.

Finally, I would be interested in the road fatality data. If this policy can be shown to have saved lives, and I strongly suspect that it will have done, then I defy those who decry it to keep up their opposition.

One of the jobs of government is to counter the failure of markets. The externalities that are created by motoring are amongst the market failures that cars create. If a saving in car repair costs can be passed on to drivers by way of reduced insurance premiums in Wales this would be a very tangible indication that these failures can be addressed. However, that is the least important of the gains. The others I note would be even more significant.

The signs are good. Governments can do good things by changing speed limits, and I hope that this policy becomes universal throughout the UK.

How is the UK Government Funded? A Primer:

Published by Anonymous (not verified) on Wed, 12/06/2024 - 7:26am in

This is again from Mike Parr, earlier of this parish… This is about Money, Government, Taxes, Interest Rates’, and the lies that the lying liars keep telling you…. The UK government has three ways in which it can raise money: Borrow by selling government bonds…Tell the Bank of England to create money…Selling assets such as,... Read more

Why do politicians only talk about working people?

Published by Anonymous (not verified) on Tue, 11/06/2024 - 5:35pm in

I put this short video out this morning. In it, I express my surprise that our politicians only seem to think that what they call 'hard-working people' matter in this country. What about everyone else?

The video can be viewed here.

The transcript is:

 Why do politicians only talk about working people?

It intensely annoys me that everything is apparently framed in the interest of ‘hard-working families.’

Why do they even talk about families when so many people live by themselves? This is just profoundly prejudiced language.

What about the young who have yet to start work?

What about the old who are retired?

What about those with disabilities who can't work?

What about those who are unemployed through no fault of their own?

What about carers?

What about those who are looking after young children and families have chosen that that a person doesn't work?

Are these people all to be excluded from political consideration by politicians who only want to talk about working people, and hard-working ones at that?

I don't understand where their prejudice comes from because in this country everyone matters. And they're getting it wrong when they only talk about some people as if no one else matters.

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